Bankruptcy and Troubled Company News

September 6, 1996

  1. Battle begins in the bankruptcy world
  2. FLAG Financial Corporation announces charge to third quarter earnings

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Battle begins in the bankruptcy world


            The Internet will be the sight of a fight by creditors to advise
        debtors that ``Bankruptcy Is A Ten Year Mistake.'' Banners will
        begin on the World Wide Web on Sept.  10 when viewers search the
        word ``bankruptcy,'' and the bold ads will suggest that the viewer
        go to a site where the ``mistake'' is explained.  The idea is
        fostered by Donald B.  Kramer, a St.  Louis collection attorney, who
        represents banks and credit unions, which are suffering from the one
        million individual bankruptcies being filed in 1996.  Debtor
        attorneys have urged Kramer to just say ``Bankruptcy MIGHT Be A Ten
        Year Mistake,'' but the collection lawyer will not retreat,
        indicating that he truly believes the word ``IS'' belongs in the

            Initially, the banners are scheduled on the Lycos and InfoSeek
        Internet search engines, with added banners depending on creditor
        support.  Kramer estimates the project will cost $30,000 for a year
        of Internet activity, which is expected to reach more than 120,000
        viewers searching the ``bankruptcy'' word.  ``That's not much,''
        says Kramer, ``when you consider the millions being spent by
        debtors' counsel in advertising to get financially distressed people
        into the bankruptcy courts.'' Creditors are urged to view the
        project at and contribute if
        they like the idea.   

        CONTACT:  Don Kramer, of Donald B. Kramer
                  800/288-5437, ext. 102.

FLAG Financial Corporation announces charge to third quarter earnings


            LAGRANGE, Ga.  --  Sept. 6, 1996  --  FLAG Financial
        Corporation (OTC:FLAG) announced today that its wholly-owned
        subsidiary, First Federal Savings Bank of LaGrange, expects to take
        a $2.3 million charge against earnings in the third quarter related
        to a portfolio of equipment leases sold to the Bank through the
        Bennett Funding Group, Inc. and loans serviced by a Bennett

            The charge will result in the Bank reporting a net loss in the
        third quarter.

            As was disclosed by FLAG in an earlier press release, the
        Bennett Funding Group, Inc. is an equipment leasing and finance
        company based in Syracuse, N.Y. which recently filed for Chapter 11
        bankruptcy protection.  As a result of the Chapter 11 filing, the
        collection of cash flows and the values associated with these leases
        have become less certain, and to reflect this possible loss in
        value, the Bank recognized a special provision of $678,000 in the
        second quarter.

            After further review and consultation with regulatory
        authorities and advisors to the Bank, it was determined that an
        additional special provision of $2.3 million should be added to the
        reserves of $678,000.  Including the additional provision of $2.3
        million, approximately $3.0 million in reserves will have been
        established by the Bank in connection with the bankruptcy.  As part
        of this review, it was also determined that future collections with
        regard to these equipment leases totaling $4.5 million should be
        classified as "Doubtful", and that the loans serviced by the Bennett
        affiliate totaling $5.0 million should be classified as

            Although the establishment of this level of reserves indicates
        less than full book value will be realized from these leases and
        loans, it in no way limits the amount of recovery sought by the
        Bank.  In fact, the Bank is seeking full recovery of the amounts
        invested and will aggressively pursue legal and other actions to
        seek such recovery.

            Commenting on the Bennett Funding situation, John S. Holle,
        President of FLAG Financial Corporation, stated, "Although we are
        disappointed in the recent bankruptcy filing of Bennett Funding,
        there are three things to remember as it relates to this charge:

            FLAG Financial Corporation is the holding company of First
        Federal Savings Bank of LaGrange.  Through its subsidiary, FLAG
        provides a broad range of financial products and services at five
        office locations.  FLAG's common stock is quoted on the Nasdaq
        National Market System under the symbol "FLAG."

        CONTACT:  FLAG Financial Corporation
                  Ellison C. Rudd, 706/845-5000