SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: May 8, 2001
GOLDEN WEST FINANCIAL CORPORATION
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(Exact Name of Registrant as specified in its Charter)
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Delaware 1-4529 95-2080059
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation or Identification No.)
Organization)
1901 Harrison Street, Oakland, California 94612
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 446-3420
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Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Exhibit
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1.0 Press Release
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GOLDEN WEST FINANCIAL CORPORATION
Dated: May 8, 2001 /s/ Russell W. Kettell
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Russell W. Kettell
President and
Chief Financial Officer
/s/ William C. Nunan
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William C. Nunan
Chief Accounting Officer
FOR FURTHER INFORMATION CONTACT FOR IMMEDIATE RELEASE
William C. Nunan,
Group Senior Vice President
Telephone: (510) 446-3614
April 18, 2001
GOLDEN WEST FINANCIAL REPORTS 41% INCREASE IN EARNINGS PER SHARE
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Oakland, California: Golden West Financial Corporation, parent of World Savings
Bank, announced record first quarter 2001 diluted earnings per share of $1.10, a
41% increase over the $.78 recorded in the same period in 2000. The Company's
per share profits of $1.10 exclude the cumulative effect of an accounting
change, which the Company made in accordance with Generally Accepted Accounting
Principles. On January 1, 2001, Golden West adopted Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which resulted in a one-time pre-tax charge of $10 million, or $.04
per diluted share.
Discussing the reasons behind the Company's excellent earnings performance,
Herbert M. Sandler, Chairman and Chief Executive Officer of Golden West,
explained, "Golden West's mortgage portfolio, which is our major earning asset,
grew by a strong 27% over the past twelve months. Profits during the first
quarter of 2001 reflected the benefits of this rapid loan growth."
In explaining results further, Sandler noted, "With the decline in interest
rates during the first quarter of 2001, we enjoyed an unusual jump in our
primary spread or profit margin."
Providing background regarding this increase, he said, "The action of the Open
Market Committee of the Federal Reserve in lowering interest rates by 150 basis
points in one quarter alone had the immediate effect of reducing our cost of
funds. Not so for our loan portfolio. It takes more time for our adjustable rate
mortgages to react to interest rate changes, both up and down. Once the yield on
our loans catches up with market rates, we will be back to a more normal
spread."
In addition to record earnings, the Company also announced all-time high first
quarter loan volume of $3.79 billion for the first three months of 2001, passing
the previous record of $3.77 billion originated in the same period a year
earlier.
Elaborating on the Company's lending results, Sandler commented, "Declines in
interest rates have made our adjustable rate mortgage business challenging.
Competition has been particularly stiff from fixed-rate mortgages carrying the
lowest rates in two years. Nevertheless, our loan origination team has produced
excellent results." Golden West's first quarter 2001 new loan volume was
comprised of 88% adjustable rate mortgages and 12% fixed-rate loans.
Continuing his discussion of the mortgage market, Sandler remarked, "Because the
price of new fixed-rate loans was at the lowest level since early 1999, many
consumers viewed the first quarter of 2001 as an opportunity to replace their
existing home loans with new low-cost mortgages. The resulting higher level of
repayments of existing loans caused the growth of our portfolio to slow versus a
year ago." Golden West's loan balances grew at a 7% annualized pace during the
first three months of 2001, down from 23% during the same period in 2000.
On another mortgage-related topic, Sandler said, "The Company's long history of
impressive loan quality continued in the first quarter of 2001." At March 31,
2001, Golden West's ratio of nonperforming assets to total assets was a low
.48%, compared with .51% a year earlier.
Concluding his remarks with a comment about Statement of Financial Accounting
Standards No. 133 (SFAS133), Sandler said, "All companies are required to adopt
this new accounting standard, which revises the rules for the accounting
treatment of derivative financial instruments." Golden West utilizes certain
derivatives, specifically interest rate swaps, to help control the impact of
interest rate changes on the Company's income. To comply with SFAS133, each
quarter, the Company must determine the market value of its derivative
instruments. Changes to the market value from the prior quarter will be reported
as income or expense. Over the life of the derivatives portfolio, income and
expenses resulting from compliance with SFAS133 will offset each other. Golden
West reported a one-time pre-tax charge of $10 million, or $.04 per diluted
share, upon adopting SFAS133 on January 1. In addition to that one-time charge,
the Company reported a pre-tax expense of $8 million, or $.03 per diluted share,
associated with the on-going quarterly valuation of the Company's derivatives
position. This additional expense occurred because the market value of Golden
West's derivatives declined during the first quarter of 2001 in conjunction with
falling short-term rates.
Headquartered in Oakland, California, Golden West is a savings and loan holding
company with assets of $57 billion as of March 31, 2001. Currently operating 423
savings and lending offices in 34 states under the World name, the Company has
one of the largest branch systems in the country. Golden West's stock is listed
on the New York and Pacific Stock Exchanges under the ticker symbol GDW.
Golden West investor information is available at www.gdw.com. Information about
the Company's home loans and savings and checking accounts can be found at
www.worldsavings.com and about its proprietary no-load mutual funds and
annuities at www.atlasfunds.com.
Information in this Press Release may include forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation Act
of 1995. Such statements include, without limitation, references to future
earnings, profit margins, and portfolio growth. It is important to note that
such forward-looking statements are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
beyond the Company's control. Thus future financial results may differ
materially from those described herein. Golden West Financial Corporation makes
no guarantee or promises regarding future results and assumes no responsibility
to update such forward-looking statements.
# # #
Financial Information Attached
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
AND OTHER FINANCIAL DATA
(Unaudited)
(Dollars in thousands except per share figures)
March 31
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2001 2000
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ASSETS
Cash $ 363,672 $ 277,667
Securities available for sale at fair value 369,690 455,709
Other investments 199,873 1,088,499
Purchased mortgage-backed securities available for sale 105,867 74,745
Purchased mortgage-backed securities held to maturity 369,268 423,160
Mortgage-backed securities with recourse held to maturity 20,003,219 10,952,263
Loans receivable 32,825,480 30,432,413
Interest earned but uncollected 276,699 190,986
Investment in capital stock of Federal Home Loan Banks 1,084,264 671,056
Foreclosed real estate 7,284 11,214
Premises and equipment--at cost less accumulated depreciation 310,216 289,047
Other assets 816,477 769,481
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$ 56,732,009 $ 45,636,240
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LIABILITIES and
STOCKHOLDERS' EQUITY
Deposits $ 31,356,959 $ 27,974,252
Advances from Federal Home Loan Banks 18,936,789 12,224,073
Securities sold under agreements to repurchase 854,507 867,049
Federal funds purchased 270,000 0
Subordinated notes--net of discount 598,968 713,167
Taxes on income 520,224 344,296
Other liabilities 358,445 300,739
Stockholders' equity 3,836,117 3,212,664
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$ 56,732,009 $ 45,636,240
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Book value per common share $ 24.19 $ 20.29
Common shares outstanding 158,563,907 158,340,533
Loan loss reserve $ 237,964 $ 233,016
Reserve for losses on loans sold or securitized and retained $ 22,411 $ 15,438
Net loan chargeoffs (recoveries) during the quarter $ (104) $ 274
New real estate loans originated during the quarter $ 3,794,010 $ 3,766,336
New adjustable rate mortgages as a percentage of new
real estate loans originated during the quarter 88.31% 96.37%
Retail deposit net activity during the quarter $ 749,040 $ 109,342
Wholesale CD net activity during the quarter 560,000 150,000
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Total deposit net activity during the quarter $ 1,309,040 $ 259,342
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GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF NET EARNINGS
AND OTHER FINANCIAL DATA
(Unaudited)
(Dollars in thousands except per share figures)
Three Months Ended
March 31
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2001 2000
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Interest Income
Interest on loans $ 704,824 $ 537,087
Interest on mortgage-backed securities 365,597 211,317
Interest and dividends on investments 63,762 44,150
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1,134,183 792,554
Interest Expense
Interest on deposits 430,748 340,010
Interest on advances 293,436 144,490
Interest on repurchase agreements 17,689 16,664
Interest on other borrowings 29,715 21,759
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771,588 522,923
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Net Interest Income 362,595 269,631
Provision for loan losses 3,183 969
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Net Interest Income after Provision for
Loan Losses
359,412 268,662
Noninterest Income
Fees 31,312 16,242
Gain on the sale of securities and loans 5,877 1,438
Change in fair value of derivatives (7,502) 0
Other 13,636 15,811
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43,323 33,491
Noninterest Expense
General and administrative:
Personnel 68,196 57,280
Occupancy 19,809 17,058
Deposit insurance 1,386 1,412
Advertising 1,877 2,174
Other 26,149 22,036
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117,417 99,960
Earnings before Taxes on Income and
Cumulative Effect of Accounting Change 285,318 202,193
Taxes on Income 109,239 76,259
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Income before Cumulative Effect of Accounting Change 176,079 125,934
Cumulative Effect of Accounting Change, Net of Tax (6,018) 0
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Net Earnings $ 170,061 $ 125,934
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Basic Earnings Per Share before
Cumulative Effect of Accounting Change $ 1.11 $ 0.79
Cumulative Effect of Accounting Change, Net of Tax (0.04) 0.00
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Basic Earnings Per Share $ 1.07 $ 0.79
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Diluted Earnings Per Share before
Cumulative Effect of Accounting Change $ 1.10 $ 0.78
Cumulative Effect of Accounting Change, Net of Tax (0.04) 0.00
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Diluted Earnings Per Share $ 1.06 $ 0.78
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Average common shares outstanding 158,478,170 159,958,610
Average diluted common shares outstanding 160,694,897 160,831,775
Ratios (a)
Net earnings before accounting change / average 18.78% 15.70%
net worth
Net earnings before accounting change / average 1.25% 1.16%
assets
Net interest income / average assets 2.58% 2.49%
General and administrative expense / average assets .84% .92%
Efficiency ratio 28.93% 32.98%
(a) Ratios are annualized by multiplying the quarterly computation by four.
Averages are computed by adding the beginning balances and each monthend
balance during the quarter and dividing by four.
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
OTHER FINANCIAL DATA
(Unaudited)
(Dollars in thousands except per share figures)
Three Months Ended
March 31
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2001 2000
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AVERAGE BALANCES (a)
Cash and investments $ 952,232 $ 1,157,689
Loans receivable including mortgage-backed 52,891,273 40,571,097
securities
Investment in capital stock of Federal Home 1,078,397 576,197
Loan Banks
Deposits 30,648,993 27,846,009
Advances from Federal Home Loan Banks 19,358,340 9,971,321
Securities sold under agreements to repurchase 830,124 1,005,484
Other borrowings 666,380 738,060
Stockholders' equity 3,750,121 3,208,477
Total Average Assets 56,172,135 43,385,139
Average Interest-Earning Assets 54,749,284 42,121,841
Average Interest-Bearing Liabilities 51,503,837 39,560,875
As of March 31
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2001 2000
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NONPERFORMING ASSETS
Loans (including MBS with recourse)
90 days or more past due $ 267,298 $ 221,070
Foreclosed real estate 7,284 11,214
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Total Nonperforming Assets $ 274,582 $ 232,284
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Ratio of nonperforming assets to total assets .48% .51%
Ratio of troubled debt restructured to total assets .00% .01%
SPREAD DATA
Yield on loan portfolio 8.01% 7.36%
Yield on investments 7.35% 6.38%
Yield on earning assets 8.01% 7.33%
Cost of deposits 5.35% 4.84%
Cost of borrowings 5.59% 5.94%
Cost of funds 5.45% 5.21%
Yield on earning assets less cost of funds 2.56% 2.12%
(a) Averages are computed by adding the beginning balances and each monthend
balance during the quarter and dividing by four.