SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________
FORM 8-K
________
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period ended June 30, 2001
_________________________________
GOLDEN WEST FINANCIAL CORPORATION
_________________________________
Commission file number 1-4629
Incorporated Pursuant to the Laws of Delaware State
Internal Revenue Service - Employer Identification No. 95-2080059
1901 Harrison Street, Oakland, California 94612
(510) 446-3420
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Exhibit
__________ __________
1.0 Second Quarter Earnings 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: July 26, 2001 /s/ Russell W. Kettell
______________________________________
Russell W. Kettell
President and
Chief Financial Officer
/s/ William C. Nunan
______________________________________
William C. Nunan
Chief Accounting Officer
FOR FURTHER INFORMATION CONTACT FOR IMMEDIATE RELEASE
William C. Nunan, Group Senior Vice President
Telephone: (510) 446-3614
July 18, 2001
GOLDEN WEST FINANCIAL REPORTS 55% INCREASE IN SECOND QUARTER EARNINGS PER SHARE
Oakland, California: Golden West Financial Corporation, parent of World Savings
Bank, announced record second quarter 2001 diluted earnings per share of $1.30,
up 55% from the $.84 recorded in the same period in 2000. First half 2001 per
share profits, excluding a one-time $.04 charge resulting from the adoption on
January 1, 2001 of Financial Accounting Standard No. 133, totaled $2.40, a 48%
increase from the $1.62 for the first six months of 2000.
Discussing the two principal factors that explain the Company's exceptionally
large earnings growth, Marion O. Sandler, Chairman and Chief Executive Officer
of Golden West, said, "First, our loan balances expanded by a strong 17% during
the past twelve months. Over the long run, the growth of Golden West's profits
relates to the expansion of the mortgage portfolio, which is our major earning
asset." Continuing, she remarked, "Second, we also received a significant, but
temporary, boost to our profit margin from the large decline in short-term
interest rates in 2001."
Citing another reason for Golden West's jump in earnings, Sandler stated,
"Noninterest income rose to $67 million in the second quarter of 2001, up from
$40 million in the same period a year earlier. Higher loan prepayment fees,
servicing fee income, and gains on sale of mortgages were primarily responsible
for the $27 million increase." First half 2001 noninterest income totaled $110
million, a $37 million increase from the $73 million recorded during the first
six months of 2000.
In addition to record earnings, the Company also announced second quarter 2001
mortgage originations of $5.6 billion, in line with the all-time high $5.7
billion originated in the same period a year earlier. For the first half of
2001, new loan volume totaled $9.42 billion, compared with a record $9.44
billion for the first six months of 2000.
Elaborating on the Company's lending results, Sandler noted, "Declines in
interest rates have made producing adjustable rate mortgages challenging.
Competition has been stiff from fixed-rate loans carrying the lowest rates in
two years. Nevertheless, our loan origination team produced near-record volume."
Adjustable rate mortgages (ARMs) comprised 83% of Golden West's new loan volume
during the second quarter of 2001 and 85% during the first half.
Continuing, Sandler said, "While we were able to produce a significant volume of
new mortgages during the first half of 2001, many borrowers, including our own,
chose to replace their existing home loans with new mortgages. The resulting
high level of repayments slowed the growth of our loan portfolio in the first
half of 2001."
On another mortgage-related topic, Sandler commented, "The Company's long
history of impressive loan quality continued in the second quarter of 2001." At
June 30, 2001, Golden West's ratio of nonperforming assets to total assets was a
low .53%, a slight increase from the .45% of a year earlier.
Wrapping up her quarterly review with a more detailed explanation of the
Company's profit margin expansion, Sandler commented, "The yield on our loan
portfolio reacts more slowly to changes in interest rates than does our cost of
funds. As a result, when rates fall, our primary spread, or profit margin,
expands." With the Federal Reserve's Open Market Committee lowering its target
for the Federal Funds rate by 275 basis points in the first half of 2001, Golden
West's primary spread surged to 2.79% at June 30, 2001, up from 1.91% a year
earlier and 2.03% at yearend 2000. The June 2001 level represented the widest
profit margin since the early 1990's, another period marked by large decreases
in interest rates.
Completing her explanation of the Company's primary spread, Sandler mentioned,
"It's important to note that the same dynamics that cause our profit margin to
expand in a falling interest environment lead to a contraction of the primary
spread when rates later stabilize or rise. So, basically, the boost to Golden
West's profit margin from declining rates is given back when rates increase."
Headquartered in Oakland, California, Golden West is a savings and loan holding
company with assets of $57 billion as of June 30, 2001. Currently operating 433
savings and lending offices in 35 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)
June 30
---------------------------------------
2001 2000
---------------- ---------------
ASSETS
Cash $ 439,590 $ 254,442
Securities available for sale at fair value 672,055 234,629
Other investments 375 302,252
Purchased mortgage-backed securities available for sale 218,876 71,113
Purchased mortgage-backed securities held to maturity 337,212 410,054
Mortgage-backed securities with recourse held to maturity 17,657,738 13,651,191
Loans receivable 35,511,200 31,683,917
Interest earned but uncollected 268,954 218,351
Investment in capital stock of Federal Home Loan Banks 1,074,756 783,667
Foreclosed real estate 8,472 9,608
Premises and equipment--at cost less accumulated depreciation 316,760 299,039
Other assets 925,555 929,621
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$ 57,431,543 $ 48,847,884
================ ===============
LIABILITIES and
STOCKHOLDERS' EQUITY
Deposits $ 31,491,959 $ 27,726,782
Advances from Federal Home Loan Banks 18,945,452 15,231,522
Securities sold under agreements to repurchase 851,197 1,160,536
Bank notes 634,951 0
Subordinated notes--net of discount 599,148 713,377
Taxes on income 471,232 332,104
Other liabilities 385,474 373,852
Stockholders' equity 4,052,130 3,309,711
---------------- ---------------
$ 57,431,543 $ 48,847,884
================ ===============
Book value per common share $ 25.50 $ 20.95
Common shares outstanding 158,876,757 157,948,933
Loan loss reserve $ 245,078 $ 234,834
Net loan chargeoffs (recoveries) during the quarter $ 691 $ 165
Net loan chargeoffs (recoveries) year-to-date $ 587 $ 439
New real estate loans originated: during the quarter $ 5,628,720 $ 5,675,604
year-to-date $ 9,422,730 $ 9,442,015
New adjustable rate mortgages as a percentage of new
real estate loans originated: during the quarter 83.31% 96.47%
year-to-date 85.33% 96.43%
Loan sales during the quarter $ 712,205 $ 62,787
Loan sales year-to-date $ 986,777 $ 135,296
Retail deposit net activity during the quarter $ 761,000 $ 502,530
Wholesale CD net activity during the quarter (626,000) (750,000)
---------------- ---------------
Total deposit activity during the quarter $ 135,000 $ (247,470)
================ ===============
Retail deposit net activity year-to-date $ 1,510,040 $ 611,872
Wholesale CD net activity year-to-date (66,000) (600,000)
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Total deposit net activity year-to-date $ 1,444,040 $ 11,872
================ ===============
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 Six Months Ended
June 30 June 30
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2001 2000 2001 2000
-------------- -------------- -------------- --------------
Interest Income
Interest on loans $ 672,823 $ 595,615 $ 1,377,647 $ 1,132,702
Interest on mortgage-backed securities 371,669 231,982 737,266 443,299
Interest and dividends on investments 53,252 64,795 117,014 108,945
-------------- -------------- -------------- --------------
1,097,744 892,392 2,231,927 1,684,946
Interest Expense
Interest on deposits 406,117 358,313 836,865 698,323
Interest on advances 239,572 206,925 533,008 351,415
Interest on repurchase agreements 14,537 21,969 32,226 38,633
Interest on other borrowings 34,217 24,658 63,932 46,417
-------------- -------------- -------------- --------------
694,443 611,865 1,466,031 1,134,788
-------------- -------------- -------------- --------------
Net Interest Income 403,301 280,527 765,896 550,158
Provision for loan losses 5,641 3,842 8,824 4,811
-------------- -------------- -------------- --------------
Net Interest Income after Provision for
Loan Losses
397,660 276,685 757,072 545,347
Noninterest Income
Fees 42,721 18,445 74,033 34,687
Gain on the sale of securities and loans 7,883 1,833 13,760 3,271
Change in fair value of derivatives 1,588 0 (5,914) 0
Other 14,636 19,647 28,272 35,458
-------------- -------------- -------------- --------------
66,828 39,925 110,151 73,416
Noninterest Expense
General and administrative:
Personnel 72,002 58,125 140,198 115,405
Occupancy 19,480 17,549 39,289 34,607
Deposit insurance 1,418 1,442 2,804 2,854
Advertising 3,048 1,488 4,925 3,662
Other 29,167 23,783 55,316 45,819
-------------- -------------- -------------- --------------
125,115 102,387 242,532 202,347
Earnings before Taxes on Income and
Cumulative Effect of Accounting Change 339,373 214,223 624,691 416,416
Taxes on Income 130,444 80,961 239,683 157,220
-------------- -------------- -------------- --------------
Income before Cumulative Effect of Accounting Change 208,929 133,262 385,008 259,196
Cumulative Effect of Accounting Change, Net of Tax 0 0 (6,018) 0
-------------- -------------- -------------- --------------
Net Earnings $ 208,929 $ 133,262 $ 378,990 $ 259,196
============== ============== ============== ==============
Basic Earnings Per Share before
Cumulative Effect of Accounting Change $ 1.32 $ 0.84 $ 2.43 $ 1.63
Cumulative Effect of Accounting Change, Net of Tax 0.00 0.00 (0.04) 0.00
-------------- -------------- -------------- --------------
Basic Earnings Per Share $ 1.32 $ 0.84 $ 2.39 $ 1.63
============== ============== ============== ==============
Diluted Earnings Per Share before
Cumulative Effect of Accounting Change $ 1.30 $ 0.84 $ 2.40 $ 1.62
Cumulative Effect of Accounting Change, Net of Tax 0.00 0.00 (0.04) 0.00
-------------- -------------- -------------- --------------
Diluted Earnings Per Share $ 1.30 $ 0.84 $ 2.36 $ 1.62
============== ============== ============== --------------
Average common shares outstanding 158,724,536 157,999,885 158,602,033 158,979,248
Average diluted common shares outstanding 160,968,179 159,593,955 160,771,429 160,227,370
Ratios(a)
Net earnings before accounting change/average net worth 21.19% 16.32% 20.01% 16.00%
Net earnings before accounting change/average assets 1.47% 1.13% 1.36% 1.15%
Net interest income/average assets 2.83% 2.39% 2.71% 2.44%
General and administrative expense/average assets .88% .87% .86% .90%
Efficiency ratio 26.61% 31.95% 27.68% 32.45%
(a) Ratios are annualized by multiplying the quarterly computation by four and
the semi-annual computations by two. Averages are computed by adding the
beginning balances and each monthend balance during the quarter and the six
month period and dividing by four and seven, respectively.
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
OTHER FINANCIAL DATA
(Unaudited)
(Dollars in thousands except per share figures)
Three Months Ended Six Months Ended
June 30 June 30
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2001 2000 2001 2000
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AVERAGE BALANCES(a)
Cash and investments $ 889,507 $ 1,191,303 $ 919,103 $ 1,082,013
Loans receivable including mortgage-backed securities 53,530,756 43,742,947 53,197,755 42,196,227
Investment in capital stock of Federal Home Loan Banks 1,075,735 703,810 1,076,037 635,567
Deposits 31,271,860 27,933,080 30,903,779 27,877,443
Advances from Federal Home Loan Banks 18,892,793 13,352,956 19,152,535 11,581,862
Securities sold under agreements to repurchase 978,626 963,568 911,499 1,001,309
Other borrowings 919,042 738,272 781,817 741,738
Stockholders' equity 3,944,077 3,265,364 3,848,668 3,240,386
Total Average Assets 56,971,953 46,993,584 56,549,192 45,125,521
Average Interest-Earning Assets 55,310,583 45,486,444 55,014,902 43,745,671
Average Interest-Bearing Liabilities 52,062,320 42,987,876 51,749,629 41,202,352
As of June 30
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2001 2000
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NONPERFORMING ASSETS
Loans (including MBS with recourse)
90 days or more past due $ 295,537 $ 210,127
Foreclosed real estate 8,472 9,608
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Total Nonperforming Assets $ 304,009 $ 219,735
============= ==============
Ratio of nonperforming assets to total assets .53% .45%
Ratio of troubled debt restructured to total assets .00% .01%
SPREAD DATA
Yield on loan portfolio 7.53% 7.52%
Yield on investments 5.50% 7.76%
Yield on earning assets 7.52% 7.52%
Cost of deposits 4.80% 5.11%
Cost of borrowings 4.62% 6.43%
Cost of funds 4.73% 5.61%
Yield on earning assets less cost of funds 2.79% 1.91%
(a) Averages are computed by adding the beginning balances and each monthend
balance during the quarter and six month period and dividing by four and
seven, respectively.