UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549 - 1004
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-4075
GREAT WESTERN FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-1913457
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
9200 Oakdale Avenue, Chatsworth, California 91311
(Address of principal executive offices) (Zip Code)
(818) 775-3411
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of July 31, 1994: 133,249,773
GREAT WESTERN FINANCIAL CORPORATION
TABLE OF CONTENTS
Page
----
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Statement of Financial
Condition - June 30, 1994, December 31, 1993
and June 30, 1993..................................... 4
Consolidated Condensed Statement of Operations -
Three and Six Months Ended June 30, 1994 and 1993..... 5
Consolidated Condensed Statement of Cash Flows -
Three and Six Months Ended June 30, 1994 and 1993..... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Three
and Six Months Ended June 30, 1994................. 8
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders.. 35
Item 5. Other Information.................................... 35
Item 6. Exhibits and Reports on Form 8-K..................... 36
GREAT WESTERN FINANCIAL CORPORATION
PART I - FINANCIAL INFORMATION
------------------------------
PERSONS FOR WHOM THE INFORMATION IS TO BE GIVEN
- - -----------------------------------------------
The accompanying financial information is filed for the Registrant, Great
Western Financial Corporation, and its subsidiaries comprising a savings bank
and companies engaged in consumer lending, mortgage banking, securities
operations and certain other financial services ("GWFC" or "the Company").
PRESENTATION OF FINANCIAL INFORMATION
- - -------------------------------------
The financial information has been prepared in conformity with the accounting
principles or practices reflected in the financial statements included in the
Annual Report filed with the Commission for the year ended December 31, 1993.
The information further reflects all adjustments which are, in the opinion of
management, of a normal recurring nature and necessary for a fair presentation
of the results for the interim periods.
Item 1. Financial Statements
GREAT WESTERN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION
June 30 December 31 June 30
(Dollars in thousands) 1994 1993 1993
------- ----------- -------
ASSETS
Cash and securities
Cash $ 815,269 $ 758,581 $ 670,101
Certificates of deposit and federal funds 255,125 217,125 25,125
Securities available for sale (fair
value $501,114, $871,074 and $646,233) 501,114 871,074 635,805
----------- ----------- -----------
1,571,508 1,846,780 1,331,031
Mortgage-backed securities held to maturity
(fair value $995,966 and $605,512) 1,014,720 618,574 -
Mortgage-backed securities available for
sale (fair value $2,266,584,
$2,570,822 and $2,852,352) 2,266,584 2,570,822 2,787,713
----------- ----------- -----------
3,281,304 3,189,396 2,787,713
Loans receivable, less reserve for
estimated losses 31,133,601 30,162,401 30,888,838
Loans receivable available for sale 264,446 499,002 472,296
----------- ----------- -----------
31,398,047 30,661,403 31,361,134
Real estate available for sale or
development, net 293,129 434,077 763,140
Interest receivable 218,841 214,990 219,188
Investment in Federal Home Loan Banks 308,284 307,352 309,076
Premises and equipment, at cost,
less accumulated depreciation 632,786 623,691 622,177
Other assets 394,536 638,983 481,890
Intangibles arising from acquisitions 408,149 431,688 303,510
----------- ----------- -----------
$38,506,584 $38,348,360 $38,178,859
=========== =========== ===========
LIABILITIES
Customer accounts $30,208,548 $31,531,563 $28,599,548
Short-term borrowings 2,475,588 676,483 2,257,292
Other borrowings 2,479,767 2,802,858 3,930,512
Other liabilities and accrued expenses 663,344 729,229 676,982
Taxes on income, principally deferred 254,612 184,826 226,293
Stockholders' equity 2,424,725 2,423,401 2,488,232
----------- ----------- -----------
$38,506,584 $38,348,360 $38,178,859
=========== =========== ===========
[FN]
Unaudited
GREAT WESTERN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
Three Months Ended June 30 Six Months Ended June 30
-------------------------- -------------------------
(Dollars in thousands, except per share) 1994 1993 1994 1993
---- ---- ---- ----
INTEREST INCOME
Real estate loans $482,122 $515,315 $ 963,631 $1,035,563
Mortgage-backed securities 44,371 47,038 89,012 97,835
Consumer loans 94,908 96,002 185,749 197,474
Securities 5,105 7,550 11,719 15,418
Other 7,297 8,592 13,684 16,006
-------- -------- ---------- ----------
633,803 674,497 1,263,795 1,362,296
INTEREST EXPENSE
Customer accounts 229,578 233,339 461,717 487,913
Borrowings
Short-term 12,602 16,758 18,367 28,165
Long-term 53,900 74,264 111,744 146,489
-------- -------- ---------- ----------
296,080 324,361 591,828 662,567
-------- -------- ---------- ----------
NET INTEREST INCOME 337,723 350,136 671,967 699,729
Provision for loan losses 52,900 85,500 104,700 148,000
-------- -------- ---------- ----------
Net interest income after provision
for loan losses 284,823 264,636 567,267 551,729
Other operating income
Real estate services
Loan fees 7,707 10,005 15,518 19,355
Mortgage banking
Gain on mortgage sales 3,508 5,856 5,796 10,892
Servicing 13,326 12,589 27,014 25,673
-------- -------- ---------- ----------
24,541 28,450 48,328 55,920
Retail banking
Banking fees 35,732 27,466 68,662 51,918
Securities operations 11,213 10,082 21,789 19,022
-------- -------- ---------- ----------
46,945 37,548 90,451 70,940
Net gain on securities and investments 592 215 2,854 409
Net insurance operations 7,571 7,192 13,995 13,161
Other 1,729 1,674 3,215 2,984
-------- -------- ---------- ----------
Total other operating income 81,378 75,079 158,843 143,414
Noninterest expenses
Operating and administrative expenses
Salaries and related personnel 117,471 119,521 239,379 241,072
Premises and occupancy 53,079 44,881 104,641 89,697
FDIC insurance premium 19,147 11,146 38,294 26,882
Amortization of intangibles 11,765 8,885 23,529 17,822
Advertising and promotion 10,093 8,786 19,396 16,342
Other 47,290 52,775 97,696 102,413
-------- -------- ---------- ----------
258,845 245,994 522,935 494,228
Real estate operations 6,301 8,030 14,945 16,913
Provision for real estate losses 6,000 500 9,000 26,000
-------- -------- ---------- ----------
Total noninterest expenses 271,146 254,524 546,880 537,141
-------- -------- ---------- ----------
EARNINGS BEFORE TAXES 95,055 85,191 179,230 158,002
Taxes on income 39,200 32,600 73,900 60,200
-------- -------- ---------- ----------
NET EARNINGS $ 55,855 $ 52,591 $ 105,330 $ 97,802
======== ======== ========== ==========
Average common shares outstanding
Without dilution 133,515,722 131,716,714 133,444,187 131,655,471
Fully diluted 140,019,059 138,059,043 139,879,510 137,997,383
Earnings per share based on average
common shares outstanding
Primary $.38 $.35 $.70 $.65
Fully diluted .38 .35 .70 .65
Cash dividend per share .23 .23 .46 .46
[FN]
Unaudited
GREAT WESTERN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
Three Months Ended June 30 Six Months Ended June 30
-------------------------- -------------------------
(Dollars in thousands) 1994 1993 1994 1993
---- ---- ---- ----
OPERATING ACTIVITIES
Net earnings $ 55,855 $ 52,591 $ 105,330 $ 97,802
Noncash adjustments to net earnings:
Provision for loan losses 52,900 85,500 104,700 148,000
Provision for real estate losses 6,000 500 9,000 26,000
Depreciation and amortization 31,980 26,996 62,798 54,161
Income taxes 24,357 15,327 99,035 26,494
Capitalized interest (1,061) (5,510) (3,319) (12,138)
Net change in accrued interest 10,338 16,708 (10,745) 11,024
Other 285,665 (61,061) 181,629 (130,454)
----------- ------------ ----------- -----------
466,034 131,051 548,428 220,889
----------- ------------ ----------- -----------
Sales and repayments of loans
receivable available for sale 338,216 918,630 1,054,473 1,429,338
Originations and purchases of loans
receivable available for sale (200,010) (940,278) (819,917) (1,504,424)
----------- ----------- ----------- -----------
138,206 (21,648) 234,556 (75,086)
----------- ----------- ----------- -----------
Net cash provided by operating
activities 604,240 109,403 782,984 145,803
----------- ----------- ----------- -----------
FINANCING ACTIVITIES
Customer accounts
Net (decrease) in transanction
accounts (263,377) (190,403) (9,253) (307,183)
Net (decrease) in term accounts (594,231) (288,220) (1,313,762) (2,035,256)
----------- ----------- ----------- -----------
(857,608) (478,623) (1,323,015) (2,342,439)
Customer account acquisitions, net - - - 33,322
Borrowings
Proceeds from new long-term debt - 1,232,620 - 2,432,620
Repayments of long-term debt (62,197) (1,085,077) (323,091) (1,449,475)
Net change in short-term debt 2,005,529 580,050 1,799,105 1,053,607
----------- ----------- ----------- -----------
1,943,332 727,593 1,476,014 2,036,752
Other financing activity
Proceeds from issuance of
common stock 4,183 4,300 10,413 11,526
Cash dividends paid (36,840) (36,141) (73,612) (72,787)
----------- ---------- ----------- -----------
(32,657) (32,141) (63,199) (61,261)
----------- ---------- ----------- -----------
Net cash provided by (used in)
financing activities 1,053,067 216,829 89,800 (333,626)
----------- ---------- ----------- -----------
/TABLE
GREAT WESTERN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
Three Months Ended June 30 Six Months Ended June 30
-------------------------- -------------------------
(Dollars in thousands) 1994 1993 1994 1993
---- ---- ---- ----
INVESTING ACTIVITIES
Investment securities
Proceeds from maturities $ 204,114 $ 148,989 $ 694,832 $ 224,548
Purchases of securities (213,869) (161,413) (337,073) (236,447)
----------- ----------- ----------- -----------
(9,755) (12,424) 357,759 (11,899)
Lending
Loans originated for investment (2,365,133) (2,040,046) (3,905,383) (3,719,627)
Purchases of mortgage-backed securities (530,974) (102,513) (581,287) (231,821)
Payments 1,835,851 1,969,734 3,600,971 3,739,089
Mortgage sales - 34,045 - 34,045
Repurchases (459,329) (82,309) (479,605) (127,165)
Other (8,741) (50) 6,232 8,502
----------- ----------- ----------- -----------
(1,528,326) (221,139) (1,359,072) (296,977)
Other investing activity
Purchases and sales of premises
and equipment, net (21,072) (28,053) (34,106) (64,383)
Sales of real estate 125,220 161,574 269,807 252,940
Acquisition and disposition of
assets, net - - - 34
Other (4,926) (29,427) (12,484) (33,245)
----------- ----------- ----------- -----------
99,222 104,094 223,217 155,346
----------- ----------- ----------- -----------
Net cash (used in) investing activities (1,438,859) (129,469) (778,096) (153,530)
----------- ----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents 218,448 196,763 94,688 (341,353)
Cash and cash equivalents at beginning
of period 851,946 498,463 975,706 1,036,579
----------- ----------- ----------- -----------
Cash and cash equivalents at end of period $ 1,070,394 $ 695,226 $ 1,070,394 $ 695,226
=========== =========== =========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid for
Interest on deposits $ 230,003 $ 234,094 $ 463,280 $ 490,081
Interest on borrowings 54,251 79,650 135,442 171,993
Income taxes 15,404 27,423 25,784 43,846
Noncash investing activities
Loans transferred to foreclosed real estate $ 157,574 $ 191,920 $ 251,160 $ 392,748
Loans originated to facilitate the sale
of real estate 23,030 11,557 41,779 41,641
Loans exchanged for mortgage-backed
securities - 2,036 - 2,036
[FN]
Unaudited
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 1994
Great Western Financial Corporation reported improved net earnings of
$55.9 million, or $.38 per share, in the 1994 second quarter compared with
earnings of $49.5 million, or $.32 per share in the 1994 first quarter and
$52.6 million, or $.35 per share, in the 1993 second quarter.
For the six months ended June 30, 1994, net earnings were $105, million
or $.70 per share, compared with $97.8 million, or $.65 per share, for the
same period a year ago.
Provisions for loan and real estate losses during the 1994 second
quarter were $58.9 million compared with $86 million in the same period of
1993. Provisions for loan and real estate losses during the first six months
of 1994 and 1993 were $114 million and $174 million, respectively. The
decrease in loan and real estate loss provisions reflects a slower rate of
deterioration in the real estate market.
HIGHLIGHTS (Dollars in thousands, except per share)
For the three months ended
June 30 1994 1993
- - -------------------------- ---- ----
Net interest income $ 337,723 $ 350,136
Net earnings 55,855 52,591
Fully diluted earnings per common share $.38 $.35
New loan volume 2,588,173 2,991,881
(Decrease) in customer accounts (857,608) (478,623)
Mortgage sales 315,833 873,655
Average net interest margin
Yield on earning assets 7.15% 7.55%
Cost of funds 3.44 3.74
---- ----
Yield on earning assets,
less cost of funds 3.71% 3.81%
==== ====
For the six months ended
June 30
- - ------------------------
Net interest income $ 671,967 $ 699,729
Net earnings 105,330 97,802
Fully diluted earnings per common share $.70 $.65
New loan volume 4,767,079 5,265,692
Retail deposits acquired, net - 33,322
(Decrease) in customer accounts (1,323,015) (2,309,117)
Mortgage sales 987,199 1,328,310
Average net interest margin
Yield on earning assets 7.12% 7.64%
Cost of funds 3.43 3.81
---- ----
Yield on earning assets,
less cost of funds 3.69% 3.83%
==== ====
At June 30
- - ----------
Total assets $38,506,584 $38,178,859
Stockholders' equity 2,424,725 2,488,232
Stockholders' equity per common share $15.99 $16.68
The Company's core business continued to improve in the second quarter
of 1994. Net interest income for the second quarter 1994 increased to $338
million compared with $334 million in the first quarter of 1994. Net
interest income was $350 million in the second quarter of 1993. While
interest earning asset levels increased slightly, the net interest margin
decreased compared with a year ago. The net interest margin is expected to
continue to decline if interest rates continue to increase.
The following summarizes the contribution to pretax income from the
Company's principal business units:
Three Months Ended Six Months Ended
June 30 June 30
------------------- ---------------------
(Dollars in thousands) 1994 1993 1994 1993
---- ---- ---- ----
Banking operations $70,052 $62,617 $129,154 $113,554
Consumer finance group 25,003 22,574 50,076 44,448
------- ------- -------- --------
Pretax earnings 95,055 85,191 179,230 158,002
Taxes on income 39,200 32,600 73,900 60,200
------- ------- -------- --------
Net earnings $55,855 $52,591 $105,330 $ 97,802
======= ======= ======== ========
BRANCH ACQUISITIONS
During the second quarter of 1994, Great Western Bank, a Federal
Savings Bank ("GWB") signed an agreement to purchase the deposits of six
branches located in San Diego County from Citibank, FSA, totaling
approximately $70 million. The deposits will be consolidated into existing
GWB branches. Pending regulatory approval, the purchase is expected to be
completed in the fourth quarter of 1994.
INTEREST EARNING ASSETS
Interest earning assets comprise real estate loans and mortgage-backed
securities ("mortgages"), consumer finance loans and marketable securities.
The composition of interest earning assets at June 30, 1994 and June 30, 1993
follows:
June 30
---------------------------------
1994 1993
-------------- --------------
(Dollars in millions) Amount % Amount %
------- --- ------- ---
Loans receivable
Real estate
Residential
Single-family $26,515 73% $25,945 73%
Apartments 1,736 5 1,965 6
Commercial and other 1,542 4 1,842 5
Consumer finance 1,860 5 1,712 5
Bank card - - 229 -
Other 380 1 367 1
------- --- ------- ---
32,033 88 32,060 90
Mortgage-backed securities 3,288 9 2,795 8
Securities 697 2 601 1
Investment in FHLB stock 308 1 309 1
------- --- ------- ---
$36,326 100% $35,765 100%
======= === ======= ===
Interest earning assets, primarily single-family mortgages, increased
during the 1994 second quarter compared with the 1993 second quarter.
Purchases of mortgage-backed securities were $531 million in the second
quarter of 1994 compared with $103 million in the same period last year.
Periodically the Company repurchases, for investment, loans which were
previously sold. The Company also repurchases delinquent loans which were
sold with recourse. Repurchased real estate loans totaled $459 million in
the second quarter of 1994, including a June repurchase of $437 million of
adjustable rate loans for investment and $22 million of delinquent loans sold
with recourse. Repurchases of delinquent loans were $82 million in the
second quarter of 1993. Commercial real estate loans continued to decrease
as a result of the Company's decision in 1987 to discontinue commercial real
estate lending except to finance the sale of foreclosed properties.
The Adjustable Rate Mortgage ("ARM") for single-family residential
properties ("SFRs") is the primary lending product held for investment.
Approximately 75% of loans in the portfolio are indexed to the cost of funds
index for financial institutions comprising the 11th District Federal Home
Loan Bank of San Francisco ("COFI"). The Company also originates an ARM
product which is indexed to the Federal Cost of Funds Index ("FCOFI"). This
index is a combination of the average interest rate on the combined
marketable treasury bills and the average interest rate on the combined
marketable treasury notes. The FCOFI ARM is similar to the COFI ARM product
as to interest-rate caps and payment changes. At June 30, 1994, ARMs
comprised 93.7% of the mortgage portfolio. A significant portion of the ARM
portfolio is subject to lifetime interest-rate caps and floors. At June 30,
1994, $8.4 billion of ARM loans with an average yield of 6.99% had reached
their floor rate. Without the floor, the average yield on these loans would
have been 6.21%. The benefit to interest income from these real estate
loans was approximately $17.6 million for the second quarter of 1994 compared
with $8.5 million in the second quarter of 1993.
The composition of new loan volume was as follows:
Six Months Ended
Three Months Ended ----------------
------------------------------ June 30
June 30 March 31 June 30 ----------------
(Dollars in millions) 1994 1994 1993 1994 1993
------- -------- ------- ---- ----
Real estate loans $2,035 $1,671 $2,421 $3,706 $4,225
Consumer loans 553 508 571 1,061 1,041
------ ------ ------ ------ ------
Total new loan volume $2,588 $2,179 $2,992 $4,767 $5,266
====== ====== ====== ====== ======
The composition of real estate loan originations by type was as follows:
Six Months Ended
Three Months Ended ----------------
---------------------------- June 30
June 30 March 31 June 30 ----------------
1994 1994 1993 1994 1993
------- -------- ------- ---- ----
ARM
COFI 74% 52% 44% 64% 45%
FCOFI 1 2 13 2 16
T-Bill 12 8 1 11 1
Other 3 3 3 2 3
--- --- --- --- ---
Total ARM 90 65 61 79 65
Fixed rate 10 35 39 21 35
--- --- --- --- ---
100% 100% 100% 100% 100%
=== === === === ===
Refinances, included above 45% 63% 65% 53% 62%
=== === === === ===
/TABLE
Fixed-rate lending, originated exclusively for sale, is negatively
influenced by the rising interest-rate environment. The portfolio of fixed-
rate loans designated as available for sale has been recorded at the lower
of cost or fair value. The Company sells loans forward into the secondary
market and purchases short-term hedge contracts for the commitment period to
protect against rate fluctuations on its commitments to fund fixed-rate loans
originated for sale. Hedge contracts are recorded at cost.
Real estate loans held for investment are primarily ARMs. During the
second quarter 1994, ARMs comprised 90% of total real estate loan
originations compared with 61% in the same period of 1993 and 65% for the
first quarter of 1994. COFI ARMs were the primary adjustable rate offering
in 1994 and 1993. The primary ARM product in the second quarter of 1994 was
a tiered cap loan where the interest-rate cap is periodically increased over
six years. The ARM differential over the appropriate indices on new ARMs was
2.57% in the second quarter 1994 compared with 2.44% a year ago. The ARM
differential on the total ARM real estate loan portfolio was 2.42% at June
30, 1994 and 2.39% at June 30, 1993. Currently, interest rates on new real
estate loans favor adjustable rate products, which may enable the Company to
generate asset growth in 1994.
The cost of funds for GWB, relative to COFI and FCOFI, is shown as
follows:
GWB Cost of
GWB Funds Less Than
Cost of ---------------
Funds COFI FCOFI COFI FCOFI
------- ---- ----- ---- -----
June 30, 1994 3.263% 3.804% 5.238% .541% 1.975%
March 31, 1994 3.197 3.629 4.928 .432 1.731
December 31, 1993 3.319 3.879 4.892 .560 1.573
June 30, 1993 3.490 4.050 5.064 .560 1.574
The contractual maturities of all loans receivable and mortgage-backed
securities as of June 30, 1994 follow:
Mortgage-Backed
Real Estate Loans Securities
----------------- ---------------
Fixed Fixed
(Dollars in millions) ARM Rate ARM Rate Consumer Total
--- ----- --- ----- -------- -----
One year or less $ 561 $ 47 $ 36 $297 $ 826 $ 1,767
Over one to two years 640 51 38 221 552 1,502
Over two to three years 858 54 40 82 378 1,412
Over three to five years 1,637 130 88 56 155 2,066
Over five to ten years 3,677 432 271 142 191 4,713
Over ten to fifteen years 4,463 158 364 94 125 5,204
Over fifteen years 16,840 245 1,487 72 13 18,657
------- ------ ------ ---- ------ -------
$28,676 $1,117 $2,324 $964 $2,240 $35,321
======= ====== ====== ==== ====== =======
INTEREST BEARING LIABILITIES
The composition of interest bearing liabilities at June 30, 1994 and
June 30, 1993 follows:
June 30
-------------------------------
1994 1993
------------- -------------
(Dollars in millions) Amount % Amount %
------ --- ------ ---
Customer accounts
Retail accounts
Term $16,349 47% $15,470 44%
Transaction 13,408 38 12,347 36
Wholesale accounts 452 1 782 2
------- --- ------- ---
30,209 86 28,599 82
------- --- ------- ---
Borrowings
FHLB 229 1 1,294 4
Other 4,726 13 4,894 14
------- --- ------- ---
4,955 14 6,188 18
------- --- ------- ---
Total interest bearing liabilities $35,164 100% $34,787 100%
======= === ======= ===
/TABLE
Borrowings totaled $5 billion at June 30, 1994, $3.5 billion at
December 31, 1993 and $6.2 billion at June 30, 1993. As a percentage of
interest bearing liabilities, borrowings totaled 14% at June 30, 1994 and 18%
at June 30, 1993. The level of borrowings is influenced by customer account
activity, deposit acquisitions and changes in assets. In the fourth quarter
of 1993, GWB acquired $4.1 billion in deposits of HomeFed Bank, F.A.
("HomeFed") from the Resolution Trust Corporation.
The following table shows the components of the change in customer
account balances:
Three Months Ended Six Months Ended
June 30 June 30
------------------ --------------------
(Dollars in millions) 1994 1993 1994 1993
---- ---- ---- ----
Transaction
Demand accounts $ (63) $ (10) $ 117 $ (2)
Money market and other
transaction accounts (190) (181) (86) (305)
Certificates of deposit (576) (423) (1,217) (2,134)
Wholesale accounts (29) 135 (137) 99
----- ----- ------- -------
(858) (479) (1,323) (2,342)
Acquisitions of deposits, net - - - 33
----- ----- ------- -------
$(858) $(479) $(1,323) $(2,309)
===== ===== ======= =======
The Company concentrates its retail deposit-gathering activity in two
states: California and Florida.
Net certificate of deposit account withdrawals have occurred during
each of the past ten quarters due to reduced rates offered. During much of
this period retaining certificates of deposit as a source of funds has not
been essential as ARM originations were not at levels where asset growth
could occur. In the second quarter of 1994, borrowings were utilized to fund
asset growth.
A summary of customer certificates of deposit by interest rate and
maturity as of June 30, 1994 follows:
90 Days 180 Days One Year Two Years
Within to to to to Three Years June 30 December 31 June 30
(Dollars in millions) 90 Days 180 Days One Year Two Years Three Years and Over 1994 1993 1993
------- -------- -------- --------- ----------- ----------- ------- ----------- -------
Under 4% $4,208 $2,447 $1,891 $1,103 $ 178 $ 32 $ 9,859 $10,998 $ 9,525
4 to 6% 952 807 1,251 552 192 1,194 4,948 4,789 4,237
6 to 8% 33 33 55 480 833 182 1,616 1,619 2,005
Over 8% 21 5 7 196 3 12 244 575 485
------ ------ ------ ------ ------ ------ ------- ------- -------
$5,214 $3,292 $3,204 $2,331 $1,206 $1,420 $16,667 $17,981 $16,252
====== ====== ====== ====== ====== ====== ======= ======= =======
$100,000 accounts
included above $ 638 $ 116 $ 74 $ 42 $ 4 $ 8 $ 882 $ 1,060 $ 1,456
NET INTEREST MARGIN AND NET INTEREST INCOME
While average interest earning assets have remained relatively stable
during the past year, the interest margin has decreased as interest rates
have begun to rise. Net interest income increased slightly to $338 million
in the second quarter 1994 compared with $334 million in the first quarter
of 1994. Net interest income was $350 million in the second quarter 1993.
The Company's net interest margin, the difference between the yield on
interest earning assets (interest on mortgages, consumer loans and
securities) and the cost of funds (interest on customer accounts and
borrowings) was 3.79% at June 30, 1994 compared with 4.04% a year ago. The
average net interest margin for the 1994 second quarter was 3.71% compared
with 3.81% in the 1993 second quarter. The average net interest margin for
the first six months of 1994 was 3.69% compared with 3.83% in the same 1993
period. The repricing lag on FCOFI and COFI ARMs reduced the average net
interest margin by approximately 6 basis points in the second quarter of 1994
compared to an increase of 11 basis points in the second quarter of 1993.
For the first quarter 1994, the repricing lag accounted for an increase of
approximately 9 basis points to the average net interest margin.
The following table of net interest income displays the average monthly
balances, interest income and expense and average rates by asset and
liability component for the periods indicated:
Three Months Ended June 30
-------------------------------------------------------
1994 1993
-------------------------- --------------------------
Average Average Average Average
(Dollars in millions) Balance Interest Rate Balance Interest Rate
------- -------- ------- ------- -------- -------
Interest earning assets
Securities $ 962 $ 12 5.16% $ 890 $ 16 7.26%
Mortgage-backed securities 3,136 44 5.66 2,885 47 6.52
Loans receivable
Real estate 29,146 483 6.62 29,647 515 6.95
Consumer 2,224 95 17.07 2,304 96 16.67
------- ---- ----- ------- ---- -----
Total interest earning assets 35,468 634 7.15 35,726 674 7.55
Other assets 2,280 2,396
------- -------
Total assets $37,748 $38,122
======= =======
Interest bearing liabilities
Customer accounts
Term accounts $16,972 172 4.04 $16,217 171 4.21
Transaction accounts 13,643 58 1.71 12,617 62 1.98
------- ---- ----- ------- ---- -----
30,615 230 3.00 28,834 233 3.24
Borrowings
FHLB 242 3 5.15 1,314 15 4.44
Other 3,539 63 7.16 4,573 76 6.69
------- ---- ----- ------- ---- -----
Total interest bearing liabilities 34,396 296 3.44 34,721 324 3.74
Other liabilities 944 932
Stockholders' equity 2,408 2,469
------- -------
Total liabilities and equity $37,748 $38,122
======= =======
Interest rate spread 3.71% 3.81%
===== =====
Effective yield summary
Interest income/earning assets $35,468 $634 7.15% $35,726 $674 7.55%
Interest expense/earning assets 35,468 296 3.34 35,726 324 3.63
---- ----- ---- -----
Net yield on earning assets $338 3.81% $350 3.92%
==== ===== ==== =====
/TABLE
Six Months Ended June 30
-------------------------------------------------------
1994 1993
-------------------------- --------------------------
Average Average Average Average
(Dollars in millions) Balance Interest Rate Balance Interest Rate
------- -------- ------- ------- -------- -------
Interest earning assets
Securities $ 1,057 $ 25 4.81% $ 935 $ 31 6.72%
Mortgage-backed securities 3,141 89 5.67 2,972 98 6.58
Loans receivable
Real estate 29,106 964 6.62 29,436 1,036 7.04
Consumer 2,219 186 16.74 2,316 197 17.05
------- ------ ----- ------- ------ -----
Total interest earning assets 35,523 1,264 7.12 35,659 1,362 7.64
Other assets 2,297 2,495
------- -------
Total assets $37,820 $38,154
======= =======
Interest bearing liabilities
Customer accounts
Term accounts $17,295 341 3.94 $16,767 359 4.28
Transaction accounts 13,562 121 1.78 12,704 129 2.04
------- ------ ----- ------- ------ -----
30,857 462 2.99 29,471 488 3.31
Borrowings
FHLB 262 8 6.03 977 23 4.79
Other 3,341 122 7.32 4,313 151 7.01
------- ------ ----- ------- ------ -----
Total interest bearing liabilities 34,460 592 3.43 34,761 662 3.81
Other liabilities 941 933
Stockholders' equity 2,419 2,460
------- -------
Total liabilities and equity $37,820 $38,154
======= =======
Interest rate spread 3.69% 3.83%
===== =====
Effective yield summary
Interest income/earning assets $35,523 $1,264 7.12% $35,659 $1,362 7.64%
Interest expense/earning assets 35,523 592 3.33 35,659 662 3.72
------ ----- ------ -----
Net yield on earning assets $ 672 3.79% $ 700 3.92%
====== ===== ====== =====
The average balance of loans receivable above includes nonaccrual loans
and therefore the interest income and average rate, as presented, are
affected by the loss of interest on such loans. Interest foregone on
nonaccrual loans that were nonperforming totaled $12.4 million for the
quarter ended June 30, 1994 compared with $22.6 million for the quarter ended
June 30, 1993. For the first six months of 1994 and 1993, nonaccrual
interest was $28.3 million and $47.3 million, respectively.
ASSET LIABILITY MANAGEMENT
The Company monitors its asset and liability structure and interest-
rate/ maturity risks on a regular basis. In this process, consideration is
given to interest-rate trends and funding requirements. ARMs comprised
approximately 96% of the real estate loan portfolio at June 30, 1994 and 94%
at June 30, 1993.
At June 30, 1994, mortgages totaling $2.3 billion were available for
sale, primarily mortgage-backed securities. Real estate loans available for
sale are valued at the lower of cost or fair value, generally on an
individual loan basis. As of June 30, 1994, $79 million of real estate
loans, primarily fixed-rate loans, were designated as available for sale.
The decrease in loans available for sale compared with the same period a year
ago resulted from reduced fixed-rate loan originations. During the quarter
and six months ended June 30, 1994, gains from this portfolio totaled $3.5
million and $5.8 million, respectively. Unrealized holding gains on real
estate loans available for sale totaled $2.6 million at June 30, 1994.
Mortgage-backed securities and other securities available for sale are
carried at fair value. At June 30, 1994, mortgage-backed securities
available for sale included $489 million of fixed-rate loans and nearly $1.8
billion of ARMs. There were no realized gains or losses in the first six
months of 1994. Unrealized holding losses were $32 million at June 30, 1994.
Unrealized holding gains were $31 million at December 31, 1993 and $65
million at June 30, 1993.
Marketable securities available for sale at June 30, 1994 had an
amortized cost of $506 million and a market value of $501 million. Gains
realized during the 1994 second quarter totaled $12,000 and for the first six
months of 1994 totaled $489,000. Unrealized holding losses in marketable
securities were $5 million at June 30, 1994. Unrealized holding gains were
$7.2 million at December 31, 1993 and $10.4 million at June 30, 1993.
The Company adopted Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities" as
of December 31, 1993. The unrealized holding gains and losses on securities
available for sale, net of income taxes, included as a component of
stockholders' equity, were as follows:
Six
Months
Three Months Ended Ended
--------------------- --------
June 30 March 31 June 30
(Dollars in thousands) 1994 1994 1994
------- -------- -------
Balance at beginning of period $ 2,537 $ 22,651 $ 22,651
Unrealized holding gains (losses),
net of taxes (22,592) (20,114) (42,706)
-------- -------- --------
Balance at end of period $(20,055) $ 2,537 $(20,055)
======== ======== ========
The following table shows that the portfolio of short-term assets
exceeded liabilities maturing or subject to interest adjustment within one
year by $3.1 billion at June 30, 1994 compared with $3.1 billion at December
31, 1993 and $4.3 billion at June 30, 1993. In the current low interest rate
environment, the Company is better protected against rising rates with an
excess of interest earning assets maturing or repricing within one year.
Maturity/Rate Sensitivity
-----------------------------------------------------------------
June 30, 1994 % of Within Over
(Dollars in millions) Rate Balance Total 1 Year 1-5 Years 5-15 Years 15 Years
---- ------- ----- ------ --------- ---------- --------
Interest earning assets
Securities 5.71% $ 697 2 $ 697 $ - $ - $ -
Mortgage-backed securities 5.94 3,288 9 2,891 397 - -
Investment in FHLB stock 5.62 308 1 - - - 308
Loans receivable
Real estate
Adjustable rate 6.72 28,676 79 26,826 1,850 - -
Fixed rate
Short-term 8.86 467 1 98 191 149 29
Long-term 8.77 650 2 174 279 175 22
Consumer 16.09 2,240 6 524 1,368 270 78
----- ------- --- ------- ------- ----- ----
7.27 36,326 100 31,210 4,085 594 437
Interest bearing liabilities
Customer accounts
Regular savings 2.00 2,265 6 2,265 - - -
Checking and limited access 1.73 11,143 32 11,143 - - -
Wholesale transactions - 134 - 134 - - -
Term accounts 4.06 16,667 48 11,711 4,941 15 -
----- ------- --- ------- ------- ----- ----
3.03 30,209 86 25,253 4,941 15 -
Borrowings
FHLB 5.31 229 1 228 1 - -
Other 6.29 4,726 13 2,734 1,269 672 51
Impact of interest-rate swaps - - - (109) 109 - -
----- ------- --- ------- ------- ----- ----
6.25 4,955 14 2,853 1,379 672 51
----- ------- --- ------- ------- ----- ----
3.48 35,164 100 28,106 6,320 687 51
----- ------- --- ------- ------- ----- ----
Excess of interest earning
assets over interest bearing
liabilities at June 30, 1994 3.79% $ 1,162 $ 3,104 $(2,235) $ (93) $386
===== ======= ======= ======= ===== ====
Excess of interest earning
assets over interest bearing
liabilities at December 31, 1993 3.76% $ 840 $ 3,105 $(1,833) $(764) $332
===== ======= ======= ======= ===== ====
Excess of interest earning
assets over interest bearing
liabilities at June 30, 1993 4.04% $ 978 $ 4,334 $(3,140) $(586) $370
===== ======= ======= ======= ===== ====
June 30
------------
1994 1993
---- ----
Calculation of adjusted margin
Unadjusted margin 3.79% 4.04%
Benefit of net interest earning assets .11 .10
---- ----
Adjusted margin 3.90% 4.14%
==== ====
/TABLE
ASSET QUALITY
The Company regularly reviews its assets to determine that each
category is reasonably valued. In this review process it monitors the loss
exposure relating to nonperforming assets, assets adversely classified for
regulatory purposes, the delinquency trend and market environment to identify
potential problems.
Loss reserves have been provided, where necessary in management's
judgment, for interest earning assets, including residential loans and
consumer loans. Valuation reserves for consumer loans are provided based
upon a percentage of the loans outstanding in relation to the loss experience
within the loan categories.
The California real estate markets did not improve significantly in
1993 or the first six months of 1994. The economic climate, particularly in
California, has not been favorable. Continuing deterioration in market
values has persisted in both single-family residential and income producing
properties. Single-family loan values have deteriorated because of continued
high unemployment rates as well as the weak economy and its effects upon the
residential market. A variety of indicators suggest an improvement in
California's economic outlook.
The Company assesses the status of general loss reserves on real estate
loans based upon its current loss experience as applied to the loan portfolio
including loans that are delinquent or adversely classified because of
declining collateral values. Because of the current recessionary
environment, the Company's general loan loss reserves remain relatively high
to give effect to current trends in this environment in valuing its loan
portfolio.
There appear to be regional differences in economic performance within
California and among property types which are attributable to the rolling
recessionary environment and its wide range effect on different economic
activities within California.
The economic factors affecting the office space market appear to be
somewhat more favorable in Northern California than in Southern California.
In particular, the vacancy rate in the San Francisco area was 12% at March
31, 1994 and 13% at March 31, 1993. In the Los Angeles area, the vacancy
rates were 19% and 20%, respectively, at March 31, 1994 and March 31, 1993.
The highest vacancy rate existed in San Diego County where it was 20% at
March 31, 1994 compared with 21% at March 31, 1993.
In the industrial space market, Northern and Southern California
vacancy rates appear to be more comparable. In the San Francisco and Los
Angeles areas, vacancy rates were 11% and 10%, respectively, at March 31,
1994. At March 31, 1993, the vacancy rates were 11% in the San Francisco and
Los Angeles areas. Unlike the office space market, San Diego County's
industrial space market had the lowest vacancy rate consisting of 4% at March
31, 1994 and 3% at March 31, 1993.
In the single-family market, regional differences also exist in the
economic performance of Northern, Central and Southern California. For
example, the median metropolitan area sales price of existing single-family
homes in the San Jose area decreased from the first quarter of 1993 to the
first quarter of 1994 by more than 3%. During the same period, the median
sales price declined 6% in the Los Angeles area and 1% in the San Diego area.
As a monitoring device the Company reviews the trends of loans
delinquent for periods of less than ninety days on a monthly (and within-
month) basis. The following summarizes loans delinquent for periods from
thirty to eighty-nine days:
June 30 March 31 December 31 June 30
(Dollars in millions) 1994 1994 1993 1993
------- -------- ----------- -------
30-59 days delinquent
SFR loans $240.0 $343.0 $190.9 $222.4
Other 15.3 46.4 19.0 35.4
60-89 days delinquent
SFR loans 122.6 175.3 105.2 99.4
Other 18.9 21.4 8.8 16.4
Delinquencies in the thirty to eighty-nine day categories have
decreased during the second quarter of 1994. The January 17, 1994 Northridge
earthquake increased loan delinquencies and is expected to result in losses
in the real estate loan portfolio in the range of $25 million to $30 million,
which will be covered by existing loan loss reserves. The Company has
identified approximately 2,800 loans, primarily SFR's, in earthquake affected
areas with outstanding principal balances of $368 million. Initially, a
ninety day forbearance was offered to customers who suffered damages during
the earthquake. Subsequent to this initial program, arrangements for
additional forbearance are being provided on a case by case basis. These
programs are intended to reduce the possibility of foreclosure and therefore
mitigate losses and costs of holding property. The decrease in delinquencies
in the thirty to eighty-nine day categories is believed to be primarily
related to the expiration of the initial period of forbearance in the second
quarter. Two and three payment delinquencies on SFRs in the earthquake
affected areas totaled $19 million and $40 million, respectively, at June 30,
1994 compared with $142 million and $73 million, respectively, at March 31,
1994. Foreclosures continue to occur at relatively high levels.
Loans delinquent over thirty days, together with restructured loans,
have been included in the process to determine estimated losses. The effects
of various loan characteristics such as geographic concentrations, loan
purpose, negative amortization and loan to value ratios ("LTV") are
considered in this review process.
The following table shows the trend in single-family residential
delinquencies (two or more payments delinquent) to the growth in the related
portfolio.
June 30 March 31 December 31 June 30
1994 1994 1993 1993
------- -------- ----------- -------
SFR loans as a percent of
total real estate loans 89.0% 88.5% 88.3% 87.2%
SFR delinquency as a percent
of total single-family
residential loans 3.7 4.4 3.2 4.4
The Company's real estate loan portfolio included approximately $3.2
billion of uninsured single-family mortgage loans at June 30, 1994, compared
with $4.1 billion a year ago, which were originated with terms where the LTV
exceeded 80% (but not in excess of 90%). During the second quarter 1994,
losses on the higher LTV mortgages totaled $5.7 million, or .52%
(annualized), compared to $10.6 million, or .74% (annualized) for the same
period a year ago. For the year 1993, losses totaled $44.8 million, or
.81% of such loans, compared with $10.1 million, or .15%, for 1992. The
Company began to purchase mortgage insurance on all new single-family
residential mortgages originated with LTVs in excess of 80% in 1990.
Therefore, this portfolio of uninsured loans is becoming more seasoned and
the balance is declining.
The recorded investment in loans for which impairment has been
recognized in accordance with Statement of Financial Accounting Standards No.
114, "Accounting by Creditors for Impairment of a Loan" and the reserve for
estimated losses related to such loans follows:
June 30
---------------------------------------------------
1994 1993
----------------------- -----------------------
Reserve for Reserve for
Loan Estimated Loan Estimated
(Dollars in thousands) Balance Losses Balance Losses
------- ----------- ------- -----------
Real estate loans
Residential
Single-family $ 45,073 $ 4,662 $ 48,522 $ 5,425
Apartments 112,454 16,230 191,736 8,639
Commercial
Offices 48,143 8,756 100,872 8,751
Retail 32,030 4,665 54,053 3,429
Hotel/motel 113,886 4,636 166,751 9,497
Industrial 11,121 1,364 103,700 4,807
Other 5,487 1,018 19,109 2,186
-------- ------- -------- -------
$368,194 $41,331 $684,743 $42,734
======== ======= ======== =======
The impaired loan portfolio decreased at June 30, 1994 compared with
June 30, 1993. The decrease was primarily the result of the bulk sale of
$213 million of apartment and commercial real estate loans in the fourth
quarter of 1993.
Single-family residential mortgage loans are generally evaluated for
impairment as homogeneous pools of loans. Certain situations may arise
leading to single-family residential mortgage loans being evaluated for
impairment on an individual basis.
A change in the fair value of an impaired loan is reported as an
increase or reduction to the provision for loan losses.
Certain loans meet the criteria of troubled debt restructurings
("TDRs") as defined in Statement of Financial Accounting Standards No. 15,
"Accounting by Debtors and Creditors for Troubled Debt Restructurings." TDRs
totaled $224 million at June 30, 1994 compared with $423 million at June 30,
1993. In the second quarter of 1993, Federal Banking Regulators issued a
joint release regarding credit availability. Based on this release, TDRs
which meet certain conditions of repayment and performance have not been
included in nonperforming assets. At June 30, 1994, $18 million of TDRs were
classified as performing assets.
Real estate available for sale is recorded at the lower of cost or fair
value and is included in a periodic review of assets to determine whether,
in management's judgment, there has been any deterioration in value. Real
estate held for development, also subject to the same review process, is
carried at the lower of cost or net realizable value. Properties where
future development is uncertain are carried at the lower of cost or fair
value. Real estate is also included in the general reserve evaluation.
Foreclosed real estate properties totaling $12 million are operating
profitably after provisions for interest and depreciation and are performing
assets.
Nonperforming assets include loans which are delinquent ninety days or
more, TDRs which do not meet certain performance criteria and certain real
estate acquired through foreclosure. The following table indicates the
amount of the Company's nonperforming assets and the ratio of nonperforming
assets to total assets:
June 30 December 31 June 30
1994 1993 1993
------------- ------------- -------------
(Dollars in millions) Amount % Amount % Amount %
------ --- ------ --- ------ ---
Loans receivable
Real estate
Residential
Single-family $ 615 1.57% $ 522 1.34% $ 827 2.12%
Apartments 75 .19 70 .18 178 .46
Commercial 210 .54 225 .58 401 1.03
Consumer finance 20 .05 20 .05 19 .05
Bank card - - - - 6 .01
Other 2 .01 2 - 1 -
------ ---- ------ ---- ------ ----
922 2.36 839 2.15 1,432 3.67
Real estate acquired
through foreclosure 205 .52 293 .75 521 1.34
------ ---- ------ ---- ------ ----
Total nonperforming assets $1,127 2.88% $1,132 2.90% $1,953 5.01%
====== ==== ====== ==== ====== ====
The geographic distribution of the real estate loan and real estate
portfolios at June 30, 1994 follows:
Oklahoma/ Maryland/
(Dollars in millions) Total California Florida Washington Arizona Texas Virginia Georgia Other
------- ---------- ------- ---------- ------- -------- -------- ------- -----
Real estate loans
Residential
Single-family $26,515 $19,308 $1,794 $ 981 $351 $595 $331 $445 $2,710
Apartments 1,736 1,382 89 7 63 33 - 55 107
Commercial
Offices 448 409 8 4 8 3 1 5 10
Retail 274 228 22 8 2 - 3 4 7
Hotel/motel 277 135 5 - 3 2 92 - 40
Industrial 320 266 14 4 7 15 - 3 11
Other 223 159 21 6 12 2 1 2 20
------- ------- ------ ------ ---- ---- ---- ---- ------
29,793 21,887 1,953 1,010 446 650 428 514 2,905
------- ------- ------ ------ ---- ---- ---- ---- ------
Real estate available
for sale, net
Real estate acquired
through foreclosure 217 186 21 2 1 1 1 - 5
Other 33 14 3 16 - - - - -
Property development 72 72 - - - - - - -
------- ------- ------ ------ ---- ---- ---- ---- ------
322 272 24 18 1 1 1 - 5
------- ------- ------ ------ ---- ---- ---- ---- ------
Total real estate loans
and real estate $30,115 $22,159 $1,977 $1,028 $447 $651 $429 $514 $2,910
======= ======= ====== ====== ==== ==== ==== ==== ======
Percent of total 100.0% 73.6% 6.5% 3.4% 1.5% 2.2% 1.4% 1.7% 9.7%
The geographic distribution of nonperforming real estate loans and
foreclosed real estate at June 30, 1994 follows:
Oklahoma/ Maryland/
(Dollars in millions) Total California Florida Washington Arizona Texas Virginia Georgia Other
----- ---------- ------- ---------- ------- -------- -------- ------- -----
Real estate loans
Residential
Single-family $ 615 $533 $21 $ 7 $ 4 $ 7 $ 3 $ 5 $35
Apartments 75 64 1 1 - - - 4 5
Commercial
Offices 40 36 2 - - 1 1 - -
Retail 28 22 1 5 - - - - -
Hotel/motel 124 32 - - - - 92 - -
Industrial 11 9 1 - - 1 - - -
Other 7 3 2 1 1 - - - -
------ ---- --- --- --- --- --- --- ---
900 699 28 14 5 9 96 9 40
------ ---- --- --- --- --- --- --- ---
Real estate
Residential
Single-family 100 89 3 - 1 1 1 - 5
Apartments 37 37 - - - - - - -
Commercial
Offices 27 14 13 - - - - - -
Retail 6 6 - - - - - - -
Hotel/motel 12 10 2 - - - - - -
Industrial 12 11 1 - - - - - -
Other 11 9 1 1 - - - - -
------ ---- --- --- --- --- --- --- ---
205 176 20 1 1 1 1 - 5
------ ---- --- --- --- --- --- --- ---
Total nonperforming real
estate loans and real
estate $1,105 $875 $48 $15 $ 6 $10 $97 $ 9 $45
====== ==== === === === === === === ===
Percent of total 100.0% 79.2% 4.3% 1.4% .5% .9% 8.8% .8% 4.1%
A comparison of the California real estate loan and foreclosed real
estate portfolios and nonperforming real estate loans and real estate by
region at June 30, 1994 follows:
California Northern California
------------------------------- --------------------------------
(Dollars in millions) Portfolio Nonperforming % Portfolio Nonperforming %
--------- ------------- --- --------- ------------- ---
Real estate loans
Residential
Single-family $19,308 $533 2.8 $5,612 $ 88 1.6
Apartments 1,382 64 4.6 167 3 1.8
Commercial
Offices 409 36 8.8 76 11 14.5
Retail 228 22 9.6 52 - -
Hotel/motel 135 32 23.7 43 - -
Industrial 266 9 3.4 37 2 5.4
Other 159 3 1.9 39 - -
------- ---- ----- ------ ---- -----
21,887 699 3.2 6,026 104 1.7
------- ---- ----- ------ ---- -----
Real estate
Residential
Single-family 89 89 100.0 12 12 100.0
Apartments 37 37 100.0 2 2 100.0
Commercial
Offices 17 14 82.4 5 5 100.0
Retail 13 6 46.2 - - -
Hotel/motel 10 10 100.0 2 2 100.0
Industrial 11 11 100.0 - - -
Other 9 9 100.0 1 1 100.0
------- ---- ----- ------ ---- -----
186 176 94.6 22 22 100.0
------- ---- ----- ------ ---- -----
Total real estate loans
and real estate $22,073 $875 4.0 $6,048 $126 2.1
======= ==== ===== ====== ==== =====
/TABLE
Central California Southern California
-------------------------------- --------------------------------
(Dollars in millions) Portfolio Nonperforming % Portfolio Nonperforming %
--------- ------------- --- --------- ------------- ---
Real estate loans
Residential
Single-family $1,620 $21 1.3 $12,076 $424 3.5
Apartments 249 4 1.6 966 57 5.9
Commercial
Offices 44 3 6.8 289 22 7.6
Retail 30 - - 146 22 15.1
Hotel/motel 27 3 11.1 65 29 44.6
Industrial 15 - - 214 7 3.3
Other 21 1 4.8 99 2 2.0
------ --- ----- ------- ---- -----
2,006 32 1.6 13,855 563 4.1
------ --- ----- ------- ---- -----
Real estate
Residential
Single-family 5 5 100.0 72 72 100.0
Apartments 5 5 100.0 30 30 100.0
Commercial
Offices - - - 12 9 75.0
Retail 7 - - 6 6 100.0
Hotel/motel - - - 8 8 100.0
Industrial 1 1 100.0 10 10 100.0
Other - - - 8 8 100.0
------ --- ----- ------- ---- -----
18 11 61.1 146 143 97.9
------ --- ----- ------- ---- -----
Total real estate loans
and real estate $2,024 $43 2.1 $14,001 $706 5.0
====== === ===== ======= ==== =====
Nonperforming real estate loans and real estate increased by $2 million
during the second quarter of 1994. Total nonperforming single-family
residential properties increased $25 million in the second quarter of 1994.
Single-family residential properties in California increased $32 million
while out of state properties declined $7 million. The loss on single-family
foreclosures sold in the second quarter of 1994 was 25.8% of the loan
balances at foreclosure. Nonperforming commercial and apartment properties
declined $23 million in the second quarter of 1994.
In an effort to reduce nonperforming assets, the Company completed four
bulk asset sales in the second half of 1993 totaling $659 million. In the
second quarter of 1994, bulk sales of foreclosed single-family properties
totaled $70.3 million. In the first six months of 1994, bulk sales of
foreclosed single-family properties totaled $155 million. Auction sales have
also been utilized to accelerate the disposition of foreclosed properties.
The Company provides a reserve for uncollected interest which is
essentially based upon loans delinquent ninety days or more or in
foreclosure. These loans are considered in "nonaccrual" status.
A summary of loan loss provisions, charge-offs and recoveries by loan type
follows:
At or For The At or For the
Three Months Ended Six Months Ended
June 30 June 30
-------------------- -----------------------
(Dollars in thousands) 1994 1993 1994 1993
Beginning balance $498,871 $501,185 $ 502,269 $ 492,871
Provision for loss
Real estate loans
SFR 30,300 65,500 55,300 105,500
Other 19,700 4,500 34,693 9,000
Consumer finance 8,400 8,900 17,700 18,700
Bank card - 5,303 - 10,481
Other (5,500) 1,297 (2,993) 4,319
-------- -------- --------- ---------
52,900 85,500 104,700 148,000
-------- -------- --------- ---------
Charge-offs
Real estate loans
SFR (37,612) (33,602) (77,543) (63,626)
Other (10,868) (18,735) (17,757) (28,530)
Consumer finance (12,060) (11,297) (24,714) (24,196)
Bank card - (6,679) - (13,247)
Other (667) (885) (1,043) (1,171)
-------- -------- --------- ---------
(61,207) (71,198) (121,057) (130,770)
-------- -------- --------- ---------
Recoveries
Real estate loans
SFR 457 105 631 359
Other 353 714 690 1,293
Consumer finance 4,046 3,910 8,092 7,698
Bank card - 596 - 1,056
Other 384 213 479 518
-------- -------- --------- ---------
5,240 5,538 9,892 10,924
-------- -------- --------- ---------
Net charge-offs
Real estate loans
SFR (37,155) (33,497) (76,912) (63,267)
Other (10,515) (18,021) (17,067) (27,237)
Consumer finance (8,014) (7,387) (16,622) (16,498)
Bank card - (6,083) - (12,191)
Other (283) (672) (564) (653)
-------- -------- --------- ---------
(55,967) (65,660) (111,165) (119,846)
-------- -------- --------- ---------
Ending balance $495,804 $521,025 $ 495,804 $ 521,025
======== ======== ========= =========
Ratio of net charge-offs
(annualized) to average loans
Real estate loans
SFR .58% .52% .60% .49%
Other 1.27 1.88 1.02 1.43
Consumer finance 1.74 1.74 1.81 1.94
Bank card - 10.45 - 10.18
Other .29 .72 .29 .35
----- ----- ----- -----
.71% .82% .71% .75%
===== ===== ===== =====
/TABLE
Provisions for losses on the leasing portfolio, included in Other loan
loss provisions, for the three and six month periods ending June 30, 1994,
decreased as a result of the reversal of a $6 million provision originally
established for an expected loss which did not materialize.
The following table presents the Company's reserve for estimated losses
and the reserve as a percent of the respective loans receivable portfolios:
June 30
-----------------------------------
1994 1993
--------------- --------------
(Dollars in millions) Amount % Amount %
------ --- ------ ---
Real estate loans
SFR $191 .72% $206 .80%
Commercial and other 242 7.38 230 6.04
Consumer finance 51 2.74 49 2.85
Bank card - - 24 10.30
Other 12 3.23 12 3.33
---- ---- ---- -----
Total $496 1.55% $521 1.63%
==== ==== ==== =====
A summary of real estate reserve activity by real estate type follows:
At or For The At or For The
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
(Dollars in millions) 1994 1993 1994 1993
---- ---- ---- ----
Beginning balance
SFR $ 4 $ 14 $ 5 $ 5
Commercial and other 114 117 119 114
---- ---- ---- ----
118 131 124 119
Provision for losses
SFR 3 - 6 11
Commercial and other 3 - 3 15
---- ---- ---- ----
6 - 9 26
Net charge-offs
SFR (2) (4) (6) (6)
Commercial and other (17) (11) (22) (23)
---- ---- ---- ----
(19) (15) (28) (29)
Ending balance
SFR 5 10 5 10
Commercial and other 100 106 100 106
---- ---- ---- ----
$105 $116 $105 $116
==== ==== ==== ====
OPERATIONS
Net interest income totaled $338 million in the second quarter 1994
compared with $350 million in the second quarter 1993. For the six month
periods ending June 30, 1994 and 1993, net interest income totaled $672
million and $700 million, respectively. Average interest earning assets and
net interest margins have declined from the second quarter a year ago. The
Company continues to experience a high level of nonaccrual loans in the
portfolio which results in lower interest income. The following table shows
the components of the change in net interest income between periods.
Three Months Ended June 30 Six Months Ended June 30
-------------------------- --------------------------
(Dollars in millions) 1994 vs 1993 1993 vs 1992 1994 vs 1993 1993 vs 1992
------------ ------------ ------------ ------------
Mortgage-backed securities
Rate (1) $ (7) $ (11) $ (14) $ (24)
Volume (2) 5 (11) 6 (20)
Rate/Volume (3) (1) 1 (1) 3
----- ----- ----- -----
(3) (21) (9) (41)
----- ----- ----- -----
Real estate loans
Rate (1) (26) (95) (61) (211)
Volume (2) (8) 15 (12) 11
Rate/Volume (3) 2 (3) 1 (2)
----- ----- ----- -----
(32) (83) (72) (202)
----- ----- ----- -----
Consumer loans
Rate (1) 2 (6) (3) (9)
Volume (2) (3) (1) (8) (4)
Rate/Volume (3) - - - -
----- ----- ----- -----
(1) (7) (11) (13)
----- ----- ----- -----
Securities and investments
Rate (1) (5) 2 (9) 2
Volume (2) 1 (3) 4 (7)
Rate/Volume (3) - - (1) -
----- ----- ----- -----
(4) (1) (6) (5)
----- ----- ----- -----
Interest earning assets
Rate (36) (110) (87) (242)
Volume (5) - (10) (20)
Rate/Volume 1 (2) (1) 1
----- ----- ----- -----
(40) (112) (98) (261)
----- ----- ----- -----
Customer accounts
Rate (1) (16) (99) (47) (212)
Volume (2) 14 (29) 23 (42)
Rate/Volume (3) (1) 8 (2) 12
----- ----- ----- -----
(3) (120) (26) (242)
----- ----- ----- -----
Borrowings
Rate (1) 9 (20) 17 (33)
Volume (2) (31) 39 (56) 37
Rate/Volume (3) (3) (7) (5) (7)
----- ----- ----- -----
(25) 12 (44) (3)
----- ----- ----- -----
Interest bearing liabilities
Rate (7) (119) (30) (245)
Volume (17) 10 (33) (5)
Rate/Volume (4) 1 (7) 5
----- ----- ----- -----
(28) (108) (70) (245)
----- ----- ----- -----
Change in net interest income $ (12) $ (4) $ (28) $ (16)
===== ===== ===== =====
(1) The rate variance reflects the change in the average rate multiplied by
the average balance outstanding during the prior period.
(2) The volume variance reflects the change in the average balance
outstanding multiplied by the average rate during the prior period.
(3) The rate/volume variance reflects the change in the average rate
multiplied by the change in the average balance outstanding.
(4) Nonaccrual loans and amortized deferred loan fees are included in the
interest income calculations.
Real estate services income totaled $48.3 million for the six months
ended June 30, 1994 compared with $55.9 million for the six months ended June
30, 1993. The decrease in income was attributed to both lower loan fees and
lower gains on mortgage sales. Gains on mortgage sales decreased as a result
of lower sales activity. Mortgage sales, primarily fixed rate, totaled $987
million in the first six months of 1994, at a gain of .59% of mortgage sales,
compared with $1.3 billion in the first six months of last year at a gain of
.82% of mortgage sales. The reduced gain as a percentage of mortgage sales
is a result of lower excess servicing gains. Servicing income increased as
the net servicing spread was 45 basis points of the servicing portfolio at
June 30, 1994, or 8 basis points higher than a year ago. Loans serviced for
others totaled $11.6 billion at June 30, 1994 compared with $12.8 billion one
year earlier.
Retail banking fee and commission income increased from $70.9 million
in the six months ended June 30, 1993 to $90.5 million in the six months
ended June 30, 1994. Securities operations income and retail banking fees
both increased because of expanding activity. Banking fees increased from
higher transaction balances, deposits acquired in acquisitions and higher
fees charged. The Company has also expanded mutual fund activity which
comprises commissions and other income from mutual fund operations. Net
revenue from these operations totaled $21.8 million in the six months ended
June 30, 1994 compared with $19 million in the same period of 1993. The
Company managed mutual funds with assets aggregating $3.2 billion at June 30,
1994 compared with $2.8 billion at June 30, 1993.
Operating expenses were $523 million for the first six months of 1994,
compared with $494 million for the first six months of 1993. The increase
in operating and administrative expenses for the six months ended June 30,
1994, compared with the same period in 1993, resulted in part from the
inclusion of the operations related to the HomeFed acquisition completed in
December 1993 and from approximately $8 million resulting from repairs of
earthquake damage to facilities. Operating expenses increased 5% between the
second quarters of 1994 and 1993 and increased 4% between the same periods
of 1993 and 1992. Operating expenses increased 6% between the 1994 and 1993
six month periods ending June 30. The operating ratios were as follows:
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
1994 1993 1994 1993
---- ---- ---- ----
Operating and administrative expenses
(annualized)
As a percent of average assets
Corporate 2.74% 2.58% 2.77% 2.59%
Banking operations 2.52 2.36 2.54 2.35
As a percent of average assets
and assets serviced for others
Corporate 2.08 1.93 2.09 1.94
Banking operations 1.88 1.74 1.89 1.73
As a percent of average retail
deposits
Banking operations 3.00 3.05 3.01 2.97
As a percent of revenue
Corporate 61.76 57.85 62.94 58.62
Banking operations 63.93 59.07 65.41 59.32
During the fourth quarter of 1993, the Company recorded a $30 million
restructuring charge, primarily associated with the cost-reduction program
at the Company's administrative headquarters. The program, designed to
increase profits and improve efficiency, will be phased in throughout 1994.
Approximately $14 million was charged against this reserve in the first six
months of 1994, principally employee separation expenses and associated
costs. Approximately 1,000 jobs, or 25% of the administrative work force,
are expected to be eliminated as a result of the cost-reduction program.
More than 800 positions have been eliminated as of June 30, 1994 through
layoffs and attrition. Reductions in nonpersonnel related costs will also
contribute to the overall savings through renegotiation of existing vendor
contracts and elimination of other administrative expenses. Anticipated
savings in 1995 and beyond will exceed $100 million annually. Approximately
$60 million of savings will be realized in 1994.
The following table presents net earnings (annualized) as a percent of
average assets and as a percent of average equity:
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
1994 1993 1994 1993
---- ---- ---- ----
Return on average assets .59% .55% .56% .51%
Return on average equity 9.28 8.52 8.71 7.95
The Company's effective tax rate was 41.2% in the first half of 1994
and 38.1% in the same period of 1993. The lower rate in 1993 is attributed
to a favorable settlement of certain tax issues and the reversal of certain
tax liabilities no longer required.
CAPITAL RESOURCES AND LIQUIDITY
Capital (stockholders' equity) was $2.4 billion at June 30, 1994 versus
$2.5 billion at June 30, 1993. At the end of the 1994 second quarter the
ratio of capital to total assets was 6.3% compared with 6.5% a year ago.
GWB is subject to certain capital requirements under applicable
regulations and meets all such requirements. At June 30, 1994, GWB's capital
was $2.6 billion, including subordinated notes of $429 million.
The following ratios, as of the most recent quarter end, compare GWB
with the fully phased-in capital requirements under regulations issued by the
Office of Thrift Supervision ("OTS"):
Actual OTS Benchmark
-------------- ------------- Capital
(Dollars in millions) Amount % Amount % Excess
------ --- ------ --- -------
Leverage/tangible ratio $1,865 5.19 $1,078 3.00 $787
Risk-based ratio 2,525 11.82 1,709 8.00 816
The OTS has amended its risk-based capital rules to incorporate
interest-rate risk requirements. Effective July 1, 1994, a savings
association is required to hold additional capital if it is projected to
experience a 2% decline in "net portfolio value" in the event interest rates
increase or decrease by two percentage points. Additional capital required
is equal to one-half of the amount by which any decline in net portfolio
value exceeds 2% of the savings association's total net portfolio value.
The OTS has proposed to amend its capital rule on the leverage ratio
requirement to reflect amendments made by the Office of the Comptroller of
the Currency ("OCC") to the capital requirements for national banks. The
proposal would establish a 3% leverage ratio (defined as the ratio of core
capital to adjusted total assets) for savings associations in the strongest
financial and managerial condition. All other savings associations would be
required to maintain leverage ratios of at least 4%. Only savings
associations rated composite 1 under the OTS CAMEL rating system will be
permitted to operate at or near the regulatory minimum leverage ratio of 3%.
For all other savings associations, the minimum core capital leverage ratio
will be 3% plus at least an additional 100 to 200 basis points.
In determining the amount of additional capital, the OTS will assess
both the quality of risk management systems and the level of overall risk in
each individual savings association through the supervisory process on a
case-by-case basis. The OTS' supervisory judgment on a savings association's
capital adequacy, both in terms of risk-based capital and the minimum
leverage ratio, will continue to be based upon an assessment of the relevant
factors present in each institution.
Savings associations that do not pass the minimum capital standards
established under the new core capital leverage ratio requirements will be
required to submit capital plans detailing steps to be taken to reach
compliance.
GWB currently meets these proposed requirements.
As of June 30, 1994, real estate loan commitments totaled $869 million
compared with $777 million at December 31, 1993 and $888 million at June 30,
1993. These commitments included $831 million of ARMs and $38 million at
fixed rates at June 30, 1994. The high percentage of ARM commitments is
indicative of a fully adjusted interest rate on COFI ARMs that is more than
200 basis points lower than the rates offered on 30-year fixed-rate loans.
The Company has several sources for raising funds for lending, among which
are mortgage repayments, mortgage sales, customer deposits, Federal Home Loan
Bank borrowings and other borrowings.
The following table presents the debt ratings of the Company and GWB
at June 30, 1994:
Moody's Investors
Standard & Poor's Service
----------------- ------------------
GWFC GWB GWFC GWB
---- --- ---- ---
Unsecured short-term debt A-2 P-2
Senior term debt BBB+ A- Baa2 A3
Subordinated term debt BBB+ Baa1
Preferred stock BBB- Baa3
The origination and sale of real estate loans is dependent upon general
market conditions. In an active real estate market loan originations
increase. In such periods mortgage sales are usually increased to fund a
portion of originations and to control asset growth. However, in some
periods mortgage sales occur to fund customer account outflows and repay
borrowings which result in asset shrinkage. Mortgage sales also occur to
limit interest-rate risk and for restructuring purposes.
As presented in the Consolidated Condensed Statement of Cash Flows the
sources of liquidity vary between quarters. The primary sources of funds in
the second quarter of 1994 were principal payments on mortgages held for
investment of $1.8 billion and an increase in borrowings, primarily short
term, of $1.9 billion. New loans originated for investment required $2.4
billion and net customer account withdrawals totaled $858 million. Operating
activities provided $604 million in the current quarter.
The Company continued to maintain liquidity balances each period in
excess of funding and legal requirements. Cash and securities totaled $1.6
billion at June 30, 1994 and $1.3 billion at June 30, 1993.
DIVIDENDS
Quarterly cash dividends have been paid since 1977. At its July 1994
meeting, the Board of Directors declared a quarterly cash dividend of $.23
per common share. The quarterly cash dividend has been paid at this level
since the second quarter of 1992.
In the second quarter of 1994 the regular quarterly dividend on the
$129 million 8 3/4% cumulative convertible preferred stock, issued in May
1991, and the regular quarterly dividend on the $165 million 8.3% cumulative
preferred stock, issued in September 1992, were paid.
The Dividend Reinvestment and Stock Purchase Plan permits a 3% discount
on stock purchased with reinvested dividends. During the second quarter 1994
reinvested dividends totaled $3.8 million.
Effective March 31, 1994, Bryant Financial Corporation ("Bryant"), a
property development subsidiary, became a wholly-owned direct subsidiary of
the Company. This realignment was in the form of a dividend from GWB to GWFC
in the amount of Bryant's book value of $38 million.
The principal source of operating income of the Company on an
unconsolidated basis is dividends from GWB and Aristar, Inc ("Aristar"). In
the second quarter of 1994, cash dividends received from GWB and Aristar
totaled $37.8 million and $6.3 million, respectively. GWB is subject to the
regulations of the OTS and FDIC. The OTS regulations impose limitations upon
"capital distributions" by savings associations, including cash dividends.
The regulations establish a three-tiered system: Tier 1 includes savings
associations with capital at least equal to their fully phased-in capital
requirement which have not been notified that they are in need of more than
normal supervision; Tier 2 includes savings associations with capital above
their minimum capital requirement but less than their fully phased-in
requirement; and Tier 3 includes savings associations with capital below
their minimum capital requirement. Tier 1 associations may, after prior
notice but without approval of the OTS, make capital distributions up to the
higher of (1) 100% of their net income during the calendar year plus the
amount that would reduce by one half their "surplus capital ratio" (the
excess over their fully phased-in capital requirement) at the beginning of
the calendar year or (2) 75% of their net income over the most recent four-
quarter period. Tier 2 associations may, after prior notice but without
approval of the OTS, make capital distributions of up to 25% to 75% of their
net income over the most recent four-quarter period depending upon their
current risk-based capital position. Tier 3 associations may not make
capital distributions without prior approval. An association subject to more
stringent restrictions imposed by agreement may apply to remove the more
stringent restrictions.
The Company believes that GWB is a Tier 1 association. Notwithstanding
the foregoing, the regulatory authorities have broad discretion to prohibit
any payment of dividends and take other actions if they determine that the
payment of such dividends would constitute an unsafe or unsound practice.
Among the circumstances posing such risk would be a capital distribution by
a Tier 1 or Tier 2 association whose capital is decreasing because of
substantial losses.
AVERAGE SHARES OUTSTANDING
The average common shares outstanding, based upon daily amounts used
in the calculation of earnings per share, are shown below:
Three Months Ended June 30 Six Months Ended June 30
-------------------------- --------------------------
1994 1993 1994 1993
---- ---- ---- ----
Primary 133,515,722 131,716,714 133,444,187 131,655,471
Fully diluted 140,019,059 138,059,043 139,879,510 137,997,383
/TABLE
PART II - OTHER INFORMATION
---------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- - ------------------------------------------------------------
See Item 4, Part II of the Company's quarterly report on Form 10-Q for
the quarter ended March 31, 1994 for a report on the voting at the Company's
Annual Meeting of Shareholders on April 26, 1994, which is incorporated
herein by reference.
ITEM 5. OTHER INFORMATION
- - --------------------------
The calculation of the Company's ratio of earnings to fixed charges as
of the dates indicated follows:
Six Months Ended Twelve Months Ended Six Months Ended
(Dollars in thousands) June 30, 1994 December 31, 1993 June 30, 1993
---------------- ------------------- ----------------
Earnings
- - --------
Net earnings $105,330 $ 62,047 $ 97,802
Taxes on income 73,900 30,000 60,200
-------- ---------- ----------
Earnings before taxes $179,230 $ 92,047 $ 158,002
======== ========== ==========
Interest expense
- - ----------------
Customer accounts $461,717 $ 939,081 $ 487,913
Borrowings 140,951 370,761 185,154
-------- ---------- ----------
Total $602,668 $1,309,842 $ 673,067
======== ========== ==========
Rent expense
- - ------------
Total $ 28,427 $ 53,638 $ 25,748
1/3 thereof 9,476 17,879 8,583
Capitalized interest $ 117 $ 777 $ 603
- - --------------------
Preferred stock dividends $ 12,508 $ 25,015 $ 12,508
- - -------------------------
Ratio of earnings to fixed charges
and preferred stock dividends
- - ----------------------------------
Excluding customer accounts
---------------------------
Earnings before fixed charges $329,657 $ 480,687 $ 351,739
Fixed charges 171,828 426,526 214,548
Ratio 1.92 1.13 1.64
Including customer accounts
---------------------------
Earnings before fixed charges $791,374 $1,419,768 $ 839,652
Fixed charges 633,545 1,365,607 702,461
Ratio 1.25 1.04 1.20
Ratio of earnings to fixed charges
- - ----------------------------------
Excluding customer accounts
- - ----------------------------------
Earnings before fixed charges $329,657 $ 480,687 $ 351,739
Fixed charges 150,544 389,417 194,340
Ratio 2.19 1.23 1.81
Including customer accounts
---------------------------
Earnings before fixed charges $791,374 $1,419,768 $ 839,652
Fixed charges 612,261 1,328,498 682,253
Ratio 1.29 1.07 1.23
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
4.1 The Company has outstanding certain long-term debt as set forth in
Note 13 of the Notes to Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993. The Company agrees to furnish copies of the
instruments representing its long-term debt to the Securities and
Exchange Commission (the "SEC") upon request.
11.1 Statement re computation of per share earnings.
b. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this
report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GREAT WESTERN FINANCIAL CORPORATION
Registrant
/s/ Carl F. Geuther
Carl F. Geuther
Executive Vice President and Chief
Financial Officer
/s/ Jesse L. King
Jesse L. King
Senior Vice President
Controller
DATE: August 11, 1994
GREAT WESTERN FINANCIAL CORPORATION
EXHIBIT INDEX
June 30, 1994
Exhibit Page
Number Number
- - ------ ------
11.1 Statement re computation of per share earnings. 39