EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
99.1 Press release dated January 24, 1996 reporting
results of operations during the quarter and
year ended December 31, 1995. 5
FOR IMMEDIATE RELEASE Contacts:
Media: Mary Trigg
818-814-7922
Investor: Steve Swartz
818-814-7986
AHMANSON REPORTS FOURTH QUARTER AND FULL YEAR RESULTS
Irwindale, CA, January 24, 1996 -- H.F. Ahmanson & Company
(AHM-NYSE), parent company of Home Savings of America, today
reported fourth quarter earnings of $60.7 million, or $0.40 per
fully diluted common share, compared to $39.9 million, or $0.23 per
fully diluted common share, earned in the same 1994 period.
Earnings for 1995 were $216.2 million or $1.40 per fully
diluted common share, compared to $237.4 million, or $1.58 per fully
diluted common share in 1994. The current year results include a
$234.7 million charge related to an accounting change effective
January 1, 1995, which eliminated goodwill in connection with
acquisitions prior to 1982. The results of operations for 1994 and
1995 include the sales of retail branch systems in Illinois and New
York, respectively.
Charles R. Rinehart, Chairman and Chief Executive Officer of
Ahmanson and Home Savings, said, "We are making significant progress
towards increasing shareholder value through the development of our
consumer lending business, the ongoing streamlining of our loan
origination process, the expansion of our distribution channels
through electronic banking and our previously announced capital
buyback program."
RESULTS OF OPERATIONS
Net interest income for the 1995 fourth quarter was $306.9
million, compared to $291.5 million in the 1994 fourth quarter. Net
interest income for 1995 totaled $1.23 billion, compared to $1.30
billion earned in 1994. The net interest margin was 2.62% at
December 31, 1995, compared to 2.24% at December 31, 1994. This
increase in net interest margin reflects the benefits of declining
interest rates and the repricing lag between the Company's assets
and liabilities, and despite the fact that the Company increased its
wholesale fundings during the latter part of 1995 as a result of the
sale of its New York branch deposit system.
During the fourth quarter of 1995, the Company provided $37.9
million for loan losses, compared to $38.5 million in the fourth
quarter of 1994 and $29.2 million in the third quarter of 1995. For
the year, the provision for loan losses was $119.1 million, compared
to $176.6 million in 1994.
"We are disappointed with credit costs which increased over
recent quarters and which reflected the lingering effects of single
family, multi-family and commercial mortgage portfolios originated
primarily prior to 1992," continued Mr. Rinehart. "Indications in
more recent books of business show a demonstrably better performance
compared to the older books of business."
In the fourth quarter of 1995, other income, which consists of
gains on sales of loans and mortgage-backed securities (MBS), loan
servicing income, and fee and other income, was $48.2 million,
compared to $135.6 million in the 1994 period, during which the
Company recorded a pre-tax gain on the sale of its Illinois retail
branch system of $77.9 million and a $16.8 million gain on the sale
of servicing rights.
For the year 1995, other income was $698.4 million, compared to
$260.4 million in 1994. The increase in other income was
principally due to the pre-tax gain on the sale of the Company's New
York retail branch system of $514.7 million in the third quarter of
1995, compared to the smaller gain on the sale of the Illinois
retail branch system in 1994.
OPERATIONS OF REAL ESTATE HELD FOR INVESTMENT (REI)
At December 31, 1995, the Company's net investment in REI was
$234.9 million, down 25% from $313.3 million at December 31, 1994.
The decline in net REI assets was primarily due to the continued
development and sale of ongoing residential projects and the sale of
four large commercial development projects. Reserves for REI assets
totaled $283.7 million or 54.7% of gross REI assets at December 31,
1995, compared to $333.8 million or 51.6% at December 31, 1994.
The Company continues its plan to exit the real estate investment
business. Plans are underway for the sale of several other
properties during 1996. No new projects have been initiated since
1990.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses (G&A) were $199.2 million
in the fourth quarter of 1995, compared to $196.2 million in the
1994 fourth quarter and $235.3 million in the third quarter of
1995. Third quarter 1995 expenses included special charges of $11.0
million relating to the reengineering of the loan origination system
referred to as Project HOME Run, and $25.7 million relating to a
charge on the proposed sale of certain premises buildings, one of
which was sold in the fourth quarter of 1995. Furthermore, the sale
of the New York deposit branches in September 1995 and the purchase
of Household Bank deposit branches in Southern California in June
1995 affect these comparisons.
G&A was $818.6 million for the year 1995, compared to $758.6
million in 1994. G&A as a percentage of average assets was 1.53% in
1995, compared to 1.46% in 1994. The rise in G&A includes the
startup costs of the major initiatives and reengineering efforts
currently underway.
During the fourth quarter of 1995, the Company continued its
efforts towards becoming a full-service consumer bank. These
efforts have the effect of increasing costs now in preparation for
significant anticipated revenue and cost savings opportunities in
the future. Major initiatives include:
CONSUMER LENDING. The Company established its Consumer Lending Division
in late 1994 to offer traditional consumer lending products to
customers, principally through existing retail and mortgage lending
channels. The Company originated its first consumer loan in May 1995,
and originated a total of $35.6 million of consumer loans during 1995.
Fredric J. Forster, President and Chief Operating Officer, stated, "The
Company's plan is to keep the `A' quality loans and sell the other loans
into the secondary market. We determined that, in view of current market
conditions, developing a consumer lending business de novo is preferable
to purchasing a consumer finance company. We have in place a management
team with extensive consumer finance background. In addition, the
existing distribution channels, both in our lending and retail
operations, are suitable for its successful implementation."
MORTGAGE STREAMLINING. Progress has been made on the Company's
initiative to streamline and consolidate the loan origination process
since its start in 1994. Project HOME Run will significantly reduce the
cost of loan originations and increase the Company's ability to respond
to market opportunities through all lending channels.
ELECTRONIC BANKING. In January 1996, the Company launched its electronic
banking program which enables customers using personal computers and
personal financial management programs to electronically access Home
Savings checking and savings products, and to pay bills and use other
services. Home Savings is one of 21 large financial institutions, and
the only thrift, working with Intuit Service Corporation, to provide
electronic home banking. This initiative is expected to further the
Company's efforts to expand checking and other core services to customers
and to expedite Home Savings' transition to a full-service consumer bank.
The Company expects that expenses related to these initiatives
will continue through most of 1996 and that these projects will not
become meaningful contributors to earnings until 1997.
ASSET QUALITY
At December 31, 1995, nonperforming assets (NPAs) totaled
$949.4 million or 1.88% of total assets, compared to $843.0 million
or 1.57% of total assets at December 31, 1994. Troubled debt
restructurings (TDRs) amounted to $163.8 million at December 31,
1995. Nonperforming asset totals increased by $52.3 million during
the month of October as the Company continued to work through the
September 1995 conversion to a new loan servicing system. During
November, NPAs increased by $9.6 million and in December, decreased
by $29.1 million. The Company's ratio of reserves to NPAs was 42.4%
at December 31, 1995, compared to 50.1% at December 31, 1994.
Net charge-offs for the fourth quarter of 1995 were $42.3
million, compared to $75.5 million in the fourth quarter of 1994.
Net charge-offs for the year were $138.5 million, compared to $215.1
million in 1994.
The Company's expenses for operations of foreclosed real estate
amounted to $25.1 million in the fourth quarter of 1995, compared to
$16.1 million and $21.0 million in the fourth quarter of 1994 and
the third quarter of 1995, respectively. REO expense for the year
1995 was $86.8 million, compared to $86.0 million in 1994.
LOAN ORIGINATIONS
Home Savings funded $1.6 billion of residential mortgages in
the fourth quarter of 1995 versus $2.5 billion in the fourth quarter
of 1994. Of the fourth quarter 1995 production, 63% were Adjustable
Rate Mortgages, compared to 99% in the fourth quarter of 1994. For
the year 1995, Home Savings funded $6.5 billion in residential
mortgages compared to $10.3 billion in 1994. All fixed rate loans
are originated for sale.
Purchase loans represented 62.8% of the total fourth quarter
1995 originations, compared to 69.4% in the fourth quarter of 1994.
Purchase loans represented 67.3% of loan production during 1995.
DEPOSITS
At year-end 1995, deposits totaled $34.2 billion compared to
$40.7 billion at year-end 1994. This decrease of $6.5 billion or
16% reflects the sale of $8.1 billion of deposits in New York in
September 1995, and the acquisition of $1.2 billion in deposits from
Household Bank in June 1995. The successful consolidation of
deposit franchises has provided substantial capital and flexibility
to continue the Company's progress to position itself as a
full-service consumer bank.
CAPITAL
At December 31, 1995, Home Savings of America's capital ratios
exceeded regulatory requirements for well-capitalized institutions,
the highest regulatory standard. At December 31, 1995, these ratios
were:
Requirement for Home Savings
Well-Capitalized Home Savings Fully Phased-In
Status at 12/31/95 at 12/31/95
---------------- ------------ ---------------
Tangible - 5.90 % 5.88%
Core Capital 5.00% 5.91 % 5.89%
Core Capital to Risk-
Weighted Assets: 6.00% 9.48% 9.44%
Risk-Based Capital: 10.00% 12.43% 12.39%
In the fourth quarter, the Company purchased 2,439,000 shares
of its common stock under the stock repurchase program at an average
price of $25.66 per share, compared to a volume weighted average
daily closing price per share traded during the fourth quarter of
$25.77. The program, approved by the Board of Directors on October
3, 1995, authorizes the Company to purchase up to $250 million of
its common stock.
Kevin M. Twomey, Senior Executive Vice President and Chief
Financial Officer, stated that, "We are pleased with the continued
progress we have made in enhancing shareholder value by managing our
capital resources. At December 31, 1995, the Parent Company had
$317 million in cash, ample resources to complete the stock
repurchase program. In addition, Home Savings had at year-end a
fully phased-in core capital ratio of 5.89%. This represents a $444
million excess to the 5% well-capitalized standard."
SUBORDINATED DEBENTURES AT HOME SAVINGS OF AMERICA
On January 17, 1996, Home Savings notified holders of its $250
million 10.5% subordinated debentures of its intent to redeem the
issue, at par, in March 1996. The redemption will affect risk-based
capital but not tangible or core capital. Home Savings had a fully
phased-in risk-based capital ratio of 12.39% at December 31, 1995,
$745 million above the well-capitalized standard. The issue will
not be replaced at this time, resulting in substantial interest
savings.
TAXES
The Company's effective tax rate was 28.2% in the fourth
quarter of 1995, compared to 53.0% in the fourth quarter of 1994.
The lower effective tax rate in the fourth quarter of 1995 is
partially due to the elimination of nondeductible goodwill
amortization while the 1994 effective tax rate reflected the 1994
fourth quarter write-off of $25.6 million of nondeductible goodwill
associated with the sale of the Illinois deposit branches. In
addition, the Company recorded various tax benefits.
FASB 115
In October 1995, the FASB agreed to a one-time opportunity for
companies to reassess their classification of securities under FASB
115, Accounting for Certain Investments in Debt and Equity
Securities, by December 31, 1995. As a result, the Company
reclassified $10.4 billion of its held-to-maturity investment
securities to available-for-sale investment securities.
**********
H.F. Ahmanson & Company, with $50.5 billion in assets, is the
Parent Company of Home Savings of America. Home Savings' deposit
base is $34.2 billion. It operates 343 financial services centers
in four states and 119 mortgage lending offices in 10 states.
**********
Additional information, including monthly financial data, about
H.F. Ahmanson & Company and Home Savings of America can be retrieved
free of charge using the following services:
Internet: http://www.investquest.com
Fax-on-Demand: (614) 844-3860
On-line BBS: (614) 844-3868
H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
(dollars in thousands except per share data)
At End of Period December 31, 1995 September 30, 1995 December 31, 1994
- ---------------- ----------------- ------------------ -----------------
Total assets $ 50,529,586 $ 50,594,790 $ 53,725,782
Investment portfolio $ 892,572 $ 791,969 $ 1,990,895
Loans receivable and mortgage-backed
securities (MBS) $ 47,407,521 $ 47,465,463 $ 48,791,165
ARMs included in loans receivable and MBS $ 45,895,028 $ 45,877,571 $ 46,409,724
Allowance for loan losses $ 380,886 $ 385,289 $ 400,232
Deposits $ 34,244,481 $ 34,617,805 $ 40,655,016
Borrowings $ 12,236,428 $ 11,757,400 $ 9,176,085
Stockholders' equity $ 3,056,922 $ 3,071,081 $ 2,964,601
Book value per common share $ 20.75 $ 20.50 $ 19.70
Tangible book value per common share $ 19.47 $ 19.20 $ 15.70
Total common shares outstanding 115,610,077 117,737,673 117,113,231
Home Savings of America Capital Ratios:
Tangible capital (to adjusted total assets) 5.90% 6.31% 5.12%
Core capital (to adjusted total assets) 5.91% 6.32% 5.50%
Core capital (to risk-weighted assets) 9.48% 10.03% 9.08%
Risk-based capital 12.43% 12.97% 12.17%
For the Three Months Ended:
- --------------------------
Net interest income $ 306,892 $ 314,444 $ 291,526
Provision for loan losses $ 37,927 $ 29,175 $ 38,544
Net earnings $ 60,709 $ 272,998 $ 39,935
Net earnings per fully diluted
common share $ 0.40 $ 2.03 $ 0.23
Dividends per common share $ 0.22 $ 0.22 $ 0.22
Loans originated and purchased $ 1,647,308 $ 1,545,219 $ 2,540,081
Average Interest Rates:
Yield on loans and MBS 7.53% 7.50% 6.56%
Yield on investment portfolio 5.38% 6.33% 5.56%
Yield on interest-earning assets 7.49% 7.44% 6.50%
Cost of deposits 4.73% 4.76% 3.85%
Cost of borrowings 6.42% 6.92% 6.23%
Cost of interest-costing liabilities 5.17% 5.08% 4.30%
Interest rate spread 2.32% 2.36% 2.20%
Net interest margin 2.54% 2.47% 2.28%
For the Years Ended:
- --------------------
Net interest income $ 1,226,755 $ 1,296,921
Provision for loan losses $ 119,111 $ 176,557
Earnings before cumulative effect of
accounting change $ 450,946 $ 237,358
Net earnings $ 216,204 $ 237,358
Net earnings per fully diluted
common share $ 1.40 $ 1.58
Dividends per common share $ 0.88 $ 0.88
Loans originated and purchased $ 6,483,069 $ 10,289,269
Average Interest Rates:
Yield on loans and MBS 7.32% 6.40%
Yield on investment portfolio 6.09% 4.87%
Yield on interest-earning assets 7.26% 6.31%
Cost of deposits 4.59% 3.35%
Cost of borrowings 6.64% 5.34%
Cost of interest-costing liabilities 4.99% 3.75%
Interest rate spread 2.27% 2.56%
Net interest margin 2.41% 2.64%
H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(in thousands)
Assets December 31, 1995 September 30, 1995 December 31, 1994
- ------ ----------------- ------------------ -----------------
Cash and amounts due from banks $ 752,878 $ 645,369 $ 782,678
Securities purchased under
agreements to resell 381,000 258,000 952,000
Other short-term investments 13,278 13,840 311,942
---------- ----------- -----------
Total cash and cash equivalents 1,147,156 917,209 2,046,620
Other investment securities held to
maturity 2,448 4,941 276,945
Other investment securities available
for sale 9,908 35,460 10,117
Investment in stock of Federal Home
Loan Bank (FHLB) 485,938 479,728 439,891
Mortgage-backed securities (MBS)
held to maturity 5,825,276 16,461,464 10,339,864
MBS available for sale 10,326,866 34,236 2,449,556
Loans receivable less allowance
for losses of
$380,886 (December 31, 1995),
$385,289 (September 30, 1995) and
$400,232 (December 31, 1994) 30,273,514 30,830,642 35,992,566
Loans held for sale 981,865 139,121 9,179
Accrued interest receivable 154,506 158,139 212,947
Real estate held for development and
investment (REI) less allowance
for losses of
$283,748 (December 31, 1995),
$321,209 (September 30, 1995) and
$333,825 (December 31, 1994) 234,855 321,467 313,316
Real estate owned held for sale (REO)
less allowance for losses of
$38,080 (December 31, 1995),
$37,387 (September 30, 1995) and
$44,726 (December 31, 1994) 225,566 212,612 161,948
Premises and equipment 410,947 483,546 614,817
Goodwill and other intangible assets 147,974 152,497 468,542
Other assets 302,767 363,728 314,853
Income taxes - - 74,621
----------- ----------- -----------
$50,529,586 $50,594,790 $53,725,782
=========== =========== ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits $34,244,481 $34,617,805 $40,655,016
Short-term borrowings under agreements
to repurchase securities sold 3,519,311 5,487,682 2,253,805
Other short-term borrowings - - 100,000
FHLB and other borrowings 8,717,117 6,269,718 6,822,280
Other liabilities 873,313 921,647 930,080
Income taxes 118,442 226,857 -
----------- ----------- -----------
Total liabilities 47,472,664 47,523,709 50,761,181
Stockholders' equity 3,056,922 3,071,081 2,964,601
----------- ----------- -----------
$50,529,586 $50,594,790 $53,725,782
=========== =========== ===========
H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands except per share data)
For the Three Months Ended For the Years Ended
----------------------------------------- December 31,
December 31, September 30, December 31, ---------------------------
1995 1995 1994 1995 1994
------------ ------------- ------------ ----------- -----------
Interest income:
Interest on loans $ 583,543 $ 576,205 $ 582,904 $ 2,405,820 $ 2,265,050
Interest on MBS 309,629 333,978 205,378 1,158,077 686,390
Interest and dividends on investments 13,205 38,983 43,125 135,194 143,935
----------- ----------- ----------- ----------- -----------
Total interest income 906,377 949,166 831,407 3,699,091 3,095,375
----------- ----------- ----------- ----------- -----------
Interest expense:
Deposits 407,113 504,241 389,090 1,835,590 1,291,893
Short-term borrowings 65,107 37,669 39,034 197,437 182,721
FHLB and other borrowings 127,265 92,812 111,757 439,309 323,840
----------- ----------- ----------- ----------- -----------
Total interest expense 599,485 634,722 539,881 2,472,336 1,798,454
----------- ----------- ----------- ----------- -----------
Net interest income 306,892 314,444 291,526 1,226,755 1,296,921
Provision for loan losses 37,927 29,175 38,544 119,111 176,557
----------- ----------- ----------- ----------- -----------
Net interest income after provision
for loan losses 268,965 285,269 252,982 1,107,644 1,120,364
----------- ----------- ----------- ----------- -----------
Other income:
Gain on sales of MBS 53 2,586 - 11,919 4,868
Gain (loss) on sales of loans 4,375 (1,021) (10,058) 5,364 (21,036)
Loan servicing income 15,940 16,688 29,332 60,490 74,441
Other fee income 26,730 26,542 28,016 103,626 110,368
Gain on sales of retail deposit branch systems - 514,671 77,901 514,671 77,901
Gain on sales of investment securities (67) 142 7 187 202
Other operating income 1,189 1,179 10,382 2,152 13,612
----------- ----------- ----------- ----------- -----------
48,220 560,787 135,580 698,409 260,356
----------- ----------- ----------- ----------- -----------
Other expenses:
General and administrative expenses (G&A) 199,217 235,305 196,161 818,579 758,560
Operations of REI 3,625 42,148 81,259 49,481 97,644
Operations of REO 25,123 21,007 16,134 86,788 86,011
Amortization of goodwill and other intangible assets 4,611 8,103 10,094 26,559 27,835
----------- ----------- ----------- ----------- -----------
232,576 306,563 303,648 981,407 970,050
----------- ----------- ----------- ----------- -----------
Earnings before provision for income taxes and
cumulative effect of accounting change 84,609 539,493 84,914 824,646 410,670
Provision for income taxes 23,900 266,495 44,979 373,700 173,312
----------- ----------- ----------- ----------- -----------
Earnings before cumulative effect of accounting change 60,709 272,998 39,935 450,946 237,358
Cumulative effect of change in accounting for goodwill - - - (234,742) -
----------- ----------- ----------- ----------- -----------
Net earnings $ 60,709 $ 272,998 $ 39,935 $ 216,204 $ 237,358
=========== =========== =========== =========== ===========
Earnings per common share - primary:
Earnings before cumulative effect of accounting change $ 0.41 $ 2.20 $ 0.23 $ 3.39 $ 1.59
Cumulative effect of change in accounting for goodwill - - - (1.99) -
----------- ----------- ----------- ----------- -----------
Net earnings $ 0.41 $ 2.20 $ 0.23 $ 1.40 $ 1.59
=========== =========== =========== =========== ===========
Earnings per common share - fully diluted:
Earnings before cumulative effect of accounting change $ 0.40 $ 2.03 $ 0.23 $ 3.20 $ 1.58
Cumulative effect of change in accounting for goodwill - - - (1.80) -
----------- ----------- ----------- ----------- -----------
Net earnings $ 0.40 $ 2.03 $ 0.23 $ 1.40 $ 1.58
=========== =========== =========== =========== ===========
Common shares outstanding, weighted average:
Primary 117,922,440 118,507,477 117,271,992 118,074,091 117,369,431
Fully diluted 129,738,144 130,541,379 117,271,992 130,378,061 128,946,242
Return on average assets 0.48% 2.04% 0.29% 0.41% 0.46%
Return on average equity 7.93% 37.72% 5.36% 7.47% 8.00%
Return on average tangible equity* 8.97% 42.71% 12.14% 21.64% 11.50%
Ratio of G&A expenses to average assets 1.58% 1.76% 1.45% 1.53% 1.46%
<FN>
*Net earnings excluding amortization of goodwill and other intangible assets, and cumulative effect of change in accounting for
goodwill, as a percentage of average equity excluding goodwill and other intangible assets.