================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[X] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GREAT WESTERN FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
H. F. AHMANSON & COMPANY
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
I. CORPORATE PROFILE
II. THE AHMANSON STORY
III. GREAT WESTERN PROPOSAL
IV. EXECUTION RISK
V. INVESTMENT SUMMARY
1
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
THIS PRESENTATION CONTAINS CERTAIN FORWARD LOOKING STATEMENTS WITH RESPECT
TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF AHMANSON AND,
ASSUMING THE CONSUMMATION OF THE PROPOSED MERGER, A COMBINED AHMANSON/GREAT
WESTERN FINANCIAL CORPORATION, INCLUDING STATEMENTS RELATING TO: (A) THE COST
SAVINGS AND ACCRETION TO CASH EARNINGS AND REPORTED EARNINGS THAT WILL BE
REALIZED FROM THE PROPOSED MERGER; (B) THE IMPACT ON REVENUES OF THE PROPOSED
MERGER, INCLUDING THE POTENTIAL FOR ENHANCED REVENUES AND THE IMPACT ON
REVENUES OF CONSOLIDATION OF RETAIL BRANCHES AND OTHER OPERATIONS AS PLANNED;
(C) AHMANSON'S STOCK PURCHASE PROGRAM; AND (D) THE RESTRUCTURING CHARGES
EXPECTED TO BE INCURRED IN CONNECTION WITH THE PROPOSED MERGER. THESE FORWARD
LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND UNCERTAINTIES. FACTORS THAT MAY
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH
FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES:
(1) EXPECTED COST SAVINGS FROM THE PROPOSED MERGER CANNOT BE FULLY REALIZED OR
REALIZED WITHIN THE EXPECTED TIME FRAME; (2) REVENUES FOLLOWING THE PROPOSED
MERGER ARE LOWER THAN EXPECTED; (3) COMPETITIVE PRESSURE AMONG DEPOSITORY
INSTITUTIONS INCREASES SIGNIFICANTLY; (4) COSTS OR DIFFICULTIES RELATED TO THE
INTEGRATION OF THE BUSINESSES OF AHMANSON AND GREAT WESTERN FINANCIAL
CORPORATION ARE GREATER THAN EXPECTED; (5) CHANGES IN THE INTEREST RATE
ENVIRONMENT REDUCE INTEREST MARGINS; (6) GENERAL ECONOMIC CONDITIONS, EITHER
NATIONALLY OR IN THE STATES IN WHICH THE COMBINED COMPANY WILL BE DOING
BUSINESS, ARE LESS FAVORABLE THAN EXPECTED; OR (7) LEGISLATION OR REGULATORY
CHANGES ADVERSELY AFFECT THE BUSINESSES IN WHICH THE COMBINED COMPANY WOULD BE
ENGAGED. FURTHER INFORMATION ON OTHER FACTORS WHICH COULD AFFECT THE FINANCIAL
RESULTS OF AHMANSON AFTER THE PROPOSED MERGER IS INCLUDED IN FILINGS BY
AHMANSON WITH THE SECURITIES AND EXCHANGE COMMISSION, ("COMMISSION"), INCLUDING
A REGISTRATION STATEMENT ON FORM S-4 FILED WITH THE COMMISSION ON FEBRUARY 18,
1997, AS AMENDED, AND THE COMMISSION FILINGS INCORPORATED BY REFERENCE THEREIN.
2
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
A CONSUMER BANK
MARCH 31, 1997
. ASSETS $48.7 BILLION
. DEPOSITS $34.4 BILLION
. LOANS $45.3 BILLION
. MARKET CAPITALIZATION $ 4.0 BILLION
. # OF FINANCIAL SERVICE
CENTERS / STATES 380 / 3
. # OF LOAN OFFICES / STATES 124 / 9
. MORTGAGE SERVICING $59 BILLION
3
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
BUILDING BLOCKS TO SUCCESS
1994
- ----
New Management Team Assembled
Franchise Rationalization and Enhancement
1995
- ----
Stock Buyback Program Initiated
Technology Development
HOME Run, CPI, Electronic Banking
New Initiatives
Investment Sales, HOME Run, Consumer Lending
1996
- ----
Business Banking & Cash Management Developed
Acquired 61 First Interstate Branches
Realize Consumer Lending & Investment
1997
- ----
Improving Credit Quality
Accelerated EPS Growth
Exceeded 15% ROE Goal
Exceeded Efficiency Targets
4
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
FINANCIAL GOALS
. ROE - FIRST 15%, NOW 18%
. EFFICIENCY RATIO - BELOW 50%
. EPS GROWTH
. CAPITAL - "WELL CAPITALIZED"
5
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
AHMANSON'S PARADIGM
. FILL THE VOID LEFT BY SECURITY PACIFIC AND FIRST
INTERSTATE, AND CROCKER TOO
. PROVIDE CUSTOMERS WITH A COMPLETE LINE OF
CONSUMER AND SMALL BUSINESS BANKING PRODUCTS
AND SERVICES
. QUALITY SERVICE PROVIDER
. CUSTOMER DRIVEN ALTERNATIVE DELIVERY CAPABILITIES
. TRUSTED FINANCIAL ADVISOR
6
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
A CONCEPTUAL APPROACH TO AHMANSON'S PROFITABILITY
ONE CAN VIEW AHMANSON AS COMPRISING 2 BANKS
. Bank A is a high performance consumer bank with growth potential
. Bank B has a more traditional thrift balance sheet and can be viewed as a
"cash cow"
Bank A Bank B
------ ------
Asset size $20 billion $30 billion
Assets . Consumer loans . Mortgage loans
. Business loans . MBS
. Mortgage loans
Funding . Checking . Higher cost CD's
. Passbook . Borrowings
. Money Market
. Lower cost CD's
ROE potential 25-30% 10-15%
7
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
AHMANSON STRATEGY
Grow Bank A: Increase Low Cost Deposits
. Consumer Checking
. Business Banking
. Cash Management
Enhance Bank A: Produce Fee Income
. Investment and Annuity Products
. Bank Services
. Cash Management Services
. Loan Servicing
. Mortgage Banking Loan Sales
Shrink Bank B: Originate more mortgages for sale
Enhance Bank B: Substitute higher yielding assets
. Consumer Loans
. Business Loans
Enhance Overall Profitability:
. Contain expenses
. Reduce credit risk
. Stock repurchase programs
8
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
GROWTH IN CONSUMER ACCOUNTS
------
1995 1996 % Change
---- ---- --------
Households 1.2 million 1.4 million 17%
Accounts with 45,000 317,000 604%
debit cards
Checking balances $2.5 billion $3.3 billion 31%
9
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
GROWTH IN OTHER FEE INCOME
------
. 1Q97 annual run rate is $79 million or $0.42 EPS higher than 1995 results
[GRAPH APPEARS HERE]
($ in millions)
1Q96 2Q96 3Q96 4Q96 1Q97
---- ---- ---- ---- ----
$27 $31 $34 $44 $46
10
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
MANY SOURCES OF FEE INCOME
Q1 Q1 %
($ in millions) 1996 1997 Change
------ ------ ------
Deposit Related
. Service Charges $11.4 $22.8 100%
. ATM 1.5 2.5 67
. Branch Services 1.9 2.5 32
. Debit Card .2 1.0 400
------ ------
Deposit Related 15.0 28.8 92
Investment Sales 3.9 7.3 87
Loan Related 7.9 9.6 22
------ ------
Total $26.8 $45.7 71
11
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
GROWTH IN INVESTMENT PRODUCT SALES
------
AVERAGE DAILY CORE SALES
[GRAPH APPEARS HERE]
($ in millions)
1995 1996 1Q97
---- ---- ----
$0.6 $2.2 $3.5
12
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
GROWTH IN HIGHER MARGIN BUSINESS
-------
CONSUMER LOANS FUNDED
[GRAPH APPEARS HERE]
($ in millions)
Quarters: 1Q96 2Q96 3Q96 4Q96 1Q97
---- ---- ---- ---- ----
$17 $52 $71 $131 $136
13
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
CONSUMER LENDING
. OBJECTIVE - GROW ASSET BASE TO $5 BILLION BY THE END OF THE DECADE
. COMPLETE PRODUCT LINE STRATEGY OF SECURED AND UNSECURED PRODUCTS
. RETENTION OF ONLY "A" CREDITS ON THE BALANCE SHEET
. TARGET CUSTOMERS AND CHANNELS
- 40% OF AHMANSON'S CURRENT 1.7 MILLION HOUSEHOLDS
- NEW CUSTOMERS THROUGH ALL EXISTING CHANNELS AND NEW INITIATIVES
14
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
ASSET ORIGINATION
IMPROVING EARNING ASSET COMPOSITION
LOAN ORIGINATION MIX
1Q
1995 1997
------ ------
Real Estate 99% 87%
Consumer 1 12
Business 0 1
15
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
COST CONTAINMENT
EFFECTIVE G&A MANAGEMENT
[GRAPH APPEARS HERE]
Quarters: 4Q95 1Q96 2Q96 3Q96 4Q96 1Q97
---- ---- ---- ---- ---- ----
G&A
($ in Millions): $199 $193 $190 $190* $188 $187
*3Q96 excludes SAIF recapitalization and one-time First Interstate
acquisition charges
16
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
COST CONTAINMENT
IMPROVED EFFICIENCY RATIOS
[GRAPH APPEARS HERE]
1995 1Q96 1Q97
---- ---- ----
Efficiency Ratio: 59% 54% 49%
17
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
ASSET QUALITY
. Credit costs down 36%
. Loan Loss Reserves strong and stable
[GRAPH APPEARS HERE]
($ in millions)
1Q96 2Q96 3Q96 4Q96 1Q97
---- ---- ---- ---- ----
Provision 46 34 36 29 24
REO 26 27 25 28 22
Loan Loss Reserves 385 382 398 389 388
18
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
ASSET QUALITY
RESIDENTIAL 1-4 FAMILY
60 DAY DELINQUENCIES
KEY LEADING INDICATOR OF NONPERFORMING ASSETS
[GRAPH APPEARS HERE]
12/95 3/96 6/96 9/96 12/96 3/97
($ in millions): $144 $134 $134 $121 $121 $100/*/
* 60 Day Delinquencies dropped to lowest level since November 1989
19
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
SOUTHERN CALIFORNIA
RESIDENTIAL 1-4 FAMILY
90+ DAYS DELINQUENT
[GRAPH APPEARS HERE]
1st QTR96 1st QTR97
PRE86 2.14 1.17
86 2.31 1.44
87 2.67 2.42
88 3.94 2.50
89 4.20 2.79
90 4.74 3.23
91 4.26 3.42
92 3.25 2.02
93 1.31 1.42
94 0.57 0.93
95 0.22 0.64
96 0.00 0.08
20
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
ASSET QUALITY
NONPERFORMING ASSETS DOWN 19%
LEADING INDICATOR OF CREDIT COSTS
[GRAPH APPEARS HERE]
3/96 6/96 9/96 12/96 3/97
($ in millions): $977 $954 $898 $846 $793/*/
*NPAs dropped to lowest level since November 1990
21
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
COMPONENTS OF CREDIT COSTS
FIRST QUARTER 1997
[GRAPH APPEARS HERE]
Pre-'93 Post-'92
Total Loans Portfolio Portfolio Peer Group Average
----------- --------- --------- ------------------
% of Loans & REO: 0.40% 0.71% 0.13% 0.20%
(a) 1996 average of BVFS, GWF, WAMU, COFI and TCB
22
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
THE VALUE OF FURTHER IMPROVEMENT IN ASSET QUALITY
ON EPS
* Each 10 bps of credit cost improvement adds $0.24 to EPS
[GRAPH APPEARS HERE]
10 bps 15 bps 20 bps
------ ------ ------
$0.24 $0.36 $0.48
23
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
ASSET ORIGINATION
RESIDENTIAL REAL ESTATE
WHAT WE WON'T DO FOR VOLUME
. 0 POINT LOANS WITHOUT PREPAYMENT PENALTIES
. DEEP DISCOUNT TEASERS
. 40 YEAR TERMS (OVER 60% OF LOANS IN 1994-1995)
. UNLIMITED COFI PRODUCTION
. EXPENSIVE HOMES TO CERTAIN SELF-EMPLOYED BORROWERS
. LAGGING ADJUSTABLES WITHOUT PREPAYMENT PENALTIES IN A RISING RATE ENVIRONMENT
24
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
ASSET ORIGINATION
DECAFFEINATING:
RESIDENTIAL REAL ESTATE
ORIGINATION MIX
1Q
1995 1997
---- ----
COFI 68% 11%
12Mat/LAMA 0 49
T-Bill 9 4
Fixed 23 36
25
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
A CONSUMER BANK WITH
BUSINESS BANKING CAPABILITY
. LARGE, PROFITABLE AND UNDERSERVED SEGMENT
. FULLY UTILIZES EXISTING DISTRIBUTION SYSTEM
. LEVERAGES STRONG LOYALTY AND NAME RECOGNITION
. HIGH ROE
. BUILT CAPABILITIES FOR FIRST INTERSTATE ACQUISITION
. IN PROCESS OF ROLLOUT TO ENTIRE CALIFORNIA FRANCHISE
26
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
PRODUCT CAPABILITIES
MORTGAGE LENDING
. SECONDARY MARKET ORIENTATION VS PORTFOLIO LENDER
. HOME RUN 90% COMPLETED
. 1997 ESTIMATED COST PER LOAN $ 3,000
. ESTIMATED COST PER LOAN AT
- $6 BILLION - $ 2,000
- $10 BILLION - $ 1,450
27
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
CAPITAL MANAGEMENT
STOCK BUYBACK PROGRAMS
3RD STOCK BUYBACK PROGRAM
- -------------------------
AUTHORIZED: NOV. 15, 1996
AMOUNT: $250 MILLION
TOTAL STOCK BUYBACKS
- --------------------
AUTHORIZED TO DATE:
COMMON STOCK $650 MILLION
PREFERRED STOCK $175 MILLION
------------
$825 MILLION
28
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
CAPITAL MANAGEMENT
COMMON STOCK BUYBACK ACTIVITY
-- 16% of Common Stock repurchased since start of programs
# Shares Average
(millions) Price paid
---------- ----------
Through Dec. 31, 1996 17.0 $26.11
YTD-March, 1997 2.2 $35.06
Programs to date 19.2 $27.11
Remaining authorized $131 million
29
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
1997 FIRST QUARTER /(1)/
IMPROVED NET INCOME AND EPS
PERCENT INCREASE FROM 1996
[GRAPH APPEARS HERE]
Dollars Fully-Diluted EPS
%: 59% 93%
(1) First quarter 1997 includes gain on sale of Arizona branches ($9.5 million
or $0.08 EPS)
30
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
REPORTED EARNINGS PER SHARE
[GRAPH APPEARS HERE]
1Q97
1Q96 2Q96 3Q96 4Q96 1Q97 Cash
---- ---- ---- ---- ---- ----
$0.45 $0.50 $0.56/(1)/ $0.69/(2)/ $0.79/(3)/ $0.82/(3)/
(1) 3Q96 excludes SAIF recap and First Interstate branch acquisition charges
(2) 4Q96 excludes gain on sale of San Antonio branches ($0.05 EPS)
(3) 1Q97 excludes gain on sale of Arizona branches ($0.08 EPS)
31
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
ACCELERATED CASH EPS GROWTH
Street estimates indicate continued above average growth
. Street Estimates CAGR (Cash Earnings)
- 1996 to 1998 = 31%
- 1996 to 1999 = 23%
[GRAPH APPEARS HERE]
1995 1996 1997E 1998E 1999E
---- ---- ----- ----- -----
$1.42 $2.31 $3.35/(1)/ $3.94/(1)/ $4.34/(2)/
(1) Based on First Call estimates, adjusted for goodwill and CDI amortization
(2) 1999 reflects 10% growth rate over 1998 First Call estimate, adjusted for
goodwill and CDI amortization
Note: 1995 excludes goodwill accounting change and gain on sale of New York
branches
1996 excludes SAIF recap and First Interstate branch acquisition charges
32
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
FEATURES OF AHMANSON OFFER
Exchange Ratio: . 1.20x when AHM stock price is below $41.67
. Floating to provide value of $50.00 to GWF
stockholders when AHM is between $41.67 and
$45.45
. Exchange ratio of 1.10x when AHM is greater than
$45.45
Determination of . The exchange ratio will be fixed based on the
Final Exchange average AHM stock price for the 20 trading days
Ratio: prior to receipt of OTS approval or through what
ever mechanism is agreed upon in a definitive
agreement with GWF
33
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
EXCHANGE RATIO ANALYSIS
[GRAPH APPEARS HERE]
AHM VALUE OF
STOCK PRICE GWF SHARES
----------- ----------
36.00 43.20
36.10 43.32
36.20 43.44
36.30 43.56
36.40 43.68
36.50 43.80
36.60 43.92
36.70 44.04
36.80 44.16
36.90 44.28
37.00 44.40
37.10 44.52
37.20 44.64
37.30 44.76
37.40 44.88
37.50 45.00
37.60 45.12
37.70 45.24
37.80 45.36
37.90 45.48
38.00 45.60
38.10 45.72
38.20 45.84
38.30 45.96
38.40 46.08
38.50 46.20
38.60 46.32
38.70 46.44
38.80 46.56
38.90 46.68
39.00 46.80
39.10 46.92
39.20 47.04
39.30 47.16
39.40 47.28
39.50 47.40
39.60 47.52
39.70 47.64
39.80 47.76
39.90 47.88
40.00 48.00
40.10 48.12
40.20 48.24
40.30 48.36
40.40 48.48
40.50 48.60
40.60 48.72
40.70 48.84
40.80 48.96
40.90 49.08
41.00 49.20
41.10 49.32
41.20 49.44
41.30 49.56
41.40 49.68
41.50 49.80
41.60 49.92
41.70 50.00
41.80 50.00
41.90 50.00
42.00 50.00
42.10 50.00
42.20 50.00
42.30 50.00
42.40 50.00
42.50 50.00
42.60 50.00
42.70 50.00
42.80 50.00
42.90 50.00
43.00 50.00
43.10 50.00
43.20 50.00
43.30 50.00
43.40 50.00
43.50 50.00
43.60 50.00
43.70 50.00
43.80 50.00
43.90 50.00
44.00 50.00
44.10 50.00
44.20 50.00
44.30 50.00
44.40 50.00
44.50 50.00
44.60 50.00
44.70 50.00
44.80 50.00
44.90 50.00
45.00 50.00
45.10 50.00
45.20 50.00
45.30 50.00
45.40 50.00
45.50 50.05
45.60 50.16
45.70 50.27
45.80 50.38
45.90 50.49
46.00 50.60
46.10 50.71
46.20 50.82
46.30 50.93
46.40 51.04
46.50 51.15
46.60 51.26
46.70 51.37
46.80 51.48
46.90 51.59
47.00 51.70
47.10 51.81
47.20 51.92
47.30 52.03
47.40 52.14
47.50 52.25
47.60 52.36
47.70 52.47
47.80 52.58
47.90 52.69
48.00 52.80
48.10 52.91
48.20 53.02
48.30 53.13
48.40 53.24
48.50 53.35
48.60 53.46
48.70 53.57
48.80 53.68
48.90 53.79
49.00 53.90
49.10 54.01
49.20 54.12
49.30 54.23
49.40 54.34
49.50 54.45
49.60 54.56
49.70 54.67
49.80 54.78
49.90 54.89
50.00 55.00
4/25/97 Value of AHM Offer: $42.60
4/25/97 Value of WAMU Offer: $40.84
34
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
KEY MERGER ASSUMPTIONS
. STREET AHM AND GWF EARNINGS ESTIMATES
. COST SAVINGS OF $454 MILLION OR 46% OF GWF BASE
. REVENUE ENHANCEMENTS OF $50 MILLION OR 3% OF GWF BASE
- NET INTEREST INCOME FROM CONSUMER LENDING AND BUSINESS BANKING
- FEE INCOME FROM RETAIL DEPOSITS, CASH MANAGEMENT AND INVESTMENT SALES
. CREDIT RESERVE OF $100 MILLION BASED ON WAMU DUE DILIGENCE AND GREAT WESTERN
CONCURRENCE
. RESTRUCTURING RESERVE OF $450 MILLION (99% OF COST SAVES)
35
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
IMPACT ON AHM STOCKHOLDERS
AHM Stock Price $45.50 $43.50 $35.50
Exchange Ratio 1.10x 1.15x 1.20x
Reported EPS
1998E $3.35 $3.27 $3.35
1999E 4.25 4.14 4.21
Cash EPS
1998E $4.33 $4.21 $4.10
1999E 5.32 5.18 5.05
36
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
IMPACT ON ACCRETION / (DILUTION)
% Accretion (Dilution)
----------------------
Exchange
Ratio 1998 1999
-------- ------ ------
Reported EPS
AHM = $35.50 1.20x (11)% 1%
AHM = $43.50 1.15 (14) (1)
AHM = $45.50 1.10 (11) 2
Cash EPS
AHM = $35.50 1.20x 4% 16%
AHM = $43.50 1.15 7 19
AHM = $45.50 1.10 10 23
37
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
ENHANCED OPERATING PERFORMANCE
EFFICIENCY RATIO
- ----------------
1997E 1998E 1999E
----- ----- -----
45% 39% 35%
CASH ROE
- --------
1997E 1998E 1999E
----- ----- -----
19% 28% 32%
38
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
AHM OFFER CLEARLY SUPERIOR TO
GWF STOCKHOLDERS ON AN EPS BASIS
AHM Offer WAMU Offer
------------------------ --------------------------
AHM AHM AHM Revised Reasonable
Cash Basis $45.50 $43.50 $35.50 Projections Assumptions
- ---------- ------------------------ --------------------------
Pro Forma EPS
1998E $4.33 $4.21 $4.10 $4.81 $4.42
1999E 5.32 5.18 5.05 5.89 5.13
Exchange Ratio 1.10x 1.15x 1.20x 0.90x 0.90x
============================================================================
Pro Forma Cash EPS per GWF Stockholder
1998E $4.76 $4.84 $4.92 $4.32 $3.97
1999E 5.85 5.96 6.06 5.30 4.62
============================================================================
39
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
AND.....
THE PROBLEM WITH THE WAMU OFFER CAN BE SUMMED UP IN JUST TWO LINES
$ VALUE OF AHM AND WAMU OFFERS
[GRAPH APPEARS HERE]
AHM WAMU
--- ----
17-Mar $47.70 $46.01
18-Mar $46.80 $45.45
19-Mar $47.55 $45.45
20-Mar $47.40 $45.45
21-Mar $47.25 $45.11 AHM OFFER
24-Mar $46.95 $45.23 IS $1.76 OR
25-Mar $46.50 $46.07 4.3% HIGHER
26-Mar $46.65 $45.45
27-Mar $44.85 $44.61
31-Mar $43.65 $43.48
1-Apr $44.40 $43.31
2-Apr $43.65 $42.53
3-Apr $43.80 $43.59
4-Apr $42.45 $42.92
7-Apr $42.60 $43.14
8-Apr $44.55 $44.44
9-Apr $44.25 $43.26
10-Apr $44.70 $42.98
11-Apr $42.30 $40.95
14-Apr $42.30 $41.74
15-Apr $44.40 $42.86
16-Apr $43.95 $42.08
17-Apr $43.95 $42.53
18-Apr $43.20 $41.96
21-Apr $42.90 $41.85
22-Apr $43.20 $41.63
23-Apr $43.95 $42.08
24-Apr $43.65 $41.40
25-Apr $42.60 $40.84
THE CHOICE IS CLEAR:
THE AHMANSON OFFER
PROVIDES GWF STOCKHOLDERS WITH HIGHER MARKET VALUE
40
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
COMPELLING STRATEGIC FRANCHISE
. CREATES CONSUMER BANKING POWERHOUSE
- SOLIDIFIES, ENHANCES AND DEEPENS POSITION IN CALIFORNIA AND FLORIDA
- MAJOR MARKET POSITION IN ALL KEY MARKETS
- CREATES 10TH LARGEST U.S. DEPOSITORY INSTITUTION
. PROVIDES ADDITIONAL SCALE IN KEY BUSINESSES
- MORTGAGE BANKING/SERVICING
- SMALL BUSINESS BANKING
- RETAIL BANKING AND CONSUMER LENDING
- INVESTMENT PRODUCTS
. CONSISTENT WITH BOTH AHM'S AND GWF'S STRATEGIC PLANS
41
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COMPELLING STRATEGIC FRANCHISE
- ----------------------------------------------------------------------
At 3/31/97 AHM GWF COMBINED
- ----------------------------------------------------------------------
Assets $49 billion $43 billion $92 billion
Loans and MBS 45 39 84
Deposits 34 28 62
Loan Servicing 59 50/(1)/ 109
Branches 380 416 796/595/(2)/
Mortgage Lending 124 657/(1)/ 781
and Consumer
Finance offices
Households 1.7 million 2.7 million/(1)/ 4.4 million
Business Customers 82,000 96,000/(1)/ 178,000
(1) Estimated
(2) After 201 branch consolidations in California and Florida
42
COMPELLING STRATEGIC FRANCHISE
STRENGTHENS AHM'S POSITION AS CA'S THIRD LARGEST INSTITUTION
CALIFORNIA'S MOST EFFICIENT DISTRIBUTION SYSTEM
- ------------------------------------------------------------------------------------------------------------------------
Rank Institution Branches Deposits Deposits/Branch Share
- ------------------------------------------------------------------------------------------------------------------------
First Tier Institutions
1 BankAmerica 1,047 $78.1 billion $74.6 million 21%
2 Wells Fargo 680/(1)/ 55.5 81.6 15
3 AHM + GWF 417/(2)/ 50.2 120.4 13
- ------------------------------------------------------------------------------------------------------------------------
* Ahmanson 301 28.4 94.4 8
* Great Western 296 21.8 73.6 6
5 Union BanCal 261 17.9 68.4 5
6 First Nationwide 203 14.0 69.2 4
7 WAMU 158 12.8 81.0 3
8 Glendale 162 9.2 56.6 2
- ------------------------------------------------------------------------------------------------------------------------
(1) Estimated
(2) After consolidation of 180 California branches
Source: SNL Securities: as of 6/30/96 adjusted for announced acquisitions
43
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COMPELLING STRATEGIC FRANCHISE
MARKET RANK IMPROVES IN 18 OF 21 OVERLAPPING MSAs
CA DEPOSIT MARKET SHARE PRO FORMA MARKET SHARE RANK
------------------------------------
[GRAPH APPEARS HERE] Rank
Top 5 CA MSAs*
BofA Wells AHM + GWF . #1 1 of 5
------- ------ --------- . #2 3 of 5
21% 15% 13% . #3 1 of 5
------
. #1, 2 or 3 5 of 5
Top 10 CA MSAs*
. #1 1 of 10
. #2 4 of 10
. #3 3 of 10
-------
. #1, 2, or 3 8 of 10
Source: SNL Securities; as of 6/30/96 adjusted for announced acquisition
*Based on population
44
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COMPELLING STRATEGIC FRANCHISE
. TOP 5 MSAS* REPRESENT 62% OF CALIFORNIA POPULATION AND 61% OF DEPOSITS
[GRAPH APPEARS HERE]
Los Angeles Riverside San Diego Orange County Oakland
----------- --------- --------- ------------- -------
Wells: 9% 10% 18% 13% 14%
AHM + GWF: 16% 18% 23% 17% 10%
BofA: 20% 20% 18% 18% 31%
Rank of AHM + GWF
in market: #2 #2 #1 #2 #3
Population (000): 9,324 3,024 2,702 2,615 2,234
Deposits (billions): $123.5 18.2 23.1 $31.8 $29.7
Source: SNL Securities: as of 6/30/96 adjusted for announced acquisitions
* Based on population
45
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COMPELLING STRATEGIC FRANCHISE
. CREATES SOUTHEAST FLORIDA'S 4TH LARGEST BANKING INSTITUTION
[GRAPH APPEARS HERE]
Miami Fort Lauderdale West Palm Beach
----- --------------- ---------------
AHM + GWF: 10% 14% 15%
Barnett: 13% 18% 15%
NationsBank: 13% 17% 10%
First Union: 18% 18% 16%
Population (000): 2,061 1,434 991
Deposits (billions): $34.5 $22.0 $17.1
Source: SNL Securities: as of 6/30/96 adjusted for announced acquisitions
* Based on population
46
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COMPELLING STRATEGIC FRANCHISE
. SIGNIFICANTLY INCREASES AHM'S MORTGAGE BANKING BUSINESS
- OVER $10 BILLION IN ANNUAL ORIGINATIONS, WITH $109 BILLION SERVICING
PORTFOLIO
- ENHANCES EFFICIENCY OF ORIGINATION AND DELIVERY SYSTEM
- LOW MARGINAL COST OF SERVICING
1996
Pro Forma
Rank
Single Family Originations
California 3rd
Florida 3rd
National 10th
Servicing 7th
47
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CRITICAL MASS IN 3 KEY STATES
TOTAL MAJOR MSAS
[GRAPH APPEARS HERE]
MSAs in CA,
TX, FL
-----------
Ahmanson Markets: 26
MSAs in WA,
OR, UT, ID, MT
--------------
WAMU's Non-CA Markets: 8
Notes: MSAs with over 100,000 households
Only includes MSAs where AHM or WAMU has a branch banking presence
48
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CRITICAL MASS IN 3 KEY STATES
TOTAL NON-FARM JOBS
[GRAPH APPEARS HERE]
(in millions)
CA TX FL
-- -- --
Ahmanson Markets: 13.0 8.4 6.3
Sum of WA, OR, UT, ID & MT
--------------------------
WAMU's Non-CA Markets: 5.8
Source: U.S. Bureau of Labor Statistics
Employment Growth by State - Feb 96 - Feb 97
49
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CRITICAL MASS IN 3 KEY STATES
NON-FARM JOB GROWTH
[GRAPH APPEARS HERE]
(in thousands)
CA TX FL
-- -- --
Ahmanson Markets: 365 204 201
Sum of WA, OR, UT, ID & MT
--------------------------
WAMU's Non-CA Markets: 193
Source: U.S. Bureau of Labor Statistics
Employment Growth by State - Feb 96 - Feb 97
50
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AHM OFFER LOW RISK
AHM offer remains predicated on a simple, proven formula:
Significant Cost Savings plus Accelerated Stock Repurchase
equals
Enhanced Shareholder Value:
1. Significant accretion
2. Accelerated EPS growth
51
AHMANSON'S MERGER BENEFITS
ASSUMPTIONS CONSERVATIVE
- -- PLUS AHM HAS THE IN-MARKET ADVANTAGE
[GRAPH APPEARS HERE]
(in millions)
Revenue Total Merger
Cost Savings Enhancements Benefits
------------ ------------ ------------
AHM: $454 $ 50 $504
WAMU: $340 $334 $674
52
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COST SAVINGS ADVANTAGE
CLEARLY BELONGS TO AHMANSON
SIGNIFICANT BRANCH OVERLAP ADVANTAGE
BRANCHES WITHIN 2 MILES
[GRAPH APPEARS HERE]
AHM -- overlap in
California and Florida: 224
WAMU -- overlap in
California only: 101
53
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
AHM+GWF COMBINATION CREATES
LARGER AND MORE EFFICIENT CA
FRANCHISE
[GRAPH APPEARS HERE]
NUMBER OF BRANCHES
------------------
--18% larger franchise
AHM + GWF 417
WAMU + GWF 354
DEPOSITS/BRANCH (a)
-------------------
(in millions)
--23% more efficient
AHM + GWF $120.4
WAMU + GWF $ 97.7
(a) After branch consolidations: AHM (180), WAMU (100)
54
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
AHM+GWF COMBINATION PROVIDES
SUPERIOR CA MARKET SHARE
[GRAPH APPEARS HERE]
TOTAL DEPOSITS
--------------
(in billions)
--45% larger base
AHM + GWF $50.2
WAMU + GWF $34.6
CA MARKET SHARE
---------------
--WAMU/GWF inferior #3 player
B OF A 21%
WELLS FARGO 15%
AHM + GWF 13%
WAMU + GWF 9%
55
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AHMANSON'S REVENUE
ENHANCEMENTS PRUDENT
WAMU'S ARE SUBSTANTIALLY
OVERSTATED
Assumed Incremental Revenue Enhancements
as a % of GWF Revenue Base/(a)/
[GRAPH APPEARS HERE]
% Revenue Enhancements
--- --------------------
AHM: 3% $ 50
WAMU: 19% $334
(a) Great Western Financial 1Q 1997 Total Revenues annualized
56
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AHMANSON'S ACQUISITION
EXPERIENCE MORE RELEVANT
AHM WAMU
----- ----
Total M&A Transactions/(a)/ 50 15
Total CA Acquisitions 25 1
Total CA Acquisitions Integrated 25 0
CA Bank Acquisitions 1 0
Total CA branches acquired 263 158
Total CA branches consolidated 131 0
(a) Includes acquisitions & divestitures since 1990
57
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AHMANSON'S PROVEN
INTEGRATION CAPABILITY
. AHMANSON ACCOMPLISHMENTS / CAPABILITIES
- 50 ACQUISITIONS OR DIVESTITURES IN THE LAST 5 YEARS
- SUCCESSFULLY INSTALLED, UPGRADED, OR CONVERTED OVER 18 SEPARATE SYSTEMS FOR
FI ACQUISITION
- SUCCESSFULLY CONVERTED FIRST INTERSTATE HOGAN SYSTEM TO AHMANSON IN-HOUSE
SYSTEM IN LESS THAN 6 MONTHS
- WAMU AND GWF ON RADICALLY DIFFERENT VERSIONS OF HOGAN, SO CONVERSION IS
COMPLEX AT BEST
- SAME LOAN SERVICING SYSTEM (CPI-ALLTEL) AS GWF AND WAMU
- SAME CONSUMER LOAN SERVICING SYSTEM (EDS) AS GWF
58
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
WAMU EXECUTION RISK
"PICK YOUR POISON"
. COST SAVES OVERSTATED
- ABILITY TO ACHIEVE $340MM IN EXPENSE REDUCTIONS
. REVENUE ENHANCEMENTS UNACHIEVABLE
- ABILITY TO ACHIEVE $334MM IN INCREMENTAL REVENUE
- CURRENT LENDING PROGRAMS BY WAMU INCONSISTENT WITH SPREAD CLAIMS
- COMBINATION OF AGGRESSIVE COST SAVES AND REVENUE ENHANCEMENTS IS
UNPRECEDENTED
. INTEREST RATE RISK EXPOSURE HIGH
- FIXED RATE LOANS
- WHOLESALE FUNDING
. QUADRUPLE SIZE OF COMPANY IN 1 YEAR
. LACK OF RELEVANT MANAGEMENT EXPERIENCE
. WAMU TRANSACTION STRUCTURE IS INFLEXIBLE - NO BUYBACK
59
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
COST SAVINGS OVERSTATED
. UNPRECEDENTED COST SAVES BY A WIDE MARGIN
- WHATEVER THE "COMPARABLE" BENCHMARK
. ASSUMES IN-MARKET COST SAVES FOR LARGELY A MARKET EXTENSION TRANSACTION
. PROJECTS 75% OF AHMANSON'S COST SAVES DESPITE HAVING LESS THAN ONE-HALF THE
BRANCH OVERLAP
. AND WITHOUT THE SOUTHERN CALIFORNIA HEADQUARTERS OVERLAP
60
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
WAMU COST SAVINGS OVERSTATED
. WAMU'S PROJECTIONS ARE SIGNIFICANTLY OVERSTATED IF COST SAVINGS ARE
NORMALIZED TO COMPARABLE TRANSACTIONS
- MARKET EXTENSION MERGERS (SEE APPENDIX)
== COST SAVINGS OVERSTATED BY $170 MILLION
- IN-MARKET MERGERS (SEE APPENDIX)
== COST SAVINGS OVERSTATED BY $107 MILLION
61
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WAMU'S REVENUE ENHANCEMENTS
ARE UNACHIEVABLE
NET INTEREST INCOME INCREASES OF $246MM OVERSTATED
. Majority of loan assets targeted for portfolio retention are low return
- Fixed rate loan spreads only 1.15% /(a)/
- COFI loan spreads only 1.35% /(a)/
- Not 1.66% or 1.73% assumed in WAMU pro formas
- 84% of WAMU's 1Q 1997 originations were fixed or COFI
. Retention of loans originated but previously sold is flawed
- Over 80% are fixed rate loans
== Low returns if fully hedged
== High interest rate exposure
. What happens to WAMU's servicing income & gains on sale ?
(a) Pre-tax - from WAMU's 4/10/97 Investor Package
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LOAN GROWTH UNACHIEVABLE
$ %
(billions of dollars) 1Q/96 1Q/97 Change Change
------------------------------------
Old WAMU $1.7 $2.0 $0.3 18
American 1.3 1.5 0.2 15
------------------------------------
New WAMU $3.0 $3.5 $0.5 17
- ------------------------------------------------
GWF 2.2
- ------------------------------------------------
Pro Forma WAMU $5.7
- ------------------------------------------------
Proposed Q4/97 Change $3.1
- ------------------------------------------------
Proposed Q4/97 $8.8
- ------------------------------------------------
% Increase 54%
- ------------------------------------------------
. $3.1B is "over and above" what WAMU/GWF could do on their own
. 1Q of ASB experience far short of that reality
. Higher interest rates will slow originations
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WAMU ASSUMED FEE INCOME
GROWTH UNACHIEVABLE
[GRAPH APPEARS HERE]
1997 to 1998 Growth
-------------------
GWF 9%*
GWF + Enhancements 28%
WAMU 13%*
WAMU + GWF 11%*
WAMU + GWF + Enhancements 21%
- - HOW CAN WAMU ACHIEVE FEE PROJECTIONS WITH "TOTALLY FREE CHECKING" PRODUCTS
AND OTHER FEE CONCESSIONS ?
- - WHERE ARE THE EXPENSES ASSOCIATED WITH THE FEE ENHANCEMENTS ?
* LEHMAN BROTHERS RESEARCH REPORTS DATED JAN. 6, 1997 FOR WAMU AND JAN. 3, 1997
FOR GWF
64
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
WAMU MERGER CREATES HIGHER
INTEREST RATE EXPOSURE
WAMU'S RELIANCE ON LOAN ORIGINATION/RETENTION WILL ONLY SERVE TO
FURTHER EXACERBATE WAMU'S EXPOSURE:
. Balance sheet growth has been and will be funded by wholesale borrowings
. More than doubling of originations required will greatly increase exposure to
fixed rate loans
. WAMU's prior experience in managing interest rate risk was less than stellar
for the 12 months following the Pacific First merger
. WAMU cannot use share repurchases as a low risk use of excess capital, given
pooling of interest accounting treatment
BY CONTRAST, AHM'S MERGER BENEFITS ARE NOT THREATENED BY FLUCTUATIONS IN
INTEREST RATES:
. Accretion primarily predicated upon cost savings and share repurchases
. AHM maintains the flexibility of investing capital as opportunities arise
. AHM in best quintile of peer group for interest rate sensitivity
-- AHM/GWF=LESS INTEREST RATE RISK
65
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
INTEREST RATE RISK/(1)/
[GRAPH APPEARS HERE]
--AHM holds less fixed rate assets in portfolio
FIXED RATE/TOTAL LOANS
----------------------
AHM: 5%
WAMU: 24%
--AHM less reliant on wholesale funding
WHOLESALE FUNDING/INTEREST BEARING LIABILITIES
----------------------------------------------
AHM: 24%
WAMU: 43%
(1) As of 3/31/97
66
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
WHOLESALE BORROWINGS
1Q 1997 CHANGE
- -- WAMU funding loan growth with interest rate sensitive wholesale borrowings
[GRAPH APPEARS HERE]
(in billions)
AHM: ($ 0.9)
WAMU: $ 1.1
67
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
AHMANSON'S MANAGEMENT HAS MORE
RELEVANT EXPERIENCE FOR GWF MERGER
Bank or
Consumer
Total Finance
H.F. Ahmanson Position Experience Experience
--------------------- -------------------------------------------- ---------- ----------
Charles Rinehart Chairman & CEO 28 7
Bruce Willison President & COO 24 23
Kevin Twomey Senior EVP & CFO 28 9
Madeleine Kleiner Senior EVP, General Counsel & Secretary 20 18/(1)/
Anne-Drue Anderson EVP, Treasurer & Director of Marketing 12 4
Carl Forsythe EVP, Director of Personal Financial Services 16 12
Nancy Markle EVP, Chief Information Officer 30 4/(2)/
Jan Cloyde EVP, Director of Banking Services 23 22
Will Barrett EVP, Director of Consumer Lending 30 24
Bob McAuslan Chief Credit Officer 24 23
----------
- -- By contrast, WAMU's executive management has no consumer finance
--
experience, and virtually no bank experience.
--
(1) Includes 18 years of financial institutions practice at a major law firm.
(2) Includes 3 years at a GSE working substantially with banks.
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RELEVANT MANAGEMENT EXPERTISE
WAMU AHM
------- -----
California market experience Limited Yes
Florida market experience No Yes
California credit cycle knowledge Limited Yes
Consumer finance expertise No Yes
Relevant asset / liability experience No Yes
Local executive management No Yes
69
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INTEGRATION RISK
HOW FAR IS TOO FAR?
---
IRWINDALE TO CHATSWORTH = 48 MILES
SEATTLE TO CHATSWORTH = 1,124 MILES
[GRAPH APPEARS HERE]
[MAP OF UNITED STATES SHOWING DISTANCE OF SEATTLE
TO CHATSWORTH AND IRWINDALE TO CHATSWORTH ALSO
MINNEAPOLIS TO NEW YORK 1,233 MILES
LITTLE ROCK TO NEW YORK 1,219 MILES
ATLANTA TO NEW YORK 870 MILES]
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WAMU'S UNPRECEDENTED GROWTH
CREATES SIGNIFICANT RISK
WAMU proposes to more than quadruple in asset size in less than 12 months:
. Has more than doubled balance sheet with out of market assets
. Projected cost savings at GWF and ASB equal to 52% of WAMU's operating
expenses in 1996
(Dollars in Billions)
-----------------------------------------------------------
WAMU
WAMU WAMU Pro Forma %
9/30/96 3/31/97 for GWF Change
-----------------------------------------------------------
Offices 317 500 916 189%
Deposits $11 $24 $52 373%
Assets 22 46 89 305%
-----------------------------------------------------------
71
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WAMU'S TRANSACTION
STRUCTURE IS HIGHLY INFLEXIBLE
WAMU'S TRANSACTION LEAVES NO MARGIN FOR ERROR:
. INABILITY TO PROFITABLY REDIRECT CAPITAL IN THE EVENT THAT LOAN GROWTH
PROJECTIONS ARE EVEN LESS ACHIEVABLE IN A RISING RATE ENVIRONMENT
. INABILITY TO OPTIMIZE THE EFFICIENCY OF THEIR CAPITAL STRUCTURE WITH
PREFERRED IN PLACE OF COMMON
. WILL BE RESTRICTED FROM DIVESTING MATERIAL ASSETS FOR 2 YEARS
- ARISTAR
- FLORIDA
72
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
A COMPELLING INVESTMENT
. CLEAR LOW RISK PATH TO FUNDAMENTAL OPERATING IMPROVEMENT EXISTS
. AHM ATTRACTIVELY PRICED, WITH OR WITHOUT GWF
. MARKETPLACE DOES NOT APPEAR TO FULLY REFLECT:
- REDUCTION IN CREDIT COSTS
- SHARE REPURCHASES
- GROWING POWER OF NEW CAPABILITIES ON OPERATING EARNINGS
73
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CLEAR PATH TO OPERATING
EARNINGS IMPROVEMENT EXISTS
CONTINUED REDUCTION IN CREDIT COST WOULD SIGNIFICANTLY IMPROVE EPS
. In addition, significant excess capital will be generated and can be
potentially used for share repurchases in 1997 and 1998
Annualized Credit Costs
-----------------------------------------------------
Street
Estimate 40 bps 30 bps 20 bps
--------------------------------------------------------------------------------------------------------------------
(Implied) Net Income $382MM $382MM $410MM $437MM
(Implied) Cash EPS /(1)/ $3.35 $3.35 $3.59 $3.84
(Implied) Cash ROE 17.2% 17.2% 18.5 19.7
(1) Compares to street consensus cash estimates of $3.35 in 1997
We have assumed that Street Estimate credit costs are 40 bps.
74
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AHM - AN ATTRACTIVELY PRICED
INVESTMENT
APPLYING MARKET P/E MULTIPLES TO AHM'S ADJUSTED CASH EPS
YIELDS VALUES SIGNIFICANTLY IN EXCESS OF CURRENT MARKET PRICE:
- -----------------------------------------------------------------------------------------------------
Street Peer Group Implied Stock Premium to
Estimate /(1)/ 1997E P/E Price Market
- -----------------------------------------------------------------------------------------------------
Cash EPS $3.35 12.0X $40.25 13%
Adjusted for Credit Costs:
40 bps $3.35 12.0X $40.28 13%
30 bps $3.59 12.0X $43.18 22%
20 bps $3.84 12.0X $46.08 30%
- -----------------------------------------------------------------------------------------------------
(1) Assumes consensus estimates are based upon projected credit costs of 40 bps.
(2) Based on closing prices of 4/25/97. Peer Group includes: BVFS, TCB, GWF,
WAMU and COFI
75
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AHMANSON - AN ATTRACTIVELY
PRICED INVESTMENT
Assuming AHM were to trade in line with its peers, analysis
implies a market price of between $41.38 and $45.67 per share:
[GRAPH APPEARS HERE]
ROE BVFS GWF AHM COFI WAMU TCB Price/Tangible Book
10.00% 1.58
11.00% 1.67
11.50% 1.72
12.00% 1.76
13.00% 1.84
14.00% 1.93
14.71% 1.98
15.00% 2.02
16.00% 2.11
17.00% 2.20
17.70% 1.92
18.00% 2.29
19.00% 2.38
19.26% 2.39
20.00% 2.46
20.30% 1.92
20.66% 2.54
21.00% 2.55
22.00% 2.64
22.99% 2.72
23.00% 2.73
24.00% 2.82
76
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AHM - SUCCESSFUL ACQUISITION
OF GWF A BONUS
REALIZING THE ACCRETION FROM A GWF TRANSACTION WOULD ONLY BE
ICING ON THE CAKE FOR AHM'S SHAREHOLDERS
AVG 1998 Implied
P/E Mult for Implied Stock Premium to
Street Estimates Peer Group Price Market
- -------------------------------------------------------------------------------------------------
Current Consensus Estimate
1998 $3.94 10.4x $40.81 15%
Pro Forma GWF Deal
1998 $4.10/(1)/ 10.4x $42.47 20%
- ------------------------------------------------------------------------------------------------
(1) Based upon 1.20x exchange ratio
77
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APPENDIX
78
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WAMU/GWF IS PRINCIPALLY A
MARKET EXTENSION MERGER
Projected
Transaction Cost Saves
- -------------------------------- ----------
US Bancorp / West One 23%
First Union / First Fidelity 18%
First Chicago / NBD 15%
Boatmens / Fourth Financial 24%
National City / Integra 21%
Charter One / First Fed 21%
WAMU / American Savings 20%
First Bank System / First Interstate 22%
----------
Average 20%
- -----------------------------------------------------------
Projected Cost Savings:
As a % of GWF's total expenses 38%
As a % of Average 190%
- -----------------------------------------------------------
79
[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
COMPARISON TO IN-MARKET
DEALS OVERSTATED
Projected
Transaction Cost Saves
- -------------------------------- ----------
Fleet / Shawmut 44%
PNC / Midlantic 30%
Chemical / Chase 40%
UJB / Summit 48%
CoreStates / Meridian 35%
Mercantile / Roosevelt 37%
Wells / First Interstate 46%
Bank of Boston / Baybanks 39%
----------
Average 40%
- ------------------------------------------------------
Projected cost savings:
As a % of GWF's CA expenses 58%
As a % of Average 145%
- ------------------------------------------------------
80
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AHM/HOME SAVINGS SENIOR MANAGERS
Years at
Name Position AHM/HSA Prior Bank and Non-Bank Experience
- ---- -------- ------- ----------------------------------
Charles Rinehart Chairman & CEO 7 7 years at a major consumer finance company
including 5 years as president; 14 years in
various positions at a major insurance company
Bruce Willison President & COO 1 23 years at a major commercial bank, including
10 years as a commercial bank CEO
Kevin Twomey Sr. Exec. Vice President & CFO 4 4 years as CFO of a large thrift; 9 years in
various financial positions at large regional
commercial banks
Madeleine Kleiner Sr. Exec. Vice President, General 2 18 years at a large L.A. law firm working in
Counsel & Secretary and Chief the financial institutions practice, partner
Administrative Officer for 12 years
Anne-Drue Anderson EVP, Treasurer & Director of Marketing 4 4 years of commercial banking, 4 years at a
large thrift
Carl Forsythe EVP, Personal Financial Services 1.5 9 years at large regional and major commercial
banks, 4 years thrift experience and 3 years at
a Big Three automotive company in finance
positions
Nancy Markle EVP, CIO 3 4 years bank and GSE experience, 23 years of
information technology experience in various
industries
Jan Cloyde EVP, Director of Banking Services 1 22 years of commercial banking
Will Barrett EVP, Director of Consumer Lending 6 24 years of consumer lending
Bob McAuslan Chief Credit Officer .5 23 years of commercial banking
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[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
SHARES OF GREAT WESTERN FINANCIAL CORPORATION ("GWF") COMMON STOCK HELD BY H. F.
AHMANSON & COMPANY ("AHMANSON"), ITS DIRECTORS AND EXECUTIVE OFFICERS AND
CERTAIN EMPLOYEES, OTHER REPRESENTATIVES OF AHMANSON AND CERTAIN OTHER PERSONS
WHO MAY SOLICIT PROXIES OR CONSENTS, AND CERTAIN TRANSACTIONS BETWEEN ANY OF
THEM AND GWF
Ahmanson and certain other persons named below may solicit proxies (a) to elect
three nominees and one or more alternate nominees (the "Nominees") as directors
of GWF at the annual meeting of stockholders of GWF to be held on a date to be
announced (the "Annual Meeting") and (b) in favor of the adoption at the Annual
Meeting of a non-binding stockholder resolution and seven proposals to amend the
By-laws of GWF. Ahmanson and certain other persons named below are also
soliciting consents from stockholders of GWF to approve proposals, without a
stockholders' meeting, to adopt non-binding resolutions of stockholders and
amendments to the By-laws of GWF. The participants in this solicitation may
include Ahmanson; the directors of Ahmanson (Byron Allumbaugh, Harold A. Black,
Richard M. Bressler, David R. Carpenter, Phillip D. Matthews, Richard L. Nolan,
Delia M. Reyes, Charles R. Rinehart, Frank M. Sanchez, Elizabeth A. Sanders,
Arthur W. Schmutz, William D. Schulte, and Bruce G. Willison); the following
executive officers and employees of Ahmanson or its subsidiaries: Kevin M.
Twomey (Senior Executive Vice President and Chief Financial Officer), Madeleine
A. Kleiner (Senior Executive Vice President, Chief Administrative Officer and
General Counsel), Anne-Drue M. Anderson (Executive Vice President and
Treasurer), Tim S. Glassett (First Vice President and Assistant General
Counsel), Linda McCall (Senior Vice President and Director of Corporate Taxes),
Stephen A. Swartz (Senior Vice President and Director of Investor Relations),
Barbara Timmer (Senior Vice President and Director of Government and Legislative
Affairs), Mary A. Trigg (Senior Vice President and Director of Public
Relations), Eric Warmstein (Senior Vice President and Director of Corporate
Development), Samantha Davies (Vice President of Public Relations), Adrian
Rodriguez (Vice President of Public Relations), and Peter Bennett (Assistant
Vice President of Public Relations); and the following Nominees: Lawrence A. Del
Santo, Robert T. Gelber, Wolfgang Schoellkopf, Hugh M. Grant and John E. Merow.
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[LOGO OF H. F. AHMANSON & COMPANY] [LOGO OF HOME SAVINGS OF AMERICA]
As of April 25, 1997, Ahmanson is the beneficial owner of 3,550,500
shares of GWF Common Stock. Other than Mr. Gelber, who owns 332 shares of GWF
Common Stock, none of the Nominees is the beneficial owner of any GWF Common
Stock.
Other than set forth herein, as of April 25, 1997, neither Ahmanson nor
any of its directors, executive officers or other representatives or employees
of Ahmanson, any Nominees or other persons known to Ahmanson, who may solicit
proxies has any security holdings in GWF. Ahmanson disclaims beneficial
ownership of any securities of GWF held by any pension plan or other employee
benefit plan of Ahmanson or by any affiliate of Ahmanson. Ahmanson further
disclaims beneficial ownership of any securities of GWF held by Ahmanson or any
of its subsidiaries for the benefit of third parties or in customer or fiduciary
accounts in the ordinary course of business.
Although Credit Suisse First Boston Corporation ("CSFB") and Montgomery
Securities ("Montgomery"), financial advisors to Ahmanson, do not admit that
they or any of their directors, officers, employees or affiliates are a
"participant," as defined in Schedule 14A promulgated under the Securities
Exchange Act of 1934 by the Securities and Exchange Commission, or that such
Schedule 14A requires the disclosure of certain information concerning CSFB or
Montgomery, CSFB and Montgomery may assist Ahmanson in such a solicitation. Each
of CSFB and Montgomery engages in a full range of investment banking, securities
trading, market-making and brokerage services for institutional and individual
clients. In the normal course of their respective businesses, each of CSFB and
Montgomery may trade securities of GWF for their own account and the account of
their customers and, accordingly, may at any time hold a long or short position
in such securities. As of April 24, 1997, CSFB held a net long position of 5,443
shares of GWF common stock and Montgomery held no shares of GWF common stock.
Except as disclosed above, to the knowledge of Ahmanson, none of
Ahmanson, the directors or executive officers of Ahmanson, the employees or
other representatives of Ahmanson who may participate in this solicitation or
the Nominees named above has any interest, direct or indirect, by security
holdings or otherwise, in GWF.
83