EXHIBIT 99.1
Golden West Financial Reports
All-Time High Earnings and Loan Originations
OAKLAND, Calif.--(BUSINESS WIRE)--July 20, 2004--Golden West
Financial Corporation (NYSE:GDW), parent of World Savings Bank,
announced record diluted earnings per share of $2.04 in the second
quarter, up 16% from the $1.76 reported during the same period in
2003. Per share profits for the first half of 2004 reached $3.98, a
16% increase from the $3.43 posted in the first six months of 2003.
The Company also announced record loan originations of $12.4
billion in the second quarter, up 55% from the $8.0 billion reported
one year earlier. For the first six months of 2004, new mortgage
volume totaled $21.8 billion, a 46% increase from the $15.0 billion
recorded in the first half of 2003.
Starting with a discussion of the Company's rapid loan growth,
Marion Sandler, Chairman of the Board and Chief Executive Officer,
said, "As usual, the popularity of our primary product, the monthly
adjustable rate mortgage or ARM, is influenced by what's happening
with fixed-rate mortgages, which are the borrowers' major alternative.
While the cost of fixed-rate loans jumped up in the second quarter,
interest rates on ARMs remained low and stable. Our lending team took
advantage of this favorable environment and produced record new
volume." Sandler added, "The dramatic increase in Golden West's loan
originations is noteworthy because it is in stark contrast to the rest
of the U.S. mortgage market, which based on early indications, is
experiencing a significant decline."
Continuing, Sandler remarked, "The Company's mortgage portfolio
has increased substantially this year, since our record loan volume
far exceeded the payoffs of existing mortgages." Golden West's loan
balances grew $6.0 billion, or at a 29% annualized rate, in the second
quarter, and increased $10.8 billion, or at a 28% annualized rate,
during the first six months of the year. Sandler added, "This sizable
growth is significant because an expanding mortgage portfolio, which
is our major earning asset, is the key contributor to increasing
profits."
Wrapping up her comments on the Company's lending results, Sandler
stated, "It is important to note that during the second quarter 99% of
Golden West's new originations consisted of monthly adjustable rate
loans, up from 91% a year ago. ARMs are a wonderful product. They have
many consumer benefits, including payment flexibility, and are
desirable from the Company's point of view as well, because
adjustables help limit earnings exposure to rising interest rates."
Discussing other factors related to the Company's profits, Sandler
pointed out, "Some of the benefit we enjoyed from the increased size
of our loan portfolio was offset by a decline in our primary spread,
which is the difference between what we earn on our loans and other
assets and what we pay for savings and borrowings. As market interest
rates started to move up this past quarter in anticipation of the June
Federal Funds rate increase by the Federal Reserve, our spread
experienced some compression." In the second quarter, Golden West's
spread averaged 2.86%, down from 2.98% one year earlier.
Covering a final earnings related subject, Sandler commented on
the Company's general and administrative expenses (G&A). She noted,
"Total G&A was up 17% from the second quarter of last year. As you
would expect, a large portion of this spending increase supported our
record loan volume. In addition, we continued to invest in people and
technology to ensure we have the resources to take advantage of growth
opportunities." Sandler added, "Despite the rise in expenses, our G&A
ratio improved from the second quarter last year due to the Company's
strong asset growth, and our numbers remained among the lowest in the
financial services industry." Golden West's ratio of G&A to average
assets was .93% in the second quarter of 2004, compared to .99% one
year earlier.
Switching to the topic of credit risk, Sandler explained, "The
Company's history of impressive loan quality continued in the second
quarter. A key measurement of the success of our risk management is
the ratio of nonperforming assets and troubled debt restructured to
total assets." At June 30, 2004 Golden West's ratio was .41%, down
from just .62% one year earlier. "As our low percentage indicates, we
remain committed to originating high-quality mortgages to minimize
credit risk."
In other second quarter news, Golden West reported retail deposit
growth of $1.2 billion, up from $882 million one year earlier. For the
first six months of 2004, savings inflows amounted to $1.9 billion,
compared to $3.3 billion in the first half of 2003. Commenting on
these results, Sandler stated, "In the second quarter the Company
posted solid deposit growth as customers responded favorably to our
featured products. For the first six months of 2004, however, total
deposit growth was down compared to last year, primarily because of
the exceptionally strong inflows experienced in the first three months
of 2003."
Finally, the Company reported that for the second consecutive
quarter World Savings Bank, Golden West's primary operating
subsidiary, brought to market $1.0 billion of long-term senior debt.
Sandler observed, "This borrowing provides an important source of
funds to support the growth of our loan portfolio. We were able to
issue debt at favorable price levels because of our high credit
ratings, Aa3 and AA- by Moody's Investors Services and Standard and
Poor's, respectively, which are among the highest for any financial
institution."
Headquartered in Oakland, California, Golden West is one of the
nation's largest financial institutions with assets over $90 billion
as of June 30, 2004. The Company has one of the most extensive thrift
branch systems in the country, with 274 savings branches in 10 states
and lending operations in 38 states. Golden West's stock is listed on
the New York Stock and Pacific Exchanges under the ticker symbol GDW.
Options on the Company's stock are traded on the Chicago Board Options
Exchange and on the Pacific Exchange.
Golden West investor information is available at www.gdw.com.
Information about the Company's home loans and savings and checking
accounts can be found at www.worldsavings.com and about its
proprietary no-load mutual funds and annuities at www.atlasfunds.com.
Information in this Press Release may contain various
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements
include projections, statements of the plans and objectives of
management for future operations, statements of future economic
performance, assumptions underlying these statements and other
statements that are not statements of historical facts.
Forward-looking statements are subject to significant business,
economic and competitive risks, uncertainties and contingencies, many
of which are beyond Golden West's control. Should one or more of these
risks, uncertainties or contingencies materialize, or should
underlying assumptions prove incorrect, actual results may vary
materially from those anticipated. Among the key risk factors that may
have a direct bearing on Golden West's results of operations and
financial condition are competitive practices in the financial
services industries; operational and systems risks; general economic
and capital market conditions, including fluctuations in interest
rates; economic conditions in certain geographic areas; and the impact
of current and future laws, governmental regulations, and accounting
and other rulings and guidelines affecting the financial services
industry in general and Golden West's operations in particular. In
addition, actual results may differ materially from the results
discussed in any forward-looking statements.
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF NET EARNINGS
AND OTHER FINANCIAL DATA
(Unaudited)
(Dollars in thousands except per share figures)
Three Months Ended Six Months Ended
June 30 June 30
------------------------- -------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Interest Income
Interest on
loans $931,645 $781,855 $1,810,461 $1,555,684
Interest on
mortgage-backed
securities 32,058 67,939 75,735 146,854
Interest and
dividends on
investments 14,029 21,529 31,293 46,219
------------ ------------ ------------ ------------
977,732 871,323 1,917,489 1,748,757
Interest Expense
Interest on
deposits 219,454 236,128 435,354 486,230
Interest on
advances 82,944 69,715 155,982 139,656
Interest on
repurchase
agreements 8,718 13 15,640 1,282
Interest on
other
borrowings 23,930 23,846 48,573 51,227
------------ ------------ ------------ ------------
335,046 329,702 655,549 678,395
------------ ------------ ------------ ------------
Net Interest
Income 642,686 541,621 1,261,940 1,070,362
Provision for loan
losses 392 3,501 633 7,980
------------ ------------ ------------ ------------
Net Interest
Income after
Provision for
Loan Losses 642,294 538,120 1,261,307 1,062,382
Noninterest Income
Fees 56,635 41,920 97,309 76,431
Gain on the sale
of securities,
MBS and loans 6,291 21,192 9,253 36,515
Change in fair
value of
derivatives 59 2,793 1,141 5,646
Other 18,162 17,025 33,251 31,400
------------ ------------ ------------ ------------
81,147 82,930 140,954 149,992
Noninterest
Expense
General and
administrative:
Personnel 137,305 110,688 268,303 215,684
Occupancy 20,744 18,988 41,138 37,477
Technology and
telecom-
munications 19,283 20,055 40,302 40,959
Deposit
insurance 1,790 1,652 3,560 3,273
Advertising 5,223 5,314 10,479 11,291
Other 23,188 20,483 43,265 38,206
------------ ------------ ------------ ------------
207,533 177,180 407,047 346,890
Earnings before
Taxes on Income 515,908 443,870 995,214 865,484
Taxes on Income 199,190 171,397 378,772 332,946
------------ ------------ ------------ ------------
Net Earnings $316,718 $272,473 $616,442 $532,538
============ ============ ============ ============
Basic Earnings Per
Share $2.07 $1.79 $4.04 $3.48
============ ============ ============ ============
Diluted Earnings
Per Share $2.04 $1.76 $3.98 $3.43
============ ============ ============ ============
Average common
shares
outstanding 152,652,032 152,582,771 152,462,835 152,963,162
Average diluted
common shares
outstanding 155,213,548 155,091,780 155,041,181 155,424,954
Ratios: (a)
Net earnings /
average
stockholders'
equity 19.79% 20.50% 19.72% 20.40%
Net earnings /
average assets 1.41% 1.53% 1.42% 1.51%
Net interest
margin (b) 2.91% 3.13% 2.94% 3.13%
General and
administrative
expense /
average assets .93% .99% .94% .99%
Efficiency ratio (c) 28.67% 28.37% 29.01% 28.43%
(a) Ratios are annualized by multiplying the quarterly computation by
four and the semi-annual computations by two. Averages are
computed by adding the beginning balances and each monthend
balance during the quarter and six month period and dividing by
four and seven, respectively.
(b) Net interest margin is net interest income divided by average
earning assets.
(c) Efficiency ratio is general and administrative expense divided by
the sum of net interest income and noninterest income.
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
AND OTHER FINANCIAL DATA
(Unaudited)
(Dollars in thousands except per share figures)
Jun. 30 Mar. 31 Dec. 31
2004 2004 2003
------------ ------------ ------------
ASSETS
Cash $296,330 $248,710 $260,823
Securities available for sale
at fair value 1,539,885 1,123,463 1,879,443
Purchased mortgage-backed
securities available for
sale at fair value 18,401 19,895 22,071
Purchased mortgage-backed
securities held to maturity
at cost 411,881 437,580 433,319
Mortgage-backed securities
with recourse held to
maturity at cost (a) 2,083,852 2,342,210 3,650,048
Loans held for sale 107,692 157,666 124,917
Loans held in portfolio less
allowance for loan losses
(a) 86,471,707 80,121,686 74,080,661
------------ ------------ ------------
Total Loans Receivable and
Mortgage-Backed Securities 89,093,533 83,079,037 78,311,016
Interest earned but
uncollected 203,145 191,475 183,761
Investment in capital stock
of Federal Home Loan Banks
at cost which approximates
fair value 1,318,642 1,203,589 1,152,339
Foreclosed real estate 9,885 13,348 13,904
Premises and equipment, net 376,501 367,579 360,327
Other assets 320,381 377,570 388,277
------------ ------------ ------------
$93,158,302 $86,604,771 $82,549,890
============ ============ ============
LIABILITIES and
STOCKHOLDERS' EQUITY
Deposits $48,611,353 $47,383,623 $46,726,965
Advances from Federal Home
Loan Banks 28,712,498 24,805,930 22,000,234
Securities sold under
agreements to repurchase 3,470,761 2,672,049 3,021,385
Federal funds purchased 0 0 0
Bank notes 1,786,668 2,504,917 3,015,854
Senior debt 2,989,726 1,989,944 991,257
Subordinated notes 0 0 0
Taxes on income 587,357 627,431 561,406
Other liabilities 434,178 377,018 285,521
Stockholders' equity 6,565,761 6,243,859 5,947,268
------------ ------------ ------------
$93,158,302 $86,604,771 $82,549,890
============ ============ ============
Book value per common share $42.98 $40.95 $39.10
Common shares outstanding 152,749,211 152,492,139 152,119,108
Sep. 30 Jun. 30
2003 2003
------------ ------------
ASSETS
Cash $219,000 $267,960
Securities available for sale at fair
value 950,329 604,998
Purchased mortgage-backed securities
available for sale at fair value 24,824 27,524
Purchased mortgage-backed securities
held to maturity at cost 425,741 106,098
Mortgage-backed securities with recourse
held to maturity at cost (a) 4,078,140 4,667,649
Loans held for sale 324,297 502,308
Loans held in portfolio less allowance for
loan losses (a) 68,096,299 63,991,745
------------ ------------
Total Loans Receivable and Mortgage-
Backed Securities 72,949,301 69,295,324
Interest earned but uncollected 179,091 198,639
Investment in capital stock of Federal
Home Loan Banks at cost which
approximates fair value 1,142,582 1,132,714
Foreclosed real estate 16,838 11,027
Premises and equipment, net 355,955 355,042
Other assets 344,744 332,321
------------ ------------
$76,157,840 $72,198,025
============ ============
LIABILITIES and
STOCKHOLDERS' EQUITY
Deposits $46,145,048 $44,385,717
Advances from Federal Home Loan Banks 19,689,871 19,927,189
Securities sold under agreements to
repurchase 721,639 21,247
Federal funds purchased 300,000 265,000
Bank notes 1,489,946 99,990
Senior debt 990,862 990,467
Subordinated notes 200,000 199,955
Taxes on income 580,969 533,122
Other liabilities 404,258 363,584
Stockholders' equity 5,635,247 5,411,754
------------ ------------
$76,157,840 $72,198,025
============ ============
Book value per common share $37.10 $35.50
Common shares outstanding 151,900,958 152,451,133
(a) During the first quarter of 2004, the Company desecuritized $1
billion of Mortgage-backed securities with recourse held to
maturity and the underlying loans were transferred to the loan
portfolio.
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands except per share figures)
For the Quarter Ended
--------------------------------------
Jun. 30 Mar. 31 Dec. 31
2004 2004 2003
------------ ------------ ------------
Net interest income $642,686 $619,254 $584,692
Provision for loan losses 392 241 1,802
Noninterest income 81,147 59,807 72,598
Noninterest expense 207,533 199,514 192,572
------------ ------------ ------------
Earnings before taxes on income 515,908 479,306 462,916
Taxes on income (a) 199,190 179,582 172,261
------------ ------------ ------------
Net earnings $316,718 $299,724 $290,655
============ ============ ============
Basic EPS $2.07 $1.97 $1.91
Diluted EPS $2.04 $1.93 $1.88
Average common shares
outstanding 152,652,032 152,273,637 152,001,578
Average diluted common shares
outstanding 155,213,548 155,040,581 154,830,609
Number of shares repurchased
and retired 0 0 0
Cost of shares repurchased $0 $0 $0
Remaining number of shares
authorized for repurchase 9,328,179 9,328,179 9,328,179
Ratios: (b)
Net earnings / average
stockholders' equity (ROE) 19.79% 19.65% 20.09%
Net earnings / average assets
(ROA) 1.41% 1.42% 1.47%
Net interest margin (c) 2.91% 2.99% 3.01%
General and administrative
expense / average assets .93% .95% .97%
Efficiency ratio (d) 28.67% 29.38% 29.30%
Loan loss reserve $289,996 $289,351 $289,937
Net loan chargeoffs
(recoveries) $(253) $827 $814
Stockholders' equity / total
assets 7.05% 7.21% 7.20%
Total deposit net activity $1,227,730 $656,658 $581,917
For the Quarter Ended
-------------------------
Sep. 30 Jun. 30
2003 2003
------------ ------------
Net interest income $553,330 $541,621
Provision for loan losses 2,082 3,501
Noninterest income 90,740 82,930
Noninterest expense 181,053 177,180
------------ ------------
Earnings before taxes on income 460,935 443,870
Taxes on income (a) 178,029 171,397
------------ ------------
Net earnings $282,906 $272,473
============ ============
Basic EPS $1.86 $1.79
Diluted EPS $1.83 $1.76
Average common shares outstanding 152,180,798 152,582,771
Average diluted common shares outstanding 154,810,821 155,091,780
Number of shares repurchased and retired 630,000 486,975
Cost of shares repurchased $53,407 $37,086
Remaining number of shares authorized for
repurchase 9,328,179 9,958,179
Ratios: (b)
Net earnings / average stockholders'
equity (ROE) 20.48% 20.50%
Net earnings / average assets (ROA) 1.53% 1.53%
Net interest margin (c) 3.07% 3.13%
General and administrative expense /
average assets .98% .99%
Efficiency ratio (d) 28.11% 28.37%
Loan loss reserve $288,949 $287,868
Net loan chargeoffs (recoveries) $1,001 $306
Stockholders' equity / total assets 7.40% 7.50%
Total deposit net activity $1,759,331 $882,482
(a) From quarter to quarter, the effective tax rate may fluctuate due
to changes in the volume of business activity in the various
states where we operate.
(b) Ratios are annualized by multiplying the quarterly computation by
four. Averages are computed by adding the beginning balance and
each monthend balance during the quarter and dividing by four.
(c) Net interest margin is net interest income divided by average
earning assets.
(d) Efficiency ratio is general and administrative expense divided by
the sum of net interest income and noninterest income.
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
OTHER FINANCIAL DATA
(Unaudited)
(Dollars in thousands)
For the Quarter Ended
--------------------------------------
Jun. 30 Mar. 31 Dec. 31
2004 2004 2003
------------ ------------ ------------
AVERAGE BALANCES (a)
Cash and investments $1,650,596 $1,641,994 $1,409,734
Loans receivable and
mortgage-backed securities 85,818,380 80,498,053 75,544,443
Investment in capital stock
of Federal Home Loan Banks 1,245,010 1,165,153 1,146,948
Deposits 47,798,007 47,029,050 46,448,866
Advances from Federal Home
Loan Banks 26,735,540 23,231,041 20,642,344
Securities sold under
agreements to repurchase 3,021,646 2,558,780 1,921,788
Other borrowings 4,654,051 4,351,662 3,219,452
Stockholders' equity 6,401,862 6,100,369 5,787,207
Total Average Assets 89,649,483 84,252,424 79,029,081
Average Earning Assets 88,389,797 82,963,346 77,773,138
Average Interest-Bearing
Liabilities 82,209,244 77,170,533 72,232,450
LOAN BALANCE AND ACTIVITY
Loans receivable and
mortgage-backed securities $89,093,533 $83,079,037 $78,311,016
Adjustable rate loans
receivable and mortgage-
backed securities 85,731,774 79,889,765 75,238,723
New real estate loans
originated $12,439,588 $9,393,862 $10,905,670
New adjustable rate mortgages
as a percentage of new real
estate loans originated 99% 98% 98%
New refinanced mortgages as a
percentage of new real
estate loans originated 71% 72% 70%
LOANS SOLD AND SERVICED DATA
Loan sales $224,874 $131,589 $401,091
Loans serviced for others 5,095,475 5,438,165 5,764,986
Balance of capitalized
mortgage servicing rights 76,217 82,503 88,967
NONPERFORMING ASSETS
Loans and MBS 90 days or more
past due $368,502 $399,904 $410,064
Foreclosed real estate 9,885 13,348 13,904
------------ ------------ ------------
Total nonperforming assets $378,387 $413,252 $423,968
============ ============ ============
Ratio of nonperforming assets
(NPAs) to total assets .41% .48% .51%
Ratio of troubled debt
restructured (TDRs) to total
assets .00% .01% .00%
Ratio of NPAs and TDRs to total
assets .41% .48% .51%
SPREAD DATA
Yield on loan portfolio 4.50% 4.58% 4.61%
Yield on interest-earning
investments 1.35% 1.05% .93%
Yield on interest-earning
assets 4.46% 4.55% 4.54%
Cost of deposits 1.88% 1.85% 1.85%
Cost of borrowings 1.43% 1.32% 1.37%
Cost of funds 1.69% 1.63% 1.67%
Yield on interest-earning
assets less cost of funds
(Primary Spread) at quarterend 2.77% 2.92% 2.87%
Average Primary Spread for the
quarter 2.86% 2.90% 2.91%
For the Quarter Ended
-------------------------
Sep. 30 Jun. 30
2003 2003
------------ ------------
AVERAGE BALANCES (a)
Cash and investments $1,275,081 $1,099,522
Loans receivable and mortgage-backed
securities 70,888,271 68,162,253
Investment in capital stock of Federal
Home Loan Banks 1,137,138 1,126,629
Deposits 45,314,936 43,891,768
Advances from Federal Home Loan Banks 19,417,796 19,765,434
Securities sold under agreements to
repurchase 522,116 21,557
Other borrowings 2,399,344 1,331,453
Stockholders' equity 5,525,243 5,315,729
Total Average Assets 74,194,553 71,279,693
Average Earning Assets 72,951,855 70,035,195
Average Interest-Bearing Liabilities 67,654,192 65,010,212
LOAN BALANCE AND ACTIVITY
Loans receivable and mortgage-backed
securities $72,949,301 $69,295,324
Adjustable rate loans receivable and
mortgage-backed securities 69,528,396 66,078,182
New real estate loans originated $10,092,199 $8,044,095
New adjustable rate mortgages as a
percentage of new real estate loans
originated 93% 91%
New refinanced mortgages as a percentage
of new real estate loans originated 70% 70%
LOANS SOLD AND SERVICED DATA
Loan sales $1,117,899 $894,345
Loans serviced for others 5,886,668 5,653,002
Balance of capitalized mortgage servicing
rights 92,098 82,060
NONPERFORMING ASSETS
Loans and MBS 90 days or more past due $409,001 $436,595
Foreclosed real estate 16,838 11,027
------------ ------------
Total nonperforming assets $425,839 $447,622
============ ============
Ratio of nonperforming assets (NPAs) to
total assets .56% .62%
Ratio of troubled debt restructured (TDRs)
to total assets .00% .00%
Ratio of NPAs and TDRs to total assets .56% .62%
SPREAD DATA
Yield on loan portfolio 4.73% 4.92%
Yield on interest-earning investments 1.10% 1.27%
Yield on interest-earning assets 4.70% 4.90%
Cost of deposits 1.95% 2.12%
Cost of borrowings 1.45% 1.58%
Cost of funds 1.78% 1.94%
Yield on interest-earning assets less cost
of funds (Primary Spread) at quarterend 2.92% 2.96%
Average Primary Spread for the quarter 2.93% 2.98%
(a) Averages are computed by adding the beginning balance and each
monthend balance during the quarter and dividing by four.
CONTACT: Golden West Financial Corporation
William C. Nunan, 510-446-3614