Exhibit 99.1
Golden West Financial Reports Record Earnings,
Loan Originations, and Deposits
OAKLAND, Calif.--(BUSINESS WIRE)--Oct. 21, 2004--Golden West
Financial Corporation (NYSE:GDW), parent of World Savings Bank,
announced record diluted earnings per share of $2.09 in the third
quarter, up 14% from the $1.83 reported during the same period in
2003. Per share profits for the first nine months of 2004 reached
$6.07, a 16% increase from the $5.25 posted in the first three
quarters of 2003.
The Company also announced all-time high loan originations of
$14.1 billion in the third quarter, up 39% from the $10.1 billion
reported one year earlier. For the first nine months of 2004, new
mortgage volume totaled $35.9 billion, a 43% increase from the $25.1
billion recorded in the first three quarters of 2003.
Golden West's savings operations also turned in a record
performance. Deposit balances grew $3.1 billion in the third quarter,
a 74% jump from the $1.8 billion of net inflows experienced one year
earlier. For the first nine months of 2004, retail savings rose $4.9
billion, similar to the $5.1 billion increase in the first three
quarters of 2003.
In other news, the Company reached a milestone in terms of size in
the third quarter. As of September 30th, total assets exceeded $100
billion for the first time in Golden West's history.
Starting with a discussion of the Company's rapid loan growth,
Herbert Sandler, Chairman of the Board and Chief Executive Officer,
said, "During the first nine months of 2004, the interest rates on our
primary product, the adjustable rate mortgage, or ARM, have remained
low and stable, while the cost of the borrowers' other alternative, a
fixed-rate loan, has been more volatile. Our lending team has taken
advantage of this opportunity to produce a record volume of new
loans." Sandler added, "The substantial increase in our mortgage
originations so far this year is noteworthy, because it contrasts with
overall nationwide lending activity, which has declined from the
record setting levels experienced in 2003."
Continuing, Sandler remarked, "The Company's mortgage portfolio,
which is our primary earning asset, has increased dramatically this
year." Golden West's loan balances grew $7.5 billion, or at a 34%
annualized rate, in the third quarter, and have increased $18.3
billion, or at a 31% annualized rate, during the first nine months of
the year. Sandler added, "This sizable growth is important because the
larger the Company's mortgage portfolio, the greater our ability to
generate profits."
Wrapping up his comments on the Company's lending results, Sandler
stated, "In the third quarter, 99% of Golden West's new originations
consisted of monthly adjustable rate loans, up from 93% a year ago.
This is significant, because ARMs are responsive to changes in
interest rates, which helps limit the Company's earnings exposure when
interest rates rise."
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." In the third
quarter, Golden West's spread averaged 2.70%, down from 2.93% one year
earlier. Sandler explained, "Market interest rates have been moving up
since early in the second quarter. As a result, our primary spread has
declined somewhat because our liabilities, which are made up of
deposits and borrowings, tend to respond to interest rate movements a
bit faster than our adjustable rate mortgage portfolio. Some
compression of our profit margin is normal in a rising interest rate
environment."
Covering a final earnings related subject, Sandler commented on
the Company's general and administrative expenses (G&A). He noted,
"Total G&A was up 16% from the third quarter of last year. As you
would expect, a large portion of this spending increase supported our
record loan volume. We also continued to invest in people and
technology to ensure we have the resources to take advantage of future
growth opportunities." He added, "Despite the rise in expenses, our
G&A ratio improved significantly from the third quarter of last year
because of the Company's strong asset growth." Golden West's ratio of
G&A to average assets was .87% in the third quarter of 2004, compared
to .98% one year earlier.
Switching to the topic of credit risk, Sandler explained, "One way
we measure the success of our risk management is the ratio of
nonperforming assets and troubled debt restructured to total assets."
At September 30, 2004, Golden West's ratio was .36%, down from just
..56% one year earlier. "As our percentage indicates, the Company's
history of impressive loan quality continued in the third quarter."
Moving to a discussion of Golden West's savings activity, Sandler
stated, "In the third quarter the Company posted record deposit
growth. Customers responded enthusiastically to our promoted products
and rates, as they continued to search for predictable, secure
investments. As a result, our savings balances grew $3.1 billion,
easily surpassing our prior all-time high for a quarter of $2.5
billion, set in the third quarter of 2002."
Finally, the Company reported that for the third consecutive
quarter World Savings Bank, Golden West's primary operating
subsidiary, brought to market $1.0 billion of long-term senior debt.
Sandler observed, "Continuing to issue these borrowings provides an
additional source of funds to support the rapid growth of our loan
portfolio."
Headquartered in Oakland, California, Golden West is one of the
nation's largest financial institutions with assets over $100 billion
as of September 30, 2004. The Company has one of the most extensive
thrift branch systems in the country, with 276 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 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 Nine Months Ended
September 30 September 30
------------------------- -------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Interest Income
Interest on loans $1,025,021 $795,003 $2,835,482 $2,350,687
Interest on
mortgage-backed
securities 28,843 60,246 104,578 207,100
Interest and
dividends on
investments 19,066 21,637 50,359 67,856
------------ ------------ ------------ ------------
1,072,930 876,886 2,990,419 2,625,643
Interest Expense
Interest on
deposits 243,669 232,789 679,023 719,019
Interest on
advances 123,565 63,181 279,547 202,837
Interest on
repurchase
agreements 13,767 1,878 29,407 3,160
Interest on other
borrowings 26,800 25,708 75,373 76,935
------------ ------------ ------------ ------------
407,801 323,556 1,063,350 1,001,951
------------ ------------ ------------ ------------
Net Interest Income 665,129 553,330 1,927,069 1,623,692
Provision for loan
losses 197 2,082 830 10,062
------------ ------------ ------------ ------------
Net Interest Income
after Provision
for Loan Losses 664,932 551,248 1,926,239 1,613,630
Noninterest Income
Fees 53,292 45,692 150,601 122,123
Gain on the sale
of securities,
MBS and loans 1,901 25,972 11,154 62,487
Change in fair
value of
derivatives 0 2,993 1,141 8,639
Other 16,412 16,083 49,663 47,483
------------ ------------ ------------ ------------
71,605 90,740 212,559 240,732
Noninterest Expense
General and
administrative:
Personnel 135,808 115,499 404,111 331,183
Occupancy 21,640 19,286 62,778 56,763
Technology and
tele-
communications 18,768 18,600 59,070 59,559
Deposit insurance 1,743 1,732 5,303 5,005
Advertising 7,979 5,240 18,458 16,531
Other 24,522 20,696 67,787 58,902
------------ ------------ ------------ ------------
210,460 181,053 617,507 527,943
Earnings before
Taxes on Income 526,077 460,935 1,521,291 1,326,419
Taxes on Income 201,299 178,029 580,071 510,975
------------ ------------ ------------ ------------
Net Earnings $324,778 $282,906 $941,220 $815,444
============ ============ ============ ============
Basic Earnings
Per Share $2.12 $1.86 $6.17 $5.34
============ ============ ============ ============
Diluted Earnings
Per Share $2.09 $1.83 $6.07 $5.25
============ ============ ============ ============
Average common
shares
outstanding 152,853,203 152,180,798 152,593,907 152,699,508
Average diluted
common shares
outstanding 155,286,689 154,810,821 155,017,202 155,179,200
Ratios: (a)
Net earnings /
average
stockholders'
equity 19.31% 20.48% 19.57% 20.43%
Net earnings /
average assets 1.34% 1.53% 1.39% 1.52%
Net interest
margin (b) 2.78% 3.07% 2.88% 3.11%
General and
administrative
expense / average
assets .87% .98% .91% .98%
Efficiency
ratio(c) 28.57% 28.11% 28.86% 28.32%
(a) Ratios are annualized by multiplying the quarterly computation by
four and the nine month computation by one and one-third. Averages are
computed by adding the beginning balances and each monthend balance
during the quarter and nine month period and dividing by four and ten,
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)
Sep. 30 Jun. 30 Mar. 31
2004 2004 2004
------------- ------------- --------------
ASSETS
Cash $283,776 $296,330 $248,710
Securities available for
sale at fair value 919,647 1,539,885 1,123,463
Purchased mortgage-backed
securities
available for sale at fair
value 15,915 18,401 19,895
Purchased mortgage-backed
securities
held to maturity at cost 395,887 411,881 437,580
Mortgage-backed securities
with recourse held to
maturity at
cost (a) 1,889,322 2,083,852 2,342,210
Loans held for sale 55,899 107,692 157,666
Loans held in portfolio
less allowance for loan
losses (a) 94,259,118 86,471,707 80,121,686
------------- ------------- --------------
Total Loans Receivable and
Mortgage-Backed
Securities 96,616,141 89,093,533 83,079,037
Interest earned but
uncollected 233,257 203,145 191,475
Investment in capital stock
of Federal Home Loan Banks
at cost which approximates
fair value 1,484,560 1,318,642 1,203,589
Foreclosed real estate 8,815 9,885 13,348
Premises and equipment, net 378,769 376,501 367,579
Other assets 322,662 320,381 377,570
------------- ------------- --------------
$100,247,627 $93,158,302 $86,604,771
============= ============= ==============
LIABILITIES and
STOCKHOLDERS' EQUITY
Deposits $51,666,515 $48,611,353 $47,383,623
Advances from Federal Home
Loan Banks 32,017,135 28,712,498 24,805,930
Securities sold under
agreements to repurchase 3,650,179 3,470,761 2,672,049
Federal funds purchased 0 0 0
Bank notes 869,154 1,786,668 2,504,917
Senior debt 3,997,707 2,989,726 1,989,944
Subordinated notes 0 0 0
Taxes on income 611,997 587,357 627,431
Other liabilities 544,153 434,178 377,018
Stockholders' equity 6,890,787 6,565,761 6,243,859
------------- ------------- --------------
$100,247,627 $93,158,302 $86,604,771
============= ============= ==============
Book value per common share $45.02 $42.98 $40.95
Common shares outstanding 153,051,389 152,749,211 152,492,139
Dec. 31 Sep. 30
2003 2003
------------- --------------
ASSETS
Cash $260,823 $219,000
Securities available for sale at fair
value 1,879,443 950,329
Purchased mortgage-backed securities
available for sale at fair value 22,071 24,824
Purchased mortgage-backed securities
held to maturity at cost 433,319 425,741
Mortgage-backed securities with recourse
held to maturity at
cost (a) 3,650,048 4,078,140
Loans held for sale 124,917 324,297
Loans held in portfolio less allowance
for loan losses (a) 74,080,661 68,096,299
------------- --------------
Total Loans Receivable and Mortgage-
Backed Securities 78,311,016 72,949,301
Interest earned but uncollected 183,761 179,091
Investment in capital stock of Federal
Home Loan Banks at cost which
approximates fair value 1,152,339 1,142,582
Foreclosed real estate 13,904 16,838
Premises and equipment, net 360,327 355,955
Other assets 388,277 344,744
------------- --------------
$82,549,890 $76,157,840
============= ==============
LIABILITIES and
STOCKHOLDERS' EQUITY
Deposits $46,726,965 $46,145,048
Advances from Federal Home Loan Banks 22,000,234 19,689,871
Securities sold under agreements to
repurchase 3,021,385 721,639
Federal funds purchased 0 300,000
Bank notes 3,015,854 1,489,946
Senior debt 991,257 990,862
Subordinated notes 0 200,000
Taxes on income 561,406 580,969
Other liabilities 285,521 404,258
Stockholders' equity 5,947,268 5,635,247
------------- --------------
$82,549,890 $76,157,840
============= ==============
Book value per common share $39.10 $37.10
Common shares outstanding 152,119,108 151,900,958
(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
--------------------------------------
Sep. 30 Jun. 30 Mar. 31
2004 2004 2004
------------ ------------ ------------
Net interest income $665,129 $642,686 $619,254
Provision for loan losses 197 392 241
Noninterest income 71,605 81,147 59,807
Noninterest expense 210,460 207,533 199,514
------------ ------------ ------------
Earnings before taxes on income 526,077 515,908 479,306
Taxes on income (a) 201,299 199,190 179,582
------------ ------------ ------------
Net earnings $324,778 $316,718 $299,724
============ ============ ============
Basic EPS $2.12 $2.07 $1.97
Diluted EPS $2.09 $2.04 $1.93
Average common shares
outstanding 152,853,203 152,652,032 152,273,637
Average diluted common shares
outstanding 155,286,689 155,213,548 155,040,581
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) 19.31% 19.79% 19.65%
Net earnings / average assets
(ROA) 1.34% 1.41% 1.42%
Net interest margin (c) 2.78% 2.91% 2.99%
General and administrative
expense / average assets .87% .93% .95%
Efficiency ratio (d) 28.57% 28.67% 29.38%
Loan loss reserve $290,079 $289,996 $289,351
Net loan chargeoffs (recoveries) $114 $(253) $827
Stockholders' equity / total
assets 6.87% 7.05% 7.21%
Total deposit net activity $3,055,162 $1,227,730 $656,658
For the Quarter Ended
-------------------------
Dec. 31 Sep. 30
2003 2003
------------ ------------
Net interest income $584,692 $553,330
Provision for loan losses 1,802 2,082
Noninterest income 72,598 90,740
Noninterest expense 192,572 181,053
------------ ------------
Earnings before taxes on income 462,916 460,935
Taxes on income (a) 172,261 178,029
------------ ------------
Net earnings $290,655 $282,906
============ ============
Basic EPS $1.91 $1.86
Diluted EPS $1.88 $1.83
Average common shares outstanding 152,001,578 152,180,798
Average diluted common shares outstanding 154,830,609 154,810,821
Number of shares repurchased and retired 0 630,000
Cost of shares repurchased $0 $53,407
Remaining number of shares authorized for
repurchase 9,328,179 9,328,179
Ratios: (b)
Net earnings / average stockholders' equity
(ROE) 20.09% 20.48%
Net earnings / average assets (ROA) 1.47% 1.53%
Net interest margin (c) 3.01% 3.07%
General and administrative expense /
average assets .97% .98%
Efficiency ratio (d) 29.30% 28.11%
Loan loss reserve $289,937 $288,949
Net loan chargeoffs (recoveries) $814 $1,001
Stockholders' equity / total assets 7.20% 7.40%
Total deposit net activity $581,917 $1,759,331
(a) The Company's effective tax rate may fluctuate from quarter to
quarter due to various state tax matters, particularly changes in the
volume of business activity in the various states in which the Company
operates.
(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
---------------------------------------
Sep. 30 Jun. 30 Mar. 31
2004 2004 2004
------------ ------------ -------------
AVERAGE BALANCES (a)
Cash and investments $1,680,206 $1,650,596 $1,641,994
Loans receivable and mortgage-
backed securities 92,976,928 85,818,380 80,498,053
Investment in capital stock of
Federal Home Loan Banks 1,413,980 1,245,010 1,165,153
Deposits 50,229,774 47,798,007 47,029,050
Advances from Federal Home
Loan Banks 30,684,256 26,735,540 23,231,041
Securities sold under
agreements to repurchase 3,590,338 3,021,646 2,558,780
Other borrowings 4,604,075 4,654,051 4,351,662
Stockholders' equity 6,729,240 6,401,862 6,100,369
Total Average Assets 96,997,990 89,649,483 84,252,424
Average Earning Assets 95,778,195 88,389,797 82,963,346
Average Interest-Bearing
Liabilities 89,108,443 82,209,244 77,170,533
LOAN BALANCE AND ACTIVITY
Loans receivable and mortgage-
backed securities $96,616,141 $89,093,533 $83,079,037
Adjustable rate loans
receivable and
mortgage-backed securities 93,426,505 85,731,774 79,889,765
New real estate loans
originated $14,071,739 $12,439,588 $9,393,862
New adjustable rate mortgages
as a percentage of new real
estate loans originated 99% 99% 98%
New refinanced mortgages as a
percentage of new real estate
loans originated 69% 71% 72%
LOANS SOLD AND SERVICED DATA
Loan sales $99,405 $224,874 $131,589
Loans serviced for others 4,812,072 5,095,475 5,438,165
Balance of capitalized
mortgage servicing rights 63,763(b) 76,217 82,503
NONPERFORMING ASSETS
Loans and MBS 90 days or more
past due $346,585 $368,502 $399,904
Foreclosed real estate 8,815 9,885 13,348
------------ ------------ -------------
Total nonperforming assets $355,400 $378,387 $413,252
============ ============ =============
Ratio of nonperforming assets
(NPAs) to total assets .35% .41% .48%
Ratio of troubled debt
restructured (TDRs) to total
assets .00% .00% .01%
Ratio of NPAs and TDRs to total
assets .36% .41% .48%
SPREAD DATA
Yield on loan portfolio 4.59% 4.50% 4.58%
Yield on interest-earning
investments 1.90% 1.35% 1.05%
Yield on interest-earning
assets 4.57% 4.46% 4.55%
Cost of deposits 1.97% 1.88% 1.85%
Cost of borrowings 1.87% 1.43% 1.32%
Cost of funds 1.93% 1.69% 1.63%
Yield on interest-earning
assets less cost of funds
(Primary Spread) at quarterend 2.64% 2.77% 2.92%
Average Primary Spread for the
quarter 2.70% 2.86% 2.90%
For the Quarter Ended
-------------------------
Dec. 31 Sep. 30
2003 2003
------------ ------------
AVERAGE BALANCES (a)
Cash and investments $1,409,734 $1,275,081
Loans receivable and mortgage-backed
securities 75,544,443 70,888,271
Investment in capital stock of Federal Home
Loan Banks 1,146,948 1,137,138
Deposits 46,448,866 45,314,936
Advances from Federal Home Loan Banks 20,642,344 19,417,796
Securities sold under agreements to
repurchase 1,921,788 522,116
Other borrowings 3,219,452 2,399,344
Stockholders' equity 5,787,207 5,525,243
Total Average Assets 79,029,081 74,194,553
Average Earning Assets 77,773,138 72,951,855
Average Interest-Bearing Liabilities 72,232,450 67,654,192
LOAN BALANCE AND ACTIVITY
Loans receivable and mortgage-backed
securities $78,311,016 $72,949,301
Adjustable rate loans receivable and
mortgage-backed securities 75,238,723 69,528,396
New real estate loans originated $10,905,670 $10,092,199
New adjustable rate mortgages as a
percentage of new real estate
loans originated 98% 93%
New refinanced mortgages as a percentage of
new real estate loans originated 70% 70%
LOANS SOLD AND SERVICED DATA
Loan sales $401,091 $1,117,899
Loans serviced for others 5,764,986 5,886,668
Balance of capitalized mortgage servicing
rights 88,967 92,098
NONPERFORMING ASSETS
Loans and MBS 90 days or more past due $410,064 $409,001
Foreclosed real estate 13,904 16,838
------------ ------------
Total nonperforming assets $423,968 $425,839
============ ============
Ratio of nonperforming assets (NPAs) to total
assets .51% .56%
Ratio of troubled debt restructured (TDRs) to
total assets .00% .00%
Ratio of NPAs and TDRs to total assets .51% .56%
SPREAD DATA
Yield on loan portfolio 4.61% 4.73%
Yield on interest-earning investments .93% 1.10%
Yield on interest-earning assets 4.54% 4.70%
Cost of deposits 1.85% 1.95%
Cost of borrowings 1.37% 1.45%
Cost of funds 1.67% 1.78%
Yield on interest-earning assets less cost of
funds (Primary Spread) at quarterend 2.87% 2.92%
Average Primary Spread for the quarter 2.91% 2.93%
(a) Averages are computed by adding the beginning balance and each
monthend balance during the quarter and dividing by four.
(b) Includes impairment reserve of $4.4 million, which resulted in an
after-tax charge of $2.7 million.
CONTACT: Golden West Financial Corporation
William C. Nunan, 510-446-3614