EXHIBIT 99.1
Golden West Posts Record Earnings and Loan Originations in 2004; Total Assets
Exceed $100 Billion
OAKLAND, Calif.--(BUSINESS WIRE)--Jan. 20, 2005--Golden West
Financial Corporation (NYSE:GDW), parent of World Savings Bank,
announced record diluted earnings per share of $4.13 for 2004, up 16%
from the previous all-time high of $3.57 reported in 2003. Per share
profits in the fourth quarter of 2004 reached $1.09, a 16% increase
from the $0.94 registered one year earlier.
The Company also reached a milestone in terms of size in 2004.
Total assets exceeded $100 billion for the first time, ranking Golden
West 15th among bank and thrift holding companies based on asset size.
The Company's lending operation provided another 2004 highlight,
producing record loan originations of $49.0 billion, a 36% increase
from the $36.0 billion reported in 2003. For the fourth quarter of
2004, new loans totaled $13.1 billion, up 20% from the $10.9 billion
booked during the same period one year earlier.
In discussing the year's accomplishments, Marion Sandler, Chairman
of the Board and Chief Executive Officer of Golden West, first touched
on the Company's earnings growth. She remarked, "An important
contributor to our record earnings this past year was our ability to
expand the mortgage portfolio, which is our primary earning asset. Our
loan balances grew 31% in 2004. Clearly, having more loans on the
books increases our capacity to generate income."
Reflecting on the Company's rapid loan growth, Sandler stated,
"This past year customers were particularly attracted to the
affordable payments and flexible terms offered by our primary product,
the adjustable rate mortgage, or ARM. In addition, we continued to
provide excellent customer service, facilitating the rapid processing
of mortgage applications. Our lending team took advantage of these
factors and produced a record volume of new loans." Sandler added,
"The substantial increase in our mortgage originations this year is
noteworthy, because it contrasts with overall nationwide lending,
which based on industry estimates, is projected to be down 25% from
the record setting levels experienced in 2003."
Continuing her comments on the Company's lending results, Sandler
said, "In 2004, 99% of Golden West's new originations were adjustable
rate loans, up from 94% one year earlier. This is significant, because
ARMs are responsive to changes in interest rates, which helps mitigate
the Company's earnings sensitivity when interest rates rise."
Returning to her discussion of the factors influencing 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 investments and what we pay for savings and borrowings." She
continued, "Short-term interest rates more than doubled this past
year. As a result, our spread decreased 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 portfolio." In 2004, Golden West's spread averaged 2.76%, down
from 2.94% one year earlier.
Covering a final earnings related topic, Sandler commented on the
Company's general and administrative expenses (G&A). She noted, "Total
G&A was 17% higher than in 2003. As you would expect, a large portion
of this spending increase supported our record loan volume." She
added, "Despite the rise in expenses, our G&A ratio improved
significantly from last year because of the Company's strong asset
growth." Golden West's ratio of G&A to average assets was .90% in
2004, compared to .98% one year earlier.
Switching to the topic of loan quality, Sandler explained, "In
2004, Golden West's loan portfolio continued to exhibit the positive
effects of our focus on producing high-quality assets in order to
manage credit risk. A key indicator of our performance is the ratio of
net chargeoffs to average loans outstanding. This measure relates
losses on foreclosed properties to the size of the loan portfolio.
Aided by a strong real estate market, the Company's chargeoff ratio
amounted to zero basis points for the seventh consecutive year."
Continuing, Sandler added, "Our success can also be judged by our
nonperforming asset level." At December 31, 2004, Golden West's ratio
of nonperforming assets and troubled debt restructured to total assets
was just .33%, compared to an already low .51% at yearend 2003.
In other 2004 news, Golden West reported retail savings growth of
$6.2 billion, a 10% increase from the $5.7 billion experienced in
2003. For the fourth quarter of 2004, deposit inflows were $1.3
billion, compared with $582 million in the same period one year
earlier. Sandler commented, "This past year customers responded
enthusiastically to our promoted products and rates, as they continued
to search for predictable, secure investments. As a result, we were
able to grow deposits significantly. In fact, in 2004 we had the
second largest increase in savings balances in the Company's history,
just below our all-time high of $6.6 billion set in 2002."
The Company also reported that World Savings Bank, Golden West's
primary operating subsidiary, brought to market $1.3 billion of
long-term senior debt in the fourth quarter, bringing the total for
the year to $4.3 billion. Sandler observed, "These borrowings provided
an additional source of funds to support the rapid growth of our loan
portfolio."
Finally, in October Golden West's Board of Directors voted to
increase the Company's annual cash dividend rate by 20%, and announced
a two-for-one split of the Company's stock. Commenting on the split,
Sandler said, "We took this action to encourage the wider distribution
and marketability of the stock." At December 31, 2004, Golden West had
approximately 307 million shares outstanding.
Headquartered in Oakland, California, Golden West is one of the
nation's largest financial institutions with assets over $105 billion
as of December 31, 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 Year Ended
December 31 December 31
------------------------- -------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Interest Income
Interest on loans $1,141,137 $827,400 $3,976,619 $3,178,087
Interest on
mortgage-backed
securities 27,142 54,612 131,720 261,712
Interest and
dividends on
investments 20,158 20,689 70,517 88,545
------------ ------------ ------------ ------------
1,188,437 902,701 4,178,856 3,528,344
Interest Expense
Interest on
deposits 265,470 219,104 944,493 938,123
Interest on
advances 168,988 66,956 448,535 269,793
Interest on
repurchase
agreements 20,182 5,888 49,589 9,048
Interest on other
borrowings 42,261 26,061 117,634 102,996
------------ ------------ ------------ ------------
496,901 318,009 1,560,251 1,319,960
------------ ------------ ------------ ------------
Net Interest Income 691,536 584,692 2,618,605 2,208,384
Provision for loan
losses 2,571 1,802 3,401 11,864
------------ ------------ ------------ ------------
Net Interest Income
after Provision
for Loan Losses 688,965 582,890 2,615,204 2,196,520
Noninterest Income
Fees 59,975 41,183 210,576 163,306
Gain on the sale
of securities,
MBS and loans 2,062 9,787 13,216 72,274
Change in fair
value of
derivatives 0 2,251 1,141 10,890
Other 19,327 19,377 68,990 66,860
------------ ------------ ------------ ------------
81,364 72,598 293,923 313,330
Noninterest Expense
General and
administrative:
Personnel 143,321 122,293 547,432 453,476
Occupancy 23,339 19,886 86,117 76,649
Technology
and
tele-
communications 20,383 19,142 79,453 78,701
Deposit
insurance 1,765 1,678 7,068 6,683
Advertising 8,285 5,985 26,743 22,516
Other 25,526 23,588 93,313 82,490
------------ ------------ ------------ ------------
222,619 192,572 840,126 720,515
Earnings before
Taxes on Income 547,710 462,916 2,069,001 1,789,335
Taxes on Income 209,209 172,261 789,280 683,236
------------ ------------ ------------ ------------
Net Earnings $338,501 $290,655 $1,279,721 $1,106,099
============ ============ ============ ============
Basic Earnings Per
Share $1.11 $0.96 $4.19 $3.63
============ ============ ============ ============
Diluted Earnings
Per Share $1.09 $0.94 $4.13 $3.57
============ ============ ============ ============
Average common
shares
outstanding 306,312,759 304,003,156 305,470,587 305,047,184
Average diluted
common shares
outstanding 311,179,468 309,661,218 310,119,746 309,974,406
Ratios: (a)
Net earnings /
average
stockholders'
equity 19.14% 20.09% 19.45% 20.33%
Net earnings /
average assets 1.31% 1.47% 1.37% 1.50%
Net interest
margin (b) 2.70% 3.01% 2.83% 3.05%
General and
administrative
expense /
average assets .86% .97% .90% .98%
Efficiency ratio(c) 28.80% 29.30% 28.85% 28.57%
(a) Ratios are annualized by multiplying the quarterly computation by
four. Averages are computed by adding the beginning balances and
each monthend balance during the quarter and the year and dividing
by four and thirteen, 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)
Dec. 31 Sep. 30 Jun. 30
2004 2004 2004
--------------- ------------- ------------
ASSETS
Cash $292,421 $283,776 $296,330
Securities available for
sale at fair value 1,374,385 919,647 1,539,885
Purchased mortgage-backed
securities available for
sale at fair value 14,438 15,915 18,401
Purchased mortgage-backed
securities held to
maturity at cost 375,632 395,887 411,881
Mortgage-backed securities
with recourse held to
maturity at cost (a) 1,719,982 1,889,322 2,083,852
Loans held for sale 52,325 55,899 107,692
Loans held in portfolio
less allowance for loan
losses (a) 100,506,854 94,259,118 86,471,707
--------------- ------------- ------------
Total Loans Receivable
and Mortgage-Backed
Securities 102,669,231 96,616,141 89,093,533
Interest earned but
uncollected 248,073 233,257 203,145
Investment in capital
stock of Federal Home
Loan Banks at cost which
approximates fair value 1,563,276 1,484,560 1,318,642
Foreclosed real estate 11,461 8,815 9,885
Premises and equipment,
net 391,523 378,769 376,501
Other assets 338,171 322,662 320,381
--------------- ------------- ------------
$106,888,541 $100,247,627 $93,158,302
=============== ============= ============
LIABILITIES and
STOCKHOLDERS' EQUITY
Deposits $52,965,311 $51,666,515 $48,611,353
Advances from Federal Home
Loan Banks 33,781,895 32,017,135 28,712,498
Securities sold under
agreements to repurchase 3,900,000 3,650,179 3,470,761
Bank notes 2,709,895 869,154 1,786,668
Senior debt 5,291,840 3,997,707 2,989,726
Taxes on income 561,772 611,997 587,357
Other liabilities 402,952 544,153 434,178
Stockholders' equity 7,274,876 6,890,787 6,565,761
--------------- ------------- ------------
$106,888,541 $100,247,627 $93,158,302
=============== ============= ============
Book value per common share $23.73 $22.51 $21.49
Common shares outstanding 306,524,716 306,102,778 305,498,422
Mar. 31 Dec. 31
2004 2003
------------ ------------
ASSETS
Cash $248,710 $260,823
Securities available for sale at fair value 1,123,463 1,879,443
Purchased mortgage-backed securities
available for sale at fair value 19,895 22,071
Purchased mortgage-backed securities
held to maturity at cost 437,580 433,319
Mortgage-backed securities with recourse
held to maturity at cost (a) 2,342,210 3,650,048
Loans held for sale 157,666 124,917
Loans held in portfolio less allowance for
loan losses (a) 80,121,686 74,080,661
------------ ------------
Total Loans Receivable and Mortgage-
Backed Securities 83,079,037 78,311,016
Interest earned but uncollected 191,475 183,761
Investment in capital stock of Federal Home
Loan Banks at cost which approximates fair
value 1,203,589 1,152,339
Foreclosed real estate 13,348 13,904
Premises and equipment, net 367,579 360,327
Other assets 377,570 388,277
------------ ------------
$86,604,771 $82,549,890
============ ============
LIABILITIES and
STOCKHOLDERS' EQUITY
Deposits $47,383,623 $46,726,965
Advances from Federal Home Loan Banks 24,805,930 22,000,234
Securities sold under agreements to
repurchase 2,672,049 3,021,385
Bank notes 2,504,917 3,015,854
Senior debt 1,989,944 991,257
Taxes on income 627,431 561,406
Other liabilities 377,018 285,521
Stockholders' equity 6,243,859 5,947,268
------------ ------------
$86,604,771 $82,549,890
============ ============
Book value per common share $20.47 $19.55
Common shares outstanding 304,984,278 304,238,216
(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 Loans Held
in Portfolio.
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands except per share figures)
For the Quarter Ended
--------------------------------------
Dec. 31 Sep. 30 Jun. 30
2004 2004 2004
------------ ------------ ------------
Net interest income $691,536 $665,129 $642,686
Provision for loan losses 2,571 197 392
Noninterest income 81,364 71,605 81,147
Noninterest expense 222,619 210,460 207,533
------------ ------------ ------------
Earnings before taxes on income 547,710 526,077 515,908
Taxes on income (a) 209,209 201,299 199,190
------------ ------------ ------------
Net earnings $338,501 $324,778 $316,718
============ ============ ============
Basic EPS $1.11 $1.06 $1.04
Diluted EPS $1.09 $1.05 $1.02
Average common shares
outstanding 306,312,759 305,706,406 305,304,064
Average diluted common shares
outstanding 311,179,468 310,573,378 310,427,096
Number of shares repurchased and
retired 0 0 0
Cost of shares repurchased $0 $0 $0
Remaining number of shares
authorized for repurchase 18,656,358 18,656,358 18,656,358
Ratios: (b)
Net earnings / average
stockholders' equity (ROE) 19.14% 19.31% 19.79%
Net earnings / average assets
(ROA) 1.31% 1.34% 1.41%
Net interest margin (c) 2.70% 2.78% 2.91%
General and administrative
expense / average assets .86% .87% .93%
Efficiency ratio (d) 28.80% 28.57% 28.67%
Loan loss reserve $290,110 $290,079 $289,996
Net loan chargeoffs (recoveries) $2,540 $114 $(253)
Stockholders' equity / total
assets 6.81% 6.87% 7.05%
Total deposit net activity $1,298,796 $3,055,162 $1,227,730
For the Quarter Ended
---------------------------
Mar. 31 Dec. 31
2004 2003
------------- -------------
Net interest income $619,254 $584,692
Provision for loan losses 241 1,802
Noninterest income 59,807 72,598
Noninterest expense 199,514 192,572
------------- -------------
Earnings before taxes on income 479,306 462,916
Taxes on income (a) 179,582 172,261
------------- -------------
Net earnings $299,724 $290,655
============= =============
Basic EPS $0.98 $0.96
Diluted EPS $0.97 $0.94
Average common shares outstanding 304,547,274 304,003,156
Average diluted common shares outstanding 310,081,162 309,661,218
Number of shares repurchased and retired 0 0
Cost of shares repurchased $0 $0
Remaining number of shares authorized for
repurchase 18,656,358 18,656,358
Ratios: (b)
Net earnings / average stockholders'
equity (ROE) 19.65% 20.09%
Net earnings / average assets (ROA) 1.42% 1.47%
Net interest margin (c) 2.99% 3.01%
General and administrative expense /
average assets .95% .97%
Efficiency ratio (d) 29.38% 29.30%
Loan loss reserve $289,351 $289,937
Net loan chargeoffs (recoveries) $827 $814
Stockholders' equity / total assets 7.21% 7.20%
Total deposit net activity $656,658 $581,917
(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
---------------------------------------
Dec. 31 Sep. 30 Jun. 30
2004 2004 2004
------------- ------------ ------------
AVERAGE BALANCES (a)
Cash and investments $1,442,083 $1,680,206 $1,650,596
Loans receivable and mortgage-
backed securities 99,698,762 92,976,928 85,818,380
Investment in capital stock of
Federal Home Loan Banks 1,521,608 1,413,980 1,245,010
Deposits 52,317,613 50,229,774 47,798,007
Advances from Federal Home
Loan Banks 32,754,803 30,684,256 26,735,540
Securities sold under
agreements to repurchase 3,900,045 3,590,338 3,021,646
Other borrowings 6,373,852 4,604,075 4,654,051
Stockholders' equity 7,073,030 6,729,240 6,401,862
Total Average Assets 103,634,158 96,997,990 89,649,483
Average Earning Assets 102,371,618 95,778,195 88,389,797
Average Interest-Bearing
Liabilities 95,346,313 89,108,443 82,209,244
LOAN BALANCE AND ACTIVITY
Loans receivable and mortgage-
backed securities $102,669,231 $96,616,141 $89,093,533
Adjustable rate loans
receivable and mortgage-
backed securities 99,730,701 93,426,505 85,731,774
New real estate loans
originated $13,083,888 $14,071,739 $12,439,588
New adjustable rate mortgages
as a percentage of new real
estate loans originated 99% 99% 99%
New refinanced mortgages as a
percentage of new real estate
loans originated 75% 69% 71%
LOANS SOLD AND SERVICED DATA
Loan sales $97,096 $99,405 $224,874
Loans serviced for others 4,537,024 4,812,072 5,095,475
Balance of capitalized
mortgage servicing rights 53,234(b) 63,763(b) 76,217
NONPERFORMING ASSETS
Loans and MBS 90 days or more
past due $332,329 $346,585 $368,502
Foreclosed real estate 11,461 8,815 9,885
------------- ------------ ------------
Total nonperforming assets $343,790 $355,400 $378,387
============= ============ ============
Ratio of nonperforming assets
(NPAs) to total assets .32% .35% .41%
Ratio of troubled debt
restructured (TDRs) to total
assets .00% .00% .00%
Ratio of NPAs and TDRs to total
assets .33% .36% .41%
SPREAD DATA
Yield on loan portfolio 4.75% 4.59% 4.50%
Yield on interest-earning
investments 2.08% 1.90% 1.35%
Yield on interest-earning
assets 4.73% 4.57% 4.46%
Cost of deposits 2.08% 1.97% 1.88%
Cost of borrowings 2.38% 1.87% 1.43%
Cost of funds 2.22% 1.93% 1.69%
Yield on interest-earning
assets less cost of funds
(Primary Spread) at quarterend 2.51% 2.64% 2.77%
Average Primary Spread for the
quarter 2.60% 2.70% 2.86%
For the Quarter Ended
--------------------------
Mar. 31 Dec. 31
2004 2003
------------- ------------
AVERAGE BALANCES (a)
Cash and investments $1,641,994 $1,409,734
Loans receivable and mortgage-backed
securities 80,498,053 75,544,443
Investment in capital stock of Federal Home
Loan Banks 1,165,153 1,146,948
Deposits 47,029,050 46,448,866
Advances from Federal Home Loan Banks 23,231,041 20,642,344
Securities sold under agreements to
repurchase 2,558,780 1,921,788
Other borrowings 4,351,662 3,219,452
Stockholders' equity 6,100,369 5,787,207
Total Average Assets 84,252,424 79,029,081
Average Earning Assets 82,963,346 77,773,138
Average Interest-Bearing Liabilities 77,170,533 72,232,450
LOAN BALANCE AND ACTIVITY
Loans receivable and mortgage-backed
securities $83,079,037 $78,311,016
Adjustable rate loans receivable and
mortgage-backed securities 79,889,765 75,238,723
New real estate loans originated $9,393,862 $10,905,670
New adjustable rate mortgages as a
percentage of new real estate loans
originated 98% 98%
New refinanced mortgages as a percentage of
new real estate loans originated 72% 70%
LOANS SOLD AND SERVICED DATA
Loan sales $131,589 $401,091
Loans serviced for others 5,438,165 5,764,986
Balance of capitalized mortgage servicing
rights 82,503 88,967
NONPERFORMING ASSETS
Loans and MBS 90 days or more past due $399,904 $410,064
Foreclosed real estate 13,348 13,904
------------- ------------
Total nonperforming assets $413,252 $423,968
============= ============
Ratio of nonperforming assets (NPAs) to
total assets .48% .51%
Ratio of troubled debt restructured (TDRs)
to total assets .01% .00%
Ratio of NPAs and TDRs to total assets .48% .51%
SPREAD DATA
Yield on loan portfolio 4.58% 4.61%
Yield on interest-earning investments 1.05% .93%
Yield on interest-earning assets 4.55% 4.54%
Cost of deposits 1.85% 1.85%
Cost of borrowings 1.32% 1.37%
Cost of funds 1.63% 1.67%
Yield on interest-earning assets less cost
of funds (Primary Spread) at quarterend 2.92% 2.87%
Average Primary Spread for the quarter 2.90% 2.91%
(a) Averages are computed by adding the beginning balance and each
monthend balance during the quarter and dividing by four.
(b) Includes a yearend impairment reserve of $7.3 million which
resulted from a fourth quarter after-tax charge of $1.8 million
and a third quarter after-tax charge of $2.7 million.
CONTACT: Golden West Financial Corporation
William C. Nunan, 510-446-3614