Exhibit 99.1
Golden West Reports 15% Increase in Earnings Per Share, Record
First Quarter Loan Originations and Deposit Growth
OAKLAND, Calif.--(BUSINESS WIRE)--April 20, 2005--Golden West
Financial Corporation (NYSE:GDW), parent of World Savings Bank,
announced diluted earnings per share of $1.12 for the first three
months of 2005, up 15% from the $0.97 reported during the same period
in 2004.
The Company also posted all-time high first quarter mortgage
originations and retail savings growth. New loan volume totaled $11.2
billion, up 19% from the $9.4 billion reported one year earlier. At
the same time, deposit inflows amounted to $2.6 billion, nearly four
times the $657 million recorded in the first three months of 2004.
In other news, Golden West received two separate accolades from
the financial community during the first quarter. In early January,
Morningstar, a leading provider of independent investment research,
named the Company's Chief Executive Officers, Herbert and Marion
Sandler, "2004 CEOs of the Year." Two months later, in the March 7,
2005 issue of FORTUNE magazine, Golden West was voted the nation's
most admired mortgage services company.
Opening with a discussion of the Company's loan growth, Herbert
Sandler, Chairman of the Board of Golden West, reflected, "Customers
continue to be attracted to the affordable payments and flexible terms
offered by our primary product, the adjustable rate mortgage, or ARM.
In addition, we maintained our high level of customer service,
facilitating the rapid processing of mortgage applications. Our
lending team took advantage of these factors and increased new loan
volume 19% from the same period one year earlier." Sandler added, "The
increase in our mortgage originations is noteworthy, because,
according to industry estimates, total nationwide lending in the first
quarter is projected to be down a bit from 2004 levels, and is
substantially lower than the all-time highs experienced in 2003."
Continuing, Sandler remarked, "The strong loan volume we generated
in the first three months of 2005 easily exceeded the payoffs of
existing mortgages. As a result, our loan portfolio, which is our
primary earning asset, grew $4.8 billion, or at a 19% annualized rate.
This growth is important, because the larger the Company's mortgage
portfolio, the greater our ability to generate profits."
Wrapping up his comments on lending results, Sandler noted, "In
the first quarter, 99% of Golden West's new loan volume was monthly
adjustable rate mortgages. Originating ARMs is an important part of
our strategy, because the yields on these loans are responsive to
changes in interest rates, thereby helping to limit the Company's
earnings sensitivity when rates fluctuate."
Adding to his 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." He
continued, "Short-term interest rates have more than doubled since the
first quarter last year. As a result, our spread has decreased,
because our liabilities, which are made up of deposits and borrowings,
respond to interest rate movements a bit faster than our ARM
portfolio, which is tied to indexes that lag changes in market
interest rates." In the first quarter of 2005, Golden West's spread
averaged 2.46%, down from 2.90% one year earlier.
Covering a final earnings related topic, Sandler commented on the
Company's general and administrative expenses (G&A). He noted, "Total
G&A was up 12% from the first quarter of 2004. As you would expect, a
large portion of this spending increase supported the growth in our
loan portfolio." He added, "Despite the rise in G&A, our expense ratio
improved significantly from the first three months of 2004 because of
the Company's strong asset growth." Golden West's ratio of G&A to
average assets was .82% in the first quarter of 2005, compared to .95%
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 March 31, 2005, Golden West's ratio was .32%, down from just .48%
one year earlier. "As our percentage indicates, the Company's history
of impressive loan quality continued in the first quarter."
Concluding with a discussion of Golden West's savings activity,
Sandler stated, "Customers responded enthusiastically to the promoted
products and rates we offered in the first quarter. As a result, our
savings balances grew $2.6 billion, surpassing the previous record for
the first quarter, which was set in 2003."
Headquartered in Oakland, California, Golden West is one of the
nation's largest financial institutions with assets over $110 billion
as of March 31, 2005. The Company has one of the most extensive thrift
branch systems in the country, with 279 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
March 31
-------------------------
2005 2004
------------ ------------
Interest Income
Interest on loans $ 1,258,615 $ 878,816
Interest on mortgage-backed securities 25,457 43,677
Interest and dividends on investments 27,413 17,264
------------ ------------
1,311,485 939,757
Interest Expense
Interest on deposits 298,318 215,900
Interest on advances 223,268 73,038
Interest on repurchase agreements 25,264 6,922
Interest on other borrowings 60,071 24,643
------------ ------------
606,921 320,503
------------ ------------
Net Interest Income 704,564 619,254
Provision for loan losses 884 241
------------ ------------
Net Interest Income after Provision for
Loan Losses 703,680 619,013
Noninterest Income
Fees 63,922 40,674
Gain on the sale of securities, MBS and
loans 1,758 2,962
Change in fair value of derivatives 219 1,082
Other 16,714 15,089
------------ ------------
82,613 59,807
Noninterest Expense
General and administrative:
Personnel 151,831 130,998
Occupancy 22,225 20,394
Technology and telecommunications 21,422 21,019
Deposit insurance 1,855 1,770
Advertising 7,540 5,256
Other 19,366 20,077
------------ ------------
224,239 199,514
Earnings before Taxes on Income 562,054 479,306
Taxes on Income 213,804 179,582
------------ ------------
Net Earnings $ 348,250 $ 299,724
============ ============
Basic Earnings Per Share $ 1.13 $ 0.98
============ ============
Diluted Earnings Per Share $ 1.12 $ 0.97
============ ============
Average common shares outstanding 306,861,057 304,547,274
Average diluted common shares outstanding 311,539,734 310,081,162
Ratios: (a)
Net earnings / average stockholders'
equity 18.78% 19.65%
Net earnings / average assets 1.27% 1.42%
Net interest margin (b) 2.60% 2.99%
General and administrative expense /
average assets .82% .95%
Efficiency ratio (c) 28.49% 29.38%
(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 dividing by four.
(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)
Mar. 31 Dec. 31 Sep. 30
2005 2004 2004
------------- ------------- -------------
ASSETS
Cash $ 311,607 $ 292,421 $ 283,776
Securities
available for
sale at fair
value 2,053,996 1,374,385 919,647
Purchased
mortgage-backed
securities
available for
sale at fair
value 13,548 14,438 15,915
Purchased
mortgage-backed
securities held
to maturity at
cost 357,843 375,632 395,887
Mortgage-backed
securities with
recourse held to
maturity at cost 1,440,341 1,719,982 1,889,322
Loans held for
sale 40,988 52,325 55,899
Loans held in
portfolio less
allowance for
loan losses 105,641,104 100,506,854 94,259,118
------------- ------------- -------------
Total Loans
Receivable and
Mortgage-Backed
Securities 107,493,824 102,669,231 96,616,141
Interest earned
but uncollected 298,693 248,073 233,257
Investment in
capital stock of
Federal Home
Loan Banks at
cost which
approximates
fair value 1,662,312 1,563,276 1,484,560
Foreclosed real
estate 10,840 11,461 8,815
Premises and
equipment, net 398,181 391,523 378,769
Other assets 358,396 338,171 322,662
------------- ------------- -------------
$112,587,849 $106,888,541 $100,247,627
============= ============= =============
LIABILITIES and
STOCKHOLDERS'
EQUITY
Deposits $ 55,593,265 $ 52,965,311 $ 51,666,515
Advances from
Federal Home
Loan Banks 35,511,757 33,781,895 32,017,135
Securities sold
under agreements
to repurchase 4,050,000 3,900,000 3,650,179
Bank notes 2,485,936 2,709,895 869,154
Senior debt 5,955,989 5,291,840 3,997,707
Taxes on income 730,094 561,772 611,997
Other liabilities 681,310 402,952 544,153
Stockholders'
equity 7,579,498 7,274,876 6,890,787
------------- ------------- -------------
$112,587,849 $106,888,541 $100,247,627
============= ============= =============
Book value per
common share $ 24.68 $ 23.73 $ 22.51
Common shares
outstanding 307,126,766 306,524,716 306,102,778
Jun. 30 Mar. 31
2004 2004
------------- -------------
ASSETS
Cash $ 296,330 $ 248,710
Securities
available for
sale at fair
value 1,539,885 1,123,463
Purchased
mortgage-backed
securities
available for
sale at fair
value 18,401 19,895
Purchased
mortgage-backed
securities held
to maturity at
cost 411,881 437,580
Mortgage-backed
securities with
recourse held to
maturity at cost 2,083,852 2,342,210
Loans held for
sale 107,692 157,666
Loans held in
portfolio less
allowance for
loan losses 86,471,707 80,121,686
------------- -------------
Total Loans
Receivable and
Mortgage-Backed
Securities 89,093,533 83,079,037
Interest earned
but uncollected 203,145 191,475
Investment in
capital stock of
Federal Home
Loan Banks at
cost which
approximates
fair value 1,318,642 1,203,589
Foreclosed real
estate 9,885 13,348
Premises and
equipment, net 376,501 367,579
Other assets 320,381 377,570
------------- -------------
$ 93,158,302 $ 86,604,771
============= =============
LIABILITIES and
STOCKHOLDERS'
EQUITY
Deposits $ 48,611,353 $ 47,383,623
Advances from
Federal Home
Loan Banks 28,712,498 24,805,930
Securities sold
under agreements
to repurchase 3,470,761 2,672,049
Bank notes 1,786,668 2,504,917
Senior debt 2,989,726 1,989,944
Taxes on income 587,357 627,431
Other liabilities 434,178 377,018
Stockholders'
equity 6,565,761 6,243,859
------------- -------------
$ 93,158,302 $ 86,604,771
============= =============
Book value per
common share $21.49 $20.47
Common shares
outstanding 305,498,422 304,984,278
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands except per share figures)
For the Quarter Ended
--------------------------------------
Mar. 31 Dec. 31 Sep. 30
2005 2004 2004
------------ ------------ ------------
Net interest
income $ 704,564 $ 691,536 $ 665,129
Provision for
loan losses 884 2,571 197
Noninterest
income 82,613 81,364 71,605
Noninterest
expense 224,239 222,619 210,460
------------ ------------ ------------
Earnings before
taxes on income 562,054 547,710 526,077
Taxes on income
(a) 213,804 209,209 201,299
------------ ------------ ------------
Net earnings $ 348,250 $ 338,501 $ 324,778
============ ============ ============
Basic EPS $ 1.13 $ 1.11 $ 1.06
Diluted EPS $ 1.12 $ 1.09 $ 1.05
Average common
shares
outstanding 306,861,057 306,312,759 305,706,406
Average diluted
common shares
outstanding 311,539,734 311,179,468 310,573,378
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) 18.78% 19.14% 19.31%
Net earnings /
average assets
(ROA) 1.27% 1.31% 1.34%
Net interest
margin (c) 2.60% 2.70% 2.78%
General and
administrative
expense /
average assets .82% .86% .87%
Efficiency ratio
(d) 28.49% 28.80% 28.57%
Loan loss reserve $ 290,192 $ 290,110 $ 290,079
Net loan
chargeoffs
(recoveries) $802 $2,540 $114
Stockholders'
equity / total
assets 6.73% 6.81% 6.87%
Total deposit net
activity $ 2,627,954 $ 1,298,796 $ 3,055,162
For the Quarter Ended
-------------------------
Jun. 30 Mar. 31
2004 2004
------------ ------------
Net interest
income $ 642,686 $ 619,254
Provision for
loan losses 392 241
Noninterest
income 81,147 59,807
Noninterest
expense 207,533 199,514
------------ ------------
Earnings before
taxes on income 515,908 479,306
Taxes on income
(a) 199,190 179,582
------------ ------------
Net earnings $ 316,718 $ 299,724
============ ============
Basic EPS $ 1.04 $ 0.98
Diluted EPS $ 1.02 $ 0.97
Average common
shares
outstanding 305,304,064 304,547,274
Average diluted
common shares
outstanding 310,427,096 310,081,162
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) 19.79% 19.65%
Net earnings /
average assets
(ROA) 1.41% 1.42%
Net interest
margin (c) 2.91% 2.99%
General and
administrative
expense /
average assets .93% .95%
Efficiency ratio
(d) 28.67% 29.38%
Loan loss reserve $ 289,996 $ 289,351
Net loan
chargeoffs
(recoveries) $ (253) $ 827
Stockholders'
equity / total
assets 7.05% 7.21%
Total deposit net
activity $ 1,227,730 $ 656,658
(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
-----------------------------------------
Mar. 31 Dec. 31 Sep. 30
2005 2004 2004
------------- ------------- -------------
AVERAGE BALANCES
(a)
Cash and
investments $ 2,074,816 $ 1,442,083 $ 1,680,206
Loans receivable
and mortgage-
backed
securities 105,079,482 99,698,762 92,976,928
Investment in
capital stock
of Federal Home
Loan Banks 1,622,540 1,521,608 1,413,980
Deposits 54,116,414 52,317,613 50,229,774
Advances from
Federal Home
Loan Banks 34,986,559 32,754,803 30,684,256
Securities sold
under
agreements to
repurchase 3,937,500 3,900,045 3,590,338
Other borrowings 8,132,422 6,373,852 4,604,075
Stockholders'
equity 7,419,240 7,073,030 6,729,240
Total Average
Assets 109,807,456 103,634,158 96,997,990
Average Earning
Assets 108,489,822 102,371,618 95,778,195
Average Interest-
Bearing
Liabilities 101,172,895 95,346,313 89,108,443
LOAN BALANCE AND
ACTIVITY
Loans receivable
and mortgage-
backed
securities $107,493,824 $102,669,231 $ 96,616,141
Adjustable rate
loans
receivable and
mortgage-backed
securities 104,481,133 99,730,701 93,426,505
New real estate
loans
originated $ 11,174,737 $ 13,083,888 $ 14,071,739
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 78% 75% 69%
LOANS SOLD AND
SERVICED DATA
Loan sales $ 91,114 $ 97,096 $ 99,405
Loans serviced
for others 4,315,925 4,537,024 4,812,072
Balance of
capitalized
mortgage
servicing rights 48,208(b) 53,234 63,763
NONPERFORMING
ASSETS
Loans and MBS 90
days or more
past due $ 342,394 $ 332,329 $ 346,585
Foreclosed real
estate 10,840 11,461 8,815
------------- ------------- -------------
Total
nonperforming
assets $ 353,234 $ 343,790 $ 355,400
============= ============= =============
Ratio of
nonperforming
assets (NPAs) to
total assets .31% .32% .35%
Ratio of troubled
debt
restructured
(TDRs) to total
assets .00% .00% .00%
Ratio of NPAs and
TDRs to total
assets .32% .33% .36%
SPREAD DATA
Yield on loan
portfolio 5.06% 4.75% 4.59%
Yield on
interest-
earning
investments 2.90% 2.08% 1.90%
Yield on
interest-
earning assets 5.02% 4.73% 4.57%
Cost of deposits 2.39% 2.08% 1.97%
Cost of
borrowings 2.89% 2.38% 1.87%
Cost of funds 2.62% 2.22% 1.93%
Yield on
interest-earning
assets less cost
of funds
(Primary Spread)
at quarterend 2.40% 2.51% 2.64%
Average Primary
Spread for the
quarter 2.46% 2.60% 2.70%
For the Quarter Ended
---------------------------
Jun. 30 Mar. 31
2004 2004
------------- -------------
AVERAGE BALANCES
(a)
Cash and
investments $ 1,650,596 $ 1,641,994
Loans receivable
and mortgage-
backed
securities 85,818,380 80,498,053
Investment in
capital stock
of Federal Home
Loan Banks 1,245,010 1,165,153
Deposits 47,798,007 47,029,050
Advances from
Federal Home
Loan Banks 26,735,540 23,231,041
Securities sold
under
agreements to
repurchase 3,021,646 2,558,780
Other borrowings 4,654,051 4,351,662
Stockholders'
equity 6,401,862 6,100,369
Total Average
Assets 89,649,483 84,252,424
Average Earning
Assets 88,389,797 82,963,346
Average Interest-
Bearing
Liabilities 82,209,244 77,170,533
LOAN BALANCE AND
ACTIVITY
Loans receivable
and mortgage-
backed
securities $ 89,093,533 $ 83,079,037
Adjustable rate
loans
receivable and
mortgage-backed
securities 85,731,774 79,889,765
New real estate
loans
originated $ 12,439,588 $ 9,393,862
New adjustable
rate mortgages
as a percentage
of new real
estate loans
originated 99% 98%
New refinanced
mortgages as a
percentage of
new real estate
loans
originated 71% 72%
LOANS SOLD AND
SERVICED DATA
Loan sales $ 224,874 $ 131,589
Loans serviced
for others 5,095,475 5,438,165
Balance of
capitalized
mortgage
servicing rights 76,217 82,503
NONPERFORMING
ASSETS
Loans and MBS 90
days or more
past due $ 368,502 $ 399,904
Foreclosed real
estate 9,885 13,348
------------- -------------
Total
nonperforming
assets $ 378,387 $ 413,252
============= =============
Ratio of
nonperforming
assets (NPAs) to
total assets .41% .48%
Ratio of troubled
debt
restructured
(TDRs) to total
assets .00% .01%
Ratio of NPAs and
TDRs to total
assets .41% .48%
SPREAD DATA
Yield on loan
portfolio 4.50% 4.58%
Yield on
interest-
earning
investments 1.35% 1.05%
Yield on
interest-
earning assets 4.46% 4.55%
Cost of deposits 1.88% 1.85%
Cost of
borrowings 1.43% 1.32%
Cost of funds 1.69% 1.63%
Yield on
interest-earning
assets less cost
of funds
(Primary Spread)
at quarterend 2.77% 2.92%
Average Primary
Spread for the
quarter 2.86% 2.90%
(a) Averages are computed by adding the beginning balance and each
monthend balance during the quarter and dividing by four.
(b) Includes an impairment reserve of $6.0 million at March 31, 2005.
CONTACT: Golden West Financial Corporation
William C. Nunan, 510-446-3614