Exhibit 99.1
Golden West Reports Record Earnings and Deposits
OAKLAND, Calif.--(BUSINESS WIRE)--July 20, 2005--Golden West
Financial Corporation (NYSE:GDW), parent of World Savings Bank,
announced diluted earnings per share of $1.16 in the second quarter,
up 14% from the $1.02 reported during the same period in 2004. Per
share profits for the first half of 2005 reached $2.28, a 15% increase
from the $1.99 posted in the first six months of 2004.
In other news, the Company's retail savings balances grew a record
$3.6 billion in the second quarter, easily surpassing the $1.2 billion
reported in the same period one year earlier. At the end of the first
six months of 2005, deposits had increased by $6.3 billion, up
dramatically from the $1.9 billion of net inflows recorded in the
first two quarters of 2004.
In discussing the Company's year-over-year quarterly results,
Marion Sandler, Chairman of the Board and Chief Executive Officer of
Golden West, first reflected on the overall interest rate environment,
"Since the second quarter of 2004, the Federal Reserve's Open Market
Committee has raised the Federal Funds rate, which influences
short-term yields, from 1.00% to 3.25%, including two one-quarter
percent moves this past quarter." She continued, "As interest rates
have risen, so have the returns on our insured deposit accounts,
increasing the public's appetite for traditional certificates of
deposit, or CDs. To address our customers' needs, we aggressively
priced our promoted savings products. With continued uncertainty in
the stock market, investors responded enthusiastically, and as a
result, we achieved all-time high deposit growth in the second
quarter."
Adding to her comments on the Company's quarterly performance,
Sandler remarked, "Consumer demand for home loans, including our
primary product, the monthly adjustable rate mortgage or ARM, remained
strong." In the second quarter, Golden West originated $13.5 billion
of loans, compared with $12.4 billion in the same period one year
earlier. For the first six months of 2005, mortgage volume totaled
$24.6 billion, a 13% increase from the $21.8 billion reported in the
first half of 2004.
Continuing, Sandler observed, "At the same time, repayments of
existing loans have remained high, stimulated by low mortgage rates
and a desire on the part of many borrowers to turn the equity in their
homes into cash. Nevertheless, since originations significantly
exceeded payoffs, the Company's loan balances grew at an annualized
rate of 20% in the second quarter."
Adding to her earnings explanation, Sandler pointed out, "In
addition to growing the loan portfolio, the other key factor that
influences Golden West's profits is the Company's primary spread,
which is the difference between what we earn on loans and investments
and what we pay for savings and borrowings." Continuing, Sandler
explained, "Our spread normally decreases when short-term rates rise,
because the return on our loan portfolio responds to interest rate
movements a bit slower than the cost of our deposits and borrowings."
In the second three months of 2005, Golden West's spread averaged
2.39%, down from 2.86% in the same period one year earlier.
Covering another earnings related topic, Sandler commented on the
Company's general and administrative (G&A) expenses, noting,
"Controlling spending is an important element of our business model,
because we want to ensure as much of our income as possible flows
through to the bottom line and is not eaten up by costs. We evaluate
the success of this strategy by determining the amount of money it
takes to manage the Company's assets. This measure is called the G&A
ratio." Golden West's G&A ratio fell to .83% in the second quarter of
2005 from .93% in the same period one year earlier. Sandler added,
"While average assets were up 28% from the second quarter of last
year, expenses grew only 15% during the same time frame, leading to
the significant decline in our G&A ratio."
Concluding with a discussion of the performance of the Company's
mortgage portfolio, Sandler explained, "One way we measure the quality
of the loans we make is the ratio of nonperforming assets, often
called NPAs, to total assets. The Company's prudent lending practices,
combined with a strong real estate market, have helped keep our NPA
levels at historic lows." At June 30, 2005, Golden West's ratio was
just .28%, down from a modest .41% one year earlier.
Headquartered in Oakland, California, Golden West is one of the
nation's largest financial institutions with assets over $115 billion
as of June 30, 2005. The Company has one of the most extensive thrift
branch systems in the country, with 281 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.
Financial Information Attached
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
June 30
-------------------------
2005 2004
------------ ------------
Interest Income
Interest on loans $ 1,412,340 $ 931,645
Interest on mortgage-backed securities
(MBS) 23,117 32,058
Interest and dividends on investments 28,745 14,029
------------ ------------
1,464,202 977,732
Interest Expense
Interest on deposits 365,029 219,454
Interest on advances 273,911 82,944
Interest on repurchase agreements 33,690 8,718
Interest on other borrowings 72,007 23,930
------------ ------------
744,637 335,046
------------ ------------
Net Interest Income 719,565 642,686
Provision for loan losses 1,807 392
------------ ------------
Net Interest Income after Provision for
Loan Losses 717,758 642,294
Noninterest Income
Fees 90,195 56,635
Gain on the sale of securities, MBS and
loans 1,847 6,291
Other 20,043 18,221
------------ ------------
112,085 81,147
Noninterest Expense
General and administrative:
Personnel 159,791 137,305
Occupancy 22,568 20,744
Technology and telecommunications 23,252 19,283
Deposit insurance 1,869 1,790
Advertising 7,045 5,223
Other 24,049 23,188
------------ ------------
238,574 207,533
Earnings before Taxes on Income 591,269 515,908
Taxes on Income 230,840 199,190
------------ ------------
Net Earnings $ 360,429 $ 316,718
============ ============
Basic Earnings Per Share $ 1.17 $ 1.04
============ ============
Diluted Earnings Per Share $ 1.16 $ 1.02
============ ============
Average common shares outstanding 307,440,730 305,304,064
Average diluted common shares outstanding 311,770,849 310,427,096
Ratios: (a)
Net earnings / average stockholders'
equity (ROE) 18.59% 19.79%
Net earnings / average assets (ROA) 1.25% 1.41%
Net interest margin (b) 2.53% 2.91%
General and administrative expense /
average assets .83% .93%
Efficiency ratio (c) 28.69% 28.67%
Six Months Ended
June 30
-------------------------
2005 2004
------------ ------------
Interest Income
Interest on loans $ 2,670,955 $ 1,810,461
Interest on mortgage-backed securities
(MBS) 48,574 75,735
Interest and dividends on investments 56,158 31,293
------------ ------------
2,775,687 1,917,489
Interest Expense
Interest on deposits 663,347 435,354
Interest on advances 497,179 155,982
Interest on repurchase agreements 58,954 15,640
Interest on other borrowings 132,078 48,573
------------ ------------
1,351,558 655,549
------------ ------------
Net Interest Income 1,424,129 1,261,940
Provision for loan losses 2,691 633
------------ ------------
Net Interest Income after Provision for
Loan Losses 1,421,438 1,261,307
Noninterest Income
Fees 154,117 97,309
Gain on the sale of securities, MBS and
loans 3,605 9,253
Other 36,976 34,392
------------ ------------
194,698 140,954
Noninterest Expense
General and administrative:
Personnel 311,622 268,303
Occupancy 44,793 41,138
Technology and telecommunications 44,674 40,302
Deposit insurance 3,724 3,560
Advertising 14,585 10,479
Other 43,415 43,265
------------ ------------
462,813 407,047
Earnings before Taxes on Income 1,153,323 995,214
Taxes on Income 444,644 378,772
------------ ------------
Net Earnings $ 708,679 $ 616,442
============ ============
Basic Earnings Per Share $ 2.31 $ 2.02
============ ============
Diluted Earnings Per Share $ 2.28 $ 1.99
============ ============
Average common shares outstanding 307,152,495 304,925,670
Average diluted common shares outstanding 311,469,354 310,082,362
Ratios: (a)
Net earnings / average stockholders'
equity (ROE) 18.68% 19.72%
Net earnings / average assets (ROA) 1.26% 1.42%
Net interest margin (b) 2.57% 2.94%
General and administrative expense /
average assets .82% .94%
Efficiency ratio (c) 28.59% 29.01%
(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
2005 2005
------------- -------------
ASSETS
Cash $ 301,269 $ 311,607
Securities available for sale at fair
value 1,682,550 2,053,996
Purchased MBS available for sale at fair
value 13,665 13,548
Purchased MBS held to maturity at cost 338,659 357,843
MBS with recourse held to maturity at
cost 1,346,080 1,440,341
Loans held for sale 48,636 40,988
Loans held in portfolio less allowance
for loan losses 110,999,190 105,641,104
------------- -------------
Total Loans Receivable and MBS 112,746,230 107,493,824
Interest earned but uncollected 319,264 298,693
Investment in capital stock of Federal
Home Loan Banks at cost which
approximates fair value 1,688,661 1,662,312
Foreclosed real estate 8,769 10,840
Premises and equipment, net 403,121 398,181
Other assets 335,814 358,396
------------- -------------
$117,485,678 $112,587,849
============= =============
LIABILITIES and
STOCKHOLDERS' EQUITY
Deposits $ 59,226,140 $ 55,593,265
Advances from Federal Home Loan Banks 35,755,870 35,511,757
Securities sold under agreements to
repurchase 4,450,000 4,050,000
Bank notes 2,232,955 2,485,936
Senior debt 6,736,979 5,955,989
Taxes on income 594,348 730,094
Other liabilities 552,943 681,310
Stockholders' equity 7,936,443 7,579,498
------------- -------------
$117,485,678 $112,587,849
============= =============
Book value per common share $ 25.79 $ 24.68
Common shares outstanding 307,760,826 307,126,766
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 MBS available for
sale at fair value 14,438 15,915 18,401
Purchased MBS held to
maturity at cost 375,632 395,887 411,881
MBS with recourse held to
maturity at cost 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 100,506,854 94,259,118 86,471,707
------------- ------------- -------------
Total Loans Receivable
and MBS 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
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
2005 2005
------------ ------------
Net interest income $ 719,565 $ 704,564
Provision for loan losses 1,807 884
Noninterest income 112,085 82,613
Noninterest expense 238,574 224,239
------------ ------------
Earnings before taxes on income 591,269 562,054
Taxes on income (a) 230,840 213,804
------------ ------------
Net earnings $ 360,429 $ 348,250
============ ============
Basic EPS $ 1.17 $ 1.13
Diluted EPS $ 1.16 $ 1.12
Average common shares outstanding 307,440,730 306,861,057
Average diluted common shares outstanding 311,770,849 311,539,734
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) 18.59% 18.78%
Net earnings / average assets (ROA) 1.25% 1.27%
Net interest margin (c) 2.53% 2.60%
General and administrative expense /
average assets .83% .82%
Efficiency ratio (d) 28.69% 28.49%
Loan loss reserve $ 291,687 $ 290,192
Net loan chargeoffs (recoveries) $ 312 $ 802
Stockholders' equity / total assets 6.76% 6.73%
Total deposit net activity $ 3,632,875 $ 2,627,954
SPREAD DATA
Yield on loan portfolio 5.40% 5.06%
Yield on interest-earning investments 3.41% 2.90%
Yield on interest-earning assets 5.38% 5.02%
Cost of deposits 2.70% 2.39%
Cost of borrowings 3.34% 2.89%
Cost of funds 2.99% 2.62%
Yield on interest-earning assets less cost of
funds (Primary Spread) at quarterend 2.39% 2.40%
Average Primary Spread for the quarter 2.39% 2.46%
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
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%
(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
2005 2005
------------- -------------
AVERAGE BALANCES (a)
Cash and investments $ 2,085,597 $ 2,074,816
Loans receivable and MBS 110,124,924 105,079,482
Investment in capital stock of Federal
Home Loan Banks 1,676,949 1,622,540
Deposits 57,300,656 54,116,414
Advances from Federal Home Loan Banks 35,696,338 34,986,559
Securities sold under agreements to
repurchase 4,325,000 3,937,500
Other borrowings 8,579,755 8,132,422
Stockholders' equity 7,756,555 7,419,240
Total Average Assets 114,951,805 109,807,456
Average Earning Assets 113,599,941 108,489,822
Average Interest-Bearing Liabilities 105,901,749 101,172,895
LOAN BALANCE AND ACTIVITY
Loans receivable and MBS $112,746,230 $107,493,824
Total deferred interest in loans
receivable and MBS $ 160,201 $ 90,172
Total deferred interest as a percentage
of total loans receivable and MBS .14% .08%
New real estate loans originated $ 13,452,983 $ 11,174,737
New adjustable rate mortgages as a
percentage of new real estate
loans originated 99% 99%
New refinanced mortgages as a percentage
of new real estate loans originated 75% 78%
LOANS SOLD AND SERVICED DATA
Loan sales $ 98,006 $ 91,114
Loans serviced for others 4,105,410 4,315,925
Balance of capitalized mortgage
servicing rights 43,835 48,208
NONPERFORMING ASSETS
Loans and MBS 90 days or more past
due $ 322,173 $ 342,394
Foreclosed real estate 8,769 10,840
------------- -------------
Total nonperforming assets $ 330,942 $ 353,234
============= =============
Ratio of nonperforming assets (NPAs) to
total assets .28% .31%
Ratio of troubled debt restructured (TDRs)
to total assets .00% .00%
Ratio of NPAs and TDRs to total assets .28% .32%
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 MBS 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 MBS $102,669,231 $ 96,616,141 $ 89,093,533
Total deferred interest
in loans receivable and
MBS $ 54,616 $ 36,042 $ 26,973
Total deferred interest
as a percentage of total
loans receivable and MBS .05% .04% .03%
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 63,763 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%
(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