8-K 1 form8kjuly2001.txt FORM 8K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________ FORM 8-K ________ Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period ended June 30, 2001 _________________________________ GOLDEN WEST FINANCIAL CORPORATION _________________________________ Commission file number 1-4629 Incorporated Pursuant to the Laws of Delaware State Internal Revenue Service - Employer Identification No. 95-2080059 1901 Harrison Street, Oakland, California 94612 (510) 446-3420 Item 7. Financial Statements and Exhibits. (c) Exhibits. Exhibit No. Exhibit __________ __________ 1.0 Second Quarter Earnings Press Release SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GOLDEN WEST FINANCIAL CORPORATION Dated: July 26, 2001 /s/ Russell W. Kettell ______________________________________ Russell W. Kettell President and Chief Financial Officer /s/ William C. Nunan ______________________________________ William C. Nunan Chief Accounting Officer FOR FURTHER INFORMATION CONTACT FOR IMMEDIATE RELEASE William C. Nunan, Group Senior Vice President Telephone: (510) 446-3614 July 18, 2001 GOLDEN WEST FINANCIAL REPORTS 55% INCREASE IN SECOND QUARTER EARNINGS PER SHARE Oakland, California: Golden West Financial Corporation, parent of World Savings Bank, announced record second quarter 2001 diluted earnings per share of $1.30, up 55% from the $.84 recorded in the same period in 2000. First half 2001 per share profits, excluding a one-time $.04 charge resulting from the adoption on January 1, 2001 of Financial Accounting Standard No. 133, totaled $2.40, a 48% increase from the $1.62 for the first six months of 2000. Discussing the two principal factors that explain the Company's exceptionally large earnings growth, Marion O. Sandler, Chairman and Chief Executive Officer of Golden West, said, "First, our loan balances expanded by a strong 17% during the past twelve months. Over the long run, the growth of Golden West's profits relates to the expansion of the mortgage portfolio, which is our major earning asset." Continuing, she remarked, "Second, we also received a significant, but temporary, boost to our profit margin from the large decline in short-term interest rates in 2001." Citing another reason for Golden West's jump in earnings, Sandler stated, "Noninterest income rose to $67 million in the second quarter of 2001, up from $40 million in the same period a year earlier. Higher loan prepayment fees, servicing fee income, and gains on sale of mortgages were primarily responsible for the $27 million increase." First half 2001 noninterest income totaled $110 million, a $37 million increase from the $73 million recorded during the first six months of 2000. In addition to record earnings, the Company also announced second quarter 2001 mortgage originations of $5.6 billion, in line with the all-time high $5.7 billion originated in the same period a year earlier. For the first half of 2001, new loan volume totaled $9.42 billion, compared with a record $9.44 billion for the first six months of 2000. Elaborating on the Company's lending results, Sandler noted, "Declines in interest rates have made producing adjustable rate mortgages challenging. Competition has been stiff from fixed-rate loans carrying the lowest rates in two years. Nevertheless, our loan origination team produced near-record volume." Adjustable rate mortgages (ARMs) comprised 83% of Golden West's new loan volume during the second quarter of 2001 and 85% during the first half. Continuing, Sandler said, "While we were able to produce a significant volume of new mortgages during the first half of 2001, many borrowers, including our own, chose to replace their existing home loans with new mortgages. The resulting high level of repayments slowed the growth of our loan portfolio in the first half of 2001." On another mortgage-related topic, Sandler commented, "The Company's long history of impressive loan quality continued in the second quarter of 2001." At June 30, 2001, Golden West's ratio of nonperforming assets to total assets was a low .53%, a slight increase from the .45% of a year earlier. Wrapping up her quarterly review with a more detailed explanation of the Company's profit margin expansion, Sandler commented, "The yield on our loan portfolio reacts more slowly to changes in interest rates than does our cost of funds. As a result, when rates fall, our primary spread, or profit margin, expands." With the Federal Reserve's Open Market Committee lowering its target for the Federal Funds rate by 275 basis points in the first half of 2001, Golden West's primary spread surged to 2.79% at June 30, 2001, up from 1.91% a year earlier and 2.03% at yearend 2000. The June 2001 level represented the widest profit margin since the early 1990's, another period marked by large decreases in interest rates. Completing her explanation of the Company's primary spread, Sandler mentioned, "It's important to note that the same dynamics that cause our profit margin to expand in a falling interest environment lead to a contraction of the primary spread when rates later stabilize or rise. So, basically, the boost to Golden West's profit margin from declining rates is given back when rates increase." Headquartered in Oakland, California, Golden West is a savings and loan holding company with assets of $57 billion as of June 30, 2001. Currently operating 433 savings and lending offices in 35 states under the World name, the Company has one of the largest branch systems in the country. Golden West's stock is listed on the New York and Pacific Stock Exchanges under the ticker symbol GDW. 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 include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. Such statements include, without limitation, references to future earnings, profit margins, and portfolio growth. It is important to note that such forward-looking statements are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control. Thus future financial results may differ materially from those described herein. Golden West Financial Corporation makes no guarantee or promises regarding future results and assumes no responsibility to update such forward-looking statements. # # # Financial Information Attached GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AND OTHER FINANCIAL DATA (Unaudited) (Dollars in thousands except per share figures)
June 30 --------------------------------------- 2001 2000 ---------------- --------------- ASSETS Cash $ 439,590 $ 254,442 Securities available for sale at fair value 672,055 234,629 Other investments 375 302,252 Purchased mortgage-backed securities available for sale 218,876 71,113 Purchased mortgage-backed securities held to maturity 337,212 410,054 Mortgage-backed securities with recourse held to maturity 17,657,738 13,651,191 Loans receivable 35,511,200 31,683,917 Interest earned but uncollected 268,954 218,351 Investment in capital stock of Federal Home Loan Banks 1,074,756 783,667 Foreclosed real estate 8,472 9,608 Premises and equipment--at cost less accumulated depreciation 316,760 299,039 Other assets 925,555 929,621 ---------------- --------------- $ 57,431,543 $ 48,847,884 ================ =============== LIABILITIES and STOCKHOLDERS' EQUITY Deposits $ 31,491,959 $ 27,726,782 Advances from Federal Home Loan Banks 18,945,452 15,231,522 Securities sold under agreements to repurchase 851,197 1,160,536 Bank notes 634,951 0 Subordinated notes--net of discount 599,148 713,377 Taxes on income 471,232 332,104 Other liabilities 385,474 373,852 Stockholders' equity 4,052,130 3,309,711 ---------------- --------------- $ 57,431,543 $ 48,847,884 ================ =============== Book value per common share $ 25.50 $ 20.95 Common shares outstanding 158,876,757 157,948,933 Loan loss reserve $ 245,078 $ 234,834 Net loan chargeoffs (recoveries) during the quarter $ 691 $ 165 Net loan chargeoffs (recoveries) year-to-date $ 587 $ 439 New real estate loans originated: during the quarter $ 5,628,720 $ 5,675,604 year-to-date $ 9,422,730 $ 9,442,015 New adjustable rate mortgages as a percentage of new real estate loans originated: during the quarter 83.31% 96.47% year-to-date 85.33% 96.43% Loan sales during the quarter $ 712,205 $ 62,787 Loan sales year-to-date $ 986,777 $ 135,296 Retail deposit net activity during the quarter $ 761,000 $ 502,530 Wholesale CD net activity during the quarter (626,000) (750,000) ---------------- --------------- Total deposit activity during the quarter $ 135,000 $ (247,470) ================ =============== Retail deposit net activity year-to-date $ 1,510,040 $ 611,872 Wholesale CD net activity year-to-date (66,000) (600,000) ---------------- --------------- Total deposit net activity year-to-date $ 1,444,040 $ 11,872 ================ ===============
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 ------------------------------ ------------------------------- 2001 2000 2001 2000 -------------- -------------- -------------- -------------- Interest Income Interest on loans $ 672,823 $ 595,615 $ 1,377,647 $ 1,132,702 Interest on mortgage-backed securities 371,669 231,982 737,266 443,299 Interest and dividends on investments 53,252 64,795 117,014 108,945 -------------- -------------- -------------- -------------- 1,097,744 892,392 2,231,927 1,684,946 Interest Expense Interest on deposits 406,117 358,313 836,865 698,323 Interest on advances 239,572 206,925 533,008 351,415 Interest on repurchase agreements 14,537 21,969 32,226 38,633 Interest on other borrowings 34,217 24,658 63,932 46,417 -------------- -------------- -------------- -------------- 694,443 611,865 1,466,031 1,134,788 -------------- -------------- -------------- -------------- Net Interest Income 403,301 280,527 765,896 550,158 Provision for loan losses 5,641 3,842 8,824 4,811 -------------- -------------- -------------- -------------- Net Interest Income after Provision for Loan Losses 397,660 276,685 757,072 545,347 Noninterest Income Fees 42,721 18,445 74,033 34,687 Gain on the sale of securities and loans 7,883 1,833 13,760 3,271 Change in fair value of derivatives 1,588 0 (5,914) 0 Other 14,636 19,647 28,272 35,458 -------------- -------------- -------------- -------------- 66,828 39,925 110,151 73,416 Noninterest Expense General and administrative: Personnel 72,002 58,125 140,198 115,405 Occupancy 19,480 17,549 39,289 34,607 Deposit insurance 1,418 1,442 2,804 2,854 Advertising 3,048 1,488 4,925 3,662 Other 29,167 23,783 55,316 45,819 -------------- -------------- -------------- -------------- 125,115 102,387 242,532 202,347 Earnings before Taxes on Income and Cumulative Effect of Accounting Change 339,373 214,223 624,691 416,416 Taxes on Income 130,444 80,961 239,683 157,220 -------------- -------------- -------------- -------------- Income before Cumulative Effect of Accounting Change 208,929 133,262 385,008 259,196 Cumulative Effect of Accounting Change, Net of Tax 0 0 (6,018) 0 -------------- -------------- -------------- -------------- Net Earnings $ 208,929 $ 133,262 $ 378,990 $ 259,196 ============== ============== ============== ============== Basic Earnings Per Share before Cumulative Effect of Accounting Change $ 1.32 $ 0.84 $ 2.43 $ 1.63 Cumulative Effect of Accounting Change, Net of Tax 0.00 0.00 (0.04) 0.00 -------------- -------------- -------------- -------------- Basic Earnings Per Share $ 1.32 $ 0.84 $ 2.39 $ 1.63 ============== ============== ============== ============== Diluted Earnings Per Share before Cumulative Effect of Accounting Change $ 1.30 $ 0.84 $ 2.40 $ 1.62 Cumulative Effect of Accounting Change, Net of Tax 0.00 0.00 (0.04) 0.00 -------------- -------------- -------------- -------------- Diluted Earnings Per Share $ 1.30 $ 0.84 $ 2.36 $ 1.62 ============== ============== ============== -------------- Average common shares outstanding 158,724,536 157,999,885 158,602,033 158,979,248 Average diluted common shares outstanding 160,968,179 159,593,955 160,771,429 160,227,370 Ratios(a) Net earnings before accounting change/average net worth 21.19% 16.32% 20.01% 16.00% Net earnings before accounting change/average assets 1.47% 1.13% 1.36% 1.15% Net interest income/average assets 2.83% 2.39% 2.71% 2.44% General and administrative expense/average assets .88% .87% .86% .90% Efficiency ratio 26.61% 31.95% 27.68% 32.45%
(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 the six month period and dividing by four and seven, respectively.
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES OTHER FINANCIAL DATA (Unaudited) (Dollars in thousands except per share figures) Three Months Ended Six Months Ended June 30 June 30 ------------------------------- ------------------------------- 2001 2000 2001 2000 ------------- -------------- ------------- -------------- AVERAGE BALANCES(a) Cash and investments $ 889,507 $ 1,191,303 $ 919,103 $ 1,082,013 Loans receivable including mortgage-backed securities 53,530,756 43,742,947 53,197,755 42,196,227 Investment in capital stock of Federal Home Loan Banks 1,075,735 703,810 1,076,037 635,567 Deposits 31,271,860 27,933,080 30,903,779 27,877,443 Advances from Federal Home Loan Banks 18,892,793 13,352,956 19,152,535 11,581,862 Securities sold under agreements to repurchase 978,626 963,568 911,499 1,001,309 Other borrowings 919,042 738,272 781,817 741,738 Stockholders' equity 3,944,077 3,265,364 3,848,668 3,240,386 Total Average Assets 56,971,953 46,993,584 56,549,192 45,125,521 Average Interest-Earning Assets 55,310,583 45,486,444 55,014,902 43,745,671 Average Interest-Bearing Liabilities 52,062,320 42,987,876 51,749,629 41,202,352 As of June 30 ------------------------------- 2001 2000 ------------- -------------- NONPERFORMING ASSETS Loans (including MBS with recourse) 90 days or more past due $ 295,537 $ 210,127 Foreclosed real estate 8,472 9,608 ------------- -------------- Total Nonperforming Assets $ 304,009 $ 219,735 ============= ============== Ratio of nonperforming assets to total assets .53% .45% Ratio of troubled debt restructured to total assets .00% .01% SPREAD DATA Yield on loan portfolio 7.53% 7.52% Yield on investments 5.50% 7.76% Yield on earning assets 7.52% 7.52% Cost of deposits 4.80% 5.11% Cost of borrowings 4.62% 6.43% Cost of funds 4.73% 5.61% Yield on earning assets less cost of funds 2.79% 1.91%
(a) 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.