8-K 1 form8kaugust2002.txt GDW FORM 8K AUGUST 2002 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 --------------------- FORM 8-K --------------------- CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 18, 2002 --------------------- GOLDEN WEST FINANCIAL CORPORATION --------------------- Commission file number 1-4629 Incorporated Pursuant to the Laws of Delaware State IRS 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 99.1 Excerpt from Second Quarter 2002 Earnings Press Release 99.2 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 99.3 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 SIGNATURES Pursuant to the requirements of the Securities 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: August 2, 2002 /s/ Russell W. Kettell ---------------------------------------- Russell W. Kettell President and Chief Financial Officer Exhibit 99.1 FOR FURTHER INFORMATION CONTACT FOR IMMEDIATE RELEASE William C. Nunan, Group Senior Vice President Telephone: (510) 446-3614 July 18, 2002 GOLDEN WEST ANNOUNCES RECORD SECOND QUARTER EARNINGS PER SHARE ALL-TIME HIGH LOAN ORIGINATIONS OF $6.9 BILLION Oakland, California: Golden West Financial Corporation, parent of World Savings Bank, posted record second quarter 2002 diluted earnings per share of $1.44, up 11% from the $1.30 reported for the same period in 2001. For the first half of 2002, per share profits reached $2.95, a 23% increase over the $2.40 registered for the first six months of 2001. The Company also announced record loan originations of $6.9 billion during the second quarter of 2002, up 23% from the $5.6 billion posted a year earlier. For the first six months of 2002, new loan volume totaled $12.3 billion, a 31% increase from the $9.4 billion recorded during the first half of 2001. Discussing the Company's growth in earnings, Marion O. Sandler, Chairman and Chief Executive Officer of Golden West, said, "In the second quarter of 2002, net interest income totaled $465 million, up 15% from the $403 million recorded in the same period of 2001. This increase in our primary revenue source occurred principally because our loan portfolio expanded by 10% during the past twelve months. An additional contribution came from a higher profit margin in the second quarter of 2002 compared to a year earlier." Golden West's primary spread, which is the difference between the yield on loans and other earning assets and the rate on savings and borrowings, averaged 2.96% during the second quarter of 2002, compared with 2.68% a year earlier. Continuing her discussion of factors influencing profits, Sandler stated, "Second quarter revenue from sources other than interest income fell by $16 million compared to a year earlier. This decline occurred principally because fees booked for servicing loans were lower than a year earlier." Wrapping up her earnings related comments, Sandler said, "Our general and administrative expenses (G&A) were 14% higher in the second quarter of 2002 than in the same period a year earlier, reflecting increased activity on both the loan and savings sides of the business. In addition, over the past year, we continued to invest in people, technology, and facilities in order to support the expansion of the Company. With these resources in place, we were easily able to take advantage of second quarter business opportunities." Golden West's ratio of G&A to average assets was .94% in the second quarter of 2002, compared with .88% a year earlier. The Company's efficiency ratio, which is general and administrative expenses divided by net interest income plus noninterest income, amounted to 27.7% during the second three months of 2002, up slightly from the 26.6% recorded during the same period of 2001. For the first six months of 2002, Golden West's efficiency ratio was 27.0%, down from 27.7% in the first half of 2001. Moving to a discussion of the lending environment, Sandler remarked, "Demand for residential mortgages remained very strong during the second quarter. Additionally, our primary product, the adjustable rate mortgage (ARM), increased in popularity because the continued decline in ARM rates made these loans more favorably priced than the fixed-rate alternative." ARMs comprised 95% of Golden West's originations during the second quarter and 93% during the first half of 2002. Expanding her discussion of the impact of very low ARM rates, Sandler commented, "With adjustable mortgage rates at historic lows, our borrowers had less incentive to prepay their mortgages in the second quarter of 2002 compared to a year earlier. That's good news because loan repayments are a deduction from the Company's loan portfolio, our major earning asset." Golden West's repayments totaled $3.7 billion in the second quarter of 2002, down from $4.7 billion in the same period in 2001. Continuing, Sandler remarked, "More good news came in the form of record total second quarter loan volume of $6.9 billion, up from $5.6 billion in the same period a year earlier, adding considerably to the Company's earning assets." Golden West's loan portfolio grew by $3.1 billion during the second three months of 2002, compared with the $421 million expansion in the same period a year earlier. Golden West's ratio of nonperforming assets and troubled debt restructured to total assets amounted to .64% at June 30, 2002, a slight increase over the .53% of a year earlier. Additionally, Golden West reported retail deposit growth of $722 million in the second quarter of 2002, in line with the $761 million recorded in the same period of 2001. For the first six months of 2002, savings growth amounted to $1.8 billion, up from $1.5 billion in the first half of 2001. Finally, the Company announced that it bought 314,500 shares of Golden West stock during the second quarter of 2002, bringing the total shares repurchased during 2002 to 1,079,500. At June 30, 2002, 12.9 million shares remained available to be purchased under current authorizations. Headquartered in Oakland, California, Golden West is the nation's second largest thrift with assets of $62 billion as of June 30, 2002. Currently operating 467 savings and lending offices in 38 states under the World name, the Company has one of the most extensive thrift branch systems in the country. Golden West's stock is listed on the New York Stock and Pacific Exchanges under the ticker symbol GDW. 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 NET EARNINGS AND OTHER FINANCIAL DATA (Unaudited) (Dollars in thousands except per share figures) Three Months Ended Six Months Ended June 30 June 30 ----------------------------- -------------------------------- 2002 2001 2002 2001 ------------- ------------ -------------- ------------- Interest Income Interest on loans $ 711,522 $ 672,823 $ 1,369,722 $ 1,377,647 Interest on mortgage-backed securities 112,479 371,669 292,447 737,266 Interest and dividends on investments 29,788 53,252 59,856 117,014 ------------- ------------ -------------- ------------- 853,789 1,097,744 1,722,025 2,231,927 Interest Expense Interest on deposits 263,148 406,117 539,729 836,865 Interest on advances 100,010 239,572 200,277 533,008 Interest on repurchase agreements 612 14,537 1,032 32,226 Interest on other borrowings 25,000 34,217 49,069 63,932 ------------- ------------ -------------- ------------- 388,770 694,443 790,107 1,466,031 ------------- ------------ -------------- ------------- Net Interest Income 465,019 403,301 931,918 765,896 Provision for loan losses 5,186 5,641 13,725 8,824 ------------- ------------ -------------- ------------- Net Interest Income after Provision for Loan Losses 459,833 397,660 918,193 757,072 Noninterest Income Fees 33,369 42,721 69,872 74,033 Gain on the sale of securities, MBS and loans 6,487 7,883 20,906 13,760 Change in fair value of derivatives (2,174) 1,588 4,957 (5,914) Other 13,611 14,636 25,562 28,272 ------------- ------------ -------------- ------------- 51,293 66,828 121,297 110,151 Noninterest Expense General and administrative: Personnel 85,207 72,002 168,039 140,198 Occupancy 21,240 19,480 42,405 39,289 Deposit insurance 1,509 1,418 3,011 2,804 Advertising 3,042 3,048 6,927 4,925 Other 31,969 29,167 63,646 55,316 ------------- ------------ -------------- ------------- 142,967 125,115 284,028 242,532 Earnings before Taxes on Income and Cumulative Effect of Accounting Change 368,159 339,373 755,462 624,691 Taxes on Income 141,791 130,444 291,013 239,683 ------------- ------------ -------------- ------------- Income before Cumulative Effect of Accounting Change 226,368 208,929 464,449 385,008 Cumulative Effect of Accounting Change, Net of Tax 0 0 0 (6,018) ------------- ------------ -------------- ------------- Net Earnings $ 226,368 $ 208,929 $ 464,449 $ 378,990 ============= ============ ============== ============= Basic Earnings Per Share before Cumulative Effect of Accounting Change $ 1.46 $ 1.32 $ 2.99 $ 2.43 Cumulative Effect of Accounting Change, Net of Tax 0.00 0.00 0.00 (0.04) ------------- ------------ -------------- ------------- Basic Earnings Per Share $ 1.46 $ 1.32 $ 2.99 $ 2.39 ============= ============ ============== ============= Diluted Earnings Per Share before Cumulative Effect of Accounting Change $ 1.44 $ 1.30 $ 2.95 $ 2.40 Cumulative Effect of Accounting Change, Net of Tax 0.00 0.00 0.00 (0.04) ------------- ------------ -------------- ------------- Diluted Earnings Per Share $ 1.44 $ 1.30 $ 2.95 $ 2.36 ============= ============ ============== ============= Average common shares outstanding 154,899,196 158,724,536 155,155,946 158,602,033 Average diluted common shares outstanding 157,078,432 160,968,179 157,269,057 160,771,429 Ratios: (a) Net earnings before accounting change / average net worth 19.85% 21.19% 20.76% 20.01% Net earnings before accounting change / average assets 1.49% 1.47% 1.55% 1.36% Net interest margin (b) 3.15% 2.92% 3.21% 2.78% General and administrative expense / average assets .94% .88% .95% .86% Efficiency ratio 27.69% 26.61% 26.97% 27.68% (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 Interest-Earning Assets.
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AND OTHER FINANCIAL DATA (Unaudited) (Dollars in thousands except per share figures) For the Quarter Ended ----------------------------------------------------------------------------- Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 2002 2002 2001 2001 2001 ------------ ------------ ------------ ------------ ------------ ASSETS Cash $ 332,027 $ 373,229 $ 339,059 $ 383,927 $ 439,590 Securities available for sale at fair value 369,238 462,201 622,670 725,881 672,055 Other investments 0 0 0 0 375 Purchased mortgage-backed securities available for sale 40,562 44,957 233,403 243,659 218,876 Purchased mortgage-backed securities held to maturity 216,697 238,934 275,150 309,171 337,212 Mortgage-backed securities with recourse held to maturity (a) 7,141,275 10,114,205 13,569,619 15,244,959 17,657,738 Loans receivable (a) 51,624,345 45,543,068 41,065,375 38,673,021 35,511,200 ------------ ------------ ------------ ------------ ------------ Total Loans Receivable 59,022,879 55,941,164 55,143,547 54,470,810 53,725,026 Interest earned but uncollected 198,842 208,521 255,600 253,328 268,954 Investment in capital stock of Federal Home Loan Banks 1,050,819 1,038,353 1,105,773 1,099,758 1,074,756 Foreclosed real estate 11,664 11,663 11,101 9,458 8,472 Premises and equipment--at cost less accumulated depreciation 343,620 336,827 328,579 321,593 316,760 Other assets 993,025 975,796 779,942 858,367 925,555 ------------ ------------ ------------ ------------ ------------ $ 62,322,114 $ 59,347,754 $ 58,586,271 $ 58,123,122 $ 57,431,543 ============ ============ ============ ============ ============ LIABILITIES and STOCKHOLDERS' EQUITY Deposits $ 36,230,741 $ 35,508,352 $ 34,472,585 $ 33,133,942 $ 31,491,959 Advances from Federal Home Loan Banks 18,948,901 17,540,760 18,037,509 17,859,941 18,945,452 Securities sold under agreements to repurchase 21,936 28,523 223,523 420,596 851,197 Federal funds purchased 50,000 200,000 0 0 0 Bank notes 1,052,822 0 0 693,976 634,951 Senior debt--net of discount 198,407 198,311 198,215 198,117 0 Subordinated notes--net of discount 399,761 499,654 599,511 599,329 599,148 Taxes on income 462,940 569,938 457,964 579,691 471,232 Other liabilities 302,017 340,504 312,774 422,391 385,474 Stockholders' equity 4,654,589 4,461,712 4,284,190 4,215,139 4,052,130 ------------ ------------ ------------ ------------ ------------ $ 62,322,114 $ 59,347,754 $ 58,586,271 $ 58,123,122 $ 57,431,543 ============ ============ ============ ============ ============ Book value per common share $ 30.04 $ 28.78 $ 27.55 $ 26.59 $ 25.50 Common shares outstanding 154,957,387 155,011,562 155,531,777 158,550,637 158,876,757 New real estate loans originated $ 6,897,783 $ 5,428,576 $ 5,739,769 $ 5,600,738 $ 5,628,720 New adjustable rate mortgages as a percentage of new real estate loans originated 95% 89% 79% 87% 83% Loan sales $ 339,498 $ 771,289 $ 1,136,438 $ 795,851 $ 712,205 (a) During the first half of 2002, the Company desecuritized $4.2 billion of FNMA MBS 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 ---------------------------------------------------------------------------- Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 2002 2002 2001 2001 2001 -------------- --------------- -------------- ------------- ------------- Net interest income $ 465,019 $ 466,899 $ 450,303 $ 415,133 $ 403,301 Provision for loan losses 5,186 8,539 9,802 3,639 5,641 Noninterest income 51,293 70,004 70,238 56,350 66,828 Noninterest expense 142,967 141,061 139,123 132,147 125,115 -------------- --------------- ------------- ------------- ------------- Earnings before taxes on income 368,159 387,303 371,616 335,697 339,373 Taxes on income 141,791 149,222 143,641 129,857 130,444 -------------- --------------- -------------- ------------- ------------- Net earnings $ 226,368 $ 238,081 $ 227,975 $ 205,840 $ 208,929 ============== =============== ============== ============= ============== Basic EPS $ 1.46 $ 1.53 $ 1.45 $ 1.30 $ 1.32 Diluted EPS $ 1.44 $ 1.51 $ 1.44 $ 1.28 $ 1.30 Average common shares outstanding 154,899,196 155,415,549 156,988,440 158,868,462 158,724,536 Average diluted common shares outstanding 157,078,432 157,570,350 158,865,399 161,000,195 160,968,179 Ratios: (a) Net earnings / average net worth (ROE) 19.85% 21.73% 21.47% 19.89% 21.19% Net earnings / average assets (ROA) 1.49% 1.62% 1.57% 1.42% 1.47% Net interest margin (b) 3.15% 3.27% 3.18% 2.96% 2.92% General and administrative expense / average assets .94% .96% .96% .91% .88% Efficiency ratio 27.69% 26.27% 26.73% 28.03% 26.61% Loan loss reserve $ 273,881 $ 269,327 $ 261,013 $ 250,444 $ 245,078 Net loan chargeoffs $ 632 $ 225 $ 1,020 $ 467 $ 691 Stockholders' equity / total assets 7.47% 7.52% 7.31% 7.25% 7.06% Retail deposit net activity $ 722,389 $ 1,035,767 $ 1,338,643 $ 1,760,983 $ 761,000 Wholesale CD net activity 0 0 0 (119,000) (626,000) -------------- --------------- -------------- ------------- ------------- Total deposit net activity $ 722,389 $ 1,035,767 $ 1,338,643 $ 1,641,983 $ 135,000 ============== =============== ============== ============= ============= (a) 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. (b) Net Interest Margin is Net Interest Income divided by Average Interest-Earning Assets.
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES OTHER FINANCIAL DATA (Unaudited) (Dollars in thousands) For the Quarter Ended --------------------------------------------------------------------------- Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 2002 2002 2001 2001 2001 ------------ ------------- -------------- ------------- ------------- AVERAGE BALANCES (a) Cash and investments $ 795,661 $ 879,542 $ 941,311 $ 1,199,668 $ 889,507 Loans receivable including mortgage-backed securities 57,462,160 55,439,619 54,811,397 54,129,499 53,530,756 Investment in capital stock of Federal Home Loan 1,043,922 1,050,966 1,078,706 1,089,663 1,075,735 Banks Deposits 35,718,354 34,987,193 33,822,924 32,271,278 31,271,860 Advances from Federal Home Loan Banks 18,596,039 17,667,900 17,784,994 18,592,677 18,892,793 Securities sold under agreements to repurchase 23,076 123,155 271,614 536,576 978,626 Other borrowings 1,090,520 772,847 1,146,076 1,310,514 919,042 Stockholders' equity 4,561,323 4,383,426 4,247,848 4,138,936 3,944,077 Total Average Assets 60,820,162 58,810,122 58,253,919 57,875,826 56,971,953 Average Interest-Earning Assets 59,001,340 57,072,122 56,566,830 56,160,623 55,310,583 Average Interest-Bearing Liabilities 55,427,989 53,551,095 53,025,608 52,711,044 52,062,320 NONPERFORMING ASSETS Loans (including MBS with recourse) 90 days or more past due $ 382,458 $ 408,862 $ 382,510 $ 336,686 $ 295,537 Foreclosed real estate 11,664 11,663 11,101 9,458 8,472 ------------- ------------- ------------- ------------- ------------- Total nonperforming assets $ 394,122 $ 420,525 $ 393,611 $ 346,144 $ 304,009 ============= ============= ============= ============= ============= Ratio of nonperforming assets (NPAs) to total assets .63% .71% .67% .60% .53% Ratio of troubled debt restructured (TDRs) to total .01 .01 .00 .00 .00 assets ------------- ------------- -------------- ------------- ------------- Ratio of NPAs and TDRs to total assets .64% .72% .67% .60% .53% ============= ============= ============== ============= ============= SPREAD DATA Yield on loan portfolio 5.59% 5.82% 6.38% 6.99% 7.53% Yield on investments 17.23% 5.95% 2.86% 4.34% 5.50% Yield on earning assets 5.59% 5.82% 6.36% 6.97% 7.52% Cost of deposits 2.92% 3.04% 3.39% 4.19% 4.80% Cost of borrowings 2.20% 2.35% 2.72% 4.05% 4.62% Cost of funds 2.65% 2.81% 3.15% 4.14% 4.73% Yield on earning assets less cost of funds 2.94% 3.01% 3.21% 2.83% 2.79% (a) Averages are computed by adding the beginning balances and each monthend balance during the quarter and dividing by four.
Exhibit 99.2 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 In connection with the accompanying Current Report on Form 8-K of Golden West Financial Corporation, dated July 18, 2002, I, Herbert M. Sandler, Chief Executive Officer of Golden West Financial Corporation, hereby certify pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that: 1) such Current Report on Form 8-K of Golden West Financial Corporation, dated July 18, 2002, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2) the information contained in such Current Report on Form 8-K of Golden West Financial Corporation, dated July 18, 2002, fairly presents, in all material respects, the financial condition and results of operations of Golden West Financial Corporation. Dated: August 2, 2002 /s/ Herbert M. Sandler ---------------------------------------- Herbert M. Sandler Chief Executve Officer Golden West Financial Corporation Exhibit 99.3 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION OF 1350 In connection with the accompanying Current Report on Form 8-K of Golden West Financial Corporation, dated July 18, 2002, I, Russell W. Kettell, Chief Financial Officer of Golden West Financial Corporation, hereby certify pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that: 1) such Current Report on Form 8-K of Golden West Financial Corporation, dated July 18, 2002, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2) the information contained in such Current Report on Form 8-K of Golden West Financial Corporation, dated July 18, 2002, fairly presents, in all material respects, the financial condition and results of operations of Golden West Financial Corporation. Dated: August 2, 2002 /s/ Russell W. Kettell ---------------------------------------- Russell W. Kettell Chief Financial Officer Golden West Financial Corporation