10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended June 30, 2004

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-4629

GOLDEN WEST FINANCIAL CORPORATION

Incorporated Pursuant to the Laws of Delaware State

IRS – Employer Identification No. 95-2080059

1901 Harrison Street, Oakland, California 94612

(510) 446-3420

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).    Yes  x    No  ¨

The number of shares outstanding of the registrant’s common stock as of July 31, 2004:

Common Stock — 152,780,439 shares.

GOLDEN WEST FINANCIAL CORPORATION

TABLE OF CONTENTS

			Page No.
PART I – FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Consolidated Statement of Financial Condition – June 30, 2004 and 2003 and December 31, 2003	1
		Consolidated Statement of Net Earnings – For the three and six months ended June 30, 2004 and 2003	2
		Consolidated Statement of Cash Flows – For the three and six months ended June 30, 2004 and 2003	3
		Consolidated Statement of Stockholders’ Equity – For the three and six months ended June 30, 2004 and 2003	5
		Note to Consolidated Financial Statements – Accounting Policies	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
		Financial Highlights	11
		Financial Condition	13
		Asset/Liability Management	14
		Cash and Investments	17
		Loans Receivable and Mortgage-Backed Securities	17
		Mortgage Servicing Rights	26
		Asset Quality	27
		Allowance for Loan Losses	29
		Deposits	30
		Advances from Federal Home Loan Banks	31
		Other Borrowings	31
		Stockholders’ Equity	31
		Regulatory Capital	32
		Results of Operations	34
		Liquidity and Capital Resources	42
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43
	Item 4.	Controls and Procedures	43
PART II – OTHER INFORMATION
	Item 6.	Exhibits and Reports on Form 8-K	44

i

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The consolidated financial statements of Golden West Financial Corporation and subsidiaries (Golden West or Company), including World Savings Bank, FSB (WSB) and World Savings Bank, FSB (Texas) (WTX), for the three and six months ended June 30, 2004 and 2003 are unaudited. In the opinion of management, all adjustments (consisting only of normal recurring accruals) that are necessary for a fair statement of the results for such three- and six- month periods have been included. The operating results for the three and six months ended June 30, 2004 are not necessarily indicative of the results for the full year.

Golden West Financial Corporation

Consolidated Statement of Financial Condition

(Unaudited)

(Dollars in thousands)

	June 30 2004		December 31 2003		June 30 2003
Assets
Cash	$	296,330	$	260,823	$	267,960
Securities available for sale at fair value		1,539,885		1,879,443		604,998
Purchased mortgage-backed securities available for sale at fair value		18,401		22,071		27,524
Purchased mortgage-backed securities held to maturity at cost		411,881		433,319		106,098
Mortgage-backed securities with recourse held to maturity at cost		2,083,852		3,650,048		4,667,649
Loans receivable:
Loans held for sale		107,692		124,917		502,308
Loans held for investment less allowance for loan losses		86,471,707		74,080,661		63,991,745
Total Loans Receivable		86,579,399		74,205,578		64,494,053
Interest earned but uncollected		203,145		183,761		198,639
Investment in capital stock of Federal Home Loan Banks, at cost which approximates fair value		1,318,642		1,152,339		1,132,714
Foreclosed real estate		9,885		13,904		11,027
Premises and equipment, net		376,501		360,327		355,042
Other assets		320,381		388,277		332,321
	$	93,158,302	$	82,549,890	$	72,198,025
Liabilities and Stockholders’ Equity
Deposits	$	48,611,353	$	46,726,965	$	44,385,717
Advances from Federal Home Loan Banks		28,712,498		22,000,234		19,927,189
Securities sold under agreements to repurchase		3,470,761		3,021,385		21,247
Federal funds purchased		-0-		-0-		265,000
Bank notes		1,786,668		3,015,854		99,990
Senior debt		2,989,726		991,257		990,467
Subordinated notes		-0-		-0-		199,955
Taxes on income		587,357		561,406		533,122
Other liabilities		434,178		285,521		363,584
Stockholders’ equity		6,565,761		5,947,268		5,411,754
	$	93,158,302	$	82,549,890	$	72,198,025

1

Golden West Financial Corporation

Consolidated Statement of Net Earnings

(Unaudited)

(Dollars in thousands except per share figures)

	Three Months Ended June 30				Six Months Ended June 30
	2004		2003		2004		2003
Interest Income:
Interest on loans	$	931,645	$	781,855	$	1,810,461	$	1,555,684
Interest on mortgage-backed securities		32,058		67,939		75,735		146,854
Interest and dividends on investments		14,029		21,529		31,293		46,219
		977,732		871,323		1,917,489		1,748,757
Interest Expense:
Interest on deposits		219,454		236,128		435,354		486,230
Interest on advances		82,944		69,715		155,982		139,656
Interest on repurchase agreements		8,718		13		15,640		1,282
Interest on other borrowings		23,930		23,846		48,573		51,227
		335,046		329,702		655,549		678,395
Net Interest Income		642,686		541,621		1,261,940		1,070,362
Provision for loan losses		392		3,501		633		7,980
Net Interest Income after Provision for Loan Losses		642,294		538,120		1,261,307		1,062,382
Noninterest Income:
Fees		56,635		41,920		97,309		76,431
Gain on the sale of securities, MBS and loans		6,291		21,192		9,253		36,515
Change in fair value of derivatives		59		2,793		1,141		5,646
Other		18,162		17,025		33,251		31,400
		81,147		82,930		140,954		149,992
Noninterest Expense:
General and administrative:
Personnel		137,305		110,688		268,303		215,684
Occupancy		20,744		18,988		41,138		37,477
Technology and telecommunications		19,283		20,055		40,302		40,959
Deposit insurance		1,790		1,652		3,560		3,273
Advertising		5,223		5,314		10,479		11,291
Other		23,188		20,483		43,265		38,206
		207,533		177,180		407,047		346,890
Earnings before Taxes on Income		515,908		443,870		995,214		865,484
Taxes on income		199,190		171,397		378,772		332,946
Net Earnings	$	316,718	$	272,473	$	616,442	$	532,538
Basic Earnings Per Share	$	2.07	$	1.79	$	4.04	$	3.48
Diluted Earnings Per Share	$	2.04	$	1.76	$	3.98	$	3.43

2

Golden West Financial Corporation

Consolidated Statement of Cash Flows

(Unaudited)

(Dollars in thousands)

	Three Months Ended June 30						Six Months Ended June 30
	2004			2003			2004			2003
Cash Flows from Operating Activities:
Net earnings	$	316,718		$	272,473		$	616,442		$	532,538
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for loan losses		392			3,501			633			7,980
Amortization of net loan costs		48,245			24,845			80,208			41,837
Depreciation and amortization		11,641			10,402			22,524			20,657
Loans originated for sale		(137,828	)		(613,617	)		(278,059	)		(1,185,058	)
Sales of loans		224,874			894,345			356,463			1,698,886
Increase in interest earned but uncollected		(11,409	)		(8,382	)		(18,221	)		(16,750	)
Federal Home Loan Bank stock dividends		(9,291	)		(9,796	)		(18,936	)		(21,471	)
Decrease in other assets		57,189			7,935			67,896			202,509
Increase (decrease) in other liabilities		59,075			(32,738	)		150,572			67,935
Increase (decrease) in taxes on income		(50,172	)		(77,907	)		15,587			62,320
Other, net		73			865			(231	)		2,609
Net cash provided by operating activities		509,507			471,926			994,878			1,413,992
Cash Flows from Investing Activities:
New loan activity:
New real estate loans originated for portfolio		(12,301,760	)		(7,430,478	)		(21,555,391	)		(13,801,794	)
Real estate loans purchased		(8,108	)		(970	)		(9,346	)		(1,070	)
Other, net		(348,121	)		(198,175	)		(549,580	)		(222,773	)
		(12,657,989	)		(7,629,623	)		(22,114,317	)		(14,025,637	)
Real estate loan principal payments:
Monthly payments		391,680			345,082			762,058			659,010
Payoffs, net of foreclosures		5,843,954			4,177,111			9,882,773			7,399,418
		6,235,634			4,522,193			10,644,831			8,058,428
Purchases of mortgage-backed securities held to maturity		-0-			-0-			(19,028	)		-0-
Repayments of mortgage-backed securities		261,209			548,399			525,381			1,091,561
Proceeds from sales of foreclosed real estate		15,414			12,361			27,662			24,780
Decrease (increase) in securities available for sale		(392,441	)		1,684			367,870			273,196
Purchases of Federal Home Loan Bank stock		(106,023	)		-0-			(148,530	)		(37,185	)
Additions to premises and equipment		(21,046	)		(10,014	)		(39,807	)		(24,891	)
Net cash used in investing activities		(6,665,242	)		(2,555,000	)		(10,755,938	)		(4,639,748	)

3

Golden West Financial Corporation

Consolidated Statement of Cash Flows (Continued)

(Unaudited)

(Dollars in thousands)

	Three Months Ended June 30						Six Months Ended June 30
	2004			2003			2004			2003
Cash Flows from Financing Activities:
Net increase in deposits	$	1,227,730		$	882,482		$	1,884,388		$	3,346,920
Additions to Federal Home Loan Bank advances		5,018,300			3,557,300			9,550,900			6,607,300
Repayments of Federal Home Loan Bank advances		(1,111,732	)		(2,512,433	)		(2,838,637	)		(5,315,210	)
Proceeds from agreements to repurchase securities		1,800,000			1,652			3,301,503			101,697
Repayments of agreements to repurchase securities		(1,001,288	)		(2,393	)		(2,852,127	)		(602,749	)
Increase in federal funds purchased		-0-			65,000			-0-			265,000
Increase (decrease) in bank notes		(718,249	)		99,990			(1,229,186	)		(1,109,935	)
Net proceeds from senior debt		997,284			-0-			1,995,534			-0-
Dividends on common stock		(15,268	)		(12,975	)		(30,494	)		(26,023	)
Exercise of stock options		6,578			3,499			14,686			5,625
Purchase and retirement of Company stock		-0-			(37,086	)		-0-			(97,823	)
Net cash provided by financing activities		6,203,355			2,045,036			9,796,567			3,174,802
Net Increase (Decrease) in Cash		47,620			(38,038	)		35,507			(50,954	)
Cash at beginning of period		248,710			305,998			260,823			318,914
Cash at end of period	$	296,330		$	267,960		$	296,330		$	267,960
Supplemental cash flow information:
Cash paid for:
Interest	$	326,420		$	332,700		$	628,991		$	675,143
Income taxes		249,362			249,401			363,220			270,766
Cash received for interest and dividends		966,062			864,061			1,898,105			1,733,248
Noncash investing activities:
Loans receivable and loans underlying mortgage-backed securities converted from adjustable rate to fixed-rate		58,051			395,182			88,182			736,952
Loans transferred to foreclosed real estate		11,124			11,709			22,672			24,500
Loans securitized into mortgage-backed securities with recourse recorded as loans receivable		10,245,617			4,766,064			10,922,830			4,766,064
Mortgage-backed securities held to maturity desecuritized into adjustable rate loans and recorded as loans receivable		-0-			-0-			1,024,116			-0-
Transfer of loans from held for sale to loans held for investment		5,038			68,959			6,421			79,244

4

Golden West Financial Corporation

Consolidated Statement of Stockholders’ Equity

(Unaudited)

(Dollars in thousands)

	For the Six Months Ended June 30, 2004
	Number of Shares	Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income		Total Stockholders’ Equity
Balance at January 1, 2004	152,119,108	$	15,212	$	220,923	$	5,513,434		$	197,699	$	5,947,268
Net earnings			-0-		-0-		616,442			-0-		616,442
Change in unrealized gains on securities available for sale			-0-		-0-		-0-			17,859		17,859
Comprehensive Income												634,301
Common stock issued upon exercise of stock options, including tax benefits	630,103		63		14,623		-0-			-0-		14,686
Cash dividends on common stock ($.20 per share)			-0-		-0-		(30,494	)		-0-		(30,494	)
Balance at June 30, 2004	152,749,211	$	15,275	$	235,546	$	6,099,382		$	215,558	$	6,565,761

	For the Six Months Ended June 30, 2003
	Number of Shares		Common Stock			Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income			Total Stockholders’ Equity
Balance at January 1, 2003	153,521,103		$	15,352		$	198,162	$	4,612,529		$	199,207		$	5,025,250
Net earnings				-0-			-0-		532,538			-0-			532,538
Change in unrealized gains on securities available for sale				-0-			-0-		-0-			(27,806	)		(27,806	)
Reclassification adjustment for gains included in income				-0-			-0-		-0-			(7	)		(7	)
Comprehensive Income															504,725
Common stock issued upon exercise of stock options, including tax benefits	256,400			26			5,599		-0-			-0-			5,625
Purchase and retirement of shares of Company stock	(1,326,370	)		(133	)		-0-		(97,690	)		-0-			(97,823	)
Cash dividends on common stock ($.17 per share)				-0-			-0-		(26,023	)		-0-			(26,023	)
Balance at June 30, 2003	152,451,133		$	15,245		$	203,761	$	5,021,354		$	171,394		$	5,411,754

5

Note to Consolidated Financial Statements — Accounting Policies

The Company’s significant accounting policies are more fully described in Note A to the Consolidated Financial Statements included in the Form 10-K for the fiscal year ended December 31, 2003 filed with the Securities and Exchange Commission (SEC) on March 12, 2004 (SEC File No. 1-4629).

Earnings Per Share

The Company calculates Basic Earnings Per Share (EPS) and Diluted EPS in accordance with Statement of Financial Accounting Standards No. 128, “Earnings Per Share” (SFAS 128). The following is a summary of the calculation of basic and diluted EPS:

Golden West Financial Corporation

Statement of Computation of Basic and Diluted Earnings Per Share

(Dollars in thousands except per share figures)

(Unaudited)

	Three Months Ended June 30				Six Months Ended June 30
	2004		2003		2004		2003
Net income	$	316,718	$	272,473	$	616,442	$	532,538
Weighted average common shares		152,652,032		152,582,771		152,462,835		152,963,162
Dilutive effect of outstanding common stock equivalents		2,561,516		2,509,009		2,578,346		2,461,792
Diluted average common shares outstanding		155,213,548		155,091,780		155,041,181		155,424,954
Basic earning per share	$	2.07	$	1.79	$	4.04	$	3.48
Diluted earning per share	$	2.04	$	1.76	$	3.98	$	3.43

6

Stock-Based Compensation

The Company has a stock-based employee compensation plan. The Company applies Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25) and related interpretations in accounting for its plan. Accordingly, no compensation cost has been recognized for awards granted under the plan. Had compensation cost been determined using the fair value based method prescribed by Statement of Financial Accounting Standards (SFAS) No. 123 “Accounting for Stock Based Compensation,” the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below:

Golden West Financial Corporation

Pro Forma Net Income and Earnings Per Share

(Dollars in thousands except per share figures)

(Unaudited)

	Three Months Ended June 30						Six Months Ended June 30
	2004			2003			2004			2003
Net income, as reported	$	316,718		$	272,473		$	616,442		$	532,538
Deduct: Total stock based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(1,784	)		(2,399	)		(4,037	)		(3,101	)
Pro forma net income	$	314,934		$	270,074		$	612,405		$	529,437
Basic earning per share
As reported	$	2.07		$	1.79		$	4.04		$	3.48
Pro forma		2.06			1.77			4.02			3.46
Diluted earning per share
As reported	$	2.04		$	1.76		$	3.98		$	3.43
Pro forma		2.03			1.74			3.95			3.41

Interest Rate Swaps

From time to time, the Company enters into interest rate swaps as a part of its interest rate risk management strategy. Such instruments are entered into primarily to offset the repricing characteristics of designated assets and liabilities. The Company does not hold any derivative financial instruments for trading purposes. Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133), as amended, establishes accounting and reporting standards for derivative instruments and for hedging activities.

Fair value hedges

In a fair value hedge, changes in the fair value of the hedging derivative are recognized in earnings and offset by also recognizing in earnings changes in the fair value of the hedged item. To the extent that the hedge is ineffective, the changes in fair value will not offset and the difference is reflected in the Consolidated Statement of Net Earnings as “Change in Fair Value of Derivatives.”

The Company formally documents the relationship between the hedging derivative used in fair value hedges and the hedged items, as well as the risk management objective and strategy before undertaking the hedge. This process includes linking all derivative instruments that are designated as fair value hedges to the specific balance sheet item.

7

In June 2004, the Company entered into an interest rate swap with a notional amount of $400 million, which the Company designated as a fair value hedge, to effectively convert payments on WSB’s long-term fixed-rate debt to floating-rate payments. This interest rate swap qualified for the shortcut method under SFAS 133 and, as such, an ongoing assessment of hedge effectiveness is not required and the change in fair value of the hedged item is deemed to be equal to the change in the fair value of the interest rate swap. The fair value of the swap at June 30, 2004 was $1.9 million which was offset by the decrease in the fair value of the debt. As such, the change in the fair value of the swap had no impact on the Consolidated Statement of Net Earnings.

The Company discontinues hedge accounting prospectively if it determines that the derivative is no longer effective in offsetting changes in the fair value of the designated hedged item; the derivative expires or is sold, terminated, or exercised; or the derivative is no longer designated as a fair value hedge. If the Company discontinues hedge accounting because the derivative no longer qualifies as an effective fair value hedge, the derivative would continue to be recorded on the balance sheet at its fair value with changes in fair value included in current earnings, but the previously hedged item would no longer be adjusted for changes in fair value.

8

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Headquartered in Oakland, California, Golden West Financial Corporation is one of the nation’s largest financial institutions with assets of $93.2 billion as of June 30, 2004. The Company’s principal operating subsidiary is World Savings Bank, FSB (WSB). WSB has a subsidiary World Savings Bank, FSB (Texas) (WTX). As of June 30, 2004, the Company operated 274 savings branches in ten states and had lending operations in 38 states under the World name.

The Company is a residential mortgage portfolio lender. In order to increase net earnings under this business model, management focuses principally on:

• growing net interest income, which is the difference between the interest and dividends earned on loans and other investments and the interest paid on customer deposits and borrowings;

• expanding the adjustable rate mortgage (ARM) portfolio, which is the Company’s primary earning asset;

• maintaining a healthy primary spread, which is the difference between the yield on interest-earning assets and the cost of deposits and borrowings;

• managing interest rate risk, principally by originating and retaining monthly adjusting ARMs in portfolio, and matching these ARMs with liabilities that respond in a similar manner to changes in interest rates;

• managing credit risk, principally by originating high-quality loans to minimize nonperforming assets and troubled debt restructured; and

• controlling expenses.

This discussion and analysis includes those material changes in liquidity and capital resources that have occurred since December 31, 2003, as well as material changes in results of operations during the three and six month periods ended June 30, 2004 and 2003, respectively.

We have assumed that readers have reviewed or have access to the Company’s 2003 Annual Report on Form 10-K, which contains the latest audited financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations as of December 31, 2003, and for the year then ended. Copies of the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to such reports are available, free of charge, through the Securities and Exchange Commission website at www.sec.gov and the Company’s website at www.gdw.com as soon as reasonably practicable after their filing with the Securities and Exchange Commission.

9

Forward-Looking Statements

This report 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.

10

Golden West Financial Corporation

Financial Highlights (Unaudited)

(Dollars in thousands except per share figures)

	June 30 2004			December 31 2003			June 30 2003
Assets	$	93,158,302		$	82,549,890		$	72,198,025
Loans receivable including mortgage-backed securities(a)		89,093,533			78,311,016			69,295,324
Adjustable rate mortgages including MBS(b)		85,731,774			75,238,723			66,078,182
Fixed-rate mortgages held for investment including MBS(b)		1,684,435			1,913,495			1,802,577
Fixed-rate mortgages held for sale including MBS(b)		107,692			124,917			502,308
Deposits		48,611,353			46,726,965			44,385,717
Stockholders’ equity		6,565,761			5,947,268			5,411,754
Stockholders’ equity/total assets		7.05	%		7.20	%		7.50	%
Book value per common share	$	42.98		$	39.10		$	35.50
Common shares outstanding		152,749,211			152,119,108			152,451,133
Yield on earning assets		4.46	%		4.54	%		4.90	%
Cost of funds		1.69	%		1.67	%		1.94	%
Yield on earning assets less cost of funds (primary spread)		2.77	%		2.87	%		2.96	%
Ratio of nonperforming assets to total assets		.41	%		.51	%		.62	%
Ratio of troubled debt restructured to total assets		.00	%		.00	%		.00	%
Loans serviced for others with recourse	$	2,646,433		$	3,092,641		$	2,993,881
Loans serviced for others without recourse		2,449,042			2,672,345			2,659,121
Number of Employees:
Full-time		9,140			8,457			7,488
Part-time		1,012			983			996
World Savings Bank, FSB (WSB):
Total assets	$	92,702,429		$	81,938,826		$	72,186,501
Stockholder’s equity		6,933,935			6,289,047			5,876,612
Stockholder’s equity/total assets		7.48	%		7.68	%		8.14	%
Regulatory capital ratios:(c)
Tier 1 capital (core or leverage)		7.27	%		7.45	%		7.91	%
Total risk-based capital		13.90	%		14.16	%		14.87	%
World Savings Bank, FSB (Texas) (WTX):
Total assets	$	11,920,601		$	9,789,764		$	8,089,273
Stockholder’s equity		624,462			504,735			471,523
Stockholder’s equity/total assets		5.24	%		5.16	%		5.83	%
Regulatory capital ratios:(c)
Tier 1 capital (core or leverage)		5.24	%		5.16	%		5.83	%
Total risk-based capital		23.65	%		22.88	%		26.06	%

(a) Includes loans in process, net deferred loan costs, allowance for loan losses, and discounts.

(b) Excludes loans in process, net deferred loan costs, allowance for loan losses, and discounts.

(c) For regulatory purposes, the requirements to be considered “well-capitalized” are 5.0% for Tier 1 capital (core or leverage) and 10.0% for total risk-based capital.

11

Golden West Financial Corporation

Financial Highlights

(Unaudited)

(Dollars in thousands except per share figures)

	Three Months Ended June 30						Six Months Ended June 30
	2004			2003			2004			2003
Real estate loans originated	$	12,439,588		$	8,044,095		$	21,833,450		$	14,986,852
New adjustable rate mortgages as a percentage of real estate loans originated		99	%		91	%		98	%		91	%
Refinances as a percentage of real estate loans originated		71	%		70	%		72	%		71	%
Deposits increase	$	1,227,730		$	882,482		$	1,884,388		$	3,346,920
Net earnings		316,718			272,473			616,442			532,538
Basic earnings per share		2.07			1.79			4.04			3.48
Diluted earnings per share		2.04			1.76			3.98			3.43
Cash dividends on common stock	$	.100		$	.085		$	.200		$	.170
Average common shares outstanding		152,652,032			152,582,771			152,462,835			152,963,162
Average diluted common shares outstanding		155,213,548			155,091,780			155,041,181			155,424,954
Ratios:(a)
Net earnings/average stockholders’ equity (ROE)		19.79	%		20.50	%		19.72	%		20.40	%
Net earnings/average assets (ROA)		1.41	%		1.53	%		1.42	%		1.51	%
Net interest margin(b)		2.91	%		3.13	%		2.94	%		3.13	%
General and administrative expense/average assets		.93	%		.99	%		.94	%		.99	%
Efficiency ratio(c)		28.67	%		28.37	%		29.01	%		28.43	%

(a) Ratios are annualized by multiplying the quarterly computation by four and the semi-annual computation by two. Averages are computed by adding the beginning balance 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 defined as general and administrative expense divided by the sum of net interest income and noninterest income.

12

Financial Condition

The consolidated condensed statement of financial condition shown in the table below presents the Company’s major asset, liability, and equity components in percentage terms at June 30, 2004, December 31, 2003, and June 30, 2003. The reader is referred to page 46 of the Company’s 2003 Annual Report on Form 10-K for similar information for the years 2001 through 2003 and a discussion of the changes in the composition of the Company’s assets and liabilities in those years.

TABLE 1

Asset, Liability, and Equity Components as

Percentages of the Total Balance Sheet

	June 30 2004		December 31 2003		June 30 2003
Assets:
Cash and investments	2.0	%	2.6	%	1.2	%
Loans receivable and MBS	95.6		94.9		96.0
Other assets	2.4		2.5		2.8
	100.0	%	100.0	%	100.0	%
Liabilities and Stockholders’ Equity:
Deposits	52.2	%	56.6	%	61.5	%
FHLB advances	30.8		26.7		27.6
Other borrowings	8.9		8.5		2.2
Other liabilities	1.1		1.0		1.2
Stockholders’ equity	7.0		7.2		7.5
	100.0	%	100.0	%	100.0	%

As the above table shows, deposits represent the majority of the Company’s liabilities. The largest asset component is loans receivable and MBS, which consists primarily of residential mortgages. The Company emphasizes ARMs – loans with interest rates that change periodically in accordance with movements in specified indexes.

Almost all of the Company’s ARMs have rates that change monthly based on one of the following three indexes plus a margin:

1. The Certificate of Deposit Index (CODI), based on the monthly rate of three-month certificates of deposit (secondary market), as published by the Federal Reserve Board. CODI is calculated by adding the twelve most recently published monthly rates together and dividing the result by twelve.

2. The Golden West Cost of Savings Index (COSI), which is equal to the monthend weighted average rate paid on the Company’s deposits.

3. The Eleventh District Cost of Funds Index (COFI), which is equal to the monthly average cost of deposits and borrowings of savings institution members of the Federal Home Loan Bank System’s Eleventh District, which is comprised of California, Arizona, and Nevada.

13

Most of the ARMs the Company currently originates allow borrowers to select an initial monthly payment amount for an interim period after origination, typically one year, that is lower than the payment amount that would be necessary to fully amortize the loan over its scheduled maturity at its initial rate and term. The borrower’s monthly payment is reset annually.

The new monthly payment amount each year is based on the amount that is sufficient to amortize the outstanding loan balance at the then applicable interest rate on the loan over the remaining term of the loan. However, the new monthly payment for the year may increase by no more than 7.5% of the prior year’s monthly payment amount. Every five years, beginning with either the fifth or the tenth annual monthly payment change, the new monthly payment amount may be reset without regard to the 7.5% payment increase limitation to the amount that would fully amortize the loan over its remaining term.

If the borrower’s monthly payment is not large enough to pay the monthly interest owed on the loan, the unpaid interest is added to the outstanding loan balance as deferred interest. Interest then accrues on the new loan balance. The borrower may pay down the balance of deferred interest in whole or in part at any time. Deferred interest may occur as long as the loan balance remains below either 125% or 110% of the original mortgage amount. The 125% cap applies to loans with original loan to value ratios at or below 85%, while the 110% cap applies to loans with original loan to value ratios above 85%. If the loan balance reaches the applicable limits, additional deferred interest would not be allowed to accrue and the monthly payment would increase to amortize the loan over its remaining term.

In addition, the Company originates a small volume of ARMs with initial interest rates and monthly payments fixed for periods of 12 to 36 months, after which the interest rate adjusts monthly and the monthly payment is reset annually as described above.

From time to time, as part of the Company’s loan retention efforts, the Company may waive or temporarily modify certain terms of a loan. Additionally, at the borrower’s request, the Company may convert an ARM to a fixed-rate mortgage. The Company sells most fixed-rate mortgages that were converted from ARMs.

Asset/Liability Management

The Company’s earnings depend primarily on its net interest income, which is the difference between the amounts it receives from interest and dividends earned on loans, MBS, and investments and the amounts it pays in interest on deposits and borrowings. The Company is subject to interest-rate risk to the extent its assets and liabilities reprice at different times and by different amounts. Repricing of an asset and a liability is the change in rate due to maturity, prepayment, the movement of an interest rate index, or any other interest rate change. The disparity between the repricing of assets (mortgage loans, MBS, and investments) and the repricing of liabilities (deposits and borrowings) can have a material impact on the Company’s net interest income and net earnings. The difference between the response of assets and liabilities to changes in interest rate is commonly referred to as the “gap” or the “repricing gap.”

The gap table on page 16 shows the volume of assets and liabilities that reprice within certain time periods as of June 30, 2004. If all repricing assets and liabilities responded equally to changes in the interest rate environment, then the gap analysis would suggest that the Company’s earnings would rise when interest rates increase and would fall when interest rates decrease. However, Golden West’s repricing assets and liabilities do not respond equally to changes in the interest rates due to the built-in reporting and repricing lags inherent in the adjustable rate mortgage indexes used by the Company. Reporting lags occur because of the time it takes to gather the data needed to compute the indexes.

14

Repricing lags occur because it may take a period of time before changes in interest rates are significantly reflected in the indexes. On balance, the reporting and repricing lags cause the Company’s assets to initially reprice more slowly than the Company’s liabilities.

CODI, which is the index Golden West uses to determine the rate on $40 billion of its existing adjustable rate mortgages, has a one-month reporting lag. CODI also has a repricing lag, because the index is a 12-month rolling average and consequently trails changes in short-term market interest rates.

COSI, which is the index Golden West uses to determine the rate on $27 billion of its existing adjustable rate mortgages, has a one-month reporting lag. COSI also has a repricing lag, because the rates paid on many of the deposits that make up COSI do not respond immediately or fully to a change in market interest rates. However, the COSI repricing lag is offset by the same repricing lag on the Company’s deposits.

COFI, which is the index Golden West uses to determine the rate on $16 billion of its existing adjustable rate mortgages, has a two-month reporting lag. As a result, the COFI in effect in any month actually reflects the Eleventh District’s cost of funds at the level it was two months prior. COFI also has a repricing lag because COFI is based on a portfolio of liabilities, not all of which reprice immediately. Many of these liabilities, including certificates of deposit and fixed-rate borrowings, do not reprice each month. In addition, when certificates of deposits do reprice, they may not reflect the full change in market rates. Some liabilities, such as low-rate checking or passbook savings accounts, may reprice by only small amounts. Still other liabilities, such as noninterest bearing deposits, do not reprice at all. Therefore, COFI does not fully reflect a change in market interest rates.

Partially offsetting the index reporting and repricing lags are similar lags on a portion of the Company’s liabilities.

15

TABLE 2

Repricing of Earning Assets and Interest-Bearing

Liabilities, Repricing Gaps, and Gap Ratio

As of June 30, 2004

(Dollars in millions)

	Projected Repricing(a)
	0 – 3 Months			4 – 12 Months			1 - 5 Years			Over 5 Years			Total
Earning Assets:
Securities available for sale	$	1,538		$	2		$	-0-		$	-0-		$	1,540
MBS:
Adjustable rate		1,982			-0-			-0-			-0-			1,982
Fixed-rate		32			73			229			198			532
Loans receivable:(b) (c)
Adjustable rate		83,549			1,067			326			-0-			84,942
Fixed-rate held for investment		122			232			479			330			1,163
Fixed-rate held for sale		106			-0-			-0-			-0-			106
Other(d)		1,530			3			-0-			133			1,666
Total	$	88,859		$	1,377		$	1,034		$	661		$	91,931
Interest-Bearing Liabilities:
Deposits(e)	$	40,346		$	4,751		$	3,512		$	2		$	48,611
FHLB advances		27,433			202			481			596			28,712
Other borrowings		6,855			-0-			898			495			8,248
Impact of interest rate swaps		400			-0-			(400	)		-0-			-0-
Total	$	75,034		$	4,953		$	4,491		$	1,093		$	85,571
Repricing gap	$	13,825		$	(3,576	)	$	(3,457	)	$	(432	)	$	6,360
Cumulative gap	$	13,825		$	10,249		$	6,792		$	6,360
Cumulative gap as a percentage of total assets		14.8	%		11.0	%		7.3	%

(a) Based on scheduled maturity or scheduled repricing; loans and MBS reflect scheduled repayments and projected prepayments of principal based on current rates of prepayment.

(b) Excludes nonaccrual loans (90 days or more past due).

(c) Includes loans in process. Loans in process are funded, interest-earning loans that have not yet been entered into the loan servicing system due to the normal five to seven day processing lag.

(d) Includes primarily cash in banks and Federal Home Loan Bank (FHLB) stock.

(e) Liabilities with no maturity date, such as checking, passbook, and money market deposit accounts, are assigned zero months.

The Company’s principal strategy to limit the sensitivity of earnings to changes in interest rates is to originate and keep in portfolio ARMs that provide interest sensitivity to the asset side of the balance sheet. At June 30, 2004, ARMs constituted 98% of the Company’s loan and MBS portfolio. Asset rate sensitivity is further enhanced by the use of adjustable rate mortgages on which the rate changes monthly. At June 30, 2004, such monthly adjustable mortgages accounted for 96% of the Company’s ARM portfolio. Additionally, the Company emphasizes home loans tied to certain adjustable rate mortgage indexes so that the ARM index rates and the rates on the liabilities that fund these mortgages respond in a similar manner to changes in market rates. Specifically, COSI-indexed ARMs track the Company’s cost of deposits and CODI-indexed ARMs follow the Company’s cost of borrowings. ARMs

16

indexed to COSI and CODI constituted 96% of the ARM originations for the first half of 2004 and 79% of the ARM portfolio at June 30, 2004. While the index strategy has improved the match between Golden West’s ARM portfolio and its savings and borrowings, there still exist some differences in the timing of the repricing of the Company’s ARMs and liabilities, primarily due to lags in the repricing of the indexes, particularly CODI and COFI. In addition to the index lags, structural features of ARM loans can have an impact on earnings. These elements include interest rate caps or limits on individual rate changes, interest rate floors, the interest rate adjustment frequency of ARM loans, and introductory fixed rates on new ARM loans.

When the interest rate environment changes, the index lags and ARM structural features cause assets to reprice more slowly than liabilities, enhancing earnings when rates are falling and restraining earnings when rates are rising.

From time to time, the Company enters into interest rate swaps as part of its interest rate-risk management strategy in order to offset the repricing characteristics of designated assets and liabilities (see Interest Rate Swaps on pages 40 and 41).

Cash and Investments

At June 30, 2004, December 31, 2003, and June 30, 2003, the Company had securities available for sale in the amount of $1.5 billion, $1.9 billion and $605 million, respectively, including unrealized gains on securities available for sale of $351 million, $323 million, and $280 million, respectively. Included in the available for sale investments at June 30, 2004 was Freddie Mac stock with a cost basis of $6 million and a market value of $356 million. At June 30, 2004, December 31, 2003, and June 30, 2003, the Company had no securities held for trading in its investment securities portfolio.

Loans Receivable and Mortgage-Backed Securities

The Company invests primarily in single-family residential real estate loans. From time to time, the Company securitizes loans from its portfolio into MBS and Real Estate Mortgage Investment Conduit Securities (MBS-REMICs). Under Statement of Financial Accounting Standards No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” (SFAS 140), if the Company retains 100% of the beneficial interests in its MBS securitizations, it will not have any effective “retained interests” requiring disclosures under SFAS 140. To date, the Company has not sold any interests requiring disclosures under SFAS 140. As of June 30, 2004, the Company has retained all of the beneficial interest in these MBS securitizations, and therefore, the securitizations formed after March 31, 2001 are securities classified as Securitized Loans and included in Loans Receivable in accordance with SFAS 140. Additionally, from time to time, the Company purchases MBS. Loans, securitized loans, and MBS are available to be used as collateral for borrowings.

During the first quarter of 2004, the Company desecuritized $1.0 billion of MBS-REMICs that were classified as MBS held to maturity with recourse and the underlying loans were reclassified to loans receivable. This desecuritization led to a decrease in the outstanding balance of MBS, which in turn contributed to lower MBS repayments and lower interest on mortgage-backed securities. The desecuritization also contributed to an increase in the outstanding balance of loans receivable and an increase in interest on loans.

17

The following table shows the components of the Company’s loans receivable portfolio and MBS at June 30, 2004, December 31, 2003, and June 30, 2003.

TABLE 3

Balance of Loans Receivable and MBS by Component

(Dollars in thousands)

	June 30 2004		December 31 2003		June 30 2003
Loans	$	56,820,000	$	49,937,769	$	43,762,348
Securitized loans(a)(b)		28,189,767		23,233,928		19,819,448
Other(c)		1,569,632		1,033,881		912,257
Total loans receivable		86,579,399		74,205,578		64,494,053
MBS-REMICs		2,083,852		3,650,048		4,667,649
Purchased MBS		430,282		455,390		133,622
Total MBS		2,514,134		4,105,438		4,801,271
Total loans receivable and MBS	$	89,093,533	$	78,311,016	$	69,295,324

(a) Loans securitized after March 31, 2001 are classified as securitized loans per SFAS 140.

(b) Includes $14.3 billion at June 30, 2004 of loans securitized with Fannie Mae with the underlying loans being subject to full credit recourse to the Company.

(c) Includes loans in process, net deferred loan costs, allowance for loan losses, and other miscellaneous reserves and discounts.

The balance of loans receivable and MBS is affected by loan originations and loan and MBS repayments. Repayments from loans receivable and MBS were $6.5 billion and $11.2 billion for the three and six months ended June 30, 2004 as compared to $5.1 billion and $9.1 billion for the same periods in 2003. These repayments were higher in 2004 as compared to 2003 due to an increase in the portfolio balance and an increase in the prepayment rate.

Loans Receivable and Lending Operations

New loan originations amounted to $12.4 billion and $21.8 billion for the three and six months ended June 30, 2004 compared to $8.0 billion and $15.0 billion for the same periods in 2003. The volume of the Company’s originations increased substantially in 2004 versus the prior year due to an increase in the popularity of adjustable rate mortgages, the Company’s principal product. ARMs increased significantly as a percentage of mortgage originations nationwide because the rates and payments on these loans remained lower than those on the more traditional fixed-rate mortgages. The Company was able to take advantage of the favorable environment for ARM lending in the first half of 2004 because of prior investments that increased the capacity of Golden West’s loan operations. Loans made for the purpose of refinancing existing mortgage debt continued to be a substantial proportion of the Company’s origination volume, constituting 71% and 72%, respectively, of new loan originations for the three and six months ended June 30, 2004, compared to 70% and 71%, respectively, for the three and six months ended June 30, 2003.

18

At June 30, 2004, the Company had lending operations in 38 states. The largest source of mortgage origination volume was loans secured by residential properties in California. For the three and six months ended June 30, 2004 and 2003, 67% of total loan originations were on residential properties in California. The five largest states, other than California, for originations for the six months ended June 30, 2004, were Florida, New Jersey, Illinois, Texas, and Nevada with a combined total of 16% of total originations. The percentage of the total loan portfolio (including MBS with recourse) that was comprised of residential loans in California was 63% at June 30, 2004 and 64% at December 31, 2003 and June 30, 2003.

First mortgages originated for portfolio (excluding equity lines of credit or “ELOCs”), amounted to $12.0 billion and $21.0 billion for the three and six months ended June 30, 2004, compared to $7.2 billion and $13.5 billion for the same periods in 2003. First mortgages originated for sale amounted to $126 million and $249 million for the three and six months ended June 30, 2004, compared to $583 million and $1.1 billion for the same periods in 2003. During the second quarter and first six months of 2004, $58 million and $88 million of loans and MBS were converted at the customer’s request from adjustable rate to fixed-rate mortgages compared to $395 million and $737 million for the same periods in 2003. The Company sells most of its new and converted fixed-rate loans. For the three and six months ended June 30, 2004, the Company sold $188 million and $319 million of fixed-rate first mortgage loans compared to $871 million and $1.7 billion for the same periods in 2003.

Golden West originates ARMs indexed primarily to CODI, COSI, and COFI. Golden West also establishes ELOCs indexed to the Prime Rate as published in the Money Rates table in The Wall Street Journal (Central Edition). Golden West’s ARM originations constituted 99% and 98% of new mortgage volume for the second quarter and first half of 2004 compared to 91% for the same periods in 2003. The following table shows the distribution of ARM originations by index for the second quarter and first six months of 2004 and 2003.

TABLE 4

Adjustable Rate Mortgage Originations by Index

(Dollars in thousands)

	Three Months Ended June 30				Six Months Ended June 30
ARM Index	2004		2003		2004		2003
CODI	$	8,188,700	$	4,383,851	$	13,928,536	$	8,366,268
COSI		3,633,654		2,279,614		6,723,877		3,976,039
COFI		149,617		463,069		290,056		917,661
Prime(a)		285,376		184,456		526,358		335,097
	$	12,257,347	$	7,310,990	$	21,468,827	$	13,595,065

(a) Only the dollar amount of ELOCs drawn at the establishment of the line of credit are included in originations.

19

The portion of the mortgage portfolio (including securitized loans and MBS) composed of adjustable rate loans was 98% at June 30, 2004 compared to 97% at December 31, 2003 and June 30, 2003. The following table shows the distribution by index of the Company’s outstanding balance of adjustable rate mortgages (including ARM MBS) at June 30, 2004, December 31, 2003, and June 30, 2003.

TABLE 5

Adjustable Rate Mortgage Portfolio by Index

(Including ARM MBS)

(Dollars in thousands)

ARM Index	June 30 2004		December 31 2003		June 30 2003
CODI	$	40,110,000	$	30,243,337	$	20,570,490
COSI		27,376,544		24,535,095		22,122,917
COFI		15,627,349		18,207,868		21,541,854
Prime(a)		2,258,440		1,827,435		1,313,719
Other(b)		359,441		424,988		529,202
Total	$	85,731,774	$	75,238,723	$	66,078,182

(a) ELOCs tied to the Prime Rate.

(b) Primarily ARMs tied to the twelve-month rolling average of the One-Year Treasury Constant Maturity (TCM).

During the life of a typical ARM loan, the interest rate may not be raised above a lifetime cap, set at the time of origination or assumption. The weighted average maximum lifetime cap rate on the Company’s ARM loan portfolio (including securitized ARM loans and MBS-REMICs before any reduction for loan servicing and guarantee fees) was 12.20% or 7.48% above the actual weighted average rate at June 30, 2004, versus 12.20% or 7.42% above the actual weighted average rate at December 31, 2003 and 12.20% or 7.14% above the actual weighted average rate at June 30, 2003.

At June 30, 2004, approximately $5.1 billion of the Company’s ARM loans (including MBS with recourse held to maturity) have terms that state that the interest rate may not fall below a lifetime floor set at the time of origination or assumption. As of June 30, 2004, $2.1 billion of ARM loans had reached their rate floors compared to $2.3 billion at December 31, 2003 and $2.5 billion at June 30, 2003. The weighted average floor rate on the loans that had reached their floor was 5.32% at June 30, 2004 compared to 5.43% at December 31, 2003 and 5.56% at June 30, 2003. Without the floor, the average rate on these loans would have been 4.28% at June 30, 2004, 4.38% at December 31, 2003 and 4.68% at June 30, 2003.

Most of the Company’s loans are collateralized by first deeds of trust on one-to-four family homes. The Company also originates second deeds of trust, a portion of which are in the form of fixed-rate loans. The Company’s fixed-rate second mortgage originations amounted to $33 million and $70 million, respectively, for the second quarter and first six months of 2004 compared to $35 million and $63 million for the same periods in 2003. The outstanding balance of fixed-rate seconds amounted to $127 million, $138 million, and $173 million at June 30, 2004, December 31, 2003, and June 30, 2003, respectively.

20

The Company also establishes ELOCs indexed to the prime rate, which are collateralized typically by second and occasionally by first deeds of trust. The table below shows the amounts of new ELOCs established for the second quarter and first six months of 2004 and 2003.

TABLE 6

New Equity Lines of Credit Established

(Dollars in thousands)

	Three Months Ended June 30				Six Months Ended June 30
	2004		2003		2004		2003
New ELOCs established	$	579,975	$	365,157	$	1,055,054	$	648,837

The following table shows the outstanding balance of ELOCs and the maximum total line of credit available on the Company’s ELOCs at June 30, 2004, December 31, 2003, and June 30, 2003.

TABLE 7

Equity Line of Credit

Outstanding Balance and Maximum Total Line of Credit Available

(Dollars in thousands)

	June 30 2004		December 31 2003		June 30 2003
ELOC outstanding balance	$	2,258,440	$	1,827,435	$	1,313,719
ELOC maximum total line of credit available	$	3,396,242	$	2,748,076	$	1,980,833

The Company generally lends up to 80% of the appraised value of residential real estate property. In some cases, a higher amount is possible through a first mortgage loan or a combination of a first and a second mortgage loan on the same property. The second mortgage loan may be a fixed-rate loan or an ELOC. During the second quarter and first six months of 2004, 10% of total loans originated exceeded 80% of the appraised value of the property. During the second quarter and first six months of 2003, 11% of total loans originated exceeded 80% of the appraised value of the property.

The Company takes steps to reduce the potential credit risk with respect to loans with a loan to value (LTV) or a combined loan to value (the sum of the first and second loan balances as a percentage of total value or “CLTV”) over 80%. Among other things, the loan amount may not exceed 95% of the appraised value of a single-family residence at the time of origination. Also, most first mortgage loans with an LTV over 80% carry mortgage insurance, which reimburses the Company for losses up to a specified percentage per loan, thereby reducing the effective LTV to below 80%. Historically, the Company has sold without recourse a significant portion of its fixed-rate second mortgage originations. Sales of second mortgages amounted to $37 million for the second quarter and first six months of 2004 as compared to $24 million and $40 million for the same periods in 2003. Fixed-rate seconds held for sale amounted to $39 million at June 30, 2004 compared to $58 million at December 31, 2003 and $46 million at June 30, 2003. In addition, the Company carries pool mortgage insurance on most ELOCs and most fixed-rate seconds held for investment. The cumulative losses covered by this pool mortgage insurance are limited to 10% or 20% of the original balance of each insured pool.

21

The following table shows first mortgage originations with LTV ratios greater than 80% for the three and six months ended June 30, 2004 and 2003.

TABLE 8

First Mortgage Originations With

Loan to Value Ratios Greater Than 80%

(Dollars in thousands)

	Three Months Ended June 30				Six Months Ended June 30
	2004		2003		2004		2003
First mortgages with LTV ratios greater than 80%:
With mortgage insurance	$	20,379	$	74,674	$	46,269	$	142,364
With no mortgage insurance		27,218		9,028		44,084		24,981
	$	47,597	$	83,702	$	90,353	$	167,345

The following table shows at June 30, 2004 and 2003 the outstanding principal balance of first mortgages with original and current LTV ratios greater than 80%. LTV is based on the outstanding balance of the first mortgage divided by the most recent appraised value, which in most cases is the original appraised value at origination.

TABLE 9

Balance of First Mortgages With Original and Current

Loan to Value Ratios Greater Than 80%^(a)

(Dollars in thousands)

	As of June 30
	2004		2003
First mortgages with original and current LTV ratios greater than 80%:
With mortgage insurance	$	515,014	$	596,589
With no mortgage insurance		155,615		215,700
	$	670,629	$	812,289

(a) Excludes loan balances with original LTV ratios over 80% that now have current LTV ratios below 80%, as well as loan balances with original LTV ratios under 80% that have current LTV ratios over 80%.

22

The following table shows originations with combined first and second mortgages where the combined loan to value (CLTV) ratio is greater than 80% for the three and six months ended June 30, 2004 and 2003.

TABLE 10

Mortgage Originations With

Combined Loan to Value Ratios Greater Than 80%

(Dollars in thousands)

	Three Months Ended June 30				Six Months Ended June 30
	2004		2003		2004		2003
First and second mortgages with combined loan to value ratios greater than 80%:(a)
With pool insurance on second mortgages	$	1,049,639	$	598,188	$	1,910,645	$	1,113,913
With no pool insurance		95,135		179,399		223,264		330,266
	$	1,144,774	$	777,587	$	2,133,909	$	1,444,179

(a) For ELOCs, only amounts drawn at the establishment of the line of credit are included in originations. The CLTV calculation for this table excludes any unused portion of the line of credit. In addition, this table only includes firsts and seconds originated together in the same month.

The following table shows at June 30, 2004 and 2003 the outstanding principal balance of combined first and second mortgages with CLTV ratios greater than 80%. CLTV is based on the outstanding balance of the combined first and second mortgages divided by the most recent appraised value.

TABLE 11

Balance of Mortgages With

Combined Loan to Value Ratios Greater Than 80%

(Dollars in thousands)

	As of June 30
	2004		2003
First and second mortgages with CLTV ratios greater than 80%:
With pool insurance on second mortgages	$	5,752,841	$	4,134,718
With no pool insurance		603,119		365,891
	$	6,355,960	$	4,500,609

23

The following tables show the Company’s loan portfolio by state at June 30, 2004 and 2003.

TABLE 12

Loan Portfolio by State

June 30, 2004

(Dollars in thousands)

	Residential Real Estate				Commercial Real Estate		Total Loans			Loans as a % of Portfolio
State	1 – 4		5+
Northern California	$	29,255,391	$	1,774,923	$	10,165	$	31,040,479		35.64	%
Southern California		22,535,838		1,474,714		1,891		24,012,443		27.57
Florida		5,013,709		57,328		14		5,071,051		5.82
New Jersey		3,602,398		-0-		369		3,602,767		4.14
Texas		3,021,298		136,950		204		3,158,452		3.63
Illinois		2,106,046		141,360		-0-		2,247,406		2.58
Washington		1,481,845		706,182		-0-		2,188,027		2.51
Colorado		1,672,124		177,767		3,853		1,853,744		2.13
Other(a)		13,716,573		190,546		1,184		13,908,303		15.98
Totals	$	82,405,222	$	4,659,770	$	17,680		87,082,672		100.00	%
Loans on deposits								10,947
Other(b)								1,569,632
Total loans receivable and MBS with recourse								88,663,251
MBS with recourse								(2,083,852	)(c)
Total loans receivable							$	86,579,399

(a) All states included in Other have total loan balances less than 2% of total loans.

(b) Includes loans in process, net deferred loan costs, allowance for loan losses, and other miscellaneous discounts.

(c) The balances for each state include the June 30, 2004 balances of loans that were securitized and retained as MBS with recourse.

24

TABLE 13

Loan Portfolio by State

June 30, 2003

(Dollars in thousands)

	Residential Real Estate				Land		Commercial Real Estate		Total Loans			Loans as a % of Portfolio
State	1 – 4		5+
Northern California	$	22,821,613	$	1,781,209	$	-0-	$	11,644	$	24,614,466		36.07	%
Southern California		17,358,671		1,541,633		-0-		2,277		18,902,581		27.70
Florida		3,743,763		50,638		-0-		59		3,794,460		5.56
New Jersey		2,608,881		-0-		-0-		886		2,609,767		3.82
Texas		2,722,440		126,384		-0-		315		2,849,139		4.18
Illinois		1,602,571		128,801		-0-		-0-		1,731,372		2.54
Washington		1,297,354		696,725		-0-		-0-		1,994,079		2.92
Colorado		1,418,047		183,057		-0-		4,052		1,605,156		2.35
Other(a)		9,972,141		161,569		1		1,828		10,135,539		14.86
Totals	$	63,545,481	$	4,670,016	$	1	$	21,061		68,236,559		100.00	%
Loans on deposits										12,886
Other(b)										912,257
Total loans receivable and MBS with recourse										69,161,702
MBS with recourse										(4,667,649	)(c)
Total loans receivable									$	64,494,053

(a) All states included in Other have total loan balances less than 2% of total loans.

(b) Includes loans in process, net deferred loan costs, allowance for loan losses, and other miscellaneous discounts.

(c) The balances for each state include the June 30, 2003 balances of loans that were securitized and retained as MBS with recourse.

Loans receivable repayments consist of monthly loan amortization and loan payoffs. For the three and six months ended June 30, 2004, loan repayments (excluding MBS) were $6.2 billion and $10.6 billion, compared to $4.5 billion and $8.1 billion for the same periods of 2003. The increase in loan repayments was primarily due to an increase in the balance of loans receivable and an increase in the prepayment rate.

Securitized Loans

The Company securitized $10.2 billion and $10.9 billion of loans during the second quarter and first six months of 2004. During the second quarter and first six months of 2003, the Company securitized $4.8 billion of loans. These securities are available to be used as collateral for borrowings and are classified as loans receivable on the Consolidated Statement of Financial Condition.

Mortgage-Backed Securities

At June 30, 2004, December 31, 2003, and June 30, 2003, the Company had MBS held to maturity in the amount of $2.5 billion, $4.1 billion, and $4.8 billion, respectively. The Company has the ability and intent to hold these MBS until maturity and, accordingly, these MBS are classified as held to maturity. The decrease in MBS held to maturity from June 30, 2003 to June 30, 2004 was due to

25

prepayments and due to the desecuritization of $1.0 billion MBS-REMICs in the first quarter of 2004. Partially offsetting the decrease in MBS held to maturity was the purchase of $19 million of MBS for Community Reinvestment Act purposes.

At June 30, 2004, December 31, 2003, and June 30, 2003, the Company had MBS available for sale in the amount of $18 million, $22 million, and $28 million, respectively, including net unrealized gains on MBS available for sale of $59 thousand at June 30, 2004, $91 thousand at December 31, 2003, and $143 thousand at June 30, 2003.

Repayments of MBS during the second quarter and first six months of 2004 were $261 million and $525 million compared to $548 million and $1.1 billion during the same periods of 2003. MBS repayments were lower during the first half of 2004 as compared to the first half of 2003 due to the decrease in the balance of MBS outstanding discussed above.

Mortgage Servicing Rights

The Company recognizes as assets the rights to service mortgage loans for others. When the servicing rights are retained by the Company upon the sale of loans, the allocated cost of these rights is then capitalized as an asset. The amount capitalized is based on the relative fair value of the servicing rights and the mortgage loan on the date the mortgage loan is sold. Capitalized mortgage servicing rights (CMSRs) are included in “Other assets” on the Consolidated Statement of Financial Condition. The following table shows the changes in capitalized mortgage servicing rights for the three and six months ended June 30, 2004 and 2003.

TABLE 14

Capitalized Mortgage Servicing Rights

(Dollars in thousands)

	Three Months Ended June 30						Six Months Ended June 30
	2004			2003			2004			2003
Beginning balance of CMSRs	$	82,503		$	74,192		$	88,967		$	69,448
New CMSRs from loan sales		3,424			16,683			6,613			29,162
Amortization of CMSRs		(9,710	)		(8,815	)		(19,363	)		(16,550	)
Ending balance of CMSRs	$	76,217		$	82,060		$	76,217		$	82,060

The CMSR balance decreased during 2004 due to the low level of fixed-rate loan sales and the high level of amortization due to loan repayments.

The estimated amortization of the June 30, 2004 balance for the remainder of 2004 and the five years ending 2009 is $18.8 million (2004), $27.7 million (2005), $18.1 million (2006), $8.9 million (2007), $2.6 million (2008), and $128 thousand (2009). Actual results may vary depending upon the level of the payoffs of the loans currently serviced.

CMSRs are reviewed monthly for impairment based on fair value. The estimated fair value of CMSRs as of June 30, 2004, December 31, 2003, and June 30, 2003 was $79 million, $95 million, and $83 million, respectively. The book value of the Company’s CMSRs did not exceed the fair value at June 30, 2004, December 31, 2003, or June 30, 2003 and, therefore, no reserve was required to adjust the servicing rights to their fair value.

26

Asset Quality

An important measure of the soundness of the Company’s loan and MBS portfolio is its ratio of nonperforming assets (NPAs) and troubled debt restructured (TDRs) to total assets. Nonperforming assets include nonaccrual loans (that is, loans, including loans securitized into MBS with recourse, that are 90 days or more past due) and real estate acquired through foreclosure. No interest is recognized on nonaccrual loans. The Company’s TDRs are made up of loans on which delinquent payments have been capitalized or on which temporary interest rate reductions have been made, primarily to customers impacted by adverse economic conditions.

The following table sets forth the components of the Company’s NPAs and TDRs and the various ratios to total assets.

TABLE 15

Nonperforming Assets and Troubled Debt Restructured

(Dollars in thousands)

	June 30 2004			December 31 2003			June 30 2003
Nonaccrual loans	$	368,502		$	410,064		$	436,595
Foreclosed real estate		9,885			13,904			11,027
Total nonperforming assets	$	378,387		$	423,968		$	447,622
TDRs	$	3,832		$	3,105		$	1,539
Ratio of NPAs to total assets		.41	%		.51	%		.62	%
Ratio of TDRs to total assets		.00	%		.00	%		.00	%
Ratio of NPAs and TDRs to total assets		.41	%		.51	%		.62	%

The balance of NPAs at June 30, 2004, December 31, 2003 and June 30, 2003 reflected the impact of the improving economy and the continued strong housing market. The Company closely monitors all delinquencies and takes appropriate steps to protect its interests. The Company mitigates its credit risk through strict underwriting standards and loan reviews. Interest foregone on nonaccrual loans (loans 90 days or more past due) amounted to a recovery of $1.6 million and $465 thousand for the three and six months ended June 30, 2004, compared to a recovery of $24 thousand for the second quarter of 2003 and an expense of $2 million for the six months ended June 30, 2003.

27

The following tables show the Company’s NPAs by state as of June 30, 2004 and 2003.

TABLE 16

Nonperforming Assets by State

June 30, 2004

(Dollars in thousands)

	Nonaccrual Loans(a)(b)						Foreclosed Real Estate (FRE)
	Residential Real Estate				Commercial Real Estate		Residential Real Estate				Commercial Real Estate		Total NPAs		NPAs as a % of Loans
State	1 – 4		5+				1-4		5+
Northern California	$	103,961	$	869	$	22	$	1,201	$	-0-	$	-0-	$	106,053	.34	%
Southern California		53,472		266		104		-0-		-0-		-0-		53,842	.22
Florida		22,764		-0-		-0-		152		-0-		-0-		22,916	.45
New Jersey		23,001		-0-		-0-		712		-0-		-0-		23,713	.66
Texas		42,673		-0-		-0-		2,796		-0-		-0-		45,469	1.44
Illinois		16,297		-0-		-0-		-0-		-0-		-0-		16,297	.73
Washington		13,868		423		-0-		786		-0-		-0-		15,077	.69
Colorado		9,997		60		-0-		-0-		-0-		-0-		10,057	.54
Other(c)		80,725		-0-		-0-		4,238		-0-		-0-		84,963	.61
Totals	$	366,758	$	1,618	$	126	$	9,885	$	-0-	$	-0-	$	378,387	.43	%

(a) Nonaccrual loans are 90 days or more past due and interest is not recognized on these loans.

(b) The June 30, 2004 balances include loans that were securitized into MBS with recourse.

(c) All states included in Other have total loan balances less than 2% of total loans.

TABLE 17

Nonperforming Assets by State

June 30, 2003

(Dollars in thousands)

	Nonaccrual Loans(a)(b)						Foreclosed Real Estate (FRE)
	Residential Real Estate				Commercial Real Estate		Residential Real Estate				Commercial Real Estate		Total NPAs		NPAs as a % of Loans
State		1 – 4		5+				1-4		5+
Northern California	$	115,966	$	574	$	6	$	605	$	-0-	$	-0-	$	117,151	.48	%
Southern California		94,607		464		209		613		-0-		-0-		95,893	.51
Florida		31,489		-0-		-0-		323		-0-		-0-		31,812	.84
New Jersey		19,069		-0-		249		132		-0-		-0-		19,450	.75
Texas		37,234		-0-		-0-		3,557		-0-		420		41,211	1.45
Illinois		16,073		-0-		-0-		464		-0-		-0-		16,537	.96
Washington		16,266		-0-		-0-		1,070		-0-		-0-		17,336	.87
Colorado		7,756		62		-0-		183		-0-		-0-		8,001	.50
Other(c)		93,567		3,004		-0-		3,660		-0-		-0-		100,231	.99
Totals	$	432,027	$	4,104	$	464	$	10,607	$	-0-	$	420	$	447,622	.66	%

(a) Nonaccruals loans are 90 days or more past due and interest is not recognized on these loans.

(b) The June 30, 2003 balances include loans that were securitized into MBS with recourse.

(c) All states included in Other have total loan balances less than 2% of total loans.

28

Allowance for Loan Losses

The Company provides specific valuation allowances for losses on major loans when impaired and a write-down on foreclosed real estate when any significant and permanent decline in value is identified. The Company also utilizes a methodology for monitoring and estimating probable loan losses that is based on both the Company’s historical loss experience and factors reflecting current economic conditions and housing market trends. This approach uses a database that identifies and measures losses on loans and foreclosed real estate from past years to the present, broken down by year of origination, type of loan, and geographical area. This process also takes into consideration current trends in economic growth, unemployment, housing market activity, and home prices for the nation and individual geographic regions. This approach further considers the impact of other events such as natural disasters. Based on the analysis of historical performance, current conditions, and other risks, management estimates a range of loss allowances by type of loan and risk category to cover probable losses in the portfolio. One-to-four single-family real estate loans are evaluated as a group. In addition, periodic reviews are made of major multi-family and commercial real estate loans and foreclosed real estate. Where indicated, valuation allowances are established or adjusted. In estimating probable losses, consideration is given to the estimated sale price, cost of refurbishing the security property, payment of delinquent taxes, cost of disposal, and cost of holding the property. Additions to and reductions from the allowances are reflected in current earnings based upon quarterly reviews of the portfolio. The review methodology and historical analyses are reviewed quarterly.

The table below shows the changes in the allowance for loan losses for the three and six months ended June 30, 2004 and 2003.

TABLE 18

Changes in Allowance for Loan Losses

(Dollars in thousands)

	Three Months Ended June 30						Six Months Ended June 30
	2004			2003			2004			2003
Beginning allowance for loan losses	$	289,351		$	284,673		$	289,937		$	281,097
Provision for losses charged to expense		392			3,501			633			7,980
Loans charged off		(163	)		(429	)		(1,227	)		(1,478	)
Recoveries		416			123			653			269
Ending allowance for loan losses	$	289,996		$	287,868		$	289,996		$	287,868
Annualized ratio of net chargeoffs to average loans receivable and MBS with recourse held to maturity		.00	%		.00	%		.00	%		.00	%
Ratio of allowance for loan losses to total loans held for investment and MBS with recourse held to maturity								.33	%		.42	%
Ratio of allowance for loan losses to NPAs								76.6	%		64.3	%

29

Deposits

The Company raises deposits through its retail branch system, through the Internet, and, from time to time, through the money markets.

Retail deposits increased during the second quarter of 2004 by $1.2 billion, including interest credited of $203 million, compared to an increase of $882 million, including interest credited of $219 million in the second quarter of 2003. The substantial retail deposit growth reported for the second quarter of 2004 reflected favorable customer response to increased rates offered on the Company’s promoted products in response to rising interest rates. Retail deposits increased during the first half of 2004 by $1.9 billion, including interest credited of $387 million, compared to an increase of $3.3 billion, including interest credited of $430 million in the first half of 2003. Retail deposit growth was lower during the first half of 2004 as compared to 2003 primarily because of the exceptionally strong net inflows experienced during the first three months of 2003. At June 30, 2004, transaction accounts (which include checking, passbook, and money market deposit accounts) represented 71% of the total balance of deposits down from 76% at March 31, 2004 and 72% at June 30, 2003.

The weighted average cost of deposits was 1.88% at June 30, 2004, 1.85% at both March 31, 2004 and December 31, 2003, and 2.12% June 30, 2003.

The table below shows the Company’s deposits by interest rate and by remaining maturity at June 30, 2004 and 2003.

TABLE 19

Deposits

(Dollars in millions)

	June 30
	2004				2003
	Rate		Amount		Rate		Amount
Deposits by rate:
Interest-bearing checking accounts	1.44	%	$	5,996	1.58	%	$	5,043
Passbook accounts	.40			501	.50			463
Money market deposit accounts	1.75			28,027	1.99			26,578
Term certificate accounts with original maturities of:
4 weeks to 1 year	1.76			7,002	1.42			4,077
1 to 2 years	1.28			2,125	1.93			3,147
2 to 3 years	2.34			1,362	3.32			1,842
3 to 4 years	3.54			1,312	4.11			1,278
4 years and over	4.68			2,244	4.94			1,883
Retail jumbo CDs	1.91			42	3.79			75
			$	48,611			$	44,386
Deposits by remaining maturity:
No contractual maturity	1.68	%	$	34,524	1.90	%	$	32,084
Maturity within one year	1.97			10,572	2.07			8,579
1 to 5 years	3.59			3,512	4.04			3,715
Over 5 years	3.60			3	4.42			8
			$	48,611			$	44,386

30

Advances from Federal Home Loan Banks

The Company uses borrowings from the FHLBs, also known as “advances,” to provide funds for loan origination activities. Advances are secured by pledges of certain loans, MBS, and capital stock of the FHLBs owned by the Company. FHLB advances amounted to $28.7 billion at June 30, 2004, compared to $22.0 billion at December 31, 2003 and $19.9 billion at June 30, 2003.

Other Borrowings

The Company borrows funds through transactions in which securities are sold under agreements to repurchase (Reverse Repos). Reverse Repos are entered into with selected major government securities dealers and large banks, using MBS from the Company’s portfolio as collateral. Reverse Repos with dealers and banks amounted to $3.5 billion, $3.0 billion, and $21 million at June 30, 2004, December 31, 2003, and June 30, 2003, respectively.

At June 30, 2004 and December 31, 2003, Golden West, at the holding company level, had no subordinated debt outstanding as compared to $200 million at June 30, 2003. As of June 30, 2004, Golden West’s subordinated debt ratings were A2 and A by Moody’s Investors Service (Moody’s) and Standard & Poor’s (S&P), respectively.

At June 30, 2004, Golden West, at the holding company level, had $992 million of senior debt outstanding as compared to $991 million at December 31, 2003 and $990 million at June 30, 2003. As of June 30, 2004 Golden West’s senior debt was rated A1 and A+ by Moody’s and S&P, respectively.

WSB has a bank note program under which up to $5.0 billion of short-term notes with maturities of less than 270 days can be outstanding at any point in time. At June 30, 2004, December 31, 2003, and June 30, 2003, WSB had $1.8 billion, $3.0 billion, and $100 million, respectively, of bank notes outstanding. As of June 30, 2004, WSB’s bank notes were rated P-1 and A-1+ by Moody’s and S&P, respectively.

WSB may issue long-term wholesale deposits and long-term unsecured senior debt. In March 2004, WSB issued $700 million of two-year unsecured floating-rate senior notes and $300 million of five-year unsecured floating-rate senior notes. In June 2004, WSB issued $600 million of three-year unsecured floating-rate senior notes and $400 million of five-year unsecured fixed-rate senior notes. At the same time, the Company entered into an interest rate swap, which the Company designated as a fair value hedge, to effectively convert the payments on $400 million of fixed-rate senior debt to floating-rate payments. See Interest Rate Swaps discussion on pages 40 and 41. At June 30, 2004, WSB had $2.0 billion of long-term unsecured senior debt outstanding. At December 31, 2003 and June 30, 2003, WSB had no senior debt outstanding. At June 30, 2004 and 2003, WSB had no long-term wholesale deposits outstanding. As of June 30, 2004, WSB’s unsecured senior debt ratings were Aa3 and AA- from Moody’s and S&P, respectively.

Stockholders’ Equity

The Company’s stockholders’ equity amounted to $6.6 billion, $5.9 billion, and $5.4 billion at June 30, 2004, December 31, 2003, and June 30, 2003, respectively. Stockholders’ equity increased by $618 million during the first half of 2004 as a result of net earnings and increased market values of securities available for sale partially offset by the payment of quarterly dividends to stockholders. The Company’s stockholders’ equity increased by $387 million during the first half of 2003 as a result of net

31

earnings partially offset by decreased market values of securities available for sale, the payment of quarterly dividends to stockholders, and the $98 million cost of the repurchase of Golden West stock. Unrealized gains, net of taxes, on securities and MBS available for sale included in stockholders’ equity at June 30, 2004, December 31, 2003, and June 30, 2003 were $216 million, $198 million, and $171 million, respectively.

Since 1993, through five separate actions, the Company’s Board of Directors has authorized the repurchase by the Company of up to 60.6 million shares of Golden West’s common stock. As of June 30, 2004, 51.3 million shares had been repurchased and retired at a cost of $1.4 billion since October 1993. Earnings from WSB are expected to continue to be the major source of funding for the stock repurchase program. The repurchase of Golden West stock is not intended to have a material impact on the normal liquidity of the Company. The Company did not repurchase any shares during the first six months of 2004 and 9,328,179 shares remained available for purchase under the Company’s stock repurchase program as of June 30, 2004.

In April 2004, the stockholders approved an increase in the number of authorized shares of Golden West common stock from 200,000,000 to 600,000,000 shares.

Regulatory Capital

The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) established capital standards for federally insured financial institutions, such as WSB and WTX. Under FIRREA, savings institutions must have tangible capital equal to at least 1.5% of adjusted total assets, have core capital equal to at least 4% of adjusted total assets, and have risk-based capital equal to at least 8% of risk-weighted assets.

The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) requires that the Office of Thrift Supervision (OTS) and other bank regulatory agencies assign banks to one of the following five capital tiers: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. The OTS regulations provide that a savings institution is “well-capitalized” if its core (or leverage) ratio is at least 5% of adjusted total assets, its Tier 1 risk-based capital ratio is at least 6% of risk-weighted assets, its total risk-based capital ratio is at least 10% of risk-weighted assets and the institution is not subject to a capital directive.

As used in the discussion, the total risk-based capital ratio is the ratio of total capital to risk-weighted assets, the Tier 1 risk-based capital ratio is the ratio of core capital to risk-weighted assets, and the Tier 1 or leverage ratio is the ratio of core capital to adjusted total assets, in each case as calculated in accordance with current OTS capital regulations. As of June 30, 2004, the most recent notification from the OTS categorized WSB and WTX as “well-capitalized” under the current requirements. There are no conditions or events that have occurred since that notification that the Company believes would have an impact on the “well-capitalized” status categorization of WSB or WTX.

32

The following tables show WSB’s and WTX’s regulatory capital ratios and compare them to the OTS minimum requirements at June 30, 2004 and 2003.

TABLE 20

Regulatory Capital Ratios, Minimum Capital Requirements,

and Well-Capitalized Capital Requirements

As of June 30, 2004

(Dollars in thousands)

	ACTUAL				MINIMUM CAPITAL REQUIREMENTS				WELL-CAPITALIZED CAPITAL RE QUIREMENTS
	Capital		Ratio		Capital		Ratio		Capital		Ratio
WSB and Subsidiaries
Tangible	$	6,710,396	7.27	%	$	1,385,374	1.50	%		—	—
Tier 1 (core or leverage)		6,710,396	7.27			3,694,330	4.00		$	4,617,912	5.00	%
Tier 1 risk-based		6,710,396	13.32			—	—			3,022,185	6.00
Total risk-based		6,999,365	13.90			4,029,580	8.00			5,036,976	10.00
WTX
Tangible	$	624,462	5.24	%	$	178,809	1.50	%		—	—
Tier 1 (core or leverage)		624,462	5.24			476,824	4.00		$	596,030	5.00	%
Tier 1 risk-based		624,462	23.61			—	—			158,691	6.00
Total risk-based		625,526	23.65			211,588	8.00			264,485	10.00

TABLE 21

Regulatory Capital Ratios, Minimum Capital Requirements,

and Well-Capitalized Capital Requirements

As of June 30, 2003

(Dollars in thousands)

	ACTUAL				MINIMUM CAPITAL REQUIREMENTS				WELL-CAPITALIZED CAPITAL REQUIREMENTS
	Capital		Ratio		Capital		Ratio		Capital		Ratio
WSB and Subsidiaries
Tangible	$	5,694,511	7.91	%	$	1,079,593	1.50	%		—	—
Tier 1 (core or leverage)		5,694,511	7.91			2,878,916	4.00		$	3,598,645	5.00	%
Tier 1 risk-based		5,694,511	14.16			—	—			2,412,669	6.00
Total risk-based		5,980,883	14.87			3,216,892	8.00			4,021,115	10.00
WTX
Tangible	$	471,523	5.83	%	$	121,344	1.50	%		—	—
Tier 1 (core or leverage)		471,523	5.83			323,584	4.00		$	404,480	5.00	%
Tier 1 risk-based		471,523	26.03			—	—			108,706	6.00
Total risk-based		472,083	26.06			144,941	8.00			181,176	10.00

33

Results Of Operations

Net Earnings

Net earnings for the three months ended June 30, 2004 were $317 million compared to net earnings of $272 million for the three months ended June 30, 2003. Net earnings for the six months ended June 30, 2004 were $616 million compared to net earnings of $533 million for the six months ended June 30, 2003. Net earnings increased in 2004 as compared to 2003 primarily as a result of increased net interest income and a lower provision for loan losses, partially offset by an increase in general and administrative expenses and a decrease in noninterest income.

Net Interest Income

The largest component of the Company’s revenue and earnings is net interest income, which is the difference between the interest and dividends earned on loans and other investments and the interest paid on customer deposits and borrowings. Long-term growth of the Company’s net interest income, and hence earnings, is related to the ability to expand the mortgage portfolio, the Company’s primary earning asset, by originating and retaining high-quality adjustable rate home loans. Over the short term, however, net interest income can be influenced by business conditions, especially movements in short-term interest rates, which can temporarily affect the level of net interest income.

Net interest income amounted to $643 million and $1.3 billion, respectively, for the three and six months ended June 30, 2004 as compared to $542 million and $1.1 billion for the same periods in 2003. These amounts represented 19% and 18% increases, respectively, over the previous year.

The increase in net interest income in 2004 compared with the prior year resulted primarily from the growth in the loan portfolio, the Company’s principal earning asset. Between June 30, 2003 and June 30, 2004, the Company’s earning asset balance increased by $21.0 billion or 30%. This growth resulted from strong mortgage originations which more than offset loan repayments and loan sales. Partially offsetting the benefit to net interest income of a larger average earning asset balance in 2004 was a decrease for the six months ended June 30, 2004 in the Company’s average primary spread, which is the monthly average of the monthend difference between the yield on loans and other investments and the rate paid on deposits and borrowings.

The level and movement of the Company’s primary spread are influenced by a variety of factors including: the amount and speed of movements in market interest rates; the shape of the yield curve, that is the difference between short-term and long-term interest rates; competition in the home lending market, which influences the pricing of the Company’s adjustable and fixed-rate mortgage products; the Company’s efforts to attract deposits and competition in the retail savings market, which influence the pricing of the Company’s deposit products; and the prices that the Company pays for its borrowings. On a year-to-year basis, the most significant factor that leads to changes in the Company’s primary spread is market interest rate movements, as discussed below.

Fluctuations in short-term market interest rates affect both the cost of the Company’s liabilities and the yield on the Company’s ARM assets. However, the liabilities tend to be affected more quickly than the assets, mainly due to the reporting and repricing lags inherent in the ARM indexes used in the Company’s loan products (described on pages 13 through 15). This timing disparity can affect the Company’s primary spread temporarily until the indexes are able to reflect, or “catch up” with, the

34

market rates. The following chart summarizes the different relationships the indexes and the market interest rates could have at any point in time, and the expected impact on the Company’s primary spread.

Market Interest Rate Scenarios	Relationship Between Indexes and Market Interest Rates and Expected Impact on Primary Spread
Market interest rates decline	The index decrease lags the market interest rate decrease, and therefore the primary spread would be expected to widen temporarily until the index catches up with the lower market interest rates.
Market interest rates increase	The index increase lags the market interest rate increase, and therefore the primary spread would be expected to narrow temporarily until the index catches up with the higher market interest rates.
Market interest rates remain constant	The primary spread would be expected to stabilize when the index catches up to the current rate level.

For the five years ended June 30, 2004, which included periods of both falling and rising interest rates, the Company’s primary spread averaged 2.65%.

During the second quarter of 2004, short-term market interest rates began to rise in anticipation of the June 30, 2004 action by the Federal Reserve’s Open Market Committee to raise the Federal Funds rate, a key short-term interest rate, by .25% from 1.00% to 1.25%. As a consequence, the Company’s cost of funds, which is related primarily to the level of short-term market interest rates, also began to increase. At the same time, the yield on Golden West’s earning assets declined a few basis points, because the indexes underlying the Company’s large adjustable rate mortgage portfolio were still catching up to previous interest rate declines. As a result, the Company’s second quarter 2004 average primary spread was lower than in the same period in 2003 and lower than in the first quarter of 2004.

The table below shows the components of the Company’s primary spread at June 30, 2004, December 31, 2003, and June 30, 2003.

TABLE 22

Yield on Earning Assets,

Cost of Funds, and Primary Spread

At Period End

	June 30 2004		December 31 2003		June 30 2003
Yield on loan portfolio and MBS	4.50	%	4.61	%	4.92	%
Yield on investments	1.35		.93		1.27
Yield on earning assets	4.46		4.54		4.90
Cost of deposits	1.88		1.85		2.12
Cost of borrowings	1.43		1.37		1.58
Cost of funds	1.69		1.67		1.94
Primary spread	2.77	%	2.87	%	2.96	%

35

The following tables set forth certain information with respect to the yields earned and rates paid on the Company’s earning assets and interest-bearing liabilities for the three and six months ended June 30, 2004 and 2003.

TABLE 23

Average Earning Assets and Interest-Bearing Liabilities

(Dollars in thousands)

	Three Months Ended June 30, 2004						Three Months Ended June 30, 2003
	Average Daily Balances(a)		Annualized Average Yield		End of Period Yield		Average Daily Balances(a)		Annualized Average Yield		End of Period Yield
ASSETS
Investments	$	1,192,546	1.59	%	1.35	%	$	3,259,868	1.44	%	1.27	%
Loans receivable and MBS(b)		85,178,143	4.53		4.50			67,903,502	5.01		4.92
Invest. in capital stock of FHLBs		1,232,718	3.01		n/a	(c)		1,125,714	3.48		n/a	(c)
Earning assets	$	87,603,407	4.46	%			$	72,289,084	4.82	%
LIABILITIES
Deposits:
Checking accounts	$	5,751,537	1.39	%	1.44	%	$	4,924,296	.04	%	1.58	%
Savings accounts		29,972,618	1.71		1.73			26,337,367	2.27		1.96
Term accounts		11,951,612	2.38		2.38			12,638,724	2.72		2.67
Total deposits		47,675,767	1.84		1.88			43,900,387	2.15		2.12
Advances from FHLBs		26,479,432	1.25		1.35			19,853,519	1.40		1.37
Reverse repurchases		3,039,176	1.15		1.29			21,857	.24		.29
Other borrowings		4,934,168	1.94		2.05			3,880,227	2.46		4.23
Interest-bearing liabilities	$	82,128,543	1.63	%			$	67,655,990	1.95	%
Average net yield			2.83	%					2.87	%
Net interest income	$	642,686					$	541,621
Net yield on average earning assets (d)			2.93	%					3.00	%

(a) Includes balances of assets and liabilities that were acquired and matured within the same month.

(b) Includes nonaccrual loans (90 days or more past due).

(c) FHLB stock pays dividends; no end of period interest yield applies.

(d) Net interest income divided by daily average of earning assets.

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TABLE 24

Average Earning Assets and Interest-Bearing Liabilities

(Dollars in thousands)

	Six Months Ended June 30, 2004						Six Months Ended June 30, 2003
	Average Daily Balances(a)		Annualized Average Yield		End of Period Yield		Average Daily Balances(a)		Annualized Average Yield		End of Period Yield
ASSETS
Investments	$	1,746,509	1.42	%	1.35	%	$	3,414,989	1.45	%	1.27	%
Loans receivable and MBS(b)		82,606,728	4.57		4.50			66,827,734	5.10		4.92
Invest. in capital stock of FHLBs		1,198,524	3.16		n/a	(c)		1,108,960	3.87		n/a	(c)
Earning assets	$	85,551,761	4.48	%			$	71,351,683	4.90	%
LIABILITIES
Deposits:
Checking accounts	$	5,686,595	1.38	%	1.44	%	$	4,780,683	.04	%	1.58	%
Savings accounts		30,076,840	1.71		1.73			25,378,191	2.40		1.96
Term accounts		11,590,179	2.39		2.38			12,981,410	2.78		2.67
Total deposits		47,353,614	1.84		1.88			43,140,284	2.25		2.12
Advances from FHLBs		24,915,875	1.25		1.35			19,158,913	1.46		1.37
Reverse repurchases		2,754,473	1.14		1.29			211,585	1.21		.29
Other borrowings		5,180,662	1.88		2.05			4,352,255	2.35		4.23
Interest-bearing liabilities	$	80,204,624	1.63	%			$	66,863,037	2.03	%
Average net yield			2.85	%					2.87	%
Net interest income	$	1,261,940					$	1,070,362
Net yield on average earning assets (d)			2.95	%					3.00	%

(a) Includes balances of assets and liabilities that were acquired and matured within the same month.

(b) Includes nonaccrual loans (90 days or more past due).

(c) FHLB stock pays dividends; no end of period interest yield applies.

(d) Net interest income divided by daily average of earning assets.

37

The following table shows the Company’s revenues and expenses as a percentage of total revenues for the three and six months ended June 30, 2004 and 2003.

TABLE 25

Selected Revenue and Expense Items

as Percentages of Total Revenues

	Three Months Ended June 30				Six Months Ended June 30
	2004		2003		2004		2003
Interest on loans	88.0	%	81.9	%	88.0	%	82.0	%
Interest on mortgage-backed securities	3.0		7.1		3.7		7.7
Interest and dividends on investments	1.3		2.3		1.5		2.4
	92.3		91.3		93.2		92.1
Less:
Interest on deposits	20.7		24.7		21.2		25.6
Interest on advances and other borrowings	10.9		9.8		10.7		10.1
	31.6		34.5		31.9		35.7
Net interest income	60.7		56.8		61.3		56.4
Provision for loan losses	.0		.4		.0		.4
Net interest income after provision for loan losses	60.7		56.4		61.3		56.0
Add:
Fees	5.4		4.4		4.7		4.0
Gain on the sale of securities, MBS, and loans	0.6		2.2		.4		1.9
Change in fair value of derivatives	.0		.3		.1		.3
Other noninterest income	1.7		1.8		1.6		1.7
	7.7		8.7		6.8		7.9
Less:
General and administrative expenses	19.7		18.5		19.8		18.3
Taxes on income	18.8		18.0		18.4		17.6
Net earnings	29.9	%	28.6	%	29.9	%	28.0	%

Interest on Loans

In the second quarter of 2004, interest on loans increased by $150 million or 19.2% from the comparable period in 2003. The increase in the second quarter of 2004 was due to a $19.7 billion increase in the average portfolio balance, which was partially offset by a 47 basis point decrease in the average portfolio yield. In the first six months of 2004, interest on loans increased by $255 million or 16.4% from the comparable period in 2003. The increase in the first half of 2004 was due to an $18.1 billion increase in the average portfolio balance, which was partially offset by a 51 basis point decrease in the average portfolio yield.

Interest on Mortgage-Backed Securities

In the second quarter of 2004, interest on MBS decreased by $36 million or 52.8% from the comparable period in 2003. The decrease in the second quarter of 2004 was primarily due to a $2.5 billion decrease in the average portfolio balance and a 48 basis point decrease in the average

38

portfolio yield. In the first half of 2004, interest on MBS decreased by $71 million or 48.4% from the comparable period in 2003. The decrease in the first half of 2004 was primarily due to a $2.3 billion decrease in the average portfolio balance and a 52 basis point decrease in the average portfolio yield. The decrease in the average portfolio balance was primarily due to the $1.0 billion desecuritization in the first quarter of 2004 as discussed on pages 25 and 26.

Interest and Dividends on Investments

The income earned on the investment portfolio fluctuates, depending upon the volume outstanding and the yields available on short-term investments. In the second quarter of 2004, interest and dividends on investments decreased by $8 million or 34.8% from the comparable period in 2003. The decrease in the second quarter of 2004 was due to a $2.0 billion decrease in the average portfolio balance partially offset by a 35 basis point increase in the average portfolio yield. In the first six months of 2004, interest and dividends on investments decreased by $15 million or 32.3% from the comparable period in 2003. The decrease in the first half of 2004 was due to a $1.6 billion decrease in the average portfolio balance partially offset by an eight basis point increase in the average portfolio yield.

Interest on Deposits

In the second quarter of 2004, interest on deposits decreased by $17 million or 7.1% from the comparable period in 2003. The decrease in the second quarter of 2004 was due to a 31 basis point decrease in the average cost of deposits partially offset by a $3.8 billion increase in the average balance of deposits. In the first six months of 2004, interest on deposits decreased by $51 million or 10.5% from the comparable period in 2003. The decrease in the first half of 2004 was due to a 42 basis point decrease in the average cost of deposits partially offset by a $4.2 billion increase in the average balance of deposits.

Interest on Advances

Interest paid on FHLB advances was $83 million and $70 million in the second quarter of 2004 and 2003, respectively. Interest on advances increased by $13 million or 19.0% from the comparable period of 2003. The increase in the second quarter of 2004 was primarily due to a $6.6 billion increase in the average balance partially offset by a 15 basis point decrease in the average cost of these borrowings. In the first six months of 2004, interest on advances increased by $16 million or 11.7 % from the comparable period of 2003. The increase in the first half of 2004 was primarily due to a $5.8 billion increase in the average balance partially offset by a 21 basis point decrease in the average cost of these borrowings.

Interest on Other Borrowings

Interest expense on other borrowings, including interest on reverse repurchase agreements, amounted to $33 million and $24 million for the three months ended June 30, 2004 and 2003, respectively. In the second quarter of 2004, interest on other borrowings increased by $9 million or 36.8% from the comparable period in 2003. The increase in the second quarter of 2004 was due to a $4.1 billion increase in the average balance partially offset by an 81 basis point decrease in the average cost of other borrowings. Interest expense on other borrowings, including interest on reverse repurchase agreements, amounted to $64 million and $53 million for the six months ended June 30, 2004 and 2003, respectively. In the first six months of 2004, interest on other borrowings increased by $12 million or 22.3% from the comparable period in 2003. The increase in the first half of 2004 was due to a $3.4 billion increase in the average balance partially offset by a 68 basis point decrease in the average cost of other borrowings.

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Interest Rate Swaps

From time to time, the Company enters into interest rate swaps as a part of its interest rate risk management strategy. Such instruments are entered into primarily to offset the repricing characteristics of designated assets and liabilities. The Company does not hold any derivative financial instruments for trading purposes. (See Interest Rate Swap discussion on pages 7 and 8.)

Fair value hedges

In June 2004, the Company entered into an interest rate swap with a notional amount of $400 million, which the Company designated as a fair value hedge, to effectively convert payments on WSB’s $400 million long-term fixed-rate debt to floating-rate payments. This interest rate swap qualified for the shortcut method under SFAS 133 and, as such, an ongoing assessment of hedge effectiveness is not required and the change in fair value of the hedged item is deemed to be equal to the change in the fair value of the interest rate swap. The fair value of the swap at June 30, 2004 was $1.9 million which was offset by the decrease in the fair value of the debt. As such, the change in the fair value of the swap had no impact on the Consolidated Statement of Net Earnings.

The following table illustrates as of June 30, 2004, the maturities and weighted average rates for the fair value interest rate swap and the hedged fixed-rate senior debt.

Table 26

Maturities and Fair Value of the Fair Value Hedge and the Related Hedged Senior Debt

As of June 30, 2004

(Dollars in millions)

	Expected Maturity Date as of June 30, 2004
	2005			2006			2007			2008			2009			Total Balance			Fair Value
Hedged Fixed-Rate Senior Debt
Contractual maturity	$	-0-		$	-0-		$	-0-		$	-0-		$	400		$	400		$	400
Weighted average interest rate		.00	%		.00	%		.00	%		.00	%		4.61	%		4.61	%
Fair Value Hedge
Notional Amount	$	-0-		$	-0-		$	-0-		$	-0-		$	400		$	400		$	2
Weighted average interest rate paid		.00	%		.00	%		.00	%		.00	%		1.37	%		1.37	%
Weighted average interest rate received		.00	%		.00	%		.00	%		.00	%		4.39	%		4.39	%

The net effect of this transaction was that the Company effectively converted fixed-rate senior debt to floating-rate senior debt with a weighted average interest rate of 1.57% at June 30, 2004.

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Interest rate swap not designated as a hedging instrument

The following table shows the activity of the Company’s interest rate swap that was not designated as a hedging instrument. This swap matured in May 2004.

TABLE 27

Schedule of Activity for Interest Rate Swap Not Designated as a Hedging Instrument

(Notional amounts in millions)

	Six Months Ended June 30, 2004
	Pay Fixed Swap
Balance at December 31, 2003	$	104
Maturities		(104	)
Balance at June 30, 2004	$	-0-

The range of floating interest rates received on swap contracts in the first six months of 2004 was 1.13% to 1.18%. The range of fixed interest rates paid on swap contracts in the first six months of 2004 was 5.92% to 7.53%.

Interest rate swap payment activity on swaps not designated as hedging instruments decreased net interest income by $57 thousand and $1.0 million for the three and six months ended June 30, 2004 as compared to a decrease of $2.9 million and $6.3 million for the same periods in 2003.

As a result of the ongoing valuation of the Company’s swaps not designated as hedging instruments, the Company reported pre-tax income of $1 million, or $.00 after tax per diluted share for the six months ended June 30, 2004, as compared to pre-tax income of $6 million, or $.02 after tax per diluted share for the six months ended June 30, 2003. This additional income occurred because the fair value of Golden West’s swaps changed in 2004 and 2003 as a result of interest rate movements and the maturities of interest rate swaps. The changes in fair value of these swap contracts are reflected as a net liability on the Consolidated Statement of Financial Condition with corresponding amounts reported in Noninterest Income as the “Change in Fair Value of Derivatives” in the Consolidated Statement of Net Earnings.

Provision for Loan Losses

The provision for loan losses was $392 thousand and $633 thousand for the three and six months ended June 30, 2004 compared to $4 million and $8 million for the same periods in 2003. The decrease in the provision in 2004 was due to the improved credit performance of the Company’s loan portfolio.

Noninterest Income

Noninterest income was $81 million and $141 million for the three and six months ended June 30, 2004 compared to $83 million and $150 million for the same periods in 2003. The decrease in 2004 as compared to 2003 resulted primarily from the decrease in income associated with a smaller volume of loan sales, partially offset by an increase in prepayment fees.

41

General and Administrative Expenses

For the second quarter and first six months of 2004, general and administrative expenses (G&A) were $208 million and $407 million compared to $177 million and $347 million for the comparable periods in 2003. G&A expenses increased in 2004 to support the record loan volume, as well as to continue investing in resources to support future expansion of the Company.

G&A as a percentage of average assets on an annualized basis was .93% and .94% for the second quarter and first six months of 2004 compared to .99% for both the second quarter and first six months of 2003. G&A as a percentage of average assets on an annualized basis was .95% for the three months ended March 31, 2004. G&A as a percentage of average assets was lower in the second quarter of 2004 as compared to the second quarter of 2003 because in 2004 average assets grew faster than the growth in general and administrative expenses. G&A as a percentage of net interest income plus noninterest income (the “efficiency ratio”) amounted to 28.67% and 29.01% for the second quarter and first six months of 2004 compared to 28.37% and 28.43% for the same periods in 2003. G&A as a percentage of net interest income plus noninterest income amounted to 29.38% for the first quarter of 2004.

Taxes on Income

The Company utilizes the accrual method of accounting for income tax purposes. Taxes as a percentage of earnings were 38.6% and 38.1% for the second quarter and first six months of 2004 compared to 38.6% and 38.5% for the same periods in 2003. From quarter to quarter, the effective tax rate may fluctuate due to changes in the volume of business activity in the various states where the Company operates. The second quarter effective tax rate was slightly higher than the first quarter 2004 tax rate of 37.5% due to more business activity in states with higher tax rates.

Liquidity and Capital Resources

WSB’s principal sources of funds are cash flows generated from loan repayments; borrowings from the FHLB of San Francisco; deposits, debt collateralized by mortgages, MBS, or securities; sale of loans; bank notes; senior debt; earnings; borrowings from its parent; and borrowings from its WTX subsidiary. In addition, WSB has other alternatives available to provide liquidity or finance operations including wholesale certificates of deposit, federal funds purchased, and additional borrowings from private and public offerings of debt. Furthermore, under certain conditions, WSB may borrow from the Federal Reserve Bank of San Francisco to meet short-term cash needs.

WTX’s principal sources of funds are cash flows generated from borrowings from the FHLB of Dallas; earnings; deposits; loan repayments; debt collateralized by mortgages or MBS; and borrowings from affiliates.

The principal sources of funds for WSB’s parent, Golden West, are the proceeds from the issuance of debt securities, dividends from subsidiaries, and interest on investments. Various statutory and regulatory restrictions and tax considerations limit the amount of dividends WSB can distribute to GDW. The principal liquidity needs of Golden West are for payment of interest and principal on debt securities, capital contributions to its insured subsidiaries, dividends to stockholders, the repurchase of Golden West stock (see Stockholders’ Equity section on page 31), and general and administrative expenses. At June 30, 2004, December 31, 2003, and June 30, 2003, Golden West’s total cash and investments amounted to $602 million, $609 million, and $710 million, respectively.

42

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Golden West estimates the sensitivity of the Company’s net interest income, net earnings, and capital ratios to interest rate changes and anticipated growth based on simulations using an asset/ liability model which takes into account the lags described on pages 14, 15, and 16. The simulation model projects net interest income, net earnings, and capital ratios based on a significant interest rate increase that is sustained for a thirty-six month period. The model is based on the actual maturity and repricing characteristics of interest-rate sensitive assets and liabilities. For mortgage assets, the model incorporates assumptions regarding the impact of changing interest rates on prepayment rates, which are based on the Company’s historical prepayment information. The model factors in projections for anticipated activity levels by products offered by the Company. Based on the information and assumptions in effect at June 30, 2004, management believes that a 200 basis point rate increase sustained over a thirty-six month period would not materially affect the Company’s long-term profitability and financial strength.

ITEM 4. CONTROLS AND PROCEDURES

The Company’s Chief Executive Officers, Chief Financial Officer, and other personnel continually review the effectiveness and timeliness of the Company’s disclosure controls and procedures. As required by Exchange Act rules, the Company, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officers and Chief Financial Officer, also conduct an evaluation at the end of each quarter to further assure the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on this quarterly evaluation, the Chief Executive Officers and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings. The Company has not made any change to its internal controls over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Index to Exhibits

Exhibit No.	Description
3 (a)	Restated Certificate of Incorporation, as amended, and amendments thereto, are incorporated by reference to Exhibit 3(a) to the Company’s Annual Report on Form 10-Q (File No. 1-4629) for the quarter ended March 31, 2004.
3 (b)	By-Laws of the Company, as amended July 2004.
4 (a)	The Registrant agrees to furnish to the Commission, upon request, a copy of each instrument with respect to issues of long-term debt, the authorized principal amount of which does not exceed 10% of the total assets of the Company.
10 (a)	1996 Stock Option Plan, as amended and restated February 2, 1996, and as further amended May 2, 2001, is incorporated by reference to Exhibit 10 (a) of the Company’s Annual Report on Form 10-K (File No. 1-4629) for the year ended December 31, 2002.
10 (b)	Incentive Bonus Plan, as amended and restated, is incorporated by reference to Exhibit A of the Company’s Definitive Proxy Statement on Schedule 14A, filed on March 15, 2002, for the Company’s 2002 Annual Meeting of Stockholders.
10 (c)	Deferred Compensation Agreement between the Company and James T. Judd is incorporated by reference to Exhibit 10(b) of the Company’s Annual Report on Form 10-K (File No. 1-4629) for the year ended December 31, 1986.
10 (d)	Deferred Compensation Agreement between the Company and Russell W. Kettell is incorporated by reference to Exhibit 10(c) of the Company’s Annual Report on Form 10-K (File No. 1-4629) for the year ended December 31, 1986.
10 (e)	Deferred Compensation Agreement between the Company and Michael Roster is incorporated by reference to Exhibit 10(e) of the Company’s Annual Report on Form 10-K (File No. 1-4629) for the year ended December 31, 2002.
10 (f)	Operating lease on Company headquarters building, 1901 Harrison Street, Oakland, California 94612, is incorporated by reference to Exhibit 10(h) of the Company’s Quarterly Report on Form 10-Q (File No. 1-4629) for the quarter ended March 31, 1998.
10 (g)	Form of Supplemental Retirement Agreement between the Company and certain executive officers is incorporated by reference to Exhibit 10(g) to the Company’s Annual Report on Form 10-K (File No. 1-4629) for the year ended December 31, 2002.
10 (h)	Form of Indemnification Agreement for use by the Company with its directors is incorporated by reference to Exhibit 10(h) of the Company’s Quarterly Report on Form 10-Q (File No. 1-4629) for the quarter ended March 31, 2003.

44

(a) Index to Exhibits (continued)

Exhibit No.	Description
31.1	Section 302 Certification of Principal Executive Officer.
31.2	Section 302 Certification of Principal Executive Officer.
31.3	Section 302 Certification of Principal Financial Officer.
32 *	Section 906 Certification of Principal Executive Officers and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350.

* Pursuant to Item 601(b)(32) of Regulation S-K, this exhibit is furnished rather than filed with this report.

(b) Reports on Form 8-K

The Registrant filed one current report on Form 8-K with the Commission during the second quarter of 2004 and has since filed one more report on Form 8-K with the Commission:

1. Report filed April 22, 2004. Item 7. Exhibits. The report dated April 20, 2004 included the Golden West First Quarter 2004 Earnings Press Release and the Golden West March 31, 2004 Thirteen Month Statistical Data Press Release.

2. Report filed July 20, 2004. Item 7. Exhibits. The report dated July 20, 2004 included the Golden West Second Quarter 2004 Earnings Press Release and the Golden West June 30, 2004 Thirteen Month Statistical Data 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: August 6, 2004	/s/ Russell W. Kettell
	Russell W. Kettell
	President and Chief Financial Officer
	/s/ William C. Nunan
	William C. Nunan
	Group Senior Vice President and Chief Accounting Officer

45

EX-3.(B)

EXHIBIT 3 (b)

REVISED BYLAWS

OF

GOLDEN WEST FINANCIAL CORPORATION

(As amended July 26, 2004)

ARTICLE I

Section 1. OFFICES. The registered office of the Corporation is hereby fixed and located in the City of Wilmington, Delaware. The Corporation may also have such offices at such other places within or without the State of Delaware as the Board of Directors shall from time to time prescribe.

ARTICLE II

Meetings of Stockholders

Section 1. PLACE OF MEETINGS. The annual meeting of stockholders and all other meetings of stockholders shall be held either at the registered office of the Corporation or at any other place within or without the State of Delaware which may be designated by the Board of Directors of the Corporation.

Section 2. ANNUAL MEETINGS. The annual meeting of stockholders shall be held the last week of April of each year or at such other time as the Board of Directors may determine.

Written notice of each annual meeting shall be given to each stockholder entitled to vote, either personally or by mail or other means of written communication, charges prepaid, addressed to such stockholder at his address appearing on the books of the Corporation or given by him to the Corporation for the purpose of notice. If a stockholder gives no address, notice shall be deemed to have been given him if sent by mail or other means of written communication addressed to the place where the registered office of the Corporation is situated, or if published at least once in some newspaper of general circulation in the county in which said office is located. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic mail or other electronic transmission, in the manner provided in Section 232 of the Delaware General Corporation Law. Notice of any such meeting of stockholders shall be sent to each stockholder entitled thereto not less than ten (10) days before each annual meeting, and shall specify the place, the day and the hour of such meeting.

Except as otherwise prohibited under the general corporation laws of Delaware, any notice hereunder shall be effective if given by a single written notice to stockholders who share an address, if consented to by the stockholders at that address to whom such notice is given. This consent will be deemed to have been given if the stockholder fails to object in writing to the Corporation within 60 days of having been given notice by the Corporation of its intention to send the single notice. The stockholder may revoke this consent by written notice to the Corporation.

Section 3. SPECIAL MEETINGS. Special meetings of stockholders for any purpose or purposes whatsoever may be called at any time by the Chairman of the Board or the Board of Directors. Except in special cases where other express provision is made by statute, notice of such special meetings shall be given in the same manner as for annual meetings of stockholders. Notices of any special meetings shall specify in addition to the place, day and hour of such meeting, the general nature of the business to be transacted.

Section 4. ADJOURNED MEETINGS AND NOTICE THEREOF. In the absence of a quorum, any meeting of stockholders may be adjourned from time to time by the vote of a majority of the shares, the holders of which are either present in person or represented by proxy thereat, but no other business may be transacted.

If any stockholders’ meeting, either annual or special, is adjourned for thirty (30) days or more or if after adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given as in the case of an original meeting. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at any adjourned meeting other than by announcement at the meeting at which such adjournment is taken.

Section 5. ENTRY OF NOTICE. An affidavit of the Secretary or an Assistant Secretary or the transfer agent of the Corporation that notice has been duly given shall be prima facie evidence that due notice of such meeting was given to such stockholder, as required by law and the Bylaws of the Corporation.

Section 6. VOTING. At all meetings of stockholders every stockholder entitled to vote shall have the right to vote in person or by proxy the number of shares standing in his own name on the stock records of the Corporation on the day three (3) days prior to any meeting of stockholders, or, if some other day be fixed for the determination of stockholders of record, then on such other day. Such voting may be viva voce or by ballot. Every stockholder entitled to vote at an election for directors shall have the right to cumulate his votes and give one candidate a number of votes equal to the number of directors to be elected, multiplied by the number of votes to which his shares are entitled, or to distribute his votes on the same principal among as many candidates as he shall think fit. The candidates receiving the highest number of votes up to the number of directors to be elected, shall be elected.

Section 7. QUORUM. The presence in person or by proxy of the holders of a majority of the shares entitled to vote at any meeting shall constitute a quorum for the transaction of business. The stockholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

Section 8. CONSENT OF ABSENTEES. The transactions of any meeting of stockholders, either annual or special, however called and noticed, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, such of the stockholders entitled to vote, not present in person or by proxy, signs a written waiver of notice, submits a waiver by electronic mail or other electronic transmission, consents to the holding of such meeting, or approves of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except where the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

Section 9. ACTION WITHOUT MEETING. Any action which under any provision of the general corporation laws of Delaware may be taken at a meeting of the stockholders, may be taken without a meeting if authorized by a writing or by electronic transmission shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Such consent shall be filed with the Secretary of the Corporation.

Notwithstanding any inconsistent provision which may be contained in these Bylaws, in order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten days of the date upon which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or any officer or agent of the Corporation having custody of the book in which proceedings of stockholders’ meetings are recorded, to the attention of the Secretary of the Corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action.

Section 10. PROXIES. Every person entitled to vote or execute consents shall have the right to do so either in person or by an agent or agents authorized by a written proxy or electronic transmission executed by such person or his duly authorized agent. A proxy shall be deemed executed if the stockholder’s name is placed on the proxy, whether by manual signature, electronic or telegraphic transmission or otherwise. A proxy shall be valid only for the specific meeting with respect to which it has been granted and any adjournment of such meeting; provided, however, that no proxy shall be valid after the expiration of eleven (11) months from the date of its execution. Any proxy duly executed and outstanding shall be deemed not to have been revoked, and to be in full force and effect, unless and until an instrument revoking said proxy, or a duly executed proxy bearing a later date, is executed and delivered. Notwithstanding that a valid proxy may be outstanding, the powers of the proxy holder or holders shall be suspended, except in the case of a proxy coupled with an interest, which shall state the fact on its face, if the person or persons executing such proxy shall be present at the meeting and elect to vote in person.

Section 11. ADVANCE NOTICE OF STOCKHOLDER PROPOSALS. At any annual or special meeting of stockholders, proposals by stockholders and persons nominated for election as directors by stockholders shall be considered only if advance notice thereof has been timely given as provided herein and such proposals or nominations are otherwise proper for consideration under applicable law and the restated certificate of incorporation and by-laws of the Corporation. Notice of any proposal to be presented by any stockholder or of the name of any person to be nominated by any stockholder for election as a director of the Corporation at any meeting of stockholders shall be delivered

to the Secretary of the Corporation at its principal executive office not less than 90 nor more than 120 days prior to the date of the meeting; provided, however, that if the date of the meeting is first publicly announced or disclosed (in a public filing or otherwise) less than 70 days prior to the date of the meeting, such advance notice shall be given not more than ten days after such date is first so announced or disclosed. Public notice shall be deemed to have been given more than 70 days in advance of the annual meeting if the Corporation shall have previously disclosed, in these by-laws or otherwise, that the annual meeting in each year is to be held on a determinable date or week, unless and until the Board determines to hold the meeting on a different date or week.

Any stockholder who gives notice of any such proposal or director nomination shall deliver therewith (i) the text of the proposal to be presented, (ii) a brief written statement of the reasons why such stockholder favors the proposal, (iii) such stockholder’s name and address, (iv) the number and class of all shares of each class of stock of the Corporation beneficially owned by such stockholder, and the length of time those shares have been held, and (v) any material interest of such stockholder in the proposal (other than as a stockholder). If a stockholder delivers a notice on behalf of one or more other beneficial owners, the notice shall also include the information in items (iii), (iv) and (v) above with respect to each beneficial owner in the stockholder group.

Any stockholder desiring to nominate any person for election as a director of the Corporation shall also deliver with such notice a statement in writing setting forth (i) the name, age, business address, residence, and principal occupation or employment of the person to be nominated, (ii) the number and class of all shares of each class of stock of the Corporation beneficially owned by such person, and the length of time those shares have been held, (iii) the information regarding such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, and required by paragraphs (a), (e) and (f) of Item 401 of Regulation S-K adopted by the Securities and Exchange Commission (or the corresponding provisions of any regulation subsequently adopted by the Securities and Exchange Commission applicable to the Corporation), (iv) whether such person would satisfy the independence standards of the New York Stock Exchange and other applicable regulations, (v) whether such person has any affiliation or arrangement with the stockholder or stockholder group making the nomination, and (vi) such person’s signed consent to serve as a director of the Corporation if elected.

As used herein, shares “beneficially owned” shall mean all shares as to which such person, together with such person’s affiliates and associates (as defined in Rule 12b-2 under the Securities and Exchange Act of 1934), may be deemed to beneficially own pursuant to Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as well as all shares as to which such person, together with such person’s affiliates and associates, has the right to become the beneficial owner pursuant to any agreement or understanding, or upon the exercise of warrants, options or rights to convert or exchange (whether such rights are exercisable immediately or only after the passage of time or the occurrence of conditions). The person presiding at the meeting, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall determine whether such notice has been duly given and shall direct that proposals and nominees not be considered if such notice has not been given.

In order to include information with respect to a stockholder proposal or director nomination in the proxy statement and form of proxy for an annual meeting, stockholders must also provide notice as required by the rules and regulations promulgated under the Securities Exchange Act of 1934. Nothing in these Bylaws shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934.

ARTICLE III

Directors

Section 1. POWERS. Subject to the limitations of the Certificate of Incorporation, of the Bylaws, and of the general corporation law of Delaware as to action to be authorized or approved by the stockholders, and subject to the duties of directors as prescribed by the Bylaws, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the directors shall have the following powers to wit:

First - To select and remove all officers, agents and employees of the Corporation, prescribe such powers and duties for them as may not be inconsistent with law, with the Certificate of Incorporation or the Bylaws, fix their compensation and require from them security for faithful service.

Second - To conduct, manage and control the affairs and business of the Corporation, and to make such rules and regulations therefore not inconsistent with law, the Certificate of Incorporation or the Bylaws as them may deem proper.

Third - To adopt, make and use a corporate seal, and to prescribe the forms of certificates of stock, and to alter the form of such seal or such certificates from time to time in a lawful manner as they may see fit.

Fourth - To authorize the issuance of shares of stock of the Corporation from time to time, upon such terms as may be lawful, in consideration of money paid, labor done, or services actually rendered, debts or securities cancelled, or tangible or intangible property actually received, or amounts transferred from surplus to stated capital upon the issuance of shares as a dividend.

Fifth - To borrow money and incur indebtedness for the purposes of the Corporation, and to cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor.

Sixth - To appoint, by resolution passed by a majority of the full Board of Directors, an executive committee and one or more other committees, and to delegate to such committees, subject to the control of the Board of Directors, any of the powers and authority of said Board except as specifically limited by statute or the Certificate of Incorporation. The executive committee shall be composed of two or more directors and shall act only in the intervals between meetings of the Board of Directors and shall be subject at all times to the control thereof.

Seventh – To delegate authority to any officer or officers, or agent or agents, to enter into any agreements, sign documents, submit applications and reports, settle disputes, authorize expenditures, and otherwise effect transactions on behalf of the Corporation, which authority may be general or confined to specific instances.

Section 2. NUMBER, ELECTION AND TERM OF OFFICE OF DIRECTORS. The number of directors of the Corporation shall be nine. This number may be changed by a resolution of the Board of Directors or a majority of the stockholders. Except as otherwise provided in the Certificate of Incorporation, the Board of Directors shall be elected at the annual meeting of stockholders, but if any such annual meeting is not held, or the directors are not elected thereat, the directors may be elected at any special meeting of stockholders held for that purpose. All directors shall hold office until their respective successors are elected.

Section 3. VACANCIES. A vacancy or vacancies in the Board of Directors shall be deemed to exist in the case of the death, resignation or removal of any director, or if the authorized number of directors be increased, or if the stockholders fail at any annual, regular or special meeting of stockholders at which any director or directors are elected to elect the full authorized number of directors to be voted for at that meeting.

Except as otherwise provided in the Certificate of Incorporation, vacancies may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director and each director so elected shall hold office until his successor is elected at an annual or regular or a special meeting of the stockholders.

The stockholders may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors. If the Board of Directors accepts the resignation of a director tendered to take effect at a future time, the Board or the stockholders may elect a successor to take office when the resignation is to become effective.

No reduction of the number of directors shall have the effect of removing any director prior to the expiration of his term of office.

Section 4. PLACE OF MEETING. All meetings of the Board of Directors shall be held at the registered office of the Corporation or at any other place within or without the State of Delaware.

Section 5. MEETINGS BY TELEPHONE. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other.

Section 6. REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without notice at such times as may from time to time be determined by the Board of Directors.

Section 7. SPECIAL MEETINGS. Special meetings of the Board of Directors for any purpose or purposes shall be called at any time by the Chairman of the Board, or if he is absent or unable or refuses to act, by the Vice Chairman of the Board, the President or by any three directors.

Written notice of the time and place of regular and special meetings shall be delivered personally to the directors or sent to each director by letter or by telegram, charges prepaid, addressed to him at his address as it is shown upon the records of the Corporation, or if it is not so shown on such records or is not readily ascertainable, at the city in which the meetings of the directors are regularly held. In case such notice is mailed or telegraphed, it shall be deposited in the United States mail or delivered to the telegraph company at least forty-eight (48) hours prior to the time of the holding of the meeting. In case such notice is personally delivered, whether by telephone, facsimile or other electronic transmission. it shall be so delivered at least twenty-four (24) hours prior to the time of the holding of the meeting. Such mailing, telegraphing or delivery as above provided shall be due, legal and personal notice to such director.

Section 8. NOTICE OF ADJOURNMENT. Notice of the time and place of holding an adjourned meeting of a directors’ meeting need not be given to absent directors if the time and place be fixed at the meeting adjourned.

Section 9. ENTRY OF NOTICE. Whenever any director has been absent from any special meeting of the Board of Directors, an entry in the minutes to the effect that notice has been duly given shall be conclusive and incontrovertible evidence that due notice of such special meeting was given to such director, as required by law and the Bylaws of the Corporation.

Section 10. WAIVER OF NOTICE. The transactions of any meetings of the Board of Directors, however called and noticed or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present, and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, submits a waiver by electronic mail or other electronic transmission, consents to holding such meeting or approves of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except where the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

Section 11. QUORUM. A majority of the authorized number of directors shall be necessary to constitute a quorum of the Board for the transaction of business, except to adjourn as hereinafter provided. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, except that a majority of the full board shall be required for amendment of the Bylaws and except as otherwise provided in the Certificate of Incorporation.

Section 12. ADJOURNMENT. A quorum of the directors may adjourn any director’s meeting to meet again at a stated day and hour; provided, however, that in the absence of a quorum, a majority of the directors present at any directors’ meeting, either regular or special, may adjourn from time to time until the time fixed for the next regular meeting of the board.

Section 13. FEES AND COMPENSATION. The Board of Directors shall have the authority to fix the compensation of directors. Nothing herein contained shall be construed to preclude any director from serving the Corporation in another capacity as an officer, agent, employee or otherwise, and receiving compensation therefor.

ARTICLE IV

Officers

Section 1. OFFICERS. The officers of the Corporation shall be one or more Chief Executive Officers, Chairmen of the Board and Presidents, and a Secretary and a Chief Financial Officer. The Corporation may also have, at the discretion of the Board of Directors, one or more Vice-Chairmen of the Board, one or more Vice Presidents, one or more Assistant Secretaries, one or more Treasurers and Assistant Treasurers and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article. Any two or more offices may be held by the same person.

Section 2. APPOINTMENT. The officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article, shall be chosen by the Board of Directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified.

Section 3. SUBORDINATE OFFICERS, ETC. The Board of Directors may appoint, or empower the Chief Executive Officers to appoint, such other officers and agents as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the Bylaws or as the Board of Directors, or the Chief Executive Officers, may from time to time determine. The Chief Executive Officers may delegate to other officers the authority to appoint subordinate officers.

Section 4. REMOVAL AND RESIGNATION. Any officer may be removed, either with or without cause, by a majority of the directors at the time in office, at any regular or special meeting of the Board of Directors or, except in the case of an officer appointed by the Board of Directors, by any officer who otherwise has such authority.

Any officer may resign at any time by giving notice to the Board of Directors, to the Chairman of the Board, or to the Secretary of the Corporation. Any resignation shall take effect at the date of the receipt of the notice or at any later time specified in the notice; and, unless otherwise specified in the notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party. Any officer positions held shall automatically terminate upon termination of employment.

Section 5. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification, or any other cause shall be filled in the manner prescribed by the Bylaws for regular appointment to such office.

Section 6. CHIEF EXECUTIVE OFFICERS. The Chief Executive Officer or Officers of the Corporation shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and other officers of the Corporation, and if there is more than one Chief Executive Officer, such powers and duties shall be shared or divided between them as they shall determine.

Section 7. CHAIRMAN OF THE BOARD. The Chairman of the Board, if present, shall preside at all meetings of the stockholders and of the Board of Directors, and shall exercise and perform such other powers and duties as may be from time to time assigned to the Chairman of the Board by the Board of Directors or by law.

Section 8. VICE CHAIRMAN. The Vice Chairman, if there be one or more persons so named, shall exercise and perform such powers and duties as may be from time to time assigned to the Vice Chairman by the Chairman of the Board, the Board of Directors or by law.

Section 9. PRESIDENT. The President shall exercise and perform such powers and duties as may be from time to time assigned to the President by either of the Chief Executive Officers, by the Board of Directors or by law.

Section 10. VICE PRESIDENTS. The Vice Presidents shall exercise and perform such powers and duties as may be from time to time assigned to them respectively by either of the Chief Executive Officers, the Board of Directors or other officers to whom they report.

Section 11. SECRETARY. The Secretary shall keep, or cause to be kept, a book of minutes at the registered office of the Corporation or such other place as the Board of Directors may order, of all meetings of directors and stockholders, with the time and place held, whether regular or special and if special, how authorized, the notice thereof given, the names of those present at directors’ meetings, the number of shares present or represented at stockholders’ meetings and the proceedings thereof.

The Secretary shall keep or cause to be kept, at the registered office of the Corporation, or at the office of the Corporation’s transfer agent, a share register or a duplicate share register, showing the names of the stockholders and their addresses; the number of classes of shares held by each; the number and date of certificates issued for the same; and the number and date of cancellation of every certificate surrendered for cancellation.

The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors required by the Bylaws to be given, shall keep the seal of the Corporation in safe custody and shall have such other powers and perform such other duties as may be from time to time assigned to the Secretary by either of the Chief Executive Officers, by the Board of Directors or by law.

Section 12. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursement, gains, losses, capital, surplus, and shares. Any surplus, including earned surplus, paid-in surplus and surplus arising from a reduction of stated capital, shall be classified according to source and shown in a separate account. The books of account shall at all times be open to inspection by any director.

The Chief Financial Officer shall deposit all moneys and other valuables in the name and to the credit of the Corporation with such depositories as may be designated by the Board of Directors. The Chief Financial Officer shall disburse the funds of the Corporation as may be authorized, shall render to the Chief Executive Officer or the directors, whenever they request it, an account of all of the financial transactions of the Company and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be assigned to the Chief Financial Officer by either of the Chief Executive Officers, by the Board of Directors or by law.

ARTICLE V

Miscellaneous

Section 1. RECORD DATE AND CLOSING STOCK BOOKS. The Board of Directors may fix a time, in the future, not exceeding sixty (60) days preceding the date of any meeting of stockholders or the date fixed for the payment of any dividend or distribution, or for the allotment of rights or when any change or conversion or exchange of shares shall go into effect, as a record date for the determination of the stockholders entitled to notice of and to vote at any such meeting, or entitled to receive any such dividend or distribution, or any such allotment of rights, or to exercise the rights in respect to any such change, conversion or exchange of shares, and in such case only stockholders of record on the date so fixed shall be entitled to notice of and to vote at such meeting, or to receive such dividend, distribution or allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after any record date fixed as aforesaid. The Board of Directors may close the books of the Corporation against transfer of shares during the whole, or any part, of any such period.

Section 2. CERTIFICATES OF STOCK. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution that some or all of any or all classes or series of stock shall be uncertificated shares. Every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by the Chairman of the Board or a Vice Chairman, or by a Chief Executive Officer or President or Vice President, and by the Chief Financial Officer or an assistant treasurer or the Secretary or an Assistant Secretary of the Corporation representing the number of shares held. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

Section 3. ISSUANCE OF NEW CERTIFICATES. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificates previously issued by it, whether alleged to have been lost, stolen, destroyed or otherwise, and the Corporation may require the owner, or the owner’s legal representative, to make an affidavit or affirmation of that fact and give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the old certificates or the issuance of a new certificate or uncertificated shares.

Section 4. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may appoint one or more transfer agents or transfer clerks, and one or more registrars, which shall be an incorporated bank or trust company, either domestic or foreign, who shall be appointed at such times and places as the requirements of the Corporation may necessitate and the Board of Directors may designate.

Section 5. SHARES OF OTHER CORPORATIONS. In the absence of any action thereon by the Board of Directors, the Chairman of the Board, Vice Chairman of the Board, President or any Vice President and the Secretary or an Assistant Secretary of this Corporation are authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this Corporation. The authority herein granted to said officers to vote or represent on behalf of this Corporation any and all such shares of other corporations may be exercised either by such officers in person or by any other person authorized to do so by proxy or power of attorney duly executed by said officers.

Section 6. ANNUAL REPORT. The Board of Directors shall cause annual reports to be given or mailed to the shareholders not later than 120 days after the close of the fiscal or calendar year.

Section 7. BOARD AND COMMITTEE ACTION WITHOUT MEETING. The Board of Directors or any Committee thereof may take any action, without holding a meeting, which they are authorized to take at a meeting lawfully held, provided, that all of the directors or members of such Committee consent in writing to any actions so taken without meeting. Written consents representing actions taken by the Board of Directors or any Committee may be executed by facsimile or by electronic mail or other electronic transmission, and such facsimile or electronic transmission shall be valid and binding to the same extent as if it were an original. Where circumstances make it impracticable for a Director to deliver his or her consent in writing, the Secretary of the Corporation or his designee is permitted to communicate orally with the Director and include a written record of the Director’s consent with the minute book of the Corporation.

Section 8. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.

(a) Actions, Suits or Proceedings Other Than By or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, service with respect to employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with such action, suit or proceeding and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

(b) Actions or Suits by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, service with respect to employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys’ fees) actually and reasonably incurred by him or her or on his or her behalf in connection with the defense or settlement of such action or suit and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made under this Section 8(b) in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper.

(c) Indemnification for Costs, Charges and Expenses of Successful Party. Notwithstanding any other provision of this Article V, to the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to in Sections 8(a) or 8(b) of this Article V or in defense of any claim, issue or matter therein, he or she shall be indemnified against all costs, charges and expenses (including attorneys’ fees) actually and reasonably incurred by him or her or on his or her behalf in connection therewith.

(d) Determination of Right to Indemnification. Any indemnification under Sections 8(a) or 8(b) of this Article V (unless ordered by a court) shall be paid by the Corporation only as authorized

in the specific case upon a determination that indemnification is proper in the circumstances because the indemnified person has met the applicable standard of conduct set forth in Sections 8(a) or 8(b) of this Article V. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel (who may be the regular counsel of the Corporation) in a written opinion, or (3) by the stockholders.

(e) Advancement of Costs, Charges and Expenses. Costs, charges and expenses (including attorneys’ fees) incurred by a director or officer referred to in Sections 8(a) or 8(b) of this Article V in defending a civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation, in advance of a determination of right to indemnification pursuant to Section 8(d) of this Article V or the final disposition of such action, suit or proceeding, upon the written request of such director or officer; provided, however, that the payment of such costs, charges and expenses in advance of the determination of right to indemnification or the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of such director or officer to repay all amounts so advanced in the event that it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation as authorized in this Section 8. The Board of Directors may, in such case, and upon approval of such director or officer of the Corporation, authorize the Corporation’s counsel to represent such person, in any action, suit or proceeding, whether or not the Corporation is a party to such action, suit or proceeding. Such costs, charges and expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate.

(f) Procedure for Indemnification. Any indemnification under Sections 8(a), 8(b) or 8(c) of this Article V, or advance of costs, charges and expenses under Section 8(e) of this Article V, shall be made promptly, and in any event within 60 days, upon the written request of the indemnified person. The right to indemnification or advances as granted by this Section 8 shall be enforceable by the indemnified person in any court of competent jurisdiction, if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within 60 days. Such person’s costs and expenses actually and reasonably incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than action brought to enforce a claim for the advance of costs, charges and expenses under Section 8(e) of this Article V where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in Section 8 (a) or 8(b) of this Article V, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Sections 8(a) or 8(b) of this Article V, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(g) Other Rights; Continuation of Right to Indemnification. The indemnification and advancement of costs, charges and expenses provided by, or granted pursuant to, this Section 8 shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of costs, charges and expenses may be entitled under any law (common or statutory), agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and

as to action in another capacity while holding such office as set forth in Sections 8(a) and 8(b) of this Article V or otherwise, and shall continue as to a person who has ceased to hold such office and shall inure to the benefit of the estate, heirs, executors and administrators of such person. All rights to indemnification under this Section 8 shall be deemed to be a contract between the Corporation and each director and officer of the Corporation who serves or served in such capacity at any time while this Section 8 is in effect. Any repeal or modification of this Section 8 or any repeal or modification of relevant provision of the Delaware General Corporation Law or any other applicable laws shall not in any way diminish any rights to indemnification of such director or officer or the obligations of the Corporation arising hereunder.

(h) Indemnification of Employees and Other Agents. The Board of Directors in its discretion shall have power on behalf of the Corporation, subject to applicable law, to indemnify any person made a party to any action, suit or proceeding by reason of the fact that such person, or his or her testator or intestate, is or was an employee or other agent of the Corporation and to advance costs, charges and expenses (including attorney’s fees) incurred by such person in defending any such action, suit or proceeding.

(i) Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her or his or her behalf in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provision of this Section 8.

(j) Savings Clause. If this Section 8 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director and officer of the Corporation as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Section 8 that shall not have been invalidated and to the full extent permitted by applicable law.

ARTICLE VI

Amendments

Section 1. POWER OF AMENDMENT. Bylaws may be adopted, amended, or repealed by the vote of the holders of a majority in interest of the stockholders of the Corporation present in person or by proxy at any annual or special meeting of the stockholders and entitled to vote thereat, a quorum being present, or by the affirmative vote of a majority of the whole Board of Directors.

Section 2. RECORD OF AMENDMENTS. Whenever an amendment or new Bylaw is adopted, it shall be copied in the minute book of the Corporation with the original Bylaws, in the appropriate place. If any Bylaw is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or written assent was filed shall be stated in said minute book.

EX-31.1

EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, Herbert M. Sandler, certify that:

1) I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2004 of Golden West Financial Corporation;

2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report;

4) The Company’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

c) disclosed in this quarterly report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5) The Company’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the Audit Committee of the Company’s Board of Directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

August 6, 2004	/s/ Herbert M. Sandler
Date	Herbert M. Sandler Chairman of the Board and Chief Executive Officer Golden West Financial Corporation

EX-31.2

EXHIBIT 31.2

SECTION 302 CERTIFICATION

I, Marion O. Sandler, certify that:

1) I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2004 of Golden West Financial Corporation;

2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report;

4) The Company’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

c) disclosed in this quarterly report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5) The Company’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the Audit Committee of the Company’s Board of Directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

August 6, 2004	/s/ Marion O. Sandler
Date	Marion O. Sandler Chairman of the Board and Chief Executive Officer Golden West Financial Corporation

EX-31.3

EXHIBIT 31.3

SECTION 302 CERTIFICATION

I, Russell W. Kettell, certify that:

1) I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2004 of Golden West Financial Corporation;

2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report;

4) The Company’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the Company’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

c) disclosed in this quarterly report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5) The Company’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the Audit Committee of the Company’s Board of Directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

August 6, 2004	/s/ Russell W. Kettell
Date	Russell W. Kettell President and Chief Financial Officer Golden West Financial Corporation

EX-32

EXHIBIT 32

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICERS AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the accompanying Form 10-Q of Golden West Financial Corporation for the quarterly period ended June 30, 2004, each of the undersigned, hereby certifies pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1) such Form 10-Q of Golden West Financial Corporation for the quarterly period ended June 30, 2004 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 Form 10-Q of Golden West Financial Corporation for the quarterly period ended June 30, 2004 fairly presents, in all material respects, the financial condition and results of operations of Golden West Financial Corporation.

August 6, 2004	/s/ Herbert M. Sandler
Date	Herbert M. Sandler Chairman of the Board and Chief Executive Officer Golden West Financial Corporation
August 6, 2004	/s/ Marion O. Sandler
Date	Marion O. Sandler Chairman of the Board and Chief Executive Officer Golden West Financial Corporation
August 6, 2004	/s/ Russell W. Kettell
Date	Russell W. Kettell President and Chief Financial Officer Golden West Financial Corporation