<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
July 21, 1998
(Date of earliest event reported)
- --------------------------------------------------------------------------------
GOLDEN STATE BANCORP INC.
(Exact name of registrant as specified in its charter)
333-28037
(Commission File Number)
Delaware 95-4642135
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
414 North Central Avenue, Glendale, California 91203
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code
(818) 500-2000
================================================================================
<PAGE>
Item 5. Other Events
On July 21, 1998, Golden State Bancorp Inc., the parent company of
Glendale Federal Bank, Federal Savings Bank, issued a press release
(the "Press Release") announcing its results of operations for the
fourth quarter and the fiscal year ended June 30, 1998. The results of
operations include those of CENFED Financial Corporation from April 21,
1998, the date of the merger, through June 30, 1998. Attached hereto as
Exhibit 99.1 is a copy of the Press Release, which is incorporated
herein by reference.
Item 7. Financial Statements, Pro-Forma Financial Information and Exhibits
(c) Exhibits
99.1 Press release, dated July 21, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Golden State Bancorp Inc.
--------------------------------
(Registrant)
Date: July 30, 1998 By: /s/ John E. Haynes
----------------------- --------------------------------
John E. Haynes
Chief Financial Officer
<PAGE>
EXHIBIT 99.1
[GOLDEN STATE BANCORP NEWS LETTERHEAD]
FOR INFORMATION CONTACT: Ken Preston (818) 409-4550
Jeff Misakian (818) 500-2824
FOR IMMEDIATE RELEASE
GOLDEN STATE BANCORP REPORTS
FOURTH QUARTER AND YEAREND RESULTS
--Quarterly net operating earnings up 53 percent over last year--
--Fiscal year net operating earnings up 50 percent over last year--
--Checking account deposits grow 51 percent year over year--
--Credit quality continues to improve--
GLENDALE, CA, July 21, 1998 - Golden State Bancorp (NYSE:GSB), parent
company of Glendale Federal Bank, today reported net earnings for the fiscal
1998 fourth quarter ended June 30 of $39.3 million, or $0.51 per diluted share.
This compares to net earnings of $24.3 million, or $0.36 per diluted share, for
the 1997 fiscal fourth quarter. Net earnings for fiscal 1998 were $128.7
million, or $1.78 per diluted share, compared with net earnings of $50.4
million, or $0.64 per diluted share, for fiscal 1997.
Excluding non-recurring items described below and their related tax
impact, 1998 fourth quarter net operating earnings would have been $43.5
million, or $0.57 per diluted share, a 53 percent improvement over the previous
year's fourth quarter net operating earnings of $28.4 million, or $0.42 per
diluted share. Net operating earnings for fiscal 1998 would have been $143.8
million, or $1.99 per diluted share, a 50 percent increase over the net
operating earnings for fiscal 1997 of $96.2 million, or $1.43 per diluted share.
Stephen J. Trafton, chairman and chief executive officer, commented,
"This is the company's fifth consecutive year of improved operating results,
reflecting the momentum that continues to build within our company. The growth
in our business lines includes both higher loan originations and increased
demand deposit accounts, fueling an increase in net interest margins and higher
fee income over last year. Credit quality continues to improve as non-
performing assets, delinquent loans and charge-offs continued to decline from
the prior quarter and year to reach the lowest levels in over a decade.
"This quarter's earnings also reflect significant progress toward the
accomplishment of the intermediate-term goals we set for ourselves just one year
ago. For example, our annualized operating return on average assets was nearly
one percent this quarter, and our annualized operating return on average equity
for the quarter was 13.5 percent, compared to our goals of one percent and 15
percent, respectively. Our interest rate spread of 2.89 percent was close to
our goal of 3.00 percent and our ratio of checking accounts to total deposits at
the end of the quarter
- more -
<PAGE>
-2-
was 17 percent, approaching our 20 percent goal. The ratio of non-performing
assets to total assets of 0.74 percent was well below our goal of one percent."
Non-recurring items in the fiscal 1998 fourth quarter results included
pre-tax restructuring charges of $3.5 million related to recent acquisitions and
the distribution of Golden State's Litigation Tracking Warrants(TM) (LTW(TM)s),
and pre-tax legal expenses of $3.8 million related to Glendale Federal's
supervisory goodwill litigation against the federal government. Non-recurring
items in the fiscal 1997 fourth quarter results included a $3.2 million pre-tax
reversal of a portion of the bank's Savings Association Insurance Fund (SAIF)
special assessment accrual and pre-tax goodwill litigation expenses of $10.3
million.
Non-recurring items in fiscal 1998 included $19.0 million in pre-tax
legal expenses related to the bank's goodwill litigation and $6.9 million in
restructuring charges related to acquisitions and the distribution of LTW(TM)s.
Non-recurring items in fiscal 1997 included a pre-tax charge of $55.5 million
for the special SAIF assessment and pre-tax legal expenses for the goodwill
litigation of $24.1 million. In addition, preferred stock conversions reduced
earnings by $0.07 per diluted share in fiscal 1997.
The bank's annualized return on average assets for the fiscal 1998
fourth quarter was 0.88 percent, compared with 0.62 percent in the fourth
quarter of fiscal 1997. Excluding non-recurring items, the annualized return on
average assets for the fiscal 1998 fourth quarter was 0.98 percent, compared
with 0.73 percent in the fourth quarter of fiscal 1997. The bank's annualized
return on average equity for the fiscal 1998 fourth quarter was 12.19 percent,
compared with 9.64 percent in the fourth quarter of fiscal 1997. Excluding non-
recurring items, the annualized return on average equity for the fiscal 1998
fourth quarter was 13.50 percent, compared with 11.27 percent in the 1997 fiscal
fourth quarter.
Returns on average assets and average equity for fiscal 1998 were 0.78
percent and 11.42 percent, respectively, compared with 0.33 percent and 5.14
percent, respectively, last year. Excluding non-recurring items, return on
average assets was 0.87 percent in fiscal 1998 and return on average equity was
12.76 percent, compared with a return on average assets of 0.63 percent and a
return on average equity of 9.81 percent last year.
Trafton commented, "Our return on average assets continued to grow in
fiscal 1998. Our pre-tax reported and operating returns on average assets for
fiscal 1998 were 1.34 percent and 1.49 percent, respectively."
NET INTEREST INCOME
- -------------------
Net interest income totaled $119.7 million in the fourth quarter of
fiscal 1998, up 19.8 percent from $99.9 million in the comparable quarter last
year, and up 11.2 percent from the $107.7 million in the previous quarter. The
increase in net interest income in the current quarter was primarily due to the
combination of a decrease in the cost of funds as a result of increased
<PAGE>
-3-
checking and demand deposits and a higher balance of interest-earning assets,
including those acquired in the recent acquisition of CENFED Financial
Corporation. Net interest income totaled $440.2 million for the fiscal year
ended June 30, 1998, an increase of 16.1 percent over the corresponding 1997
period amount of $379.0 million.
The bank's interest rate spread at June 30, 1998 increased 21 basis
points to 2.89 percent from the 2.68 percent reported at June 30, 1997, but was
down 6 basis points from the previous quarter end. Adjusted for the dollar
amounts of interest-earning assets and interest-bearing liabilities, the
interest rate spread was 2.99 percent at June 30, 1998, compared with 2.79
percent at June 30, 1997 and 3.08 percent at March 31, 1998. The decrease in
the interest rate spread over the previous quarter was primarily due to a
decline in the yield on interest-earning assets, reflecting the prepayment of
higher-yielding loans and mortgage-backed securities, and to the effect of the
acquisition of CENFED Financial.
Trafton commented, "The current interest rate environment has made it
difficult for thrift institutions to increase their mortgage loan portfolios due
to prepayments of existing loans and borrowers' preference for fixed rate loans.
However, our aggressive focus on the acquisition of checking accounts and the
addition of prime rate-based business and consumer lending relationships has
helped offset the recent margin pressure created by mortgage loan prepayments
and has contributed to the steady increase in our fee income. The addition of
checking accounts will help to mitigate the effect of loan prepayments in any
interest rate cycle and allow us to add a valuable customer base that can be
built upon in future years."
CREDIT COSTS AND ASSET QUALITY
- ------------------------------
The company recorded a credit of $2.1 million in the provision for
loan losses in the fiscal 1998 fourth quarter. Provisions for loan losses were
$3.9 million and a credit of $1.6 million, respectively, in the fiscal 1997
fourth quarter and the fiscal 1998 third quarter. The company recorded a credit
of $1.7 million in the provision for loan losses for fiscal 1998, versus a
provision of $25.2 million in the year-ago period. The provision for loan
losses has declined from prior periods primarily because of the improving
California economy and the continued improvement in asset quality.
Net charge-offs to the allowance for loan losses were $4.7 million in
the fourth quarter of fiscal 1998, compared with $9.1 million a year ago and
$7.4 million last quarter. For fiscal 1998, net charge-offs totaled $22.5
million, compared with $52.3 million in fiscal 1997. The annualized ratio of
net charge-offs to average loans in the 1998 fiscal fourth quarter was 14 basis
points, versus 31 basis points a year ago and 25 basis points last quarter. For
fiscal 1998, the ratio of net charge-offs to average loans was 18 basis points,
versus 46 basis points in fiscal 1997.
Non-performing assets, which include non-accrual loans and other real
estate owned (REO), totaled $134.3 million at June 30, 1998, or 0.74 percent of
total assets, a 34.5 percent decrease
<PAGE>
-4-
from the $205.0 million, or 1.26 percent of total assets, reported at June 30,
1997 and a 2.4 percent decline from the $137.6 million, or 0.86 percent of total
assets, reported at March 31, 1998. Restructured loans totaled $21.5 million at
June 30, 1998, compared with $31.1 million at June 30, 1997 and $20.1 million at
March 31, 1998. Delinquent loans, including those delinquent more than 90 days,
totaled $184.3 million, a 14.4 percent decline from the $215.3 million reported
at June 30, 1997, and a 2.0 percent decline from the $188.0 million reported at
March 31, 1998. The June 30, 1998 data include the effect of the addition of the
CENFED Financial loan portfolios during the quarter. The decrease in non-
performing assets and delinquent loans reflects continued improvement in the
California economy.
The allowance for loan losses totaled $156.5 million at June 30, 1998,
compared with $163.8 million at June 30, 1997, and $146.4 million at March 31,
1998. The ratios of allowance to non-accrual loans and total gross loans at
June 30, 1998 were 163 percent and 1.1 percent, respectively, compared with 117
percent and 1.4 percent, respectively, at June 30, 1997. At March 31, 1998, the
comparable ratios were 142 percent and 1.2 percent, respectively.
Income from REO operations totaled $1.5 million in the current
quarter, compared with a loss of $0.7 million in the same quarter last year and
income of $2.8 million in the previous quarter. Income from REO operations in
fiscal 1998 totaled $3.1 million, versus a loss of $6.6 million in fiscal 1997.
The income reported from REO operations was primarily due to the addition of
fewer REO properties, especially larger non-residential and multi-family
residential properties, than last year, and to recoveries of reserves upon REO
sales.
OTHER INCOME
- ------------
Loan servicing income for the quarter ended June 30, 1998 declined
34.0 percent to $5.5 million from $8.3 million in the same quarter last year,
and declined 8.5 percent from the $6.0 million recorded in the March 31, 1998
quarter. For fiscal 1998, loan servicing income decreased 15.5 percent to $28.6
million, versus $33.8 million in fiscal 1997. The decreases in loan servicing
income were principally due to the increased amortization of the loan servicing
assets resulting from higher actual and anticipated repayments of the underlying
servicing portfolio. If interest rates were to continue to decline
significantly, the company could experience an adverse impact on earnings due to
a shrinking loan servicing portfolio and an impairment to the value of the loan
servicing assets.
Other fees and service charges for the fourth quarter of fiscal 1998
increased by 23.2 percent to $19.3 million, compared with $15.7 million in the
same period last year, and increased by 9.9 percent from the $17.6 million
reported in the previous quarter. For fiscal 1998, other fees and service
charges increased by 22.2 percent to $69.5 million from $56.9 million in fiscal
1997. The increase in fee income is primarily a result of increased demand
deposit accounts, an expanded ATM network and higher ATM and loan-related fees.
<PAGE>
-5-
NON-INTEREST EXPENSE AND EFFICIENCY RATIO
- -----------------------------------------
General and administrative expenses for the 1998 fiscal fourth quarter
were $77.2 million, compared with $67.8 million in the year-ago quarter and
$73.0 million in the previous quarter. For fiscal 1998, general and
administrative expenses totaled $293.7 million, versus $263.2 million in fiscal
1997. Factors affecting the increase in expenses included recent acquisitions,
including CENFED Financial, the cost of implementing new business lines, the
cost of technology related to year 2000 systems improvements and new branch
openings. Excluding these factors, general and administrative expenses for the
1998 fourth quarter and fiscal year were essentially unchanged from a year ago.
During fiscal 1998, the bank added a net 30 new branches in
California, including opening 18 through de novo expansion and 12 through
acquisitions. These include a combination of new full-service branches,
supermarket branches and branches inside Kinko's Inc. locations in California.
Trafton commented, "We've invested a considerable amount in building our branch
franchise, as well as expanding our ATM network into off-site locations in
McDonald's restaurants, Kinko's Copy Stores and United Artists Theatres. While
the expansion has required a considerable investment, the investments we make
today should provide added returns in the future for Golden State Bancorp
stockholders and the new banking company."
Glendale Federal's efficiency ratio (general and administrative
expenses divided by net interest income plus loan servicing and other fee
income) was 53.4 percent in the 1998 fiscal fourth quarter, versus 54.8 percent
in the comparable quarter last year and 55.6 percent in the 1998 fiscal third
quarter. For the full 1998 fiscal year, the efficiency ratio was 54.6 percent,
versus 56.0 percent in fiscal 1997.
ASSETS, LIABILITIES AND EQUITY
- ------------------------------
Glendale Federal's total assets grew by 11.7 percent to $18.1 billion
at June 30, 1998, compared with $16.2 billion at June 30, 1997. Total assets
were $15.9 billion at March 31, 1998. The $1.9 billion increase in total assets
during fiscal 1998 was principally due to the acquisition of CENFED Financial in
April 1998 and loan purchases. Loans receivable increased to $13.8 billion at
June 30, 1998 from $11.9 billion at June 30, 1997. Deposits totaled $10.7
billion at June 30, 1998, versus the $9.4 billion at June 30, 1997. The deposit
increase was primarily due to the CENFED Financial acquisition.
During fiscal 1998, Glendale Federal Bank had one of the fastest
growing checking account bases of any major California bank. The bank opened
more than 113,800 new accounts, contributing to a 23 percent increase in retail
checking account balances. Including balances added through acquisitions and
mortgage loan servicing accounts, checking accounts increased 51 percent in
fiscal 1998 to a total of $1.8 billion.
<PAGE>
-6-
"Our extraordinary year-over-year growth in lower-costing checking and
daily access account deposits has not abated," Trafton said. "Over the past
three years, our checking account deposits have grown an average of 41 percent
each year from a base of $662 million at the end of fiscal 1995. At June 30,
1998, checking accounts and total daily access accounts represented 17 percent
and 44 percent, respectively, of all deposits, versus 8 percent and 28 percent,
respectively, at June 30, 1995. This notable growth has made us a leader among
our peers in terms of the proportion of checking and daily access accounts to
total deposits."
Loan originations in the current quarter were $575.5 million, a 106
percent increase from the $279.2 million booked in the comparable quarter last
year and 51 percent higher than the $381.6 million booked in the previous
quarter. Loan originations in fiscal 1998 totaled $1.6 billion, a 96 percent
increase from the $817.9 million booked in fiscal 1997. The increase in loan
originations in the current quarter was primarily due to a decline in interest
rates, resulting in an increase in fixed-rate mortgage lending, and an increase
in business and consumer lending.
Loan purchases totaled $1.3 billion in the current quarter, compared
with $808.8 million in the same quarter last year and $675.4 million in the
previous quarter. In fiscal 1998, the bank purchased $2.7 billion in loans,
versus $2.4 billion in fiscal 1997.
During fiscal 1998, the bank continued to make progress in expanding
its business lines and product offerings. Commercial loans outstanding
increased to $290.5 million at June 30, 1998, compared with $160.1 million a
year ago and $258.8 million at March 31, 1998. Consumer loans outstanding rose
to $150.1 million at June 30, 1998, versus $120.7 million a year ago and $137.8
million at March 31, 1998.
New commitments under commercial lines of credit were $57.1 million
and $276.6 million for the fourth quarter and fiscal 1998, respectively,
compared with $40.7 million and $158.9 million, respectively, for the same
periods in fiscal 1997. New commitments under secured and unsecured consumer
lines of credit were $55.8 million and $171.4 million for the three months and
fiscal year ended June 30, 1998, respectively, compared with $48.8 million and
$150.8 million, respectively, for the same periods last year.
At June 30, 1998, Glendale Federal's regulatory capital ratios
continued to be in excess of the levels required by federal regulators for "well
capitalized" institutions.
RECENT DEVELOPMENTS
- -------------------
FIRST NATIONWIDE MERGER - The Board of Directors has set July 6, 1998
as the record date and August 17, 1998 as the date for the stockholders' meeting
called for Golden State Bancorp shareholders to vote on the company's pending
merger with First Nationwide (Parent) Holdings Inc., indirect parent of
California Federal Bank FSB.
CENFED FINANCIAL ACQUISITION - Golden State completed its acquisition
of CENFED Financial Corporation on April 21, 1998. CenFed Bank offices and
accounts were converted to
<PAGE>
-7-
those of Glendale Federal on May 8, 1998. CENFED Financial had assets of $1.9
billion and deposits of $1.4 billion. As provided in the merger agreement, 7.4
million shares of Golden State common stock were issued in the transaction.
Goodwill recorded in the merger totaled $90.5 million, which is being amortized
over 15 years.
REDFED BANCORP ACQUISITION - Golden State Bancorp completed its
acquisition of RedFed Bancorp, parent company of Redlands Federal Bank, and
converted RedFed's offices and accounts to Glendale Federal's offices and
systems on July 11, 1998. At June 30, 1998, RedFed had assets of $1.0 billion
and deposits of $859 million. Pursuant to the merger agreement, 0.68271 shares
of Golden State common stock were issued for each RedFed share, equal in value
to $20.75 per RedFed share. In total, Golden State issued 5.2 million common
shares in the transaction. The company estimates that it will record goodwill
in the RedFed merger of approximately $67 million, which will be amortized over
15 years. On a pro forma basis to reflect the merger with RedFed, Golden State
had total assets of $19.1 billion and deposits of $11.6 billion.
LTW(TM) DISTRIBUTION - The company distributed Litigation Tracking
Warrants(TM) to its securities holders on May 29, 1998. The LTW(TM)as represent
the right to receive, upon exercise, Golden State common stock equal in value to
85 percent of the net after-tax proceeds, if any, from Glendale Federal's
pending goodwill lawsuit against the United States Government. The LTW(TM)s are
the first goodwill lawsuit security to be distributed on a tax-free basis for
both securities holders and the distributing institution.
STOCK REPURCHASE PROGRAM - The company completed its stock repurchase
program, which was undertaken in connection with its acquisition of RedFed
Bancorp. The company repurchased 5.2 million shares of its common stock in this
program, of which 4.7 million was repurchased in the June 1998 quarter.
Golden State Bancorp, with $19 billion in assets including the recent
acquisition of RedFed Bancorp, is the parent company of Glendale Federal Bank -
California's leading community bank, serving the business and consumer banking
needs of Californians through 209 banking offices and 25 loan offices.
Customers can reach the bank by calling 1-800-41FEDUP, or get information
through its Internet site at HTTP://WWW.GLENDALEFEDERAL.COM
###
<PAGE>
GOLDEN STATE BANCORP FOURTH QUARTER EARNINGS (a)
FINANCIAL HIGHLIGHTS
(In thousands except per-share data)
(unaudited)
<TABLE>
<CAPTION>
June 30, March 31, June 30,
For the Quarter Ended: 1998 1998 1997
- ---------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Net Earnings $ 39,300 $ 32,021 $ 24,294
Net Earnings Applicable to Common Stock:
Basic $ 36,775 $ 29,493 $ 21,766
Diluted $ 39,300 $ 32,021 $ 24,294
Average Shares Outstanding:
Basic 57,061 51,155 50,326
Diluted 76,862 71,105 68,395
Earnings Per Share:
Basic $ 0.64 $ 0.58 $ 0.43
Diluted $ 0.51 $ 0.45 $ 0.36
Average Balances:
Loans receivable $13,426,712 $11,775,696 $11,715,066
Mortgage-backed securities 2,379,553 2,269,158 2,238,509
Investments 917,614 992,241 948,524
----------- ----------- -----------
Total interest-earning assets $16,723,879 $15,037,095 $14,902,099
=========== =========== ===========
Deposits $10,646,483 $ 9,565,517 $ 9,224,326
Borrowings 5,540,008 5,020,200 5,249,676
----------- ----------- -----------
Total interest-bearing liabilities $16,186,491 $14,585,717 $14,474,002
=========== =========== ===========
Total assets $17,768,891 $15,974,616 $15,677,159
Stockholders' equity:
Common $ 1,174,397 $ 992,193 $ 893,018
Preferred 115,490 115,550 115,550
----------- ----------- -----------
Total $ 1,289,887 $ 1,107,743 $ 1,008,568
=========== =========== ===========
Profitability Ratios:
Return on average assets (ROAA):
Pre-Tax:
Reported ROAA 1.47% 1.38% 1.08%
Operating ROAA (b) 1.63% 1.54% 1.26%
After-Tax:
Reported ROAA 0.88% 0.80% 0.62%
Operating ROAA (b) 0.98% 0.89% 0.73%
Return on average equity (ROAE):
Reported ROAE 12.19% 11.56% 9.64%
Operating ROAE (b) 13.50% 12.86% 11.27%
Efficiency Ratios 53.43% 55.61% 54.75%
</TABLE>
Highlights Continued on Next Page
<PAGE>
GOLDEN STATE BANCORP FOURTH QUARTER EARNINGS (a)
FINANCIAL HIGHLIGHTS (Continued)
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
June 30, March 31, June 30,
For the Quarter Ended: 1998 1998 1997
- --------------------- --------- ---------- ----------
<S> <C> <C> <C>
Loan Volume:
Loans originated $ 575,452 $ 381,604 $ 279,219
Loans purchased 1,272,289 675,361 808,817
Mortgage-backed securities purchased 221,742 36,556 146,091
Loans sold 104,297 104,395 20,739
Mortgage-backed securities sold 196,774 56,968 4,024
New Commitments Under Lines of Credit:
Consumer $ 55,837 $ 38,933 $ 48,799
Commercial 57,128 83,828 40,655
---------- ---------- ----------
Total $ 112,965 $ 122,761 $ 89,454
========== ========== ==========
Net Charge-offs/(Recoveries) by Type:
Single-family 1-4 units residential $ 1,817 $ 2,543 $ 3,674
Multi-family residential:
5 to 36 units 780 1,529 2,314
37 or more units 3 434 593
Non-residential real estate 1,385 2,643 2,526
Consumer 668 600 244
Commercial 6 (334) (242)
---------- ---------- ----------
Total $ 4,659 $ 7,415 $ 9,109
========== ========== ==========
</TABLE>
<PAGE>
GOLDEN STATE BANCORP FOURTH QUARTER EARNINGS (a)
FINANCIAL HIGHLIGHTS (Continued)
(in thousands except per-share data)
(unaudited)
<TABLE>
<CAPTION>
June 30, June 30,
For the Year Ended: 1998 1997
- ------------------ ------------------ -------------------
<S> <C> <C>
Net Earnings $ 128,749 $ 50,423
Net Earnings Applicable to Common Stock:
Basic $ 118,641 $ 35,409
Diluted $ 128,749 $ 35,409
Average Shares Outstanding:
Basic 52,354 49,095
Diluted 72,270 55,169
Earnings Per Share:
Basic $ 2.27 $ 0.72
Diluted $ 1.78 $ 0.64
Average Balances:
Loans receivable $12,382,205 $11,341,678
Mortgage-backed securities 2,309,968 2,243,784
Investments 938,874 939,209
------------- -------------
Total interest-earning assets $15,631,047 $14,524,671
============= =============
Deposits $ 9,769,682 $ 8,959,092
Borrowings 5,421,997 5,074,311
------------- -------------
Total interest-bearing liabilities $15,191,679 $14,033,403
============= =============
Total assets $16,587,881 $15,202,508
Stockholders' equity:
Common $ 1,011,910 $ 855,358
Preferred 115,535 124,975
------------- -------------
Total $ 1,127,445 $ 980,333
============= =============
Profitability Ratios:
Return on average assets (ROAA):
Pre-Tax:
Reported ROAA 1.34% 0.57%
Operating ROAA (b) 1.49% 1.09%
After-Tax:
Reported ROAA 0.78% 0.33%
Operating ROAA (b) 0.87% 0.63%
Return on average equity (ROAE):
Reported ROAE 11.42% 5.14%
Operating ROAE (b) 12.76% 9.81%
Efficiency Ratios 54.56% 56.04%
</TABLE>
Highlights Continued on Next Page
<PAGE>
GOLDEN STATE BANCORP FOURTH QUARTER EARNINGS (a)
FINANCIAL HIGHLIGHTS (Continued)
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
June 30, June 30,
For the Year Ended: 1998 1997
- ------------------ ---------- ----------
<S> <C> <C>
Loan Volume:
Loans originated $1,604,275 $ 817,873
Loans purchased 2,720,739 2,430,461
Mortgage-backed securities purchased 584,101 498,066
Loans sold 344,348 78,809
Mortgage-backed securities sold 294,767 42,222
New Commitments Under Lines of Credit:
Consumer $ 171,356 $ 150,759
Commercial 276,608 158,922
---------- ----------
Total $ 447,964 $ 309,681
========== ==========
Net Charge-offs/(Recoveries) by Type:
Single-family 1-4 units residential $ 10,971 $ 25,606
Multi-family residential:
5 to 36 units 6,239 10,748
37 or more units 265 5,612
Non-residential real estate 4,820 11,837
Consumer 2,507 1,981
Commercial $ (2,349) (3,507)
---------- ----------
Total $ 22,453 $ 52,277
========== ==========
</TABLE>
Highlights Continued on Next Page
<PAGE>
GOLDEN STATE BANCORP FOURTH QUARTER EARNINGS (a)
FINANCIAL HIGHLIGHTS (Continued)
(dollars in thousands except per-share data)
(unaudited)
<TABLE>
<CAPTION>
June 30, March 31, June 30,
At Period End: 1998 1998 1997
- ------------- ------------ ------------ ------------
<S> <C> <C> <C>
Total assets $ 18,116,737 $ 15,924,250 $ 16,218,259
Cash and investment portfolio 611,627 831,448 885,356
Loans receivable, net 13,774,580 11,807,318 11,905,093
Mortgage-backed securities 2,375,363 2,178,372 2,279,534
Allowance for loan losses 156,482 146,382 163,759
Deposits 10,698,265 9,692,874 9,356,909
Borrowings 5,852,945 4,824,073 5,567,464
Stockholders' equity:
Common $ 1,123,240 $ 999,322 $ 896,524
Preferred 115,437 115,550 115,550
------------ ------------ ------------
Total $ 1,238,677 $ 1,114,872 $ 1,012,074
============ ============ ============
Book value per common share $ 20.24 $ 19.47 $ 17.81
Tangible book value per common share $ 16.99 $ 17.67 $ 15.83
Common shares outstanding 55,485,151 51,327,541 50,348,509
Interest Rate Spread:
Loans and mortgage-backed securities 7.55% 7.59% 7.58%
Investment portfolio 6.17% 6.51% 7.10%
Loans and investment portfolio 7.50% 7.53% 7.55%
Deposits 4.06% 4.06% 4.37%
Borrowings 5.61% 5.62% 5.72%
Deposits and borrowings 4.61% 4.58% 4.87%
Interest rate spread 2.89% 2.95% 2.68%
Adjusted interest rate spread (c) 2.99% 3.08% 2.79%
Non-Performing Assets and Restructured Loans:
Non-accrual loans $ 95,994 $ 102,788 $ 140,295
REO and other assets 38,275 34,848 64,663
------------ ------------ ------------
Total non-performing assets $ 134,269 $ 137,636 $ 204,958
============ ============ ============
Restructured loans $ 21,465 $ 20,123 $ 31,064
============ ============ ============
Non-Performing Assets and Restructured
Loans Ratios (d):
Non-accrual loans 0.53% 0.65% 0.86%
REO and other assets 0.21% 0.21% 0.40%
------------ ------------ ------------
Total non-performing assets 0.74% 0.86% 1.26%
============ ============ ============
Restructured loans 0.12% 0.13% 0.19%
============ ============ ============
</TABLE>
Highlights Continued on Next Page
<PAGE>
GOLDEN STATE BANCORP FOURTH QUARTER EARNINGS (a)
FINANCIAL HIGHLIGHTS (Continued)
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
June 30, March 31, June 30,
At Period End: 1998 1998 1997
- ------------- ------------ ------------ ------------
<S> <C> <C> <C>
Gross Loan Portfolio:
Single-family 1-4 units residential $ 10,355,638 $ 8,902,036 $ 8,821,828
Multi-family residential:
5 to 36 units 1,504,858 1,407,887 1,477,549
37 or more units 313,575 312,143 345,052
Non-residential real estate 1,358,880 983,954 1,207,013
Commercial 290,515 258,821 160,061
Consumer 150,050 137,803 120,685
------------ ------------ ------------
Total $ 13,973,516 $ 12,002,644 $ 12,132,188
============ ============ ============
Deposit Composition:
Checking $ 1,812,869 $ 1,705,459 $ 1,198,011
Passbook 477,199 429,398 452,225
Money market 2,379,249 2,196,104 2,119,553
------------ ------------ ------------
Total daily access accounts 4,669,317 4,330,961 3,769,789
------------ ------------ ------------
Short-term certificates (1 year or less) 2,494,525 2,615,983 2,703,538
Long-term certificates (over 1 year) 3,199,049 2,494,327 2,700,906
Jumbo and brokered certificates 335,374 251,603 182,676
------------ ------------ ------------
Total certificate accounts 6,028,948 5,361,913 5,587,120
------------ ------------ ------------
Total deposits $ 10,698,265 $ 9,692,874 $ 9,356,909
============ ============ ============
Deposit Composition:
Checking 17.0% 17.6% 12.8%
Passbook 4.5% 4.4% 4.8%
Money market 22.2% 22.7% 22.7%
------------ ------------ ------------
Total daily access accounts 43.7% 44.7% 40.3%
------------ ------------ ------------
Short-term certificates (1 year or less) 23.3% 27.0% 28.9%
Long-term certificates (over 1 year) 29.9% 25.7% 28.9%
Jumbo and brokered certificates 3.1% 2.6% 1.9%
------------ ------------ ------------
Total certificate accounts 56.3% 55.3% 59.7%
------------ ------------ ------------
Total deposits 100.0% 100.0% 100.0%
============ ============ ============
</TABLE>
(a) Golden State Bancorp Inc's fiscal year ends June 30.
(b) Net earnings adjusted to exclude non-recurring items.
(c) Net interest income annualized at the rates in effect as of the reported
date divided by the balance of interest-earning assets as of such date.
(d) As a percentage of total assets.
<PAGE>
GOLDEN STATE BANCORP FOURTH QUARTER EARNINGS (a)
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands)
<TABLE>
<CAPTION>
June 30, March 31, June 30,
ASSETS 1998 1998 1997
-------------- ------------- -------------
<S> <C> <C> <C>
Cash and amounts due from banks $311,278 $284,113 $221,557
Federal funds sold and assets
purchased under resale agreements 172,000 520,000 632,000
Certificates of deposit (substantially restricted) 2,200 2,805 4,005
Other debt and equity securities available for sale 126,149 24,530 27,794
Mortgage-backed securities held to maturity, net 914,593 995,038 1,162,825
Mortgage-backed securities available for sale 1,460,770 1,183,334 1,116,709
Loans receivable, net 13,742,673 11,795,753 11,886,090
Loans held for sale 31,907 11,565 19,003
Real estate held for sale or investment 6,327 6,124 8,689
Real estate acquired in settlement of loans 37,393 33,466 61,500
Interest receivable 114,009 98,169 102,940
Investment in capital stock of Federal Home
Loan Bank, at cost 300,339 271,749 259,587
Premises and equipment, at cost, less
accumulated depreciation 146,893 142,288 134,936
Mortgage servicing assets 243,314 247,914 284,472
Goodwill and other intangible assets 180,463 92,510 99,533
Other assets 326,429 214,892 196,619
----------- ----------- -----------
$18,116,737 $15,924,250 $16,218,259
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $10,698,265 $9,692,874 $9,356,909
Securities sold under agreements to repurchase 175,551 - 768,682
Borrowings from the Federal Home Loan Bank 5,613,458 4,824,000 4,788,000
Other borrowings 63,936 73 10,782
Other liabilities and accrued expenses 281,806 212,424 221,540
Income taxes payable 45,044 80,007 60,272
----------- ----------- -----------
Total liabilities 16,878,060 14,809,378 15,206,185
=========== =========== ===========
STOCKHOLDERS' EQUITY:
Preferred stock 4,617 4,622 4,622
Common stock 60,173 51,328 50,349
Additional paid-in capital 1,049,822 813,913 793,111
Net unrealized holding loss on debt
and equity securities available for sale (1,607) (2,003) (1,154)
Retained earnings (substantially restricted) 283,787 247,012 165,146
Common stock in treasury, at cost (158,115) - -
----------- ----------- -----------
Total stockholders' equity 1,238,677 1,114,872 1,012,074
----------- ----------- -----------
$18,116,737 $15,924,250 $16,218,259
=========== =========== ===========
</TABLE>
<PAGE>
GOLDEN STATE BANCORP FOURTH QUARTER EARNINGS (a)
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------------
June 30, March 31, June 30,
1998 1998 1997
------------- ------------ ------------
<S> <C> <C> <C>
Interest income:
Loans receivable $255,817 $225,950 $223,181
Mortgage-backed securities 37,064 36,588 37,566
Investments 12,182 14,025 15,600
-------- -------- --------
Total interest income 305,063 276,563 276,347
-------- -------- --------
Interest expense:
Deposits 107,347 97,733 101,176
Short-term borrowings 1,331 7,515 4,738
Other borrowings 76,708 63,657 70,565
-------- -------- --------
Total interest expense 185,386 168,905 176,479
-------- -------- --------
Net interest income 119,677 107,658 99,868
Provision for loan losses (2,144) (1,577) 3,878
-------- -------- --------
Net interest income after
provision for loan losses 121,821 109,235 95,990
Other income:
Loan servicing income, net 5,487 5,999 8,317
Other fees and service charges 19,301 17,570 15,666
Gain (loss) on sale of loans, net 1,202 (406) (16)
Gain (loss) on sale of mortgage-backed
securities, net 3,239 1,191 (231)
Other income (loss), net 184 28 (51)
-------- -------- --------
Total other income 29,413 24,382 23,685
-------- -------- --------
Other expenses:
Compensation and employee benefits 35,346 35,103 29,772
Occupancy expense, net 8,970 7,917 8,414
Regulatory insurance 2,095 1,920 2,558
Other general and administrative
expenses 30,781 28,031 27,067
-------- -------- --------
Total general and administrative expenses 77,192 72,971 67,811
SAIF Special Assessment - - (3,153)
Legal expense - Goodwill lawsuit 3,814 5,254 10,338
Acquisition and restructuring costs 3,506 946 -
Operations of real estate held
for sale or investment 26 20 219
Operations of real estate acquired
in settlement of loans (1,544) (2,785) 717
Amortization of goodwill and
other intangible assets 3,050 2,002 1,606
-------- -------- --------
Total other expenses 86,044 78,408 77,538
-------- -------- --------
Earnings before income tax provision 65,190 55,209 42,137
Income tax provision 25,890 23,188 17,843
-------- -------- --------
Net earnings $ 39,300 $ 32,021 $ 24,294
======== ======== ========
</TABLE>
<PAGE>
GOLDEN STATE BANCORP FOURTH QUARTER EARNINGS (a)
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended June 30,
------------------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Interest income:
Loans receivable $ 950,265 $ 861,858
Mortgage-backed securities 149,749 149,551
Investments 57,931 61,547
---------- ----------
Total interest income 1,157,945 1,072,956
---------- ----------
Interest expense:
Deposits 408,300 405,182
Short-term borrowings 37,591 18,642
Other borrowings 271,894 270,148
---------- ----------
Total interest expense 717,785 693,972
---------- ----------
Net interest income 440,160 378,984
Provision for loan losses (1,727) 25,204
---------- ----------
Net interest income after
provision for loan losses 441,887 353,780
Other income:
Loan servicing income, net 28,550 33,795
Other fees and service charges 69,526 56,901
Gain (loss) on sale of loans, net 605 (291)
Gain (loss) on sale of mortgage-backed
securities, net 4,562 (1,804)
Other income, net 1,645 62
---------- ----------
Total other income 104,888 88,663
---------- ----------
Other expenses:
Compensation and employee benefits 135,966 114,270
Occupancy expense, net 34,215 31,777
Regulatory insurance 7,843 16,317
Other general and administrative
expenses 115,646 100,860
---------- ----------
Total general and administrative expenses 293,670 263,224
SAIF Special Assessment - 55,519
Legal expense - Goodwill lawsuit 19,045 24,058
Acquisition and restructuring costs 6,939 -
Operations of real estate held
for sale or investment (664) 935
Operations of real estate acquired
in settlement of loans (3,111) 6,623
Amortization of goodwill and
other intangible assets 9,151 5,530
---------- ----------
Total other expenses 325,030 355,889
---------- ----------
Earnings before income tax provision 221,745 86,554
Income tax provision 92,996 36,131
---------- ----------
Net earnings $ 128,749 $ 50,423
========== ==========
</TABLE>
