<PAGE>PAGE F-1
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Golden West Financial Corporation
Oakland, California
We have audited the accompanying consolidated statement of financial
condition of Golden West Financial Corporation and subsidiaries as of
December 31, 1993 and 1992, and the related consolidated statements of net
earnings, stockholders' equity, and cash flows for each of the three years in
the period ended December 31, 1993. These financial statements are the
responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Golden West Financial
Corporation and subsidiaries at December 31, 1993 and 1992, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1993 in conformity with generally accepted accounting
principles.
Deloitte & Touche
Oakland, California
January 25, 1994
<PAGE>PAGE F-2
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(Dollars in thousands except per share figures)
<TABLE>
<CAPTION>
ASSETS
December 31
------------------------------
1993 1992
----------- -----------
<S> <C> <C>
Cash $ 243,185 $ 228,796
Securities available for sale (1993 at fair value and
1992 at cost with a fair value of $160,935) (Note C) 1,636,586 160,883
Other investments at cost (fair value of $538,100 and
$874,257) (Notes D and L) 538,100 790,189
Mortgage-backed securities available for sale at fair
value (Notes E and L) 1,114,069 -0-
Mortgage-backed securities held to maturity at cost
(fair value of $412,243 and $1,899,512) (Notes F and L) 408,467 1,791,615
Loans receivable less allowance for loan losses of
$106,698 and $70,924 (Notes G and K) 23,912,571 21,968,676
Interest earned but uncollected 175,080 157,723
Investment in capital stock of Federal Home Loan Banks,
at cost which approximates fair value (Note K) 325,737 289,707
Real estate held for sale or investment (Note H) 67,156 67,762
Prepaid expenses and other assets 108,832 131,394
Premises and equipment, net (Note I) 162,751 148,303
Goodwill arising from acquisitions (Notes A and B) 136,754 155,873
----------- -----------
$28,829,288 $25,890,921
=========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE>PAGE F-3
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31
------------------------------
1993 1992
----------- -----------
<S> <C> <C>
Customer deposits (Note J) $17,422,484 $16,486,246
Advances from Federal Home Loan Banks (Note K) 6,281,691 5,499,363
Securities sold under agreements to repurchase (Note L) 442,874 556,710
Medium-term notes (Note M) 676,540 81,267
Accounts payable and accrued expenses 355,799 361,126
Taxes on income (Note O) 364,235 257,110
----------- -----------
25,543,623 23,241,822
Subordinated notes (Note N) 1,220,061 921,701
Stockholders' equity (Notes P and Q):
Preferred stock, par value $1.00:
Authorized 20,000,000 shares
Issued and outstanding, none
Common stock, par value $.10:
Authorized 200,000,000 shares
Issued and outstanding 63,928,935 and 63,924,810 shares 6,393 6,392
Paid-in capital 40,899 36,186
Retained earnings - substantially restricted 1,933,593 1,684,820
----------- -----------
1,980,885 1,727,398
Unrealized gains on securities available for sale 84,719 -0-
----------- -----------
Total Stockholders' Equity 2,065,604 1,727,398
----------- -----------
$28,829,288 $25,890,921
=========== ===========
</TABLE>
<PAGE>PAGE F-4
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF NET EARNINGS
(Dollars in thousands except per share figures)
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Interest Income:
Interest on loans $1,637,764 $1,740,845 $1,877,955
Interest on mortgage-backed securities 138,874 178,010 210,834
Interest and dividends on investments 93,534 65,655 125,801
---------- ---------- ----------
1,870,172 1,984,510 2,214,590
Interest Expense:
Interest on customer deposits (Note J) 705,700 844,710 1,094,383
Interest on advances 273,816 268,320 323,034
Interest on repurchase agreements 36,023 65,779 76,154
Interest on other borrowings 121,875 88,371 89,243
---------- ---------- ----------
1,137,414 1,267,180 1,582,814
---------- ---------- ----------
Net Interest Income 732,758 717,330 631,776
Provision for loan losses 65,837 43,218 34,984
---------- ---------- ----------
Net Interest Income after Provision for
Loan Losses 666,921 674,112 596,792
Non-Interest Income:
Fees 31,061 24,458 20,889
Gain (loss) on the sale of securities and
mortgage-backed securities 22,541 4,058 (1,021)
Other 8,440 12,601 7,008
---------- ---------- ----------
62,042 41,117 26,876
Non-Interest Expense:
General and administrative:
Personnel 132,472 118,553 107,759
Occupancy 40,443 38,521 35,619
Deposit insurance 35,706 37,621 34,245
Advertising 10,782 8,968 10,486
Other 53,764 47,212 47,312
---------- ---------- ----------
273,167 250,875 235,421
Amortization of goodwill arising
from acquisitions (Note B) (1,586) 661 1,532
---------- ---------- ----------
271,581 251,536 236,953
---------- ---------- ----------
Earnings Before Taxes on Income 457,382 463,693 386,715
Taxes on income (Note O) 183,528 180,155 148,116
---------- ---------- ----------
Net Earnings $ 273,854 $ 283,538 $ 238,599
========== ========== ==========
Net earnings per share $4.28 $4.46 $3.76
===== ===== =====
</TABLE>
See notes to consolidated financial statements.
<PAGE>PAGE F-5
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Dollars in thousands except per share figures)
<TABLE>
<CAPTION>
Unrealized Gains Total
Common Paid-in Retained on Securities Stockholders'
Stock Capital Earnings Available For Sale Equity
------ ------- ---------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1991 $6,333 $24,709 $1,189,361 $1,220,403
Common stock issued upon
exercise of stock options -
168,800 shares 17 2,170 -0- 2,187
Net earnings -0- -0- 238,599 238,599
Cash dividends on common stock
($.19 per share) -0- -0- (12,054) (12,054)
------ ------- ---------- ----------
Balance at December 31, 1991 6,350 26,879 1,415,906 1,449,135
Common stock issued upon
exercise of stock options,
including tax benefits -
425,890 shares 42 9,307 -0- 9,349
Net earnings -0- -0- 283,538 283,538
Cash dividends on common stock
($.23 per share) -0- -0- (14,624) (14,624)
------ ------- ---------- ----------
Balance at December 31, 1992 6,392 36,186 1,684,820 1,727,398
Common stock issued upon
exercise of stock options,
including tax benefits -
208,125 shares 21 4,713 -0- 4,734
Net earnings -0- -0- 273,854 273,854
Cash dividends on common stock
($.27 per share) -0- -0- (17,280) (17,280)
Purchase and retirement of 204,000
shares of Company stock (Note P) (20) -0- (7,801) (7,821)
Unrealized gains on securities
available for sale -0- -0- -0- $84,719 84,719
------ ------- ---------- ------- ----------
Balance at December 31, 1993 $6,393 $40,899 $1,933,593 $84,719 $2,065,604
====== ======= ========== ======= ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>PAGE F-6
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 273,854 $ 283,538 $ 238,599
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for loan losses 65,837 43,218 34,984
Amortization of loan fees and discounts (45,666) (53,125) (43,707)
Depreciation and amortization 13,978 14,990 14,728
Reduction of a valuation allowance on investments (24,000) (4,000) -0-
Loans originated for sale (442,880) (278,346) (77,154)
Sales of loans originated for sale 432,362 280,832 66,763
Decrease (increase) in interest earned but uncollected (17,357) 11,955 27,335
Federal Home Loan Bank stock dividends (12,744) (4,598) (17,734)
Decrease (increase) in prepaid expenses and other assets 26,020 (51,777) (7,269)
Increase (decrease) in accounts payable and accrued
expenses (5,327) 37,860 4,782
Increase in taxes on income, excluding acquisitions 72,828 179,301 105,612
Other, net (12,806) 1,571 22,604
----------- ----------- -----------
Net cash provided by operating activities 324,099 461,419 369,543
Cash Flows From Investing Activities:
New loan activity:
New real estate loans originated for portfolio (5,968,997) (6,176,744) (4,800,003)
Real estate loans purchased (13,567) (4,678) (301,719)
Other, net 25,836 47,390 (8,635)
----------- ----------- -----------
(5,956,728) (6,134,032) (5,110,357)
Real estate loan principal payments:
Monthly payments 574,459 502,431 317,624
Payoffs, net of foreclosures 2,852,722 3,230,825 2,194,383
Refinances 388,171 374,363 294,091
----------- ----------- -----------
3,815,352 4,107,619 2,806,098
Purchases of mortgage-backed securities (302,313) (343,736) (148,506)
Sales of mortgage-backed securities 138 243 433,724
Repayments of mortgage-backed securities 645,647 552,045 200,310
Sales of real estate 206,009 145,247 65,287
Purchases of securities held for sale (4,326,544) (1,388,319) -0-
Sales and maturities of securities held for sale 3,771,617 1,227,427 -0-
Decrease (increase) in other investments (569,697) 257,204 1,407,070
Purchases of Federal Home Loan Bank stock (79,713) (1,440) (337)
Redemptions of Federal Home Loan Bank stock 52,969 6,111 -0-
Additions to premises and equipment (37,496) (15,462) (19,410)
Cash from business combinations, net -0- -0- 359,903
----------- ----------- -----------
Net cash used in investing activities (2,780,759) (1,587,093) (6,218)
</TABLE>
See notes to consolidated financial statements
<PAGE>PAGE F-7
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows From Financing Activities:
Customer deposit activity:
Increase (decrease) in deposits, net 368,749 (1,008,304) (262,407)
Interest credited 567,489 676,040 902,664
----------- ----------- -----------
936,238 (332,264) 640,257
Additions to Federal Home Loan Bank advances 1,701,200 2,428,850 600,000
Repayments of Federal Home Loan Bank advances (919,195) (1,088,000) (275,000)
Decrease in securities sold under agreements to
repurchase (113,836) (95,503) (688,554)
Proceeds from medium-term notes 609,235 66,766 -0-
Repayments of medium-term notes (14,500) (152,305) (794,845)
Proceeds from subordinated debt 297,008 295,616 198,321
Dividends on common stock (17,280) (14,624) (12,054)
Purchase and retirement of Company stock (7,821) -0- -0-
----------- ----------- -----------
Net cash provided (used) by financing activities 2,471,049 1,108,536 (331,875)
----------- ----------- -----------
Net Increase (Decrease) in Cash 14,389 (17,138) 31,450
Cash at beginning of period 228,796 245,934 214,484
----------- ----------- -----------
Cash at end of period $ 243,185 $ 228,796 $ 245,934
=========== =========== ===========
Supplemental cash flow information:
Cash paid for:
Interest $ 1,176,338 $ 1,253,610 $ 1,599,008
Income taxes 112,970 51,917 72,495
Cash received for interest and dividends 1,852,815 1,996,465 2,239,017
Noncash investing activities:
Loans transferred to foreclosed real estate 234,149 172,920 99,626
Securities transferred to available for sale 845,786 -0- -0-
Mortgage-backed securities transferred to available
for sale 1,114,069 -0- -0-
In connection with business combinations (Note B):
Fair value of assets:
Interest-bearing deposits $ -0- $ -0- $ 1,321,483
Cash received, net -0- -0- 359,903
Other -0- -0- 137,426
----------- ----------- -----------
Fair value of liabilities, primarily customer deposits $ -0- $ -0- $ 1,818,812
=========== =========== ===========
</TABLE>
<PAGE>PAGE F-8
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
NOTE A - Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Golden
West Financial Corporation, a Delaware corporation, and its wholly owned
subsidiaries (the Company or Golden West). World Savings and Loan Association,
a federally chartered association (the Association or World Savings), is the
Company's principal operating subsidiary with $28 billion in assets on
December 31, 1993. Intercompany accounts and transactions have been eliminated.
Certain reclassifications have been made to prior year financial statements to
conform to current year presentation.
Cash and Investments
The Association is required by regulation to maintain liquid assets in
the form of cash and securities approved by federal regulations at a monthly
average of not less than 5% of customer deposits and short-term borrowings.
Effective December 31, 1993, the Company adopted Statement of
Financial Accounting Standards No. 115 (FAS 115), "Accounting for Certain
Investments in Debt and Equity Securities." FAS 115 establishes classifications
of investments into three categories: held to maturity, trading, and available
for sale. In accordance with FAS 115, the Company modified its accounting
policies as of December 31, 1993, to identify investment securities as either
held to maturity or available for sale. The Company has no trading securities.
Held to maturity securities are recorded at cost with any discount or premium
amortized using a method that is not materially different from the interest
method. Securities held to maturity are recorded at cost because the Company
has the ability to hold these securities to maturity and because it is
Management's intention to hold them to maturity. At December 31, 1993, the
Company had no securities held to maturity. Securities available for sale
increase the Company's portfolio management flexibility for investments and
are reported at fair value. Net unrealized gains and losses are excluded from
earnings and reported net of applicable income taxes as a separate component of
stockholders' equity until realized. Gains or losses on sales of securities are
realized and recorded in earnings at the time of sale and are determined by the
difference between the net sales proceeds and the cost of the security, using
specific identification, adjusted for any unamortized premium or discount. The
Company has other investments which are recorded at cost with any discount or
premium amortized using a method that is not materially different from the
interest method. The adoption of FAS 115 resulted in the reclassification of
certain securities from the investment securities portfolio to the securities
available for sale portfolio.
Prior to December 31, 1993, securities were classified as either
securities held for sale or investment securities. Securities held for sale
were recorded at the aggregate portfolio's lower of amortized cost or market,
with the unrealized gains and losses included in earnings. Investment
securities were recorded at amortized cost.
Mortgage-Backed Securities
FAS 115 also requires the same three classifications for mortgage-
backed securities (MBS): held to maturity, trading, and available for sale. In
accordance with FAS 115, the Company modified its accounting policies as of
December 31, 1993, to identify MBS as either held to maturity or available for
sale. The Company has no trading MBS. Mortgage-backed securities held to
maturity are recorded at cost because the Company has the ability to hold these
MBS to maturity and because management intends to hold these securities to
maturity. Premiums and discounts on MBS are amortized or accreted using the
interest method, also known as the level yield
<PAGE>PAGE F-9
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
method, over the life of the security. MBS available for sale are reported at
fair value, with unrealized gains and losses excluded from earnings and reported
net of applicable income taxes as a separate component of stockholders' equity
until realized. Gains or losses on sales of MBS are realized and recorded in
earnings at the time of sale and are determined by the difference between the
net sales proceeds and the cost of the MBS, using specific identification,
adjusted for any unamortized premium or discount. Prior to December 31, 1993,
all MBS were recorded at amortized cost.
Loans Receivable
The Association's real estate loan portfolio consists primarily of
long-term loans collateralized by first trust deeds on single-family residences
and multi-family residential property. In addition to real estate loans, the
Association makes loans on the security of savings accounts.
The adjustable rate mortgage (ARM) is the Association's primary real
estate loan. The ARM carries an interest rate which may change as often as
monthly, based on movements in certain cost of funds or other indexes. Interest
rate changes and monthly payments of principal and interest may be subject to
maximum increases or decreases. Negative amortization may occur during periods
when payments are limited. The Association also offers "modified" ARMs, loans
which offer a low fixed rate generally from 1% to 3% below the contract rate for
an initial period, usually three to 36 months.
The Association does make a limited number of loans that are held for
sale, primarily fixed-rate loans. These loans are usually originated against
firm commitments to sell. These loans are recorded at the lower of cost or
market.
The Company adopted Statement of Financial Accounting Standards
No. 114 (FAS 114), "Accounting by Creditors for Impairment of a Loan," in the
fourth quarter of 1993, retroactive to January 1, 1993. FAS 114 requires that
impaired loans be measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate. As a practical
expedient, impairment may be measured based on the loan's observable market
price or the fair value of the collateral if the loan is collateral dependent.
When the measure of the impaired loan is less than the recorded investment in
the loan, the impairment is recorded through a valuation allowance. The
valuation allowance and provision for loan losses are adjusted for changes
in the present value of impaired loans for which impairment is measured based
on the present value of expected future cash flows. The Company had previously
measured loan impairment in accordance with the methods prescribed in FAS 114.
As a result, no additional loss provisions were required by early adoption of
the pronouncement.
FAS 114 requires that impaired loans for which foreclosure is probable
should be accounted for as loans. As a result, $16,258 of in-substance
foreclosed loans, with a valuation allowance of $7,267, were reclassified from
real estate held for sale to loans receivable. Prior year amounts have not been
restated.
Loan origination fees and certain direct loan origination costs are
deferred and amortized, as an interest income yield adjustment, over the life of
the related loans using the interest method.
"Fees," which include fees for prepayment of loans, income for
servicing loans, late charges for delinquent payments, fees from customer
deposit accounts, and miscellaneous fees, are recorded when collected.
Premiums and discounts on purchased loans, including premiums and
discounts arising from acquisitions of other associations, are generally
amortized using the interest method over the actual life of the loans.
<PAGE>PAGE F-10
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
Nonperforming assets consist of loans 90 days or more delinquent, with
balances not reduced for loan loss reserves, and real estate owned through
foreclosure. For loans past due 90 days or more, all interest earned but
uncollected is fully reserved.
Troubled debt restructured consists of loans that have been modified
by the lender to grant a concession to the borrower because of a perceived
temporary weakness in the collateral and/or borrower.
Real Estate Held for Sale or Investment
Real estate held for sale or investment is comprised primarily of
improved property acquired through foreclosure. In prior years, loans
considered in-substance foreclosed were included in real estate held for sale
but upon the adoption of FAS 114, are now classified with loans receivable.
See Loans Receivable for further discussion.
All real estate owned is recorded at the lower of cost or fair value.
Costs relating to holding property, net of rental and option income, are
expensed in the current period. Gains on the sale of real estate are recognized
at the time of sale. Losses realized and expenses incurred in connection with
the disposition of foreclosed real estate are charged to current earnings.
Provision for Loan Losses
The Company provides valuation allowances for probable losses on loans
when impaired and on real estate owned when any significant and permanent
decline in value is identified. Additions to and reductions from allowances
are reflected in current earnings. Periodic reviews are made of major loans
and real estate owned. Major lending areas are regularly reviewed to determine
potential problems. Where indicated, valuation allowances are established or
adjusted. In estimating loan losses, consideration is given to the estimated
sale price, cost of refurbishing, payment of delinquent taxes, cost of disposal,
and cost of holding the property.
Goodwill
Positive goodwill, or the excess of the cost over the fair value of
net assets acquired resulting from acquisitions, of $235,853 (1993) and $271,392
(1992) is stated net of accumulated amortization of $184,284 (1993) and
$169,450 (1992). Negative goodwill, or the excess of the fair value of net
assets acquired over the cost resulting from acquisitions, of $99,099 (1993) and
$115,519 (1992) is shown net of accumulated amortization of $47,101 (1993) and
$30,681 (1992). Positive and negative goodwill are being amortized on the
straight-line method over periods ranging from 5 to 40 years. See NOTE B for
additional information.
Securities Sold Under Agreements to Repurchase
The Company enters into sales of securities under agreements to
repurchase (reverse repurchase agreements) only with selected dealers. Fixed-
coupon reverse repurchase agreements are treated as financings and the
obligations to repurchase securities sold are reflected as a liability in the
Consolidated Statement of Financial Condition. The securities underlying the
agreements remain in the asset accounts.
Taxes on Income
The Company files consolidated federal income tax returns with its
subsidiaries. The provision for federal and state taxes on income is based on
taxes currently payable and taxes expected to be payable in the future as a
result of events that have been recognized in the financial statements or tax
returns.
<PAGE>PAGE F-11
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
The Association is permitted by the Internal Revenue Code to deduct
from taxable income an annual addition to a reserve for bad debts subject to
certain limitations. An effective rate of 8% of taxable income has been used in
computing the amount of the addition to the bad debt reserve. In the event
distributions (which are subject to the regulatory restrictions described below)
are made from these reserves, such distributions will be subject to federal
income taxes at the then prevailing corporate rates. It is not contemplated
that accumulated reserves will be used in a manner that will create income tax
liabilities.
In the first quarter of 1993, the Company adopted Statement of
Financial Accounting Standards No. 109 (FAS 109), "Accounting for Income
Taxes." FAS 109 required a change from the deferred to the liability method of
computing deferred income taxes. The Company has applied FAS 109 prospectively.
The cumulative effect of this change in accounting for income taxes for the
periods ending prior to January 1, 1993, is not material. FAS 109 required
the Company to adjust its purchase accounting for prior business combinations
by increasing deferred tax assets and reducing goodwill by $23 million to
reflect the non-taxability of purchase accounting income. This deferred tax
asset is being amortized over the remaining lives of the related purchased
assets.
The consolidated financial statements presented for the years prior to
1993 reflect income taxes under the deferred method under previous accounting
standards.
Regulatory Capital Requirements
The Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (FIRREA) established capital standards. Under FIRREA, thrifts must have
core capital equal to 3% of adjusted total assets and have tangible capital
equal to 1.5% of adjusted total assets. FIRREA also established risk-based
capital standards as a percentage of risk-weighted assets of 8% after
December 30, 1992.
At December 31, the Association had the following regulatory capital
calculated in accordance with FIRREA's capital standards:
<TABLE>
<CAPTION>
1993 1992
----------------------------------------- ---------------------------------------
ACTUAL REQUIRED ACTUAL REQUIRED
------------------- ------------------ ------------------- ------------------
Capital Ratio Capital Ratio Capital Ratio Capital Ratio
---------- ------ ---------- ----- ---------- ------ ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tangible $2,030,992 7.27% $ 419,052 1.50% $1,677,449 6.54% $ 384,484 1.50%
Core 2,240,518 8.02 838,103 3.00 1,933,772 7.54 768,968 3.00
Risk-based 2,533,738 17.42 1,163,650 8.00 2,196,576 16.28 1,079,538 8.00
</TABLE>
The Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA) required each federal banking agency to implement prompt corrective
actions for capital deficient institutions that it regulates. In response to
this requirement, the Office of Thrift Supervision (OTS) adopted final rules,
effective December 19, 1992, based upon FDICIA's five capital tiers: well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized.
The rules provide that a savings association is "well capitalized" if
its total risk-based capital ratio is 10% or greater, its Tier 1 risk-based
capital ratio is 6% or greater, its leverage ratio is 5% or greater, and the
institution is not subject to a capital directive.
As used herein, total risk-based capital ratio is the ratio of total
capital to risk-weighted assets, Tier 1 risk-based capital ratio means the ratio
of core capital to risk-weighted assets, and leverage ratio is the ratio of core
capital to adjusted total assets, in each case as calculated in accordance with
current OTS capital regulations. Under these regulations, World Savings is
deemed to be "well capitalized."
<PAGE>PAGE F-12
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
At December 31, the Association had the following regulatory capital
calculated in accordance with FDICIA's capital standards:
<TABLE>
<CAPTION>
1993 1992
------------------------------------------ ----------------------------------------
ACTUAL WELL CAPITALIZED ACTUAL WELL-CAPITALIZED
------------------- ------------------- ------------------- -------------------
Capital Ratio Capital Ratio Capital Ratio Capital Ratio
---------- ------ ---------- ------ ---------- ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Leverage $2,240,518 8.02% $1,396,839 5.00% $1,933,772 7.54% $1,281,613 5.00%
Tier 1 risk-based 2,240,518 15.40 872,737 6.00 1,933,772 14.33 809,653 6.00
Total risk-based 2,533,738 17.42 1,454,562 10.00 2,196,576 16.28 1,349,422 10.00
</TABLE>
Retained Earnings
Under OTS regulations, the OTS must be given at least 30 days' advance
notice by the Association of any proposed dividend to be paid to the Company.
Under OTS regulations, World Savings is classified as a Tier 1 association and
is, therefore, allowed to distribute dividends up to 100% of its net income in
any year plus one-half of its capital in excess of the OTS fully phased-in
capital requirement as of the end of the prior year.
At December 31, 1993, $354 million of the Association's retained
earnings had not been subjected to federal income taxes due to the application
of the bad debt deduction, and $1.8 billion of the Association's retained
earnings were available for the payment of cash dividends without the imposition
of additional federal income taxes. The Company is not subject to the same tax
and reporting restrictions as is World Savings.
Earnings Per Share
Earnings per share have been computed by dividing net earnings by the
weighted average number of common shares outstanding, 63,977,876 (1993),
63,578,168 (1992), and 63,442,345 (1991).
NOTE B - Business Combinations/Divestitures
On August 13, 1993, the Company acquired $320 million in deposits and
seven branches in Arizona from PriMerit Bank. On September 17, 1993, the
Company sold $133 million of savings in two Ohio branches to Trumbull Savings
and Loan. On October 15, 1993, the Company sold its remaining Ohio branches
with $131 million in deposits to Fifth Third Bancorp.
On March 6, 1992, the Company sold its two Washington branches with
$37 million in deposits.
On July 15, 1991, the Company took title to the common stock of Beach
Federal Savings and Loan Association (Beach) of Boynton Beach, Florida, and its
$1.5 billion in assets. The transaction has been accounted for as a purchase,
and the results of operations have been included with the Company's results of
operations since July 15, 1991. As a result of the Beach acquisition, Golden
West recognized, for tax purposes, certain Beach net operating losses that
resulted in a $103 million benefit in 1991 and a $25 million benefit in 1992.
For financial statement reporting, this benefit has been recorded as negative
goodwill and is being amortized into income over ten years ($13 million in 1993
and $12 million in 1992).
On March 31, 1991, World Savings and Loan Association of Ohio (World
of Ohio), a wholly owned subsidiary of Golden West, was merged into World
Savings. In conjunction with Golden West's acquisition of World of Ohio in
1988, the benefits of net operating loss carryforwards resulted in recording
$18 million of negative goodwill in 1991. This benefit is being amortized into
income over the period 1989 to 1993 ($3 million and $4 million in 1993 and 1992,
respectively).
<PAGE>PAGE F-13
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
During 1991, World Savings acquired from the Resolution Trust
Corporation (RTC) a total of $355 million of deposits and 11 branches from four
separate acquisitions.
The acquisitions described above are not material to the financial
position or net earnings of the Company and pro forma information is not deemed
necessary.
NOTE C - Securities Available for Sale
The following is a summary of securities available for sale:
<TABLE>
<CAPTION>
December 31, 1993
----------------------------------------------------
Unrealized Unrealized
Cost Gains Losses Fair Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Certificates of deposit and short-term bank notes $ 482,069 $ 33 $ 2 $ 482,100
U.S. Treasury and Government agency obligations 419,056 821 62 419,815
Collateralized mortgage obligations 275,304 865 761 275,408
Commercial paper 230,385 4 -0- 230,389
Bankers acceptances 58,395 -0- -0- 58,395
Equity securities 101,592 68,887 -0- 170,479
---------- ------- ---- ----------
$1,566,801 $70,610 $825 $1,636,586
========== ======= ==== ==========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1992
----------------------------------------------------
Unrealized Unrealized
Cost Gains Losses Fair Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest-bearing deposits $150,989 $ 48 $-0- $151,037
Bankers acceptances 7,465 4 -0- 7,469
Other securities 2,429 -0- -0- 2,429
-------- ---- ----
$160,883 $ 52 $-0- $160,935
======== ==== ==== ========
</TABLE>
The weighted average portfolio yields on securities available for sale
were 3.93% and 3.90% at December 31, 1993, and 1992, respectively. Sales of
securities held for sale resulted in realized gains of $22 (1993) and
$105 (1992) and realized losses of $13 (1993) and $65 (1992).
At December 31, 1993, the securities available for sale had maturities
as follows:
<TABLE>
<CAPTION>
Amortized Fair
Maturity Cost Value
------------------- ---------- ----------
<S> <C> <C>
No maturity $ 101,592 $ 170,479
1994 907,984 908,011
1995 through 1998 493,610 494,104
1999 through 2003 26,611 26,573
2004 and thereafter 37,004 37,419
---------- ----------
$1,566,801 $1,636,586
========== ==========
</TABLE>
<PAGE>PAGE F-14
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
NOTE D - Other Investments
At December 31, 1993, the Company held certain other investments not
subject to FAS 115. The 1992 amounts were previously classified as investment
securities.
<TABLE>
<CAPTION>
December 31, 1993
--------------------------------------------------
Unrealized Unrealized
Cost Gains Losses Fair Value
-------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Federal funds $ 25,000 $-0- $-0- $ 25,000
Short-term repurchase agreements collateralized
by mortgage-backed securities 513,100 -0- -0- 513,100
-------- ---- ---- --------
$538,100 $-0- $-0- $538,100
======== ==== ==== ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1992
--------------------------------------------------
Unrealized Unrealized
Cost Gains Losses Fair Value
-------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest-bearing deposits $245,021 $ 59 $-0- $245,080
U.S. Treasury and Government agencies 43,434 352 102 43,684
Short-term repurchase agreements collateralized
by mortgage-backed securities 273,991 -0- -0- 273,991
Corporate notes and bonds 10,001 3 -0- 10,004
Bankers acceptances 17,962 2 -0- 17,964
Collateralized mortgage obligations 94,237 -0- 40 94,197
Other securities 105,543 83,794 -0- 189,337
-------- ------- ---- --------
$790,189 $84,210 $142 $874,257
======== ======= ==== ========
</TABLE>
The weighted average portfolio yields on other investments were 3.42%
and 4.23% at December 31, 1993, and 1992, respectively. Sales of other
investments resulted in gains of $24,000 (1993), $4,009 (1992), and $263 (1991)
and losses of $1,473 (1993), $-0- (1992), and $1,180 (1991).
As of December 31, 1993, the entire other investments portfolio
matures in 1994.
<PAGE>PAGE F-15
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
NOTE E - Mortgage-Backed Securities Available for Sale
Mortgage-backed securities available for sale are summarized as
follows:
<TABLE>
<CAPTION>
December 31, 1993
-----------------------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
FNMA $ 439,817 $25,957 $268 $ 465,506
FHLMC 326,354 24,480 27 350,807
GNMA 271,390 24,164 25 295,529
Other 2,115 112 -0- 2,227
---------- ------- ---- ----------
$1,039,676 $74,713 $320 $1,114,069
========== ======= ==== ==========
</TABLE>
The weighted average portfolio yields on mortgage-backed securities
available for sale were 9.35% at December 31, 1993.
At December 31, 1993, mortgage-backed securities available for sale
had maturities as follows:
<TABLE>
<CAPTION>
Amortized Fair
Maturity Cost Value
------------------- ---------- ----------
<S> <C> <C>
1995 through 1998 $ 4,039 $ 4,222
1999 through 2003 2,309 2,478
2004 and thereafter 1,033,328 1,107,369
---------- ----------
$1,039,676 $1,114,069
========== ==========
</TABLE>
NOTE F - Mortgage-Backed Securities Held to Maturity
Mortgage-backed securities held to maturity are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1993
----------------------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
FNMA $408,467 $7,103 $3,327 $412,243
======== ====== ====== ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1992
----------------------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
FNMA $ 751,210 $ 31,030 $250 $ 781,990
FHLMC 575,298 37,824 2 613,120
GNMA 461,853 39,018 4 500,867
Other 3,254 281 -0- 3,535
---------- -------- ---- ----------
$1,791,615 $108,153 $256 $1,899,512
========== ======== ==== ==========
</TABLE>
<PAGE>PAGE F-16
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
The weighted average portfolio yields of mortgage-backed securities
held to maturity were 6.94% and 9.30% at December 31, 1993, and 1992,
respectively. Principal proceeds from the sales of securities from the
mortgage-backed securities portfolio were $144 (1993), $252 (1992), and
$433,620 (1991) and resulted in realized gains of $7 (1993), $9 (1992), and
$7,794 (1991) and realized losses of $-0- (1993), $-0- (1992), and
$7,898 (1991).
As of December 31, 1993, the entire mortgage-backed securities held to
maturity portfolio matures in 2004 and thereafter.
NOTE G - Loans Receivable
<TABLE>
<CAPTION>
December 31
-----------------------------
1993 1992
----------- -----------
<S> <C> <C>
Loans collateralized primarily by first deeds of trust:
One- to four-family dwelling units $20,197,613 $18,487,247
Over four-family dwelling units 3,785,673 3,509,105
Commercial property 153,396 176,900
Construction loans 580 580
Land 2,407 1,763
----------- -----------
24,139,669 22,175,595
Loans on savings accounts 32,012 33,230
----------- -----------
24,171,681 22,208,825
Less:
Undisbursed loan funds 1,882 2,687
Unearned fees and discounts 112,751 109,446
Unamortized discount arising from acquisitions 37,779 57,092
Allowance for loan losses 106,698 70,924
----------- -----------
$23,912,571 $21,968,676
=========== ===========
</TABLE>
In addition to loans receivable, the Association services loans for
others. At December 31, 1993, and 1992, the amount of loans serviced for others
was $806,504 and $612,311, respectively.
At December 31, 1993, and 1992, the Company had $56 million and
$16 million, respectively, in loans held for sale, all of which are carried at
the lower of cost or market.
<PAGE>PAGE F-17
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
A summary of the changes in the allowance for loan losses is as
follows:
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------
1993 1992 1991
-------- ------- -------
<S> <C> <C> <C>
Balance at January 1 $ 70,924 $48,036 $26,799
Provision for loan losses charged to expense 65,837 43,218 34,984
Less loans charged off, net of recoveries 37,330 20,330 13,747
Reclassification of in-substance foreclosure allowances 7,267 -0- -0-
-------- ------- -------
Balance at December 31 $106,698 $70,924 $48,036
======== ======= =======
</TABLE>
At December 31, 1993, the Company had $330 million and $37 million of
nonperforming loans and troubled debt restructured, respectively.
NOTE H - Real Estate Held for Sale or Investment
<TABLE>
<CAPTION>
December 31
-------------------
1993 1992
------- -------
<S> <C> <C>
Real estate acquired through foreclosure of loans, net of
allowance for losses $62,724 $56,642
Loans in-substance foreclosed, net of allowance for losses
(See Note A) -0- 9,351
Real estate in judgement, net of allowance for losses 1,366 1,030
Real estate held for investment, net of allowance for
losses 3,066 739
------- -------
$67,156 $67,762
======= =======
</TABLE>
NOTE I - Premises and Equipment
<TABLE>
<CAPTION>
December 31
---------------------
1993 1992
-------- --------
<S> <C> <C>
Land $ 43,738 $ 41,560
Buildings and leasehold improvements 122,465 111,478
Furniture, fixtures and equipment 102,056 88,929
-------- --------
268,259 241,967
Accumulated depreciation and amortization 105,508 93,664
-------- --------
$162,751 $148,303
======== ========
</TABLE>
Depreciation and amortization, computed by the straight-line method
for financial statement purposes, are provided over the useful lives of the
various classes of premises and equipment.
The aggregate rentals under long-term operating leases on land or
premises in effect on December 31, 1993, and which expire between 1994 and 2064,
amounted to approximately $134,061. The approximate minimum payments during the
five years ending 1998 are $13,183 (1994), $11,793 (1995), $10,864 (1996),
$10,217 (1997), and $9,372 (1998). Certain of the leases provide for options to
renew and for the payment of taxes, insurance, and maintenance costs. The
rental expense for the year amounted to $15,579 (1993), $14,823 (1992), and
$14,009 (1991).
<PAGE>PAGE F-18
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
NOTE J - Customer Deposits
<TABLE>
<CAPTION>
December 31
---------------------------------------
1993 1992
------------------ ------------------
Rate* Amount Rate* Amount
----- ----------- ----- -----------
<S> <C> <C> <C> <C>
Customer deposits by rate:
Interest-bearing checking accounts 1.35% $ 736,767 1.91% $ 710,851
Passbook accounts 2.12 611,606 2.70 541,701
Money market deposit accounts 2.35 2,378,087 4.02 2,731,338
Term certificate accounts with original
maturities of:
4 weeks to 1 year 3.24 4,334,208 3.47 4,762,359
1 to 2 years 3.85 4,614,059 4.21 3,494,606
2 to 3 years 4.62 1,448,779 5.64 1,246,978
3 to 4 years 6.11 1,149,108 6.99 1,267,707
4 years and over 6.72 2,021,350 6.67 1,612,784
Retail jumbo CDs 5.03 109,250 6.07 94,651
All other 7.76 19,270 7.75 23,271
----------- -----------
$17,422,484 $16,486,246
=========== ===========
*Weighted average interest rate
Customer deposits by remaining maturity
at year end:
No contractual maturity $ 3,726,460 $ 3,983,890
Maturity within one year:
1st quarter 3,811,037 4,111,337
2nd quarter 2,991,744 2,613,350
3rd quarter 1,666,045 1,284,585
4th quarter 1,391,652 1,292,873
----------- -----------
9,860,478 9,302,145
1 to 2 years 1,865,989 1,635,360
2 to 3 years 460,472 446,546
3 to 4 years 651,243 159,830
Over 4 years 857,842 958,475
----------- -----------
$17,422,484 $16,486,246
=========== ===========
</TABLE>
At December 31, the weighted average cost of deposits was 3.92% (1993)
and 4.40% (1992).
Interest expense on customer deposits is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------
1993 1992 1991
-------- -------- ----------
<S> <C> <C> <C>
Interest-bearing checking accounts $ 11,426 $ 12,376 $ 15,017
Passbook accounts 21,043 23,315 24,146
Money market deposit accounts 47,339 75,223 88,601
Term certificate accounts 625,892 733,796 966,619
-------- -------- ----------
$705,700 $844,710 $1,094,383
======== ======== ==========
</TABLE>
<PAGE>PAGE F-19
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
NOTE K - Advances from Federal Home Loan Banks
Advances are secured by pledges of $10,843,941 of certain loans and
capital stock of the Federal Home Loan Banks, and these borrowings have
maturities and interest rates as follows:
<TABLE>
<CAPTION>
December 31
------------------------------------------------------------
1993 1992
-------------------------- -----------------------------
Maturity Rate* Amount Rate* Amount
- -------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
1993 6.35% $ 518,845
1994 8.05% $ 72,549 8.03 72,539
1995 2.01 325,424 2.49 325,377
1996 4.52 170,051 8.00 170,032
1997 5.11 150,524 5.13 1,250,016
1998 3.66 1,048,621 4.08 1,024,293
1999 and thereafter 3.93 4,514,522 4.11 2,138,261
---------- ----------
$6,281,691 $5,499,363
========== ==========
</TABLE>
*Weighted average interest rate, including the effect of hedging transactions
At December 31, the weighted average cost of advances was 3.87% (1993)
and 4.62% (1992).
NOTE L - Securities Sold Under Agreements to Repurchase
<TABLE>
<CAPTION>
December 31
------------------------
1993 1992
-------- --------
<S> <C> <C>
Securities sold under agreements to repurchase with
broker/dealers, due at various dates through
August 1999 at coupon rates of 2.65% to 8.40%
collateralized by government obligations and
mortgage-backed securities with a market value
of $387,286 at December 31, 1993 $376,864 $485,705
Consumer repurchase agreements due within 90 days at
interest rates of 1.11% to 3.25% collateralized by
mortgage-backed securities with a market value of
$96,613 at December 31, 1993, which are pledged to
a trustee 66,010 71,005
-------- --------
$442,874 $556,710
======== ========
</TABLE>
At December 31, these liabilities had a weighted average interest rate
of 6.06% (1993) and 8.09% (1992). These borrowings averaged $464,091 (1993) and
$905,145 (1992) and the maximum outstanding at any month end was $773,140 (1993)
and $1,213,376 (1992). At the end of 1993 and 1992, respectively, $139,811 and
$301,404 of the agreements to repurchase with broker/dealers were to reacquire
the same securities. Agreements with broker/dealers to repurchase substantially
the same securities amounted to $237,053 (1993) and $184,301 (1992).
<PAGE>PAGE F-20
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
At December 31, 1993, securities sold under agreements to repurchase
had maturities and interest rates as follows:
<TABLE>
<CAPTION>
Maturity Rate* Amount
-------- ----- --------
<S> <C> <C>
1994 5.77% $383,213
1995 thru 1998 8.52 53,061
1999 and thereafter 2.98 6,600
--------
$442,874
========
</TABLE>
*Weighted average interest rate
NOTE M - Medium-Term Notes
Medium-term notes are unsecured. They have maturities and interest
rates as follows:
<TABLE>
<CAPTION>
December 31
------------------------------------------------------------
1993 1992
-------------------------- -----------------------------
Maturity Rate* Amount Rate* Amount
- -------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
1993 8.45% $ 14,497
1995 6.03% $ 66,848 6.04 66,770
1996 4.02 609,692 -- -0-
---------- ----------
$ 676,540 $ 81,267
========== ==========
</TABLE>
*Weighted average interest rate
NOTE N - Subordinated Notes
<TABLE>
<CAPTION>
December 31
-----------------------------
1993 1992
---------- --------
<S> <C> <C>
Parent:
Subordinated notes, unsecured, due from
1997 to 2003 at coupon rates of 6.00%
to 10.25%, net of unamortized discount
of $8,818 (1993) and $6,968 (1992) $1,021,182 $723,032
Association:
Subordinated notes, unsecured, due from
1997 to 2000 at coupon rates of 9.90%
to 10.25%, net of unamortized discount
of $1,121 (1993) and $1,331 (1992) 198,879 198,669
---------- --------
$1,220,061 $921,701
========== ========
</TABLE>
<PAGE>PAGE F-21
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
At December 31, subordinated notes had a weighted average interest rate
of 8.65% (1993) and 9.35% (1992). At December 31, 1993, subordinated notes had
maturities and interest rates as follows:
<TABLE>
<CAPTION>
Maturity Rate* Amount
-------- ------ ----------
<S> <C> <C>
1997 10.39% $ 214,217
1998 9.06 198,906
2000 9.32 312,322
2002 8.08 296,354
2003 6.14 198,262
----------
$1,220,061
==========
</TABLE>
*Weighted average interest rate
NOTE O - Taxes on Income
Income taxes for 1992 and 1991 have not been restated for the effect
of adopting FAS 109. The cumulative effect of the change in the method of
accounting for income taxes for the periods ending prior to January 1, 1993, is
not material. The following is a comparative analysis of the provision for
federal and state taxes on income:
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Federal income tax:
Current $141,016 $149,678 $112,776
Deferred 3,599 (11,622) 232
State tax:
Current 42,014 47,019 35,864
Deferred (3,101) (4,920) (756)
-------- -------- --------
$183,528 $180,155 $148,116
======== ======== ========
</TABLE>
The amounts of net deferred liability included in taxes on income in
the Consolidated Statement of Financial Condition are:
<TABLE>
<CAPTION>
December 31
---------------------
1993 1992
-------- -------
<S> <C> <C>
Federal income tax $111,369 $91,155
State tax 53,460 48,037
</TABLE>
<PAGE>PAGE F-22
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
For 1993, deferred tax liability results from changes in the amounts
of temporary differences between January 1, 1993, and December 31, 1993. The
components of the net deferred tax liability are as follows:
<TABLE>
<CAPTION>
December 31 January 1
1993 1993
----------- ---------
<S> <C> <C>
Deferred tax liabilities:
Loan fees and interest income deferred for tax purposes $ 60,550 $ 58,947
FHLB stock dividends recognized as income for financial statement
purposes, allocated to cost basis of stock for tax purposes 57,695 53,574
Tax depreciation expense in excess of financial statement depreciation
expense 10,518 7,996
Bad debt reserve for tax purposes in excess of base year bad debt
reserve 54,458 58,771
Unrealized gains on debt and equity securities reflected in equity
for financial statements 59,459 -0-
Other deferred tax liabilities 1,032 5,820
-------- --------
Gross deferred tax liabilities 243,712 185,108
Deferred tax assets:
State tax expensed for financial statements deferred for tax purposes 15,251 15,493
Provision for loss on investment securities expensed for financial
statement, deferred for tax purposes -0- 9,681
Provision for losses on loans 41,293 28,573
Loan discount primarily related to acquisitions 15,678 23,245
Other deferred tax assets 6,661 6,465
-------- --------
Gross deferred tax assets 78,883 83,457
-------- --------
Net deferred tax liability $164,829 $101,651
======== ========
</TABLE>
<PAGE>PAGE F-23
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
For 1992 and 1991, deferred tax expense under APB 11 results from
timing differences in the recognition of revenue and expense for tax and
financial statement purposes. The sources of these differences and the tax
effects of each are as follows:
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------------
1992 1991
------------------- ------------------
Federal State Federal State
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Loan fees and interest
income deferred for
tax purposes $ 506 $ 143 $ 3,806 $ 1,075
Revenue and expense
reported on the
cash basis for tax
purposes (4,801) (1,355) (730) (286)
Effect of allowable
federal bad debt
deduction applied to
timing differences 1,016 -0- (159) -0-
State tax expensed for
financial statements,
not deductible for
tax purposes (10,888) -0- (6,280) -0-
FHLB stock dividends
recognized as
income for finan-
cial statements,
allocated to cost
basis of stock for
tax purposes 2,693 760 6,030 1,702
Other (148) (4,468) (2,435) (3,247)
-------- ------- ------- -------
$(11,622) $(4,920) $ 232 $ (756)
======== ======= ======= =======
</TABLE>
<PAGE>PAGE F-24
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
A reconciliation of income taxes at the federal statutory corporate
rate to the effective tax rate follows:
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------------------------
1993 1992 1991
----------------- ----------------- -----------------
Percent Percent Percent
of of of
Pretax Pretax Pretax
Amount Income Amount Income Amount Income
-------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Computed standard
corporate tax
expense $160,083 35.0% $157,655 34.0% $131,483 34.0%
Increases (reduc-
tions) in taxes
resulting from:
Bad debt deduc-
tion based on
a percentage
of income -0- -0- 3,906 0.8 2,185 0.6
Net financial
income, not
subject to
income tax,
primarily
related to
acquisitions (3,293) (0.7) (7,773) (1.6) (6,938) (1.8)
State tax, net of
federal income
tax benefit 27,783 6.0 27,785 6.0 23,171 6.0
Adjustment of
deferred tax
liability due
to tax rate
increase 1,793 0.4 -0- -0- -0- -0-
Other (2,838) (0.6) (1,418) (0.3) (1,785) (0.5)
-------- ---- -------- ---- -------- ----
$183,528 40.1% $180,155 38.9% $148,116 38.3%
======== ==== ======== ==== ======== ====
</TABLE>
In 1993, the Company adopted FAS 109 and elected to apply it
prospectively. The cumulative effect of this change in accounting for income
taxes for the periods ending prior to January 1, 1993, is not material. FAS 109
required the Company to record a deferred tax asset of $23 million and a
corresponding reduction in goodwill to reflect the benefit of certain purchase
accounting income that is not subject to income tax.
In accordance with FAS 109, a deferred tax liability has not been
recognized for the tax bad debt reserve of World Savings and Loan Association
that arose in tax years that began prior to December 31, 1987. At December 31,
1993, and 1992, the portion of the tax bad debt reserve attributable to
pre-1988 tax years was
<PAGE>PAGE F-25
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
approximately $252 million. The amount of unrecognized deferred tax liability
at December 31, 1993, and 1992, was approximately $88 million and $86 million,
respectively. This deferred tax liability could be recognized if, in the
future, there is a change in Federal tax law, the savings institution fails to
meet the definition of a "qualified savings institution," certain distributions
are made with respect to the stock of the savings institution, or the bad debt
reserve is used for any purpose other than absorbing bad debt losses.
NOTE P - Stockholders' Equity
On October 28, 1993, the Company's Board of Directors authorized the
purchase by the Company of up to 3.2 million shares of Golden West's common
stock. As of December 31, 1993, 204,000 shares had been repurchased and
retired.
NOTE Q - Stock Options
The Company's 1987 stock option plan authorizes the granting of
options to key employees to purchase up to 7 million shares of the Company's
common stock.
The plan permits the issuance of either non-qualified stock options
or incentive stock options. Under terms of the plan, incentive stock options
have been granted at fair market value as of the date of grant and are
exercisable any time after two to six years and prior to either five or ten
years from the grant date. Non-qualified options have been granted at fair
market value as of the date of grant and are exercisable after two to six years
and prior to ten years and one month from the grant date.
A summary of the transactions of the stock option plan follows:
<TABLE>
<CAPTION>
Average
Price per
Shares Share
--------- ---------
<S> <C> <C>
Outstanding, January 1, 1991 2,944,650 $14.32
Granted 228,600 $34.80
Exercised (168,800) $12.94
Canceled (11,050) $19.18
--------- ------
Outstanding, December 31, 1991 2,993,400 $15.94
Granted 278,650 $38.13
Exercised (425,890) $12.15
Canceled (9,300) $26.73
--------- ------
Outstanding, December 31, 1992 2,836,860 $18.66
Granted 329,950 $39.53
Exercised (208,125) $13.54
Canceled (30,100) $29.62
--------- ------
Outstanding, December 31, 1993 2,928,585 $21.26
========= ======
</TABLE>
<PAGE>PAGE F-26
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
At December 31, shares available for option amounted to
3,465,400 (1993), 3,765,250 (1992), and 4,034,600 (1991); and shares exercisable
amounted to 1,792,235 (1993), 1,225,210 (1992), and 1,251,950 (1991).
Outstanding options at December 31, 1993, were held by 326 employees and had
expiration dates ranging from November 20, 1994, to January 15, 2004.
NOTE R - Financial Instruments with Off-Balance-Sheet Risk and Concentrations of
Credit Risk
As of December 31, 1993, the Company's loans receivable balance was
$23.9 billion. Of that $23.9 billion balance, 82% were California loans, 3%
were Colorado loans, 2% were Illinois loans, and 2% were New Jersey loans. No
other single state made up more than 2% of the total loan portfolio. The
majority of these loans are secured by first deeds of trust on one- to
four-family residential property. Economic conditions and real estate values in
the states in which the Company lends are the key factors that affect the credit
risk of the Company's loan portfolio.
In order to reduce its exposure to fluctuations in interest rates, the
Company is a party to financial instruments with off-balance-sheet risk entered
into in the normal course of business. These financial instruments include
commitments to fund loans; commitments to purchase or sell securities, mortgage-
backed securities, loans, and mortgage derivative products; interest rate swaps
and caps; and futures and options contracts. These instruments involve, to
varying degrees, elements of credit and interest rate risk in excess of the
amount recognized in the consolidated statement of financial condition. The
contract or notional amounts of these instruments reflect the extent of
involvement the Company has in particular classes of financial instruments.
To limit credit exposure, among other things, the Company enters into financial
instrument contracts only with the Federal Home Loan Bank of San Francisco and
with major banks and securities dealers selected by the Company upon the basis
of their creditworthiness and other matters. Typically, the Company does not
require or provide collateral or other security to support these financial
instruments.
Commitments to originate mortgage loans are agreements to lend to a
customer providing that the customer satisfies the terms of the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Prior to entering each commitment, the
Company evaluates the customer's creditworthiness. The amount of outstanding
loan commitments at December 31, 1993, and 1992, was $350 million and
$444 million, respectively. Most of these commitments were for adjustable
rate mortgages.
The Company enters into commitments to purchase or sell mortgage-
backed securities and other mortgage derivative products. The commitments
generally have a fixed delivery or receipt settlement date. The Company
controls the credit risk of such commitments through credit evaluations, limits,
and monitoring procedures. The interest rate risk of the commitment is
considered by the Company and matched with the appropriate funding sources.
Interest rate risk during the commitment period may also be managed by use of
over-the-counter options, options on futures and futures contracts. The
Company had no outstanding commitments to purchase or sell mortgage-backed
securities as of December 31, 1993, and 1992.
The Company has entered into interest rate swap and cap agreements
with selected banks and government securities dealers. An interest rate swap
is an agreement between two parties in which one party exchanges cash payments
based on a fixed rate of interest for a counterparty's cash payment based on a
floating rate of interest. The amounts to be paid are defined by agreement and
determined by applying the specified interest rates to a notional principal
amount. The interest rate differential to be paid or received on interest rate
swap agreements entered into to reduce the impact of changes in interest rates
of the hedged customer deposits,
<PAGE>PAGE F-27
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
mortgage loans, or other specified assets and borrowings is recognized over the
life of the agreements. At December 31, 1993, the Company paid a fixed interest
rate of 3.96% to 9.54% with a weighted average of 7.10% and received a floating
interest rate based upon a specified interest rate index, the London Interbank
Offered Rate (LIBOR), on interest rate swap agreements. The agreements have
original terms to maturity from two to ten years and remaining terms to maturity
of less than one to ten years. At December 31, 1993, and 1992, the Company had
notional principal balances totalling $2.6 billion, with interest payable at
fixed rates. At December 31, 1993, the Company paid a floating interest rate
based upon a specified interest rate index, either LIBOR or the Federal Home
Loan Bank (FHLB) 11th District Cost of Funds, and received a fixed interest
rate of 3.82% to 9.77% with a weighted average of 5.37% on interest rate swap
agreements. The agreements have original terms to maturity from one to ten
years and remaining terms to maturity of less than one to seven years. At
December 31, 1993, and 1992, the Company had notional principal balances
totalling $2.9 billion and $1.1 billion, respectively, with interest payable at
floating rates. At December 31, 1993, the Company paid and received a floating
rate of interest based upon a spread applied to a specified interest rate index,
the FHLB 11th District Cost of Funds and the FHLB 6-month Discount Note Rate,
respectively, on interest rate swap agreements. The agreements have original
terms to maturity of five years and remaining terms to maturity of three to four
years. At December 31, 1993, the Company had a notional principal balance of
$600 million, with interest payable and receivable at floating rates. At
December 31, 1993, and 1992, the Company had $89 million and $72 million,
respectively, of net unrealized losses on outstanding interest rate swaps.
An interest rate cap is an agreement between two parties in which one
party pays a fee for the right to receive a payment from a counterparty based on
the excess, if any, of an open market floating rate over a base rate applied to
a notional principal amount. The excess which may be received on interest rate
cap agreements reduces the impact of changes in interest rates and is recognized
over the life of the agreements. At December 31, 1993, the Company received the
excess of a specified interest rate index, LIBOR, over a fixed base interest
rate of 4.25% to 11% on interest rate cap agreements. The agreements have
original terms to maturity of three to seven years and remaining terms to
maturity of less than one to three years. At December 31, 1993, and 1992, the
Company had notional principal balances totalling $437 million and $452 million,
respectively.
These interest rate swaps and caps were designated as hedges against
customer deposits, mortgage loans, and other specified assets and borrowings.
The Company is exposed to credit risk in the event of nonperformance by the
other parties to the interest rate swap and cap agreements; however, the
Company does not anticipate nonperformance by the other parties.
Futures contracts and long put options for futures contracts for
Eurodollars, Treasury Bills, and interest rate contracts are entered into by the
Company as hedges against specific liabilities or assets and not for
speculation. At the time a contract is entered into, its purpose is
specifically identified and documented as part of the corporate records. Gains
and losses on futures contracts are deferred until the contracts are closed, at
which time gains and losses are included in the cost basis of the assets and
liabilities hedged and amortized, using the straight-line or level yield method,
into interest income or expense over the remaining life of the asset or
liability, or they are amortized over the period hedged. The possible inability
of counterparties to meet the terms of their contracts exposes the Company to
credit risk to the extent that gains remain unsettled on the contracts. At
December 31, 1993, the Company had no short positions outstanding. At
December 31, 1992, the Company had outstanding a $4.1 billion short position
in various futures, which were designated as hedges against specified
borrowings. At December 31, 1993, and 1992, the Company had $-0- and $598 of
unrealized gains, respectively, on outstanding financial futures. At
December 31, 1993, and 1992, the Company had no positions in long put options.
<PAGE>PAGE F-28
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
The Company controls the credit risk of its futures contracts, long
put options for futures contracts, interest rate swap agreements, and interest
rate cap agreements through credit approvals, limits, and monitoring procedures.
The contract or notional amount of these contracts does not represent exposure
to credit risk; rather, credit risk relates only to unsettled amounts on
contracts.
NOTE S - Disclosure About Fair Value of Financial Instruments
The Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 107 (FAS 107) requires disclosure of the fair value of
financial instruments for which it is practicable to estimate that value. The
statement provides for a variety of different valuation methods, levels of
aggregation, and assessments of practicability of estimating fair value.
Moreover, there are significant inherent weaknesses in any estimating techniques
employed.
Fair value estimates are not necessarily more relevant than historical
cost values. Fair values may have limited usefulness in evaluating portfolios
of long-term financial instrument assets and liabilities held by going concerns.
Differences in the alternative methods and assumptions selected by various
companies as well as differences in the methodology utilized between years may,
and probably will, significantly limit comparability and usefulness of the data
displayed. For these reasons, as well as others, management believes that the
disclosure presented herein has limited relevance to the Company and its
operations.
The values presented are based upon information as of December 31,
1993, and 1992, and do not reflect any subsequent changes in fair value. Fair
values may have changed significantly following the balance sheet dates. The
estimates presented herein are not necessarily indicative of amounts that could
be realized in a current transaction.
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:
The historical cost amounts approximate the fair value of the
following financial instruments: cash, interest earned but
uncollected, investment in capital stock of Federal Home Loan Banks,
other investments, customer demand deposits, and securities sold under
agreements to repurchase with brokers/dealers due within 90 days.
Fair values are based on quoted market prices for securities available
for sale, mortgage-backed securities available for sale, mortgage-
backed securities held to maturity, medium-term notes, subordinated
notes, and futures contracts.
Fair values are estimated using projected cash flows present valued at
replacement rates currently offered for instruments of similar
remaining maturities for: customer term deposits, advances from
Federal Home Loan Banks, and consumer repurchase agreements.
<PAGE>PAGE F-29
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
For loans receivable and loan commitments, the fair value is estimated
by present valuing projected future cash flows, using current rates at
which similar loans would be made to borrowers and with assumed rates
of prepayment. Adjustment for credit risk is estimated based upon the
classification status of the loans.
The fair value of interest rate caps is derived from current market
prices of similar interest rate cap instruments. The fair value of
interest rate swap agreements is the estimated amount the Company
would receive or pay to terminate the swap agreements on the reporting
date, considering current interest rates.
<TABLE>
<CAPTION>
December 31
----------------------------------------------------------
1993 1992
--------------------------- ---------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Financial Assets:
Cash $ 243,185 $ 243,185 $ 228,796 $ 228,796
Securities available for sale 1,636,586 1,636,586 160,883 160,935
Other investments 538,100 538,100 790,189 874,257
Mortgage-backed securities available for sale 1,114,069 1,114,069 -0- -0-
Mortgage-backed securities held to maturity 408,467 412,243 1,791,615 1,899,512
Loans receivable 23,912,571 24,166,244 21,968,676 22,227,635
Interest earned but uncollected 175,080 175,080 157,723 157,723
Investment in capital stock of Federal Home
Loan Banks 325,737 325,737 289,707 289,707
Financial Liabilities:
Customer deposits 17,422,484 17,564,644 16,486,246 16,608,720
Advances from Federal Home Loan Banks 6,281,691 6,035,503 5,499,363 5,376,785
Securities sold under agreements to
repurchase 442,874 447,163 556,710 562,948
Medium-term notes 676,540 686,581 81,267 81,806
Subordinated notes 1,220,061 1,349,037 921,701 1,010,937
Off-Balance Sheet Instruments (Unrealized Gains
(Losses)):
Interest rate caps (1,422) (4,058)
Interest rate swaps (88,942) (72,073)
Futures contracts -0- 598
Loan commitments (68) 505
</TABLE>
<PAGE>PAGE F-30
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
NOTE T - Parent Company Financial Information
<TABLE>
<CAPTION>
Statement of Net Earnings
Year Ended December 31
--------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Investment income $ 28,047 $ 22,542 $ 13,126
Insurance commissions
and trustee fees 1,357 2,978 3,275
Other 20 25 (27)
-------- -------- --------
29,424 25,545 16,374
Expenses:
Interest 75,601 58,313 40,040
General and administrative 2,188 2,088 1,972
Other -0- -0- 415
-------- -------- --------
77,789 60,401 42,427
-------- -------- --------
Loss before earnings of subsidiaries
and income tax credit (48,365) (34,856) (26,053)
Income tax credit 21,585 15,279 10,399
Earnings of subsidiaries 300,634 303,115 254,253
-------- -------- --------
Net Earnings $273,854 $283,538 $238,599
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Statement of Financial Condition
Assets
December 31
-------------------------
1993 1992
---------- ----------
<S> <C> <C>
Cash $ 9,658 $ 9,877
Securities available for sale 681,935 2,024
Other investments 114,714 130,876
Note receivable from subsidiary 150,000 475,000
Prepaid expenses and other assets 7,008 22,233
Investment in subsidiaries 2,169,364 1,825,036
---------- ----------
$3,132,679 $2,465,046
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Securities sold under agreements to repurchase $ 24,875 $ -0-
Accounts payable and accrued expenses 21,018 14,616
Subordinated notes, net 1,021,182 723,032
Stockholders' equity 2,065,604 1,727,398
---------- ----------
$3,132,679 $2,465,046
========== ==========
</TABLE>
<PAGE>PAGE F-31
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
NOTE T - Parent Company Financial Information (Continued)
<TABLE>
<CAPTION>
Statement of Cash Flows
Year Ended December 31
------------------------------------
1993 1992 1991
----------- --------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 273,854 $ 283,538 $238,599
Adjustments to reconcile net earnings to
net cash used in operating activities:
Equity in earnings of subsidiaries (300,634) (303,115) (254,253)
Amortization of intangibles and
discount on subordinated debt 1,209 837 863
Decrease (increase) in income taxes
receivable 9,318 (7,808) (3,714)
Other, net 6,191 4,911 1,331
----------- --------- --------
Net cash used in operating activities (10,062) (21,637) (17,174)
Cash flows from investing activities:
Repayment of subordinated note -0- -0- 38,000
Capital contributed to subsidiaries -0- -0- (102,350)
Dividends received from subsidiary 34,000 40,000 121,500
Purchases of securities held for sale (1,920,007) (434,738) -0-
Sales of securities held for sale 1,440,605 432,685 -0-
Decrease (increase) in other investments (169,355) 175,703 (155,016)
Notes receivable from subsidiary (150,000) (695,000) -0-
Repayments of notes receivable from
subsidiary 475,000 220,000 -0-
----------- --------- --------
Net cash used in investing activities (289,757) (261,350) (97,866)
Cash flows from financing activities:
Repayments of borrowings from subsidiary -0- -0- (75,000)
Increase in securities sold under agreements
to repurchase 24,875 -0- -0-
Proceeds from subordinated debt 297,008 295,616 198,312
Dividends on common stock (17,280) (14,624) (12,054)
Sale of stock 2,818 5,153 2,187
Purchase and retirement of Company stock (7,821) -0- -0-
----------- --------- --------
Net cash provided by financing activities 299,600 286,145 113,445
Net increase (decrease) in cash (219) 3,158 (1,595)
Cash at beginning of period 9,877 6,719 8,314
----------- --------- --------
Cash at end of period $ 9,658 $ 9,877 $ 6,719
=========== ========= ========
Supplemental cash flow information:
Debt forgiven by subsidiary $ -0- $ -0- $(90,000)
Reduction in investment in subsidiaries -0- -0- 90,000
</TABLE>
<PAGE>PAGE F-32
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share figures)
NOTE U - Selected Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
1993
------------------------------------------------------------
Quarter Ended
------------------------------------------------------------
March 31 June 30 September 30 December 31
-------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Interest income $463,027 $472,073 $473,813 $461,259
Interest expense 280,911 291,831 288,550 276,122
Net interest income 182,116 180,242 185,263 185,137
Provision for loan losses 11,459 13,182 16,196 25,000
Non-interest income 11,907 13,428 14,444 22,263
Non-interest expense 64,361 63,870 70,077 73,273
-------- -------- -------- --------
Earnings before taxes on income 118,203 116,618 113,434 109,127
Taxes on income 46,619 46,035 49,666 41,208
-------- -------- -------- --------
Net earnings $ 71,584 $ 70,583 $ 63,768 $ 67,919
======== ======== ======== ========
Net earnings per share $ 1.12 $ 1.10 $ 1.00 $ 1.06
======== ======== ======== ========
Cash dividends per share $ .065 $ .065 $ .065 $ .075
======== ======== ======== ========
</TABLE>
Non-interest income in the fourth quarter of 1993 includes a
$17 million reduction of a valuation allowance on investments charged to
income in a previous year.
<TABLE>
<CAPTION>
1992
------------------------------------------------------------
Quarter Ended
------------------------------------------------------------
March 31 June 30 September 30 December 31
-------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Interest income $520,541 $504,214 $487,541 $472,214
Interest expense 344,721 320,485 311,518 290,456
Net interest income 175,820 183,729 176,023 181,758
Provision for loan losses 9,750 11,040 10,944 11,484
Non-interest income 10,085 9,939 10,205 10,888
Non-interest expense 62,403 62,123 61,278 65,732
-------- -------- -------- --------
Earnings before taxes on income 113,752 120,505 114,006 115,430
Taxes on income 43,759 46,581 44,298 45,517
-------- -------- -------- --------
Net earnings $ 69,993 $ 73,924 $ 69,708 $ 69,913
======== ======== ======== ========
Net earnings per share $ 1.10 $ 1.16 $ 1.10 $ 1.10
======== ======== ======== ========
Cash dividends per share $ .055 $ .055 $ .055 $ .065
======== ======== ======== ========
</TABLE>
<PAGE>PAGE 67
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Stockholders
Golden West Financial Corporation
Oakland, California
We consent to the incorporation by reference in Post-Effective
Amendment No. 2 to Registration Statement No. 2-66913 on Form S-8, Registration
Statement No. 33-14833 on Form S-8, Registration Statement No. 33-29286 on
Form S-3, Registration Statement No. 33-40572 on Form S-8, Registration
Statement No. 33-48976 on Form S-3, and Registration Statement No. 33-57882 on
Form S-3 of our report dated January 25, 1994 appearing in this Annual Report
on Form 10-K of Golden West Financial Corporation for the year ended
December 31, 1993.
Deloitte & Touche
Oakland, California
March 23, 1994
