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
October 17, 1996
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(Date of earliest event reported)
Golden West Financial Corporation
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(Exact name of registrant as specified in its charter)
Delaware 1-4629 95-2080059
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1901 Harrison Street, Oakland, California 94612
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(Address of principal executive offices) (Zip Code)
(510) 446-3420
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(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events.
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Attached hereto as Exhibit 99 is a copy of Golden West Financial
Corporation's press release dated October 17, 1996.
Item 7. Financial Statements, Pro Forms
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Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements of Business Acquired
Not applicable.
(b) Pro Forma Financial Information
Not applicable.
(c) Exhibits
Exhibit Number Description
99 Golden West Financial Corporation's press release dated
October 17, 1996.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GOLDEN WEST FINANCIAL CORPORATION
/s/ J. L. Helvey
Dated: October 17, 1996 -------------------------------------
J. L. Helvey
Executive Vice President
(duly authorized and principal
financial officer)
FOR FURTHER INFORMATION CONTACT: FOR IMMEDIATE RELEASE
J. L. Helvey, Executive Vice President
Telephone: (510) 446-3405
October 17, 1996
NONRECURRING ITEMS DOMINATE GOLDEN WEST EARNINGS
THIRD QUARTER LOAN VOLUME SETS RECORD
OAKLAND, CALIFORNIA: Golden West Financial Corporation, parent of World
Savings, today announced that third quarter and nine-month earnings for 1996
were significantly influenced by three nonrecurring items: the federally
mandated recapitalization of the Savings Association Insurance Fund (SAIF), the
recognition of tax benefits associated with an acquisition made several years
ago, and the Company's adoption of Statement of Financial Accounting Standards
(SFAS) No. 72 pertaining to acquisitions made prior to September 30, 1982.
Summarizing the combined impact of these three one-time events, Herbert M.
Sandler, Chairman of the Board and Chief Executive Officer of Golden West, said,
"When the plusses and minuses are all added up, Golden West's third quarter per
share profits amounted to $2.32 while nine month earnings totaled $1.52 per
share."
Discussing the nonrecurring items in more detail, Sandler first addressed
the deposit insurance fund issue, noting, "On September, 30, 1996, Congress
passed and President Clinton signed long-awaited federal legislation that
recapitalized the Savings Association Insurance Fund. The new banking law
requires members to pay a levy of $4.7 billion to bring SAIF up to the required
reserve level of 1.25% of insured deposits, but lowers savings and loan deposit
insurance premiums starting in 1997." As a result of this legislation, Golden
West's subsidiary, World Savings and Loan Association, incurred a one-time
charge of $133 million, or $1.34 per share on an after-tax basis, at the end of
the third quarter. Beginning on January 1, 1997, the premium paid by the
Association for deposit insurance will be reduced from $2.30 per $1,000 in
savings balances to $.64 per $1,000.
Moving on to the impact of tax benefits, Sandler provided background
information, stating, "In December 1988, Golden West entered into a government
approved transaction with Beach Federal Savings and Loan Association to provide
management services to that institution. As part of the agreement, Golden West
obtained an option to take title to the stock of Beach and subsequently
exercised this right in July 1991. When Golden West took title to the stock, the
Company disclosed that tax benefits were anticipated from operating losses which
had been accumulated at Beach's predecessor institution up to the time of the
1988 agreement, although the availability and the amount of these benefits were
uncertain." The availability of $139.5 million, or $2.40 per share, of tax
benefits was confirmed in the third quarter of 1996.
On the matter of the last nonrecurring item, Sandler explained, "In the
third quarter of 1996, Golden West adopted, retroactive to January 1, 1996,
Statement of Financial Accounting Standards No. 72, `Accounting for Certain
Acquisitions of Banking or Thrift Institutions,' pertaining to acquisitions made
prior to September 30, 1982." As a result of adopting SFAS 72, the Company
wrote-off goodwill totaling $205 million and restated earnings for the first
half of 1996. Consequently, first quarter profits of $1.28 per share were
reduced to a loss of $2.15 per share, while second quarter per share earnings
benefited slightly, increasing from $1.32 to $1.35.
Continuing with his discussion of financial results, Sandler stated,
"Recognizing that these nonrecurring items make year-over-year net income
comparisons difficult, we have also provided earnings figures excluding these
one-time events." Without the three items, Golden West's third quarter profits
would have totaled $1.23 per share, a 14% increase over the $1.08 per share
posted in the same period of 1995; net income for the first nine months of 1996
would have amounted to $3.83 per share, up 34% from the $2.86 per share recorded
for the first three quarters of 1995.
<PAGE>
Completing his discussion of earnings, Sandler commented, "Our recurring
profits in 1996 have benefited from a generally wider profit margin than in 1995
and the 8% year-over-year growth of our mortgage portfolio (including
mortgage-backed securities), our most important earning asset."
Turning to lending results for the three months ended September 30, 1996,
Sandler commented, "We are pleased to report that Golden West's mortgage
origination team produced a new quarterly record: $2.1 billion of new loans, up
53% from the $1.4 billion recorded in the same period a year ago." The Company's
volume for the first nine months of 1996 totaled $5.2 billion, a 14% increase
over the $4.6 billion generated in the first three quarters of 1995. Elaborating
on Golden West's strong lending performance, Sandler noted, "Third quarter
lending operations continued to benefit from favorable market conditions, in
particular a strong level of home sales and a positive environment for
adjustable rate mortgages (ARMs), our primary product. The latter occurred
because traditional fixed home loan rates, which spiked in the spring of 1996,
generally remained above 8% while the initial cost of ARMs was very affordable,
with most starting rates below 7.5%."
Wrapping up with a review of funding sources, Sandler stated, "To support
our strong third quarter loan volume we used a combination of retail consumer
deposits and wholesale borrowings. On the savings side, we experienced solid
growth of $544 million. We supplemented our retail program with borrowings,
primarily Federal Home Loan Bank of San Francisco advances, which increased by
$984 million during the third quarter 1996."
Headquartered in Oakland, California, Golden West is a savings and loan
holding company with assets in excess of $37 billion. Currently operating retail
deposit gathering offices in seven states under the name of World Savings,
Golden West has one of the largest multi-state systems in the country. Golden
West's stock is listed on the New York and Pacific Stock Exchanges and traded on
the Boston and Midwest Stock Exchanges under the ticker symbol GDW. Options on
Golden West's stock are bought and sold on the Philadelphia Options Exchange.
# # #
(Financial Information Attached)
<PAGE>
<TABLE>
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF NET EARNINGS
AND OTHER FINANCIAL DATA
(Unaudited)
(Dollars in thousands except per share figures)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Interest Income
Interest on loans $ 554,245 $ 540,154 $1,637,733 $1,557,366
Interest on mortgage-backed securities 59,882 54,007 181,416 117,511
Interest and dividends on investments 32,460 37,611 96,723 112,935
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646,587 631,772 1,915,872 1,787,812
Interest Expense
Interest on customer deposits 264,445 274,000 787,727 779,795
Interest on advances 107,803 87,681 289,476 280,087
Interest on repurchase agreements 31,054 25,565 93,408 41,169
Interest on other borrowings 38,338 57,093 124,152 160,596
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441,640 444,339 1,294,763 1,261,647
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Net Interest Income 204,947 187,433 621,109 526,165
Provision for loan losses 23,498 14,622 59,256 44,052
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Net Interest Income after Provision
for Loan Losses 181,449 172,811 561,853 482,113
Non-Interest Income
Fees 9,504 7,690 27,872 20,399
Gain (loss) on the sale of securities,
mortgage-backed securities, and loans 1,952 (366) 9,783 (344)
Other 6,220 3,152 18,371 10,660
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17,676 10,476 56,026 30,715
Non-Interest Expense
General and administrative:
Personnel 40,146 37,692 119,273 111,909
Occupancy 12,702 12,431 37,267 36,406
Deposit insurance (a) 140,949 11,602 162,298 33,162
Advertising 1,954 2,166 6,711 7,620
Other 15,531 14,596 46,993 45,918
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211,282 78,487 372,542 235,015
Amortization of goodwill
arising from acquisitions (b) 0 527 0 2,393
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211,282 79,014 372,542 237,408
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Earnings (Loss) Before Taxes on Income (12,157) 104,273 245,337 275,420
Taxes on income (c) (147,942) 40,892 (48,626) 107,545
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Income Before Cumulative Effect of
Change in Accounting for Goodwill 135,785 63,381 293,963 167,875
Cumulative Effect of Change in
Accounting for Goodwill (b) 0 0 (205,242) 0
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Net Earnings $ 135,785 $ 63,381 $ 88,721 $ 167,875
============ ============ ============ =============
Earning Per Share (EPS):
EPS Before Cumulative Effect of
Change in Accounting for Goodwill $ 2.32 $ 1.08 $ 5.01 $ 2.86
Cumulative Effect of Change in
Accounting for Goodwill (b)
0.00 0.00 (3.49) 0.00
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Net earnings per share $ 2.32 $ 1.08 $ 1.52 $ 2.86
============ ============ ============ =============
Average common shares outstanding 57,584,306 58,681,021 58,216,474 58,637,427
============ ============ ============ =============
Net loan chargeoffs $ 8,990 $ 10,927 $ 22,890 $ 30,678
============ ============ ============ =============
</TABLE>
<TABLE>
<CAPTION>
September 30
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1996 1995
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<S> <C> <C>
Yield on loan 7.39% 7.68%
portfolio
Yield on investments 6.06% 6.05%
Yield on earning assets 7.32% 7.58%
Cost of deposits 4.95% 5.22%
Cost of borrowings 5.85% 6.22%
Cost of funds 5.28% 5.57%
Yield on earning assets less cost of funds 2.04% 2.01%
</TABLE>
(a) The amounts for 1996 reflect the one-time SAIF assessment of $132,587.
(b) In September 1996, Golden West Financial Corporation adopted SFAS 72
effective January 1, 1996 for acquisitions prior to September 30, 1982.
As a result, the Company wrote-off goodwill totaling $205,242 as the
cumulative effect of the change in accounting for goodwill.
(c) The amounts for 1996 reflect a tax benefit of $139,485 arising from a
prior year acquisition.
<PAGE>
<TABLE>
GOLDEN WEST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
AND OTHER FINANCIAL DATA
(Unaudited)
(Dollars in thousands except per share figures)
September 30
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1996 1995
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<S> <C> <C>
Cash $ 130,467 $ 173,994
Securities available for sale 650,927 1,249,736
Other investments 1,350,002 818,730
Mortgage-backed securities available for sale without recourse 237,176 298,221
Mortgage-backed securities available for sale with recourse 220,612 0
Mortgage-backed securities held to maturity without recourse 814,619 917,005
Mortgage-backed securities held to maturity with recourse 2,039,227 1,969,697
Loans receivable 30,278,267 27,951,161
Interest earned but uncollected 218,366 234,442
Investment in capital stock of Federal Home Loan Banks 480,468 346,356
Real estate held for sale or investment 83,074 71,426
Prepaid expenses and other assets 297,917 225,899
Premises and equipment-at cost less accumulated depreciation 210,301 202,674
Goodwill arising from acquisitions (a) 0 138,931
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$ 37,011,423 $34,598,272
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LIABILITIES and STOCKHOLDERS' EQUITY
Customer deposits $21,584,365 $20,559,933
Advances from Federal Home Loan Banks 8,159,240 5,976,515
Securities sold under agreements to repurchase 2,227,481 1,865,172
Medium-term notes 689,755 1,864,229
Accounts payable and accrued expenses 593,594 462,041
Taxes on income 163,252 352,232
Subordinated notes-net of discount 1,323,592 1,321,989
Stockholders' equity 2,270,144 2,196,161
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$ 37,011,423 $34,598,272
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Book value per common share $ 39.57 $ 37.44
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Common shares outstanding 57,375,909 58,663,619
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New real estate loans originated during the quarter $ 2,106,376 $ 1,375,406
New real estate loans originated during the year $ 5,199,442 $ 4,578,500
Increase (decrease) in customer deposits during the quarter $ 543,767 $ (178,222)
Increase in customer deposits during the year $ 736,455 $ 1,340,544 (b)
Ratio of nonperforming assets to total assets 1.20% 1.08%
Ratio of troubled debt restructured to total assets 0.16% 0.16%
Loan loss reserve $ 178,354 $ 137,377
</TABLE>
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(a) In September 1996, Golden West Financial Corporation adopted SFAS 72
effective January 1, 1996 for acquisitions prior to September 30, 1982.
As a result, the Company wrote-off goodwill totaling $205,242 as the
cumulative effect of the change in accounting for goodwill
(b) Amount reflects the sale of seven Colorado branches with $152,870 of
customer deposits, and the acquisition of $47,952 in customer deposits
in New Jersey.
