<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549 - 1004
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-4075
GREAT WESTERN FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-1913457
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
9200 Oakdale Avenue, Chatsworth, California 91311
(Address of principal executive offices) (Zip Code)
(818) 775-3411
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of April 30, 1995: 135,073,826
<PAGE>
<PAGE>
GREAT WESTERN FINANCIAL CORPORATION
TABLE OF CONTENTS
Page
----
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Statement of Financial Condition -
March 31, 1995, December 31, 1994 and March 31, 1994 4
Consolidated Condensed Statement of Operations -
Three Months Ended March 31, 1995 and 1994 5
Consolidated Condensed Statement of Cash Flows -
Three Months Ended March 31, 1995 and 1994 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations for the
Three Months Ended March 31, 1995 8
Part II. Other Information
Item 5. Other Information 34
Item 6. Exhibits and Reports on Form 8-K 35
<PAGE>
<PAGE>
GREAT WESTERN FINANCIAL CORPORATION
PART I - FINANCIAL INFORMATION
------------------------------
PERSONS FOR WHOM THE INFORMATION IS TO BE GIVEN
- - - - -----------------------------------------------
The accompanying financial information is filed for the Registrant, Great
Western Financial Corporation, and its subsidiaries comprising a savings bank
and companies engaged in consumer lending, mortgage banking, securities
operations and certain other financial services ("GWFC" or "the Company").
PRESENTATION OF FINANCIAL INFORMATION
- - - - -------------------------------------
The financial information has been prepared in conformity with the accounting
principles or practices reflected in the financial statements included in the
Annual Report filed with the Commission for the year ended December 31, 1994.
The information further reflects all adjustments which are, in the opinion of
management, of a normal recurring nature and necessary for a fair presentation
of the results for the interim periods.
<PAGE>
<PAGE>
Item 1. Financial Statements
GREAT WESTERN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31 December 31 March 31
(Dollars in thousands) 1995 1994 1994
-------- ----------- --------
<S> <C> <C> <C>
ASSETS
Cash and securities
Cash $ 741,813 $ 983,440 $ 551,821
Certificates of deposit, repurchase
agreements and federal funds 215,125 165,125 300,125
Securities available for sale 988,870 917,095 499,680
----------- ----------- -----------
1,945,808 2,065,660 1,351,626
Mortgage-backed securities held to
maturity (fair value $8,154,155,
$6,211,731 and $609,114) 8,193,363 6,335,104 628,465
Mortgage-backed securities available
for sale 2,891,642 2,934,503 2,376,905
----------- ----------- -----------
11,085,005 9,269,607 3,005,370
Loans receivable, less reserve for
estimated losses 27,933,446 28,079,620 30,058,312
Loans receivable available for sale 348,743 298,748 402,652
----------- ----------- -----------
28,282,189 28,378,368 30,460,964
Real estate available for sale or
development, net 208,892 256,967 326,924
Interest receivable 258,478 230,925 217,353
Investment in Federal Home Loan Banks 342,138 306,041 308,320
Premises and equipment, at cost,
less accumulated depreciation 609,879 616,116 621,318
Other assets 519,125 730,574 714,625
Intangibles arising from acquisitions 353,980 363,999 419,924
----------- ----------- -----------
$43,605,494 $42,218,257 $37,426,424
=========== =========== ===========
LIABILITIES
Customer accounts $29,300,503 $28,700,947 $31,066,156
Securities sold under agreements
to repurchase 6,964,910 6,299,055 -
Short-term borrowings 1,340,300 1,210,461 470,059
Other borrowings 2,530,682 2,611,144 2,541,964
Other liabilities and accrued expenses 677,504 716,741 682,000
Taxes on income, principally deferred 240,328 196,123 243,076
Stockholders' equity 2,551,267 2,483,786 2,423,169
----------- ----------- -----------
$43,605,494 $42,218,257 $37,426,424
=========== =========== ===========
</TABLE>
[FN]
Unaudited
<PAGE>
<PAGE>
GREAT WESTERN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
(Dollars in thousands, except per share) 1995 1994
---- ----
<S> <C> <C>
INTEREST INCOME
Real estate loans $465,527 $481,509
Mortgage-backed securities 171,817 44,641
Consumer loans 97,425 90,841
Securities 12,583 6,614
Other 9,714 6,387
-------- --------
757,066 629,992
INTEREST EXPENSE
Customer accounts 278,916 232,139
Borrowings
Short-term 115,686 5,765
Long-term 55,372 57,844
-------- --------
449,974 295,748
-------- --------
NET INTEREST INCOME 307,092 334,244
Provision for loan losses 47,600 51,800
-------- --------
Net interest income after provision
for loan losses 259,492 282,444
Other operating income
Real estate services
Loan fees 6,199 7,811
Mortgage banking
Gain on mortgage sales 1,260 2,288
Servicing 13,798 13,688
-------- --------
21,257 23,787
Retail banking
Banking fees 36,028 32,930
Securities operations 3,967 10,576
-------- --------
39,995 43,506
Net gain on securities and investments 466 2,262
Net insurance operations 6,727 6,424
Other 1,736 1,486
-------- --------
Total other operating income 70,181 77,465
Noninterest expenses
Operating and administrative expenses
Salaries and related personnel 116,878 121,908
Premises and occupancy 46,127 51,562
FDIC insurance premium 18,639 19,147
Advertising and promotion 8,129 9,303
Other 60,106 50,406
-------- --------
249,879 252,326
Amortization of intangibles 10,019 11,764
Real estate operations (3,709) 8,644
Provision for real estate losses 1,500 3,000
-------- --------
Total noninterest expenses 257,689 275,734
-------- --------
EARNINGS BEFORE TAXES 71,984 84,175
Taxes on income 28,500 34,700
-------- --------
NET EARNINGS $ 43,484 $ 49,475
======== ========
Average common shares outstanding
Without dilution 135,060,229 133,356,647
Fully diluted 135,338,118 139,698,559
Earnings per share based on average
common shares outstanding
Primary $.28 $.32
Fully diluted .28 .32
Cash dividend per share .23 .23
</TABLE>
[FN]
Unaudited
<PAGE>
<PAGE>
GREAT WESTERN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
(Dollars in thousands) 1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 43,484 $ 49,475
Noncash adjustments to net earnings:
Provision for loan losses 47,600 51,800
Provision for real estate losses 1,500 3,000
Depreciation and amortization 19,593 19,054
Amortization of intangibles 10,019 11,764
Income taxes 10,327 74,678
Capitalized interest (5,635) (2,258)
Net change in accrued interest (42,740) (21,083)
Other 176,330 (104,036)
----------- ------------
260,478 82,394
----------- ------------
Sales and repayments of loans
receivable available for sale 45,617 708,213
Originations and purchases of loans
receivable available for sale (95,532) (542,547)
----------- -----------
(49,915) 165,666
----------- -----------
Net cash provided by operating
activities 210,563 248,060
----------- -----------
FINANCING ACTIVITIES
Customer accounts
Net (decrease) increase in transaction
accounts (677,551) 254,124
Net increase (decrease) in term accounts 1,277,107 (719,531)
----------- -----------
599,556 (465,407)
Borrowings
Repayments of long-term debt (80,462) (260,894)
Net change in securities sold
under agreements to repurchase 665,855 -
Net change in short-term debt 129,839 (206,424)
---------- -----------
715,232 (467,318)
Other financing activity
Proceeds from issuance of
common stock 11,031 6,230
Cash dividends paid (37,147) (36,772)
---------- ----------
(26,116) (30,542)
---------- ----------
Net cash provided by (used in)
financing activities 1,288,672 (963,267)
---------- ----------
/TABLE
<PAGE>
<PAGE>
GREAT WESTERN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
(Dollars in thousands) 1995 1994
---- ----
<S> <C> <C>
INVESTING ACTIVITIES
Investment securities
Proceeds from maturities $ 242,100 $ 490,718
Purchases of securities (302,499) (123,204)
----------- -----------
(60,399) 367,514
Lending
Loans originated for investment (2,813,330) (1,439,331)
Purchases of mortgage-backed securities - (50,313)
Payments 1,151,873 1,594,885
Repurchases (23,994) (20,276)
Other 4,675 14,973
----------- ----------
(1,680,776) 99,938
Other investing activity
Purchases and sales of premises
and equipment, net (22,639) (13,034)
Sales of real estate 116,031 144,587
Net change in investment in FHLB stock (36,097) (968)
Other (6,982) (6,590)
----------- -----------
50,313 123,995
----------- -----------
Net cash (used in) provided by
investing activities (1,690,862) 591,447
----------- -----------
Net (decrease) in cash and cash
equivalents (191,627) (123,760)
Cash and cash equivalents at beginning
of period 1,148,565 975,706
----------- -----------
Cash and cash equivalents at end of period $ 956,938 $ 851,946
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid for
Interest on deposits $ 278,522 $ 233,277
Interest on borrowings 186,639 81,191
Income taxes 16,360 10,380
Noncash investing activities
Loans transferred to foreclosed real estate $ 107,745 $ 93,586
Loans originated to finance the sale
of real estate 46,421 18,749
Loans originated to refinance existing loans 56,394 178,279
Loans exchanged for mortgage-backed
securities 1,997,585 -
</TABLE>
[FN]
Unaudited
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1995
Great Western Financial Corporation reported net earnings of $43.5
million, or $.28 per share, in the 1995 first quarter compared with earnings
of $49.5 million, or $.32 per share in the 1994 first quarter. Provisions
for loan and real estate losses during the 1995 first quarter were $49.1
million compared with $54.8 million in the first quarter of 1994 as credit
quality continued to show steady improvement.
<TABLE>
<CAPTION>
HIGHLIGHTS (Dollars in thousands, except per share)
For the three months ended
March 31 1995 1994
- - - - -------------------------- ---- ----
<S> <C> <c.
Net interest income $ 307,092 $ 334,244
Net earnings 43,484 49,475
Fully diluted earnings per common share $.28 $.32
New loan volume 3,011,677 2,178,906
Increase (decrease) in customer accounts 599,556 (465,407)
Mortgage sales 19,278 671,366
Average net interest margin
Yield on interest earning assets 7.48% 7.10%
Cost of funds 4.58 3.44
---- ----
Yield on interest earning assets
less cost of funds 2.90% 3.66%
==== ====
At March 31
Total assets $43,605,494 $37,426,424
Stockholders' equity 2,551,267 2,423,169
Stockholders' equity per common share $16.73 $16.01
</TABLE>
The Company's core business was affected by the rising interest rate
environment and its effect on the net interest margin. Net interest income
for the first quarter of 1995 declined to $307 million compared with $320
million in the fourth quarter of 1994 and $334 million in the first quarter
of 1994. While interest earning asset levels increased significantly, the
net interest margin and net interest income decreased compared with both the
1994 fourth quarter and the 1994 first quarter. The net interest margin is
expected to widen if interest rates stabilize.
<PAGE>
<PAGE>
The following summarizes the contribution to pretax income from the
Company's principal business units:
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
(Dollars in thousands) 1995 1994
---- ----
<S> <C> <C>
Banking operations $48,084 $59,102
Consumer finance group 23,900 25,073
------- -------
Pretax earnings 71,984 84,175
Taxes on income 28,500 34,700
------- -------
Net earnings $43,484 $49,475
======= =======
</TABLE>
INTEREST EARNING ASSETS
Interest earning assets comprise real estate loans and mortgage-backed
securities ("mortgages"), consumer finance loans and marketable securities.
The composition of interest earning assets at March 31, 1995 and March 31,
1994 follows:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
March 31
----------------------------------
1995 1994
-------------- --------------
(Dollars in millions) Amount % Amount %
------- --- ------- ---
<S> <C> <C> <C> <C>
Loans receivable
Real estate
Residential
Single-family $23,207 56% $25,567 73%
Apartments 1,712 4 1,781 5
Commercial and other 1,435 3 1,550 4
Consumer finance 1,969 5 1,824 5
Other 473 1 389 1
------- --- ------- ---
28,796 69 31,111 88
Mortgage-backed securities 11,107 27 3,012 9
Securities 1,153 3 740 2
Investment in FHLB stock 342 1 308 1
------- --- ------- ---
$41,398 100% $35,171 100%
======= === ======= ===
</TABLE>
Interest earning assets, primarily single-family mortgages, increased
$1.9 billion during the 1995 first quarter compared with a decrease of
$680,000 in the 1994 first quarter due to a shift in the mix of single-family
loan originations toward the Adjustable Rate Mortgage ("ARM"). ARMs are held
in the Company's portfolio, whereas fixed-rate loans are sold shortly after
origination. Since September 1994, the Company has swapped $7.5 billion of
single-family residential ARM loans for mortgage-backed securities to provide
collateral for borrowings. These securities are recorded in the Company's
held-to-maturity portfolio and are subject to full credit recourse. During
the first three months of 1995, the Company swapped $2 billion of single-
family ARMs.
The Company repurchases delinquent loans which were sold with recourse.
Repurchased loans totaled $24 million in the three months ended March 31,
1995 compared with $20.3 million in the three months ended March 31, 1994.
Commercial real estate loans continued to decrease as a result of the
Company's decision in 1987 to discontinue commercial real estate lending
except to finance the sale of foreclosed properties.
<PAGE>
<PAGE>
The ARM for single-family residential properties ("SFRs") is the
primary lending product held for investment. Approximately 77% of loans in
the portfolio were indexed to the Cost of Funds Index for financial
institutions comprising the 11th District Federal Home Loan Bank of San
Francisco ("COFI") at March 31, 1995. The Company also originates ARM
products which are indexed to one-year Treasury bills, the prime rate and the
Federal Cost of Funds Index ("FCOFI"). The FCOFI is a combination of the
average interest rate on the combined marketable treasury bills and the
average interest rate on the combined marketable treasury notes. In March
1995, the Company introduced a new product, the London Interbank Offered Rate
("LIBOR") Annual Monthly Average ("LAMA") ARM. The LAMA ARM is indexed to
a 12 month average of the Federal National Mortgage Association ("FNMA") One
Month LIBOR. The FCOFI and LAMA ARMs are similar to the COFI ARM product
with respect to interest-rate caps and payment changes. At March 31, 1995,
ARMs comprised 95.3% of the mortgage portfolio. A significant portion of the
ARM portfolio is subject to lifetime interest-rate caps and floors. At March
31, 1995, $344 million of ARM loans with an average yield of 8.20% had
reached their floor rate. Without the floor, the average yield on these
loans would have been 7.62%. The benefit to interest income from real estate
loans which have reached their floor interest rate was approximately $1.8
million for the first quarter of 1995 compared with $16.3 million in the
first quarter of 1994.
An increasingly significant source of loan originations includes
wholesale brokers and a network of correspondent relationships in which the
Company purchases loans originated by unaffiliated mortgage lenders. In the
first three months of 1995, third party originations were $1.1 billion, or
43.1% of new real estate loans, compared with $149 million, or 8.9% of new
real estate loans in the first three months of 1994.
The composition of new loan volume was as follows:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------
March 31 December 31 March 31
(Dollars in millions) 1995 1994 1994
-------- ----------- --------
<S> <C> <C> <C>
Real estate loans $2,500 $2,152 $1,671
Consumer loans 512 696 508
------ ------ ------
Total new loan volume $3,012 $2,848 $2,179
====== ====== ======
</TABLE>
<PAGE>
<PAGE>
The composition of real estate loan originations by type was as
follows:
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------
March 31 December 31 March 31
1995 1994 1994
-------- ----------- --------
<S> <C> <C> <C>
ARM
COFI 94% 93% 52%
FCOFI 1 1 2
T-Bill 1 2 8
Other 1 2 3
--- --- ---
Total ARM 97 98 65
Fixed rate 3 2 35
--- --- ---
100% 100% 100%
=== === ===
Refinances included above 32% 35% 63%
=== === ===
</TABLE>
Fixed-rate lending, originated exclusively for sale, is negatively
influenced by the rising interest-rate environment. The portfolio of fixed-
rate loans designated as available for sale has been recorded at the lower
of cost or fair value. The Company sells loans forward into the secondary
market and purchases short-term hedge contracts for the commitment period to
protect against rate fluctuations on its commitments to fund fixed-rate loans
originated for sale. Hedge contracts are recorded at cost. At March 31,
1995, there were no open hedge contracts due to the low level of fixed-rate
commitments.
During the first quarter of 1995, ARMs comprised 97% of total real
estate loan originations compared with 65% in the same period of 1994 and 98%
for the fourth quarter of 1994. COFI ARMs were the primary adjustable rate
offering in the first three months of 1995 and 1994. The principal COFI
product in 1994 and the first three months of 1995 was a tiered cap loan
where the interest-rate cap is periodically increased over six years. The
ARM differential over the appropriate indices on new ARMs was 2.65% in the
first quarter of 1995 compared with 2.54% a year ago. The ARM differential
on the total ARM real estate loan portfolio was 2.47% at March 31, 1995 and
2.41% at March 31, 1994. Currently, interest rates on new real estate loans
favor adjustable rate products, which has enabled the Company to generate
asset growth in the last half of 1994 and the first quarter of 1995.<PAGE>
<PAGE>
The cost of funds for Great Western Bank, a Federal Savings Bank
("GWB"), relative to COFI and FCOFI, is shown as follows:
<TABLE>
<CAPTION>
GWB Cost of
GWB Funds Less Than
Cost of ---------------
Funds COFI FCOFI COFI FCOFI
------- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C>
March 31, 1995 4.580% 5.007% 6.336% .427% 1.756%
December 31, 1994 4.019 4.589 5.971 .570 1.952
March 31, 1994 3.197 3.629 4.928 .432 1.731
</TABLE>
The contractual maturities of all loans receivable and mortgage-backed
securities as of March 31, 1995 follow:
<TABLE>
<CAPTION>
Mortgage-Backed
Real Estate Loans Securities
----------------- ----------------
Fixed Fixed
(Dollars in millions) ARM Rate ARM Rate Consumer Total
--- ----- --- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
One year or less $ 416 $ 48 $ 123 $ 343 $ 900 $ 1,830
Over one to two years 510 46 131 88 599 1,374
Over two to three years 814 53 141 27 441 1,476
Over three to five years 1,302 137 312 42 165 1,958
Over five to ten years 3,271 441 974 114 196 4,996
Over ten to fifteen years 4,066 134 1,346 57 138 5,741
Over fifteen years 14,900 216 7,395 14 3 22,528
------- ------ ------- ---- ------ -------
$25,279 $1,075 $10,422 $685 $2,442 $39,903
======= ====== ======= ==== ====== =======
</TABLE>
<PAGE>
<PAGE>
INTEREST BEARING LIABILITIES
The composition of interest bearing liabilities at March 31, 1995 and
March 31, 1994 follows:
<TABLE>
<CAPTION>
March 31
-------------------------------
1995 1994
-------------------------------
(Dollars in millions) Amount % Amount %
------- --- ------- ---
<S> <C> <C> <C> <C>
Customer accounts
Retail accounts
Term $17,396 44% $16,925 50%
Transaction 11,336 28 13,661 40
Wholesale accounts 568 1 480 1
------- --- ------- ---
29,300 73 31,066 91
------- --- ------- ---
Borrowings
FHLB 135 - 281 1
Securities sold under
agreements to repurchase 6,965 18 - -
Other 3,736 9 2,731 8
------- --- ------- ---
10,836 27 3,012 9
------- --- ------- ---
Total interest bearing liabilities $40,136 100% $34,078 100%
======= === ======= ===
</TABLE>
Borrowings at March 31, 1995 increased $7.8 billion compared with the same
period last year, primarily securities sold under agreements to repurchase. The
level of borrowings is influenced by customer account activity, deposit
acquisitions and changes in assets. Customer accounts and borrowings have
been utilized during 1994 and the first quarter of 1995 to fund asset growth.
<PAGE>
<PAGE>
The following table shows the components of the change in customer account
balances:
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------
(Dollars in millions) 1995 1994
---- ----
<S> <C> <C>
Transaction
Demand accounts $ (217.7) $ 179.6
Money market and other transaction
accounts (459.3) 103.9
Certificates of deposit 1,272.2 (640.7)
Wholesale accounts 4.4 (108.2)
-------- -------
$ 599.6 $(465.4)
======== =======
</TABLE>
The Company concentrates its retail deposit-gathering activity in two
states: California and Florida.
Certificates of deposit have increased in each of the past two
quarters. Customers have shifted from money market accounts as a result of
higher interest rates offered on certificate of deposit accounts with terms
of one year and greater. Prior to the past two quarters, net certificate of
deposit account withdrawals had occurred for the previous eleven quarters.
A summary of customer certificates of deposit by interest rate and
maturity as of March 31, 1995 follows:
<TABLE>
<CAPTION>
90 Days 180 Days One Year Two Years
Within to to to to Three Years March 31 December 31 March 31
(Dollars in millions) 90 Days 180 Days One Year Two Years Three Years and Over 1995 1994 1994
------- -------- -------- --------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Under 4% $1,338 $ 420 $ 151 $ 41 $ 4 $ 13 $ 1,967 $ 3,745 $11,045
4 to 6% 2,368 1,729 2,681 1,511 359 462 9,110 9,363 4,439
6 to 8% 258 751 2,489 2,216 449 355 6,518 3,197 1,460
Over 8% 5 6 11 184 1 5 212 225 317
------ ------ ------ ------ ---- ---- ------- ------- -------
$3,969 $2,906 $5,332 $3,952 $813 $835 $17,807 $16,530 $17,261
====== ====== ====== ====== ==== ==== ======= ======= =======
$100,000 accounts
included above $ 399 $ 158 $ 98 $ 10 $ 2 $ 7 $ 674 $ 748 $ 971
</TABLE>
<PAGE>
<PAGE>
NET INTEREST MARGIN AND NET INTEREST INCOME
While average interest earning assets have increased during the past
year, the interest margin has decreased as interest rates have risen. Net
interest income decreased to $307 million in the first quarter of 1995
compared with $320 million in the fourth quarter of 1994. Net interest
income was $334 million in the first quarter of 1994. The Company's net
interest margin, the difference between the yield on interest earning assets
(interest on mortgages, consumer loans and securities) and the cost of funds
(interest on customer accounts and borrowings) was 3.02% at March 31, 1995
compared with 3.97% a year ago. The interest-rate spread for the 1995 first
quarter was 2.90% compared with 3.21% in the 1994 fourth quarter and 3.66%
in the 1994 first quarter. The repricing lag on COFI and FCOFI ARMs reduced
the interest-rate spread by approximately 25 basis points in both the first
quarter of 1995 and the fourth quarter of 1994. For the first quarter of
1994, the repricing lag accounted for an increase of approximately 9 basis
points to the interest-rate spread. The interest-rate spread is compressed
in a rising interest rate environment as increases in COFI and FCOFI, to
which most interest earning assets are tied, lag behind deposit and borrowing
rate increases.
The following table of net interest income displays the average monthly
balances, interest income and expense and average rates by asset and
liability component for the periods indicated:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended March 31
-------------------------------------------------------
1995 1994
-------------------------- --------------------------
Average Average Average Average
(Dollars in millions) Balance Interest Rate Balance Interest Rate
------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets
Securities $ 1,448 $ 22 6.16% $ 1,149 $ 13 4.52%
Mortgage-backed securities 10,195 172 6.74 3,114 45 5.74
Loans receivable
Real estate 26,393 466 7.06 29,015 481 6.64
Consumer 2,435 97 16.01 2,212 91 16.42
------- ---- ----- ------- ---- -----
Total interest earning assets 40,471 757 7.48 35,490 630 7.10
Other assets 2,288 2,303
------- -------
Total assets $42,759 $37,793
======= =======
Interest bearing liabilities
Customer accounts
Term accounts $17,342 225 5.20 $17,610 169 3.85
Transaction accounts 11,643 54 1.84 13,542 63 1.85
------- ---- ----- ------- ---- -----
28,985 279 3.85 31,152 232 2.98
Borrowings
FHLB 158 2 5.61 287 5 6.68
Other 10,197 169 6.62 2,990 59 7.87
------- ---- ----- ------- ---- -----
Total interest bearing liabilities 39,340 450 4.58 34,429 296 3.44
Other liabilities 912 933
Stockholders' equity 2,507 2,431
------- -------
Total liabilities and equity $42,759 $37,793
======= =======
Interest rate spread 2.90% 3.66%
===== =====
Effective yield summary
Interest income/earning assets $40,471 $757 7.48% $35,490 $630 7.10%
Interest expense/earning assets 40,471 450 4.45 35,490 296 3.33
---- ----- ---- -----
Net yield on interest earning assets $307 3.03% $334 3.77%
==== ===== ==== =====
</TABLE>
The average balance of loans receivable above includes nonaccrual loans
and therefore the interest income and average rate, as presented, are
affected by the loss of interest on such loans. Interest foregone on
nonaccrual loans that were nonperforming declined to $9.1 million for the
quarter ended March 31, 1995 compared with $15.9 million for the quarter
ended March 31, 1994.
ASSET LIABILITY MANAGEMENT
The Company monitors its asset and liability structure and interest-
rate/ maturity risks on a regular basis. In this process, consideration is
given to interest-rate trends and funding requirements. ARMs comprised
approximately 96% of the real estate loan portfolio at both March 31, 1995
and March 31, 1994.<PAGE>
<PAGE>
At March 31, 1995, mortgages totaling $3.0 billion were available for
sale, primarily mortgage-backed securities. Real estate loans available for
sale are valued at the lower of cost or fair value, generally on an
individual loan basis. As of March 31, 1995 and 1994, real estate loans
available for sale, all fixed rate, were $66.5 million and $205 million,
respectively. The decrease in loans available for sale compared with the
same period a year ago resulted from reduced fixed-rate loan originations.
During the three months ended March 31, 1995, gains from this portfolio
totaled $1.3 million compared with $2.3 million in the first three months of
1994. Unrealized holding gains on real estate loans available for sale
totaled $269,000 at March 31, 1995 compared with $6 million at March 31,
1994.
Mortgage-backed securities available for sale and other securities
available for sale are carried at fair value. At March 31, 1995, mortgage-
backed securities available for sale included $339 million of fixed-rate
loans and $2.6 billion of ARMs. There were no realized gains or losses in
the first three months of 1995. Unrealized holding losses were $6.3 million
at March 31, 1995. Unrealized holding losses were $77.3 million at December
31, 1994 and $4.0 million at March 31, 1994.
Marketable securities available for sale at March 31, 1995 had an
amortized cost of $996 million and a fair value of $989 million. There were
no gains realized during the 1995 first quarter. Gains realized during the
first quarter of 1994 totaled $477,000. Unrealized holding losses on
marketable securities were $6.9 million at March 31, 1995. Unrealized
holding losses were $18.3 million at December 31, 1994 compared with $3.3
million of unrealized holding gains at March 31, 1994.
The unrealized holding gains and losses on securities available for
sale, net of income taxes, included as a component of stockholders' equity,
were as follows:
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------
March 31 December 31 March 31
(Dollars in thousands) 1995 1994 1994
-------- ----------- --------
<S> <C> <C> <C>
Balance at beginning of
period $(55,084) $(32,406) $ 22,651
Unrealized holding gains
(losses), net of taxes 49,163 (22,678) (20,114)
-------- -------- --------
Balance at end of period $ (5,921) $(55,084) $ 2,537
======== ======== ========
</TABLE>
<PAGE>
<PAGE>
The following table shows that the portfolio of short-term assets
exceeded liabilities maturing or subject to interest adjustment within one
year by $4.9 billion at March 31, 1995 compared with $3.8 billion at December
31, 1994 and $3.4 billion at March 31, 1994. In the current interest rate
environment, the Company is better protected against rising rates with an
excess of interest earning assets maturing or repricing within one year.
<TABLE>
<CAPTION>
Maturity/Rate Sensitivity
-----------------------------------------------------------------
March 31, 1995 % of Within Over
(Dollars in millions) Rate Balance Total 1 Year 1-5 Years 5-15 Years 15 Years
---- ------- ----- ------ --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest earning assets
Securities 6.38% $ 1,153 3 $ 1,153 $ - $ - $ -
Mortgage-backed securities 6.97 11,107 27 10,800 307 - -
Investment in FHLB stock 4.43 342 1 - - - 342
Loans receivable
Real estate
Adjustable rate 7.33 25,279 61 24,434 845 - -
Fixed rate
Short-term 9.00 498 1 37 68 129 264
Long-term 8.78 577 1 70 77 145 285
Consumer 16.47 2,442 6 620 1,466 269 87
----- ------- --- ------- ------- ----- ----
7.77 41,398 100 37,114 2,763 543 978
Interest bearing liabilities
Customer accounts
Regular savings 2.03 1,929 5 1,929 - - -
Checking and limited access 1.98 9,407 24 9,407 - - -
Wholesale transactions - 157 - 157 - - -
Term accounts 5.45 17,807 44 12,207 5,593 7 -
----- ------- --- ------- ------- ----- ----
4.08 29,300 73 23,700 5,593 7 -
Borrowings
FHLB 6.15 135 - 134 1 - -
Other 6.58 10,701 27 8,494 1,435 723 49
Impact of interest-rate swaps - - - (109) 109 - -
----- ------- --- ------- ------- ----- ----
4.75 40,136 100 32,219 7,138 730 49
----- ------- --- ------- ------- ----- ----
Excess of interest earning
assets over interest bearing
liabilities at March 31, 1995 3.02% $ 1,262 $ 4,895 $(4,375) $(187) $929
===== ======= ======= ======= ===== ====
Excess of interest earning
assets over interest bearing
liabilities at December 31, 1994 3.08% $ 715 $ 3,757 $(3,573) $(105) $636
===== ======= ======= ======= ===== ====
Excess of interest earning
assets over interest bearing
liabilities at March 31, 1994 3.97% $ 1,093 $ 3,424 $(2,266) $(423) $358
===== ======= ======= ======= ===== ====
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
March 31
------------
1995 1994
---- ----
<S> <C> <C>
Calculation of adjusted margin
Unadjusted margin 3.02% 3.97%
Benefit of net interest earning assets .14 .11
---- ----
Adjusted margin 3.16% 4.08%
==== ====
</TABLE>
ASSET QUALITY
The Company regularly reviews its assets to determine that each
category is reasonably valued. In this review process it monitors the loss
exposure relating to nonperforming assets, assets adversely classified for
regulatory purposes, the delinquency trend and market environment to identify
potential problems.
Loss reserves have been provided, where necessary in management's
judgment, for interest earning assets, including residential loans and
consumer loans. Valuation reserves for consumer loans are provided based
upon a percentage of the loans outstanding in relation to the loss experience
within the loan categories.
The Company assesses the status of general loss reserves on real estate
loans based upon its current loss experience as applied to the loan
portfolio, including loans that are delinquent or adversely classified
because of declining collateral values. In the first quarter of 1995 and
throughout 1994, the Company reduced reserve levels on the real estate loan
and real estate portfolios as a result of decreasing nonperforming assets
and an improving economy.
The California real estate market requires continued review. There
appear to be regional differences in economic performance within California
and among property types which are attributable to differing recovery rates
for the wide range of economic activities within California.
On a regional basis, the economic factors affecting the single-family
market appear to be somewhat more favorable in Northern California than in
Southern California. In particular, the median metropolitan area sales price
of existing single-family homes in the San Jose area increased from the
fourth quarter of 1993 to the fourth quarter of 1994 by 1 percent. During
the same period, the median sales price for the Los Angeles and San Diego
areas, declined 4 percent and 2 percent, respectively.
In the Los Angeles area, the vacancy rate of the office space market
was 20 percent at both December 31, 1994 and December 31, 1993. In San Diego
County, the vacancy rate was 18 percent at December 31, 1994 compared with
21 percent at December 31, 1993.
<PAGE>
<PAGE>
In the Los Angeles area, the vacancy rate of the industrial space
market decreased to 8 percent at December 31, 1994 from 11 percent a year
earlier. San Diego County's industrial space market had a vacancy rate of
4 percent at both December 31, 1994 and December 31, 1993.
Loans delinquent over 30 days, together with restructured loans, have
been included in the process to determine estimated losses. The effects of
various loan characteristics such as geography, delinquency, date of
origination, property type and loan-to-value ratios ("LTV") are considered
in this review process.
As a monitoring device, the Company reviews the trends of loans
delinquent for periods of less than ninety days on a monthly (and within-
month) basis. The following summarizes loans delinquent for periods from
thirty to eighty-nine days:
<TABLE>
<CAPTION>
March 31 December 31 March 31
(Dollars in millions) 1995 1994 1994
-------- ----------- --------
<S> <C> <C> <C>
30-59 days delinquent
SFR loans $183.4 $168.6 $343.0
Other 6.5 24.0 46.4
60-89 days delinquent
SFR loans 93.0 90.4 175.3
Other 16.9 6.7 21.4
</TABLE>
The significant reduction in thirty to eighty-nine day delinquencies
at March 31, 1995 compared with March 31, 1994 is primarily due to the
decrease in delinquencies which were a result of the January 17, 1994
Northridge earthquake. These loans have either been brought current, paid
off or to a lesser degree, foreclosed.
<PAGE>
<PAGE>
The following table shows the trend in single-family residential
delinquencies (two or more payments delinquent) to the growth in the related
portfolio.
<TABLE>
<CAPTION>
March 31 December 31 March 31
1995 1994 1994
-------- ----------- --------
<S> <C> <C> <C>
SFR loans as a percent of total
real estate loans 90.7% 90.3% 88.5%
SFR delinquency as a percent of total
single-family residential loans 2.4 2.6 4.4
</TABLE>
The Company's real estate loan portfolio included approximately $2.9
billion of uninsured single-family mortgage loans at March 31, 1995, compared
with $3.4 billion a year ago, which were originated with terms where the LTV
exceeded 80% (but not in excess of 90%). During the first quarter of 1995,
losses on the higher LTV mortgages totaled $7.3 million, or .85%
(annualized), compared with $3.7 million, or .30% (annualized) for the same
period a year ago. For the year 1994, losses totaled $24.3 million, or .59%
of such loans, compared with $44.8 million, or .81%, for 1993. The Company
began to purchase mortgage insurance on all new single-family residential
mortgages originated with LTVs in excess of 80% in 1990. Therefore, this
portfolio of uninsured loans is becoming more seasoned and the balance is
declining.
The recorded investment in loans for which impairment has been
recognized in accordance with Statement of Financial Accounting Standards No.
114, "Accounting by Creditors for Impairment of a Loan" and the reserve for
estimated losses related to such loans follows:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Impaired Loans
-------------------------------------------------------------------
Having Having
related Reserves for Net with no related
reserves estimated reserves reserves for Net of reserves
for losses losses for losses losses for losses
---------- ------------ ---------- ------------ ---------------
(Dollars in thousands) March 31, 1995
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Real estate loans
Residential
Single-family $ 36,779 $ 9,883 $ 26,896 $ 16,318 $ 43,214
Apartments 88,825 19,350 69,475 35,314 104,789
Commercial
Offices 27,959 10,679 17,280 12,026 29,306
Retail 27,236 5,765 21,471 9,005 30,476
Hotel/motel 20,962 2,912 18,050 782 18,832
Industrial 14,204 3,668 10,536 5,230 15,766
Other 3,600 648 2,952 2,262 5,214
-------- ------- -------- -------- --------
$219,565 $52,905 $166,660 $ 80,937 $247,597
======== ======= ======== ======== ========
March 31, 1994
-------------------------------------------------------------------
Real estate loans
Residential
Single-family $ 27,564 $ 5,796 $ 21,768 $ 16,300 $ 38,068
Apartments 73,462 17,249 56,213 40,433 96,646
Commercial
Offices 35,377 9,112 26,265 12,549 38,814
Retail 21,174 3,623 17,551 7,450 25,001
Hotel/motel 50,305 5,085 45,220 57,687 102,907
Industrial 7,718 1,989 5,729 8,958 14,687
Other 3,332 1,018 2,314 2,238 4,552
-------- ------- -------- -------- --------
$218,932 $43,872 $175,060 $145,615 $320,675
======== ======= ======== ======== ========
</TABLE>
The impaired loan portfolio decreased at March 31, 1995 compared with
March 31, 1994. The decrease was primarily the result of both a sale and a
foreclosure in the last half of 1994, of two nonperforming loans with a
combined balance of approximately $92 million. The Company's policy for
recognizing income on impaired loans is to accrue earnings unless a loan is
in foreclosure or becomes nonperforming, at which time the accrued earnings
are reversed.
Single-family residential mortgage loans are generally evaluated for
impairment as homogeneous pools of loans. Certain situations may arise
leading to single-family residential mortgage loans being evaluated for
impairment on an individual basis.
A change in the fair value of an impaired loan is reported as an
increase or reduction to the provision for loan losses.
<PAGE>
<PAGE>
Certain loans (where GWB works with borrowers encountering economic
difficulty) meet the criteria of, and are classified as, troubled debt
restructurings ("TDRs") because of modification to loan terms. TDRs totaled
$149 million at March 31, 1995 compared with $246 million at March 31, 1994.
The decrease in TDR's is primarily the result of the previously mentioned
disposition of $92 million of nonperforming loans in addition to $63 million
of performing TDR's which reached the end of their restructuring period in
1994, returning them to a normal amortization schedule. TDRs which meet
certain conditions of repayment and performance have not been included in
nonperforming assets. At March 31, 1995, $23 million of TDRs were classified
as performing assets compared with $43 million at March 31, 1994.
Real estate available for sale is recorded at the lower of cost or fair
value and is included in a periodic review of assets to determine whether,
in management's judgment, there has been any deterioration in value. Real
estate held for development, also subject to the same review process, is
carried at the lower of cost or net realizable value. Properties where
future development is uncertain are carried at the lower of cost or fair
value. Real estate is also included in the general reserve evaluation. At
March 31, 1995, foreclosed real estate properties totaling $15 million are
operating profitably after provisions for interest and depreciation and are
performing assets.
Nonperforming assets include loans which are delinquent ninety days or
more, TDRs which do not meet certain performance criteria and certain real
estate owned which does not generate sufficient income to meet return on
investment criteria. The following table indicates the amount of the
Company's nonperforming assets and the ratio of nonperforming assets to total
assets:
<TABLE>
<CAPTION>
March 31 December 31 March 31
1995 1994 1994
------------- ------------- -------------
(Dollars in millions) Amount % Amount % Amount %
------ --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C>
Loans receivable
Real estate
Residential
Single-family $466 1.07% $509 1.19% $ 599 1.57%
Apartments 66 .15 68 .16 87 .23
Commercial 96 .22 90 .21 218 .57
Consumer finance 21 .05 22 .05 20 .05
Other 2 - 1 - 2 .01
---- ---- ---- ---- ------ ----
651 1.49 690 1.61 926 2.43
Real estate 163 .38 156 .37 199 .52
---- ---- ---- ---- ------ ----
Total nonperforming assets $814 1.87% $846 1.98% $1,125 2.95%
==== ==== ==== ==== ====== ====
/TABLE
<PAGE>
<PAGE>
The geographic distribution of the real estate loan and real estate
portfolios at March 31, 1995 follows:
<TABLE>
<CAPTION>
Oklahoma/
(Dollars in millions) Total California Florida Washington Texas Georgia Arizona Oregon Other
------- ---------- ------- ---------- -------- ------- ------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate loans
Residential
Single-family $23,207 $15,920 $1,629 $1,041 $682 $388 $305 $328 $2,914
Apartments 1,712 1,371 85 7 33 53 65 2 96
Commercial
Offices 407 361 8 15 3 4 5 - 11
Retail 257 217 20 8 - - 2 1 9
Hotel/motel 224 141 5 - 2 - 3 - 73
Industrial 325 273 13 4 13 4 7 - 11
Other 222 165 19 4 1 2 11 3 17
------- ------- ------ ------ ---- ---- ---- ---- ------
26,354 18,448 1,779 1,079 734 451 398 334 3,131
------- ------- ------ ------ ---- ---- ---- ---- ------
Real estate available
for sale, net
Acquired through
foreclosure 174 151 16 2 1 - - - 4
Other 13 12 1 - - - - - -
Property development 47 47 - - - - - - -
------- ------- ------ ------ ---- ---- ---- ---- ------
234 210 17 2 1 - - - 4
------- ------- ------ ------ ---- ---- ---- ---- ------
Total real estate loans
and real estate $26,588 $18,658 $1,796 $1,081 $735 $451 $398 $334 $3,135
======= ======= ====== ====== ==== ==== ==== ==== ======
Percent of total 100.0% 70.2% 6.7% 4.1% 2.8% 1.7% 1.5% 1.2% 11.8%
</TABLE>
<PAGE>
<PAGE>
The geographic distribution of nonperforming real estate loans and real
estate at March 31, 1995 follows:
<TABLE>
<CAPTION>
Oklahoma/
(Dollars in millions) Total California Florida Washington Texas Georgia Arizona Oregon Other
----- ---------- ------- ---------- -------- ------- ------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate loans
Residential
Single-family $466 $395 $16 $ 4 $ 4 $ 6 $ 3 $ 1 $37
Apartments 66 57 1 1 - 4 - - 3
Commercial
Offices 24 23 - - - - - - 1
Retail 23 17 1 5 - - - - -
Hotel/motel 32 32 - - - - - - -
Industrial 12 11 1 - - - - - -
Other 5 2 2 - - - 1 - -
---- ---- --- --- --- --- --- --- ---
628 537 21 10 4 10 4 1 41
---- ---- --- --- --- --- --- --- ---
Real estate
Residential
Single-family 111 102 3 1 1 - - - 4
Apartments 18 18 - - - - - - -
Commercial
Offices 18 9 9 - - - - - -
Retail 2 2 - - - - - - -
Hotel/motel 2 - 2 - - - - - -
Industrial 4 4 - - - - - - -
Other 8 6 2 - - - - - -
---- ---- --- --- --- --- --- --- ---
163 141 16 1 1 - - - 4
---- ---- --- --- --- --- --- --- ---
Total nonperforming real
estate loans and real
estate $791 $678 $37 $11 $ 5 $10 $ 4 $ 1 $45
==== ==== === === === === === === ===
Percent of total 100.0% 85.7% 4.7% 1.4% .6% 1.3% .5% .1% 5.7%
</TABLE>
<PAGE>
A comparison of the California real estate loan and real estate
portfolios and nonperforming real estate loans and real estate by region at
March 31, 1995 follows:
<TABLE>
<CAPTION>
California Northern California
------------------------------- --------------------------------
(Dollars in millions) Portfolio Nonperforming % Portfolio Nonperforming %
--------- ------------- --- --------- ------------- ---
<S> <C> <C> <C> <C> <C> <C>
Real estate loans
Residential
Single-family $15,920 $395 2.5 $4,807 $ 78 1.6
Apartments 1,371 57 4.2 168 2 1.2
Commercial
Offices 361 23 6.4 74 12 16.2
Retail 217 17 7.8 52 - -
Hotel/motel 141 32 22.7 46 1 2.2
Industrial 273 11 4.0 43 4 9.3
Other 165 2 1.2 53 - -
------- ---- ----- ------ ---- -----
18,448 537 2.9 5,243 97 1.9
------- ---- ----- ------ ---- -----
Real estate
Residential
Single-family 102 102 100.0 10 10 100.0
Apartments 19 18 94.7 2 2 100.0
Commercial
Offices 15 9 60.0 4 2 50.0
Retail 4 2 50.0 - - -
Hotel/motel 6 - - - - -
Industrial 4 4 100.0 - - -
Other 60 6 10.0 21 - -
------- ---- ----- ------ ---- -----
210 141 67.1 37 14 37.8
------- ---- ----- ------ ---- -----
Total real estate loans
and real estate $18,658 $678 3.6 $5,280 $111 2.1
======= ==== ===== ====== ==== =====
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Central California Southern California
-------------------------------- --------------------------------
(Dollars in millions) Portfolio Nonperforming % Portfolio Nonperforming %
--------- ------------- --- --------- ------------- ---
<S> <C> <C> <C> <C> <C> <C>
Real estate loans
Residential
Single-family $1,296 $17 1.3 $ 9,817 $300 3.1
Apartments 245 9 3.7 958 46 4.8
Commercial
Offices 41 - - 246 11 4.5
Retail 29 - - 136 17 12.5
Hotel/motel 27 3 11.1 68 28 41.2
Industrial 15 - - 215 7 3.3
Other 20 - - 92 2 2.2
------ --- ----- ------- ---- -----
1,673 29 1.7 11,532 411 3.6
------ --- ----- ------- ---- -----
Real estate
Residential
Single-family 4 4 100.0 88 88 100.0
Apartments 3 3 100.0 14 13 92.9
Commercial
Offices 2 2 100.0 9 5 55.6
Retail 1 1 100.0 3 1 33.3
Hotel/motel - - - 6 - -
Industrial - - - 4 4 100.0
Other 11 - - 28 6 21.4
------ --- ----- ------- ---- -----
21 10 47.6 152 117 77.0
------ --- ----- ------- ---- -----
Total real estate loans
and real estate $1,694 $39 2.3 $11,684 $528 4.5
====== === ===== ======= ==== =====
</TABLE>
Nonperforming real estate loans and real estate decreased by $32 million
during the first quarter of 1995. Total nonperforming single-family
residential properties decreased $16 million in the first quarter of 1995
due primarily to a decrease in new ninety day delinquencies. Single-family
residential properties in California decreased $11 million while out of state
properties declined $5 million. Nonperforming commercial and apartment
properties declined $16 million in the first quarter of 1995 as sales of
commercial and apartment properties outpaced new delinquencies.
In the first three months of 1995, bulk sales of foreclosed single-
family properties totaled $60.4 million compared with $84.6 million in the
first three months of 1994. Auction sales have also been utilized to
accelerate the disposition of foreclosed properties. Foreclosures continue
to occur at relatively high levels.
The Company provides a reserve for uncollected interest which is
essentially based upon loans delinquent ninety days or more or in
foreclosure. These loans are considered in "nonaccrual" status.
<PAGE>
<PAGE>
A summary of loan loss provisions, charge-offs and recoveries by loan
type follows:
<TABLE>
<CAPTION>
At or For The
Three Months Ended
March 31
----------------------
(Dollars in thousands) 1995 1994
---- ----
<S> <C> <C>
Beginning balance $438,051 $502,269
Provision for loss
Real estate loans
SFR 35,600 25,000
Other 1,000 15,000
Consumer finance 10,600 9,300
Other 400 2,500
-------- --------
47,600 51,800
-------- --------
Charge-offs
Real estate loans
SFR (50,365) (39,931)
Other (5,492) (6,896)
Consumer finance (14,801) (12,654)
Other (275) (369)
-------- --------
(70,933) (59,850)
-------- --------
Recoveries
Real estate loans
SFR 472 174
Other 24 337
Consumer finance 4,090 4,046
Other 83 95
-------- --------
4,669 4,652
-------- --------
Net charge-offs
Real estate loans
SFR (49,893) (39,757)
Other (5,468) (6,559)
Consumer finance (10,711) (8,608)
Other (192) (274)
-------- --------
(66,264) (55,198)
-------- --------
Ending balance $419,387 $498,871
======== ========
Ratio of net charge-offs
(annualized) to average loans
Real estate loans
SFR .67% .62%
Other .70 .78
Consumer finance 2.16 1.88
Other .17 .29
---- ----
.75% .71%
==== ====
</TABLE>
Beginning in the third quarter of 1994, writedowns on foreclosed real
estate to estimated fair value are being recorded at acquisition. As a
result, charge-offs in the first quarter of 1995 have increased compared with
the same period last year.<PAGE>
<PAGE>
The following table presents the Company's reserve for estimated losses
and the reserve as a percent of the respective loans receivable portfolios:
<TABLE>
<CAPTION>
March 31
------------------------------------
1995 1994
--------------- ---------------
(Dollars in millions) Amount % Amount %
------ --- ------ ---
<S> <C> <C> <C> <C>
Real estate loans
SFR $175 .57% $197 .77%
Commercial and other 180 5.74 233 6.99
Consumer finance 53 2.70 51 2.77
Other 11 2.32 18 4.64
---- ---- ---- ----
Total $419 1.16% $499 1.60%
==== ==== ==== ====
A summary of real estate reserve activity by real estate type follows:
</TABLE>
<TABLE>
<CAPTION>
At or For The
Three Months Ended
March 31
------------------
(Dollars in millions) 1995 1994
---- ----
<S> <C> <C>
Beginning balance
SFR $ 3 $ 5
Commercial and other 74 119
---- ----
77 124
Provision for losses
SFR - 3
Commercial and other 1 -
---- ----
1 3
Net charge-offs
SFR - (4)
Commercial and other (11) (5)
---- ----
(11) (9)
Ending balance
SFR 3 4
Commercial and other 64 114
---- ----
$ 67 $118
==== ====
</TABLE>
<PAGE>
<PAGE>
OPERATIONS
Net interest income totaled $307 million in the first quarter of 1995
compared with $334 million in the first quarter of 1994. The following table
shows the components of the change in net interest income between periods.
<TABLE>
<CAPTION>
Three Months Ended March 31
------------------------------
(Dollars in millions) 1995 vs 1994 1994 vs 1993
------------ ------------
<S> <C> <C>
Mortgage-backed securities
Rate (1) $ 7 $ (7)
Volume (2) 102 1
Rate/Volume (3) 18 -
---- ----
127 (6)
---- ----
Real estate loans (4)
Rate (1) 30 (35)
Volume (2) (43) (4)
Rate/Volume (3) (3) -
---- ----
(16) (39)
---- ----
Consumer loans (4)
Rate (1) (2) (6)
Volume (2) 9 (5)
Rate/Volume (3) - -
---- ----
7 (11)
---- ----
Securities and investments
Rate (1) 5 (4)
Volume (2) 3 3
Rate/Volume (3) 1 (1)
---- ----
9 (2)
---- ----
Interest earning assets
Rate 40 (52)
Volume 71 (5)
Rate/Volume 16 (1)
---- ----
127 (58)
---- ----
Customer accounts
Rate (1) 67 (31)
Volume (2) (16) 9
Rate/Volume (3) (4) (1)
---- ----
47 (23)
---- ----
Borrowings
Rate (1) (9) 8
Volume (2) 137 (25)
Rate/Volume (3) (21) (2)
---- ----
107 (19)
---- ----
Interest bearing liabilities
Rate 58 (23)
Volume 121 (16)
Rate/Volume (25) (3)
---- ----
154 (42)
---- ----
Change in net interest income $(27) $(16)
==== ====
/TABLE
<PAGE>
<PAGE>
(1) The rate variance reflects the change in the average rate multiplied
by the average balance outstanding during the prior period.
(2) The volume variance reflects the change in the average balance
outstanding multiplied by the average rate during the prior period.
(3) The rate/volume variance reflects the change in the average rate
multiplied by the change in the average balance outstanding.
(4) Nonaccrual loans and amortized deferred loan fees are included in the
interest income calculations.
Real estate services income totaled $21.3 million for the three months
ended March 31, 1995 compared with $23.8 million for the three months ended
March 31, 1994. The decrease in income was attributed to both lower loan
fees and lower gains on mortgage sales. Gains on mortgage sales decreased
as a result of lower sales activity. Mortgage sales in the first three
months of 1995, all fixed rate, totaled $19.3 million, at a gain of 1.59% of
mortgage sales, compared with $671 million in the first three months of last
year at a gain of .88% of mortgage sales. The increased gain as a percentage
of mortgage sales is a result of increased premiums on loan sales. At March
31, 1995, the servicing spread was 44 basis points on the $10.8 billion
servicing portfolio compared with a servicing spread of 42 basis points on
a $12.2 billion portfolio at March 31, 1994. The portfolio of loans serviced
for others is expected to continue to decline as a result of the lower level
of fixed-rate loan originations and sales.
Retail banking fee and commission income decreased from $43.5 million
in the three months ended March 31, 1994 to $40 million in the three months
ended March 31, 1995. Banking fees increased to $36 million in the first
three months of 1995 compared with $32.9 million in the same period last
year. Income from mutual fund operations has been reduced as a result of a
change in the commission and fee structure as well as significantly reduced
subscriptions. Net revenue from these operations totaled $4 million in the
three months ended March 31, 1995 compared with $10.6 million in the same
period of 1994. The Company managed mutual funds with assets aggregating $3
billion at March 31, 1995 compared with $3.3 billion at March 31, 1994.
Other income was $8.9 million for the three months ended March 31, 1995
compared with $10.2 million for the same period a year ago.
Operating expenses were $250 million for the first three months of
1995, compared with $252 million for the first three months of 1994. Fourth
quarter 1994 operating expenses were $240 million. The increase from year-
end 1994 is primarily attributable to the costs associated with the
implementation of the Company's outsourced data network operations during the
first quarter. These new information management technology strategies are
expected to result in significant operational efficiencies in the future.
Operating expenses decreased 1% between the first quarters of 1995 and 1994.
The operating ratios were as follows:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------
1995 1994
---- ----
<S> <C> <C>
Operating and administrative expenses (annualized)
As a percent of average assets
Corporate 2.34% 2.67%
Banking operations 2.15 2.46
As a percent of average assets and assets
serviced for others
Corporate 1.86 2.02
Banking operations 1.69 1.83
As a percent of average retail deposits
Banking operations 3.08 2.88
As a percent of revenue
Corporate 68.89 64.14
Banking operations 73.14 66.93
</TABLE>
In 1993, the Company embarked on a cost-reduction program at its
administrative headquarters designed to increase profits and improve
efficiency and recorded a related $30 million restructuring charge. The
program was phased in throughout 1994 and continues in 1995. Charges against
this reserve since the program was initiated, principally employee separation
expenses and associated costs, totaled $29 million. Approximately 1,300
positions have been eliminated as of March 31, 1995 through layoffs and
attrition. Reductions in nonpersonnel related costs will also contribute to
the overall savings through renegotiation of existing vendor contracts and
elimination of other administrative expenses. Anticipated savings in 1995
and beyond will exceed $100 million annually.
The following table presents net earnings (annualized) as a percent of
average assets and as a percent of average equity:
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
1995 1994
---- ----
<S> <C> <C>
Return on average assets .41% .52%
Return on average equity 6.94 8.14
<PAGE>
<PAGE>
The Company's effective tax rate for the first quarter of 1995
decreased due to the reversal of certain tax liabilities no longer required.
As a result, the Company's effective tax rate was 39.6% in the first three
months of 1995 and 41.2% in the same period of 1994.
DEPOSIT INSURANCE PREMIUMS
Under current law, the Federal Deposit Insurance Corporation (the
"FDIC") is required to increase the reserves of both the Bank Insurance Fund
(the "BIF") and the Savings Association Insurance Fund (the "SAIF") to 1.25%
of insured deposits over a reasonable period of time and thereafter to
maintain such reserves at not less than that level. Based on current
experience, it is generally anticipated that the BIF will reach the required
reserve level in the near future. However, it is expected that the SAIF
reserves will not reach the required level for a number of years without
Congressional action to provide additional funding or merge the separate
insurance funds in some fashion. Accordingly, the FDIC has proposed that
future deposit insurance premiums of SAIF-insured institutions be assessed
at substantially higher premiums than the corresponding premium assessment
rates for BIF-insured institutions. The effect of this proposal would be
that the SAIF assessment rate to be paid by SAIF members would continue to
range from 23 cents per $100 of domestic deposits to 31 cents per $100 of
domestic deposits, depending on risk classification. The current assessment
rate for GWB is 23 cents per $100 of domestic deposits for the first half of
1995. The FDIC has proposed that BIF members pay an assessment rate of 4
cents to 31 cents per $100 of domestic deposits. Such a deposit insurance
premium disparity could place SAIF-insured institutions, such as GWB, at a
competitive disadvantage with commercial banks and other BIF-insured
institutions.
On March 1, 1995, GWFC submitted applications to federal bank
regulators seeking the creation of two new national banks in California and
Florida. Both the proposed national banks would be insured by the Federal
Deposit Insurance Corporation through the BIF and would allow the Company to
offer a wide variety of banking products and services to its present and
future customers. GWFC will file an application with the Federal Reserve to
become a bank holding company.
If its applications are approved, GWFC will operate the banks at
existing branch locations and it is anticipated that a portion of GWB's
present deposit base will voluntarily flow to the national banks. The bank
applications are expected to be acted upon later in 1995 and require the
approval of the Office of the Comptroller of the Currency, the FDIC, and the
Federal Reserve Board.
<PAGE>
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
Capital (stockholders' equity) was $2.6 billion at March 31, 1995 and
$2.4 billion at March 31, 1994. At the end of the 1995 first quarter the
ratio of capital to total assets was 5.9% compared with 6.5% a year ago.
GWB is subject to certain capital requirements under applicable
regulations and meets all such requirements. At March 31, 1995, GWB's
capital was $2.8 billion, including subordinated notes of $429 million.
The following ratios compare GWB with the fully phased-in capital
requirements under regulations issued by the Office of Thrift Supervision
("OTS"):
</TABLE>
<TABLE>
<CAPTION>
March 31, 1995
--------------------------------------------
Actual OTS Benchmark
-------------- ------------- Capital
(Dollars in millions) Amount % Amount % Excess
------ --- ------ --- -------
<S> <C> <C> <C> <C> <C>
Leverage/tangible ratio $2,113 5.14 $1,233 3.00 $880
Risk-based ratio 2,814 11.86 1,898 8.00 916
</TABLE>
The OTS amended its risk-based capital rules to incorporate interest-
rate risk ("IRR") requirements which require a savings association to hold
additional capital if it is projected to experience an excessive decline in
"net portfolio value" in the event interest rates increase or decrease by two
percentage points. The additional capital required is equal to one-half of
the amount by which any decline in net portfolio value exceeds 2 percent of
the savings association's total net portfolio value. GWB does not expect the
interest-rate risk requirements to have a material impact on its required
capital levels.
The OTS has proposed to amend its capital rule on the leverage ratio
requirement to reflect amendments made by the Office of the Comptroller of
the Currency ("OCC") to the capital requirements for national banks. The
proposal would establish a 3% leverage ratio (defined as the ratio of core
capital to adjusted total assets) for savings associations in the strongest
financial and managerial condition. All other savings associations would be
required to maintain leverage ratios of at least 4%. Only savings
associations rated composite 1 under the OTS CAMEL rating system will be
permitted to operate at or near the regulatory minimum leverage ratio of 3%.
For all other savings associations, the minimum core capital leverage ratio
will be 3% plus at least an additional 100 to 200 basis points.<PAGE>
<PAGE>
In determining the amount of additional capital, the OTS will assess
both the quality of risk management systems and the level of overall risk in
each individual savings association through the supervisory process on a
case-by-case basis. The OTS' supervisory judgment on a savings association's
capital adequacy, both in terms of risk-based capital and the minimum
leverage ratio, will continue to be based upon an assessment of the relevant
factors present in each institution.
Savings associations that do not pass the minimum capital standards
established under the new core capital leverage ratio requirements will be
required to submit capital plans detailing steps to be taken to reach
compliance.
GWB currently meets these proposed requirements.
As of March 31, 1995, real estate loan commitments totaled $816 million
compared with $882 million at December 31, 1994 and $749 million at March 31,
1994. These commitments included $796 million of ARMs and $20 million at
fixed rates at March 31, 1995. The high percentage of ARM commitments is
indicative of a fully adjusted interest rate on COFI ARMs that is more than
100 basis points lower than the rates offered on 30-year fixed-rate loans.
The Company has several sources for raising funds for lending, among which
are mortgage repayments, mortgage sales, customer deposits, Federal Home Loan
Bank borrowings and other borrowings.
The following table presents the debt ratings of the Company and GWB
at March 31, 1995:
<TABLE>
<CAPTION>
Moody's Investors
Standard & Poor's Service
----------------- -----------------
GWFC GWB GWFC GWB
---- --- ---- ---
<S> <C> <C> <C> <C>
Unsecured short-term debt A-2 A-2 P-2 P-1
Senior term debt BBB+ A- Baa1 A-2
Subordinated term debt BBB+ A-3
Preferred stock BBB- Baa2
</TABLE>
The origination and sale of real estate loans is dependent upon general
market conditions. In an active real estate market loan originations
increase. In such periods mortgage sales are usually increased to fund a
portion of originations and to control asset growth. However, in some
periods mortgage sales occur to fund customer account outflows and repay
borrowings which result in asset shrinkage. Mortgage sales also occur to
limit interest-rate risk and for restructuring purposes.<PAGE>
<PAGE>
As presented in the Consolidated Condensed Statement of Cash Flows the
sources of liquidity vary between quarters. The primary sources of funds in
the first quarter of 1995 were principal payments on mortgages held for
investment of $1.1 billion and an increase in borrowings of $715,000. New
loans originated for investment required $2.8 billion in the first quarter
of 1995. Operating activities provided $211 million in the current quarter.
The Company continued to maintain liquidity balances each period in
excess of funding and legal requirements. Cash and securities totaled $1.6
billion at March 31, 1995 and $1 billion at March 31, 1994.
DIVIDENDS
Quarterly cash dividends have been paid since 1977. At its April 1995
meeting, the Board of Directors declared a quarterly cash dividend of $.23
per common share payable in May 1995. The quarterly cash dividend has been
paid at this level since the second quarter of 1992.
In the first quarter of 1995 the regular quarterly dividend on the $129
million 8 3/4% cumulative convertible preferred stock, issued in May 1991,
and the regular quarterly dividend on the $165 million 8.3% cumulative
preferred stock, issued in September 1992, were paid.
The Dividend Reinvestment and Stock Purchase Plan permits a 3% discount
on stock purchased with reinvested dividends. During the first quarter of
1995, reinvested dividends totaled $10.6 million.
Effective March 31, 1994, Bryant Financial Corporation ("Bryant"), a
property development subsidiary, became a wholly-owned direct subsidiary of
the Company. This realignment was in the form of a dividend from GWB to GWFC
in the amount of Bryant's book value of $38 million.
The principal source of operating income of the Company on an
unconsolidated basis is dividends from GWB and Aristar, Inc ("Aristar"). In
the first quarter of 1995, cash dividends received from GWB and Aristar
totaled $2.8 million and $7.5 million, respectively. GWB is subject to the
regulations of the OTS and FDIC. The OTS regulations impose limitations upon
"capital distributions" by savings associations, including cash dividends.
The regulations establish a three-tiered system: Tier 1 includes savings
associations with capital at least equal to their fully phased-in capital
requirement which have not been notified that they are in need of more than
normal supervision; Tier 2 includes savings associations with capital above
their minimum capital requirement but less than their fully phased-in
requirement; and Tier 3 includes savings associations with capital below
their minimum capital requirement. Tier 1 associations may, after prior
notice but without approval of the OTS, make capital distributions up to the
higher of (1) 100% of their net income during the calendar year plus the
amount that would reduce by one half their "surplus capital ratio" (the
excess over their fully phased-in capital requirement) at the beginning of
the calendar year or (2) 75% of their net income over the most recent four-
quarter period. Tier 2 associations may, after prior notice but without
<PAGE>
approval of the OTS, make capital distributions of up to 25% to 75% of their
net income over the most recent four-quarter period depending upon their
current risk-based capital position. Tier 3 associations may not make
capital distributions without prior approval. An association subject to more
stringent restrictions imposed by agreement may apply to remove the more
stringent restrictions.
The Company believes that GWB is a Tier 1 association. Notwithstanding
the foregoing, the regulatory authorities have broad discretion to prohibit
any payment of dividends and take other actions if they determine that the
payment of such dividends would constitute an unsafe or unsound practice.
Among the circumstances posing such risk would be a capital distribution by
a Tier 1 or Tier 2 association whose capital is decreasing because of
substantial losses.
AVERAGE SHARES OUTSTANDING
The average common shares outstanding, based upon daily amounts used
in the calculation of earnings per share, are shown below:
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
1995 1994
---- ----
<S> <C> <C>
Primary 135,060,229 133,356,647
Fully diluted 135,338,118 139,698,559
</TABLE>
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- - - - ------------------------------------------------------------
The Company's Annual Meeting of Shareholders was held on April 25, 1995.
121,144,539 shares of GWFC common stock were represented at the Annual Meeting
in person or by proxy.
Shareholders voted in favor of the election of four nominees for
director. The voting results for each nominee were as follows:
<TABLE>
<CAPTION>
Votes in Favor
Nominee of Election Votes Withheld
- - - - ------- -------------- --------------
<S> <C> <C>
Stephen E. Frank 120,674,667 469,872
Enrique Hernandez, Jr. 120,617,716 526,823
John F. Maher 120,696,042 448,497
Willis B. Wood, Jr. 120,679,839 464,700
</TABLE>
In addition, the term of office of the following directors continued after
the meeting:
Dr. David Alexander
H. Frederick Christie
John V. Giovenco
Firmin A. Gryp
Charles D. Miller
James F. Montgomery
Dr. Alberta E. Siegel
<PAGE>
<PAGE>
ITEM 5. OTHER INFORMATION
- - - - --------------------------
The calculation of the Company's ratio of earnings to fixed charges as of
the dates indicated follows:
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended Three Months Ended
(Dollars in thousands) March 31, 1995 December 31, 1994 March 31, 1994
------------------ ------------------- ------------------
<S> <C> <C> <C>
Earnings
Net earnings $ 43,484 $ 251,234 $ 49,475
Taxes on income 28,500 155,300 34,700
-------- ---------- --------
Earnings before taxes $ 71,984 $ 406,534 $ 84,175
======== ========== ========
Interest expense
Customer accounts $278,916 $ 950,299 $232,139
Borrowings 186,175 370,044 74,792
-------- ---------- --------
Total $465,091 $1,320,303 $306,931
======== ========== ========
Rent expense
Total $ 13,770 $ 55,011 $ 14,916
1/3 thereof 4,590 18,337 4,972
Capitalized interest $ - $ 196 $ 110
Preferred stock dividends $ 6,254 $ 25,015 $ 6,254
Ratio of earnings to fixed charges
and preferred stock dividends
Excluding customer accounts
Earnings before fixed charges $262,749 $ 794,875 $163,939
Fixed charges 201,118 429,015 90,514
Ratio 1.31 1.85 1.81
Including customer accounts
Earnings before fixed charges $541,665 $1,745,174 $396,078
Fixed charges 480,034 1,379,314 322,653
Ratio 1.13 1.27 1.23
Ratio of earnings to fixed charges
Excluding customer accounts
Earnings before fixed charges $262,749 $ 794,875 $163,939
Fixed charges 190,765 388,537 79,874
Ratio 1.38 2.05 2.05
Including customer accounts
Earnings before fixed charges $541,665 $1,745,174 $396,078
Fixed charges 469,681 1,338,836 312,013
Ratio 1.15 1.30 1.27
/TABLE
<PAGE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- - - - -----------------------------------------
a. Exhibits
--------
4.1 The Company has outstanding certain long-term debt as set forth in Note
14 of the Notes to Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1994. The Company agrees to furnish copies of the instruments
representing its long-term debt to the Securities and Exchange Commission
(the "SEC") upon request.
11.1 Statement re computation of per share earnings.
27.1 Financial Data Schedule
b. Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter for which this report
is filed.<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GREAT WESTERN FINANCIAL CORPORATION
Registrant
/s/Carl F. Geuther
Carl F. Geuther
Executive Vice President and Chief
Financial Officer
/s/Jesse L. King
Jesse L. King
Senior Vice President and
Controller
DATE: May 11, 1995
<PAGE>
Exhibit 11.1
GREAT WESTERN FINANCIAL CORPORATION
Computation of Net Income Per Common Share
Primary and Fully Diluted
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
(Dollars in thousands) 1995 1994
---- ----
<S> <C> <C>
Net income $43,484 $49,475
Preferred stock dividends - convertible
and nonconvertible (6,254) (6,254)
------- -------
Net income for computing earnings per
Common share - primary 37,230 43,221
Preferred stock dividends - convertible - 2,830
------- -------
Net income for computing earnings per
Common share - fully diluted $37,230 $46,051
======= =======
</TABLE>
<TABLE>
<CAPTION>
Computation of Average Number of
Common Shares Outstanding on Primary and Fully Diluted Basis
(In thousands, except per share amounts)
Three Months Ended
March 31
------------------
1995 1994
---- ----
<S> <C> <C>
Average number of Common shares outstanding
during each period - without dilution 134,532 132,779
Common share equivalents outstanding at
the end of each period 528 578
------- -------
Average number of Common shares and Common
share equivalents outstanding during each
period on a primary basis 135,060 133,357
Common share equivalents outstanding at
the end of each period on a fully
diluted basis 278 -
Addition from assumed conversion as of the
beginning of each period of the convertible
preferred stock outstanding at the end of
each period - 6,342
------- -------
Average number of Common shares outstanding
during each period on a fully diluted basis 135,338 139,699
======= =======
Net income per Common share
Primary $.28 $.32
Fully diluted .28 .32
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 741,813
<INT-BEARING-DEPOSITS> 125
<FED-FUNDS-SOLD> 215,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,880,512
<INVESTMENTS-CARRYING> 8,193,363
<INVESTMENTS-MARKET> 8,154,155
<LOANS> 28,701,576
<ALLOWANCE> 419,387
<TOTAL-ASSETS> 43,605,494
<DEPOSITS> 29,300,503
<SHORT-TERM> 8,305,210
<LIABILITIES-OTHER> 917,832
<LONG-TERM> 2,530,682
<COMMON> 134,939
0
294,375
<OTHER-SE> 2,121,953
<TOTAL-LIABILITIES-AND-EQUITY> 43,605,494
<INTEREST-LOAN> 569,151
<INTEREST-INVEST> 184,400
<INTEREST-OTHER> 9,714
<INTEREST-TOTAL> 763,265
<INTEREST-DEPOSIT> 278,916
<INTEREST-EXPENSE> 449,974
<INTEREST-INCOME-NET> 313,291
<LOAN-LOSSES> 47,600
<SECURITIES-GAINS> 466
<EXPENSE-OTHER> 257,689
<INCOME-PRETAX> 71,984
<INCOME-PRE-EXTRAORDINARY> 43,484
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,484
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
<YIELD-ACTUAL> 3.02
<LOANS-NON> 524,675
<LOANS-PAST> 0
<LOANS-TROUBLED> 125,380
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 438,051
<CHARGE-OFFS> 70,933
<RECOVERIES> 4,669
<ALLOWANCE-CLOSE> 419,387
<ALLOWANCE-DOMESTIC> 419,387
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
