SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 9, 1994
H. F. Ahmanson & Company
(Exact name of registrant as specified in charter)
Delaware 1-8930 95-0479700
(State or other (Commission (IRS employer
jurisdiction of file number) identification no.)
incorporation)
4900 Rivergrade Road, Irwindale, California 91706
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (818) 960-6311
Not applicable
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
H. F. Ahmanson & Company (the "Company"), the parent company
of Home Savings of America, FSB ("Home Savings"), reported net income of
$28.5 million, or $.14 per fully diluted common share, for the quarter
ended December 31, 1993 compared to $15.5 million, or $0.10 per fully
diluted common share, for the quarter ended December 31, 1992. For the
year ended December 31, 1993, the Company reported a net loss of
$159.6 million, or $1.69 per fully diluted common share, which was
largely attributable to bulk sales in the first and second quarters of
$1.3 billion of delinquent loans and additions to reserves. In 1992,
the Company had net earnings of $204.1 million, or $1.60 per fully
diluted common share. The Company's results in the quarter and year
ended December 31, 1993 included several nonrecurring items, including
an extraordinary charge of $21.6 million resulting from the early
retirement of approximately $325 million of Home Savings' 10-1/4%
Subordinated Notes due December 5, 1996.
RESULTS OF OPERATIONS. Net interest income in the fourth
quarter of 1993 was $318.8 million, compared to $336.3 million in the
fourth quarter of 1992. The average effective net spread was 2.75% in
the fourth quarter of 1993, compared to 2.98% in the fourth quarter of
1992. The decline in net interest income was largely attributable to a
reserve of $17.8 million established for the cancellation of certain
interest rate swaps and recorded as a reduction to interest income on
loans in December 1993 due to the early prepayment of related loans. In
addition, a narrowing of the net interest margin contributed to the
decline in net interest income. Net interest income for the year ended
December 31, 1993 totaled $1.34 billion, compared to $1.36 billion in
1992. For the year ended December 31, 1993, the average effective net
spread was 2.90%, compared to 3.02% in 1992. The reserve for
cancellation of certain interest rate swaps had the effect of reducing
the average effective net spread by 15 basis points in fourth quarter of
1993 and four basis points for all of 1993. For purposes of Home
Savings' Thrift Financial Report to the Office of Thrift Supervision,
however, interest adjustments related to interest rate swaps are
included in interest expense and the reserve therefore had the effect of
increasing Home Savings' average cost of interest-bearing liabilities
reported on that basis by 45 basis points for the month of
December 1993.
During the fourth quarter of 1993, the Company provided $47.9
million for possible loan losses. During the year ended December 31,
1993, the Company provided $575.0 million.
Other income increased $14.3 million in the fourth quarter of
1993 from the amount reported in the fourth quarter of 1992 and
decreased $111.9 million in the year ended December 31, 1993 from the
amount reported in 1992. The increase in the fourth quarter was
primarily attributable to the settlement of a lawsuit and sale of the
Company's credit card operations, offset by a charge of $34.4 million to
strengthen reserves for real estate development operations, principally
for two commercial projects in Northern California. The reduction in
other income for the year was attributable to increases in the reserves
for real estate development operations.
Other expenses increased in the fourth quarter and the year
ended December 31, 1993 due mainly to the costs associated with
disposition of foreclosed properties, certain restructuring costs, and
the costs of additional personnel necessary to administer delinquent
real estate loans. General and administrative expenses as a percentage
of average assets were 1.76% in the fourth quarter of 1993 and 1.66% for
the year ended December 31, 1993. In addition, in the fourth quarter of
1993, as part of its restructuring efforts, the Company wrote off
$12.4 million in goodwill associated with its operations in Ohio.
ASSET QUALITY. At December 31, 1993, nonperforming assets
totaled $960.3 million, or 1.89% of total assets, as compared to $2.2
billion, or 4.61% of total assets, as of December 31, 1992. Troubled
debt restructurings totaled $100.8 million at December 31, 1993.
Net loan charge-offs for the fourth quarter of 1993 totaled
$52.1 million and were $590.7 million for all of 1993 (including
$378.1 million related to bulk sales of nonperforming loans). The loan
loss reserve was $438.8 million at December 31, 1993. The reserve for
foreclosed real estate was $66.5 million at December 31, 1993. The
reserves for losses on nonperforming assets equaled 49.2% of
nonperforming assets at December 31, 1993, compared to 21.2% at December
31, 1992.
During the fourth quarter of 1993, the Company sold
$200.8 million of foreclosed properties, comprised of $124.6 million of
single-family residences and $76.2 million of major properties. During
the year ended December 31, 1993, the Company sold $831.3 million of
foreclosed real estate, comprised of $591.8 million of single-family
residences, and $239.5 million of major properties. At December 31,
1993, the Company had $179.9 million in foreclosed properties, compared
to $453 million at December 31, 1992.
Real estate development assets, net of reserves, totaled
$443.7 million at December 31, 1993, compared to $674.3 million at
December 31, 1992. The reserves for real estate development operations
totaled $341.7 million, or 43.5% of gross real estate assets, at
December 31, 1993, compared to $154.7 million, or 18.7% of gross real
estate assets, at December 31, 1992.
The Company originated $3.6 billion in loans in the fourth
quarter of 1993, compared to $3.4 billion in the fourth quarter of 1992.
Mortgage loan originations totaled $11.6 billion in 1993. In addition,
the Company purchased $1 billion of adjustable rate mortgages ("ARMs")
in the first quarter of 1993. Of total loan originations in 1993, 86%
were single family mortgages and 77% were ARMs. Mortgage refinances
accounted for 60.5% of the Company's total loan originations in 1993.
CAPITAL. Throughout 1993, the Company took several steps to
improve its capital position. In February, the Company sold
approximately $195 million of its Depositary Shares, representing
interests in the Company's 8.40% Series C Preferred Stock The net
proceeds of the Series C Preferred Stock offering were contributed to
Home Savings as equity. In August, the Company issued $287.5 million of
its Depositary Shares, representing interests in the Company's 6% Series
D Preferred Stock. The Company contributed $141 million of the net
proceeds of Series D Preferred Stock offering to Home Savings. In
November, Home Savings issued $250 million of 6% Subordinated Notes due
November 1, 2000 to replace, in part, the approximately $325 million of
10-1/4% Subordinated Notes due December 5, 1996 that were retired early.
Home Savings exceeds all current and fully phased-in federal
capital requirements. The capital ratios of Home Savings of America at
December 31, 1993, were:
<TABLE>
<CAPTION>
Home Savings Required Home Savings
at December 31, 1993 at December 31, 1993 Fully Phased-In
<S> <C> <C> <C>
Tangible: 4.97% 1.50% 4.76%
Core: 5.72% 3.00% 4.76%
Risk-based 12.59% 8.00% 11.21%
</TABLE>
At December 31, 1993, the Company adopted Statement of
Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities, resulting in an increase in
the Company's equity of $21.5 million.
The Company is presently communicating with borrowers and has
sent lending personnel and appraisers into the area damaged by the
earthquake that struck California on January 17, 1994. However, it is
still too early to assess the extent of possible loss.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits:
99.1 Consolidated Financial Highlights (Unaudited) as of, for
the year ended and the three months ended December 31,
1992 and December 31, 1993 and as of and for the three
months ended September 30, 1993, Condensed Consolidated
Statements of Financial Condition (Unaudited) as of
December 31, 1992, September 30, 1993 and December 31,
1993 and Condensed Consolidated Statements of Operation
(Unaudited) for the year ended December 31, 1992 and
December 31, 1993 and for the three months ended December
30, 1992, September 30, 1993 and December 31, 1993.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: February 9, 1994
H.F. AHMANSON & COMPANY
By:/s/George Miranda
First Vice President and
Principal Accounting Officer
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<TABLE>
<CAPTION>
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
<S> <C> <C>
99.1 Consolidated Financial Highlights (Unaudited)
as of, for the year ended and the three
months ended December 31, 1992 and December
31, 1993 and as of and for the three months
ended September 30, 1993, Condensed
Consolidated Statements of Financial
Condition (Unaudited) as of December 31,
1992, September 30, 1993 and December 31,
1993 and Condensed Consolidated Statements of
Operation (Unaudited) for the year ended
December 31, 1992 and December 31, 1993 and
for the three months ended December 30, 1992,
September 30, 1993 and December 31, 1993.
</TABLE>
<TABLE>
<CAPTION>
H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands except per share data)
For the Three Months Ended For the Years Ended
December 31, September 30, December 31, December 31,
1993 1993 1992 1993 1992
Interest income:
<S> <C> <C> <C> <C> <C>
Interest on real
estate loans $ 603,750 $ 662,079 $ 701,346 $ 2,623,139 $ 2,978,267
Interest on MBS 85,219 63,287 72,098 278,908 336,517
Interest and
dividends on
investments 29,586 26,230 24,859 101,375 114,195
_________ _________ _________ _________ _________
Total interest income 718,555 751,596 798,303 3,003,422 3,428,979
_________ _________ _________ _________ _________
Interest expense:
Deposits 309,539 322,192 384,159 1,301,063 1,738,347
Short-term borrowings 28,058 30,471 24,860 112,171 122,073
FHLB advances and
other borrowings 62,109 65,703 52,964 253,116 209,993
_________ _________ _________ _________ _________
Total interest
expense 399,706 418,366 461,983 1,666,350 2,070,413
_________ _________ _________ _________ _________
Net interest income 318,849 333,230 336,320 1,337,072 1,358,566
Provision for loan
losses 47,893 22,243 100,879 574,970 367,366
_________ _________ _________ _________ _________
Net interest income
(loss) after
provision for loan
losses 270,956 310,987 235,441 762,102 991,200
_________ _________ _________ _________ _________
Other income:
Gain on sales of
loans 35,315 13,260 23,815 80,037 62,622
Gain on sale of MBS 8,722 8,996 12,991 21,007 12,991
Loan servicing income 13,978 14,355 17,014 58,854 72,498
Other fee income 29,936 31,607 30,394 125,259 112,051
Operations of real
estate held for
development and
investment (39,930) (1,992) (15,357) (229,300) (58,359)
Other 36,515 1,417 1,367 40,730 6,695
_________ _________ _________ _________ _________
84,536 67,643 70,224 96,587 208,498
_________ _________ _________ _________ _________
Other expenses:
General and
administrative
expenses 219,280 206,052 196,913 827,462 753,257
Operations of real
estate ownedheld
for sale 39,361 40,457 68,804 212,130 129,153
Amortization of
goodwill 18,999 6,701 6,846 39,163 27,674
_________ _________ _________ _________ _________
277,640 253,210 272,563 1,078,755 910,084
_________ _________ _________ _________ _________
Earnings (loss) before
provision for income
taxes (benefit),
extraordinary loss
and cumulative
effect of accounting
change 77,852 125,420 33,102 (220,066) 289,614
Provision for income
taxes (benefit) 27,747 55,431 17,583 ( 82,034) 133,222
_________ _________ _________ _________ _________
Earnings (loss) before
extraordinary loss
and cumulative
effect of accounting
change 50,105 69,989 15,519 (138,032) 156,392
Extraordinary loss on
early extinguishment
of debt (net of
taxes) (21,607) - - (21,607) -
Cumulative effect of
change in accounting
for income taxes - - - - 47,677
_________ _________ _________ _________ _________
Net earnings (loss) $28,498 $69,989 $15,519 $(159,639) $ 204,069
========= ========= ========= ========= =========
Earnings (loss) per
common share -
primary and fully
diluted:
Earnings (loss) before
extraordinary loss
and cumulative
effect of accounting
change $0.32 $ 0.50 $ 0.10 $ (1.51) $1.19
Extraordinary loss on
early
extinguishment of
debt (0.18) - - (0.18) -
Cumulative effect of
change in
accounting for
income taxes - - - - 0.41
_________ _________ _________ _________ _________
Net earnings (loss) $0.14 $0.50 $ 0.10 $( 1.69) $1.60
========= ========= ========= ========= =========
Common shares
outstanding,
weighted average 117,284,812 117,275,683 116,846,594 117,270,295 116,915,342
Return on average
assets 0.23% 0.56% 0.13% (0.32)% 0.42%
Return on average
equity 3.87% 10.09% 2.25% ( 5.58)% 7.49%
Return on average
tangible equity* 7.56% 13.24% 3.94% ( 5.01)% 10.42%
Ratio of G&A expenses
to average assets 1.76% 1.64% 1.60% 1.66 % 1.54%
<FN>
*Net earnings excluding amortization of goodwill as a percentage of average equity excluding goodwill.
</TABLE>
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<TABLE>
<CAPTION>
H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(in thousands)
Assets December 31, 1993 September 30, 1993 December 31, 1992
<S> <C> <C> <C>
Cash and amounts due from banks $ 843,944 $ 806,670 $ 832,680
Securities purchased under agreements to resell 2,637,677 2,781,370 1,076,800
Other short-term investments 48,507 51,010 46,110
_________ _________ _________
Total cash and cash equivalents 3,530,128 3,639,050 1,955,590
Other investment securities 11,524 5,745 6,860
Investment in stock of Federal Home Loan Bank
(FHLB) 364,392 362,579 400,113
Mortgage-backed securities (MBS) held to maturity 4,064,128 255,475 339,963
MBS available for sale 2,855,869 3,212,126 3,575,545
Loans receivable less allowance for possible
losses of $438,786 (December 31, 1993),
$443,027 (September 30, 1993) and
$434,114 (December 31, 1992) 37,529,079 39,806,880 38,643,300
Loans available for sale 175,289 183,553 319,575
Accrued interest receivable 166,848 194,546 205,034
Real estate held for development and investment
less allowance for possible losses of $341,705
(December 31, 1993), $309,267 (September 30,
1993) and $154,743 (December 31, 1992) 443,657 498,798 674,300
Real estate owned held for sale less allowance for
possible losses of $66,453 (December 31, 1993),
$87,446 (September 30, 1993) and $47,970
(December 31, 1992) 179,862 312,489 452,971
Premises and equipment 673,879 677,644 686,693
Goodwill 428,444 452,997 478,017
Other assets 399,403 418,971 402,546
Income taxes 48,743 117,780 -
_________ _________ _________
$ 50,871,245 $ 50,138,633 $ 48,140,507
========= ========= =========
Liabilities and Stockholders' Equity
Deposits $ 38,018,653 $ 38,901,710 $ 39,273,192
Short-term borrowings under agreements to
repurchase securities sold 4,807,767 2,830,674 2,186,262
Other short-term borrowings 169,854 274,700 130,000
FHLB advances and other borrowings 3,901,724 4,087,604 2,662,321
Other liabilities 1,024,216 1,107,319 1,118,058
Income taxes - - 25,030
_________ _________ _________
Total liabilities 47,922,214 47,202,007 45,394,863
Stockholders' equity 2,949,031 2,936,626 2,745,644
_________ _________ _________
$ 50,871,245 $ 50,138,633 $ 48,140,507
========= ========= =========
</TABLE>
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<TABLE>
<CAPTION>
H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
(dollars in thousands except per share data)
At End of Period December 31, September 30, December 31,
1993 1993 1992
<S> <C> <C> <C>
Total assets $ 50,871,245 $ 50,138,633 $ 48,140,507
Investment portfolio $ 3,062,100 $ 3,200,704 $ 1,529,883
Loans receivable and mortgage-backed securities
(MBS) $ 44,624,365 $ 43,458,034 $ 42,878,383
Allowance for possible loan losses $ 438,786 $ 443,027 $ 434,114
ARMs included in loans receivable and MBS $ 41,838,441 $ 41,798,901 $ 40,671,029
Deposits $ 38,018,653 $ 38,901,710 $ 39,273,192
Borrowings $ 8,879,345 $ 7,192,978 $ 4,978,583
Stockholders' equity $ 2,949,031 $ 2,936,626 $ 2,745,644
Book value per common share $ 19.61 $ 19.50 $ 22.04
Tangible book value per common share $ 15.94 $ 15.63 $ 17.94
Total common shares outstanding 116,879,943 116,868,967 116,649,459
Average Interest Rates:
Yield on loans and MBS 6.50% 6.69% 7.22%
Yield on investment portfolio 3.83% 3.52% 3.48%
Yield on interest-earning assets 6.33% 6.47% 7.09%
Cost of deposits 3.14% 3.21% 3.60%
Cost of borrowings 4.73% 5.18% 5.99%
Cost of interest-bearing liabilities 3.44% 3.52% 3.87%
Earnings spread 2.89% 2.95% 3.22%
Effective net spread 2.95% 3.00% 3.21%
Home Savings of America capital ratios:
Tangible 4.97% 4.86% 4.85%
Core 5.72% 5.61% 5.77%
Risk-based 12.59% 12.14% 12.99%
For the Three Months Ended:
Net interest income $ 318,849 $ 333,230 $ 336,320
Provision for loan losses $ 47,893 $ 22,243 $ 100,879
Earnings before extraordinary loss $ 50,105 $ 69,989 $ 15,519
Net earnings $ 28,498 $ 69,989 $ 15,519
Net earnings (loss) per fully diluted common
share $ 0.14 $ 0.50 $ 0.10
Dividends per common share $ 0.22 $ 0.22 $ 0.22
Loans originated $ 3,570,561 $ 2,907,635 $ 3,429,867
For the Years Ended:
Net interest income $ 1,337,072 $ 1,358,566
Provision for loan losses $ 574,970 $ 367,366
Earnings (loss) before extraordinary loss and
cumulative effect of accounting change $ (138,032) $ 156,392
Net earnings (loss) $ (159,639) $ 204,069
Net earnings (loss) per fully diluted common
share $ (1.69) $1.60
Dividends per common share $ 0.88 $ 0.88
Loans originated $ 11,575,944 $ 12,169,346
Loans purchased $ 1,062,447 $ 4,362
</TABLE>
