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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): April 16, 1996
H. F. Ahmanson & Company
(Exact name of registrant as specified in charter)
Delaware 1-8930 95-0479700
(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification No.)
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.
On April 16, 1996, H. F. Ahmanson & Company (the "Company"), issued a
press release reporting its results of operations during the quarter ended
March 31, 1996.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Press release dated April 16, 1996 reporting results of
operations during the quarter ended March 31, 1996.
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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: April 16, 1996
H. F. AHMANSON & COMPANY
/s/ George Miranda
By: George Miranda
First Vice President and
Chief Accounting Officer
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EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NO. DESCRIPTION NUMBERED PAGE
99.1 Press release dated April 16, 1996 reporting 5
results of operations during the quarter ended
March 31, 1996.
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FOR IMMEDIATE RELEASE Contacts:
Media: Mary Trigg
818-814-7922
Investor: Steve Swartz
818-814-7986
AHMANSON REPORTS FIRST QUARTER RESULTS
- Net Interest Margin Continues to Expand -
Irwindale, CA, April 16, 1996 -- H. F. Ahmanson & Company (AHM-NYSE),
parent company of Home Savings of America, today reported first quarter
earnings of $64.8 million, or $0.45 per fully diluted common share,
compared to $60.7 million, or $0.40 per fully diluted common share, earned
in the fourth quarter of 1995. In the first quarter of 1995, the company
recorded a net loss of $181.9 million, or $1.66 per fully diluted common
share, which included a $234.7 million charge relating to a change in
accounting for goodwill. First quarter results in 1995 without the
accounting change were $50.7 million, or $0.33 per fully diluted common
share.
Ahmanson and Home Savings Chairman and Chief Executive Officer Charles
R. Rinehart said, "Earnings growth during the first quarter reflects a
momentum building within our business units as we steadily progress toward
our goal of becoming a full-service consumer bank. It also reflects
greater intensity throughout the company in holding the line on operating
expenses as we implement key strategic initiatives.
"Although credit costs increased during the first quarter, we were
encouraged by the decline in nonperforming assets during the month of
March," he added.
RESULTS OF OPERATIONS
Net interest income totaled $317.0 million for the first quarter of
1996, compared to $295.2 million in the first quarter of 1995, and $306.9
million in the fourth quarter of 1995. In the first quarter of 1996, the
average net interest margin was 2.64%, compared to 2.27% in the first
quarter of 1995, and 2.54% in the fourth quarter of 1995. At March 31,
1996, the net
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interest margin was 2.74%, the highest it has been since June, 1994. This
increase in the net interest margin is due to a decline in wholesale
funding costs, coupled with a decline in the cost of deposits.
OTHER INCOME
In the first quarter of 1996, other income was $60.5 million, an
increase of $24.5 million from the amount reported in the year ago quarter,
and an increase of $12.3 million from the fourth quarter of 1995. During
the first quarter of 1996, the company sold $586.0 million of fixed rate
loans and $353.4 million of Adjustable Rate Mortgages (ARMs) from its held-
for-sale portfolio for a gain of $15.0 million. Fee income from personal
financial services and Griffin Financial Services also continues to show
improvement as the company implements its strategy to become a full-service
consumer bank.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses (G&A) were $193.0 million in the
first quarter of 1996, compared to $182.8 million in the first quarter of
1995 and $199.2 million in the fourth quarter of 1995. In the first
quarter of 1996, the company recorded approximately $5 million of severance
expense. Recent major initiatives such as consumer lending, Project HOME
Run and electronic banking accounted for approximately $6 million of the
increase from the 1995 first quarter. First quarter of 1995 expenses
reflect a $5.7 million refund of Federal Deposit Insurance Corporation
premiums.
Expressed as an efficiency ratio that measures G&A expenses as a
percentage of net interest income and loan servicing and other fee income,
the operating efficiency ratio was 53.8% in the first quarter of 1996,
compared to 55.0% in the first quarter of 1995 and 57.0% in the fourth
quarter of 1995.
CREDIT COSTS
During the first quarter of 1996, the company provided $45.9 million
for loan losses, compared to $26.5 million in the 1995 first quarter and
$37.9 million in the fourth quarter of 1995. Expenses for the operations
of foreclosed real estate amounted to $25.7 million in the 1996 first
quarter, compared to $21.1 million in the first quarter of 1995 and $25.1
million in the
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fourth quarter of 1995. Increases in the provision for loan losses and the
operations of foreclosed real estate during the first quarter of 1996 were
due to weakness in the Southern California real estate market.
ASSET QUALITY
At March 31, 1996, nonperforming assets totaled $977.4 million, or
1.96% of total assets, compared to $878.6 million, or 1.64%, at March 31,
1995, and $949.4 million, or 1.88%, at December 31, 1995. Nonperforming
assets increased $44.7 million in January and $31.1 million in February,
then decreased by $47.8 million in March. Troubled debt restructurings
totaled $174.9 million at March 31, 1996.
Net loan charge-offs for the 1996 first quarter totaled $41.5 million,
compared to $35.7 million in the first quarter of 1995, and $42.3 million
in the fourth quarter of 1995.
At March 31, 1996, the allowances for loan losses and foreclosed real
estate were $385.4 million and $37.1 million, respectively. The ratio of
allowances for losses to nonperforming assets equaled 41.7% at March 31,
1996, compared to 46.8% at March 31, 1995, and 42.4% at December 31, 1995.
LOAN ORIGINATIONS
The company originated $1.3 billion of loans in the first quarter of
1996, compared to $1.7 billion in the year-ago quarter. In the 1996 first
quarter, 83% were single family mortgages and 43% were ARMs. Loans to
refinance real estate holdings accounted for 44% of the company's first
quarter 1996 originations, compared to 27% of the company's first quarter
1995 originations. Single family originations in California accounted for
61% of the company's single family production. The company funded $16.6
million in consumer loans during the quarter and had additional unfunded
commitments of $10.0 million at March 31, 1996. The company had $66.7
million in applications in the consumer loan pipeline at March 31, 1996, an
increase of $50.8 million from year-end 1995.
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DEPOSITS
At March 31, 1996, deposits totaled $33.9 billion, compared to $41.7
billion at March 31, 1995, and $34.2 billion at December 31, 1995. This
$7.8 billion, or 19% decrease from a year ago, principally reflects the
purchase of $1.2 billion from Household Bank in June 1995 and $8.1 billion
as a result of the sale of the New York retail deposit branch system in
September 1995.
CAPITAL
At March 31, 1996, Home Savings of America's federal capital ratios
exceeded all regulatory requirements for well-capitalized institutions, the
highest regulatory standard.
Requirement for Home Savings
Well-Capitalized Home Savings Fully Phased-In
Status at 3/31/96 at 3/31/96
Tangible - 6.12% 6.10%
Core Capital 5.00% 6.13% 6.11%
Core Capital to Risk-
Weighted Assets: 6.00% 9.87% 9.84%
Risk-Based Capital: 10.00% 12.01% 11.98%
On March 31, 1996, fully phased-in core capital exceeded the well-
capitalized standard by $546 million.
STOCK REPURCHASE PROGRAM
Through March 31, 1996, the company had purchased 5.7 million shares
of its common stock at an average price of $24.67 under a stock repurchase
program. The program, approved by the board of directors on October 3,
1995, authorizes the company to purchase up to $250 million of its common
stock. On March 31, 1996, the parent company had $258.0 million in cash,
ample resources to complete the stock repurchase program.
SUBORDINATED DEBENTURES AT HOME SAVINGS OF AMERICA
On March 12, 1996, Home Savings redeemed its $250 million 10.5%
subordinated debentures at par. The redemption affected risk-based capital
ratios, but neither tangible nor core capital ratios were affected. Home
Savings was $606 million above the well-capitalized risk-based capital
standard at March 31, 1996.
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HOME SAVINGS PURCHASES 61 FIRST INTERSTATE BRANCHES
On March 28, 1996, Home Savings announced it had signed a definitive
agreement to purchase 61 branches of First Interstate Bancorp from Wells
Fargo & Company. Home Savings will acquire $2.5 billion in deposits and
$1.3 billion in loans as part of this transaction. The transaction is
expected to close in the third quarter of 1996. The purchase price
represents a premium of 8.11% on the deposits.
H. F. Ahmanson & Company, with $49.8 billion in assets, is the parent
company of Home Savings of America. Home Savings' deposit base is $34.2
billion. It operates 345 financial service centers in four states and 120
mortgage lending offices in 10 states.
********
Additional information, including monthly financial data, about H. F.
Ahmanson & Company and Home Savings of America can be retrieved free of
charge using the following services:
Internet: http: //www.investquest.com
Fax-on-Demand: (614) 844-3860
On-line BBS: (614) 844-3868
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H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
(dollars in thousands except per share data)
<TABLE>
<CAPTION>
At End of Period March 31, 1996 December 31, 1995 March 31, 1995
- ---------------- ----------------- ------------------ -----------------
<S> <C> <C> <C>
Total assets $ 49,781,986 $ 50,529,586 $ 53,664,970
Investment portfolio $ 707,045 $ 892,572 $ 1,595,350
Loans receivable and mortgage-backed
securities (MBS) $ 46,530,610 $ 47,407,521 $ 49,638,155
ARMs included in loans receivable and MBS $ 44,870,834 $ 45,895,028 $ 47,303,335
Allowance for loan losses $ 385,367 $ 380,886 $ 391,105
Deposits $ 33,947,928 $ 34,244,481 $ 41,669,705
Borrowings $ 11,601,867 $ 12,236,428 $ 8,378,702
Stockholders' equity $ 2,952,702 $ 3,056,922 $ 2,783,854
Book value per common share $ 20.40 $ 20.75 $ 18.16
Tangible book value per common share $ 19.12 $ 19.47 $ 16.20
Total common shares outstanding 112,512,418 115,610,077 117,110,979
Home Savings of America Capital Ratios:
Tangible capital (to adjusted total assets) 6.12% 5.90% 5.19%
Core capital (to adjusted total assets) 6.13% 5.91% 5.19%
Core capital (to risk-weighted assets) 9.87% 9.48% 8.56%
Risk-based capital 12.01% 12.43% 11.66%
For the Three Months Ended:
- --------------------------
Net interest income $ 316,982 $ 306,892 $ 295,244
Provision for loan losses $ 45,942 $ 37,927 $ 26,544
Net earnings (loss) $ 64,755 $ 60,709 $ (181,892)
Net earnings (loss) per fully diluted
common share $ 0.45 $ 0.40 $ (1.66)
Dividends per common share $ 0.22 $ 0.22 $ 0.22
Loans originated and purchased $ 1,339,779 $ 1,647,308 $ 1,708,144
Average Interest Rates:
Yield on loans and MBS 7.48% 7.53% 6.91%
Yield on investment portfolio 5.83% 5.38% 6.09%
Yield on interest-earning assets 7.45% 7.49% 6.86%
Cost of deposits 4.57% 4.73% 4.25%
Cost of borrowings 6.28% 6.42% 6.56%
Cost of interest-costing liabilities 5.02% 5.17% 4.69%
Interest rate spread 2.43% 2.32% 2.17%
Net interest margin 2.64% 2.54% 2.27%
</TABLE>
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H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Assets March 31, 1996 December 31, 1995 March 31, 1995
- ------ ----------------- ------------------ -----------------
<S> <C> <C> <C>
Cash and amounts due from banks $ 683,480 $ 752,878 $ 610,028
Securities purchased under
agreements to resell 278,000 381,000 820, 399
Other short-term investments 14,364 13,278 23,789
---------- ----------- -----------
Total cash and cash equivalents 975,844 1,147,156 1,454,216
Other investment securities held to
maturity 2,445 2,448 272,813
Other investment securities available
for sale 9,809 9,908 10,441
Investment in stock of Federal Home
Loan Bank (FHLB) 402,427 485,938 467,908
Mortgage-backed securities (MBS)
held to maturity 5,649,418 5,825,276 11,198,413
MBS available for sale 10,410,053 10,326,866 2,320,466
Loans receivable less allowance
for losses of
$385,367 (March 31, 1996),
$380,886 (December 31, 1995) and
$391,105 (March 31, 1995) 30,211,898 30,273,514 36,092,689
Loans held for sale 259,241 981,865 26,587
Accrued interest receivable 223,968 228,111 160,088
Real estate held for development and
investment (REI) less allowance
for losses of
$286,327 (March 31, 1996),
$283,748 (December 31, 1995) and
$332,382 (March 31, 1995) 230,445 234,855 323,179
Real estate owned held for sale (REO)
less allowance for losses of
$37,137 (March 31, 1996),
$38,080 (December 31, 1995) and
$36,852 (March 31, 1995) 225,870 225,566 189,146
Premises and equipment 413,487 410,947 610,237
Goodwill and other intangible assets 143,981 147,974 228,877
Other assets 623,100 229,162 285,441
Income taxes - - 24,469
----------- ----------- -----------
$49,781,986 $50,529,586 $53,664,970
=========== =========== ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits $33,947,928 $34,244,481 $41,669,705
Short-term borrowings under agreements
to repurchase securities sold 1,998,431 3,519,311 1,826,949
Other short-term borrowings 50,000 - 5,188
FHLB and other borrowings 9,553,436 8,717,117 6,546,565
Other liabilities 1,170,026 873,313 832,709
Income taxes 109,463 118,442 -
----------- ----------- -----------
Total liabilities 46,829,284 47,472,664 50,881,116
Stockholders' equity 2,952,702 3,056,922 2,783,854
----------- ----------- -----------
$49,781,986 $50,529,586 $53,664,970
=========== =========== ===========
</TABLE>
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H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands except per share data)
<TABLE>
<CAPTION>
For the Three Months Ended
-----------------------------------------
March 31, December 31, March 31,
1996 1995 1995
------------ ------------- ------------
<S> <C> <C> <C>
Interest income:
Interest on loans $ 574,855 $ 583,543 $ 630,791
Interest on MBS 308,354 309,629 220,087
Interest and dividends on investments 11,661 13,205 43,105
----------- ----------- -----------
Total interest income 894,870 906,377 893,983
----------- ----------- -----------
Interest expense:
Deposits 387,173 407,113 439,458
Short-term borrowings 40,230 65,107 49,518
FHLB and other borrowings 150,485 127,265 109,763
----------- ----------- -----------
Total interest expense 577,888 599,485 598,739
----------- ----------- -----------
Net interest income 316,982 306,892 295,244
Provision for loan losses 45,942 37,927 26,544
----------- ----------- -----------
Net interest income after provision for loan losses 271,040 268,965 268,700
----------- ----------- -----------
Other income:
Gain on sales of MBS - 53 603
Gain on sales of loans 15,028 4,375 231
Loan servicing income 15,145 15,940 12,966
Other fee income 26,819 26,730 23,972
Gain (loss) on sales of investment securities - (67) 10
Other operating income 3,538 1,189 (1,800)
----------- ----------- -----------
60,530 48,220 35,982
----------- ----------- -----------
Other expenses:
General and administrative expenses (G&A) 193,048 199,217 182,752
Operations of REI 6,743 3,625 1,087
Operations of REO 25,689 25,123 21,053
Amortization of goodwill and other intangible assets 3,994 4,611 6,911
----------- ----------- -----------
229,474 232,576 211,803
----------- ----------- -----------
Earnings before provision for income taxes and
cumulative effect of accounting change 102,096 84,609 92,879
Provision for income taxes 37,341 23,900 40,029
----------- ----------- -----------
Earnings before cumulative effect of accounting change 64,755 60,709 52,850
Cumulative effect of change in accounting for goodwill - - (234,742)
----------- ----------- -----------
Net earnings (loss) $ 64,755 $ 60,709 $ (181,892)
=========== =========== ===========
Earnings (loss) per common share - primary:
Earnings before cumulative effect of accounting change $ 0.45 $ 0.41 $ 0.34
Cumulative effect of change in accounting for goodwill - - (2.00)
----------- ----------- -----------
Net earnings (loss) $ 0.45 $ 0.41 $ (1.66)
=========== =========== ===========
Earnings (loss) per common share - fully diluted:
Earnings before cumulative effect of accounting change $ 0.45 $ 0.40 $ 0.34
Cumulative effect of change in accounting for goodwill - - (2.00)
----------- ----------- -----------
Net earnings (loss) $ 0.45 $ 0.40 $ (1.66)
=========== =========== ===========
Common shares outstanding, weighted average:
Primary 114,781,516 117,922,440 117,143,614
Fully diluted 126,651,898 129,738,144 117,143,614
Return on average assets 0.51% 0.48% (1.33)%
Return on average equity 8.60% 7.93% (25.84)%
Return on average tangible equity* 9.60% 8.97% 9.26%
Ratio of G&A expenses to average assets 1.53% 1.58% 1.34%
*Net earnings excluding amortization of goodwill and other intangible assets, and cumulative effect of change in accounting for
goodwill, as a percentage of average equity excluding goodwill and other intangible assets.
</TABLE>
