<PAGE>
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): July 10, 1997
----------------
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.
On July 10, 1997, H. F. Ahmanson & Company (the "Company"),
issued a press release reporting its results of operations
during the quarter and six months ended June 30, 1997.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Press release dated July 10, 1997 reporting results
of operations during the quarter and six months
ended June 30, 1997.
<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: July 10, 1997
H. F. AHMANSON & COMPANY
/s/George Miranda
----------------------------
George Miranda
First Vice President and
Principal Accounting Officer
<PAGE>
H. F. AHMANSON & COMPANY
4900 Rivergrade Road
Irwindale, California 91706 HOME SAVINGS OF AMERICA
(818) 814-7922 SAVINGS OF AMERICA NEWS
FOR IMMEDIATE RELEASE CONTACTS:
- ---------------------
MEDIA: MARY TRIGG
(818) 814-7922
INVESTOR: STEVE SWARTZ
(818) 814-7986
AHMANSON REPORTS 102% EARNINGS PER SHARE INCREASE
- CREDIT COSTS AND NONPERFORMING ASSETS DECLINE -
Irwindale, CA, July 10, 1997 -- H.F. Ahmanson & Company (NYSE:AHM),
parent company of Home Savings of America, today announced continued strong
earnings growth.
Second quarter 1997 net income was $115.7 million, a 68% increase
compared to the second quarter of 1996 and a 12% increase compared to the
first quarter of 1997. On a fully diluted common share basis, second quarter
earnings were $1.01, a 102% increase compared to the second quarter of 1996
and 16% above the first quarter of 1997. Earnings per share grew at a faster
rate than net income as a result of the company's ongoing stock purchase
program. During the quarter, nonperforming assets declined by $102 million.
Results for the second quarter of 1997 include an after-tax gain of $24.6
million, or $0.22 per fully diluted common share, on the sale of the company's
deposit branch system on the West Coast of Florida ("West Florida gain"), and
a net after-tax cost of $3.2 million, or $0.03 per fully diluted common share,
as a result of its proposed merger with Great Western Financial Corporation
("net Great Western costs"). That proposal was withdrawn on June 4, 1997.
Excluding the West Florida gain and net Great Western costs, earnings would
have been $94.3 million, or $0.82 per fully diluted common share.
Return on equity was 19.3% for the second quarter of 1997 and 15.9%
without the West Florida gain and the net Great Western costs.
Charles R. Rinehart, Chairman and Chief Executive Officer of Ahmanson and
Home Savings, said, "We are very pleased with our strong results during the
second quarter of 1997.
<PAGE>
Improved credit costs, lower expenses and strong fee income more than offset
the effects of a compressed net interest margin to increase earnings. Our
stock buyback program further demonstrated its effectiveness in boosting
shareholder returns. We continue to meet our goal of maintaining our
efficiency ratio below 50%. Nonperforming assets declined by $102 million
during the quarter and reached their lowest level since September 1990. In
addition, credit costs continued their declining trend during the second
quarter of 1997 and were $39.9 million, a $21.3 million decline from the
second quarter of 1996.
"The completion of Project HOME Run, (the reengineering of our loan
origination process), continued growth of consumer lending, and the rollout of
our business banking products and services in California, should give us a
competitive advantage in an improving California economy during this period of
change in the marketplace for consumer and small business banking services."
For the first six months of the year, the company earned $218.7 million,
compared to $133.5 million, in the first six months of 1996. On a fully
diluted common share basis, earnings were $1.86 in the first six months of
1997 compared to $0.94 in the first six months of 1996. Return on equity for
the first six months of 1997 was 18.3%, and would have been 15.9% without the
branch sales in Arizona in the first quarter of 1997 and West Florida in the
second quarter of 1997, in addition to the net Great Western costs.
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income totaled $308.1 million for the second quarter of
1997, compared to $311.6 million in the second quarter of 1996, and $317.6
million in the first quarter of 1997. The decline in net interest income was
a result of margin pressure caused by rising interest rates early in the
quarter and a lower level of interest earning assets, partially due to the
sale of $548 million of 11th District Cost of Funds Indexed loans.
In the second quarter of 1997, the average net interest margin was 2.66%,
compared to 2.63% in the second quarter of 1996, and 2.64% in the first
quarter of 1997.
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NONINTEREST INCOME
Noninterest income, excluding the West Florida gain, was $70.2 million in
the second quarter of 1997, an increase of $14.2 million or 25% from the $56.0
million reported in the year ago quarter and a decrease of $2.7 million from
the first quarter of 1997, excluding the pre-tax gain of $16.0 million from
the sale of the Arizona branches in that quarter. In the second quarter of
1997, the company sold its 12 branches on the West Coast of Florida. The
company continues to operate 27 Personal Financial Service Centers on the East
Coast of Florida with deposits of $3.4 billion.
In the second quarter of 1997, Home Savings completed the rollout of its
business banking program throughout its California franchise. Business
customers in California can now obtain cash management products and a full
array of small business loan products through Home Savings' 301 Personal
Financial Service Centers. In addition, through Griffin Financial Services,
which provides investment and insurance brokerage products and services, small
business owners and their employees have available to them retirement products
such as 401(k) plans.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses (G&A) were $180.5 million in the
second quarter of 1997, compared to $189.7 million in the second quarter of
1996 and $186.8 million in the first quarter of 1997.
The efficiency ratio -- G&A expenses as a percentage of net interest
income, loan servicing and other fee income -- was 48.7% in the second quarter
of 1997, compared to 52.8% and 49.1% in the second quarter of 1996 and the
first quarter of 1997, respectively. For the first six months of 1997, the
company's efficiency ratio was 48.9%, compared to 53.3% for the first six
months of 1996.
NET GREAT WESTERN COSTS
The second quarter of 1997 includes $23.1 million of pretax legal,
printing, advisory and other expenses associated with the Great Western
transaction. These costs were largely offset when the company sold the 3.6
million Great Western shares it had purchased in connection with the
transaction. The sales resulted in a pretax gain of $17.6 million.
<PAGE>
CREDIT COSTS/ASSET QUALITY
Total credit costs (provision for loan losses and expenses for the
operations of foreclosed real estate) continued their improving trend,
dropping by 14% from the first quarter of 1997 and 35% from the second quarter
of 1996. Credit costs were $39.9 million during the second quarter of 1997,
compared to $61.2 million in the 1996 second quarter and $46.3 million in the
first quarter of 1997. Net loan charge-offs for the 1997 second quarter
totaled $17.4 million, compared to $36.8 million in the second quarter of 1996
and $25.7 million in the first quarter of 1997.
During the second quarter, nonperforming assets declined by $102 million,
the fifth consecutive quarterly decline. Cumulatively, nonperforming assets
have declined $335 million or 33% since February 1996. At June 30, 1997,
nonperforming assets totaled $690.5 million, or 1.45% of total assets,
compared to $953.7 million, or 1.93% at June 30, 1996, and $792.7 million, or
1.63% at March 31, 1997. Nonperforming assets decreased every month during
the second quarter of 1997 -- $41 million in April, $36 million in May and $25
million in June. Loans classified as troubled debt restructurings (TDRs) were
$214.6 million at June 30, 1997. The ratio of nonperforming assets and TDRs
to total assets was 1.90% at June 30, 1997, compared to 2.29% at June 30,
1996.
At June 30, 1997, the allowances for loan losses and foreclosed real
estate were $388.3 million and $25.8 million, respectively. The ratio of
allowances for losses to nonperforming assets equaled 57.8% at June 30, 1997,
compared to 42.4% at June 30, 1996 and 50.7% at March 31, 1997.
LOAN ORIGINATIONS
The company originated $1.1 billion of mortgage loans in the second
quarter of 1997, compared to $1.4 billion in the year-ago quarter and $1.0
billion in the first quarter of 1997. All mortgage loans were originated
through the company's retail franchise. Only 15% of mortgage loans originated
in the second quarter were tied to the 11th District Cost of Funds Index,
while 31% were fixed rate. The company also funded $224 million in consumer
loans during the second quarter of 1997, compared to $81 million in the second
quarter of 1996, and $164 million in the
<PAGE>
first quarter of 1997. Consumer loans now include savings account loans and
prior periods have been restated to reflect the change. The consumer loan
portfolio totaled $885 million at June 30, 1997.
CAPITAL
At June 30, 1997, Home Savings of America's capital ratios exceeded the
regulatory requirements for well-capitalized institutions, the highest
regulatory standard.
STOCK PURCHASE PROGRAM
In the second quarter of 1997, the company purchased 3.4 million shares
of its common stock at an average price of $39.83 per share, investing $135
million. Between the initiation of the first stock purchase program in
October of 1995 and June 30, 1997, the company has purchased 22.5 million
common shares, or 19% of the outstanding shares at September 30, 1995, at an
average price of $29.02 per share. The company has $246 million remaining of
its $250 million authorized for its fourth stock purchase program. The
company had $279 million in cash at the parent company at June 30, 1997.
# # # #
H.F. Ahmanson & Company, with $47.5 billion in assets, is the parent
company of Home Savings of America, one of the nation's largest full-service
consumer and small business banks. It operates 368 financial service centers
in three states and 115 mortgage lending offices in eight states.
Additional information, including monthly financial data, about H.F.
Ahmanson & Company and Home Savings of America can be retrieved by using the
following service:
* Corporate News on the Net: http://www.businesswire.com/cnn/ahm.htm
For information regarding PC Banking, Home Loans, Investments, Insurance,
Business Banking and Consumer Loans, contact:
* Home Savings Website: http://www.homesavings.com
<PAGE>
H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
At End of Period June 30, 1997 March 31, 1997 June 30, 1996
- ---------------- --------------- ---------------- ---------------
<S> <C> <C> <C>
Total assets $ 47,532,068 $ 48,697,126 $ 49,506,630
Investment portfolio $ 792,983 $ 735,868 $ 1,124,122
Loans receivable and mortgage-backed
securities (MBS) $ 44,356,772 $ 45,338,937 $ 45,855,263
ARMs included in loans receivable and MBS $ 42,384,378 $ 43,249,938 $ 44,365,520
Allowance for loan losses $ 388,287 $ 387,688 $ 382,485
Deposits $ 32,741,870 $ 34,399,125 $ 33,281,931
Borrowings and trust capital securities $ 11,192,523 $ 10,779,429 $ 12,351,740
Stockholders' equity $ 2,463,416 $ 2,398,942 $ 2,777,356
Book value per common share $ 20.35 $ 19.05 $ 19.78
Tangible book value per common share $ 18.57 $ 17.29 $ 19.00
Total common shares outstanding 97,335,863 100,595,547 107,188,014
For the Three Months Ended
- --------------------------
Net interest income $ 308,069 $ 317,619 $ 311,574
Provision for loan losses $ 17,989 $ 24,223 $ 33,901
Net income $ 115,656 $ 103,093 $ 68,734
Net income per fully diluted
common share $ 1.01 $ 0.87 $ 0.50
Dividends per common share $ 0.22 $ 0.22 $ 0.22
Loans originated and purchased $ 1,365,298 $ 1,162,969 $ 1,467,829
Average Interest Rates:
Yield on loans and MBS 7.38% 7.34% 7.35%
Yield on investment portfolio 6.70% 6.96% 6.06%
Yield on interest-earning assets 7.37% 7.33% 7.33%
Cost of deposits 4.42% 4.39% 4.45%
Cost of borrowings and trust capital securities 6.24% 6.22% 6.20%
Cost of interest-costing liabilities 4.86% 4.83% 4.91%
Interest rate spread 2.51% 2.50% 2.42%
Net interest margin 2.66% 2.64% 2.63%
For the Six Months Ended
- ------------------------
Net interest income $ 625,688 $ 628,556
Provision for loan losses $ 42,212 $ 79,843
Net income $ 218,749 $ 133,489
Net income per fully diluted
common share $ 1.86 $ 0.94
Dividends per common share $ 0.44 $ 0.44
Loans originated and purchased $ 2,528,267 $ 2,837,460
Average Interest Rates:
Yield on loans and MBS 7.36% 7.39%
Yield on investment portfolio 6.83% 5.94%
Yield on interest-earning assets 7.35% 7.37%
Cost of deposits 4.40% 4.51%
Cost of borrowings and trust capital securities 6.23% 6.24%
Cost of interest-costing liabilities 4.84% 4.96%
Interest rate spread 2.51% 2.41%
Net interest margin 2.65% 2.63%
</TABLE>
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H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Assets June 30, 1997 March 31, 1997 December 31, 1996 June 30, 1996
- ------ ------------- -------------- ----------------- -------------
<S> <C> <C> <C> <C>
Cash and amounts due from banks $ 515,171 $ 540,831 $ 691,578 $ 722,581
Federal funds sold and securities
purchased under agreements to resell 376,100 283,800 737,500 690,200
Other short-term investments 6,120 12,160 14,782 13,797
----------- ------------ ------------ -----------
Total cash and cash equivalents 897,391 836,791 1,443,860 1,426,578
Other investment securities 11,457 12,408 11,597 12,355
Investment in stock of Federal Home
Loan Bank (FHLB) 399,306 427,500 420,978 407,770
Mortgage-backed securities (MBS) 13,628,019 14,417,249 14,296,512 15,360,005
Loans receivable less allowance
for losses of
$388,287 (June 30, 1997),
$387,688 (March 31, 1997),
$389,135 (December 31, 1996) and
$382,485 (June 30, 1996) 30,728,753 30,921,688 31,789,158 30,495,258
Accrued interest receivable 203,052 210,512 209,839 218,529
Real estate held for development and
investment (REI) less allowance
for losses of
$112,744 (June 30, 1997),
$121,318 (March 31, 1997),
$132,432 (December 31, 1996) and
$144,441 (June 30, 1996) 146,845 147,425 147,851 212,561
Real estate owned held for sale (REO)
less allowance for losses of
$25,840 (June 30, 1997),
$29,529 (March 31, 1997),
$32,137 (December 31, 1996) and
$37,493 (June 30, 1996) 195,712 233,694 247,577 260,735
Premises and equipment 380,917 412,652 424,567 412,602
Goodwill and other intangible assets 292,713 298,887 308,083 140,022
Other assets 647,903 778,320 602,022 560,215
----------- ----------- ----------- -----------
$47,532,068 $48,697,126 $49,902,044 $49,506,630
=========== =========== =========== ===========
Liabilities, Capital Securities of Subsidiary Trust and Stockholders' Equity
- ----------------------------------------------------------------------------
Deposits $32,741,870 $34,399,125 $34,773,945 $33,281,931
Securities sold under agreements to
repurchase 2,525,000 2,325,000 1,820,000 2,689,000
Other short-term borrowings 539,373 458,640 210,529 200,000
FHLB and other borrowings 7,979,772 7,847,454 9,549,992 9,462,740
Other liabilities 1,022,887 1,029,512 917,198 1,035,557
Income taxes 111,372 90,118 48,918 60,046
----------- ----------- ----------- -----------
Total liabilities 44,920,274 46,149,849 47,320,582 46,729,274
Capital securities, Series A, of
subsidiary trust 148,378 148,335 148,413 -
Stockholders' equity 2,463,416 2,398,942 2,433,049 2,777,356
----------- ----------- ----------- -----------
$47,532,068 $48,697,126 $49,902,044 $49,506,630
=========== =========== =========== ===========
</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 For the Six Months Ended
----------------------------------------- June 30,
June 30, March 31, June 30, ----------------------------
1997 1997 1996 1997 1996
------------ ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Interest income:
Loans $ 575,802 $ 577,533 $ 559,078 $ 1,153,335 $ 1,133,933
MBS 259,429 267,673 296,927 527,102 605,281
Investments 16,271 16,897 11,231 33,168 22,892
----------- ----------- ----------- ----------- -----------
Total interest income 851,502 862,103 867,236 1,713,605 1,762,106
----------- ----------- ----------- ----------- -----------
Interest expense:
Deposits 374,187 375,139 372,997 749,326 760,170
Short-term borrowings 42,924 33,120 36,334 76,044 76,564
FHLB and other borrowings 126,322 136,225 146,331 262,547 296,816
----------- ----------- ----------- ----------- -----------
Total interest expense 543,433 544,484 555,662 1,087,917 1,133,550
----------- ----------- ----------- ----------- -----------
Net interest income 308,069 317,619 311,574 625,688 628,556
Provision for loan losses 17,989 24,223 33,901 42,212 79,843
----------- ----------- ----------- ----------- -----------
Net interest income after provision
for loan losses 290,080 293,396 277,673 583,476 548,713
----------- ----------- ----------- ----------- -----------
Other income:
Loss on sales of MBS (74) - (29) (74) (29)
Gain on sales of loans 6,137 7,989 6,166 14,126 21,194
Loan servicing income 17,078 16,748 16,657 33,826 31,802
Banking and other retail service fees 28,525 29,334 16,640 57,859 30,863
Other fee income 17,059 16,381 14,651 33,440 27,247
Gain on sales of financial service centers 41,610 15,956 - 57,566 -
Other operating income 1,457 2,461 1,915 3,918 5,453
----------- ----------- ----------- ----------- -----------
111,792 88,869 56,000 200,661 116,530
----------- ----------- ----------- ----------- -----------
Other expenses:
Compensation and other employee expenses 84,368 95,468 91,468 179,836 188,912
Occupancy expenses 26,647 26,712 27,835 53,359 57,073
Federal deposit insurance premiums and assessments 6,269 6,549 19,315 12,818 40,139
Other general and administrative expenses 63,180 58,044 51,034 121,224 96,576
----------- ----------- ----------- ----------- -----------
General and administrative expenses (G&A) 180,464 186,773 189,652 367,237 382,700
Net acquisition costs 5,475 - - 5,475 -
Operations of REI 399 1,859 7,535 2,258 14,278
Operations of REO 21,884 22,108 27,302 43,992 52,991
Amortization of goodwill and other intangible assets 6,447 6,390 3,958 12,837 7,952
----------- ----------- ----------- ----------- -----------
214,669 217,130 228,447 431,799 457,921
----------- ----------- ----------- ----------- -----------
Income before provision for income taxes 187,203 165,135 105,226 352,338 207,322
Provision for income taxes 71,547 62,042 36,492 133,589 73,833
----------- ----------- ----------- ----------- -----------
Net income $ 115,656 $ 103,093 $ 68,734 $ 218,749 $ 133,489
=========== =========== =========== =========== ===========
Income per common share:
Primary $ 1.09 $ 0.93 $ 0.51 $ 1.99 $ 0.96
Fully diluted $ 1.01 $ 0.87 $ 0.50 $ 1.86 $ 0.94
Common shares outstanding, weighted average:
Primary 98,208,190 102,308,938 110,016,213 101,270,618 112,432,758
Fully diluted 110,185,833 113,968,090 122,098,197 113,303,148 124,585,694
Return on average assets 0.96% 0.84% 0.56% 0.90% 0.54%
Return on average equity 19.32% 17.21% 9.73% 18.27% 9.16%
Return on average tangible equity* 21.54% 19.29% 10.37% 20.42% 9.78%
Efficiency ratio 48.68% 49.14% 52.75% 48.91% 53.27%
*Net income excluding amortization of goodwill and other intangible assets (net of applicable tax) as a percentage of average
equity excluding goodwill and other intangible assets (net of applicable tax).
</TABLE>
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H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONSOLIDATED AVERAGE STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(IN THOUSANDS)
<TABLE>
<CAPTION>
For the Three Months Ended June 30, 1997 March 31, 1997 June 30, 1996
- -------------------------- ------------- -------------- -------------
<S> <C> <C> <C>
Loans receivable (1) $ 31,111,587 $ 31,581,124 $ 30,757,519
MBS (2) 14,141,655 14,470,954 15,825,136
------------ ------------ ------------
Total loans and MBS 45,253,242 46,052,078 46,582,655
Investments 974,052 983,885 741,627
------------ ------------ ------------
Total interest-earning assets 46,227,294 47,035,963 47,324,282
Other assets 1,874,118 1,991,631 1,864,958
------------ ------------ ------------
Total assets $ 48,101,412 $ 49,027,594 $ 49,189,240
============ ============ ============
Deposits $ 33,946,754 $ 34,670,277 $ 33,515,453
Borrowings and trust capital securities 10,872,299 11,049,815 11,782,682
------------ ------------ ------------
Total interest-costing liabilities 44,819,053 45,720,092 45,298,135
Other liabilities 888,383 911,137 1,066,079
Stockholders' equity:
Preferred 482,500 482,500 657,500
Common 1,911,476 1,913,865 2,167,526
------------ ------------ ------------
Total liabilities and
stockholders' equity $ 48,101,412 $ 49,027,594 $ 49,189,240
============ ============ ============
For the Six Months Ended
- ------------------------
Loans receivable (1) $ 31,345,058 $ 31,016,758
MBS (2) 14,305,395 16,030,212
------------ ------------
Total loans and MBS 45,650,453 47,046,970
Investments 978,941 770,804
------------ ------------
Total interest-earning assets 46,629,394 47,817,774
Other assets 1,932,551 1,944,588
------------ ------------
Total assets $ 48,561,945 $ 49,762,362
============ ============
Deposits $ 34,306,517 $ 33,719,946
Borrowings and trust capital securities 10,960,567 11,965,575
------------ ------------
Total interest-costing liabilities 45,267,084 45,685,521
Other liabilities 900,229 1,163,778
Stockholders' equity:
Preferred 482,500 657,500
Common 1,912,132 2,255,563
------------ ------------
Total liabilities and
stockholders' equity $ 48,561,945 $ 49,762,362
============ ============
(1) Excludes the allowance for losses.
(2) Excludes the unrealized gain/loss on MBS available for sale.
</TABLE>
