<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: JULY 15, 1997
WESTCORP
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-13646 51-0308535
(State or other jurisdiction Commission File IRS Employer
of incorporation) Number Identification Number
23 PASTEUR, IRVINE, CALIFORNIA 92618-3816
(Address of principal executive offices) (Zip Code)
714-727-1000
(Registrant's telephone number, including area code)
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ITEM 7: Financial Statements and Exhibits
---------------------------------
a. List of documents filed as a part of this report
Exhibit 99.1. Westcorp News Release of July 15, 1997
WESTCORP
a California Corporation
Dated: July 15, 1997
/s/ RICHARD A. PALMER
------------------------------
Richard A. Palmer
Vice President, Westcorp
<PAGE> 1
EXHIBIT 99.1
July 15, 1997
Lee Whatcott
Senior Vice President & CFO
(714) 727-1629
WESTCORP ANNOUNCES SECOND QUARTER AND SIX MONTH RESULTS;
WESTERN FINANCIAL BANK FILES FOR SUBORDINATED DEBT OFFERING
Irvine, CA: Westcorp (NYSE: WES), the financial services holding company whose
principal subsidiaries are WFS Financial Inc (Nasdaq: WFSI) and Western
Financial Bank, today announced results for its second quarter and six months
ended June 30, 1997, and reported that Western Financial Bank had filed a
registration statement with the Office of Thrift Supervision with the intent of
issuing $150 million of subordinated debentures.
Westcorp reported net income of $9.9 million, or $0.38 per share, for the 1997
second quarter compared with net income of $10.7 million, or $0.41 per share a
year earlier. For the first half of 1997, net income totalled $17.8 million, or
$0.68 per share, compared with $20.5 million, or $0.79 per share for the first
six months of 1996. The decrease in net income is primarily related to the
increase in noninterest expenses.
Noninterest income in 1997 increased 32% to $57.6 million for the second quarter
and 27% to $109 million for the six-month period compared with $43.5 million and
$85.8 million, respectively, a year ago. The increases result primarily from
larger mortgage and automobile loan servicing portfolios. At June 30, 1997,
total serviced loans, including those serviced for the benefit of others,
reached $9.9 billion, up 10% from $9.0 billion at December 31, 1996.
Noninterest expense increased to $63.3 million and $121 million, respectively,
for the second quarter and first half of 1997 compared with $46.6 million and
$86.5 million for the corresponding prior year periods. The majority of the
increase stemmed from geographic expansion programs (which were substantially
completed in 1996) and
<PAGE> 2
investments in automation that are designed to enhance the growth opportunities
for Westcorp's automobile lending, mortgage and commercial banking businesses.
WFS automobile loan originations totalled $613 million during the second quarter
of 1997, a 17% increase over the $524 million originated a year ago. For the
first half of 1997, originations totalled $1.2 billion, a 13% increase over the
first six months of 1996. The increases reflect the nationwide expansion by WFS
as well as continued expansion in its existing markets, tempered by a heightened
emphasis on improving credit quality.
Mortgage loan originations by the Bank during the second quarter and first half
of 1997 increased to $543 million and $985 million compared with $251 million
and $560 million during the respective periods of 1996. These amounts represent
116% and 76% increases, reflecting an improved real estate market and continued
efficiencies gained in the Bank's origination capacity.
Nonperforming assets decreased to $28.1 million or 0.8% of total assets at June
30, 1997, compared with $33.0 million or 1.0% at December 31, 1996. Loans
delinquent 60 days or more also decreased to 1.0% of total loans at June 30,
1997 down from 1.1% at December 31, 1996. The allowance for loan losses was
$36.6 million at June 30, 1997 and $40.2 million at December 31, 1996. This
equates to 2.0% of total loans as of June 30, 1997 compared with 2.4% at
December 31, 1996.
Western Financial Bank said proceeds from the subordinated debt offering will be
used to (1) fund the operations of WFS (2) pay a dividend to Westcorp and (3)
use the balance for general corporate purposes. The Bank's primary growth
strategies focus on leveraging existing infrastructure to expand mortgage,
consumer and commercial lending; attracting and retaining customers through an
expanded range of deposit and lending products and other customer services; and
lowering its costs of funds. The offering is being managed by Donaldson, Lufkin
& Jenrette with co-manager Morgan Stanley Dean Witter. A copy of the prospectus
relating to the offering may be obtained from the underwriters.
<PAGE> 3
Western Financial Bank is a diversified financial services company providing a
wide array of products and services, including residential real estate lending
through its mortgage banking and equity lending divisions, deposit gathering
through its retail branch network, and commercial banking. The Bank currently
performs these activities through 25 wholesale and retail mortgage banking
offices in ten states, and through 26 retail banking offices in California. At
June 30, 1997, the Bank serviced $6.4 billion of mortgage loans.
All financing of automobile and light duty truck loans is conducted by WFS, a
subsidiary of the Bank. WFS currently originates and purchases loans in
California and 34 other states through 143 offices. At June 30, 1997, WFS
serviced $3.4 billion of loans secured by automobiles and light duty trucks.
This news release contains forward-looking statements including, but not limited
to, estimates of the impact of future losses and operating costs to future
periods that are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected, including that the
systems and initiatives that the company is undertaking do not achieve their
intended results. Additional risks that may affect the company's future
performance are detailed under the caption "Forward-looking Statements" in the
business section of the company's annual report on Form 10-K and quarterly
reports on Form 10-Q as filed with the Securities and Exchange Commission.
# # #
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WESTCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Cash, investments and time deposits $ 240,307 $ 315,905
Mortgage-backed securities 1,009,415 849,548
Loans:
Consumer (1) 320,894 284,858
Real Estate (2) 1,533,273 1,438,892
Commercial 17,983 7,867
Allowance for loan losses (36,616) (40,211)
Real estate owned, net 7,680 11,279
Non interest-earning assets 585,257 466,907
----------- -----------
$ 3,678,193 $ 3,335,045
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 1,997,051 $ 1,873,942
Securities sold under agreements to repurchase 370,424 287,412
FHLB advances and other borrowings 326,401 281,945
Non interest-bearing liabilities 546,234 468,899
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3,240,110 2,912,198
Subordinated debentures 105,214 104,917
Shareholders' equity 332,869 317,930
----------- -----------
$ 3,678,193 $ 3,335,045
=========== ===========
</TABLE>
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(1) Net of unearned discount and includes loans held for sale.
(2) Net of undisbursed loan proceeds and includes loans held for sale.
<PAGE> 5
WESTCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees $ 47,142 $ 42,917 $ 91,026 $ 84,576
Mortgage-backed securities 17,897 12,411 33,083 26,606
Investment securities 1,878 1,829 3,855 3,623
Other 1,641 1,690 3,124 3,122
----------- ----------- ----------- -----------
TOTAL INTEREST INCOME 68,558 58,847 131,088 117,927
Interest expense:
Deposits 26,480 24,579 52,415 49,696
Federal Home Loan Bank advances and other borrowings 8,699 5,155 15,742 11,188
Securities sold under agreement to repurchase 4,854 2,900 8,357 7,974
----------- ----------- ----------- -----------
TOTAL INTEREST EXPENSE 40,033 32,634 76,514 68,858
----------- ----------- ----------- -----------
NET INTEREST INCOME 28,525 26,213 54,574 49,069
Provision for loan losses 2,602 1,454 6,973 7,053
----------- ----------- ----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 25,923 24,759 47,601 42,016
Noninterest income:
Automobile lending 48,713 36,073 94,347 72,521
Mortgage banking 7,125 5,427 12,156 9,741
Investment and mortgage-backed
securities gains (losses) 837 90 837 (1,883)
Insurance income 1,315 1,336 2,580 5,686
Real estate operations (367) 209 (626) (1,351)
Rental operations (355) (174) (613) (84)
Miscellaneous 358 526 705 1,141
----------- ----------- ----------- -----------
TOTAL NONINTEREST INCOME 57,626 43,487 109,386 85,771
Noninterest expenses:
Salaries and employee benefits 36,855 28,084 70,317 51,331
Occupancy 3,850 2,483 7,669 4,954
Insurance 589 1,193 749 2,399
Miscellaneous 22,050 14,828 41,826 27,802
----------- ----------- ----------- -----------
TOTAL NONINTEREST EXPENSES 63,344 46,588 120,561 86,486
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 20,205 21,658 36,426 41,301
Income taxes 8,573 9,090 15,387 17,163
----------- ----------- ----------- -----------
INCOME BEFORE MINORITY INTEREST 11,632 12,568 21,039 24,138
Minority interest in earnings of subsidiaries 1,747 1,894 3,258 3,616
----------- ----------- ----------- -----------
NET INCOME $ 9,885 $ 10,674 $ 17,781 $ 20,522
=========== =========== =========== ===========
NET INCOME PER COMMON SHARE
AND COMMON SHARE EQUIVALENTS $ 0.38 $ 0.41 $ 0.68 $ 0.79
=========== =========== =========== ===========
CASH DIVIDENDS DECLARED PER SHARE
AND COMMON SHARE EQUIVALENTS $ 0.10 $ 0.10 $ 0.20 $ 0.20
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
AND COMMON SHARE EQUIVALENTS 26,283,343 26,196,613 26,273,447 26,135,111
=========== =========== =========== ===========
</TABLE>
<PAGE> 6
WESTCORP AND SUBSIDIARIES
OTHER SELECTED FINANCIAL DATA (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
LOAN ORIGINATIONS
Consumer $ 616,299 $ 525,596 $1,170,459 $1,031,332
Real Estate 543,105 251,438 984,574 560,237
Commercial 10,272 17,938
---------- ---------- ---------- ----------
Total $1,169,676 $ 777,034 $2,172,971 $1,591,569
========== ========== ========== ==========
INTEREST RATE SPREAD - OWNED LOANS
Yield on interest-earning assets 8.54% 8.64% 8.50% 8.49%
Cost of interest-bearing liabilities 5.78% 5.69% 5.79% 5.78%
---------- ---------- ---------- ----------
Interest spread 2.76% 2.95% 2.71% 2.71%
========== ========== ========== ==========
OWNED LOAN LOSS EXPERIENCE
Consumer 2.18% 2.12% 2.76% 2.86%
Real Estate 1.08% (0.03)% 0.67% 0.06%
---------- ---------- ---------- ----------
Total 1.28% 0.42% 1.04% 0.61%
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- -----------
<S> <C> <C>
SERVICING PORTFOLIO (1)
Consumer $3,423,479 $3,048,678
Real Estate 6,426,846 5,918,497
Commercial 17,982 7,867
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$9,868,307 $8,975,042
========== ==========
</TABLE>
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
----------------------- -----------------------
Amount % Amount %
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
OWNED LOAN DELINQUENCY 60+
Consumer $ 2,200 0.7% $ 2,524 0.9%
Real Estate 15,594 1.0% 17,022 1.2%
---------- ---------- ---------- ----------
Total $ 17,794 1.0% $ 19,546 1.1%
========== ========== ========== ==========
</TABLE>
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(1) At end of period, net of unearned discount and includes loans held for sale.
