<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 11-K
(Mark One)
[x] Annual Report pursuant to Section 15(d) of the Securities Exchange of
1934 [Fee Required]
For the fiscal year ended December 31, 1995
OR
[ ] Transition Report pursuant to Section 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the transition period from to
------ ------
Commission File Number 1-13578
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A. EMPLOYEES' RETIREMENT
AND SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
DOWNEY FINANCIAL CORP.
3501 Jamboree Road
Newport Beach, CA 92660
================================================================================
<PAGE>
INTRODUCTION
Downey Financial Corp. (the "Company") has established the Downey Savings
and Loan Association, F.A. Employees' Retirement and Savings Plan (the "Plan").
The Plan is a cash or deferred arrangement plan intended to qualify under
Section 401(k) of the Internal Revenue Code of 1986, as amended.
REQUIRED INFORMATION
I. Financial Statements.
These statements are listed in the Index to the Financial Statements.
II. Exhibits:
Consent of Independent Auditors.
Letter regarding Change in Certifying Accountant
CERTAIN INFORMATION REQUIRED BY ITEM 304 OF REGULATION S-K
Following completion of the audit for 1995, the Plan's auditor Scott,
Bankhead & Co. ("Former Auditors") resigned. The Former Auditors' report on the
financial statements for the past two years did not, for either of the years,
contain an adverse opinion or a disclaimer of opinion nor was it qualified or
modified as to uncertainty, audit scope or accounting principles. During the
registrant's two most recent fiscal years and the interim period preceding the
Former Auditors' resignation, there were no disagreements with the Former
Auditors on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of the Former Auditors, would have caused them
to make reference to the subject matter of the disagreements in connection with
their report, however, the Former Auditors objected that the Plan's Trustee did
not maintain separate accounting records for each fund and that initially the
investment valuation statement prepared by the Plan's record keeper did not
agree with the Trustee's accounting records. The Former Auditors informed the
Company that this accounting practice initially resulted in difficulties in
allocating accounts in the Statement of Changes in Net Assets Available to Plan
Benefits to individual funds. This matter was subsequently resolved to the
satisfaction of the Former Auditors.
Independent Auditors for the Plan are designated by the Company subject to
an approval involving selection by the Plan Committee. On January 1, 1997, KPMG
Peat Marwick LLP was engaged as the principal accountant to audit the Plan's
financial statements. The Board of Directors of the Company approved the change
of accountants.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed on its behalf by the undersigned, hereunto duly authorized.
DOWNEY SAVINGS AND LOAN
ASSOCIATION, F.A. EMPLOYEES'
RETIREMENT AND SAVINGS PLAN
Date: July 1, 1997 By: /s/ THOMAS E. PRINCE
------------- ----------------------------------
Thomas E. Prince
Member, Administrative Committee
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
Independent Auditors' Report
and
Financial Statements
(Item 26b of IRS Form 5500)
(EIN: 95-1953342 and PN: 001)
For the Years Ended
December 31, 1995 and 1994
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
Table of Contents
<TABLE>
Page
<S> <C>
Independent Auditors' Report ............................................... 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits .............. 3
Statements of Changes in Net Assets Available
for Plan Benefits ............................................... 4
Notes to Financial Statements (1 to 7) ............................ 5
Supplemental Statements and Schedules
Statement of Net Assets Available for Plan Benefits
by Fund as of December 31, 1995.................................. 11
Statement of Changes in Net Assets Available for
Plan Benefits by Fund for the Year Ended
December 31, 1995................................................ 12
Statement of Net Assets Available for Plan Benefits
by Fund as of December 31, 1994.................................. 13
Statement of Changes in Net Assets Available for
Plan Benefits by Fund for the Year Ended
December 31, 1994................................................ 14
Schedules of Assets Held for Investment Purposes .................. 15
Schedules of Reportable Transactions............................... 17
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Administrative Committee
of Downey Savings and Loan Association, FA
Employees' Retirement and Savings Plan
We have audited the Statements of Net Assets Available for Plan Benefits
(combined and by fund) of the Downey Savings and Loan Association, FA Employees'
Retirement and Savings Plan as of December 31, 1995 and 1994 and the related
Statements of Changes in Net Assets Available for Plan Benefits (combined and by
fund) for the years then ended. These financial statements are the
responsibility of the Administrative Committee of the Plan. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Downey
Savings and Loan Association, FA Employees' Retirement and Savings Plan as of
December 31, 1995 and 1994 and the changes in net assets available for plan
benefits for the years then ended in conformity with generally accepted
accounting principles.
(Continued on Page 2)
Page 1
<PAGE>
Independent Auditors' Report (Continued)
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedules of Assets Held
for Investment Purposes and Schedules of Reportable Transactions are presented
for the purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information. The Schedules of Assets
Held for Investment Purposes and Schedules of Reportable Transactions are
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedules have been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Scott Bankhead & Co.
September 20, 1996
Page 2
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
Combined Statements of Net Assets Available for Plan Benefits
December 31, 1995 and 1994
<TABLE>
<CAPTION>
Assets
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Investments, at fair value:
Mutual funds ........................... $ 4,989,614 3,338,071
Money market funds ..................... 2,870,320 2,328,404
Downey Financial Corp. .................
common stock ......................... 1,263,784 602,762
Notes receivable ....................... 312,367 101,263
First trust deed mortgages ............. -- 8,791
- --------------------------------------------------------------------------------
9,436,085 6,379,291
- --------------------------------------------------------------------------------
Receivables:
Employers' contribution ................ 908,361 979,236
Employees' contribution ................ -- 46,121
Dividends receivable ................... 24,532 --
- --------------------------------------------------------------------------------
932,893 1,025,357
Cash ..................................... 122,569 9
- --------------------------------------------------------------------------------
Total assets .................... 10,491,547 7,404,657
================================================================================
Liabilities
Accrued expenses ......................... -- (5,498)
Bank overdraft ........................... -- (821)
Note payable ............................. (19,850) --
- --------------------------------------------------------------------------------
Net assets available for
plan benefits .......................... $ 10,471,697 7,398,338
================================================================================
</TABLE>
See accompanying independent auditors' report
and notes to financial statements. Page 3
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
Combined Statements of Changes in Net Assets
Available for Plan Benefits
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Additions to net assets
attributed to:
Interest and dividends ................. $ -- 200,372
Gain on sale of investments ............ -- 920
Interest, dividend, and
realized and unrealized
gains and losses ..................... 1,430,210 --
- --------------------------------------------------------------------------------
1,430,210 201,292
Contributions by employers ............. 1,158,329 1,190,376
Contributions by employees ............. 1,349,427 1,339,183
Other .................................. -- 1,820
- --------------------------------------------------------------------------------
Total additions .................. 3,937,966 2,732,671
Deductions from net assets
attributed to:
Benefits paid to participants .......... (859,397) (621,253)
Administrative expenses ................ (5,210) (21,039)
Net depreciation in fair value
of investments ....................... -- (322,291)
- --------------------------------------------------------------------------------
Total deductions ................. (864,607) (964,583)
Transfers in ............................... 1,738,274 937,237
Transfers out .............................. (1,738,274) (937,237)
- --------------------------------------------------------------------------------
Net increase ..................... 3,073,359 1,768,088
Net assets available for plan benefits:
Beginning of year ........................ 7,398,338 5,630,250
- --------------------------------------------------------------------------------
End of year .............................. $ 10,471,697 7,398,338
================================================================================
</TABLE>
See accompanying independent auditors' report
and notes to financial statements. Page 4
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 1995 and 1994
(1) Description of Plan
The Downey Savings and Loan Association, FA Employees' Retirement and
Savings Plan (Plan) was originally established as a profit sharing plan on
January 1, 1978 and was originally called the Employees' Profit Sharing
Plan of Downey Savings and Loan Association. The Plan was restated as of
August 1, 1993 to qualify as both a profit sharing plan and a qualified
cash or deferred arrangement under Internal Revenue Code Sections 401(a)
and 401(k). The following description provides only general information.
Reference is made to the Plan's agreement for a more complete description
of the Plan's provisions.
(a) General
The Plan is a defined contribution plan covering all employees of
Downey Savings and Loan Association, FA, its affiliates and
subsidiaries (Employers) who have attained at least age twenty-one (21)
and completed at least one (1) year of "eligibility service". It
is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA). The Plan is administered by an
Administrative Committee, which is comprised of not less than three
persons appointed by the Association's Board of Directors.
(b) Contributions
Each year, participants may contribute up to 15 percent of their
compensation, as defined in the Plan. Participants may not roll over
into the Plan amounts representing distributions from other qualified
plans.
Each quarter, the Employers make a matching contribution equal to 25
percent of the participant's pretax contributions for the quarter which
do not exceed four percent (4%) of the participant's compensation for
that quarter. In addition, the Employers make annual contributions
based upon the participant's annual compensation and a participant age
weighted factor. Contributions are subject to certain limitations.
See accompanying independent auditors' report. Page 5
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 1995 and 1994
(c) Participant Accounts
Each participant's account is credited with the participant's
contribution and allocations of (a) the Employers' contributions and
(b) plan earnings and losses, and charged with an allocation of
administrative expenses. Allocations are based on participant earnings/
losses or account balances, as defined. Forfeited balances of
terminated participants' non-vested accounts are applied first to
restore amounts previously forfeited, are next applied to reduce
administrative expenses and then are applied to reduce future
Employers' contributions. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's
account.
(d) Vesting
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Employers' matching and discretionary
contribution portion of their accounts plus actual earnings thereon
is based on years of continuous service. A participant is 100 percent
vested after five years of credited service.
(e) Investment Options
Contributions by and on behalf of a participant shall be invested in
accordance with the participant's investment designations in one or
more investment funds established by the Administrative Committee.
Participants may change their investment options daily. The available
options are as follows:
Stock Fund -- The purpose of the fund is to give Plan participants the
opportunity to invest in Downey Financial Corp.
Schwab Institutional Advantage Money Market Fund -- The Fund seeks to
preserve capital and maintain a high degree of liquidity while
providing current income. This fund is managed by Charles Schwab
Investment Management Inc. The fun d will use a variety of securities
whose maturities will range between 30 and 75 days.
See accompanying independent auditors' report. Page 6
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 1995 and 1994
PIMCO Low Duration Fund -- The Fund seeks total return -- both income
and capital appreciation -- consistent with prudent investment
management.
Fidelity Balanced Fund -- The Fund seeks to obtain as much income as is
consistent with preservation of capital. The fund invests in a broadly
diversified portfolio of high-yielding securities, including common
stocks, preferred stocks and bonds.
Neuberger & Berman Guardian Fund -- The Fund is a growth and income
fund that emphasizes investments in stocks of established, high
quality companies considered to be undervalued in comparison to stocks
of similar companies.
Dodge & Cox Balanced Fund -- The Fund seeks income, conservation of
principal, and long-term growth of principal and income.
Wasatch Aggressive Equity Fund -- The Fund seeks long-term growth of
capital and income.
(f) Participant Notes Receivable
Participants may borrow from their fund accounts. Loan transactions
are treated as a transfer to (from) the investment funds. The loans are
secured by the balance in the participant's account and bear interest
at a rate commensurate with local prevailing rates as determined by
the Plan Committee. Principal and interest are paid ratably through
payroll deductions.
(g) Payment of Benefits
Upon termination of service, a participant may elect to receive
either a single sum payment in cash or Company Stock equal to the
value of the vested interest in his or her account, or a series of
substantially equal annual or more frequent installments over a period
not to exceed five (5) years.
(2) Summary of Accounting Policies
The accompanying financial statements have been prepared on the accrual
basis of accounting. The financial statements and notes are a
representation of the Plan's Administrative
See accompanying independent auditors' report. Page 7
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 1995 and 1994
Committee, which is responsible for their integrity and objectivity. Plan
investments are presented at fair value, which is determined by quoted
market prices on the last business day of the year. Benefits are recorded
when paid.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the plan administrator to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results may differ from those estimates.
(3) Investments
Under the terms of a trustee agreement, The Charles Schwab Trust Company
administers the investment funds on behalf of the Plan, under the direction
of the Employers' Administrative Committee. In accordance with the terms of
the Plan's Investment Policies, Guidelines, and Objectives the Plan will
offer a minimum of five investment options. Plan participants select the
options they prefer and allocate their contributions between options as
they deem appropriate. The Plan's investments are stated at fair value as
determined by the closing market value on the last business day of the
year. Brokerage commissions on the purchase of the common stock are
included in the cost of the stock. Purchases and sales of securities are
recorded on a trade-date basis. Interest income is recorded on the accrual
basis. Dividends are recorded on the ex-dividend date.
During 1981, Downey Savings and Loan Association, FA contributed to the
Plan first trust deed mortgages with a face value of $289,339 and a
discounted fair value of approximately sixty percent of face value. The
statements of net assets available for plan benefits include the discounted
fair value of the remaining unpaid mortgages.
Notes receivable from participants are included in the Statements of Net
Assets Available for Plan Benefits at cost, which approximates fair value
of the notes. The notes are payable through payroll deductions in
installments of principal plus interest at rates varying from 4.9% to
11.0%, with final payments due between April 1995 and January 2001, and are
secured by the participants' vested account balances. Participant notes
receivable are valued at cost which approximates the fair value of the
notes.
See accompanying independent auditors' report. Page 8
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 1995 and 1994
The following table presents the fair values of Plan investments as of December
31, 1995:
<TABLE>
<CAPTION>
Principal Fair
Cost Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Mutual Funds ............................. $4,631,962 4,989,614
Money Market funds ....................... 2,870,320 2,870,320
Downey Financial Corp..
common stock ........................... 963,153 1,263,784
Notes receivable ......................... 312,367 312,367
First Trust Deed
mortgages .............................. -- --
- --------------------------------------------------------------------------------
Total Investments ........................ $8,777,802 9,436,085
================================================================================
</TABLE>
The following table presents the fair values of Plan investments as of December
31, 1994:
<TABLE>
<CAPTION>
Principal Fair
Cost Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Mutual Funds ............................. $3,509,778 3,338,071
Money Market funds ....................... 2,328,404 2,328,404
Downey Financial Corp. ...................
common stock ........................... 704,246 602,762
Notes receivable ......................... 101,263 101,263
First Trust Deed
mortgages .............................. 8,791 8,791
- --------------------------------------------------------------------------------
Total Investments ........................ $6,652,482 6,379,291
================================================================================
</TABLE>
For the Plan year ended December 31, 1994, the Plan's investments depreciated in
value by $322,291.
See accompanying independent auditors' report. Page 9
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 1995 and 1994
(4) Plan Termination
Although they have not expressed any intent to do so, the Employers have
the right under the Plan to discontinue contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
(5) Federal Income Taxes
The Employers have obtained a letter of determination that the Plan, as
amended through plan year 1985, is exempt from federal income taxes under
Section 401(a) of the Internal Revenue Code.
The Plan was subsequently amended and/or restated several times. The most
recent restatement of the Plan was effective February 15, 1996. In the
opinion of management, the Plan continues to meet the requirements of the
Internal Revenue Code.
(6) Reclassifications
Certain amounts in the 1994 financial statements were reclassified to
conform to the current year's presentation. The 1994 General Fund was
combined with the 1994 Money Market Fund, and the 1994 participant notes
receivable were separated from the 1994 Money Market Fund and transferred
to a Loan Fund.
(7) Subsequent Events
During the first quarter of 1995, Downey Financial Corp. was formed as the
holding company of Downey Savings and Loan Association, FA. Shares of
Downey Savings and Loan Association common stock were exchanged for shares
of Downey Financial Corp. common stock.
See accompanying independent auditors' report. Page 10
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA EMPLOYEE RETIREMENT AND SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS BY FUND
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PIMCO NEUBERGER
MONEY LOW FIDELITY BERMAN DODGE WASATCH
STOCK MARKET DURATION BALANCED GUARDIAN LOAN & COX EQUITY
FUND FUND FUND FUND FUND FUND FUND FUND TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments at
fair value:
Mutual funds .... $ -- -- 822,011 1,478,919 2,053,483 -- 297,336 337,865 4,989,614
Money market
funds ......... -- 2,870,320 -- -- -- -- -- -- 2,870,320
Downey Financial
Corp. common
stock ........ 1,263,784 -- -- -- -- -- -- -- 1,263,784
Notes receivable -- 1,062 -- -- -- 311,305 -- -- 312,367
- ------------------------------------------------------------------------------------------------------------------------------------
1,263,784 2,871,382 822,011 1,478,919 2,053,483 311,305 297,336 337,865 9,436,085
- ------------------------------------------------------------------------------------------------------------------------------------
Receivables:
Employers'
contribution
Employees'
contribution .... 107,823 183,520 101,955 192,532 234,596 -- 28,351 59,584 908,361
Dividends ........ -- -- -- -- -- -- -- -- --
receivable ...... -- 19,709 4,823 -- -- -- -- -- 24,532
- ------------------------------------------------------------------------------------------------------------------------------------
107,823 203,229 106,778 192,532 234,596 -- 28,351 59,584 932,893
Cash .............. 40,924 14,052 10,785 17,879 25,991 -- 3,542 9,396 122,569
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets .. 1,412,531 3,088,663 939,574 1,689,330 2,314,070 311,305 329,229 406,845 10,491,547
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued expenses .. -- -- -- -- -- -- -- -- --
Bank overdraft .... -- -- -- -- -- -- -- -- --
Note payable ...... -- (19,850) -- -- -- -- -- -- (19,850)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets
available for
plan benefits .... $ 1,412,531 3,068,813 939,574 1,689,330 2,314,070 311,305 329,229 406,845 10,471,697
====================================================================================================================================
</TABLE>
See accompanying independent auditors' report. Page 11
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA EMPLOYEE RETIREMENT AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS BY FUND
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PIMCO NEUBERGER
MONEY LOW FIDELITY BERMAN DODGE WASATCH
STOCK MARKET DURATION BALANCED GUARDIAN LOAN & COX EQUITY
FUND FUND FUND FUND FUND FUND FUND FUND TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to
net assets
attributed to:
Interest,
dividend and
realized and
unrealized gains
and losses ....... $ 438,466 147,404 85,599 210,683 497,422 17,237 17,032 16,367 1,430,210
- ------------------------------------------------------------------------------------------------------------------------------------
438,466 147,404 85,599 210,683 497,422 17,237 17,032 16,367 1,430,210
Contributions by
employers ......... 126,836 294,461 123,985 231,969 285,097 -- 30,897 65,084 1,158,329
Contributions by
employees ......... 142,537 370,717 138,915 280,779 360,275 -- 20,191 36,013 1,349,427
- ------------------------------------------------------------------------------------------------------------------------------------
Total additions .. 707,839 812,582 348,499 723,431 1,142,794 17,237 68,120 117,464 3,937,966
Deductions from net
assets attributed
to:
Benefits paid to
participants .... (73,732) (252,076) (71,027) (208,832) (247,143) (6,587) -- -- (859,397)
Administrative
expenses ........ -- (5,210) -- -- -- -- -- -- (5,210)
- ------------------------------------------------------------------------------------------------------------------------------------
Total deductions (73,732) (257,286) (71,027) (208,832) (247,143) (6,587) -- -- (864,607)
Transfers in ....... 161,602 309,129 57,066 117,491 222,604 282,153 265,749 322,480 1,738,274
Transfers out ...... (147,286) (393,129) (189,401) (520,849) (367,109) (82,761) (4,640) (33,099) (1,738,274)
Net increase
(decrease) .... 648,423 471,296 145,137 111,241 751,146 210,042 329,229 406,845 3,073,359
Net assets
available for
plan benefits:
Beginning of year 764,108 2,597,517 794,437 1,578,089 1,562,924 101,263 -- -- 7,398,338
- ------------------------------------------------------------------------------------------------------------------------------------
End of year ..... $1,412,531 3,068,813 939,574 1,689,330 2,314,070 311,305 329,229 406,845 10,471,697
====================================================================================================================================
</TABLE>
See accompanying independent auditors' report. Page 12
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA EMPLOYEE RETIREMENT AND SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS BY FUND
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PIMCO NEUBERGER
MONEY LOW FIDELITY BERMAN
STOCK MARKET DURATION BALANCED GUARDIAN LOAN
FUND FUND FUND FUND FUND FUND TOTAL
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments at fair value:
Mutual funds ............. $ -- -- 682,040 1,338,168 1,317,863 -- 3,338,071
Money market funds ....... -- 2,328,379 -- 25 -- -- 2,328,404
Downey Financial Corp. ...
common stock ........... 602,762 -- -- -- -- -- 602,762
Notes receivable ......... -- -- -- -- -- 101,263 101,263
First trust deed mortgages -- 8,791 -- -- -- -- 8,791
Other .................... 34,489 (34,737) (194) 89 353 -- --
- -------------------------------------------------------------------------------------------------------------------------
637,251 2,302,433 681,846 1,338,282 1,318,216 101,263 6,379,291
- -------------------------------------------------------------------------------------------------------------------------
Receivables:
Employers' contribution .. 122,356 289,567 107,391 228,220 231,702 -- 979,236
Employees' contribution .. 4,501 11,827 5,200 11,587 13,006 -- 46,121
- -------------------------------------------------------------------------------------------------------------------------
126,857 301,394 112,591 239,807 244,708 -- 1,025,357
Cash ....................... -- 9 -- -- -- -- 9
- -------------------------------------------------------------------------------------------------------------------------
Total assets ......... 764,108 2,603,836 794,437 1,578,089 1,562,924 101,263 7,404,657
Liabilities:
Accrued expenses ........... -- (5,498) -- -- -- -- (5,498)
Bank overdraft ............. -- (821) -- -- -- -- (821)
- -------------------------------------------------------------------------------------------------------------------------
Net assets available for
plan benefits ............ $ 764,108 2,597,517 794,437 1,578,089 1,562,924 101,263 7,398,338
=========================================================================================================================
</TABLE>
See accompanying independent auditors' report. Page 13
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA EMPLOYEE RETIREMENT AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS BY FUND
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PIMCO NEUBERGER
MONEY LOW FIDELITY BERMAN
STOCK MARKET DURATION BALANCED GUARDIAN LOAN
FUND FUND FUND FUND FUND FUND TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
Additions to net assets
attributed to:
<S> <C> <C> <C> <C> <C> <C> <C>
Interest and dividends ............ $ 18,386 86,259 38,866 41,075 15,786 -- 200,372
Gain (loss) on sale of
investments ...................... -- -- (3,665) (11,676) 16,261 -- 920
- ------------------------------------------------------------------------------------------------------------------------------------
18,386 86,259 35,201 29,399 32,047 -- 201,292
Contributions by employers ......... 145,552 386,440 126,226 265,916 266,242 -- 1,190,376
Contributions by employees ......... 140,129 327,582 156,376 361,642 353,454 -- 1,339,183
Other .............................. -- 1,820 -- -- -- -- 1,820
- ------------------------------------------------------------------------------------------------------------------------------------
Total additions .............. 304,067 802,101 317,803 656,957 651,743 -- 2,732,671
Deductions from net assets attributed
to: ................................. (46,897) (574,356) -- -- -- -- (621,253)
Benefits paid to participants ...... (2,923) (7,850) (2,687) (4,118) (3,461) -- (21,039)
Administrative expenses
Net appreciation (depreciation) .... 164,766) -- (30,631) (99,873) (27,021) -- (322,291)
in fair value of investments ...... 279,751 (343,199) (194) 89 353 63,200 --
Other
- ------------------------------------------------------------------------------------------------------------------------------------
Total deductions ............. 65,165 (925,405) (33,512) (103,902) (30,129) 63,200 (964,583)
Transfers in ........................ 28,970 750,265 13,363 3,038 141,601 -- 937,237
Transfers out ....................... (66,714) (479,684) (81,956) (229,451) (79,432) -- (937,237)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) ...... 331,488 147,277 215,698 326,642 683,783 63,200 1,768,088
Net assets available for plan
benefits:
Beginning of year ................. 432,620 2,450,240 578,739 1,251,447 879,141 38,063 5,630,250
- ------------------------------------------------------------------------------------------------------------------------------------
End of year ....................... $764,108 2,597,517 794,437 1,578,089 1,562,924 101,263 7,398,338
====================================================================================================================================
</TABLE>
See accompanying independent auditors' report. Page 14
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
Schedule of Assets Held for Investment Purposes
(Item 27a of IRS Form 5500)
(EIN: 95-1953342 and PN: 001)
Year Ended December 31, 1995
<TABLE>
<CAPTION>
(c)
(b) Description of
Identity Investment Including
of Issue Maturity Date,
Borrower, Rate of Interest, (e)
Lessor, or Collateral, Par or (d) Current
(a) Similar Party Maturity Value Cost Value
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
* Schwab Money Market
Institutional
Advantage
Money Fund $ 2,870,320 2,870,320
* Downey Financial
Corp. Common Stock 963,153 1,263,784
PIMCO Low
Duration Fund Mutual Fund 817,843 822,011
Fidelity
Balanced Fund Mutual Fund 1,435,289 1,478,918
Neuberger &
Berman Equity
Guardian Fund Mutual Fund 1,755,943 2,053,482
Dodge & Cox
Balanced Fund Mutual Fund 290,957 297,338
Wasatch Advisors
Aggressive
Equity Fund Mutual Fund 331,930 337,865
Various Notes Receivable
4.9% and 11%
maturing between
April 1995 and
January 2001 -- 312,367
</TABLE>
* Denotes a party-in-interest
See accompanying independent auditors' report. Page 15
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
Schedule of Assets Held for Investment Purposes
(Item 27a of IRS Form 5500)
(EIN: 95-1953342 and PN: 001)
Year Ended December 31, 1994
<TABLE>
<CAPTION>
(c)
(b) Description of
Identity Investment Including
of Issue Maturity Date,
Borrower, Rate of Interest, (e)
Lessor, or Collateral, Par or (d) Current
(a) Similar Party Maturity Value Cost Value
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PIMCO Low
Duration Fund Mutual Fund $ 718,045 682,039
Fidelity
Balanced Fund Mutual Fund 1,448,496 1,338,167
Neuberger &
Berman Equity
Guardian Fund Mutual Fund 1,343,237 1,317,865
* Union Bank Money Market 2,328,404 2,328,404
* Downey
Financial Common Stock,
Corp. 39,852 shares 704,246 602,762
Plan Notes Receivable
Participants 4.9% and 7.6%,
maturing between
April 1995 and
December 1999 -- 101,263
Various First Trust Deed
Mortgages 8,791 8,791
</TABLE>
* Denotes a party-in-interest
See accompanying independent auditors' report. Page 16
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
Schedule of Reportable Transactions
(Item 27d of IRS Form 5500)
(EIN: 95-1953342 and PN: 001)
Year Ended December 31, 1995
<TABLE>
<CAPTION>
(g)(h)
Cost and
(f) Current (i)
(a) (c)(d) Expense Value of Net
Identity (b) Purchase Incurred Asset on Gain
of Party Description (Selling) with Transaction or
Involved of Asset Price Transaction Date Loss
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity Mutual Fund
Balanced Series of
Fund 82 purchases 769,135 -- 769,135 --
Fidelity Mutual Fund
Balanced Series of
Fund 77 sales 773,643 -- 782,394 (8,751)
Neuberger Mutual Fund
& Berman Series of 103
Equity purchases
Guardian
Fund 959,128 -- 959,128 --
Neuberger Mutual Fund
& Berman Series of
Equity 62 sales
Guardian
Fund 703,278 -- 545,887 157,391
PIMCO Low Mutual Fund
Duration Series of
Fund 77 purchases 370,852 -- 370,852 --
Schwab Money Market
Institu- Fund
tional Series of 135
Advantage purchases
Money Fund 3,606,046 -- 3,606,046 --
Schwab Money Market
Institu- Fund
tional Series of
Advantage 98 sales
Money Fund 784,872 -- 784,872 --
</TABLE>
See accompanying independent auditors' report. Page 17
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, FA
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
Schedule of Reportable Transactions
(Item 27d of IRS Form 5500)
(EIN: 95-1953342 and PN: 001)
Year Ended December 31, 1994
<TABLE>
<CAPTION>
(g)(h)
Cost and
(f) Current (i)
(a) (c)(d) Expense Value of Net
Identity (b) Purchase Incurred Asset on Gain
of Party Description (Selling) with Transaction or
Involved of Asset Price Transaction Date Loss
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Union Money Market
Bank Funds --
Series of 269
purchases 3,088,330 -- 3,088,330 --
PIMCO Low Mutual Fund
Duration Series of 35
Fund purchases 324,925 -- 324,925 --
Neuberger Mutual Fund
& Berman Series of 32
Guardian purchases
Fund 673,178 -- 673,178 --
Union Bank Money Market
Fund --
Series of
104 sales (2,776,570) -- (2,776,570) --
</TABLE>
See accompanying independent auditors' report. Page 18
<PAGE>
EXHIBIT 23.1
CONSENT OF SCOTT BANKHEAD & CO.
<PAGE>
June 27, 1997
Board of Directors
Downey Financial Corp.
3501 Jamboree Road
Newport Beach, CA 92660
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of Downey Financial Corp. pertaining to the Downey Savings and Loan
Association, F.A. Employees' Retirement and Savings Plan of our report dated
September 20, 1996 with respect to the financial statements of the Downey
Savings and Loan Association, F.A. Employees' Retirement and Savings Plan for
years ended December 31, 1995 and 1994 which report appears in the 1995 Annual
Report on Form 11-K of Downey Savings and Loan Association, F.A. Employees'
Retirement and Savings Plan.
Very truly yours,
/s/ Scott, Bankhead & Co.
<PAGE>
EXHIBIT 23.2
Letter regarding Change in Certifying Accountant
<PAGE>
June 27, 1997
Board of Directors
Downey Financial Corp.
3501 Jamboree Road
Newport Beach, CA 92660
We consent to the description of the statements made by the registrant in the
current Form 11-K concerning our resignation after the completion of the
independent auditor's report and financial statements for the plan year ending
December 31, 1995.
Very truly yours,
/s/ Scott, Bankhead & Co.
