EXHIBIT 99.1
Press Release dated January 18, 2001
For further information contact:
Thomas E. Prince
Chief Financial Officer
(949)509-4440
DOWNEY ANNOUNCES ANOTHER RECORD YEAR
Newport Beach, California - January 18, 2000 - Downey Financial Corp.
(NYSE: DSL) reported that net income for 2000 totaled a record $99.2 million or
$3.51 per share on a diluted basis. Included in the results was a $5.6 million
after-tax gain from the sale of Downey's indirect automobile finance subsidiary
in February 2000. Excluding the gain, net income for the year would have been
$93.6 million or $3.32 per share on a diluted basis, up 46.8% from $63.8 million
or $2.26 per share in 1999.
Highlights of 2000 (excluding the gain from the sale of the indirect
automobile finance subsidiary) compared to last year include:
o a 15.8% increase in assets and a 23.2% increase in deposits;
o adjusted net income from banking operations of $89.2 million, up $35.4
million or 65.8%;
o an efficiency ratio of 46.2%, compared to 58.4%;
o an adjusted return on average shareholders' equity of 16.20%, up from
12.70%; and
o non-performing assets of only 0.50% of total assets.
Daniel D. Rosenthal, President and Chief Executive Officer commented, "We
were very pleased with the performance this year within our banking operations
which benefited from the significant growth over the past year in our loan
portfolio thereby contributing to higher net interest income. Banking operations
also benefited from declines in both general and administrative expense and
provision for loan losses. This improved performance was reflected in a higher
stock price for our shareholders, as our stock price increased 172% during the
year."
Mr. Rosenthal continued, "The recent decline in market interest rates is
resulting in increasing borrower interest in fixed rate mortgages and a higher
level of refinance activity. We stand ready to take advantage of this changing
market and anticipate originating a higher volume of fixed rate loans for sale
in the secondary market. Even though borrower preference is changing, we still
anticipate a market for adjustable rate mortgages to add to our portfolio. There
has been recent investor concern over potential problem loans for institutions
that lend to California's major public utility companies. Downey does not have
any loans to those entities."
Net income for the fourth quarter of 2000 totaled $23.0 million or $0.81
per share
<PAGE>
on a diluted basis, up 15.9% from the $19.8 million or $0.70 per share reported
in the same period a year ago. Net income from banking operations totaled $22.7
million and was $8.2 million or 56.6% above a year ago, while net income from
real estate operations declined by $5.1 million to $0.3 million.
Net interest income totaled $68.9 million in the fourth quarter of 2000, up
$12.7 million or 22.5% from the same period last year. The improvement between
fourth quarters reflected increases in both average earning assets and the
effective interest rate spread. Average earning assets increased by $1.5 billion
or 17.3% to $10.2 billion, while the effective interest rate spread increased to
2.71% from 2.59% in the fourth quarter of 1999. For 2000, net interest income
totaled $262.5 million, up $55.0 million or 26.5% from a year ago.
Provision for loan losses was $0.5 million in the current quarter, down
from $3.3 million in the year-ago quarter. The allowance for loan losses
declined from $38 million at December 31, 1999 to $34 million at December 31,
2000 due to the previously mentioned sale of the indirect automobile finance
subsidiary. Net charge-offs totaled $0.1 million in the 2000 fourth quarter,
down from $0.9 million a year ago. For 2000, provision for loan losses was $3.3
million and net charge-offs were $1.3 million. That compares to a provision for
loan losses of $11.3 million and net charge-offs of $4.4 million in 1999.
Total other income was $7.5 million in the fourth quarter of 2000, down
$10.9 million from a year ago. The decline was primarily in the categories of
income from real estate held for investment, loan servicing fees and net gains
from the sales of loans and mortgage-backed securities. Income from real estate
held for investment declined by $8.7 million, as net gains on sales and declines
in valuation allowances totaled $0.4 million, compared to $8.4 million in the
year-ago quarter. Loan servicing fees in the current quarter reflected a loss of
$4.1 million compared to income of $0.4 million in the year-ago period. The
current quarter loss resulted from a $5.0 million addition to the valuation
allowance for mortgage servicing assets due to an increase in expected
prepayments from the recent drop in mortgage interest rates. Net gains on sales
of loans and mortgage-backed securities declined by $1.3 million to $1.1 million
due to a lower volume of loans being sold. Partially offsetting those declines
was a $3.9 million increase in loan and deposit related fees reflecting
increases of $2.4 million in loan prepayment fees and $0.7 million in automated
teller machine fees. For 2000, total other income was $50.6 million, down $8.7
million from a year ago despite the pre-tax gain from the sale of the indirect
auto finance subsidiary of $9.8 million.
Operating expense totaled $36.3 million in the current quarter, down $0.7
million from the fourth quarter of 1999. The decline was due to lower general
and administrative costs even though current quarter expense included a $1.1
million one-time increase associated with an adjustment to an existing pension
obligation. Excluding that one-time adjustment, general and administrative
expense would have declined by $2.0 million or 5.5%. That decline was primarily
due to lower costs associated with residential lending activities and the sale
of the indirect automobile finance subsidiary. For 2000, operating
<PAGE>
expense totaled $137.5 million, down $7.4 million from 1999.
At December 31, 2000, assets totaled $10.9 billion, up $1.5 billion or
15.8% from a year ago. Single family loan originations totaled $1.226 billion in
the fourth quarter of 2000, down 21.2% from the $1.554 billion originated in the
fourth quarter of 1999. Of the current quarter total, $890 million represented
originations of loans for portfolio of which $211 million represented subprime
credits. At year end, the subprime portfolio totaled $1.7 billion, with an
average loan-to-value ratio at origination of 75% and, of the total, 71%
represented "A-" credits. In addition to single family loans, $58 million of
other loans were originated in the quarter.
At December 31, 2000, deposits totaled $8.1 billion, up $1.5 billion or
23.2% from a year ago. During the quarter, one new traditional branch and six
new in-store branches were opened, increasing total branches to 114, of which 49
were in-store. At year end, the average deposit size of our traditional branches
was $108 million, while the average size of our in-store branches was $22
million.
Non-performing assets increased $5 million during the quarter to $55
million or 0.50% of total assets. The increase was in single family residential
loans, of which $2 million was associated with subprime credits.
At December 31, 2000, Downey Financial Corp.'s primary subsidiary, Downey
Savings and Loan Association, F.A., had core and tangible capital ratios of
6.42% and a risk-based capital ratio of 12.94%. These capital levels were well
above the "well capitalized" standards of 5% and 10%, respectively, as defined
by regulation.
Certain statements in this release may constitute "forward looking
statements" under the Private Securities Litigation Reform Act of 1995, which
involve risk and uncertainties. Downey's actual results may differ significantly
from the results discussed in such forward-looking statements. Factors that
might cause such a difference include, but are not limited to, economic
conditions, competition in the geographic and business areas in which Downey
conducts its operations, fluctuations in interest rates, credit quality and
government regulation.
For further information contact: Thomas E. Prince, Executive Vice President
and Chief Financial Officer at (949)509-4440.
<PAGE>
Downey Financial Corp. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
--------------------------
(Dollars in Thousands, Except Per Share Data) 2000 1999
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash ....................................................................... $ 108,202 $ 121,146
Federal funds .............................................................. 19,601 1
---------------------------------------------------------------------------------------------------------
Cash and cash equivalents ................................................. 127,803 121,147
U.S. Treasury securities, agency obligations and other investment securities
available for sale, at fair value ......................................... 305,615 171,823
Municipal securities held to maturity, at amortized cost (estimated market
value of $6,534 at December 31, 2000 and $6,710 at December 31, 1999) ..... 6,550 6,728
Loans held for sale, at lower of cost or market ............................ 251,572 136,005
Mortgage-backed securities available for sale, at fair value ............... 10,203 21,719
Loans receivable held for investment ....................................... 9,822,578 8,588,339
Investments in real estate and joint ventures .............................. 17,641 42,172
Real estate acquired in settlement of loans ................................ 9,942 5,899
Premises and equipment ..................................................... 104,178 107,978
Federal Home Loan Bank stock, at cost ...................................... 106,356 102,392
Mortgage servicing rights, net ............................................. 40,731 34,263
Other assets ............................................................... 90,694 69,075
---------------------------------------------------------------------------------------------------------
$10,893,863 $ 9,407,540
=========================================================================================================
Liabilities and Stockholders' Equity
Deposits ................................................................... $ 8,082,689 $ 6,562,761
Federal Home Loan Bank advances ............................................ 1,978,348 2,122,407
Other borrowings ........................................................... 224 373
Accounts payable and accrued liabilities ................................... 54,236 45,682
Deferred income taxes ...................................................... 33,730 23,899
---------------------------------------------------------------------------------------------------------
Total liabilities ......................................................... 10,149,227 8,755,122
---------------------------------------------------------------------------------------------------------
Company obligated mandatorily redeemable capital securities of subsidiary
trust holding solely junior subordinated debentures of the Company
("Capital Securities") .................................................... 120,000 120,000
Stockholders' equity:
Preferred stock, par value of $0.01 per share; authorized 5,000,000 shares;
outstanding none .......................................................... -- --
Common stock, par value of $0.01 per share; authorized 50,000,000 shares;
outstanding 28,205,741 shares at Dec. 31, 2000 and 28,148,409 shares at
December 31, 1999 ......................................................... 282 281
Additional paid-in capital ................................................. 93,239 92,385
Accumulated other comprehensive income (loss)-unrealized gains (losses) on
securities available for sale ............................................. 687 (1,568)
Retained earnings .......................................................... 530,428 441,320
---------------------------------------------------------------------------------------------------------
Total stockholders' equity ................................................ 624,636 532,418
---------------------------------------------------------------------------------------------------------
$10,893,863 $ 9,407,540
=========================================================================================================
</TABLE>
<PAGE>
Downey Financial Corp. and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------------------------------------------
(Dollars in Thousands, Except Per Share Data) 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Loans receivable ..................................................... $ 203,336 $ 156,771 $ 760,538 $ 519,006
U.S. Treasury securities and agency obligations ...................... 3,956 2,547 13,387 8,025
Mortgage-backed securities ........................................... 184 364 1,060 1,638
Other investments .................................................... 2,299 1,562 9,375 5,082
---------------------------------------------------------------------------------------------------------------------------------
Total interest income ............................................... 209,775 161,244 784,360 533,751
---------------------------------------------------------------------------------------------------------------------------------
Interest expense:
Deposits ............................................................. 108,894 75,713 379,303 256,764
Borrowings ........................................................... 28,903 26,208 130,419 64,161
Capital securities ................................................... 3,041 3,041 12,163 5,348
---------------------------------------------------------------------------------------------------------------------------------
Total interest expense .............................................. 140,838 104,962 521,885 326,273
---------------------------------------------------------------------------------------------------------------------------------
Net interest income .................................................. 68,937 56,282 262,475 207,478
Provision for loan losses ............................................. 511 3,253 3,251 11,270
---------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses .................. 68,426 53,029 259,224 196,208
---------------------------------------------------------------------------------------------------------------------------------
Other income, net:
Loan and deposit related fees ........................................ 9,300 5,422 30,089 20,097
Real estate and joint ventures held for investment, net:
Operations, net ..................................................... 678 5,376 6,683 10,430
Net gains on sales of wholly owned real estate ...................... 303 3,969 2,981 5,206
(Provision for) reduction of losses on real estate and joint ventures (36) 292 (866) 3,666
Secondary marketing activities:
Loan servicing fees ................................................. (4,113) 423 (3,628) 1,672
Net gains (losses) on sales of loans and mortgage-backed securities . 1,112 2,366 3,297 14,806
Net gains (losses) on sales of investment securities ................. 2 -- (106) 288
Gain on sale of subsidiary ........................................... -- -- 9,762 --
Other ................................................................ 299 558 2,342 3,113
---------------------------------------------------------------------------------------------------------------------------------
Total other income, net ............................................. 7,545 18,406 50,554 59,278
---------------------------------------------------------------------------------------------------------------------------------
Operating expense:
Salaries and related costs ........................................... 21,743 22,342 82,522 86,163
Premises and equipment costs ......................................... 5,945 5,592 23,220 20,617
Advertising expense .................................................. 1,121 1,675 4,786 8,595
Professional fees .................................................... 1,274 938 3,319 2,502
SAIF insurance premiums and regulatory assessments ................... 696 1,031 2,626 3,937
Other general and administrative expense ............................. 5,188 5,362 19,716 22,568
---------------------------------------------------------------------------------------------------------------------------------
Total general and administrative expense ............................ 35,967 36,940 136,189 144,382
---------------------------------------------------------------------------------------------------------------------------------
Net operation of real estate acquired in settlement of loans ......... 263 32 818 19
Amortization of excess of cost over fair value of net assets acquired 114 120 462 474
---------------------------------------------------------------------------------------------------------------------------------
Total operating expense ............................................. 36,344 37,092 137,469 144,875
---------------------------------------------------------------------------------------------------------------------------------
Income before income taxes ............................................ 39,627 34,343 172,309 110,611
Income taxes .......................................................... 16,632 14,507 73,058 46,807
---------------------------------------------------------------------------------------------------------------------------------
Net income ........................................................... $ 22,995 $ 19,836 $ 99,251 $ 63,804
=================================================================================================================================
PER SHARE INFORMATION:
Basic ................................................................ $ 0.81 $ 0.71 $ 3.52 $ 2.27
=================================================================================================================================
Diluted .............................................................. $ 0.81 $ 0.70 $ 3.51 $ 2.26
=================================================================================================================================
Cash dividends declared and paid ..................................... $ 0.09 $ 0.09 $ 0.36 $ 0.35
=================================================================================================================================
Weighted average diluted shares outstanding .......................... 28,276,052 28,176,837 28,225,551 28,175,537
=================================================================================================================================
</TABLE>
<PAGE>
Downey Financial Corp. and Subsidiaries
Selected Financial Statistics
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- ---------------------------
2000 1999 2000 1999
----------------------- ---------------------------
<S> <C> <C> <C> <C>
Net income by business segment:
Banking (a) ........................................... $ 22,738 $ 14,520 $ 94,822 $ 53,796
Real estate investment ................................ 257 5,316 4,429 10,008
----------------------- ---------------------------
Total net income ..................................... $ 22,995 $ 19,836 $ 99,251 $ 63,804
======================= ===========================
Effective interest rate spread ......................... 2.71% 2.59% 2.66% 2.88%
Return on average assets ............................... 0.87 0.88 0.97 0.85
Return on average equity ............................... 15.00 15.19 17.17 12.70
Loans for portfolio:
Originations (b):
One-to-four unit residential mortgages ............... $ 678,656 $ 894,522 $ 2,849,941 $ 3,402,050
One-to-four unit residential mortgages-subprime ...... 211,121 316,264 404,506 1,207,702
All other ............................................ 57,901 126,756 253,529 530,129
Repayments ............................................ (621,199) (439,238) (1,981,802) (1,823,585)
Loans originated for sale .............................. 335,726 343,603 1,729,220 2,042,274
Increase in loans (including mortgage-backed securities) 437,612 845,462 1,338,290 2,957,698
Increase in assets ..................................... 526,650 906,851 1,486,323 3,137,121
Increase in deposits ................................... 390,907 251,449 1,519,928 1,523,028
Increase (decrease) in borrowings ..................... 118,069 637,072 (144,208) 1,419,060
</TABLE>
<TABLE>
<CAPTION>
December 31, September 30, December 31,
2000 2000 1999
-------------------------------------------
<S> <C> <C> <C>
Capital ratios (Bank only):
Tangible capital ......... 6.42% 6.56% 6.27%
Core capital ............. 6.42 6.56 6.27
Risk-based capital ....... 12.94 13.11 12.14
Book value per share ...... $22.15 $21.37 $18.91
Number of branches including in-store locations 114 107 104
</TABLE>
(a) In the first quarter of 2000, a $5.6 million after-tax gain was recognized
from the sale of Downey Auto Finance Corp.
(b) Includes minor amounts of loans purchased.
Note: Certain prior period amounts have been reclassified to conform to
the current period presentation.
<PAGE>
Downey Financial Corp. and Subsidiaries
Selected Financial Statistics - Continued
(Dollars in Thousands)
<TABLE>
<CAPTION>
December 31, September 30, December 31,
2000 2000 1999
--------------------------------------------
<S> <C> <C> <C>
Loans held for investment:
Loans secured by real estate:
Residential one-to-four units ............................ $ 7,655,238 $ 7,393,275 $ 6,155,399
Residential one-to-four units-subprime ................... 1,743,914 1,652,462 1,639,401
--------------------------------------------
Total one-to-four units ................................. 9,399,152 9,045,737 7,794,800
Residential five or more units ........................... 19,460 19,728 21,055
Commercial real estate ................................... 164,604 164,305 148,327
Construction ............................................. 118,165 120,179 176,487
Land ..................................................... 26,880 26,294 67,631
Non-mortgage:
Commercial ............................................... 21,721 23,454 26,667
Automobile (a) ........................................... 39,614 40,303 399,789
Other consumer ........................................... 60,653 60,362 49,344
--------------------------------------------
Total loans held for investment ......................... 9,850,249 9,500,362 8,684,100
Increase (decrease) for:
Undisbursed loan funds and net deferred costs and premiums 6,781 1,186 (57,419)
Allowance for losses ..................................... (34,452) (34,014) (38,342)
--------------------------------------------
Total loans held for investment, net .................... $ 9,822,578 $ 9,467,534 $ 8,588,339
============================================
Loans held for sale, net:
Loans held for sale:
One-to-four units ......................................... $ 251,014 $ 163,726 $ 122,133
One-to-four units-subprime ................................ 558 3,050 13,872
--------------------------------------------
Total loans held for sale ................................ $ 251,572 $ 166,776 $ 136,005
============================================
Loans serviced for others ................................... $ 3,964,462 $ 4,020,931 $ 2,923,778
============================================
Delinquent loans:
30-59 days ................................................. $ 20,191 $ 23,227 $ 21,934
60-89 days ................................................. 16,324 8,595 7,674
90+ days ................................................... 30,070 28,636 21,559
--------------------------------------------
Total delinquent loans .................................... $ 66,585 $ 60,458 $ 51,167
============================================
Delinquencies as a percentage of total loans ................ 0.66% 0.63% 0.58%
============================================
Non-performing assets:
Non-accrual loans:
Residential one-to-four units ............................. $ 20,746 $ 17,976 $ 15,590
Residential one-to-four units-subprime .................... 22,296 20,389 13,914
Other ..................................................... 1,708 1,867 3,477
--------------------------------------------
Total non-accrual loans .................................. 44,750 40,232 32,981
Troubled debt restructure-below market rate (b) ........... 206 209 --
Real estate acquired in settlement of loans ............... 9,942 9,161 5,899
Repossessed automobiles ................................... 76 -- 314
--------------------------------------------
Total non-performing assets .............................. $ 54,974 $ 49,602 $ 39,194
============================================
Non-performing assets as a percentage of total assets ....... 0.50% 0.48% 0.42%
============================================
<FN>
(a) The decline between December 31, 1999 and September 30, 2000 primarily
reflected the sale of subsidiary.
(b) Represents one one-to-four unit residential loan.
</FN>
</TABLE>
<PAGE>
Downey Financial Corp. and Subsidiaries
Selected Financial Statistics - Continued
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------
December 31, 2000 December 31, 1999
----------------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Rate Balance Rate
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans ........................................... $ 9,803,336 8.30% $ 8,392,613 7.47%
Mortgage-backed securities ...................... 11,282 6.52 22,663 6.42
Investment securities ........................... 378,359 6.58 277,453 5.88
--------------------------------------------------------------------------------------------------
Total interest-earning assets .................. 10,192,977 8.23 8,692,729 7.42
Non-interest-earning assets ...................... 341,736 324,486
--------------------------------------------------------------------------------------------------
Total assets .................................... $10,534,713 $9,017,215
==================================================================================================
Transaction accounts:
Non-interest-bearing checking ................... $ 228,353 -- % $ 181,083 -- %
Interest-bearing checking (a) ................... 386,301 0.80 360,522 1.03
Money market .................................... 88,956 2.84 95,234 2.79
Regular passbook ................................ 764,511 3.42 817,256 3.48
--------------------------------------------------------------------------------------------------
Total transaction accounts ..................... 1,468,121 2.16 1,454,095 2.39
Certificates of deposit .......................... 6,394,378 6.28 4,996,976 5.32
--------------------------------------------------------------------------------------------------
Total deposits .................................. 7,862,499 5.51 6,451,071 4.66
Borrowings ....................................... 1,814,189 6.34 1,836,878 5.66
Capital securities ............................... 120,000 10.14 120,000 10.14
--------------------------------------------------------------------------------------------------
Total deposits, borrowings and capital securities 9,796,688 5.72 8,407,949 4.95
Other liabilities ................................ 124,765 86,806
Stockholders' equity ............................. 613,260 522,460
--------------------------------------------------------------------------------------------------
Total liabilities and stockholders equity ....... $10,534,713 $9,017,215
==================================================================================================
Net interest income/interest rate spread ......... 2.51% 2.47%
Excess of interest-earning assets over
deposits, borrowings and capital securities ..... $ 396,289 $ 284,780
Effective interest rate spread ................... 2.71 2.59
==================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Twelve Months Ended
----------------------------------------------
December 31, 2000 December 31, 1999
----------------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Rate Balance Rate
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans ........................................... $ 9,514,978 7.99% $6,937,342 7.48%
Mortgage-backed securities ...................... 15,959 6.64 26,361 6.21
Investment securities ........................... 346,192 6.57 232,746 5.63
--------------------------------------------------------------------------------------------------
Total interest-earning assets .................. 9,877,129 7.94 7,196,449 7.42
Non-interest-earning assets ...................... 340,242 304,779
--------------------------------------------------------------------------------------------------
Total assets .................................... $10,217,371 $7,501,228
==================================================================================================
Transaction accounts:
Non-interest-bearing checking ................... $ 209,221 -- % $ 165,271 -- %
Interest-bearing checking (a) ................... 381,269 0.92 336,604 1.04
Money market .................................... 89,495 2.84 95,282 2.77
Regular passbook ................................ 796,212 3.50 767,238 3.42
--------------------------------------------------------------------------------------------------
Total transaction accounts ..................... 1,476,197 2.30 1,364,395 2.37
Certificates of deposit .......................... 5,814,653 5.94 4,332,897 5.18
--------------------------------------------------------------------------------------------------
Total deposits .................................. 7,290,850 5.20 5,697,292 4.51
Borrowings ....................................... 2,118,497 6.16 1,175,704 5.46
Capital securities ............................... 120,000 10.14 52,903 10.14
--------------------------------------------------------------------------------------------------
Total deposits, borrowings and capital securities 9,529,347 5.48 6,925,899 4.71
Other liabilities ................................ 110,045 72,917
Stockholders' equity ............................. 577,979 502,412
--------------------------------------------------------------------------------------------------
Total liabilities and stockholders equity ....... $10,217,371 $7,501,228
==================================================================================================
Net interest income/interest rate spread ......... 2.46% 2.71%
Excess of interest-earning assets over
deposits, borrowings and capital securities ..... $ 347,782 $ 270,550
Effective interest rate spread ................... 2.66 2.88
==================================================================================================
</TABLE>
(a) Includes amounts swept into money market deposit accounts.
