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WASHINGTON MUTUAL ANNOUNCES RECORD FIRST-QUARTER EARNINGS AND INCREASED CASH DIVIDEND

    SEATTLE, April 20 /PRNewswire/ -- Washington Mutual Savings Bank (NASDAQ: WAMU) announced today record first-quarter 1993 earnings of $38.7 million, up 67 percent from first-quarter 1992 earnings of $23.2 million.  Fully diluted earnings per share were 86 cents, up from 62 cents a year earlier.
    The board of directors declared today an increased cash dividend on the common stock of 16 cents per share, a 7-percent increase from the previous cash dividend of 15 cents.  The increase is the 10th consecutive in the quarterly cash dividend.  The board also declared dividends of 57 cents per share on Series C Preferred Stock (NASDAQ: WAMUO) and $1.50 per share on Series D Preferred Stock (NASDAQ:WAMUN).  The dividends are payable May 17 to shareholders of record on April 30.
    "The strong performance throughout the company in the first quarter improved upon the strong momentum we built last year.  We had record first-quarter earnings and net interest income, continued strong loan production, a solid capital position, and decreased nonperforming assets.  Plus, we recently increased our customer base and retail network by acquiring Pioneer Savings Bank in the first quarter and Pacific First Bank early in the second quarter," said Kerry Killinger, Washington Mutual's chairman, president and chief executive officer.
    On March 1, 1993, the bank acquired Pioneer Savings Bank.  Pioneer Bank operated 17 branches and one mortgage lending center in the populous suburban areas north and east of Seattle.  At Feb. 28, 1993, Pioneer Bank had assets of $926.5 million, deposits of $659.5 million and stockholders' equity of $114.4 million.  All financial information presented has been restated to reflect the pooling-of-interests method of accounting required by the merger of Pioneer Bank into Washington Mutual.
    On April 9, 1993, the bank acquired Pacific First Bank, A Federal Savings Bank.  Pacific First operated 129 branches and 14 home loan centers in Washington and Oregon.  At March 31, 1993, Pacific First had assets of $5.8 billion and deposits of $3.8 billion.  This transaction will be accounted for as an acquisition and will be reflected in the second-quarter's financial statements.
    The continued favorable interest rate environment, plus the bank's solid capital position and ongoing focus on consumer banking, contributed to record net interest income of $102.1 million for first quarter 1993, up 45 percent from $70.5 million a year earlier.  The net interest margin increased to 4.25 percent for the first quarter of the year, up from 3.83 percent a year earlier.
    For the quarter ended March 31, 1993, residential loan originations were $491.5 million versus $641.2 million a year earlier, residential construction loan originations rose to $176.8 million from $101.1 million for first quarter 1992, and consumer loan originations increased to $122.7 million from $97.6 million a year ago.  While total loan originations for the quarter were $808.6 million, down from $849 million for first quarter 1992, record residential loan applications of approximately $664 million in March 1993 suggest that second-quarter originations should be very strong.
    While total deposits were relatively unchanged at $6 billion between March 31, 1993, and Dec. 31, 1992, funds under management increased. During that period, WM Life annuities increased to $602.7 million from $571.4 million and assets of the Composite Group of mutual funds rose to $1.1 billion from $1 billion.
    The operating efficiency ratio (other expense as a percentage of net interest income and other income) improved to 54.22 percent for first quarter 1993 from 55.5 percent for fourth quarter 1992.  The operating efficiency ratio was 52.6 percent for first quarter 1992.
    The nonbanking subsidiaries had pre-tax operating income (before amortization of intangible assets and intercompany eliminations) of $3.7 million, up from $3.3 million for the same period a year earlier.
    Total nonperforming assets decreased to $119.8 million at March 31, 1993, from $142.1 million at year-end 1993 and $149.5 million at March 31, 1992, the result of substantial sales as well as write downs of real estate owned.  This decrease, in conjunction with the bank's growth in assets, reduced total nonperforming assets as a percentage of total assets to 1.17 percent at March 31, 1993, from 1.43 percent at year-end 1992 and 1.83 percent at March 31, 1992.
    While nonperforming assets decreased during the quarter, the bank increased its loan loss provision for the first quarter to $12.5 million, versus a provision of $4.7 million for fourth quarter 1992 and $2.5 million for first quarter 1992.  This increase reflects the bank's larger loan portfolio and management's assessment that increased reserves are appropriate in light of continued pressure on the California real estate market and some slowing in the Northwest economy.  For the latter two reasons, the bank also set aside a $7-million provision for the real estate owned reserve for this quarter.
    The first-quarter financial statements reflect a significant accounting change and a number of extraordinary transactions.  First, the bank recorded approximately $6 million in one-time expenses related to the Pioneer Bank merger.
    Second, as the bank downsized slightly its balance sheet in preparation for the closing of the Pacific First acquisition, it recorded a gain of $10.6 million on the sale of $173.2 million in mortgage-backed securities and a loss of $5.9 million on an after-tax basis which reflects the prepayment of $302.6 million in advances from the Federal Home Loan Bank.
    Third, the bank set aside $1.6 million on an after-tax basis for a reserve to cover the expenses associated with calling the bank's 10-1/2-percent subordinated notes.  Although regulatory approval must be obtained, the bank intends to pursue calling these notes before March 16, 1994.
    Finally, as previously announced, the bank implemented the statement issued in February 1992 by the Financial Accounting Standards Board. The statement changed the accounting principles governing accounting for income taxes and the bank recorded an after-tax positive adjustment of $13.4 million.
    While a number of adjustments were included in the first quarter's earnings, operating earnings continued the favorable trend the bank experienced in 1992, said Killinger.
    "We look forward to building on the first quarter's excellent momentum and to integrating quickly and efficiently Pacific First and Pioneer Bank into our operations," Killinger added.
    Assets at March 31, 1993, were $10.2 billion.  As a result of merging Pacific First Bank into Washington Mutual's federal savings bank subsidiary and following the planned restructuring of assets, the bank expects to have assets of approximately $14.5 billion.  With 265 financial centers and 32 home loan centers in Washington and Oregon, Washington Mutual is the largest independently owned bank headquartered in Washington and the largest consumer bank in the Northwest.
        WASHINGTON MUTUAL SAVINGS BANK AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF INCOME
      (Unaudited, in thousands, except for per-share amounts)
                                                       Quarter
      Ended Mar. 31:                            1993            1992
      INTEREST INCOME
    Loans                                   $152,876        $135,145
    Mortgage-backed securities                40,092          38,066
    Investment securities                     11,443           6,746
    Cash equivalents                             394           1,049
    Total interest income                    204,805         181,006
      INTEREST EXPENSE
    Deposits                                  65,983          78,850
    Borrowings                                36,770          31,610
    Total interest expense                   102,753         110,460
    Net interest income                      102,052          70,546
    Provision for loan losses                 12,500           2,500
    Net interest income after provision
      for loan losses                         89,552          68,046
      OTHER INCOME
    Service fees                              13,416          11,230
    Loan servicing fees                        2,050           2,728
    Other operating income                     2,478           2,390
    Gain on sale of loans                      5,709           3,709
    Gain on sale of other assets, net          9,332           3,417
    Total other income                        32,985          23,474
      OTHER EXPENSE
    Salaries and employee benefits            31,870          22,910
    Occupancy and equipment                    8,920           7,655
    Deposit insurance                          3,558           3,236
    Other operating expense                   18,576          12,246
    Amortization of goodwill and
      other intangible assets                  2,724           2,247
    Real estate owned operations,
      inclusive of write-downs                 6,874           1,127
    Write-down of other assets                   694              --
    Total other expense                       73,216          49,421
    Income before federal income tax and
      extraordinary items                     49,321          42,099
    Federal income tax                        16,501          14,853
    Income before extraordinary items and
      cumulative effect of change in tax
      accounting method                       32,820          27,246
    Extraordinary items, net of federal
      income tax effect                       (7,499)         (4,035)
    Cumulative effect of change in tax
      accounting method                       13,365              --
    NET INCOME                              $ 38,686        $ 23,211
    NET INCOME AVAILABLE TO PRIMARY
      COMMON STOCK                          $ 34,990        $ 21,992
    Return on average assets (percents)         1.54            1.17
    Return on average equity (percents)        16.05           13.86
              WASHINGTON MUTUAL SAVINGS BANK AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF INCOME, CONTINUED
          (Unaudited, in thousands, except for per-share amounts)
                                                       Quarter
      Ended March 31:                           1993            1992
      Per-share amounts - primary
    Income before extraordinary items and
      cumulative effect of change in tax
      accounting method                        $0.77           $0.77
    Extraordinary items, net of federal
      income tax effect                        (0.20)          (0.12)
    Cumulative effect of change in tax
      accounting method                         0.36              --
    Net income                                 $0.93           $0.65
      Per-share amounts - fully diluted
    Income before extraordinary items and
      cumulative effect of change in tax
      accounting method                        $0.72           $0.73
    Extraordinary items, net of federal
      income tax effect                        (0.17)          (0.11)
    Cumulative effect of change in tax
      accounting method                         0.31              --
    Net income                                 $0.86           $0.62
               WASHINGTON MUTUAL SAVINGS BANK AND SUBSIDIARIES
                        SELECTED FINANCIAL INFORMATION
                      (Unaudited, dollars in thousands)
                                                      Quarter
      Ended March 31:                           1993            1992
      DATA USED TO COMPUTE PER-SHARE AMOUNTS
    Net income                               $38,686         $23,211
      Preferred stock dividends:
    Noncumulative Perpetual, Series C         (1,596)             --
    Noncumulative Convertible Perpetual,
      Series A                                    --          (1,219)
    Noncumulative Convertible Perpetual,
      Series D                                (2,100)             --
    Net income available to primary
      common stock                           $34,990         $21,992
    Net income                               $38,686         $23,211
      Preferred stock dividends:
    Noncumulative Perpetual, Series C         (1,596)             --
    Net income available to fully diluted
      common stock                           $37,090         $23,211
      Average common shares outstanding:
    Primary                               37,802,634      33,817,247
    Noncumulative Convertible Perpetual
      Preferred Stock, Series A            1,738,741       3,451,305
    Noncumulative Convertible Perpetual
      Preferred Stock, Series D            3,612,910              --
    Fully diluted                         43,154,285      37,268,552
             WASHINGTON MUTUAL SAVINGS BANK AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
      (Unaudited, dollars in thousands, except for per-share amounts)
                                             March 31,        Dec. 31,
                                               1993            1992
      ASSETS
    Cash and cash equivalents             $   144,668      $  190,602
    Trading account securities                  2,391           1,926
    Investment securities                     619,377         401,975
    Mortgage-backed securities              2,129,375       2,183,576
    Loans                                   6,707,093       6,719,680
    Real estate owned                          56,986          87,427
    Bank premises and equipment                77,706          78,306
    Goodwill and other intangible assets       59,881          61,448
    Other assets                              401,618         186,663
    Total assets                          $10,199,095      $9,911,603
      LIABILITIES
      Deposits:
    Checking accounts                     $   634,237      $  633,879
    Savings and money market accounts       1,820,961       1,771,479
    Time certificates                       3,523,138       3,651,029
    Total deposits                          5,978,336       6,056,387
    Annuities                                 602,717         571,428
    Federal Funds                               1,600              --
    Securities sold under agreements
      to repurchase                         1,284,391       1,061,332
    Advances from the Federal Home
      Loan Bank                             1,127,768       1,057,768
    Other borrowings                            5,118           5,124
    Other liabilities                         128,960         124,528
    Subordinated capital notes                 40,000          40,000
    Total liabilities                       9,168,890       8,916,567
      STOCKHOLDERS' EQUITY
    Preferred stock, $1 par value:
      5,500,000 shares authorized -
      4,200,290 and 5,494,150 shares
      issued and outstanding                    4,200           5,494
    Common stock, $1 par value:
      75,000,000 shares authorized -
      39,646,940 and 36,062,916 shares
      issued and outstanding                   39,647          36,063
    Capital surplus                           515,892         514,529
    Retained earnings                         470,466         438,950
    Total stockholders' equity              1,030,205         995,036
    Total liabilities and stockholders'
      equity                              $10,199,095      $9,911,603
    Book value per common share           $     22.20      $    21.46
    Tangible book value per common share  $     20.63      $    19.61
             Washington Mutual Savings Bank and Subsidiaries
                      Selected Financial Information
                     (Unaudited, dollars in millions)
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Date:Apr 20, 1993
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