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WASHINGTON MUTUAL ANNOUNCES RECORD SECOND-QUARTER EARNINGS, 50 PERCENT STOCK DIVIDEND AND 31 PERCENT INCREASE IN THE CASH DIVIDEND

    SEATTLE, July 20 /PRNewswire/ -- Washington Mutual Savings Bank (NASDAQ: WAMU) announced today record second-quarter earnings of $45.6 million, up 72 percent from $26.5 million for second quarter 1992. Fully diluted earnings per share were $1.02, up from 69 cents a year earlier.  For the first six months of 1993, earnings of $84.3 million, or $1.88 per share, increased 69 percent from $49.7 million, or $1.31 per share, a year earlier.
    The board of directors declared today a 50 percent stock dividend on the common stock (having the same effect as a three-for-two stock split) and a cash dividend of 14 cents per share on the common stock.  The cash dividend applies to all shares of common stock resulting from the stock dividend and is, in effect, a 31 percent increase from the 16 cents-per-share dividend declared for first quarter 1993.  Dividends on common stock are payable Aug. 13, 1993, to shareholders of record on July 30, 1993.
    The higher cash dividend is the 11th consecutive increase in the quarterly cash dividend.  The stock dividend is the fourth 50 percent stock dividend since the bank's initial public offering in 1983.
    The directors 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).  Dividends on preferred stock are payable Aug. 16, 1993, to shareholders of record on July 30, 1993.
    "For the quarter, we set records for net income, net interest income, loan originations and subsidiary profitability.  Asset quality remained good, with nonperforming assets as a percentage of total assets declining to less than 1 percent.  And we made substantial progress in fully integrating the Pacific First and Pioneer Bank acquisitions," said Kerry Killinger, Washington Mutual's chairman, president and chief executive officer.
    In the quarter just ended, the bank completed the conversion of Pioneer Savings Bank systems and locations that were acquired during the first quarter.  After consolidation, Pioneer Bank added 14 branches and one mortgage lending center in the populous suburban areas north and east of Seattle.
    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 $5.9 billion and deposits of $3.8 billion.  This transaction was accounted for as a purchase of assets and an assumption of liabilities.  The conversion of Pacific First's data processing systems and signs at Washington locations will be completed the weekend of July 24-25 and at Oregon locations the Labor Day weekend.
    The larger asset base and 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 $140 million for second quarter 1993, up 78 percent from $78.7 million a year earlier.  The net interest margin increased to 4.04 percent for the second quarter of the year, up from 3.79 percent a year earlier.
    For the quarter ended June 30, 1993, residential loan originations increased to a record $1.1 billion from $698.1 million a year earlier, residential construction loan originations rose to $195.6 million from $180.9 million for second quarter 1992, and consumer loan originations increased to $260.5 million from $176.3 million a year ago.  Total loan originations for second quarter 1993 increased to a record $1.6 billion from $1.1 billion a year earlier.
    Total deposits increased to $9.6 billion at June 30, 1993, from $6 billion at March 31, 1993, as a result of acquiring Pacific First. Funds under management also increased during the same period:  WM Life annuities increased to $645.4 million from $602.7 million and assets of the Composite Group of mutual funds rose to $1.2 billion from $1.1 billion.
    The nonbanking subsidiaries had pretax operating income (before amortization of intangible assets and intercompany eliminations) of $5.5 million for second quarter 1993, up from $2.6 million for the same period a year earlier.
    Costs associated with recent acquisitions contributed to an increase in the operating efficiency ratio (other expense as a percentage of net interest income and other income) to 56.12 percent for second quarter 1993 from 54.22 percent for first quarter 1993.  The bank expects to begin realizing in the third quarter the effects of consolidating duplicative branches and head office support functions.
    As anticipated, total nonperforming assets increased as a result of the Pacific First acquisition but decreased substantially as a percentage of total assets.  Total nonperforming assets were $138.7 million at June 30, 1993, versus $119.8 million at March 31, 1993, and $142.1 million at year-end 1992.  Total nonperforming assets as a percentage of total assets were 0.96 percent at June 30, 1993, down from 1.17 percent at March 31, 1993, and 1.43 percent at year-end 1992.
    Loan loss reserves increased to $115 million at June 30, 1993, versus $64.6 million at March 31, 1993.  The substantial increase in reserves reflects $7.5 million in provisions in second quarter 1993 and the addition of $46 million from the acquisition of Pacific First.  As a percentage of nonperforming assets (less real estate owned), reserves increased to 133.7 percent at quarter end from 102.8 percent at March 31, 1993.
    The increased volume of fixed-rate residential loans originated during second quarter 1993 contributed to a gain on the sale of loans of $8.8 million versus a gain of $4.3 million a year earlier.  Adjustments to the balance sheet as a result of acquiring Pacific First also produced a gain on the sale of other assets previously owned by Washington Mutual for second quarter 1993 of $5.5 million versus a gain of $888,000 a year earlier.  Partially offsetting these gains was a $1.5 million extraordinary loss (on an aftertax basis) for prepaying $130 million in Federal Home Loan Bank advances.
    As previously announced, the bank will redeem for cash on Sept. 15, 1993, all $40 million in principal of its 10 1/2 percent subordinated capital notes due March 15, 1999.  The redemption price will be $1,040 per each $1,000 in principal amount of the notes, together with interest accrued and unpaid to the redemption date.  All regulatory approvals for the redemption have been received.
    Killinger commented that while the acquisition of Pacific First had reduced the bank's capital ratios from their March 31, 1993, levels, the reduction was planned and the bank continued to exceed the FDIC requirements for "well-capitalized" institutions at quarter end.
    "We enter the second half of 1993 with excellent momentum.  Our priorities are to complete the integration of Pacific First, to maintain strong core operations and to increase our share of the Northwest consumer banking market.  Our future and the opportunities for continued growth appear very promising," said Killinger.
    Serving the financial needs of Northwest consumers since 1889, Washington Mutual is the largest locally managed, independently owned bank in Washington and the largest consumer bank in the Northwest.  At June 30, 1993, Washington Mutual had assets of $14.4 billion and operated 256 financial centers and 26 home loan centers in Washington and Oregon.
               WASHINGTON MUTUAL SAVINGS BANK AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF INCOME
             (Unaudited, in thousands, except for per share amounts)
                             Quarter Ended          Six Months Ended
                                June 30,                June 30,
                           1993        1992         1993         1992
      INTEREST INCOME
    Loans                $212,454    $145,716     $365,330     $280,975
    Mortgage-backed
      securities           45,046      38,556       85,138       76,622
    Investment
      securities           19,440       7,129       30,883       13,875
    Cash equivalents          517       1,097          911        2,146
    Total interest
      income              277,457     192,498      482,262      373,618
      INTEREST EXPENSE
    Deposits               94,626      81,626      160,609      160,476
    Borrowings             42,858      32,158       79,628       63,768
    Total interest
        expense           137,484     113,784      240,237      224,244
    Net interest income   139,973      78,714      242,025      149,374
    Provision for
      loan losses           7,500       3,150       20,000        5,650
    Net interest income after
      provision for loan
      losses              132,473      75,564      222,025      143,724
      OTHER INCOME
    Service fees           18,144      13,377       31,560       24,442
    Loan servicing fees     4,275       2,617        6,325        5,345
    Other operating income  5,793       2,536        8,271        4,918
    Gain on sale of loans   8,791       4,332       14,500        8,041
    Gain on sale of other
      assets, net           5,545         888       14,877        4,256
    Total other income     42,548      23,750       75,533       47,002
      OTHER EXPENSE
    Salaries and employee
      benefits             41,144      26,875       73,014       49,785
    Occupancy
      and equipment        17,334       8,244       26,254       15,847
    Deposit insurance       5,463       3,387        9,021        6,623
    Other operating
      expense              28,444      16,695       47,020       28,941
    Amortization of goodwill
      and other intangible
      assets                7,857       2,726       10,581        4,973
    Real estate owned operations,
      inclusive of
      write-downs             397         186        7,271        1,257
    Write-down of other
      assets                1,794         120        2,488          120
    Total other expense   102,433      58,233      175,649      107,546
    Income before income
      taxes, extraordinary
      items and cumulative
      effect of change in tax
      accounting method    72,588      41,081      121,909       83,180
    Income taxes           25,563      13,983       42,064       28,836
    Income before extraordinary
      items and cumulative
      effect of change in tax
      accounting method    47,025      27,098       79,845       54,344
    Extraordinary items,
      net of income tax
      effect               (1,454)       (580)      (8,953)      (4,615)
    Cumulative effect of
      change in tax accounting
      method                  ---         ---       13,365          ---
      NET INCOME         $ 45,571    $ 26,518     $ 84,257     $ 49,729
      NET INCOME AVAILABLE
        TO PRIMARY COMMON
        STOCK            $ 41,875    $ 25,299     $ 76,865     $ 47,291
    Return on average
      assets (pct)           1.23        1.20         1.36         1.18
    Return on average
      equity (pct)          17.65       14.75        16.88        14.32
      Per share amounts - primary
    Income before extraordinary
      items and cumulative effect
      of change in tax
      accounting method     $1.09       $0.74        $1.87        $1.51
    Extraordinary items,
      net of federal income
      tax effect            (0.03)      (0.02)       (0.23)       (0.14)
    Cumulative effect of
      change in tax
      accounting method       ---         ---         0.34          ---
    Net income              $1.06       $0.72        $1.98        $1.37
      Per share amounts -
        fully diluted
    Income before extraordinary
      items and cumulative effect
      of change in tax accounting
      method                $1.05       $0.70        $1.77        $1.43
    Extraordinary items, net of
      federal income tax
      effect                (0.03)      (0.01)       (0.20)       (0.12)
    Cumulative effect of
      change in tax accounting
      method                  ---         ---         0.31          ---
    Net income              $1.02       $0.69        $1.88        $1.31
             WASHINGTON MUTUAL SAVINGS BANK AND SUBSIDIARIES
                      SELECTED FINANCIAL INFORMATION
                    (Unaudited, dollars in thousands)
                             Quarter Ended           Six Months Ended
                                June 30,                 June 30,
                           1993        1992         1993          1992
      DATA USED TO
        COMPUTE PER SHARE AMOUNTS
    Net income            $45,571     $26,518      $84,257      $49,729
      Preferred stock dividends:
    Noncumulative Perpetual,
      Series C             (1,596)        ---       (3,192)         ---
    Noncumulative Convertible
      Perpetual, Series A     ---      (1,219)         ---       (2,438)
    Noncumulative Convertible
      Perpetual, Series D  (2,100)        ---       (4,200)         ---
    Net income available to
      primary common
      stock               $41,875     $25,299      $76,865      $47,291
    Net income            $45,571     $26,518      $84,257      $49,729
      Preferred stock dividends:
    Noncumulative Perpetual,
      Series C             (1,596)        ---       (3,192)         ---
    Net income available to
      fully diluted common
      stock               $43,975     $26,518      $81,065      $49,729
      Average common shares
        outstanding:
    Primary            39,678,530  35,117,846   38,751,961   34,467,547
    Noncumulative Convertible
      Perpetual Preferred
      Stock, Series A         149   3,451,305      864,765    3,451,305
    Noncumulative Convertible
      Perpetual Preferred
      Stock, Series D   3,612,910         ---    3,612,910          ---
    Fully diluted      43,291,589  38,569,151   43,229,636   37,918,852
              WASHINGTON MUTUAL SAVINGS BANK AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
      (Unaudited, dollars in thousands, except for per share amounts)
                                       June 30,        Dec. 31,
                                         1993            1992
      ASSETS
    Cash and cash equivalents       $   223,816     $   190,602
    Trading account securities            3,023           1,926
    Investment securities               866,188         401,975
    Mortgage-backed securities        2,610,865       2,183,575
    Loans                            10,061,931       6,719,680
    Real estate owned                    52,642          95,733
    Bank premises and equipment         138,156          78,306
    Goodwill and other intangible
      assets                            229,095          61,448
    Other assets                        241,140         178,357
    Total assets                    $14,426,856     $ 9,911,602
      LIABILITIES
      Deposits:
    Checking accounts               $ 1,150,079     $   642,662
    Savings and money market
      accounts                        2,939,484       1,764,569
    Time certificates                 5,540,106       3,650,881
    Total deposits                    9,629,669       6,058,112
    Annuities                           645,409         571,428
    Securities sold under agreements
      to repurchase                   1,614,521       1,061,332
    Advances from the Federal Home
      Loan Bank                       1,175,958       1,057,768
    Other borrowings                     88,689           5,124
    Other liabilities                   165,533         122,802
    Subordinated capital notes           40,000          40,000
    Total liabilities                13,359,779       8,916,566
      STOCKHOLDERS' EQUITY
    Preferred stock, $1 par value:
      10,000,000 shares authorized -
      4,200,000 and 5,494,150 shares
      issued and outstanding              4,200           5,494
    Common stock, $1 par value:
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Date:Jul 20, 1993
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