Morningstar Names Golden West's Herbert and Marion Sandler 2004 CEOs

    Business Editors

    OAKLAND, Calif.--(BUSINESS WIRE)--Jan. 6, 2005--Golden West Financial Corporation (NYSE:GDW), parent of World Savings Bank, announced that on January 4, 2005, Morningstar, Inc. named Golden West's Chairmen and Chief Executive Officers, Herbert and Marion Sandler, as "2004 CEOs of the Year." Beginning in 2000, Morningstar, a leading provider of independent investment research, has annually named a "CEO of the Year" to recognize "a chief executive who exhibits exemplary corporate stewardship, demonstrates independent thinking, creates lasting value for shareholders, and has put his or her stamp on an industry."
    In making the announcement of the 2004 award, Patrick Dorsey, director of stock research for Morningstar, stated that, "Golden West may be one of the largest and most successful companies you've never heard of." He pointed out that Golden West has "created a phenomenal track record during the past four decades in a tough industry that is both commoditized and unpredictable." Expanding on the reasons behind Morningstar's 2004 award, Dorsey noted that the Sandlers "run their business efficiently, allocate capital carefully, treat shareholders respectfully with excellent financial disclosure, and are compensated reasonably." He concluded, "It's easy to see why we are delighted to name the Sandlers our 2004 CEOs of the Year."
    Commenting on receiving the Morningstar award, the Sandlers said, "Being named 'CEOs of the Year' by Morningstar is a testament to the entire management team at Golden West." They continued, "For over 40 years, we have operated a traditional savings institution, taking in deposits from the public and lending these funds on residential mortgage loans that we keep in our own portfolio." They noted, "This recipe seems very simple on the surface. However, the execution is complex, because heavy competition in all our markets means profit margins are inherently narrow. As a result, to achieve high levels of profitability, we must carefully control both risks and costs." Focusing on the contributions of Company employees, the Sandlers stated, "Managers and staff at all levels throughout Golden West have embraced the Company's risk-averse, efficient, customer-oriented strategy, and have thus enabled us to post consistently strong results through the years."
    Turning to a more detailed analysis of Golden West's business, Morningstar discussed the Company's "focus on adjustable rate mortgages (ARMs), which the company has been originating for more than 20 years." Morningstar noted that Golden West's ARM strategy "sets it apart from others because it helps the firm better manage interest rate sensitivity." Morningstar concluded, "Golden West stands out because it retains on its balance sheet the loans it originates in order to minimize volatility and increase profits."
    Morningstar cited many examples of Golden West's financial success, noting that, with more than $100 billion in assets, the Company has "become the nation's second-largest savings and loan." Morningstar also pointed to Golden West's strong earnings "of more than $940 million during the first nine months of 2004." Expanding on Golden West's earning power, Morningstar remarked, "Earnings per share have increased nearly 20% per year during the past 37 years." One of Golden West's hallmarks is a strong culture of expense management. Along this vein, Morningstar observed, "The company's efficiency ratio (expenses as a percentage of revenues) of 29% is about half of the industry average of 57 percent." Additionally, Morningstar commented that, "Golden West's stock boasts an average total return of more than 20 percent for the past 20 years, compared with about 13 percent for the S&P 500 index."
    Another important component of the Morningstar selection criteria for "CEO of the Year" involves corporate governance. Morningstar's Dorsey stated, "Scrupulous corporate governance has recently come into vogue, yet for the Morningstar CEO of the Year contenders, it never went out of style." He continued, "The Sandlers of Golden West have created a company that is a paragon of corporate governance." Morningstar noted that Golden West's "Financial disclosure is excellent, with detailed monthly financial reports, and an annual report that makes even a complicated business make sense."
    Citing another aspect of Golden West that sets it apart from most other firms, Morningstar noted that the Company is one of eight Fortune 500 companies with a female CEO, and one of two Fortune 500 companies where women constitute a majority of the board members.
    Concluding their reaction to being named "CEOs of the Year" by Morningstar, the Sandlers said, "Receiving this award based on the results of our many years of involvement with Golden West is most gratifying, especially when we see who the other short-list contenders were." For the 2004 award, Morningstar also considered John Mackey, CEO of Whole Foods Markets; James Sinegal, co-founder, president, and CEO of Costco; and Richard Kinder, co-founder and CEO of Kinder Morgan Energy Partners and Kinder Morgan.
    Headquartered in Oakland, California, Golden West is one of the nation's largest financial institutions with assets over $100 billion as of November 30, 2004. The Company has one of the most extensive thrift branch systems in the country, with 276 savings branches in 10 states and lending operations in 38 states. Golden West's stock is listed on the New York Stock and Pacific Exchanges under the ticker symbol GDW. Options on the Company's stock are traded on the Chicago Board Options Exchange and the Pacific Exchange.
    Golden West investor information is available at www.gdw.com. Information about the Company's home loans and savings and checking accounts can be found at www.worldsavings.com and about its proprietary no-load mutual funds and annuities at www.atlasfunds.com.

    Information in this Press Release may contain various forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include projections, statements of the plans and objectives of management for future operations, statements of future economic performance, assumptions underlying these statements and other statements that are not statements of historical facts. Forward-looking statements are subject to significant business, economic and competitive risks, uncertainties and contingencies, many of which are beyond Golden West's control. Should one or more of these risks, uncertainties or contingencies materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated. Among the key risk factors that may have a direct bearing on Golden West's results of operations and financial condition are competitive practices in the financial services industries; operational and systems risks; general economic and capital market conditions, including fluctuations in interest rates; economic conditions in certain geographic areas; and the impact of current and future laws, governmental regulations, and accounting and other rulings and guidelines affecting the financial services industry in general and Golden West's operations in particular. In addition, actual results may differ materially from the results discussed in any forward-looking statements.

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CONTACT: Golden West Financial Corporation William C. Nunan, 510-446-3614

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: BANKING SOURCE: Golden West Financial Corporation

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