Investment

» runner26 - World Savings sale approved by shareholders

Golden West shareholder meeting heralds the end of an era
By MICHAEL LIEDTKE, AP Business Writer

Thursday, August 31, 2006
(08-31) 16:40 PDT Oakland, Calif. (AP) --
Golden West Financial Corp. shareholders approved the company's sale to Wachovia Corp. Thursday, moving a step closer to ending the 43-year reign of the savings and loan's folksy co-chief executives, Herb and Marion Sandler — the only married couple running a Fortune 500 business.

Their quaint odyssey began in 1963 when Herb and Marion moved from New York to buy a two-branch thrift in the San Francisco Bay area for $4 million and vowed to maintain a personal touch even as Golden West's main franchise — World Savings — grew into an industry powerhouse.

That homespun feel remained evident Thursday as a couple dozen shareholders gathered in a small room at Golden West's Oakland headquarters to snack on cookies and listen to the Sandlers address them for a final time.

"Isn't that neat?" said longtime shareholder Phyliss Linton Peterson of San Leandro, Calif. as she watched Herb tease Marion before Thursday's meeting started. "It's like watching mom and dad."

The sale to Wachovia, currently valued at about $24 billion, is expected to completed in October, contingent on regulatory approval. Wachovia shareholders also approved the deal Thursday in a separate meeting held a few hours before Golden West's.

The acquisition will establish Charlotte, N.C-based Wachovia as a more formidable force in California and several other western states as it snaps up World Savings' nearly 300 branches and $129 billion in assets.

No matter how hard Wachovia tries, things will never be the same in World Savings' branches without Herb and Marion in the picture, said Bert Ely, a financial services consultant in Alexandria, Va.

After the sale is completed, the Sandlers will continue to advise the new management, although they say they won't filling the two spots on Wachovia's board that are being reserved for Golden West officials.

The sale initially was difficult for Marion to contemplate when it was first announced in May, but she seemed happy Thursday. "It's a fitting climax," she said in an interview. "It's the right thing for everyone involved."

Long known for his levity, Herb Sandler made sure Golden West's meeting didn't become a maudlin affair, largely because he avoided reading the emotional testimonials that have poured in from World Savings customers since sale was announced in May.

"Some of us will find this a very moving and unusual moment," Herb told shareholders during one of the few moments he appeared to become choked up.

Allan Bortel, a Golden West shareholder for more than 30 years, thought the proceedings were important enough to videotape so he could share the images with his children and grandchildren.

"There has never been anything like (Golden West) and I don't know there will ever be the likes of it again," said Bortel, a retired savings and loan analyst who credits the Sandlers for helping him understand the industry.

The Sandlers have always been unusual because Herb, 74, and Marion, 75, chose to share the chief executive job from the outset. The arrangement was part of their goal to build a corporate meritocracy after being exposed to rampant sexism in their previous jobs on Wall Street, where Herb worked as lawyer and Marion was a savings and loan analyst.

But being married CEOs wasn't all that made the couple stand out. For decades, they have preached the need for more integrity and old-fashioned decency in business, a virtuous attitude that especially stood out during the 1980s as financial recklessness and outright fraud sank the savings and loan industry in a morass that cost taxpayers more than $100 billion.

As scores of other financial services companies diversified in new directions, the Sandlers kept Golden West on a staid course, focused almost exclusively on collecting customer deposits and then turning a profit by lending out the money as adjustable-rate mortgages.

The conservative strategy has produced outlandish returns.

An investor who bought $10,000 worth of Golden West's stock when the company first went public in December 1968 would have $3.9 million today, assuming dividends weren't reinvested.

The Sandlers became the biggest winners of all as their Golden West stake swelled to a $2.4 billion fortune. The couple plans to give virtually all of their money away, a process that began in June and July when they transferred a $1.3 billion chunk of their Golden West stock holdings to a family foundation to be based in San Francisco.

Both Herb and Marion say they will devote much of their attention to ensuring the Golden West workers laid off in the Wachovia takeover find new jobs. The Sandlers are hoping only a few hundred of Golden West's 13,000 workers are jettisoned after Wachovia takes control.

To help workers who receive pink slips, the Sandlers negotiated a $50 million severance pool as part of the sale. The Sandlers are refusing to take any severance pay, another unusual move for top executives involved in a takeover.

When Golden West is sold, the company's shareholders will receive stock in Wachovia. Peterson, for one, isn't certain she will hold on to the Wachovia stock because the Sandlers won't be running things any longer.

"You always just felt more comfortable and safe with them there," Peterson said.

-- posted by runner26

» runner26 - 6% CD Rates back at Pentagon Federal

3, 4 and 5 year 6% APY CD Rates have Returned to Pentagon Federal Credit Union.

http://www.penfed.org/index.asp

-- posted by runner26

» bernardo - Western Fed Credit Union

It's all a game of watchful waiting. PFCU offers respectable rates but its not end all or be all.
This summer IRA rates at Northrop Grumman FCU for 3 yr term neared 6.4%. Pounced on that one, significantly higher than 4.8% Stable Value in my 401k ( of course, allan wouldn't be interested given the super duper rate of his legendary (but undocumented) SV fund).
Then this summer and until Nov Western FCU offers 6.5% or so depending on term & amount for referers and referred, both IRA and non-IRA . Pounced on that one too.
That is a fine rate for risk free. With S&P EPs in the 5 to 6% range and dividends in the 1 to 1.5% range, the Gordon equation suggests expected returns for stocks in the 6 to 7.5% range, a rather crummy risk premium of -0.5 to 1% relative to CU risk free.
Moral of the story: There are deals out there in excess of 6% for the watchful & resourceful. OTOH, pigs may get slaughtered so nibbling at anything 6% or better makes perfect sense. In addition, absent risk premia of 2 to 3% maintain a modest position in equities, and some dry powder in case premia turn favorable. But never put all eggs in one basket. Hedge, young man, always hedge your bets.

-- posted by bernardo

» pbradford6 - Western Fed Credit Union

In response to Western Fed Credit Union posted by bernardo:
I'm glad to see you alive and well and posting again. Are you still using your 4x4 method for equities or some variance of that idea? I see Vanguard is using a 6x6 box and has corresponding index funds.
=========================
On another subect, when buying CDs make sure you are tracking the maturity dates. Many/all institutions don't notify you when a CD matures and then they roll your money into another CD which may not be competitive. When the investor finds out later, they frequently charge a 6 month penalty fund to with draw early. I thought all institutions would remind their investors when Maturities expired like Charles Schwab does. Be careful.

-- posted by pbradford6

» runner26 - Western Fed Credit Union

In response to Western Fed Credit Union posted by bernardo:

I checked out their web site. I see their fixed rate CD's are in the 5's. Those 6%+ CD's are stated as variable rate. I didn't see any indication of what they were pegged to, but the rate is not guaranteed for the full term.

Agree, watchfulness brings these gems along, and that is the point of this thread, to share our discoveries of places to stuff our "chicken money".

-- posted by runner26

» bernardo - Western Fed Credit Union: Clarification

In response to Western Fed Credit Union posted by runner26:

True, you don't get the 1% upper on WFCU rates unless you are a new member referred by another member (like me) by Oct 31. But once you are, you can cascade that into a flurry of additional 1% uppers by subsequently referring other family members. In any case the 1% lifts the 24 mo to over 6.4% and 36 mo to over 6.5% for a minimum deposit of 40K. Not too shabby.

-- posted by bernardo

» bernardo - Equities

In response to Western Fed Credit Union posted by pbradford6:
The point is diversify to reduce correlation and adjust compensatable risk to your preferred setting. Fortunately some of the independent variables, such as company size, PE or PB, and country economic size, also correspond to different levels of compensatable risk, so you can dial in risk and therefore expected return.

Other variables such as geography are not necessarily risk factors but can lessen correlation at constant risk. This is not a science so 4x4 or 6x6 if you can stand the hassle are all fine.

Personally, I like to play the edges like microcap offset by ultralarge, and deep value (ultralow PB) by high growth (high PB). Has worked very weel for me. But no one has the magic bullet, so as long as you're fanatic about diversification, almost any strategy should reap rewards over time.

If you have a background in statisitics you can get the whole story from the original papers by Fama, French, & coworkers. But if not, all this stuff is laid out on a silver platter in layman's language in Swedroe, Bill Bernstein and Frank Armstrong's books.

-- posted by bernardo

» AL_W - World Savings 6.01% 7 month CD

In response to World Savings 6.01% 7 month CD posted by Kirk:

Kirk,

I have a friend who has several CD's there and he says they will renew a CD at the intro rate if you tell them you want that rate or else. He says no hassles when doing this, so it must be somewhat normal. He also says they generally e-mail renewal rates that are near the intro's.

Now that Wachovia is taking them over, it will be interesting to see how much the small-town banking features disappear.

-- posted by AL_W

» TonyFromGlendale - World CD at 6.01%

Just did a CD with World at 6.01% that was a snap. Nobody attempted to sell me anything. Wrote my check, got my little red bank book, and it took all of five minutes max. Learned about it from a site called: bankdeals.blogspot.com which is a collection of the best deals folks can find and share the information.

-- posted by TonyFromGlendale

» runner26 - World CD vs. Treasury

In response to re: World CD at 6.01% posted by Kirk:

World's CDs continue to be a good investment. Right now, you can get 5.31% on a four month CD which is quite a bit more than you get for a treasury of that same maturity.

For California residents in the 9.3% tax bracket, the treasury is still a better choice.

At last auction, 3 mo. Treasury was 4.999 investment rate, or 4.999/.907 = equiv. 5.50% state taxable.

At last auction, 6 mo. Treasury was 5.03 investment rate, or 5.03/.907 = 5.55% equiv. state taxable.

-- posted by runner26