Golden West Financial

Golden West Financial

Company type	Public
Industry	Savings and loan
Founded	1929 in Oakland, California, United States
Founder	Herbert Sandler, Marion Sandler
Defunct	2006
Fate	Acquired by Wachovia Bank
Headquarters	Oakland, California , United States
Area served	United States
Key people	Herbert Sandler (co-CEO), Marion Sandler (co-CEO)
Products	Savings and loan services, adjustable-rate mortgages
Number of employees	11,600 (2006)

Golden West Financial ranked as the second-largest savings and loan institution in the United States, operating its branches under the name World Savings Bank.

History

Golden West Financial was originally established in 1929 as Golden West Savings and Loan Association in Oakland, California. Its subsidiary, World Savings, had been founded earlier in 1912 in Madera, California.

Golden West Financial

In 1963, Herbert and Marion Sandler purchased Golden West Savings and Loan Association for $4 million through their newly created entity, Golden West Financial. The transaction was financed partly by bank loans alongside Marion Sandler’s family resources. Marion, formerly a Wall Street analyst, and Herbert, a real estate lawyer, jointly managed the company. The firm became publicly traded in 1968. The following year, Golden West expanded by acquiring Modesto Savings, which was merged into Golden West Savings.

Expansion during the 1970s and 1980s

The growth of savings and loan institutions during the 1970s motivated the Sandlers to acquire World Savings in 1975. This acquisition extended Golden West Financial’s reach beyond California to encompass 107 branches. Subsequently, the company consolidated its operations under the World Savings brand.

With regulatory easing in the early 1980s, Golden West leveraged rapid industry expansion by prudently navigating market volatility and avoiding excessive risk during the savings and loan crisis. This approach ensured consistent profitability and portfolio growth.

Developments in the 1990s and 2000s

Marion and Herbert Sandler acted as co-CEOs, with Marion directing overall operations while Herbert focused on lending strategies. In 1990, The New York Times described Golden West as "the Nation's Best-Run S.& L.," commending its adherence to a traditional business model.

Following a recovery in the mortgage market during the mid-1990s, Golden West extended its footprint to the U.S. East Coast through acquisitions of struggling savings and loan institutions. By 1995, it managed $31 billion in assets, ranking third nationally among mortgage lenders. In 1997, nonprofit Catalyst recognized Golden West’s board for having one of the highest proportions of female directors among Fortune 500 companies.

Herbert Sandler pioneered an effective adjustable-rate mortgage (ARM) program aimed at first-time homebuyers and low-income borrowers, aligning with federal efforts such as Freddie Mac.

By the year 2000, Golden West was regarded as a leading stock in the mortgage industry, noted for its expertise in ARM lending and interest rate risk management that fueled strong earnings. Despite downturns following refinancing surges, asset growth persisted.

In 2006, Fortune honored Golden West Financial as the "Most Admired Company" within mortgage services. At the time of its acquisition by Wachovia that year, Golden West held assets exceeding $125 billion and employed approximately 11,600 staff members.

Acquisition by Wachovia

After more than four decades at the helm, founders Herbert and Marion Sandler decided to retire and dedicate themselves to philanthropic pursuits.

In 2006, they consented to sell Golden West Financial along with its thrift arm, World Savings, to Wachovia Bank. This transaction added 285 branches across ten states to Wachovia’s network and significantly bolstered its California operations where Golden West maintained $32 billion in deposits across 123 branches. The deal also included roughly $122 billion in option adjustable-rate mortgages.

The acquisition was announced on May 7, 2006, with a valuation near $25.5 billion and finalized in October of that year. Unfortunately, this coincided with the onset of the subprime mortgage crisis which severely damaged Wachovia’s financial stability. Post-acquisition, World Savings experienced a decline in lending volume and began issuing loans at annual rates as low as 1%, marking a shift from its previously conservative lending standards. These high-risk loans contributed to major losses that ultimately undermined Wachovia’s position and led to its takeover by Wells Fargo in 2008.

In popular media

Wachovia's CEO, G. Kennedy "Ken" Thompson, described Golden West as a "crown jewel," yet the $25 billion acquisition finalized in 2006 was met with a negative response from investors. Experts later contended that Wachovia acquired Golden West at the height of the US housing market surge, and the mortgage-related challenges stemming from this purchase played a major role in Wachovia's eventual downfall.

On October 4, 2008, an episode of Saturday Night Live mocked the Wachovia-Golden West transaction within a financial bailout sketch, focusing on the failure of a $19 billion mortgage portfolio. Herb Sandler, co-founder of Golden West, reacted by voicing his disappointment over the unfavorable depiction and standing up for the company’s integrity.