World Savings

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
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, conducting its operations under the brand name World Savings Bank.

History

Established in 1929 in Oakland, California as Golden West Savings and Loan Association, its subsidiary World Savings traces its origins back to 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. This acquisition was funded partly by bank financing and contributions from Marion Sandler’s family. Marion, formerly a Wall Street analyst, teamed with Herbert, a real estate lawyer, to co-manage the enterprise. Golden West Financial went public in 1968. The following year, it grew by acquiring Modesto Savings, which was merged into Golden West Savings.

Expansion during the 1970s and 1980s

The surge in savings and loan institutions during the 1970s led the Sandlers to acquire World Savings in 1975, broadening Golden West Financial’s reach beyond California with 107 locations. The company consolidated its savings and loan businesses under the World Savings brand.

With regulatory easing in the early 1980s, Golden West leveraged industry growth by prudently navigating market volatility and steering clear of excessive risk amid the savings and loan crisis. This approach enabled ongoing portfolio growth and consistent profitability.

Developments in the 1990s and 2000s

Marion and Herbert Sandler operated as co-CEOs—Marion overseeing operations while Herbert managed lending activities. By 1990, Golden West earned recognition as "the Nation's Best-Run S.& L." due to its conservative business approach. The revival of the mortgage market in the mid-1990s facilitated expansion into the U.S. East Coast through acquisitions of financially troubled savings and loans. By 1995, Golden West controlled $31 billion in assets, ranking third nationally among mortgage lenders. In 1997, it stood out for having one of the highest proportions of women on its board among Fortune 500 companies.

Herbert Sandler developed an innovative adjustable-rate mortgage program that offered competitive options for first-time homebuyers and low-income clients by utilizing government-backed initiatives such as Freddie Mac. This innovation played a key role in driving company growth.

By 2000, Golden West was regarded as one of the top-performing stocks within its sector, lauded for its superior ARM lending strategies and interest rate management that generated outstanding profits. The firm continued to increase assets and lending volumes even during economic downturns.

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

Acquisition by Wachovia

After leading the company for forty-three years, the Sandlers retired to dedicate themselves to philanthropic endeavors.

In 2006, they consented to sell Golden West Financial along with its thrift subsidiary World Savings to Wachovia Bank. This transaction expanded Wachovia’s network by adding 285 branches across ten states, significantly strengthening its presence in California where Golden West maintained $32 billion in deposits across 123 branches. Wachovia also obtained roughly $122 billion in option adjustable-rate mortgages through this deal.

Announced on May 7, 2006, at a price just below $25.5 billion, the acquisition was finalized in October of that year.

Nevertheless, the subprime mortgage crisis diminished the value of this purchase. Soon after completion, World Savings experienced a downturn in lending activity and began offering loans at an unprecedentedly low annual interest rate of 1%, diverging sharply from prior lending practices. The substantial losses incurred from these loans severely weakened Wachovia’s financial position, ultimately leading to Wachovia’s takeover by Wells Fargo in 2008.

In popular media

Although World Savings exercised rigorous evaluation of borrowers, the extremely low interest rates attracted clients whose financial credentials were less easily verified.

Wachovia's CEO, G. Kennedy "Ken" Thompson, referred to Golden West as a "crown jewel," yet the $25 billion acquisition was met with skepticism by investors. Experts later contended that Wachovia acquired Golden West at the peak of the housing market, with mortgage-related complications playing a significant role in Wachovia's eventual downfall.

The October 4, 2008 installment of Saturday Night Live humorously portrayed Wachovia's acquisition of Golden West. Darrell Hammond impersonated Herb Sandler, highlighting the collapse of their mortgage portfolio, which had once been valued at nearly $19 billion. The actual Herb Sandler expressed that the depiction was unjust.