EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

Washington Federal, Inc.

425 Pike Street

Seattle, WA 98101

Contact: Cathy Cooper

(206) 777-8246

Thursday, October 22, 2009

FOR IMMEDIATE RELEASE

Washington Federal Reports Quarterly Net Income of $9.6 Million

and $40.7 Million for its Fiscal Year

 

 

SEATTLE – Washington Federal, Inc. (Nasdaq: WFSL), parent company of Washington Federal Savings, today announced earnings of $9,605,000 or $.11 per diluted share for the quarter ended September 30, 2009. In the same quarter one year ago, the Company reported a loss of $39,337,000 or $.45 per diluted share due to a writedown of $88 million on preferred stock investments in the U.S. Government sponsored entities of Fannie Mae and Freddie Mac. Earnings for the fiscal year ended September 30, 2009 totaled $40,684,000 or $.46 per diluted share, compared to $62,332,000 or $.71 per diluted share for the same period one year ago.

Recession related credit costs and rising FDIC insurance premiums were the primary contributors to the decline in net income of $21,648,000, or 35%, for the full year. The provision for loan losses amounted to $193 million for the year ended September 30, 2009, a $132.5 million increase over the $60.5 million provided for during the prior year. Additionally, FDIC insurance premiums increased by $9.9 million.

In September, the Company completed a follow-on public offering of 24,150,000 shares of common stock. The offering produced net proceeds of $333,177,000 which will be used for general corporate purposes, which may include capital to support future acquisitions. As of September 30, 2009, the Company’s ratio of tangible common equity to tangible assets was

12.08%, and its total risk-based capital ratio was 21.57%. Both of these ratios are significantly above regulatory requirements to be classified as well capitalized.

Chairman, President & CEO Roy M. Whitehead commented, “The past year was an extraordinarily difficult time for the industry, marked by nearly unprecedented levels of problem real estate loans. Despite our own high level of troubled assets, we are very gratified to be one of the few financial institutions in the Pacific Northwest to have been solidly profitable. Declining deposit costs contributed significantly to strong core earnings during the year. Perhaps more notably, after nearly three years of consistent increases, this quarter we were able to record a decline in non-performing assets. This is a welcome and encouraging development; however, investors are advised to expect problem assets and credit costs to continue at an elevated level in the new fiscal year. With roughly $500 million in cash equivalents and a capital ratio more than twice the required regulatory minimum, management and the board of the Company feel that Washington Federal is well-positioned to be an industry leader in the new fiscal year.”

Non-performing assets declined to $557 million, or 4.43%, of total assets at year-end from $606 million at June 30 th, a decrease of $49 million. Compared to September 30, 2008, non-performing assets increased $393 million or 240%. This increase was concentrated in the Company’s portfolio of land and speculative construction loans. The net balance of the land and construction portfolio was $593 million, or 6.6% of net loans at September 30th. In response to deteriorating credit conditions, the Company increased its allowance for loan losses from $85 million as of September 30, 2008, to $167 million as of September 30, 2009, an $82 million or 96% increase.

Overall delinquencies were 4.86% as of September 30, 2009, compared to 5.69% for the previous quarter ended June 30, 2009. Delinquencies as of September 30, 2008 were 2.46%. Single family residential mortgage loans, which represent 75% of the net total portfolio, experienced delinquencies of only 2.91%, which compares favorably to the national average mortgage delinquencies of 9.24%i.

Much of the decline in delinquent loans can be attributed to the migration of troubled loans to Real Estate Owned (REO) due to foreclosures, along with the restructuring of troubled debts. Troubled Debts Restructured (TDR’s) increased from $68.3 Million at June 30th to $136.9 Million at September 30th. The increase is due primarily to the restructuring of one large builder/developer relationship and heavy mortgage loan modification volume. At quarter-end, the Company owned 398 properties acquired through, or in lieu of, foreclosure, of which 87 have sales pending. During the quarter, the Company completed the sale of 121 REO properties.

Total assets increased by $752 million or 6% to $12.6 billion from $11.8 billion at September 30, 2008. Specifically, investment securities increased by $704 million or 44% during year, as the Company purchased agency mortgage backed securities in anticipation of a potential increase in refinance activity. As of September 30, 2009, the Company’s investment portfolio had net unrealized gains of $90 million, an increase of $87 million from September 30, 2008. During the year, net loans outstanding decreased from $9.5 billion to $9.0 billion as a result of increased loan prepayments stemming from record low interest rates available on 30 year fixed-rate mortgages. Cash and cash equivalents increased by $416 million as the Company built its liquidity position from its equity offering and deposit growth.

Customer deposit accounts increased by $673 million, or 9.4%, and borrowings decreased by $296 million during the year as the Company repaid all of its short term borrowings due to growth in customer deposits and reduced loan demand.

Net interest income increased by 23% or $69 million from the previous year, benefiting from falling deposit costs. The Company’s period end spread increased to 3.17% as of September 30, 2009, compared to 2.85% one year ago. In the next quarter the Company has $2.9 billion of deposits that will mature with a weighted average rate of 2.30%.

The Company’s efficiency ratio of 27.3% for the year, a slight increase from 27.2% from one year ago, remains among the lowest in the industry. The year produced a return on assets of .33%, while return on equity amounted to 2.87%. These ratios represent historical lows for the Company attributable to reduced earnings caused by significant declines in real estate values throughout the western United States.

On October 23, 2009, Washington Federal will pay a cash dividend of $.05 per share to common stockholders of record on October 9, 2009. This will be the Company’s 107th consecutive quarterly cash dividend.

Washington Federal Savings, with headquarters in Seattle, Washington, has 150 offices in eight western states.

To find out more about the Company, please visit our website. The Company uses its website to distribute financial and other material information about the Company, which is routinely posted on and accessible at www.washingtonfederal.com.

Important Cautionary Statements

The foregoing information should be read in conjunction with the financial statements, notes and other information contained in the Company’s 2008 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Financial information contained in this release should be considered to be an estimate until the Company files its fiscal 2009 Annual Report on Form 10-K with the Securities and Exchange Commission. While the Company is not aware of any need to revise the results disclosed in this release, accounting literature may require adverse information received by management on troubled assets between the date of this release and the filing of the Form 10-K to be reflected in the results of fiscal 2009, even though the new information was received by management in fiscal 2010 subsequent to the date of this release.

Statements contained herein that are not historical facts should be considered forward-looking statements with respect to Washington Federal. Forward-looking statements of this type speak only as of the date of this report. By nature, forward-looking statements involve inherent risk and uncertainties. Various factors, including, but not limited to, unforeseen local, regional,

national or global events, economic conditions, asset quality, interest rates, loan demand, changes in business or consumer spending, borrowing or savings habits, deposit growth, adequacy of the reserve for loan losses, competition, stock price volatility, government monetary and economic policy, anticipated expense levels, changes in laws and regulations, the level of success of the company’s asset/liability management strategies as well as its marketing, product development, sales and other strategies, the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as the Financial Accounting Standards Board and other accounting standard setters, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, and changes in the assumptions used in making the forward-looking statements, could cause actual results to differ materially from those contemplated by the forward-looking statements. Washington Federal undertakes no obligation to update or revise forward-looking statements to reflect subsequent circumstances, events or information or for any other reason.

# # #

 

 

i

Source: Mortgage statistics as reported by Bloomberg, ticker DLQTDLQT as of 6/30/09

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

 

     September 30, 2009     September 30, 2008  
     (In thousands, except per share data)  
ASSETS     

Cash and cash equivalents

    $ 498,388      $ 82,600   

Available-for-sale securities

      2,201,083        1,476,067   

Held-to-maturity securities

      103,042        124,537   

Loans receivable, net

      8,983,430        9,501,620   

Interest receivable

      53,288        54,365   

Premises and equipment, net

      133,477        133,357   

Real estate held for sale

      176,863        37,107   

FHLB stock

      144,495        144,874   

Intangible assets, net

      256,797        260,158   

Other assets

      31,612        15,456   
                
   $ 12,582,475      $ 11,830,141   
                
LIABILITIES AND STOCKHOLDERS’ EQUITY     
Liabilities     

Customer accounts

     

Savings and demand accounts

    $ 7,786,467      $ 7,146,045   

Repurchase agreements with customers

      55,843        23,494   
                
     7,842,310        7,169,539   

FHLB advances

      2,078,930        1,998,308   

Other borrowings

      800,600        1,177,600   

Advance payments by borrowers for taxes and insurance

      38,376        37,206   

Federal and state income taxes

      18,075        33,716   

Accrued expenses and other liabilities

      58,699        81,098   
                
     10,836,990        10,497,467   
Stockholders’ equity     

Common stock, $1.00 par value, 300,000,000 shares authorized; 129,320,072 and 105,092,724 shares issued; 112,247,748 and 87,916,286 shares outstanding

      129,320        105,093   

Paid-in capital

      1,574,555        1,261,032   

Accumulated other comprehensive income (loss), net of taxes

      54,431        2,472   

Treasury stock, at cost; 17,072,324 and 17,176,438 shares

      (208,985 )      (210,250 ) 

Retained earnings

      196,164        174,327   
                
     1,745,485        1,332,674   
                
   $ 12,582,475      $ 11,830,141   
                
CONSOLIDATED FINANCIAL HIGHLIGHTS     

Common stockholders’ equity per share

    $ 15.55      $ 15.16   

Tangible common stockholders’ equity per share

     13.26        12.20   

Stockholders’ equity to total assets

      13.87 %      11.27 % 

Tangible common stockholders’ equity to tangible assets

      12.08        9.27   

Weighted average rates at period end

     

Loans and mortgage-backed securities

      6.04 %      6.33 % 

Combined loans, mortgage-backed securities and investment securities

      5.75        6.26   

Customer accounts

      1.96        3.25   

Borrowings

      4.25        3.77   

Combined cost of customer accounts and borrowings

      2.58        3.41   

Interest rate spread

      3.17        2.85   

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

     Quarter Ended September 30,     Twelve Months Ended September 30,  
     2009     2008     2009     2008  
     (In thousands, except per share data)  
INTEREST INCOME         

Loans

    $ 138,767      $ 153,175      $ 579,244      $ 599,878   

Mortgage-backed securities

      27,914        22,238        109,486        88,425   

Investment securities and cash equivalents

      585        2,090        3,044        13,125   
                                
     167,266        177,503        691,774        701,428   
INTEREST EXPENSE         

Customer accounts

      40,340        59,528        191,435        259,769   

FHLB advances and other borrowings

      31,527        33,718        127,192        137,872   
                                
     71,867        93,246        318,627        397,641   
                                
Net interest income      95,399        84,257        373,147        303,787   

Provision for loan losses

      51,800        36,800        193,000        60,516   
                                

Net interest income after provision for loan losses

      43,599        47,457        180,147        243,271   
OTHER INCOME         

Gain on sale of loans

      —          83        —          517   

Gain on sale of real estate

      —          —          —          13,123   

Gain on sale of investments (Other than temporary impairment)

      104        (87,747 )      1,063        (87,747 ) 

Other

      4,997        3,586        17,946        14,916   
                                
     5,101        (84,078 )      19,009        (59,191 ) 
OTHER EXPENSE         

Compensation and fringe benefits

      13,932        14,580        57,097        52,832   

Occupancy

      3,301        3,221        13,049        11,213   

FDIC insurance

      2,445        279        10,688        792   

Other

      6,801        6,419        26,226        22,383   
                                
     26,479        24,499        107,060        87,220   

Gain (loss) on real estate acquired through foreclosure, net

      (8,609 )      (840 )      (16,354 )      (1,021 ) 
                                

Income (loss) before income taxes

      13,612        (61,960 )      75,742        95,839   

Income taxes

      4,007        (22,623 )      27,570        33,507   
                                
NET INCOME (LOSS)      9,605        (39,337 )      48,172        62,332   
                                

Preferred dividends accrued

      —          —          7,488        —     
                                

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS

    $ 9,605      $ (39,337 )    $ 40,684      $ 62,332   
                                
PER SHARE DATA         

Basic earnings (loss)

    $ .11      $ (0.45 )    $ .46      $ .71   

Diluted earnings (loss)

      .11        (0.45 )      .46        .71   

Cash Dividends per share

      .05        .21        .20        .84   

Basic weighted average number of shares outstanding

      90,701,391        87,843,753        88,689,553        87,675,978   

Diluted weighted average number of shares outstanding, including dilutive stock options

      90,752,105        87,961,784        88,711,694        87,818,580   
PERFORMANCE RATIOS         

Return on average assets

      .31 %      -1.33 %      .33 %      .55 % 

Return on average common equity

      2.57 %      - 11.52 %      2.87 %      4.59 %