EX-99.1 2 dex991.htm PRESS RELEASE

PRESS RELEASE

Exhibit 99.1

Washington Federal, Inc.

425 Pike Street

Seattle, WA 98101

Contact: Cathy Cooper

206-777-8246

Tuesday, January 19, 2010

FOR IMMEDIATE RELEASE

Washington Federal Reports First Quarter Earnings of $7.9 Million

SEATTLE, WASHINGTON – Washington Federal, Inc. (Nasdaq: WFSL), parent company of Washington Federal Savings, today announced earnings of $7,911,000, or $.07, per diluted share for the quarter ended December 31, 2009, compared to $20,169,000, or $.23, per diluted share for the same period one year ago. Earnings decreased by $12,258,000, or 61%, primarily as a result of higher credit costs. Total credit costs, which include the provision for loan losses and Real Estate Owned (“REO”) expenses, were $82,500,000 for the quarter ended December 31, 2009, an increase of $46,261,000, or 128%, over the previous year.

Chairman, President and Chief Executive Officer Roy M. Whitehead commented, “Last quarter the company took a more aggressive approach to the writedown of problem assets. High unemployment, the planned unwinding of central bank support for the mortgage-backed securities market, pending FDIC liquidations in our markets, and changing social attitudes about mortgage default collectively drove us to the conclusion that the supply/demand imbalance in residential real estate will persist longer than we had previously believed. Washington Federal is fortunate to be in a position to absorb higher losses, which on individual properties can be astonishing, while remaining profitable and in a fortress-level capital position.

That financial strength, at a time of extraordinary weakness for most in the industry, enables us to take advantage of unique opportunities to expand at a reasonable cost. The acquisition of the former Horizon Bank on January 8th, for example, will add materially to earnings in the current quarter and beyond, with limited risk to shareholders due to a loss sharing agreement with the FDIC. Victories are relative in these tough economic times, and while these are relatively good times for Washington Federal we continue to be realistic about near-term prospects for a rebound in the overall economy.”

Non-performing assets amounted to $553 million, or 4.37%, of total assets at quarter-end. This is a decrease of $4 million from September 30, 2009. There has been a meaningful decrease in non-performing loans over the last 6 months due to payoffs, writedowns and the migration of problem real estate loans to REO. As of June 30, 2009 non-performing loans totaled $492 million and as of December 31, 2009 have decreased to $369 million, a 25% decline. Overall delinquencies declined to 4.74% in the current quarter from 4.86% at September 30, 2009; however the delinquency rate on single family residential mortgages, the largest portion of the loan portfolio, increased slightly from 2.91% to 3.20%. In response to the continued declines in real estate values and weak credit conditions of its loan portfolio, the Company increased its provision for loan loss expense from $35 million for the quarter ended December 31, 2008 to $70 million for the quarter ended December 31, 2009. As of quarter end the allowance for loan losses totaled $191 million.

During the quarter the Company sold $316 million out of its investment portfolio and realized a gain of $20 million and increased its cash position to $937 million from $498 million. This cash position, combined with its substantial capital base, will provide the Company with the flexibility to manage through potentially higher interest rates in the future.

The Company’s efficiency ratio of 26.6% for the quarter remains among the lowest in the industry. The quarter produced a return on assets of .25%, while return on equity amounted to 1.8%. These ratios represent near historical lows for the Company and are reflective of the effects of the significant declines in real estate values throughout the western United States.

On January 15, 2010, Washington Federal paid a cash dividend of $.05 per share to common stockholders of record on January 4, 2010. This was the Company’s 108th consecutive quarterly cash dividend.

The Company’s Annual Meeting of Stockholders will be held at 2:00 p.m. on January 20, 2010, at the Sheraton Hotel, 1400 6th Avenue, in Seattle, Washington.

Washington Federal Savings, with headquarters in Seattle, Washington, has 168 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.

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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

		December 31, 2009				September 30, 2009
		(In thousands, except per share data)
ASSETS
Cash and cash equivalents		$	936,833			$	498,388
Available-for-sale securities			1,920,165				2,201,083
Held-to-maturity securities			97,795				103,042
Loans receivable, net			8,855,533				8,983,430
Interest receivable			49,459				53,288
Premises and equipment, net			134,397				133,477
Real estate held for sale			183,508				176,863
FHLB stock			144,495				144,495
Intangible assets, net			256,069				256,797
Other assets			84,212				31,612
		$	12,662,466			$	12,582,475
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Customer accounts
Savings and demand accounts		$	7,921,117			$	7,786,467
Repurchase agreements with customers			50,137				55,843
			7,971,254				7,842,310
FHLB advances			2,074,507				2,078,930
Other borrowings			800,000				800,600
Advance payments by borrowers for taxes and insurance			15,075				38,376
Federal and state income taxes			13,384				18,075
Accrued expenses and other liabilities			54,496				58,699
			10,928,716				10,836,990
Stockholders’ equity
Common stock, $1.00 par value, 300,000,000 shares authorized; 129,512,273 and 129,320,072 shares issued; 112,439,949 and 112,247,748 shares outstanding			129,512				129,320
Paid-in capital			1,576,352				1,574,555
Accumulated other comprehensive income (loss), net of taxes			38,386				54,431
Treasury stock, at cost; 17,072,324 shares			(208,985	)			(208,985	)
Retained earnings			198,485				196,164
			1,733,750				1,745,485
		$	12,662,466			$	12,582,475
CONSOLIDATED FINANCIAL HIGHLIGHTS
Common stockholders’ equity per share		$	15.42			$	15.55
Tangible common stockholders’ equity per share			13.14				13.26
Stockholders’ equity to total assets			13.69	%			13.87	%
Tangible common stockholders’ equity to tangible assets			11.91				12.08
Weighted average rates at period end
Loans and mortgage-backed securities			6.01	%			6.04	%
Combined loans, mortgage-backed securities and investment securities			5.49				5.75
Customer accounts			1.75				1.96
Borrowings			4.25				4.25
Combined cost of customer accounts and borrowings			2.41				2.58
Interest rate spread			3.08				3.17

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

		Quarter Ended December 31,
		2009				2008
		(In thousands, except per share data)
INTEREST INCOME
Loans		$	137,451			$	152,319
Mortgage-backed securities			27,281				25,312
Investment securities and cash equivalents			938				908
			165,670				178,539
INTEREST EXPENSE
Customer accounts			36,485				55,908
FHLB advances and other borrowings			31,420				32,618
			67,905				88,526
Net interest income			97,765				90,013
Provision for loan losses			69,750				35,000
Net interest income after provision for loan losses			28,015				55,013
OTHER INCOME
Gain on sale of investments			20,428				—
Other			3,809				4,175
			24,237				4,175
OTHER EXPENSE
Compensation and fringe benefits			13,637				14,805
Occupancy			3,249				3,174
FDIC insurance			3,564				279
Other			6,525				6,329
			26,975				24,587
Gain (loss) on real estate acquired through foreclosure, net			(12,720	)			(1,239	)
Income (loss) before income taxes			12,557				33,362
Income taxes			4,646				11,844
NET INCOME (LOSS)			7,911				21,518
Preferred dividends accrued			—				1,349
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS		$	7,911			$	20,169
PER SHARE DATA
Basic earnings (loss)		$	.07			$	.23
Diluted earnings (loss)			.07				.23
Cash Dividends per share			.05				.05
Basic weighted average number of shares outstanding			112,353,941				87,966,308
Diluted weighted average number of shares outstanding,
including dilutive stock options			112,583,127				88,028,272
PERFORMANCE RATIOS
Return on average assets			.25	%			.66	%
Return on average common equity			1.80	%			5.97	%