Acquisitions

Charter Bank

Effective October 14, 2011, Washington Federal (the “Bank”) a wholly-owned subsidiary of the Company, acquired six branch locations and the related $254 million in deposits from Charter Bank, headquartered in Albuquerque, New Mexico (“Charter”).

Western National Bank

Effective December 16, 2011, Washington Federal, acquired certain assets and liabilities, including most of the loans and deposits, of Western National Bank, headquartered in Phoenix, Arizona (“WNB”) from the Federal Deposit Insurance Corporation (“FDIC”) in an FDIC assisted transaction. Under the terms of the Purchase and Assumption Agreement, the Bank and the FDIC agreed to an asset discount of $53 million and no loss sharing provision or premium on deposits.

WNB operated three full-service offices in Arizona. The Bank acquired certain assets with a book value of $177 million, including $143 million in loans and $7 million in foreclosed real estate, and selected liabilities with a book value of $153 million, including $136 million in deposits. Pursuant to the purchase and assumption agreement with the FDIC, the Bank received a cash payment from the FDIC for $30 million. As shown in the table below, the $30 million cash payment is the difference between the bid discount of $53 million and the $23 million in book value of net assets acquired.

The acquisition was accounted for under the acquisition method of accounting. The purchased assets and assumed liabilities were recorded at their respective acquisition date estimated fair values. The purchase accounting for acquired assets and liabilities, mainly related to the valuation of the acquired loans, is subject to future adjustment based on the completion of valuations. The amounts currently recognized in the financial statements have been determined provisionally as we are completing a fair value analysis of those assets. Final purchase accounting adjustments will be made in the coming quarter, but at this time the Company does not anticipate recording a significant upfront gain or goodwill asset as a result of this transaction. Loans that were classified as non-performing loans by WNB are no longer classified as non-performing because, at acquisition, the carrying value of these loans was adjusted to reflect fair value. Management believes that the new book value reflects an amount that will ultimately be collected.

The operating results for the period ended December 31, 2011 include the results of the acquired assets and liabilities for the period from December 16, 2011 through December 31, 2011.

The net liabilities acquired are presented in the following table:



	Received from		Fair value			Recorded by
	FDIC		adjustments			WFSL
	(In thousands)
Assets:
Cash and cash equivalents	$	20,677	—			$	20,677
Available for sale securities	3,500		—			3,500
FHLB & FRB stock	1,744		4			1,748
Loans receivable, net	143,487		(49,080		)	94,407
Interest receivable	251		—			251
Property and equipment, net	—		—			—
Real estate held for sale	6,997		(3,058		)	3,939
Other assets	79		125			204
Total Assets	176,735		(52,009		)	124,726

Liabilities:
Customer accounts	135,790		—			135,790
FHLB advances	17,666		9			17,675
Other liabilities	40		995			1,035
Total Liabilities	153,496		1,004			154,500

Net assets (liabilities) acquired	$	23,239	$	(53,013	)	$	(29,774	)

Aggregate fair value adjustments			$	(53,013	)

Net liabilities acquired						$	(29,774	)
Cash received from the FDIC						29,774
Gain on acquisition of WNB						$	—