Washington Federal Enhances Shareholder Value


Continuing with its trend of boosting shareholders’ value, Washington Federal Inc. (WAFD) recently raised its quarterly cash dividend by 11% to 10 cents per share. Concurrently, it announced an additional share buyback authorization as well.

The new dividend represents Washington Federal’s 121stconsecutive quarterly cash dividend. It will be paid on Oct 18, 2013 to stockholders of record as of Oct 4, 2013.

Earlier in Mar 2013, Washington Federal had announced a 12.5% hike in its quarterly cash dividend to 9 cents per share. The payout was disbursed on Apr 19, 2013 to stockholders of record as of Apr 5, 2013.

The latest share buyback authorization was for additional 10 million shares. Under its existing 6.2 million share buyback program, the company had repurchased 6.0 million shares for $104.0 million since Sep 2012.

The company has also been using its capital strength to grow inorganically. In Jul 2013, Washington Federal signed an agreement to acquire 51 retail branches of Bank of America Corporation (BAC) situated in Eastern Washington, Idaho, Oregon and New Mexico.

As of Jun 30, 2013, the company had Tier 1 risk-based capital ratio of 25.43% and total risk based capital ratio of 26.59%, well above the regulatory requirements. This suggests that it will be able to maintain the trend of deploying capital through enhancing shareholder value and acquiring other companies going forward.

However, we remain concerned about the company’s considerable exposure to real estate markets, which are still volatile.

Currently, Washington Federal carries a Zacks Rank #3 (Hold). Some better-performing banks include 1st Century Bancshares, Inc. (FCTY) and Investors Bancorp Inc. (ISBC). Both these stocks carry a Zacks Rank #1 (Strong Buy).

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