Washington Federal Reports Quarterly Net Income Increased 5.6% to $36.0 Million

Marketwired

SEATTLE, WA--(Marketwired - Apr 16, 2013) - Washington Federal, Inc. (NASDAQ: WAFD), parent company of Washington Federal, today announced earnings of $35,978,000 or $.34 per diluted share for the quarter ended March 31, 2013, compared to $34,071,000 or $.32 per diluted share for the same period one year ago, a 5.6% increase. For the six months ended March 31, 2013, earnings were $71,260,000 or $.67 per diluted share, compared to $67,489,000 or $.63 per diluted share for the six months ended March 31, 2012, a 5.6% increase. The Company's ratio of tangible common equity to tangible assets ended the quarter at 13.00% and continues to be among the best of large regional financial institutions in the U.S.

Chairman, President & CEO Roy M. Whitehead commented, "Higher earnings during the quarter were largely due to improved asset quality driven by progress in housing and overall market conditions in our eight state territory. Still, consumers and businesses remain cautious and we expect earnings to be under pressure until loan demand improves or higher interest rates enable us to be more competitive with government mortgage sources."

Non-performing assets amounted to $246 million or 1.88% of total assets at quarter-end, a $27 million or 9.8% decrease from September 30, 2012. Non-performing assets peaked at $606 million or 5.60% of total assets, on June 30, 2009 and have since decreased by $360 million or 59.4%. Specifically, non-performing loans decreased from $173 million at the Company's September 30, 2012 fiscal year-end, to $149 million as of March 31, 2013, a 14.1% decrease. Net loan charge-offs decreased from $29 million in the quarter ended March 31, 2012 to $4 million in the most recent quarter, an 86.3% decrease. Total loan delinquencies were 2.34% as of March 31, 2013, a decrease from the 2.57% at September 30, 2012. Delinquencies on single family mortgage loans, the largest component of the loan portfolio, declined during the quarter to 2.55% from 2.73% at September 30, 2012. Real Estate held for sale decreased from $99 million at September 30, 2012 to $97 million at quarter end, a $2 million or 2.0% decrease.

Improving asset quality trends and increasing real estate values combined with decreasing loans outstanding resulted in zero provision for loan losses during the quarter. Consistent with these improving asset quality indicators, the Company decreased its total allowance for loan losses by $10 million or 7.7%, from September 30, 2012. As of March 31, 2013, the total allowance was 1.57% of loans, a decrease of twelve basis points from the 1.69% as of September 30, 2012 reflecting the improving asset quality. 

Total assets increased by $643 million or 5.2% to $13.1 billion at March 31, 2013 from $12.5 billion at September 30, 2012. Specifically, loans and covered loans increased by $59 million and investments increased by $519 million. As of March 31, 2013, the Company's investment portfolio had net unrealized gains of $18 million. During the quarter ended March 31, 2013, total non-covered loans outstanding decreased by $171 million or 2.2% as a result of high loan prepayments stemming from low interest rates available on 30 year fixed-rate mortgages in the market. The pace of net loan runoff decreased slightly in the 2nd quarter of the year compared to the first quarter, but remained elevated. Loan originations were down 9.8% from the December 31, 2012 quarter, but when compared to the same quarter one year ago, originations increased 35.5%. The Company is focusing its originations in shorter duration assets given the potential interest rate risk in originating 30 year mortgages at current levels.

During the quarter, the Company had an average balance of $613 million in cash and cash equivalents invested overnight at a yield of approximately 0.25%. The Company is maintaining higher than normal amounts of liquidity due to concern for potentially rising interest rates in the future. The period end spread decreased to 2.72% as of March 31, 2013 from 2.80% at September 30, 2012, as a result of lower asset yields.

Net interest income for the quarter was $93.0 million, an $11.6 million decrease from the same quarter one year ago. Net interest margin was 3.10% for the quarter, compared to 3.29% for the same quarter one year ago and 3.22% for the quarter ended December 31, 2012. The decreases in both net interest income and net interest margin were the result of lower volume and yields on loans outstanding combined with lower yields on investments. 

The provision for loan losses decreased from $18.0 million to zero, for the quarters ended March 31, 2012 and 2013, respectively. Net loss on real estate acquired through foreclosure increased by $2.4 million to $4.0 million for the current quarter, compared to the same quarter one year ago. Net loss on real estate acquired through foreclosure includes gains and losses on sales, ongoing maintenance expenses and any additional write-downs from lower valuations. 

The Company's efficiency ratio of 41.6% for the quarter remains among the best in the industry. The efficiency ratio has increased noticeably over the last year due to pressure on the net interest margin and the increased operating expenses from the South Valley acquisition which added 24 branch locations. During the 2nd half of this year, the Company expects to complete its conversion and rebrand the South Valley branches. Following the systems conversion the Company plans on consolidating seven branch locations. The quarter produced a return on assets of 1.10%, while return on equity amounted to 7.49%.

During the quarter the Company settled a tax dispute in its favor, resulting in a reduced effective tax rate of 33.25% for the quarter compared to the previous quarter of 36.00%. This lower effective tax rate amounted to $1.5 million in reduced tax expense for the quarter. Going forward, the Company expects its effective tax rate to be approximately 36%.

On April 19, 2013, the Company will pay a cash dividend of $.09 per share to common stockholders of record on April 5, 2013. This will be the Company's 121st consecutive quarterly cash dividend. During the quarter the Company repurchased 498,782 shares of stock at a weighted average price of $16.99. The Company has a remaining authorization to repurchase 2.9 million shares.

Washington Federal has filed an application with the Office of the Comptroller of the Currency (OCC) to covert its current federal savings association charter to a national bank charter. Management and the Board view the national bank charter as more closely aligned with the Company's business model and the current regulatory structure. In connection with national bank conversion, Washington Federal, Inc. will file an application with the Federal Reserve for approval to become a bank holding company. 

Washington Federal, with headquarters in Seattle, Washington, has 188 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 2012 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

This press release contains statements about the Company's future that are not statements of historical fact. These statements are "forward looking statements" for purposes of applicable securities laws, and are based on current information and/or management's good faith belief as to future events. The words "believe," "expect," "anticipate," "project," and similar expressions signify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance. By their nature, forward-looking statements involve inherent risk and uncertainties, which change over time; and actual performance could differ materially from those anticipated by any forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statement.

             
WASHINGTON FEDERAL, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION  
(UNAUDITED)  
             
    March 31, 2013     September 30, 2012  
    (In thousands, except per share data)  
ASSETS                
Cash and cash equivalents   $ 782,059     $ 751,430  
Available-for-sale securities     2,022,668       1,781,705  
Held-to-maturity securities     1,469,983       1,191,487  
Loans receivable, net     7,444,216       7,451,998  
Covered loans, net     355,515       288,376  
Interest receivable     45,448       46,857  
Premises and equipment, net     206,797       178,845  
Real estate held for sale     97,042       99,478  
Covered real estate held for sale     32,274       29,549  
FDIC indemnification asset     80,391       87,571  
FHLB stock     152,038       149,840  
Intangible assets, net     263,054       256,076  
Federal and state income taxes     37,991       22,513  
Other assets     126,357       137,219  
    $ 13,115,833     $ 12,472,944  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Liabilities                
Customer accounts                
  Transaction deposit accounts   $ 3,556,616     $ 2,946,453  
  Time deposit accounts     5,595,609       5,630,165  
      9,152,225       8,576,618  
FHLB advances     1,930,000       1,880,000  
Advance payments by borrowers for taxes and insurance     16,192       40,041  
Accrued expenses and other liabilities     83,066       76,533  
      11,181,483       10,573,192  
Stockholders' Equity                
Common stock, $1.00 par value, 300,000,000 shares authorized; 131,979,030 and 129,950,223 shares issued; 105,011,626 and 106,177,615 shares outstanding     131,979       129,950  
Paid-in capital     1,620,327       1,586,295  
Accumulated other comprehensive income, net of taxes     11,897       13,306  
Treasury stock, at cost; 26,967,404 and 23,772,608 shares     (363,803 )     (310,579 )
Retained earnings     533,950       480,780  
      1,934,350       1,899,752  
    $ 13,115,833     $ 12,472,944  
CONSOLIDATED FINANCIAL HIGHLIGHTS                
Common stockholders' equity per share   $ 18.42     $ 17.89  
Tangible common stockholders' equity per share     15.92       15.48  
Stockholders' equity to total assets     14.75 %     15.23 %
Tangible common stockholders' equity to tangible assets     13.00       13.45  
Weighted average rates at period end                
  Loans and mortgage-backed securities     4.54 %     4.72 %
  Combined loans, mortgage-backed securities and investment securities     3.94       4.18  
  Customer accounts     0.73       0.90  
  Borrowings     3.52       3.59  
  Combined cost of customer accounts and borrowings     1.22       1.38  
  Interest rate spread     2.72       2.80  
                 
                 
                 
                       
                       
WASHINGTON FEDERAL, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(UNAUDITED)  
                       
                       
    Quarter Ended March 31,   Six Months Ended March 31,  
    2013     2012   2013     2012  
    (In thousands, except per share data)            
INTEREST INCOME                              
Loans & covered assets   $ 112,879     $ 123,772   $ 229,722     $ 251,251  
Mortgage-backed securities     10,642       28,682     22,374       54,978  
Investment securities and cash equivalents     2,984       2,127     5,717       4,278  
      126,505       154,581     257,813       310,507  
                               
INTEREST EXPENSE                              
Customer accounts     16,695       22,016     35,466       45,965  
FHLB advances and other borrowings     16,787       27,963     33,890       56,226  
      33,482       49,979     69,356       102,191  
                               
Net interest income     93,023       104,602     188,457       208,316  
Provision for loan losses     -       18,000     3,600       29,210  
Net interest income after provision for loan losses     93,023       86,602     184,857       179,106  
                               
OTHER INCOME                              
Other     6,046       5,028     11,003       9,674  
      6,046       5,028     11,003       9,674  
                               
OTHER EXPENSE                              
Compensation and benefits     23,077       20,185     44,149       38,860  
Occupancy     4,825       4,094     9,272       8,025  
FDIC premiums     3,107       4,350     6,450       8,543  
Other     10,155       8,183     19,591       15,749  
      41,164       36,812     79,462       71,177  
Gain (loss) on real estate acquired through foreclosure, net     (4,003 )     (1,582 )   (7,322 )     (12,151 )
Income before income taxes     53,902       53,236     109,076       105,452  
Income taxes provision     17,924       19,165     37,816       37,963  
NET INCOME   $ 35,978     $ 34,071   $ 71,260     $ 67,489  
                               
PER SHARE DATA                              
Basic earnings   $ .34     $ .32   $ .67     $ .63  
Diluted earnings     .34       .32     .67       .63  
Cash Dividends per share     .09       .08     .17       .16  
Basic weighted average number of shares outstanding     105,206,491       107,198,829     105,606,688       107,523,686  
Diluted weighted average number of shares outstanding, including dilutive stock options     105,258,240       107,237,972     105,655,770       107,549,396  
                               
PERFORMANCE RATIOS                              
Return on average assets     1.10 %     1.00 %   1.11 %     .99 %
Return on average common equity     7.49 %     7.12 %   7.45 %     7.07 %
                               
View Comments (0)