Filed by Washington Federal, Inc. pursuant
to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Anchor Bancorp
Commission File No.: 001-34965
Explanatory Note: On April 13, 2017, the Company announced by press release its earnings for the quarter ended March 31, 2017.
Thursday, April 13, 2017
FOR IMMEDIATE RELEASE
Washington Federal Announces 4% Increase In Quarterly Earnings
SEATTLE, WASHINGTON – Washington Federal, Inc. (Nasdaq: WAFD), parent company of Washington Federal, National Association, today announced quarterly earnings of $42,070,000 or $0.47 per diluted share for the quarter ended March 31, 2017 compared to $41,723,000 or $0.45 per diluted share for the quarter ended March 31, 2016, a $0.02 or 4% increase. Return on equity for the quarter ended March 31, 2017 was 8.37% compared to 8.51% for the quarter ended March 31, 2016. Return on assets for the quarter ended March 31, 2017 was 1.13% compared to 1.14% for the same quarter in the prior year.
President & Chief Executive Officer Brent Beardall commented, “Washington Federal had a strong quarter and is positioned well for future growth. Operating metrics improved as we benefited from continued strong macro economic factors in our key markets. The Company had loan originations of $944 million during the quarter, a 24% increase from the prior year. Commercial loans represented two-thirds of total originations for the quarter. As announced earlier this week, we have entered into a merger agreement with Anchor Bancorp. This transaction will enhance our presence in southwestern Washington and is expected to be immediately accretive to tangible book value per share as well as accretive to earnings per share once fully integrated. It is important to recognize a milestone event that will occur on Monday April 24, 2017. That date marks the centennial anniversary for Washington Federal. We thank our clients, shareholders and employees for building one of the
strongest banks in the United States. We look forward with optimism to the next 100 years as we strive to fulfill the changing needs of our clients while staying true to the values that made us who we are today.”
Total assets were $15.0 billion as of March 31, 2017 compared to $14.9 billion as of September 30, 2016. The Company continued to shift its asset mix from cash and investment securities to loans receivable. Since September 30, 2016, available-for-sale securities decreased $534 million or 27.8%, held-to-maturity securities increased $280 million or 19.8% and cash and cash equivalents decreased $184 million or 40.8%. During that same period net loans receivable increased by $552 million or 5.6%.
Customer deposits increased by $30 million or 0.3% since September 30, 2016 and totaled $10.6 billion as of March 31, 2017. Transaction accounts increased by $207 million or 3.4% during that period while time deposits decreased $177 million or 3.9%. The mix of customer deposits has continued to shift over the last several years as the Company focuses on growing transaction accounts to lessen sensitivity to rising interest rates and reduce interest expense. As of March 31, 2017, 58.4% of the Company’s deposits were in transaction accounts. Core deposits, defined as all transaction accounts and time deposits less than $250,000, totaled 94.8% of deposits at March 31, 2017.
Borrowings from the Federal Home Loan Bank totaled $2.2 billion as of March 31, 2017 and $2.1 billion at September 30, 2016.
Loan originations totaled $944 million for the 2nd fiscal quarter 2017, a $181 million or 24% increase over the $763 million of originations in the same quarter one year ago. Partially offsetting loan originations in each of these respective quarters were loan repayments of $711 million and $581 million. Commercial loans represented 66% of all loan originations during the 2nd fiscal quarter 2017 with consumer loans accounting for the remaining 34%. The Company views organic loan growth as the highest and best use of its capital and prefers commercial loans in this low rate environment because of their shorter duration. The weighted average interest rate on loans decreased to 4.25% as of March 31, 2017 from 4.26% at September 30, 2016 as new loans continue to be originated at interest rates lower than the average of the overall portfolio.
Asset quality remains strong and the ratio of non-performing assets to total assets was 0.53% as of March 31, 2017 compared to 0.56% at December 31, 2016 and 0.48% at September 30, 2016. Since September 30, 2016, real estate owned decreased by $6 million, or 22%, and non-accrual loans increased by $15 million, or 35%. Delinquent loans represented 0.65% of total loans at March 31, 2017 compared to 0.74% at December 31, 2016 and 0.68% at September 30, 2016. The allowance for loan losses and reserve for unfunded commitments totaled $127 million as of March 31, 2017 and was 1.09% of gross loans outstanding, as compared to $117 million or 1.07% of gross loans outstanding at September 30, 2016. The slight increase in the ratio of the total allowance and reserve to gross loans since our fiscal year end reflects the continued
shift in the mix of the loan portfolio to include a greater proportion of commercial loans outstanding, which generally require a higher level of reserves.
On February 10, 2017, the Company paid a regular dividend on common stock of $0.15 per share, which represented the 136th consecutive quarterly cash dividend, as well as a special cash dividend on common stock of $0.25 per share. Since September 30, 2016, tangible common stockholders’ equity per share increased by $0.50 or 2.7% to $19.22 and the ratio of tangible common equity to tangible assets remained strong at 11.72% as of March 31, 2017.
Net interest income was $108 million for the quarter, an increase of $1.4 million or 1.3% from the same quarter in the prior year. The increase in net interest income was due to average earning assets increasing by $230 million. Net interest margin decreased to 3.15% in the 2nd fiscal quarter of 2017 from 3.16% for same quarter in the prior year. The decrease in net interest margin is primarily due to a decline in yield on loans as the low rate environment has led to new loan originations having lower yields than the loans that repaid.
The Company recorded a release of loan loss allowance of $1.6 million in the 2nd fiscal quarter of 2017 compared with a release of $1.5 million in the same quarter of 2016 as net recoveries in both quarters were offset by strong growth in the loan portfolio. Net recoveries were $5.2 million in the 2nd fiscal quarter of 2017 and $3.5 million for the prior year quarter.
Total other income was $10.1 million for the 2nd fiscal quarter 2017, a decrease of $0.6 million from $10.7 million in the same quarter of the prior year. The decrease this quarter was primarily related to $0.4 million less of deposit fee income.
Total operating expenses were $57.5 million in the 2nd fiscal quarter 2017, a decrease of $1.8 million or 3.0% from the prior year quarter. Information technology costs decreased by $0.8 million and product delivery costs declined $0.8 million from the prior year quarter and this was largely attributable to the system conversion and resulting efficiency gains since 2016. The Company’s efficiency ratio was 48.8% in the 2nd fiscal quarter 2017 and is lower than the 50.6% for the same period one year ago due primarily to the decrease in operating expenses noted above.
Net gain on real estate owned was $0.8 million for 2nd fiscal quarter 2017 compared to a net gain of $3.9 million for the same quarter last year. Net gain or loss on real estate owned is expected to be somewhat volatile as it includes gains and losses on sales, ongoing maintenance expenses and any additional net valuation adjustments.
For the quarter ended March 31, 2017, the Company recorded federal and state income tax expense of $20.7 million, which equates to a 33.00% effective tax rate. This compares to an effective tax rate of 33.89% for the fiscal year ended September 30, 2016. The decline in the effective tax rate from the prior year is due primarily to increased investments in bank owned life insurance, low income housing tax credits and tax exempt loans.
Washington Federal, a national bank with headquarters in Seattle, Washington, has 236 branches in eight western states. To find out more about Washington Federal, please visit our website www.washingtonfederal.com. Washington Federal uses its website to distribute financial and other material information about the Company.
Important Cautionary Statements
The foregoing information should be read in conjunction with the financial statements, notes and other information contained in the Company’s 2016 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
This press release contains statements about the Company’s future that are not statements of historical fact. These statements are “forward looking statements” for purposes of applicable securities laws, and are based on current information and/or management's good faith belief as to future events. The words “believe,” “expect,” “anticipate,” “project,” and similar expressions signify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance. By their nature, forward-looking statements involve inherent risk and uncertainties, which change over time; and actual performance, could differ materially from those anticipated by any forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statement.
# # #
Contact:
Washington Federal, Inc.
425 Pike Street, Seattle, WA 98101
Brad Goode, SVP, Director of Communications
206-626-8178
brad.goode@wafd.com
Washington Federal, Inc.
Fact Sheet
March 31, 2017
($ in Thousands)
| As of 09/16 | As of 12/16 | As of 03/17 | |||||||||||||||||||||
| Loan Loss Reserve - Total | $ | 116,729 | $ | 123,356 | $ | 126,972 | |||||||||||||||||
| General and Specific Allowance | 113,494 | 118,456 | 121,922 | ||||||||||||||||||||
| Commitments Reserve | 3,235 | 4,900 | 5,050 | ||||||||||||||||||||
| Allowance as a % of Gross Loans | 1.07 | % | 1.09 | % | 1.09 | % | |||||||||||||||||
| 09/16 QTR | 09/16 YTD | 12/16 QTR | 12/16 YTD | 03/17 QTR | 03/17 YTD | ||||||||||||||||||
| Loan Originations - Total | $ | 1,190,431 | $ | 3,948,534 | $ | 1,241,046 | $ | 1,241,046 | $ | 944,083 | $ | 2,185,129 | |||||||||||
| Single-Family Residential | 236,184 | 692,575 | 215,241 | 215,241 | 170,547 | 385,788 | |||||||||||||||||
| Construction | 230,597 | 900,649 | 338,599 | 338,599 | 167,422 | 506,021 | |||||||||||||||||
| Construction - Custom | 144,095 | 421,816 | 122,955 | 122,955 | 120,646 | 243,601 | |||||||||||||||||
| Land - Acquisition & Development | 25,956 | 59,511 | 16,229 | 16,229 | 10,336 | 26,565 | |||||||||||||||||
| Land - Consumer Lot Loans | 10,405 | 29,661 | 9,065 | 9,065 | 8,158 | 17,223 | |||||||||||||||||
| Multi-Family | 63,280 | 361,261 | 111,959 | 111,959 | 93,279 | 205,238 | |||||||||||||||||
| Commercial Real Estate | 88,770 | 353,265 | 164,098 | 164,098 | 77,949 | 242,047 | |||||||||||||||||
| Commercial & Industrial | 370,481 | 1,051,950 | 243,924 | 243,924 | 277,676 | 521,600 | |||||||||||||||||
| HELOC | 19,882 | 74,538 | 18,391 | 18,391 | 17,221 | 35,612 | |||||||||||||||||
| Consumer | 781 | 3,308 | 585 | 585 | 849 | 1,434 | |||||||||||||||||
| Purchased Loans (including acquisitions) | $ | 53,774 | $ | 105,420 | $ | — | $ | — | $ | 72,856 | $ | 72,856 | |||||||||||
| Net Loan Fee and Discount Accretion | $ | 6,730 | $ | 29,898 | $ | 6,762 | $ | 6,762 | $ | 5,764 | $ | 12,526 | |||||||||||
| Repayments | |||||||||||||||||||||||
| Loans | $ | 851,578 | $ | 2,935,167 | $ | 896,109 | $ | 896,109 | $ | 710,691 | $ | 1,606,800 | |||||||||||
| MBS | 142,329 | 462,973 | 178,169 | 178,169 | 96,900 | 275,069 | |||||||||||||||||
| MBS Premium Amortization | $ | 3,962 | $ | 12,920 | $ | 5,039 | $ | 5,039 | $ | 2,992 | $ | 8,031 | |||||||||||
| Efficiency | |||||||||||||||||||||||
| Operating Expenses/Average Assets | 1.49 | % | 1.60 | % | 1.46 | % | 1.46 | % | 1.55 | % | 1.50 | % | |||||||||||
| Efficiency Ratio (%) | 48.54 | % | 50.80 | % | 47.23 | % | 47.23 | % | 48.76 | % | 48.00 | % | |||||||||||
| Amortization of Intangibles | $ | 548 | $ | 2,369 | $ | 521 | $ | 521 | $ | 398 | $ | 919 | |||||||||||
| EOP Numbers | |||||||||||||||||||||||
| Shares Issued and Outstanding | 89,680,847 | 89,272,268 | 89,438,563 | ||||||||||||||||||||
| Share repurchase information | |||||||||||||||||||||||
| Remaining shares authorized for repurchase | 5,039,310 | 4,231,553 | 4,157,081 | ||||||||||||||||||||
| Shares repurchased | 707,642 | 3,867,563 | 757,768 | 757,768 | 477 | 758,245 | |||||||||||||||||
| Average share repurchase price | $ | 25.20 | $ | 22.72 | $ | 26.90 | $ | 26.90 | $ | 33.55 | $ | 26.91 | |||||||||||
| Tangible Common Book Value | As of 09/16 | As of 12/16 | As of 03/17 | ||||||||||||||
| $ Amount | $ | 1,678,742 | $ | 1,703,133 | $ | 1,718,625 | |||||||||||
| Per Share | 18.72 | 19.08 | 19.22 | ||||||||||||||
| # of Employees | 1,806 | 1,813 | 1,797 | ||||||||||||||
| Investments | |||||||||||||||||
| Available-for-sale: | |||||||||||||||||
| Agency MBS | $ | 1,072,912 | $ | 959,661 | $ | 916,006 | |||||||||||
| Other | 849,982 | 482,274 | 472,776 | ||||||||||||||
| $ | 1,922,894 | $ | 1,441,935 | $ | 1,388,782 | ||||||||||||
| Held-to-maturity: | |||||||||||||||||
| Agency MBS | $ | 1,417,599 | $ | 1,752,010 | $ | 1,697,650 | |||||||||||
| $ | 1,417,599 | $ | 1,752,010 | $ | 1,697,650 | ||||||||||||
| As of 09/16 | As of 12/16 | As of 03/17 | |||||||||||||||
| Loans Receivable by Category (a) | AMOUNT | % | AMOUNT | % | AMOUNT | % | |||||||||||
| Single-Family Residential | $ | 5,658,830 | 51.7% | $ | 5,624,263 | 49.6% | $ | 5,693,072 | 48.9% | ||||||||
| Construction | 1,110,411 | 10.1 | 1,265,747 | 11.2 | 1,311,635 | 11.3 | |||||||||||
| Construction - Custom | 473,069 | 4.3 | 494,447 | 4.4 | 527,319 | 4.5 | |||||||||||
| Land - Acquisition & Development | 118,497 | 1.1 | 119,085 | 1.1 | 118,726 | 1.0 | |||||||||||
| Land - Consumer Lot Loans | 104,567 | 1.0 | 101,104 | 0.9 | 101,227 | 0.9 | |||||||||||
| Multi-Family | 1,124,290 | 10.3 | 1,217,594 | 10.7 | 1,266,911 | 10.9 | |||||||||||
| Commercial Real Estate | 1,093,639 | 10.0 | 1,207,573 | 10.7 | 1,296,039 | 11.1 | |||||||||||
| Commercial & Industrial | 978,589 | 8.9 | 1,025,821 | 9.1 | 1,071,629 | 9.2 | |||||||||||
| HELOC | 149,716 | 1.4 | 148,452 | 1.3 | 146,172 | 1.3 | |||||||||||
| Consumer | 139,000 | 1.3 | 124,547 | 1.1 | 107,759 | 0.9 | |||||||||||
| 10,950,608 | 100% | 11,328,633 | 100% | 11,640,489 | 100% | ||||||||||||
| Less: | |||||||||||||||||
| ALL | 113,494 | 118,456 | 121,922 | ||||||||||||||
| Loans in Process | 879,484 | 1,027,168 | 1,009,937 | ||||||||||||||
| Net Deferred Fees, Costs and Discounts | 46,710 | 46,698 | 45,608 | ||||||||||||||
| Sub-Total | 1,039,688 | 1,192,322 | 1,177,467 | ||||||||||||||
| $ | 9,910,920 | $ | 10,136,311 | $ | 10,463,022 | ||||||||||||
| Net Loan Portfolio by Category (a) | AMOUNT | % | AMOUNT | % | AMOUNT | % | |||||||||||
| Single-Family Residential | $ | 5,601,350 | 56.5% | $ | 5,565,673 | 54.9% | $ | 5,632,558 | 53.8% | ||||||||
| Construction | 475,022 | 4.8 | 486,784 | 4.8 | 564,133 | 5.4 | |||||||||||
| Construction - Custom | 227,348 | 2.3 | 233,867 | 2.3 | 248,878 | 2.4 | |||||||||||
| Land - Acquisition & Development | 88,408 | 0.9 | 95,997 | 0.9 | 96,330 | 0.9 | |||||||||||
| Land - Consumer Lot Loans | 101,435 | 1.0 | 98,118 | 1.0 | 98,252 | 0.9 | |||||||||||
| Multi-Family | 1,113,661 | 11.2 | 1,205,737 | 11.9 | 1,254,499 | 12.0 | |||||||||||
| Commercial Real Estate | 1,074,146 | 10.8 | 1,188,637 | 11.7 | 1,278,189 | 12.2 | |||||||||||
| Commercial & Industrial | 945,150 | 9.5 | 992,261 | 9.8 | 1,039,309 | 9.9 | |||||||||||
| HELOC | 147,737 | 1.5 | 146,790 | 1.4 | 144,642 | 1.4 | |||||||||||
| Consumer | 136,663 | 1.4 | 122,447 | 1.2 | 106,232 | 1.0 | |||||||||||
| $ | 9,910,920 | 100% | $ | 10,136,311 | 100% | $ | 10,463,022 | 100% | |||||||||
| (a) Some loans have been reclassified by loan type as a result of system conversion in 1Q16, primarily impacting Construction, Multi-family and Commercial Real Estate. | |||||||||||||||||
| As of 09/30/16 | As of 12/31/16 | As of 03/31/17 | |||||||||||||||||||||||||||
| Deposits by State | AMOUNT | % | # | AMOUNT | % | # | AMOUNT | % | # | ||||||||||||||||||||
| Washington (WA) | $ | 5,100,754 | 48.1 | % | 81 | $ | 5,196,140 | 48.8 | % | 81 | $ | 5,146,140 | 48.4 | % | 81 | ||||||||||||||
| Idaho (ID) | 782,413 | 7.4 | 25 | 768,704 | 7.2 | 24 | 785,092 | 7.4 | 24 | ||||||||||||||||||||
| Oregon (OR) | 1,964,173 | 18.5 | 48 | 1,952,655 | 18.3 | 48 | 1,946,137 | 18.3 | 47 | ||||||||||||||||||||
| Utah (UT) | 285,234 | 2.7 | 10 | 280,457 | 2.6 | 10 | 272,804 | 2.6 | 10 | ||||||||||||||||||||
| Nevada (NV) | 340,324 | 3.2 | 11 | 333,789 | 3.1 | 11 | 335,266 | 3.2 | 11 | ||||||||||||||||||||
| Texas (TX) | 94,113 | 0.9 | 5 | 97,276 | 0.9 | 5 | 94,656 | 0.9 | 5 | ||||||||||||||||||||
| Arizona (AZ) | 1,188,335 | 11.2 | 31 | 1,173,538 | 11.0 | 31 | 1,193,459 | 11.2 | 31 | ||||||||||||||||||||
| New Mexico (NM) | 845,506 | 8.0 | 27 | 845,016 | 7.9 | 27 | 857,253 | 8.1 | 27 | ||||||||||||||||||||
| Total | $ | 10,600,852 | 100% | 238 | $ | 10,647,575 | 100% | 237 | $ | 10,630,807 | 100% | 236 | |||||||||||||||||
| Deposits by Type | AMOUNT | % | AMOUNT | % | AMOUNT | % | |||||||||||||||||||||||
| Checking (non-interest) | $ | 1,091,738 | 10.3 | % | $ | 1,124,169 | 10.6 | % | $ | 1,142,372 | 10.7 | % | |||||||||||||||||
| NOW (interest) | 1,629,983 | 15.4 | 1,732,836 | 16.3 | 1,731,737 | 16.3 | |||||||||||||||||||||||
| Savings (passbook/statement) | 820,980 | 7.7 | 844,849 | 7.9 | 871,722 | 8.2 | |||||||||||||||||||||||
| Money Market | 2,462,891 | 23.2 | 2,492,483 | 23.4 | 2,466,868 | 23.2 | |||||||||||||||||||||||
| Time Deposits | 4,595,260 | 43.3 | 4,453,238 | 41.8 | 4,418,108 | 41.6 | |||||||||||||||||||||||
| Total | $ | 10,600,852 | 100% | $ | 10,647,575 | 100% | $ | 10,630,807 | 100% | ||||||||||||||||||||
| Deposits greater than $250,000 - EOP | $ | 2,250,622 | $ | 2,410,863 | $ | 2,426,837 | |||||||||||||||||||||||
| Time Deposit Repricing | Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||||||||||||
| Within 3 months | $ | 824,019 | 0.82 | % | $ | 933,770 | 0.76 | % | $ | 930,544 | 0.71 | % | |||||||||||||||||
| From 4 to 6 months | 896,484 | 0.80 | % | 896,254 | 0.74 | % | 852,702 | 0.67 | % | ||||||||||||||||||||
| From 7 to 9 months | 618,180 | 0.89 | % | 532,682 | 0.81 | % | 429,013 | 0.79 | % | ||||||||||||||||||||
| From 10 to 12 months | 508,732 | 0.83 | % | 391,159 | 0.80 | % | 442,072 | 0.84 | % | ||||||||||||||||||||
| Non-Performing Assets | AMOUNT | % | AMOUNT | % | AMOUNT | % | |||||||||||||||||||||||
| Non-accrual loans: | |||||||||||||||||||||||||||||
| Single-Family Residential | $ | 33,148 | 78.2% | $ | 38,568 | 63.5% | $ | 34,373 | 60.1% | ||||||||||||||||||||
| Construction | — | — | — | — | — | — | |||||||||||||||||||||||
| Construction - Custom | — | — | — | — | 240 | 0.4 | |||||||||||||||||||||||
| Land - Acquisition & Development | 58 | 0.1 | 603 | 1.0 | 80 | 0.1 | |||||||||||||||||||||||
| Land - Consumer Lot Loans | 510 | 1.2 | 969 | 1.6 | 1,129 | 2.0 | |||||||||||||||||||||||
| Multi-Family | 776 | 1.8 | 1,160 | 1.9 | 1,364 | 2.4 | |||||||||||||||||||||||
| Commercial Real Estate | 7,100 | 16.7 | 9,660 | 15.9 | 10,507 | 18.4 | |||||||||||||||||||||||
| Commercial & Industrial | 583 | 1.4 | 9,230 | 15.2 | 8,864 | 15.5 | |||||||||||||||||||||||
| HELOC | 239 | 0.6 | 480 | 0.8 | 583 | 1.0 | |||||||||||||||||||||||
| Consumer | — | — | 45 | 0.1 | 55 | 0.1 | |||||||||||||||||||||||
| Total non-accrual loans | 42,414 | 100% | 60,715 | 100% | 57,195 | 100% | |||||||||||||||||||||||
| Real Estate Owned | 29,027 | 22,637 | 22,543 | ||||||||||||||||||||||||||
| Total non-performing assets | $ | 71,441 | $ | 83,352 | $ | 79,738 | |||||||||||||||||||||||
| Non-accrual loans as % of total net loans | 0.43 | % | 0.60 | % | 0.55 | % | |||||||||||||||||||||||
| Non-performing assets as % of total assets | 0.48 | % | 0.56 | % | 0.53 | % | |||||||||||||||||||||||
| As of 9/30/16 | As of 12/31/16 | As of 03/31/17 | ||||||||||||||||||
| AMOUNT | % | AMOUNT | % | AMOUNT | % | |||||||||||||||
| Restructured loans: | ||||||||||||||||||||
| Single-Family Residential | $ | 228,186 | 87.3% | $ | 217,943 | 87.2% | $ | 204,955 | 87.6% | |||||||||||
| Construction | — | — | — | — | — | — | ||||||||||||||
| Construction - Custom | — | — | — | — | — | — | ||||||||||||||
| Land - Acquisition & Development | 1,154 | 0.4 | 1,139 | 0.5 | 594 | 0.3 | ||||||||||||||
| Land - Consumer Lot Loans | 9,630 | 3.7 | 9,619 | 3.8 | 9,410 | 4.0 | ||||||||||||||
| Multi-Family | 1,505 | 0.6 | 1,496 | 0.6 | 1,131 | 0.5 | ||||||||||||||
| Commercial Real Estate | 19,434 | 7.4 | 18,179 | 7.3 | 16,290 | 7.0 | ||||||||||||||
| Commercial & Industrial | — | — | — | — | — | — | ||||||||||||||
| HELOC | 1,506 | 0.6 | 1,461 | 0.6 | 1,414 | 0.6 | ||||||||||||||
| Consumer | 116 | — | 113 | — | 107 | — | ||||||||||||||
| Total restructured loans | $ | 261,531 | 100% | $ | 249,950 | 100% | $ | 233,901 | 100% | |||||||||||
| Restructured loans were as follows: | ||||||||||||||||||||
| Performing | $ | 251,583 | 96.2% | $ | 235,503 | 94.2% | $ | 222,208 | 95.0% | |||||||||||
| Non-performing (b) | 9,948 | 3.8 | 14,447 | 5.8 | 11,693 | 5.0 | ||||||||||||||
| Total restructured loans | $ | 261,531 | 100% | $ | 249,950 | 100% | $ | 233,901 | 100% | |||||||||||
| (b) Included in "Total non-accrual loans" above | ||||||||||||||||||||
| AMOUNT | CO % (c) | AMOUNT | CO % (c) | AMOUNT | CO % (c) | |||||||||||||||
| Net Charge-offs (Recoveries) by Category | ||||||||||||||||||||
| Single-Family Residential | $ | (204 | ) | (0.01)% | $ | 3 | —% | $ | 157 | 0.01% | ||||||||||
| Construction | (388 | ) | (0.14) | — | — | — | — | |||||||||||||
| Construction - Custom | — | — | — | — | 3 | — | ||||||||||||||
| Land - Acquisition & Development | (2,063 | ) | (6.96) | (3,985 | ) | (13.39) | (4,168 | ) | (14.04) | |||||||||||
| Land - Consumer Lot Loans | 29 | 0.11 | (53 | ) | (0.21) | (180 | ) | (0.71) | ||||||||||||
| Multi-Family | — | — | — | — | — | — | ||||||||||||||
| Commercial Real Estate | (172 | ) | (0.06) | (339 | ) | (0.11) | (1,164 | ) | (0.36) | |||||||||||
| Commercial & Industrial | (2,123 | ) | (0.87) | (667 | ) | (0.26) | (112 | ) | (0.04) | |||||||||||
| HELOC | — | — | 36 | 0.10 | 53 | 0.15 | ||||||||||||||
| Consumer | (657 | ) | (1.89) | (291 | ) | (0.93) | 195 | 0.72 | ||||||||||||
| Total net charge-offs (recoveries) | $ | (5,578 | ) | (0.20)% | $ | (5,296 | ) | (0.19)% | $ | (5,216 | ) | (0.18)% | ||||||||
| (c) Annualized Net Charge-offs (recoveries) divided by Gross Balance | ||||||||||||||||||||
| Interest Rate Risk | ||||||||||||||||||||
| One Year GAP | (10.1 | )% | (15.3 | )% | (14.7 | )% | ||||||||||||||
| NPV post 200 bps shock (d) | 14.8 | % | 13.9 | % | 13.9 | % | ||||||||||||||
| Change in NII after 200 bps shock (d) | 3.2 | % | 1.7 | % | 1.3 | % | ||||||||||||||
| (d) Assumes no balance sheet management actions taken | ||||||||||||||||||||
| Historical CPR Rates (e) | |||||
| WAFD | WAFD | ||||
| Average for Quarter Ended: | SFR Mortgages | GSE MBS | |||
| 9/30/2014 | 14.6 | % | 13.4 | % | |
| 12/31/2014 | 15.9 | % | 12.1 | % | |
| 3/31/2015 | 16.4 | % | 13.9 | % | |
| 6/30/2015 | 18.7 | % | 15.9 | % | |
| 9/30/2015 | 17.8 | % | 14.5 | % | |
| 12/31/2015 | 16.7 | % | 13.4 | % | |
| 3/31/2016 | 13.9 | % | 12.0 | % | |
| 6/30/2016 | 17.3 | % | 17.5 | % | |
| 9/30/2016 | 17.7 | % | 20.0 | % | |
| 12/31/2016 | 19.3 | % | 24.8 | % | |
| 3/31/2017 | 13.6 | % | 13.5 | % | |
| (e) The CPR Rate (conditional payment rate) is the rate that is equal to the proportion of the principal of a pool of loans that is paid off prematurely in each period. | |||||
Washington Federal, Inc.
Fact Sheet
March 31, 2017
Average Balance Sheet
($ in Thousands)
| Three Months Ended | ||||||||||||||||||||||||||||||||
| September 30, 2016 | December 31, 2016 | March 31, 2017 | ||||||||||||||||||||||||||||||
| Average | Average | Average | Average | Average | Average | |||||||||||||||||||||||||||
| Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Loans receivable | $ | 9,756,353 | $ | 114,283 | 4.65 | % | $ | 10,013,798 | $ | 114,835 | 4.55 | % | $ | 10,267,530 | $ | 116,034 | 4.58 | % | ||||||||||||||
| Mortgage-backed securities | 2,568,917 | 13,820 | 2.13 | 2,537,585 | 12,789 | 2.00 | 2,664,959 | 16,226 | 2.47 | |||||||||||||||||||||||
| Cash & investments | 1,218,195 | 4,029 | 1.31 | 1,010,299 | 4,246 | 1.67 | 632,114 | 3,068 | 1.97 | |||||||||||||||||||||||
| FHLB & FRB Stock | 117,205 | 740 | 2.50 | 117,210 | 894 | 3.03 | 118,092 | 870 | 2.99 | |||||||||||||||||||||||
| Total interest-earning assets | 13,660,670 | 132,872 | 3.86 | % | 13,678,892 | 132,764 | 3.85 | % | 13,682,695 | 136,198 | 4.04 | % | ||||||||||||||||||||
| Other assets | 1,210,388 | 1,197,304 | 1,161,023 | |||||||||||||||||||||||||||||
| Total assets | $ | 14,871,058 | $ | 14,876,196 | $ | 14,843,718 | ||||||||||||||||||||||||||
| Liabilities and Equity | ||||||||||||||||||||||||||||||||
| Customer accounts | 10,610,740 | 13,423 | 0.50 | % | 10,610,314 | 13,017 | 0.49 | % | 10,578,631 | 12,392 | 0.48 | % | ||||||||||||||||||||
| FHLB advances | 2,080,000 | 16,633 | 3.17 | 2,080,000 | 16,595 | 3.17 | 2,102,556 | 16,079 | 3.10 | |||||||||||||||||||||||
| Other borrowings | 33 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
| Total interest-bearing liabilities | 12,690,773 | 30,056 | 0.94 | % | 12,690,314 | 29,612 | 0.93 | % | 12,681,187 | 28,471 | 0.91 | % | ||||||||||||||||||||
| Other liabilities | 205,817 | 201,233 | 153,105 | |||||||||||||||||||||||||||||
| Total liabilities | 12,896,590 | 12,891,547 | 12,834,292 | |||||||||||||||||||||||||||||
| Stockholders’ equity | 1,974,468 | 1,984,649 | 2,009,426 | |||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 14,871,058 | $ | 14,876,196 | $ | 14,843,718 | ||||||||||||||||||||||||||
| Net interest income | $ | 102,816 | $ | 103,152 | $ | 107,727 | ||||||||||||||||||||||||||
| Net interest margin (1) | 3.01 | % | 3.02 | % | 3.15 | % | ||||||||||||||||||||||||||
| (1) Annualized net interest income divided by average interest-earning assets | ||||||||||||||||||||||||||||||||
Washington Federal, Inc.
Fact Sheet
March 31, 2017
Delinquency Summary
($ in Thousands)
| AMOUNT OF LOANS | # OF LOANS | % based | % based | |||||||||||||||||||||||||||||
| TYPE OF LOANS | #LOANS | AVG Size | NET OF LIP & CHG-OFFs | 30 | 60 | 90 | Total | on # | $ Delinquent | on $ | ||||||||||||||||||||||
| March 31, 2017 | ||||||||||||||||||||||||||||||||
| Single-Family Residential | 25,999 | 219 | $ | 5,692,305 | 74 | 36 | 163 | 273 | 1.05 | % | $ | 53,147 | 0.93 | % | ||||||||||||||||||
| Construction | 633 | 938 | 593,479 | 4 | — | — | 4 | 0.63 | 601 | 0.10 | ||||||||||||||||||||||
| Construction - Custom | 1,149 | 219 | 251,906 | — | — | 2 | 2 | 0.17 | 240 | 0.10 | ||||||||||||||||||||||
| Land - Acquisition & Development | 122 | 847 | 103,280 | 1 | — | 3 | 4 | 3.28 | 262 | 0.25 | ||||||||||||||||||||||
| Land - Consumer Lot Loans | 1,187 | 85 | 101,168 | 3 | 2 | 12 | 17 | 1.43 | 1,261 | 1.25 | ||||||||||||||||||||||
| Multi-Family | 968 | 1,309 | 1,266,845 | — | — | 4 | 4 | 0.41 | 1,224 | 0.10 | ||||||||||||||||||||||
| Commercial Real Estate | 1,067 | 1,215 | 1,296,019 | 7 | 1 | 10 | 18 | 1.69 | 6,342 | 0.49 | ||||||||||||||||||||||
| Commercial & Industrial | 1,836 | 584 | 1,071,622 | 13 | 2 | 32 | 47 | 2.56 | 4,964 | 0.46 | ||||||||||||||||||||||
| HELOC | 2,939 | 50 | 146,169 | 5 | 2 | 32 | 39 | 1.33 | 814 | 0.56 | ||||||||||||||||||||||
| Consumer | 4,542 | 24 | 107,759 | 70 | 19 | 75 | 164 | 3.61 | 601 | 0.56 | ||||||||||||||||||||||
| 40,442 | 263 | $ | 10,630,552 | 177 | 62 | 333 | 572 | 1.41 | % | $ | 69,456 | 0.65 | % | |||||||||||||||||||
| December 31, 2016 | ||||||||||||||||||||||||||||||||
| Single-Family Residential | 26,259 | 214 | $ | 5,623,668 | 88 | 53 | 165 | 306 | 1.17 | % | $ | 60,201 | 1.07 | % | ||||||||||||||||||
| Construction | 638 | 804 | 513,046 | 3 | — | 1 | 4 | 0.63 | 341 | 0.07 | ||||||||||||||||||||||
| Construction - Custom | 1,079 | 219 | 236,668 | 2 | 1 | — | 3 | 0.28 | 157 | 0.07 | ||||||||||||||||||||||
| Land - Acquisition & Development | 126 | 819 | 103,148 | 1 | — | 4 | 5 | 3.97 | 1,262 | 1.22 | ||||||||||||||||||||||
| Land - Consumer Lot Loans | 1,204 | 84 | 101,045 | 4 | 2 | 15 | 21 | 1.74 | 1,076 | 1.06 | ||||||||||||||||||||||
| Multi-Family | 959 | 1,270 | 1,217,594 | 3 | 1 | 2 | 6 | 0.63 | 1,868 | 0.15 | ||||||||||||||||||||||
| Commercial Real Estate | 1,040 | 1,130 | 1,175,475 | 6 | 2 | 12 | 20 | 1.92 | 7,766 | 0.66 | ||||||||||||||||||||||
| Commercial & Industrial | 1,843 | 574 | 1,057,826 | 4 | 6 | 34 | 44 | 2.39 | 1,108 | 0.10 | ||||||||||||||||||||||
| HELOC | 2,931 | 51 | 148,448 | 7 | — | 32 | 39 | 1.33 | 1,375 | 0.93 | ||||||||||||||||||||||
| Consumer | 4,842 | 26 | 124,547 | 78 | 30 | 79 | 187 | 3.86 | 1,063 | 0.85 | ||||||||||||||||||||||
| 40,921 | 252 | $ | 10,301,465 | 196 | 95 | 344 | 635 | 1.55 | % | $ | 76,217 | 0.74 | % | |||||||||||||||||||
| September 30, 2016 | ||||||||||||||||||||||||||||||||
| Single-Family Residential | 26,508 | 213 | $ | 5,658,122 | 93 | 39 | 173 | 305 | 1.15 | % | $ | 56,665 | 1.00 | % | ||||||||||||||||||
| Construction | 640 | 779 | 498,450 | — | — | 1 | 1 | 0.16 | — | — | ||||||||||||||||||||||
| Construction - Custom | 1,041 | 221 | 229,957 | 2 | — | — | 2 | 0.19 | 538 | 0.23 | ||||||||||||||||||||||
| Land - Acquisition & Development | 132 | 719 | 94,928 | — | — | 3 | 3 | 2.27 | — | — | ||||||||||||||||||||||
| Land - Consumer Lot Loans | 1,229 | 85 | 104,534 | 5 | 6 | 13 | 24 | 1.95 | 2,061 | 1.97 | ||||||||||||||||||||||
| Multi-Family | 944 | 1,191 | 1,124,290 | 2 | 1 | 3 | 6 | 0.64 | 1,983 | 0.18 | ||||||||||||||||||||||
| Commercial Real Estate | 1,074 | 1,018 | 1,093,549 | 1 | 2 | 10 | 13 | 1.21 | 4,868 | 0.45 | ||||||||||||||||||||||
| Commercial & Industrial | 1,832 | 534 | 978,582 | — | 3 | 32 | 35 | 1.91 | 42 | — | ||||||||||||||||||||||
| HELOC | 2,924 | 51 | 149,713 | 11 | 3 | 26 | 40 | 1.37 | 1,200 | 0.80 | ||||||||||||||||||||||
| Consumer | 5,094 | 27 | 139,000 | 93 | 34 | 66 | 193 | 3.79 | 922 | 0.66 | ||||||||||||||||||||||
| 41,418 | 243 | $ | 10,071,125 | 207 | 88 | 327 | 622 | 1.50 | % | $ | 68,279 | 0.68 | % | |||||||||||||||||||
Forward Looking Statements
This filing may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks, uncertainties and contingencies, many of which are difficult to predict and are generally beyond the control of the Company, Anchor and the combined company. A number of important
factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. Risks and uncertainties for the Company, Anchor and the combined company include, but are not limited to, the following factors: the expected cost savings, synergies and other financial benefits from the merger might not be realized within the expected time frames or at all; governmental approval of the merger may not be obtained or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger; conditions to the closing of the merger may not be satisfied; the shareholders of Anchor may fail to approve the consummation of the merger; delay in closing the merger; the integration of the combined company, including personnel changes/retention, might not proceed as planned; the combined company might not perform as well as expected; business disruption following the proposed transaction; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; the reaction to the transaction of the companies’ customers, employees and counterparties; the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms; and the other risks described in the Company’s and Anchor’s reports filed with the SEC, including the Company’s Annual Report on Form 10-K for the year ended September 30, 2016 and Anchor’s Annual Report on Form 10-K for the year ended June 30, 2016. All forward-looking statements included in this Report are based on information available at the time of the communication. The Company and Anchor undertake no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect new information, future events or circumstances or otherwise that occur after the date on which such statements were made.
Additional Information
In connection with the proposed transaction, the Company intends to file a registration statement on Form S-4 with the SEC which will contain a proxy statement/prospectus to be distributed to the shareholders of Anchor in connection with their vote on the Merger. Each party will also file other documents regarding the proposed transaction with the SEC. Before making any voting or investment decision regarding the transaction, shareholders of Anchor are encouraged to read the registration statement and any other relevant documents filed with the SEC, including the proxy statement/prospectus that will be part of the registration statement, as well as any amendments or supplements to these documents, when they become available, because they will contain important information about the Merger. The final proxy statement/prospectus will be mailed to shareholders of Anchor. Investors and security holders will be able to obtain the documents free of charge at the SEC’s website, www.sec.gov. In addition, documents filed with the SEC by the Company will be available free of charge by accessing the Company’s website at www.washingtonfederal.com or by writing the Company at 425 Pike Street, Seattle, WA 98101, Attention: Investor Relations or calling (206) 626-8178, or by writing Anchor at 601 Woodland Square Loop SE, Lacey, WA 98503, Attention: Corporate Secretary or calling (360) 537-1388.
Participants in this Transaction
The Company, Anchor, their directors, executive officers and certain other persons may be deemed to be participants in the solicitation of proxies from Anchor shareholders in favor of the approval of the merger. Information about the directors and executive officers of the Company and their ownership of Company stock is included in the proxy statement for its 2017 annual meeting of shareholders, which was filed with the SEC on December 9, 2016. Information about the directors and executive officers of Anchor and their ownership of Anchor stock is set forth in the proxy statement for its 2016 annual meeting of shareholders, which was filed with the SEC on September 9, 2016, and also will be included in the proxy statement/prospectus for the merger. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the registration statement and the proxy statement/prospectus regarding the proposed merger when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.