Exhibit 99.1
Washington Federal, Inc.
425 Pike Street
Seattle, WA 98101
Contact: Cathy Cooper
(206) 777-8246
Tuesday, January 8, 2008
FOR IMMEDIATE RELEASE
Washington Federal Reports Steady First Quarter Results
Amid Mortgage Market Turmoil
SEATTLE – Washington Federal, Inc. (Nasdaq: WFSL), parent company of Washington Federal Savings, today announced earnings of $33,048,000 or $.38 per diluted share for the quarter ended December 31, 2007, compared to $33,384,000 or $.38 per diluted share for the same period one year ago. Total assets increased by $291 million or 3% to $10,576,641,000 from $10,285,417,000 at September 30, 2007.
Washington Federal’s net loans outstanding increased to $8,355,814,000 as of December 31, 2007, a 15.3% increase from one year ago. Total customer deposits were $6,065,931,000 a 13.2% increase from one year ago. Non-performing assets amounted to 0.38% of total assets at quarter-end. While this is a significant increase from the 0.08% one year ago, it is consistent with the Company’s ten year average non-performing assets ratio of 0.35% and lower than its 20 year average of 0.49%.
The Company’s total number of delinquent loans amounted to 0.82% of total loans, compared to the mortgage industry average of 5.59%.i The Company’s efficiency ratio of 24.71% for the quarter remains among the lowest in the industry. The quarter produced a return on assets of 1.26%, while return on equity amounted to 9.95%. These ratios represent historical lows for the Company and are reflective of the effects of the rise in short term rates over the last few years, followed by the inversion of the yield curve, and higher non-performing assets.
Washington Federal’s Quarterly Earnings - Page Two
Earnings this quarter include accrued interest reversals of $1,119,000 related to non-performing loans, an increase in the loan loss provision to $1,000,000 and a gain on the sale of real estate in the amount of $1,246,000.
Chairman, President and Chief Executive Officer Roy M. Whitehead commented, “The Company’s mortgage portfolio, which consists primarily of prime 30-year fixed rate loans, continues to perform well. With the tightening of credit standards by major lenders, fewer qualified buyers are affecting inventory turns of homebuilders, and we have seen an increase in homes that are finished at least 90 days and remain unsold. This ordinarily leads to an increase in foreclosures down the road. It’s also interesting to note that declining short-term interest rates are not producing the normal expected increase in net interest margin. This unusual condition appears to be due to heightened competition for deposits from weakened competitors. We are optimistic that with the passage of more time we will ultimately receive the usual lift from lower rates. Overall, the quarter was a respectable beginning to what is shaping up to be a difficult year for the industry as a whole.”
On January 11, 2008, Washington Federal will pay a cash dividend of $.21 per share to common stockholders of record on December 28, 2007. This will be the Company’s 100th consecutive quarterly cash dividend.
On July 2, 2007, the Company announced the signing of a definitive merger agreement to acquire First Mutual Bancshares (“First Mutual”), the parent company of First Mutual Bank. The merger agreement provides for the merger of First Mutual with and into the Company, followed by the merger of First Mutual Bank into the Company’s wholly owned subsidiary, Washington Federal Savings, in a stock and cash transaction valued at approximately $189.8 million. Pursuant to the terms of the merger agreement, if the average share price of Washington Federal’s common stock is below $22.75 during a specified pricing period (expected to be January 10, 2008 through January 24, 2008), Washington Federal has the option to pay all cash for the shares of First Mutual common stock, regardless of the election of stock or cash by shareholders of First Mutual.
- 2 -
Washington Federal’s Quarterly Earnings - Page Three
First Mutual, headquartered in Bellevue, Washington with 12 branches in the greater Seattle / Bellevue area, had total assets of $1.02 billion, total deposits of $750.7 million and total stockholders’ equity of $75.3 million as of September 30, 2007. On October 11, 2007 First Mutual’s shareholders voted to approve the transaction. On January 2, 2008, Washington Federal received regulatory approval of the transaction from the Office of Thrift Supervision. The transaction is expected to close on Friday, February 1, 2008.
The Company’s Annual Meeting of Stockholders will be held at 2:00 p.m. on January 22, 2008, at Benaroya Hall, 3rd Avenue & Union Street, in Seattle, Washington.
Washington Federal Savings, with headquarters in Seattle, Washington, has 135 offices in eight western states.
# # #
i | Source: Bloomberg. Includes all mortgages greater than 30 days delinquent as of 9/30/07 |
- 3 -
WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
| December 31, 2007 | September 30, 2007 | |||||||
| (In thousands, except per share data) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 56,779 | $ | 61,378 | ||||
Available-for-sale securities, including mortgage-backed securities of $1,423,020 | 1,645,972 | 1,515,688 | ||||||
Held-to-maturity securities, including mortgage-backed securities of $126,909 | 135,015 | 138,373 | ||||||
Loans receivable, net | 8,355,814 | 8,188,278 | ||||||
Interest receivable | 49,208 | 49,611 | ||||||
Premises and equipment, net | 75,385 | 74,807 | ||||||
Real estate held for sale | 5,656 | 4,873 | ||||||
FHLB stock | 132,084 | 132,397 | ||||||
Intangible assets, net | 106,669 | 107,245 | ||||||
Other assets | 14,059 | 12,767 | ||||||
| $ | 10,576,641 | $ | 10,285,417 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Customer accounts | ||||||||
Savings and demand accounts | $ | 6,048,612 | $ | 5,979,049 | ||||
Repurchase agreements with customers | 17,319 | 17,736 | ||||||
| 6,065,931 | 5,996,785 | |||||||
FHLB advances | 1,908,912 | 1,760,979 | ||||||
Other borrowings | 1,120,000 | 1,075,000 | ||||||
Advance payments by borrowers for taxes and insurance | 13,496 | 31,824 | ||||||
Federal and state income taxes | 61,242 | 38,032 | ||||||
Accrued expenses and other liabilities | 65,029 | 64,670 | ||||||
| 9,234,610 | 8,967,290 | |||||||
Stockholders’ equity | ||||||||
Common stock, $1.00 par value, 300,000,000 shares authorized; | ||||||||
104,954,972 and 104,921,450 shares issued;87,475,272 and 87,441,750 shares outstanding | 104,955 | 104,921 | ||||||
Paid-in capital | 1,255,405 | 1,254,490 | ||||||
Accumulated other comprehensive loss, net of taxes | (4,768 | ) | (13,033 | ) | ||||
Treasury stock, at cost;17,479,700 shares | (213,934 | ) | (213,934 | ) | ||||
Retained earnings | 200,373 | 185,683 | ||||||
| 1,342,031 | 1,318,127 | |||||||
| $ | 10,576,641 | $ | 10,285,417 | |||||
CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||||||
Stockholders’ equity per share | $ | 15.34 | $ | 15.07 | ||||
Stockholders’ equity to total assets | 12.69 | % | 12.82 | % | ||||
Weighted average rates at period end | ||||||||
Loans and mortgage-backed securities | 6.49 | % | 6.57 | % | ||||
Investment securities* | 4.63 | 4.61 | ||||||
Combined loans, mortgage-backed securities and investment securities | 6.42 | 6.50 | ||||||
Customer accounts | 4.33 | 4.36 | ||||||
Borrowings | 4.47 | 4.64 | ||||||
Combined cost of customer accounts and borrowings | 4.38 | 4.45 | ||||||
Interest rate spread | 2.04 | 2.05 | ||||||
| * | Includes municipal bonds at tax equivalent yields and cash equivalents |
- 4 -
WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Quarter Ended December 31, | ||||||||
| 2007 | 2006 | |||||||
| (In thousands, except per share data) | ||||||||
INTEREST INCOME | ||||||||
Loans | $ | 140,505 | $ | 123,175 | ||||
Mortgage-backed securities | 21,962 | 19,075 | ||||||
Investment securities and cash equivalents | 4,125 | 3,226 | ||||||
| 166,592 | 145,476 | |||||||
INTEREST EXPENSE | ||||||||
Customer accounts | 65,970 | 55,948 | ||||||
FHLB advances and other borrowings | 35,329 | 27,138 | ||||||
| 101,299 | 83,086 | |||||||
Net interest income | 65,293 | 62,390 | ||||||
Provision for loan losses | 1,000 | 50 | ||||||
Net interest income after provision for loan losses | 64,293 | 62,340 | ||||||
OTHER INCOME | ||||||||
Gain on sale of securities, net | — | — | ||||||
Other | 4,387 | 3,134 | ||||||
| 4,387 | 3,134 | |||||||
OTHER EXPENSE | ||||||||
Compensation and fringe benefits | 11,118 | 9,535 | ||||||
Occupancy | 2,239 | 1,960 | ||||||
Other | 3,862 | 2,457 | ||||||
| 17,219 | 13,952 | |||||||
Gain (loss) on real estate acquired through foreclosure, net | (24 | ) | 236 | |||||
Income before income taxes | 51,437 | 51,758 | ||||||
Income taxes | 18,389 | 18,374 | ||||||
NET INCOME | $ | 33,048 | $ | 33,384 | ||||
PER SHARE DATA | ||||||||
Basic earnings | $ | .38 | $ | .39 | ||||
Diluted earnings | .38 | .38 | ||||||
Cash dividends | .210 | .205 | ||||||
Weighted average number of shares outstanding, including dilutive stock options | 87,614,498 | 87,586,910 | ||||||
Return on average assets | 1.26 | % | 1.47 | % | ||||
- 5 -