Exhibit 99.1
Washington Federal, Inc.
425 Pike Street
Seattle, WA 98101
Contact: Cathy Cooper
(206) 777-8246
Monday, April 14, 2008
FOR IMMEDIATE RELEASE
Washington Federal Announces a 5.9% Increase
in 2nd Quarter Earnings
SEATTLE – Washington Federal, Inc. (Nasdaq: WFSL), parent company of Washington Federal Savings, today announced earnings of $35,452,000 or $.40 per diluted share for the quarter ended March 31, 2008, compared to $33,483,000 or $.38 per diluted share for the quarter ended March 31, 2007, a 5.9% increase in earnings. For the six months ended March 31, 2008 earnings were $68,500,000 or $.78 per diluted share, compared to $66,867,000 or $.76 per diluted share for the six months ended March 31, 2007, a 2.4% increase in earnings.
The second fiscal quarter produced a return on assets of 1.27%, while return on equity amounted to 10.45% for the quarter. Nonperforming assets totaled $68 million or 0.58% of assets as of March 31, 2008. The Company’s average non-performing assets ratio is 0.33% and 0.47%, for 10 and 20 years, respectively. In response to declining asset quality caused by the current housing cycle, the Company recorded a provision for loan losses of $9,500,000 for the quarter. Net charge offs amounted to $3,046,000 for the second quarter. During the quarter the Company sold real estate for a gain of $8,700,000.
During the quarter, the Company completed its acquisition of First Mutual Bank. This acquisition added $945,351,000 in loans, $744,182,000 in customer accounts, 169 employees and 12 offices primarily located on the rapidly growing eastside of Seattle. Total consideration amounted to $188,702,000, which the Company elected to pay in cash, and resulted in $117,093,000 of intangible assets, primarily goodwill.
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Washington Federal’s Quarterly Earnings - Page Two
Chief Executive Officer Roy M. Whitehead commented, “In the midst of the most severe financial crisis in at least a generation, we are very pleased to deliver increased earnings. The quarter benefited from a significant improvement in net interest spread and nearly two months of earnings from the recently acquired First Mutual Bank. We also took advantage of a strong commercial real estate market to harvest a gain from a non-core real estate investment that enabled the Company to fund expected higher credit losses and strengthen the loan loss reserve.
We believe that non-performing assets will continue to increase before peaking at some point in the future and that loan losses will also be higher than normal. Nonetheless, with improving net interest spread and a strong capital position, the Company seems well positioned to handle the financial stress of current market challenges”.
On April 18, 2008, Washington Federal will pay a cash dividend of $.21 per share to common stockholders of record on April 4, 2008. This will be the Company’s 101st consecutive quarterly cash dividend.
Washington Federal Savings, with headquarters in Seattle, Washington, has 146 offices in eight western states.
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
| March 31, 2008 | September 30, 2007 | |||||||
| (In thousands, except per share data) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 65,396 | $ | 61,378 | ||||
Available-for-sale securities, including mortgage-backed securities of $1,488,966 | 1,638,392 | 1,515,688 | ||||||
Held-to-maturity securities, including mortgage-backed securities of $123,469 | 131,270 | 138,373 | ||||||
Loans receivable, net | 9,324,717 | 8,188,278 | ||||||
Interest receivable | 53,852 | 49,611 | ||||||
Premises and equipment, net | 116,382 | 74,807 | ||||||
Real estate held for sale | 12,033 | 4,873 | ||||||
FHLB stock | 145,237 | 132,397 | ||||||
Intangible assets, net | 223,331 | 107,245 | ||||||
Other assets | 28,639 | 12,767 | ||||||
| $ | 11,739,249 | $ | 10,285,417 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Customer accounts | ||||||||
Savings and demand accounts | $ | 7,072,345 | $ | 5,979,049 | ||||
Repurchase agreements with customers | 14,449 | 17,736 | ||||||
| 7,086,794 | 5,996,785 | |||||||
FHLB advances | 2,203,049 | 1,760,979 | ||||||
Other borrowings | 920,600 | 1,075,000 | ||||||
Advance payments by borrowers for taxes and insurance | 27,988 | 31,824 | ||||||
Federal and state income taxes | 46,945 | 38,032 | ||||||
Accrued expenses and other liabilities | 77,809 | 64,670 | ||||||
| 10,363,185 | 8,967,290 | |||||||
Stockholders’ equity | ||||||||
Common stock, $1.00 par value, 300,000,000 shares authorized;105,029,042 and 104,921,450 shares issued;87,800,628 and 87,441,750 shares outstanding | 105,029 | 104,921 | ||||||
Paid-in capital | 1,258,281 | 1,254,490 | ||||||
Accumulated other comprehensive income (loss), net of taxes | 6,273 | (13,033 | ) | |||||
Treasury stock, at cost;17,228,414and 17,479,700 shares | (210,881 | ) | (213,934 | ) | ||||
Retained earnings | 217,362 | 185,683 | ||||||
| 1,376,064 | 1,318,127 | |||||||
| $ | 11,739,249 | $ | 10,285,417 | |||||
CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||||||
Stockholders’ equity per share | $ | 15.67 | $ | 15.07 | ||||
Stockholders’ equity to total assets | 11.72 | % | 12.82 | % | ||||
Tangible stockholders’ equity to tangible assets | 10.01 | 11.90 | ||||||
Weighted average rates at period end | ||||||||
Loans and mortgage-backed securities | 6.41 | % | 6.57 | % | ||||
Investment securities* | 4.28 | 4.61 | ||||||
Combined loans, mortgage-backed securities and investment securities | 6.35 | 6.50 | ||||||
Customer accounts | 3.91 | 4.36 | ||||||
Borrowings | 4.37 | 4.64 | ||||||
Combined cost of customer accounts and borrowings | 4.05 | 4.45 | ||||||
Interest rate spread | 2.30 | 2.05 | ||||||
| * | Includes municipal bonds at tax equivalent yields and cash equivalents |
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Quarter Ended March 31, | Six Months Ended March 31, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
INTEREST INCOME | ||||||||||||||||
Loans | $ | 151,190 | $ | 129,297 | $ | 291,694 | $ | 252,472 | ||||||||
Mortgage-backed securities | 21,818 | 18,464 | 43,780 | 37,539 | ||||||||||||
Investment securities and cash equivalents | 3,844 | 4,241 | 7,970 | 7,467 | ||||||||||||
| 176,852 | 152,002 | 343,444 | 297,478 | |||||||||||||
INTEREST EXPENSE | ||||||||||||||||
Customer accounts | 68,076 | 59,037 | 134,045 | 114,986 | ||||||||||||
FHLB advances and other borrowings | 35,203 | 27,772 | 70,532 | 54,910 | ||||||||||||
| 103,279 | 86,809 | 204,577 | 169,896 | |||||||||||||
Net interest income | 73,573 | 65,193 | 138,867 | 127,582 | ||||||||||||
Provision for loan losses | 9,500 | 150 | 10,500 | 200 | ||||||||||||
Net interest income after provision for loan losses | 64,073 | 65,043 | 128,367 | 127,382 | ||||||||||||
OTHER INCOME | ||||||||||||||||
Gain on sale of loans | 401 | — | 401 | — | ||||||||||||
Gain on sale of real estate | 8,712 | — | 8,712 | — | ||||||||||||
Other | 3,827 | 3,291 | 8,214 | 6,425 | ||||||||||||
| 12,940 | 3,291 | 17,327 | 6,425 | |||||||||||||
OTHER EXPENSE | ||||||||||||||||
Compensation and fringe benefits | 13,007 | 10,879 | 24,125 | 20,414 | ||||||||||||
Occupancy | 2,837 | 2,194 | 5,076 | 4,153 | ||||||||||||
Other | 6,004 | 2,984 | 9,869 | 5,441 | ||||||||||||
| 21,848 | 16,057 | 39,070 | 30,008 | |||||||||||||
Gain (loss) on real estate acquired through foreclosure, net | (230 | ) | (79 | ) | (253 | ) | 157 | |||||||||
Income before income taxes | 54,935 | 52,198 | 106,371 | 103,956 | ||||||||||||
Income taxes | 19,483 | 18,715 | 37,871 | 37,089 | ||||||||||||
NET INCOME | $ | 35,452 | $ | 33,483 | $ | 68,500 | $ | 66,867 | ||||||||
PER SHARE DATA | ||||||||||||||||
Basic earnings | $ | .40 | $ | .38 | $ | .78 | $ | .77 | ||||||||
Diluted earnings | .40 | .38 | .78 | .76 | ||||||||||||
Cash dividends | .210 | .205 | .420 | .410 | ||||||||||||
Weighted average number of shares outstanding, including dilutive stock options | 87,661,907 | 87,571,131 | 87,680,352 | 87,608,059 | ||||||||||||
PERFORMANCE RATIOS | ||||||||||||||||
Return on average assets | 1.27 | % | 1.41 | % | 1.26 | % | 1.43 | % | ||||||||
Return on average stockholders’ equity | 10.45 | % | 10.40 | % | 10.20 | % | 10.45 | % | ||||||||
Net interest margin | 2.71 | % | 2.81 | % | 2.64 | % | 2.81 | % | ||||||||
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