Exhibit 99.1
Washington Federal, Inc.
425 Pike Street
Seattle, WA 98101
Contact: Cathy Cooper
(206) 777-8246
Friday, October 17, 2008
FOR IMMEDIATE RELEASE
Washington Federal Announces 4th Quarter Results
SEATTLE – Washington Federal, Inc. (Nasdaq: WFSL), parent company of Washington Federal Savings, today affirmed its previously announced net loss of $39,337,000 or $.45 per diluted share for the quarter ended September 30, 2008, compared to net income of $33,885,000 or $.39 per diluted share for the quarter ended September 30, 2007. For the year ended September 30, 2008 earnings were $62,332,000 or $.71 per diluted share, compared to $135,017,000 or $1.54 per diluted share for the year ended September 30, 2007, a 54% decrease in earnings.
The primary cause of the net loss for the quarter and the significant decrease in earnings for the year was an other than temporary impairment charge of $87.7 million pre tax on the Company’s investment in Freddie Mac and Fannie Mae Preferred Stock. The value of these securities declined significantly after the U.S. Government placed both companies into conservatorship in September 2008. The securities have a new cost basis of approximately $2.5 million. Additionally, in response to increasing non-performing assets and a deteriorating housing market, the Company recorded a provision for loan losses of $60.5 million for the fiscal year, compared to $1.6 million for fiscal 2007.
The fiscal year produced a return on assets of .55%, while return on equity amounted to 4.59%. Fiscal 2007 produced a return on assets of 1.40%, while return on equity amounted to 10.46%. Non-performing assets totaled $164.2 million or 1.39% of assets as of September 30,
2008, an increase of $148.3 million over the prior year. Net charge-offs amounted to $15,160,000 for the year. The total allowance for loan losses increased during the year from $28.5 million to $85.1 million as of September 30,2008. Net interest spread increased from 2.05% at September 30, 2007 to 2.85% at September 30, 2008, contributing to the $43,606,000 increase in net interest income for the same period.
The fiscal year saw net loans outstanding grow by $1.3 billion or 16.0%. Deposits grew $1.2 billion or 19.6%. The primary driver of both loan and deposit growth during the year was the acquisition of First Mutual Bank on February 1, 2008. As of the date of acquisition, First Mutual had $945,351,000 in net loans, $744,182,000 in customer accounts, 169 employees and 12 offices primarily located on the rapidly growing east side of Seattle
Chief Executive Officer Roy M. Whitehead commented, “The Company was solidly profitable this year despite the significant one-time charge to the investment portfolio and materially higher credit costs. Of course we’re disappointed to report our first quarterly loss since going public in 1982, yet it’s important to note that the Company remains very well capitalized and on sound financial footing. We expect credit costs to continue at a higher than normal level, and also believe that growth in net interest income should allow us to report improved results in the 1st fiscal quarter.”
On October 17, 2008, Washington Federal paid a cash dividend of $.21 per share to common stockholders of record on October 3rd, 2008. This was the Company’s 103rd consecutive quarterly cash dividend.
During the quarter, Washington Federal opened a new branch in Bothell, Washington. This is the Company’s second branch in the Bothell area.
Washington Federal Savings, with headquarters in Seattle, Washington, has 148 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 atwww.washingtonfederal.com.
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
| September 30, 2008 | September 30, 2007 | |||||||
| (In thousands, except per share data) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 82,600 | $ | 61,378 | ||||
Available-for-sale securities, including mortgage-backed securities of $1,434,835 | 1,476,067 | 1,515,688 | ||||||
Held-to-maturity securities, including mortgage-backed securities of $116,767 | 124,537 | 138,373 | ||||||
Loans receivable, net | 9,501,620 | 8,188,278 | ||||||
Interest receivable | 54,365 | 49,611 | ||||||
Premises and equipment, net | 133,357 | 74,807 | ||||||
Real estate held for sale | 37,107 | 4,873 | ||||||
FHLB stock | 144,874 | 132,397 | ||||||
Intangible assets, net | 221,294 | 107,245 | ||||||
Federal and state income taxes | 5,148 | — | ||||||
Other assets | 15,456 | 12,767 | ||||||
| $ | 11,796,425 | $ | 10,285,417 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Customer accounts | ||||||||
Savings and demand accounts | $ | 7,146,045 | $ | 5,979,049 | ||||
Repurchase agreements with customers | 23,494 | 17,736 | ||||||
| 7,169,539 | 5,996,785 | |||||||
FHLB advances | 1,998,308 | 1,760,979 | ||||||
Other borrowings | 1,177,600 | 1,075,000 | ||||||
Advance payments by borrowers for taxes and insurance | 37,206 | 31,824 | ||||||
Federal and state income taxes | — | 38,032 | ||||||
Accrued expenses and other liabilities | 81,098 | 64,670 | ||||||
| 10,463,751 | 8,967,290 | |||||||
Stockholders’ equity | ||||||||
Common stock, $1.00 par value, 300,000,000 shares authorized;105,092,724 and 104,921,450 shares issued;87,916,286 and 87,441,750 shares outstanding | 105,093 | 104,921 | ||||||
Paid-in capital | 1,261,032 | 1,254,490 | ||||||
Accumulated other comprehensive income (loss), net of taxes | 2,472 | (13,033 | ) | |||||
Treasury stock, at cost;17,176,438and 17,479,700 shares | (210,250 | ) | (213,934 | ) | ||||
Retained earnings | 174,327 | 185,683 | ||||||
| 1,332,674 | 1,318,127 | |||||||
| $ | 11,796,425 | $ | 10,285,417 | |||||
CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||||||
Stockholders’ equity per share | $ | 15.16 | $ | 15.07 | ||||
Stockholders’ equity to total assets | 11.30 | % | 12.82 | % | ||||
Tangible stockholders’ equity to tangible assets | 9.60 | 11.90 | ||||||
Weighted average rates at period end | ||||||||
Loans and mortgage-backed securities | 6.33 | % | 6.57 | % | ||||
Investment securities* | 2.78 | 4.61 | ||||||
Combined loans, mortgage-backed securities and investment securities | 6.26 | 6.50 | ||||||
Customer accounts | 3.25 | 4.36 | ||||||
Borrowings | 3.77 | 4.64 | ||||||
Combined cost of customer accounts and borrowings | 3.41 | 4.45 | ||||||
Interest rate spread | 2.85 | 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 September 30, | Year Ended September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
INTEREST INCOME | ||||||||||||||||
Loans | $ | 153,176 | $ | 138,994 | $ | 599,878 | $ | 526,923 | ||||||||
Mortgage-backed securities | 22,238 | 19,262 | 88,425 | 75,478 | ||||||||||||
Investment securities and cash equivalents | 2,090 | 4,328 | 13,125 | 16,281 | ||||||||||||
| 177,504 | 162,584 | 701,428 | 618,682 | |||||||||||||
INTEREST EXPENSE | ||||||||||||||||
Customer accounts | 59,529 | 65,139 | 259,769 | 243,837 | ||||||||||||
FHLB advances and other borrowings | 33,718 | 31,266 | 137,872 | 114,664 | ||||||||||||
| 93,247 | 96,405 | 397,641 | 358,501 | |||||||||||||
Net interest income | 84,257 | 66,179 | 303,787 | 260,181 | ||||||||||||
Provision for loan losses | 36,800 | 350 | 60,516 | 1,550 | ||||||||||||
Net interest income after provision for loan losses | 47,457 | 65,829 | 243,271 | 258,631 | ||||||||||||
OTHER INCOME | ||||||||||||||||
Gain on sale of loans | 83 | — | 517 | — | ||||||||||||
Other than temporary impairment charge | (87,747 | ) | — | (87,747 | ) | — | ||||||||||
Gain on sale of real estate | — | — | 13,123 | — | ||||||||||||
Other | 3,585 | 3,586 | 14,916 | 15,241 | ||||||||||||
| (84,079 | ) | 3,586 | (59,191 | ) | 15,241 | |||||||||||
OTHER EXPENSE | ||||||||||||||||
Compensation and fringe benefits | 14,580 | 11,576 | 52,832 | 43,566 | ||||||||||||
Occupancy | 3,221 | 2,266 | 11,213 | 8,720 | ||||||||||||
Other | 6,697 | 3,820 | 23,175 | 12,602 | ||||||||||||
| 24,498 | 17,662 | 87,220 | 64,888 | |||||||||||||
Gain (loss) on real estate acquired through foreclosure, net | (840 | ) | 188 | (1,021 | ) | 328 | ||||||||||
Income (loss) before income taxes | (61,960 | ) | 51,941 | 95,839 | 209,312 | |||||||||||
Income tax provision (benefit) | (22,623 | ) | 18,056 | 33,507 | 74,295 | |||||||||||
NET INCOME (LOSS) | $ | (39,337 | ) | $ | 33,885 | $ | 62,332 | $ | 135,017 | |||||||
PER SHARE DATA | ||||||||||||||||
Basic earnings (loss) | $ | (0.45 | ) | $ | .39 | $ | .71 | $ | 1.55 | |||||||
Diluted earnings (loss) | (0.45 | ) | .39 | .71 | 1.54 | |||||||||||
Cash dividends | .21 | .21 | .84 | .83 | ||||||||||||
Weighted average number of shares outstanding, including dilutive stock options | 87,961,784 | 87,657,256 | 87,818,580 | 87,696,225 | ||||||||||||
PERFORMANCE RATIOS | ||||||||||||||||
Return on average assets | - 1.33 | % | 1.34 | % | .55 | % | 1.40 | % | ||||||||
Return on average stockholders’ equity | - 11.52 | % | 10.39 | % | 4.59 | % | 10.46 | % | ||||||||
Net interest margin | 2.97 | % | 2.70 | % | 2.78 | % | 2.77 | % | ||||||||
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