Exhibit 99.1
Washington Federal, Inc.
425 Pike Street
Seattle, WA 98101
Contact: Cathy Cooper
206-777-8246
Tuesday, January 19, 2010
FOR IMMEDIATE RELEASE
Washington Federal Reports First Quarter Earnings of $7.9 Million
SEATTLE, WASHINGTON – Washington Federal, Inc. (Nasdaq: WFSL), parent company of Washington Federal Savings, today announced earnings of $7,911,000, or $.07, per diluted share for the quarter ended December 31, 2009, compared to $20,169,000, or $.23, per diluted share for the same period one year ago. Earnings decreased by $12,258,000, or 61%, primarily as a result of higher credit costs. Total credit costs, which include the provision for loan losses and Real Estate Owned (“REO”) expenses, were $82,500,000 for the quarter ended December 31, 2009, an increase of $46,261,000, or 128%, over the previous year.
Chairman, President and Chief Executive Officer Roy M. Whitehead commented, “Last quarter the company took a more aggressive approach to the writedown of problem assets. High unemployment, the planned unwinding of central bank support for the mortgage-backed securities market, pending FDIC liquidations in our markets, and changing social attitudes about mortgage default collectively drove us to the conclusion that the supply/demand imbalance in residential real estate will persist longer than we had previously believed. Washington Federal is fortunate to be in a position to absorb higher losses, which on individual properties can be astonishing, while remaining profitable and in a fortress-level capital position.
That financial strength, at a time of extraordinary weakness for most in the industry, enables us to take advantage of unique opportunities to expand at a reasonable cost. The acquisition of the former Horizon Bank on January 8th, for example, will add materially to earnings in the current quarter and beyond, with limited risk to shareholders due to a loss sharing agreement with the FDIC. Victories are relative in these tough economic times, and while these are relatively good times for Washington Federal we continue to be realistic about near-term prospects for a rebound in the overall economy.”
Non-performing assets amounted to $553 million, or 4.37%, of total assets at quarter-end. This is a decrease of $4 million from September 30, 2009. There has been a meaningful decrease in non-performing loans over the last 6 months due to payoffs, writedowns and the migration of problem real estate loans to REO. As of June 30, 2009 non-performing loans totaled $492 million and as of December 31, 2009 have decreased to $369 million, a 25% decline. Overall delinquencies declined to 4.74% in the current quarter from 4.86% at September 30, 2009; however the delinquency rate on single family residential mortgages, the largest portion of the loan portfolio, increased slightly from 2.91% to 3.20%. In response to the continued declines in real estate values and weak credit conditions of its loan portfolio, the Company increased its provision for loan loss expense from $35 million for the quarter ended December 31, 2008 to $70 million for the quarter ended December 31, 2009. As of quarter end the allowance for loan losses totaled $191 million.
During the quarter the Company sold $316 million out of its investment portfolio and realized a gain of $20 million and increased its cash position to $937 million from $498 million. This cash position, combined with its substantial capital base, will provide the Company with the flexibility to manage through potentially higher interest rates in the future.
The Company’s efficiency ratio of 26.6% for the quarter remains among the lowest in the industry. The quarter produced a return on assets of .25%, while return on equity amounted to 1.8%. These ratios represent near historical lows for the Company and are reflective of the effects of the significant declines in real estate values throughout the western United States.
On January 15, 2010, Washington Federal paid a cash dividend of $.05 per share to common stockholders of record on January 4, 2010. This was the Company’s 108th consecutive quarterly cash dividend.
The Company’s Annual Meeting of Stockholders will be held at 2:00 p.m. on January 20, 2010, at the Sheraton Hotel, 1400 6th Avenue, in Seattle, Washington.
Washington Federal Savings, with headquarters in Seattle, Washington, has 168 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)
| December 31, 2009 | September 30, 2009 | |||||||
| (In thousands, except per share data) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 936,833 | $ | 498,388 | ||||
Available-for-sale securities | 1,920,165 | 2,201,083 | ||||||
Held-to-maturity securities | 97,795 | 103,042 | ||||||
Loans receivable, net | 8,855,533 | 8,983,430 | ||||||
Interest receivable | 49,459 | 53,288 | ||||||
Premises and equipment, net | 134,397 | 133,477 | ||||||
Real estate held for sale | 183,508 | 176,863 | ||||||
FHLB stock | 144,495 | 144,495 | ||||||
Intangible assets, net | 256,069 | 256,797 | ||||||
Other assets | 84,212 | 31,612 | ||||||
| $ | 12,662,466 | $ | 12,582,475 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Customer accounts | ||||||||
Savings and demand accounts | $ | 7,921,117 | $ | 7,786,467 | ||||
Repurchase agreements with customers | 50,137 | 55,843 | ||||||
| 7,971,254 | 7,842,310 | |||||||
FHLB advances | 2,074,507 | 2,078,930 | ||||||
Other borrowings | 800,000 | 800,600 | ||||||
Advance payments by borrowers for taxes and insurance | 15,075 | 38,376 | ||||||
Federal and state income taxes | 13,384 | 18,075 | ||||||
Accrued expenses and other liabilities | 54,496 | 58,699 | ||||||
| 10,928,716 | 10,836,990 | |||||||
Stockholders’ equity | ||||||||
Common stock, $1.00 par value, 300,000,000 shares authorized;129,512,273 and 129,320,072 shares issued;112,439,949 and 112,247,748 shares outstanding | 129,512 | 129,320 | ||||||
Paid-in capital | 1,576,352 | 1,574,555 | ||||||
Accumulated other comprehensive income (loss), net of taxes | 38,386 | 54,431 | ||||||
Treasury stock, at cost;17,072,324 shares | (208,985 | ) | (208,985 | ) | ||||
Retained earnings | 198,485 | 196,164 | ||||||
| 1,733,750 | 1,745,485 | |||||||
| $ | 12,662,466 | $ | 12,582,475 | |||||
CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||||||
Common stockholders’ equity per share | $ | 15.42 | $ | 15.55 | ||||
Tangible common stockholders’ equity per share | 13.14 | 13.26 | ||||||
Stockholders’ equity to total assets | 13.69 | % | 13.87 | % | ||||
Tangible common stockholders’ equity to tangible assets | 11.91 | 12.08 | ||||||
Weighted average rates at period end | ||||||||
Loans and mortgage-backed securities | 6.01 | % | 6.04 | % | ||||
Combined loans, mortgage-backed securities and investment securities | 5.49 | 5.75 | ||||||
Customer accounts | 1.75 | 1.96 | ||||||
Borrowings | 4.25 | 4.25 | ||||||
Combined cost of customer accounts and borrowings | 2.41 | 2.58 | ||||||
Interest rate spread | 3.08 | 3.17 | ||||||
WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Quarter Ended December 31, | ||||||||
| 2009 | 2008 | |||||||
| (In thousands, except per share data) | ||||||||
INTEREST INCOME | ||||||||
Loans | $ | 137,451 | $ | 152,319 | ||||
Mortgage-backed securities | 27,281 | 25,312 | ||||||
Investment securities and cash equivalents | 938 | 908 | ||||||
| 165,670 | 178,539 | |||||||
INTEREST EXPENSE | ||||||||
Customer accounts | 36,485 | 55,908 | ||||||
FHLB advances and other borrowings | 31,420 | 32,618 | ||||||
| 67,905 | 88,526 | |||||||
Net interest income | 97,765 | 90,013 | ||||||
Provision for loan losses | 69,750 | 35,000 | ||||||
Net interest income after provision for loan losses | 28,015 | 55,013 | ||||||
OTHER INCOME | ||||||||
Gain on sale of investments | 20,428 | — | ||||||
Other | 3,809 | 4,175 | ||||||
| 24,237 | 4,175 | |||||||
OTHER EXPENSE | ||||||||
Compensation and fringe benefits | 13,637 | 14,805 | ||||||
Occupancy | 3,249 | 3,174 | ||||||
FDIC insurance | 3,564 | 279 | ||||||
Other | 6,525 | 6,329 | ||||||
| 26,975 | 24,587 | |||||||
Gain (loss) on real estate acquired through foreclosure, net | (12,720 | ) | (1,239 | ) | ||||
Income (loss) before income taxes | 12,557 | 33,362 | ||||||
Income taxes | 4,646 | 11,844 | ||||||
NET INCOME (LOSS) | 7,911 | 21,518 | ||||||
Preferred dividends accrued | — | 1,349 | ||||||
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | 7,911 | $ | 20,169 | ||||
PER SHARE DATA | ||||||||
Basic earnings (loss) | $ | .07 | $ | .23 | ||||
Diluted earnings (loss) | .07 | .23 | ||||||
Cash Dividends per share | .05 | .05 | ||||||
Basic weighted average number of shares outstanding | 112,353,941 | 87,966,308 | ||||||
Diluted weighted average number of shares outstanding, | ||||||||
including dilutive stock options | 112,583,127 | 88,028,272 | ||||||
PERFORMANCE RATIOS | ||||||||
Return on average assets | .25 | % | .66 | % | ||||
Return on average common equity | 1.80 | % | 5.97 | % | ||||