1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30,2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
For Quarter Ended June 30, 2001 Commission file number 0-25454
WASHINGTON FEDERAL, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Washington 91-1661606
-------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
425 Pike Street Seattle, Washington 98101
-----------------------------------------------------
(Address of principal executive offices and Zip Code)
(206) 624-7930
----------------------------------------------------
(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
(1) Yes [X]. No [ ].
(2) Yes [X]. No [ ].
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
TITLE OF CLASS: AT AUGUST 1, 2001
Common stock, $1.00 par value 57,829,649
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
PART I
Item 1. Financial Statements
The Consolidated Financial Statements of Washington Federal, Inc. and
Subsidiaries filed as a part of the report are as follows:
Consolidated Statements of Financial Condition
as of June 30, 2001 and September 30, 2000 ................................ Page 3
Consolidated Statements of Operations for the three
and nine months ended June 30, 2001 and 2000 .............................. Page 4
Consolidated Statements of Cash Flows for the
nine months ended June 30, 2001 and 2000 .................................. Page 5
Notes to Consolidated Financial Statements ................................ Page 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .......................................... Page 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk ...................... Page 11
PART II
Item 1. Legal Proceedings ............................................................ Page 12
Item 2. Changes in Securities ........................................................ Page 12
Item 3. Defaults upon Senior Securities .............................................. Page 12
Item 4. Submission of Matters to a Vote of Stockholders .............................. Page 12
Item 5. Other Information ............................................................ Page 12
Item 6. Exhibits and Reports on Form 8-K ............................................. Page 12
Signatures ................................................................. Page 13
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
June 30, 2001 September 30, 2000
-------------- ------------------
(In thousands, except per share data)
ASSETS
Cash .............................................................. $ 74,662 $ 28,286
Available-for-sale securities, including encumbered
securities of $647,688 ......................................... 1,093,202 1,178,317
Held-to-maturity securities, including encumbered
securities of $140,340 ........................................ 263,176 292,780
Securitized assets subject to repurchase .......................... 1,275,345 --
Loans receivable, net ............................................. 4,084,262 4,949,235
Interest receivable ............................................... 47,143 40,700
Premises and equipment, net ....................................... 52,544 50,487
Real estate held for sale ......................................... 13,781 17,416
FHLB stock ........................................................ 122,205 116,314
Costs in excess of net assets acquired, net ....................... 37,324 41,577
Other assets ...................................................... 2,357 4,729
----------- -----------
$ 7,066,001 $ 6,719,841
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Customer accounts
Savings and demand accounts ................................... $ 3,861,015 $ 3,375,036
Repurchase agreements with customers .......................... 61,936 90,234
----------- -----------
3,922,951 3,465,270
FHLB advances ..................................................... 1,407,000 1,209,000
Other borrowings, primarily securities sold under agreements
to repurchase ................................................. 774,060 1,154,509
Advance payments by borrowers for taxes and insurance ............. 12,238 29,093
Federal and state income taxes .................................... 64,969 53,012
Accrued expenses and other liabilities ............................ 54,060 49,792
----------- -----------
6,235,278 5,960,676
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value, 100,000,000 shares authorized;
68,957,621 and 68,525,260 shares issued; and 57,788,324
and 57,333,025 shares outstanding ............................ 68,952 62,296
Paid-in capital ................................................... 892,722 785,745
Accumulated other comprehensive income, net of taxes .............. 27,000 3,000
Treasury stock, at cost; 11,169,297 and 11,192,235 shares ......... (189,630) (190,018)
Retained earnings ................................................. 31,679 98,142
----------- -----------
830,723 759,165
----------- -----------
$ 7,066,001 $ 6,719,841
=========== ===========
CONSOLIDATED FINANCIAL HIGHLIGHTS
Stockholders' equity per share .................................... $ 14.38 $ 13.24
Stockholders' equity to total assets .............................. 11.76% 11.30%
Loans serviced for others ......................................... $ 30,078 $ 37,912
Weighted average rates at period end:
Loans and mortgage-backed securities ............................ 7.67% 7.90%
Investment securities* .......................................... 8.01 7.82
Combined rate on loans, mortgage-backed securities
and investment securities ..................................... 7.68 7.90
Customer accounts ............................................... 5.08 5.57
Borrowings ...................................................... 4.71 6.29
Combined cost of customer accounts and borrowings ............. 4.95 5.86
Interest rate spread ............................................ 2.73 2.04
*Includes municipal bonds at tax-equivalent yields
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Quarter Ended June 30, Nine Months Ended June 30,
------------------------- --------------------------
2001 2000 2001 2000
-------- -------- --------- ---------
(Dollars in thousands, except per share data)
INTEREST INCOME
Loans ...................................................... $107,718 $ 97,195 $320,025 $282,606
Mortgage-backed securities ................................. 22,296 23,907 68,787 71,544
Investment securities ...................................... 4,587 4,209 13,316 13,023
-------- -------- -------- --------
134,601 125,311 402,128 367,173
INTEREST EXPENSE
Customer accounts .......................................... 48,190 43,500 145,934 126,014
FHLB advances and other borrowings ......................... 29,198 32,990 102,235 88,970
-------- -------- -------- --------
77,388 76,490 248,169 214,984
-------- -------- -------- --------
NET INTEREST INCOME ........................................ 57,213 48,821 153,959 152,189
Provision for loan losses .................................. 500 -- 650 --
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ........ 56,713 48,821 153,309 152,189
OTHER INCOME
Gains on sale of securities, net ........................... -- 1,110 3,235 2,826
OTHER ...................................................... 1,971 1,585 4,737 4,382
-------- -------- -------- --------
1,971 2,695 7,972 7,208
OTHER EXPENSE
Compensation and fringe benefits ........................... 7,567 6,727 20,412 20,225
FDIC deposit insurance premiums ............................ 162 174 496 831
Occupancy expense .......................................... 1,061 1,009 3,288 3,095
Other ...................................................... 3,819 3,406 11,260 11,340
-------- -------- -------- --------
12,609 11,316 35,456 35,491
Gains on real estate owned, net ............................ 301 147 360 754
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES ................................. 46,376 40,347 126,185 124,660
Income taxes ............................................... 16,526 14,059 44,459 43,943
-------- -------- -------- --------
NET INCOME ................................................. $ 29,850 $ 26,288 $ 81,726 $ 80,717
======== ======== ======== ========
PER SHARE DATA
Basic earnings per share ................................... $ .52 $ .46 $ 1.42 $ 1.39
Diluted earnings per share ................................. .51 .45 1.40 1.38
Cash dividends ............................................. .24 .23 .70 .66
Weighted average number of shares outstanding,
including dilutive stock options ......................... 58,311,815 57,801,404 58,168,929 58,401,853
Return on average assets ................................... 1.71% 1.63% 1.59% 1.70%
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended June 30,
----------------------------
2001 2000
--------- ---------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income ............................................................. $ 81,726 $ 80,717
Adjustments to reconcile net income to net cash provided by
operating activities
Amortization of fees, discounts and premiums, net .................... (157) (12,695)
Amortization of costs in excess of net assets acquired ............... 4,253 4,541
Depreciation ......................................................... 2,135 1,710
Gains on investment securities and real estate held for sale ......... (3,595) (3,580)
Increase in accrued interest receivable .............................. (6,443) (1,665)
Increase (decrease) in income taxes payable .......................... (43) 2,377
FHLB stock dividends ................................................. (5,891) (5,600)
Decrease (increase) in other assets .................................. 2,372 (1,149)
Increase in accrued expenses and other liabilities ................... 4,268 4,280
--------- ---------
Net cash provided by operating activities .............................. 78,625 68,936
CASH FLOWS FROM INVESTING ACTIVITIES
Loans and contracts originated
Loans on existing property ........................................... (873,752) (661,810)
Construction loans ................................................... (274,991) (352,180)
Land loans ........................................................... (97,966) (80,937)
Loans refinanced ..................................................... (67,367) (19,434)
--------- ---------
(1,314,076) (1,114,361)
Savings account loans originated ....................................... (2,692) (2,324)
Loan principal repayments .............................................. 925,137 723,361
Decrease in undisbursed loans in process ............................... (28,910) (4,105)
Loans purchased ........................................................ (1,825) (1,499)
Purchase of available-for-sale securities .............................. (63,419) (169,574)
Principal payments and maturities of available-for-sale securities ..... 138,548 97,879
Proceeds from sales of available-for-sale securities ................... 50,282 34,467
Purchase of held-to-maturity securities ................................ -- (4,010)
Principal payments and maturities of held-to-maturity securities ....... 29,992 27,992
Proceeds from sales of real estate held for sale ....................... 14,697 8,240
Premises and equipment purchased, net .................................. (4,192) (2,200)
--------- ---------
Net cash used by investing activities .................................. (256,458) (406,134)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in customer accounts ...................................... 457,681 21,055
Increase borrowings .................................................... (182,449) 410,870
Proceeds from exercise of common stock options ......................... 5,476 755
Proceeds from employee stock ownership plan ............................ 573 3,573
Treasury stock purchased ............................................... -- (48,485)
Dividends .............................................................. (40,217) (38,316)
Decrease in advance payments by borrowers for taxes and insurance ...... (16,855) (9,928)
--------- ---------
Net cash provided by financing activities .............................. 224,209 339,524
INCREASE IN CASH ....................................................... 46,376 2,326
CASH AT BEGINNING OF PERIOD ............................................ 28,286 25,037
--------- ---------
CASH AT END OF PERIOD .................................................. $ 74,662 $ 27,363
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
NON-CASH INVESTING ACTIVITIES
Real estate acquired through foreclosure ............................. $ 4,483 $ 7,925
NON-CASH OPERATING ACTIVITIES
Assets securitized subject to repurchase, net ........................ 1,388,197 --
CASH PAID DURING THE PERIOD FOR
Interest ............................................................. 249,838 214,021
Income taxes ......................................................... 43,452 42,518
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTER ENDED JUNE 30, 2001
(Unaudited)
NOTE A - Basis of Presentation
The consolidated interim financial statements included in this report have
been prepared by Washington Federal, Inc. ("Company") without audit. The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America ("GAAP")
requires management to make estimates and assumptions that affect amounts
reported in the financial statements. Actual results could differ from these
estimates. In the opinion of management, all adjustments (consisting only
of normal recurring accruals)necessary for a fair presentation are reflected
in the interim financial statements. The September 30, 2000 Consolidated
Statement of Financial Condition was derived from audited financial
statements.
The information included in this Form 10-Q should be read in conjunction
with Washington Federal, Inc.'s 2000 Annual Report on Form 10-K to the
Securities and Exchange Commission. Interim results are not necessarily
indicative of results for a full year.
NOTE B - Dividends
Dividends per share increased to 24 cents for the quarter ended June 30, 2001
compared with 23 cents for the same period one year ago. On July 27, 2001,
the Company paid its 74th consecutive quarterly cash dividend.
NOTE C - Comprehensive Income
The Company's comprehensive income includes all items that comprise net
income plus the unrealized holding gains (losses) on available-for-sale
securities and forward commitments to purchase mortgage-backed securities.
Total comprehensive income for the quarters ended June 30, 2001, and June
30, 2000, totaled $37,850,000 and $29,228,000, respectively. The total
comprehensive income for the nine months ended June 30, 2001, and June
30, 2000, totaled $105,726,000 and $64,717,000, respectively. The
difference between the Company's net income and total comprehensive
income equals the change in the net unrealized gain or loss on securities
available-for-sale and forward commitments to purchase mortgage-backed
securities during the applicable periods.
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Note D - Encumbered Securities
Encumbered securities having a fair value of $788 million and an amortized
cost of $778 million are subject to certain agreements that may allow the
secured party to either rehypothecate or otherwise pledge the securities.
In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 140, these amounts have been separately identified in the statements
of financial condition. In addition, securities with an amortized cost
of $100 million and a fair value of $106 million were pledged to secure
public deposits and other borrowings. The Company had not accepted any
securities as collateral that it was permitted to sell or repledge as
of June 30, 2001.
Note E - Securitized Assets Subject to Repurchase
During the second quarter of fiscal 2001, the Company completed the
securitization of over 13,000 residential mortgage loans into a real
estate mortgage investment conduit ("REMIC"). This transaction did not
qualify as a sale under SFAS No. 125, therefore no gain or loss was
realized. The Company is currently the holder of all of the securities
issued by REMIC. The result of this transaction was a transfer of
securitized loans and related capitalized costs, deferred loan fees,
and allowance for loan losses into a new line item on the balance
sheet, securitized assets subject to repurchase, which continue to
be accounted for in a manner similar to residential mortgage loans.
The original balance consisted of the following:
Securitized loans $1,397,643,742
Deferred loan costs 4,200,000
Deferred loan fees (11,447,000)
Allowance for loan losses (2,200,000)
--------------
$1,388,196,742
Note F - Allowance for Loan Losses
The following table summarizes the activity in the allowance for loan
losses (including the allowance allocated to the REMIC) for the nine
months ended June 30, 2001 and 2000:
Nine Months Ended June 30,
2001 2000
Balance at beginning of period $ 20,831,138 $ 21,900,257
Provision for loan losses 650,000 -
Charge-offs (2,038,617) (591,679)
Recoveries 840,791 223,389
---------- ----------
Balance at end of period $ 20,283,312 $ 21,531,967
Note G - New Accounting Pronouncements
In June 2001 the Financial Accounting Standards Board approved SFAS No. 141,
"Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 prospectively prohibits the pooling of interests method
of accounting for business combinations initiated after June 30, 2001. SFAS
No. 142 requires companies to cease amortizing goodwill that existed at June
30, 2001. The amortization of existing goodwill will cease on September 30,
2001. Any goodwill resulting from acquisitions completed after June 30, 2001
will not be amortized. SFAS No. 142 also establishes a new method of testing
goodwill for impairment on an annual basis or on an interim basis if an event
occurs or circumstances change that would reduce the fair value of a reporting
unit below its carrying value. The adoption of SFAS No. 142 will result in the
Company discontinuing the amortization of its goodwill; however, the Company
will be required to test its goodwill for impairment under the new standard
beginning in the first quarter of fiscal 2002.
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Washington Federal, Inc. ("Company") is a savings and loan holding company.
The Company's primary operating subsidiary is Washington Federal Savings
("Association").
INTEREST RATE RISK
The Company assumes a high level of interest rate risk as a result of its
policy to originate fixed-rate single family home loans, which are longer
term in nature than the short-term characteristics of its liabilities of
customer accounts and borrowed money. At June 30, 2001, the Company had
a negative one-year maturity gap of approximately 50% of total assets.
The interest rate spread increased to 2.73% at June 30, 2001 from 2.04%
at September 30, 2000. The increase was, in large part, due to the
steepening of the yield curve as a result of the Federal Reserves
reduction in the federal funds target interest rate six times, totaling
275 basis points, during the nine-month period ended June 30, 2001.
During this phase of the interest rate cycle, the Company continued to
increase earning assets, strengthen its capital position, and
de-leverage its balance sheet by reducing borrowed money. Earning
assets increased by $236 million or 3.6% from September 30, 2000, to
June 30, 2001.
FHLB advances and other borrowed money decreased to an equivalent of
30.9% of total assets at June 30, 2001 compared to 35.2% of total
assets at September 30, 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Company's net worth at June 30, 2001 was $830,723,000 or 11.76% of
total assets. This was an increase of $71,558,000 from September 30,
2000 when net worth was $759,165,000 or 11.30% of total assets. The
increase in the Company's net worth included $81,726,000 from net
income and a $24,000,000 increase in other comprehensive income. Stock
options exercised during the first nine months of fiscal 2001 increased
net worth by $5,065,000. Net worth was reduced by $40,126,000 of cash
dividends paid. During the nine months ended June 30, 2001 no
additional shares were repurchased under the Company's ongoing common
stock repurchase program, which left a total of 3.18 million shares
currently authorized by the Board of Directors as available for
repurchase.
The Company's percentage of net worth to total assets is among the
highest in the nation and is nearly three times the minimum required
under Office of Thrift Supervision ("OTS") regulations. Management
believes this strong net worth position will help protect earnings
against interest rate risk and enable it to compete more effectively
for controlled growth through acquisitions, de novo expansion and
increased customer deposits.
The Company's cash and investment securities amounted to $220,390,000,
a $49,112,000 increase from September 30, 2000. This increase was due
primarily to increased cash flows from financing activities and an
increase in the unrealized gains on available-for-sale securities in
the investment portfolio.
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CHANGES IN FINANCIAL CONDITION
Available-for-sale and held-to-maturity securities: The Company purchased
$63,419,000 of mortgage-backed securities during the nine-month period
ended June 30, 2001, all of which were categorized as available-for-sale.
The Company sold $50,282,000 of mortgage-backed securities during the nine
months ended June 30, 2001, which resulted in a gain of $3,234,000. There
were no purchases of held-to-maturity securities during the nine months
ended June 30, 2001. As of June 30, 2001, the Company had unrealized
gains on available-for-sale securities of $27,000,000, net of tax, which
were recorded as part of stockholders' equity.
Loans receivable and securitized assets subject to repurchase: During
the nine months ended June 30, 2001, the Company completed the securitization
of more than 13,000 residential mortgage loans into a real estate mortgage
investment conduit (REMIC). In completing this transaction, the Company
gained increased flexibility in managing its asset/liability strategy and
will receive ongoing financial benefits through a reduction of future
operating expenses. The result of this transaction was a transfer of
securitized loans and related capitalized costs, deferred fees and
allowance for loan losses into a new line item on the balance sheet,
securitized assets subject to repurchase. The combined total of loans
receivable and securitized assets subject to repurchase increased 8.3%
during the nine month period to $5,359,607,000 at June 30, 2001 from
$4,949,235,000 at September 30, 2000.
Non-performing assets: Non-performing assets increased less than 1%
during the nine-month period ended June 30, 2001 to $31,618,000 from
$31,393,000 at September 30, 2000.
Costs in excess of net assets acquired: The Company periodically monitors
costs in excess of net assets acquired for potential impairment; there
was no impairment at June 30, 2001. The Company will continue to evaluate
these assets and, if appropriate, provide for any diminution in value.
Customer accounts: Customer accounts increased $457,681,000, or 13.2%, to
$3,922,951,000 at June 30, 2001 compared with $3,465,270,000 at September
30, 2000. This increase was due to attractive pricing and continued
uncertainty in the equity markets.
FHLB advances and other borrowings: Total borrowings decreased 7.7% to
$2,181,060,000 during the nine months ended June 30, 2001. See Interest
Rate Risk above.
RESULTS OF OPERATIONS
Interest income on loans increased $37,419,000 (13.2%) to $320,025,000
for the nine months ended June 30, 2001 from $282,606,000 for the nine
months ended June 30, 2000. This increase was due to an increase in
average loan balances of $588,744,000 (12.9%) and an increase in the
weighted average rate of two basis points to 8.31% for the nine months
ended June 30, 2001 compared to the nine months ended June 30, 2000.
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Interest income on loans increased $10,523,000 (10.8%) to $107,718,000
for the quarter ended June 30, 2001 from $97,195,000 for the quarter
ended June 30, 2000. This increase was due to an increase in average
loan balances of $609,896,000 (13.1%) for the quarter ended June 30,
2001 compared to the quarter ended June 30, 2000. This increase in
average loans was offset by a reduction in average interest rate on
loans of 16 basis points from 8.33% for the quarter ended June 30,
2000 to 8.17% for the quarter ended June 30, 2001.
Interest income on mortgage-backed securities decreased $2,757,000
(3.9%) to $68,787,000 for the nine months ended June 30, 2001 from
$71,544,000 for the nine months ended June 30, 2000. This decrease
was the result of the decrease in the average mortgage-backed securities
balance of $53,349,000 (4.0%) from the same period one year ago. Interest
income on investments remained consistent with prior quarters, decreasing
1.0% and .7%, for the six months ended March 31, 2001 compared to
the six months ended March 31, 2000, and for the quarter ended March 31, 2001
compared to the quarter ended March 31, 2000, respectively.
Interest on mortgage-backed securities decreased $1,611,000 (6.7%) to
$22,296,000 for the quarter ended June 30, 2001 compared with $23,907,000
for the same period one year ago. The average balance of mortgage-backed
securities decreased $92,064,000 (7.0%) to $1,224,691,000 for the quarter
ended June 30, 2001 from $1,316,755,000 for the quarter ended June 30, 2000.
Interest income on investments increased $293,000 (2.2%) to $13,316,000
for the nine months ended June 30, 2001 from $13,023,000 for the nine months
ended June 30, 2000. This increase was the result of the increase in the
average investments balance of $2,973,000 (1.2%) from the same period one
year ago. Interest on investments increased $378,000 (9.0%) to $4,587,000
for the quarter ended June 30, 2001 compared with $4,209,000 for the same
period one year ago. The average balance of investments increased $7,319,000
(2.9%) to $259,886,000 for the quarter ended June 30, 2001 from $252,567,000
for the quarter ended June 30, 2000. In addition, the average yield on
investments increased 39 basis points from 6.67% for the quarter ended
June 30, 2000 to 7.06% for the quarter ended June 30, 2001.
Interest expense on customer accounts increased $19,920,000 (15.8%) to
$145,934,000 for the nine months ended June 30, 2001 from $126,014,000 for
the nine months ended June 30, 2000. This increase was due to an increase
in average customer accounts of $139,183,000 (4.1%) and an increase in the
weighted average rate of 58 basis points to 5.52% for the nine months ended
June 30, 2001, compared to the nine months ended June 30, 2000. Interest
expense on customer accounts increased $4,690,000 (10.8%) from June 30,
2001 compared to the quarter ended June 30, 2000, due to an increase in
average balances of $308,136,000 and an increase in the weighted average
rate of 10 basis points to 5.24% for the quarter ended June 30, 2001.
Provision for loan losses increased $500,000 and $650,000 for the quarter
and nine months ended June 30, 2001, respectively, compared to the same
periods one year ago. Management determined the provision to be necessary
due to the continued growth in the loan portfolio and the softening of
the economy.
Interest on FHLB advances and other borrowings increased $13,265,000
(14.9%) to $102,235,000 for the nine months ended June 30, 2001 from
$88,970,000 for the nine months ended June 30, 2000. This increase was
due to an increase in average borrowings of $351,632,000 (17.3%) offset
by a decrease in the weighted average rate of 10 basis points to 5.69%
for the nine months ended June 30, 2001 compared to the nine months
ended June 30, 2000. Interest on FHLB advances and other borrowings
decreased $3,792,000 (11.5%) to $29,198,000 for the quarter ended June
30, 2001 from $32,990,000 for the quarter ended June 30, 2000. This
decrease was due mainly to a decrease in the weighted average rate of
109 basis points to 5.00% for the quarter ended June 30, 2001. The
decrease in the weighted average rate was offset by an increase in
average FHLB advances and other borrowings of $180,938,000 (8.36%)
for quarter ended June 30, 2001 compared to the quarter ended
June 30, 2000.
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Total other income increased $764,000 (10.6%) to $7,972,000 for the nine
months ended June 30, 2001 from $7,208,000 for the nine months ended
June 30, 2000. This increase was attributable primarily to the gains
realized from the sale of securities. Gain on the sale of securities
totaled $3,235,000 and $2,826,000 for the nine months ended June 30,
2001 and June 30, 2000, respectively. Total other income decreased
$724,000 (26.9%) to $1,971,000 for the quarter ended June 30, 2001
from $2,695,000 for the quarter ended June 30, 2000. This decrease
was attributable primarily to the gain realized from the sale of
securities in the quarter ended June 30, 2000. Gain on the sale of
securities totaled $1,110,000 for the quarter ended June 30, 2000.
The Company realized no gain on the sale of securities for the quarter
ended June 30, 2001.
Total other expense increased $1,293,000 (11.4%) for quarter ended
June 30, 2001 compared to the June 30, 2000 quarter. This increase
was primarily the result of an employee bonus accrual and de-novo
branch expansion. Total other expense for the quarter and nine months
ended June 30, 2001 equaled .72% and .69% of average assets,
respectively, compared to .70% and .75%, respectively, for the same
periods one year ago. The number of staff, including part-time employees
on a full-time equivalent basis, was 718 at June 30, 2001 compared to 686
full-time equivalent employees at June 30, 2000.
Income taxes increased $2,467,000 (17.5%) and 516,000 (1.2%) for the
quarter and nine-month period ended June 30, 2001, respectively, compared
to the same periods one year ago, as a result of a higher taxable income
base. The effective tax rate was 35.25% for both the nine-month period
ended June 30, 2001 and June 30, 2000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have not been any material changes in quantitative and qualitative
information about market risk since September 30, 2000.
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12
WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time the Company or its subsidiaries are engaged in legal
proceedings in the ordinary course of business, none of which are considered to
have a material impact on the Company's financial position or results of
operations.
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Not applicable
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
/s/ Ronald L. Saper
August 7, 2001 --------------------------------------
RONALD L. SAPER
Executive Vice-President and Chief
Financial Officer (principal financial
officer)
/s/ Brent J. Beardall
August 7, 2001 --------------------------------------
BRENT J. BEARDALL
Controller (principal
accounting officer)
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