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Washington Federal, Inc.
425 Pike Street
Seattle, WA 98101
Contact: Cathy Cooper
(206) 777-8246
Tuesday, October 21, 2003
FOR IMMEDIATE RELEASE
Washington Federal Completes Best Year
SEATTLE - Washington Federal, Inc. (Nasdaq: WFSL), parent company of
Washington Federal Savings, today announced earnings of $145,544,000 or
$2.07 per diluted share for the year ended September 30, 2003, compared
to $143,954,000 or $2.04 per diluted share for the same period one year
ago, a 1% per share increase. Earnings for the fourth fiscal quarter
amounted to $34,311,000 or $.49 per diluted share compared to
$36,927,000 or $.52 per diluted share for the same period a year ago,
a 6% per share decrease.
Roy M. Whitehead, Chief Executive Officer, commented, "We are pleased
to report another record year with over $145 million in earnings. This
is the 19th time in our 21 years as a public company that we have
recorded a year-over-year increase in net income. The company also
closed the fiscal year with a very liquid, strongly capitalized balance
sheet, positioning the company well to adjust for changing economic
conditions."
During the year, capital grew to exceed $1 billion for the first time,
while 19% of the company's assets were invested short-term at fiscal
year-end. Net interest income fell by $14.7 million during the year
as asset yields declined due to a more conservative asset mix and
accelerated mortgage prepayments. Reduced asset yields were partially
offset by lower deposit costs and an increase of $15.6 million in
accretion of loan fees and discounts on securities. Operating
expenses were reduced by $4.8 million, while other income increased
by $6.9 million and the provision for loan loss declined by $5.5
million.
The year produced a return on assets of 2.00%, while return on equity
amounted to 15.60%. During the fourth quarter, return on assets measured
1.89% and return on equity was 14.22%. The Company's efficiency ratio
improved to an industry leading 16.51%.
On August 31, 2003 the company successfully completed its acquisition
of United Savings and Loan Bank of Seattle. The acquisition added $315
million in assets and 4 Seattle area branches.
On October 17, 2003, Washington Federal paid a cash dividend of
$.22 per share to common stockholders of record on October 3, 2003.
This was the company's 83rd consecutive quarterly cash dividend.
Based on recent market prices, the cash dividend yield is 3.25%.
Washington Federal Savings, with headquarters in Seattle,
Washington, has 119 offices in eight western states.
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
September 30, 2003 September 30, 2002
------------------ ------------------
(In thousands, except per share data)
ASSETS
Cash and cash equivalents ......................................... $ 1,437,208 $ 975,153
Available-for-sale securities, including mortgage-backed
securities of $507,743.......................................... 804,186 918,776
Held-to-maturity securities, including mortgage-backed
securities of $140,051.......................................... 154,178 168,925
Securitized assets subject to repurchase, net ..................... 210,782 755,961
Loans receivable, net ............................................. 4,606,726 4,292,003
Interest receivable ............................................... 29,489 39,503
Premises and equipment, net ....................................... 60,942 55,119
Real estate held for sale ......................................... 16,204 17,587
FHLB stock ........................................................ 143,851 132,320
Intangible Assets ................................................. 57,504 35,703
Other assets ...................................................... 12,073 1,391
----------- -----------
$ 7,533,143 $ 7,392,441
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Customer accounts
Savings and demand accounts .................................... $ 4,520,051 $ 4,452,250
Repurchase agreements with customers ........................... 57,547 69,672
----------- -----------
4,577,598 4,521,922
FHLB advances ..................................................... 1,650,000 1,650,000
Other borrowings................................................... 100,000 100,000
Advance payments by borrowers for taxes and insurance ............. 23,281 22,704
Federal and state income taxes .................................... 67,179 84,235
Accrued expenses and other liabilities ............................ 59,489 52,862
----------- -----------
6,477,547 6,431,723
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value, 100,000,000 shares authorized;
85,553,789 and 83,833,244 shares issued; 71,173,487
and 69,894,902 shares outstanding .............................. 84,554 76,212
Paid-in capital ................................................... 1,085,650 968,858
Accumulated other comprehensive income, net of taxes .............. 34,624 56,000
Treasury stock, at cost; 14,380,302 and 13,938,342 shares ......... (207,337) (198,279)
Retained earnings ................................................. 57,105 57,927
----------- -----------
1,055,596 960,718
----------- -----------
$ 7,533,143 $ 7,392,441
=========== ===========
CONSOLIDATED FINANCIAL HIGHLIGHTS
Stockholders' equity per share .................................... $ 14.83 $ 13.75
Stockholders' equity to total assets .............................. 14.01% 13.00%
Weighted average rates at period end
Loans and mortgage-backed securities* ........................... 6.40% 7.26%
Investment securities** ......................................... 1.98 2.82
Combined loans, mortgage-backed securities
and investment securities .................................... 5.28 6.53
Customer accounts ............................................... 1.96 2.94
Borrowings ...................................................... 5.03 5.03
Combined cost of customer accounts and borrowings ............... 2.81 3.52
Interest rate spread ............................................ 2.47 3.01
* Includes securitized assets subject to repurchase
**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,
-------------------------- --------------------------
2003 2002 2003 2002
-------- -------- --------- ---------
(In thousands, except per share data)
INTEREST INCOME
Loans and securitized assets subject to repurchase ........ $ 82,053 $98,622 $353,286 $406,262
Mortgage-backed securities ................................. 13,151 18,517 62,911 76,138
Investment securities and cash equivalents.................. 8,626 6,468 33,988 22,561
-------- -------- -------- --------
103,830 123,607 450,185 504,961
INTEREST EXPENSE
Customer accounts .......................................... 22,279 34,358 105,919 152,288
FHLB advances and other borrowings ......................... 22,420 21,077 85,965 82,653
-------- -------- -------- --------
44,699 55,435 194,884 234,941
-------- -------- -------- --------
NET INTEREST INCOME ........................................ 59,131 68,172 255,301 270,020
Provision for loan losses .................................. - 1,500 1,500 7,000
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ........ 59,131 66,672 253,801 263,020
OTHER INCOME
Gains on sale of securities, net ........................... 504 - 992 765
Gain on sale of real estate ................................ - - 3,382 -
OTHER ...................................................... 3,396 1,838 10,643 7,322
-------- -------- -------- --------
3,900 1,838 15,017 8,087
OTHER EXPENSE
Compensation and fringe benefits ........................... 7,547 7,867 30,846 34,059
Occupancy .................................................. 1,178 1,288 5,098 4,778
Other ...................................................... 1,403 2,309 8,115 10,034
-------- -------- -------- --------
10,128 11,464 44,059 48,871
Gain (loss) on real estate acquired through foreclosure, net 84 10 (194) 118
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES ................................. 52,987 57,056 224,565 222,354
Income taxes ............................................... 18,676 20,129 79,021 78,400
-------- -------- -------- --------
NET INCOME ................................................. $ 34,311 $ 36,927 $145,544 $143,954
======== ======== ======== ========
PER SHARE DATA
Basic earnings ............................................. $ .49 $ .53 $ 2.09 $ 2.06
Diluted earnings ........................................... .49 .52 2.07 2.04
Cash dividends ............................................. .22 .21 .86 .82
Weighted average number of shares outstanding,
including dilutive stock options ........................ 70,581,441 70,488,685 70,232,695 70,523,160
Return on average assets ................................... 1.89% 2.07% 2.00% 2.05%
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