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TO OUR STOCKHOLDERS

Dear Stockholder:

It is a privilege to report that your company achieved outstanding
financial results again last year. While net income of $145.5 million
represented a modest 1.1% increase over fiscal 2002, it was nonetheless
our best year ever. This is the 19th time in 21 years as a public
entity that your company has reported an increase in operating results
over the prior year. Earnings per share also improved to a record $2.07,
a 1.5% increase over last year. Return on assets reached the
"gold standard" for our industry of 2.00%, while return on equity
amounted to a respectable 15.60%. Continued strong earnings also
enabled the board of directors to increase your cash dividend for
the 38th time since 1982 to an annualized $.88 per share.

During the year, your company's balance sheet also strengthened.
Assets grew to $7.536 billion and capital exceeded $1 billion at
fiscal year-end for the first time.  The quality of the company's
assets remained high. Recent industry reports credit Washington
Federal with the lowest ratio of past due loans among the largest
mortgage servicing companies in the nation, while non-performing
assets declined by 19% to $27.434 million, and net charge-offs
fell to $1.2 million, the lowest in three years. Due to management's
decision to invest cautiously given historically low interest rates,
liquid assets continued to increase.  At year-end, over $1.5 billion
of the company's assets were invested very short-term, representing
a potentially significant increase in future revenues. With three
times the minimum capital required by our regulators, strong
earnings, unprecedented liquidity and excellent asset quality,
we continue to believe that we are indeed "One of America's
Strongest Financial Institutions".

Having said all that, it's equally important to note that the
past two years of peak financial performance occurred in an ideal
climate for our business.  It would seem imprudent to expect such
conditions to persist indefinitely. For example, abnormally high
prepayments of mortgage loans and mortgage backed securities
during each of the past two years caused a temporary surge in
interest income. This occurred because deferred revenues, primarily
loan fees collected at origination and securities discounts that
normally amortize over a longer period of time, were accelerated
into current accounting periods. The company has also benefited
from a very steep yield curve, meaning a historically wide spread
between short and long-term interest rates, which we know from
hard experience won't last forever. In 2003, we also reached a
cyclical top in the demand for mortgage loans.  With the passing
of the refinance boom, we are already experiencing a slowdown in
the mortgage market and we expect intensified price competition
until the hangover of excess capacity in the industry melts away.

The good news is that, in choosing not to maximize current earnings,
the flexibility to take advantage of changing market conditions was
preserved.  During the past year we focused on building liquidity
and increasing net worth as a percentage of assets.  This approach
had a cost to current earnings, but offered the benefit of less
interest rate risk and the potential for higher earnings in the
future than we might otherwise have achieved.  With interest rates
higher at present, it appears that we will have the opportunity to
invest at better rates than we could have during recent quarters.
Therefore, we believe that your company is well positioned to
continue its long tradition of outperforming the industry.

On August 31st, the acquisition of United Savings and Loan Bank
was finalized.  This was our first acquisition since 1996, and
added $344 million in assets and $268 million in deposits.
United was established in 1960 to provide financial services
to immigrants to Seattle from Asian countries, primarily China,
who at that time had difficulty accessing the banking system.
It is a privilege to welcome the employees and customers of this
unique company to Washington Federal. With the addition of four
United branches in Seattle, one new office in Puyallup, Washington,
and the consolidation of one office in Nampa, Idaho, the branch
count at year-end totaled 119.

During the year, we also completed a management transition that
has been underway for many years.  Linda Brower, who joined us
in January to head Human Resources, was recently promoted to
Executive Vice President.  Brent Beardall, in his third year with
Washington Federal, was promoted to Senior Vice President and
Chief Financial Officer.  Linda and Brent join Ed Hedlund,
Jack Jacobson and myself on the Executive Management Committee.
My hope is that this outstanding group of executives will
work with the board and me to lead and manage the company for
the next ten to fifteen years.

Recently, we also added two new members to the Board of
Directors. Derek Chinn, former President & CEO of United Savings
and Loan Bank joined the board in September.  Tom Kenney,
VP Finance and the principal financial officer of Haggen, Inc.,
a Bellingham, Washington based grocery store chain, joined
the board in October.  Prior to joining Haggen, Inc. in 1996,
Mr. Kenney spent 20 years in the financial services industry.
Both new directors will serve on the board's Audit Committee and
possess the financial literacy necessary to represent shareholder
interests in that important capacity.  I thank them both for their
willingness to serve during a time when so much is expected of
directors.

Alas, some good people are moving on, too.  At the Annual
Meeting in January, 2004 Kermit Hanson, Dean Emeritus of the
Graduate School of Business at the University of Washington
and a director since 1966, will retire from the Board.  I
hope that you will take a moment at the meeting to thank him for
his 38 years of outstanding service to the company. I also wish
to recognize Ron Saper, former Executive Vice President, who
retired this year after serving 11 years as your company's
Chief Financial Officer. The legacy of Ron's financial
discipline will benefit stockholders for years to come.

In August, Standard & Poor's, in a promotion of sorts,
removed Washington Federal from their Small Cap 600 Index
and added our stock to their Mid Cap 400 Index. This was
nice recognition of the growth in the market value of your
company, and exposes our stock to a whole new universe of
investors. It's interesting to note that, although we still
think of ourselves as a small company, our current market
capitalization of nearly $2 billion places us in the top 10%
of all NASDAQ companies, and in the top 30% of all NYSE
companies. Based on net income last year, our rankings are
even higher: top 2% of NASDAQ companies and top 20% of NYSE
companies.

In closing, I wish to thank our customers, employees,
stockholders and directors for their continuing support.
Let me also remind you to send your friends, neighbors
and relatives to Washington Federal for their home loans
and savings needs.  I hope to see you at the Annual
Stockholders' Meeting scheduled at 2:00 pm, on Wednesday,
January 21, 2004 at the Sheraton Hotel in downtown
Seattle, Washington.


Sincerely,

Roy M. Whitehead
Vice Chairman, President and Chief Executive Officer