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Washington Federal, Inc.
425 Pike Street
Seattle, WA 98101
Contact: Cathy Cooper
(206) 777-8246
Thursday, October 21, 2004
FOR IMMEDIATE RELEASE
Washington Federal Reports Annual Earnings
SEATTLE - Washington Federal, Inc. (Nasdaq: WFSL), parent company of
Washington Federal Savings, today announced earnings of $131,868,000 or
$1.66 per diluted share for the year ended September 30, 2004, compared
to $144,999,000 or $1.88 per diluted share for the same period one year
ago, a 9% decrease. Earnings for the fourth fiscal quarter amounted to
$31,493,000 or $.40 per diluted share, including a one-time pre-tax
charge of $5,191,000 related to the extinguishment of debt, compared to
$34,747,000 or $.45 per diluted share for the same period one year ago,
a 9% decrease.
Net interest income declined by $10.4 million in fiscal 2004 due to lower
asset yields that were only partially offset by a reduction in interest
expense. Other income in 2004 included the one-time charge of $5 million
mentioned above, compared to a gain on sale of real estate of $3 million
reported in fiscal 2003. The company experienced record loan production
during the year, resulting in a 5.7% net increase in loans outstanding.
High cost debt obligations of $450 million were repaid during the year
and capital grew to 15.62% of assets, the highest ratio in our history.
Asset quality continued to be very strong due to the robust housing
market.
Roy M. Whitehead, President & CEO, commented, "Although down from the
prior year, we are pleased to report solid operating results again this
year. Net interest spread improved to 3.00% at year end from 2.47% last
year, which gives us good reason to be optimistic about future earnings."
The year produced a return on assets of 1.78%, while return on equity
amounted to 12.12%. The company's efficiency ratio of 18.57% remains
among the best in the industry.
On October 19, 2004, Washington Federal announced a restatement of
financial results for the fiscal years 2001 through 2003 due to a
review of its accounting for derivatives under FAS 133. The review
resulted in an adjustment that increased after-tax net income in those
years by a cumulative $7,734,000, or 1.92% of previously reported
net income.
On October 22, 2004, Washington Federal will pay a cash dividend of
$.21 per share to common stockholders of record on October 8, 2004.
This will be the company's 87th consecutive quarterly cash dividend.
Washington Federal Savings, with headquarters in Seattle, Washington,
has 120 offices in eight western states.
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
September 30, 2004 September 30, 2003
------------------ -------------------------------
as previously
restated reported
-------- -----------
(In thousands, except per share data)
ASSETS
Cash and cash equivalents ......................................... $ 508,361 $ 1,437,208 $ 1,437,208
Securities purchased under agreements to resell ................... 200,000 - -
Available-for-sale securities, including mortgage-backed
securities of $522,145 ......................................... 899,525 781,798 804,186
Held-to-maturity securities, including mortgage-backed
securities of $119,312 ......................................... 156,373 154,178 154,178
Securitized assets subject to repurchase, net ..................... 110,607 210,782 210,782
Loans receivable, net ............................................. 4,982,836 4,606,726 4,606,726
Interest receivable ............................................... 29,832 29,489 29,489
Premises and equipment, net ....................................... 63,049 60,942 60,942
Real estate held for sale ......................................... 8,630 16,204 16,204
FHLB stock ........................................................ 137,274 143,851 143,851
Intangible assets ................................................. 58,939 60,336 60,336
Other assets ...................................................... 13,779 34,461 12,073
----------- ----------- -----------
$ 7,169,205 $ 7,535,975 $ 7,535,975
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Customer accounts
Savings and demand accounts .................................... $ 4,569,245 $ 4,520,051 $ 4,520,051
Repurchase agreements with customers ........................... 41,113 57,547 57,547
----------- ----------- -----------
4,610,358 4,577,598 4,577,598
FHLB advances ..................................................... 1,200,000 1,650,000 1,650,000
Other borrowings................................................... 100,000 100,000 100,000
Advance payments by borrowers for taxes and insurance ............. 25,226 23,281 23,281
Federal and state income taxes .................................... 62,081 70,011 70,011
Accrued expenses and other liabilities ............................ 51,352 59,489 59,489
----------- ----------- -----------
6,049,017 6,480,379 6,480,379
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value, 100,000,000 shares authorized;
94,383,496 and 94,109,168 shares issued; 78,679,597
and 78,290,836 shares outstanding .............................. 94,383 85,554 85,554
Paid-in capital ................................................... 1,161,627 1,085,650 1,085,650
Accumulated other comprehensive income, net of taxes .............. 17,107 26,890 34,624
Treasury stock, at cost; 15,703,899 and 15,818,332 shares ......... (206,666) (207,337) (207,337)
Retained earnings ................................................. 53,737 64,839 57,105
----------- ----------- -----------
1,120,188 1,055,596 1,055,596
----------- ----------- -----------
$ 7,169,205 $ 7,535,975 $ 7,535,975
=========== =========== ===========
CONSOLIDATED FINANCIAL HIGHLIGHTS
Stockholders' equity per share .................................... $ 14.24 $ 13.48 $ 13.48
Stockholders' equity to total assets .............................. 15.62% 14.01% 14.01%
Weighted average rates at period end
Loans and mortgage-backed securities* ........................... 6.17% 6.40% 6.40%
Investment securities** ......................................... 3.01 1.98 1.98
Combined loans, mortgage-backed securities
and investment securities .................................... 5.62 5.28 5.28
Customer accounts ............................................... 1.96 1.96 1.96
Borrowings ...................................................... 4.96 5.03 5.03
Combined cost of customer accounts and borrowings ............... 2.62 2.81 2.81
Interest rate spread ............................................ 3.00 2.47 2.47
* 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,
------------------------------ --------------------------------
2004 2003 2003 2004 2003 2003
-------- -------- -------- -------- -------- --------
as previously as previously
restated reported restated reported
-------- ----------- -------- -----------
(In thousands, except per share data)
INTEREST INCOME
Loans and securitized assets subject to repurchase ........ $ 83,533 $ 82,053 $ 82,053 $330,967 $353,286 $353,286
Mortgage-backed securities ................................. 12,781 13,583 13,151 48,554 62,021 62,911
Investment securities and cash equivalents.................. 8,883 8,626 8,626 34,251 33,988 33,988
-------- -------- -------- -------- -------- --------
105,197 104,262 103,830 413,772 449,295 450,185
INTEREST EXPENSE
Customer accounts .......................................... 22,128 22,279 22,279 86,099 105,919 105,919
FHLB advances and other borrowings ......................... 19,124 22,420 22,420 83,654 88,965 88,965
-------- -------- -------- -------- -------- --------
41,252 44,699 44,699 169,753 194,884 194,884
-------- -------- -------- -------- -------- --------
NET INTEREST INCOME ........................................ 63,945 59,563 59,131 244,019 254,411 255,301
Provision (reversal of reserve) for loan losses ............ --- --- --- (231) 1,500 1,500
-------- -------- -------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ........ 63,945 59,563 59,131 244,250 252,911 253,801
OTHER INCOME
Gain (loss) on sale of securities, net ..................... (171) 746 504 (890) 1,039 992
Gain on sale of real estate ................................ --- --- --- --- 3,382 3,382
Loss on extinguishment of debt ............................. (5,191) --- --- (5,191) --- ---
Other ...................................................... 2,653 3,914 3,396 11,224 12,343 10,643
-------- -------- -------- -------- -------- --------
(2,709) 4,660 3,900 5,143 16,764 15,017
OTHER EXPENSE
Compensation and fringe benefits ........................... 8,202 7,547 7,547 31,411 30,846 30,846
Occupancy .................................................. 2,323 1,696 1,178 7,813 6,798 5,098
Other ...................................................... 2,068 1,403 1,403 7,040 8,115 8,115
-------- -------- -------- -------- -------- --------
12,593 10,646 10,128 46,264 45,759 44,059
Gain (loss) on real estate acquired through foreclosure, net 28 84 84 583 (194) (194)
-------- -------- -------- -------- -------- --------
Income before income taxes ................................. 48,671 53,661 52,987 203,712 223,722 224,565
Income taxes ............................................... 17,178 18,914 18,676 71,844 78,723 79,021
-------- -------- -------- -------- -------- --------
NET INCOME ................................................. $ 31,493 $ 34,747 $ 34,311 $131,868 $144,999 $145,544
======== ======== ======== ======== ======== ========
PER SHARE DATA
Basic earnings ............................................. $ .40 $ .45 $ .45 $ 1.68 $ 1.89 $ 1.89
Diluted earnings ........................................... .40 .45 .44 1.66 1.88 1.88
Cash dividends ............................................. .21 .20 .20 .82 .78 .78
Weighted average number of shares outstanding,
including dilutive stock options ........................ 79,314,820 77,639,585 77,639,585 79,209,806 77,255,964 77,255,964
Return on average assets ................................... 1.73% 1.90% 1.90% 1.78% 1.98% 1.98%
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