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Washington Federal, Inc.
425 Pike Street
Seattle, WA 98101
Contact: Cathy Cooper
(206) 777-8246
Thursday, October 20, 2005
FOR IMMEDIATE RELEASE
Washington Federal's Annual Earnings Increase 11%
SEATTLE - Washington Federal, Inc. (Nasdaq: WFSL), parent company of
Washington Federal Savings, today announced earnings of $145,889,000 or
$1.67 per diluted share for the year ended September 30, 2005, compared
to $131,868,000 or $1.51 per diluted share for the same period one year
ago, an 11% increase. Earnings for the fourth fiscal quarter amounted to
$34,389,000 or $.39 per diluted share compared to $31,493,000 or $.36 per
diluted share for the same period one year ago, a 9% increase.
Roy M. Whitehead, Chief Executive Officer, commented, "Fiscal 2005 was a
very good year for Washington Federal. Record loan production and strong
deposit inflows accompanied a healthy increase in earnings which was
delivered despite a sharp increase in deposit costs. Overall housing
activity remains solid throughout our lending territory and problem assets
are negligible. Near-term challenges center primarily on what we expect
will be continued pressure on funding costs and a tighter spread between
short and long term interest rates."
The year produced a return on assets of 1.90%, while return on equity
amounted to 12.63%. The Company's efficiency ratio (operating expenses
as a percentage of net revenue) of 19.16% remains among the best in the
industry.
Record loan production for the year ended September 30, 2005 totaled
$2,436,000,000, an 18% increase over the previous record of $2,070,000,000
produced in fiscal 2004. Total assets of $8.2 billion at September 30, 2005,
represents an increase of $1.1 billion or 15% above last year. During the
quarter the Company recorded a $2.2 million charge for the early extinguishment
of debt, a $1.5 million expense for a state business tax assessment and a
$2.5 million reduction of federal income tax expense. As a result of a
change in accounting rules, beginning in October 2005, the Company will record
an estimated expense of $375,000 per quarter for unvested stock options
outstanding as of September 30, 2005.
On October 21, 2005, Washington Federal will pay a cash dividend of $.20 per
share to common stockholders of record on October 7, 2005. This will be the
company's 91st consecutive quarterly cash dividend.
During the year the Company opened new branch locations in Klamath Falls,
Oregon, Richardson, Texas and Las Vegas, Nevada.
Washington Federal Savings, with headquarters in Seattle, Washington, has
122 offices in seven western states.
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
September 30, 2005 September 30, 2004
------------------ ------------------
(In thousands, except per share data)
ASSETS
Cash and cash equivalents ......................................... $ 637,791 $ 508,361
Securities purchased under agreements to resell ................... - 200,000
Available-for-sale securities, including mortgage-backed
securities of $899,920 ......................................... 1,077,856 899,525
Held-to-maturity securities, including mortgage-backed
securities of $175,421 ......................................... 212,479 156,373
Securitized assets subject to repurchase, net ..................... 71,257 110,607
Loans receivable, net ............................................. 5,937,675 4,982,836
Interest receivable ............................................... 34,048 29,832
Premises and equipment, net ....................................... 63,287 63,049
Real estate held for sale ......................................... 5,631 8,630
FHLB stock ........................................................ 129,453 137,274
Intangible assets ................................................. 57,259 58,939
Other assets ...................................................... 7,714 13,779
----------- -----------
$ 8,234,450 $ 7,169,205
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Customer accounts
Savings and demand accounts .................................... $ 5,002,172 $ 4,569,245
Repurchase agreements with customers ........................... 29,333 41,113
----------- -----------
5,031,505 4,610,358
FHLB advances ..................................................... 1,230,000 1,200,000
Other borrowings................................................... 655,000 100,000
Advance payments by borrowers for taxes and insurance ............. 27,533 25,226
Federal and state income taxes .................................... 44,617 62,081
Accrued expenses and other liabilities ............................ 58,487 51,352
----------- -----------
7,047,142 6,049,017
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value, 300,000,000 shares authorized;
104,140,966 and 103,821,846 shares issued; 86,933,294 and
86,547,557 shares outstanding .................................. 104,141 94,383
Paid-in capital ................................................... 1,240,310 1,161,627
Accumulated other comprehensive income (loss), net of taxes ....... (704) 17,107
Treasury stock, at cost; 17,207,672 and 17,274,289 shares ......... (205,874) (206,666)
Retained earnings ................................................. 49,435 53,737
----------- -----------
1,187,308 1,120,188
----------- -----------
$ 8,234,450 $ 7,169,205
=========== ===========
CONSOLIDATED FINANCIAL HIGHLIGHTS
Stockholders' equity per share .................................... $ 13.66 $ 12.94
Stockholders' equity to total assets .............................. 14.42% 15.62%
Weighted average rates at period end
Loans and mortgage-backed securities* ........................... 6.19% 6.17%
Investment securities** ......................................... 3.74 3.01
Combined loans, mortgage-backed securities
and investment securities .................................... 5.91 5.62
Customer accounts ............................................... 2.94 1.96
Borrowings ...................................................... 4.51 4.96
Combined cost of customer accounts and borrowings ............... 3.37 2.62
Interest rate spread ............................................ 2.54 3.00
* 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,
-------------------------- --------------------------
2005 2004 2005 2004
-------- -------- --------- ---------
(In thousands, except per share data)
INTEREST INCOME
Loans and securitized assets subject to repurchase ......... $ 97,610 $83,534 $369,023 $330,967
Mortgage-backed securities ................................. 12,813 12,781 61,459 48,554
Investment securities and cash equivalents ................. 7,752 8,883 31,419 34,251
-------- -------- -------- --------
118,175 105,198 461,901 413,772
INTEREST EXPENSE
Customer accounts .......................................... 34,719 22,127 115,826 86,099
FHLB advances and other borrowings ......................... 21,584 19,124 79,434 83,654
-------- -------- -------- --------
56,303 41,251 195,260 169,753
-------- -------- -------- --------
NET INTEREST INCOME ........................................ 61,872 63,947 266,641 244,019
Provision (reversal of reserve) for loan losses ............ - - (134) (231)
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ........ 61,872 63,947 266,775 244,250
OTHER INCOME
Loss on sale of securities, net ............................ - (171) (3,534) (890)
Loss on extinguishment of debt ............................. (2,194) (5,191) (2,194) (5,191)
Other ...................................................... 3,188 2,653 12,137 11,224
-------- -------- -------- --------
994 (2,709) 6,409 5,143
OTHER EXPENSE
Compensation and fringe benefits ........................... 8,436 8,118 34,197 31,084
Occupancy .................................................. 1,915 2,323 8,788 7,813
Other ...................................................... 3,255 2,154 9,334 7,367
-------- -------- -------- --------
13,606 12,595 52,319 46,264
Gain on real estate acquired through foreclosure, net 180 28 1,443 583
-------- -------- -------- --------
Income before income taxes ................................. 49,440 48,671 222,308 203,712
Income taxes ............................................... 15,051 17,178 76,419 71,844
-------- -------- -------- --------
NET INCOME ................................................. $ 34,389 $ 31,493 $145,889 $131,868
======== ======== ======== ========
PER SHARE DATA
Basic earnings ............................................. $ .40 $ .36 $ 1.68 $ 1.53
Diluted earnings ........................................... .39 .36 1.67 1.51
Cash dividends ............................................. .20 .19 .78 .75
Weighted average number of shares outstanding,
including dilutive stock options ........................ 87,544,855 87,246,302 87,478,708 87,130,787
PERFORMANCE RATIOS
Return on average assets ................................... 1.71% 1.73% 1.90% 1.78%
Return on average stockholders' equity ..................... 11.63% 11.37% 12.63% 12.12%
Net interest margin ........................................ 3.18% 3.61% 3.57% 3.41%
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