Washington Federal, Inc. ("WFSL") acquisition of First Federal
Banc of the Southwest, Inc. ("FFSW") - Transaction details
Purchase Price - all cash:
* $24.14 per share of FFSW stock. Total consideration to be paid for FFSW
stock and employee stock options will be approximately $99 million
* FFSW has 15 branches - 13 in New Mexico and 2 in El Paso, Texas
* Represents:
- a premium of 33% over FFSW's last traded price of $18.15 (as of
10/10/06)
- 1.88 times FFSW's book value of $52,532,000 as of June 30, 2006
- 2.11 times FFSW's tangible book value of $46,917,000 as of June 30,
2006
- 19.3% book premium ($46,468,000) as a percentage of core deposits
($240,299,000) as of June 30, 2006
- 19.4 times FFSW's earnings (based on FFSW's income for the quarter
ended June 30, 2006)
Reasons for the transaction:
- We expect this transaction to be accretive to WFSL's income in the
first year, with additional earnings enhancements going forward
- FFSW has its heritage as a traditional thrift, its assets are
concentrated in real estate secured loans
- Employee base will add to depth of talent at WFSL
- Opportunity for WFSL to profitably deploy a portion of its excess
capital
- Acquisition of a deposit base with a weighted average cost of 2.30%
as of June 30, 2006
- Diversification of our loan portfolio, FFSW's weighted average yield
on loans was 7.10% as of June 30, 2006
Integration:
- All branches will remain open.
- Planned integration will be deliberate to ensure retention of key
customers and employees and minimize system integration issues.
Loan & Deposit Information:
All amounts are unaudited as of June 30, 2006, in thousands
FFSW WFSL Combined(1)
LOANS
Single Family Residential 199,571 47.9% 5,223,994 76.6% 5,423,565 75.0%
Construction 36,680 8.8% 1,121,661 16.5% 1,158,341 16.0%
Land 36,926 8.9% 552,933 8.1% 589,859 8.2%
Multifamily 9,031 2.2% 505,102 7.4% 514,133 7.1%
Commercial Real Estate 95,345 22.9% 24,037 0.4% 119,382 1.7%
Other Commercial 33,009 7.9% - 0.0% 33,009 0.5%
Consumer 9,396 2.3% 1,263 0.0% 10,659 0.1%
Net Credits (Allowance,
LIP, Net Def. Fees) (3,214) -0.8% (613,277) -9.0% (616,491) -8.5%
============= =============== ===============
416,744 100.0% 6,815,713 100.0% 7,232,457 100.0%
DEPOSITS
Certificates of Deposit 151,862 38.7% 4,108,726 77.8% 4,260,588 75.1%
Savings 84,108 21.4% 167,128 3.2% 251,236 4.4%
Money Market 23,762 6.1% 785,306 14.9% 809,068 14.3%
Interest Checking 59,103 15.1% 192,604 3.6% 251,707 4.4%
Non-Interest Checking 73,326 18.7% 30,195 0.6% 103,521 1.8%
============= ============== ================
392,161 100.0% 5,283,959 100.0% 5,676,120 100.0%
(1) Combined amounts represent only the aggregation of the two balances,
this does not contemplate any purchase accounting adjustments that may
be necessary.
Forward Looking Statements
This release may contain forward-looking statements regarding Washington
Federal, First Federal, and the proposed merger. These statements involve
certain risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Such risks and
uncertainties include, but are not limited to, the following factors:
governmental approval of the merger may not be obtained or adverse
regulatory conditions may be imposed in connection with governmental
approvals of the merger; and the shareholders of First Federal may fail
to approve the consummation of the merger. Washington Federal and First
Federal undertake no obligation to revise or publicly release any revision
or update to these forward-looking statements to reflect events or
circumstances that occur after the date on which such statements were
made.
Notice to First Federal Shareholders
FFSW intends to file a proxy statement in connection with the proposed
merger. FFSW shareholders should read the proxy statement and other
relevant materials when they become available, because they will contain
important information about FFSW and the proposed merger. In addition
to the documents described above, FFSW files annual, quarterly, and
current reports, proxy statements, and other information with the U.S.
Securities and Exchange Commission (the "SEC"). The proxy statement and
other relevant materials (when they become available), and any other
documents filed with the SEC by FFSW are available without charge at the
SEC's website, at www.sec.gov.