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Washington Federal, Inc.
425 Pike Street
Seattle, WA 98101
Contact: Cathy Cooper
(206) 777-8246
Friday, January 12, 2007
FOR IMMEDIATE RELEASE
Washington Federal Reports 1st Quarter Results
SEATTLE - Washington Federal, Inc. (Nasdaq: WFSL), parent company of
Washington Federal Savings, today announced earnings of $33,384,000 or
$.38 per diluted share for the quarter ended December 31, 2006, compared
to 36,146,000 or $.41 per diluted share for the same period one year
ago, a 7.3% decrease in earnings per share.
Washington Federal's total assets amounted to $9,150,828,000 as of December
31, 2006, a 10.2% increase from December 31, 2005. Net loans outstanding
increased to $7,246,311,000 as of December 31, 2006, a 15.7% increase from
one year ago. Non-performing assets amounted to only 0.08% of total assets
at quarter-end. The Company's efficiency ratio of 21.29% for the quarter
remains among the lowest in the industry. The quarter produced a return on
assets of 1.47%, while return on equity amounted to 10.50%.
Chairman, President and Chief Executive Officer Roy M. Whitehead commented,
"Reduced earnings are attributible to a decline in net interest spread to
2.09% during the quarter, which approached the company's all-time low of
2.00% experienced in December 2000, as prior increases by the Federal
Reserve in short-term interest rates continued to pass through to our
funding costs during the quarter. This is a normal, yet challenging, part
of the interest rate cycle."
On January 12, 2007, Washington Federal will pay a cash dividend of $.205
per share to common stockholders of record on December 29, 2006. This will
be the Company's 96th consecutive quarterly cash dividend.
On October 10, 2006, Washington Federal announced the signing of a
definitive merger agreement to acquire First Federal Banc of the Southwest,
Inc. ("First Federal"). First Federal is headquartered in Roswell, New
Mexico with 13 branches in New Mexico and 2 branches in El Paso, Texas.
First Federal reported total assets of $547 million, total deposits of
$377 million and total stockholders' equity of $54 million as of
September 30, 2006. The transaction is expected to close in the first
calendar quarter of 2007.
During the first quarter the Company opened a new branch location in Denton,
Texas. The Company now has four locations in Texas.
The Company's Annual Meeting of Stockholders will be held at 2 p.m. on
January 25, 2007, at the Westin Hotel in Seattle, Washington.
Washington Federal Savings, with headquarters in Seattle, Washington,
has 124 offices in seven western states.
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
December 31, 2006 September 30, 2006
----------------- ------------------
(In thousands, except per share data)
ASSETS
Cash and cash equivalents.......................................... $ 58,029 $ 45,722
Available-for-sale securities, including mortgage-backed
securities of $1,192,222........................................ 1,385,787 1,451,038
Held-to-maturity securities, including mortgage-backed
securities of $144,519.......................................... 152,640 184,928
Loans receivable, net.............................................. 7,246,311 7,078,443
Interest receivable................................................ 42,139 42,304
Premises and equipment, net........................................ 61,350 62,159
Real estate held for sale.......................................... 4,391 3,903
FHLB stock......................................................... 129,453 129,453
Intangible assets, net............................................. 56,040 56,259
Other assets....................................................... 14,688 14,811
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$ 9,150,828 $ 9,069,020
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Customer accounts
Savings and demand accounts..................................... $ 5,334,099 $ 5,285,708
Repurchase agreements with customers............................ 23,939 26,018
----------- -----------
5,358,038 5,311,726
FHLB advances...................................................... 1,500,000 1,500,000
Other borrowings................................................... 890,000 870,000
Advance payments by borrowers for taxes and insurance.............. 13,705 29,505
Federal and state income taxes..................................... 58,202 39,667
Accrued expenses and other liabilities............................. 51,294 55,402
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7,871,239 7,806,300
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value, 300,000,000 shares authorized;
104,562,903 and 104,467,245 shares issued; 87,434,482
and 87,338,824 shares outstanding............................... 104,563 104,467
Paid-in capital.................................................... 1,247,040 1,246,025
Accumulated other comprehensive loss, net of taxes................. (5,696) (5,975)
Treasury stock, at cost; 17,128,421 shares......................... (204,930) (204,930)
Retained earnings.................................................. 138,612 123,133
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1,279,589 1,262,720
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$ 9,150,828 $ 9,069,020
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CONSOLIDATED FINANCIAL HIGHLIGHTS
Stockholders' equity per share..................................... $ 14.63 $ 14.46
Stockholders' equity to total assets............................... 13.98% 13.92%
Weighted average rates at period end
Loans and mortgage-backed securities*............................ 6.67% 6.48%
Investment securities**.......................................... 4.35 4.10
Combined loans, mortgage-backed securities
and investment securities..................................... 6.43 6.38
Customer accounts................................................ 4.26 4.05
Borrowings....................................................... 4.53 4.55
Combined cost of customer accounts and borrowings................ 4.34 4.20
Interest rate spread............................................. 2.09 2.18
* 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 December 31,
--------------------------
2006 2005
-------- --------
(In thousands, except per share data)
INTEREST INCOME
Loans....................................................... $ 123,175 $ 102,405
Mortgage-backed securities.................................. 19,075 14,368
Investment securities and cash equivalents.................. 3,226 7,789
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145,476 124,562
INTEREST EXPENSE
Customer accounts........................................... 55,949 38,850
FHLB advances and other borrowings.......................... 27,138 21,650
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83,087 60,500
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NET INTEREST INCOME......................................... 62,389 64,062
Provision for loan losses................................... 50 -
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES......... 62,339 64,062
OTHER INCOME
Gain on sale of securities, net............................. - -
Other....................................................... 3,134 3,391
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3,134 3,391
OTHER EXPENSE
Compensation and fringe benefits............................ 9,535 8,235
Occupancy................................................... 1,960 1,912
Other....................................................... 2,456 2,522
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13,951 12,669
Gain on real estate acquired through foreclosure, net....... 236 139
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INCOME BEFORE INCOME TAXES.................................. 51,758 54,923
Income taxes................................................ 18,374 18,777
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NET INCOME.................................................. $ 33,384 $ 36,146
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PER SHARE DATA
Basic earnings.............................................. $ .38 $ .42
Diluted earnings............................................ .38 .41
Cash dividends.............................................. .205 .200
Weighted average number of shares outstanding,
including dilutive stock options......................... 87,586,910 87,346,842
Return on average assets.................................... 1.47% 1.75%
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