SOURCE: Washington Federal Savings

April 16, 2007 18:00 ET

Washington Federal Announces 2nd Quarter Earnings

SEATTLE, WA -- (MARKET WIRE) -- April 16, 2007 -- Washington Federal, Inc. (NASDAQ: WFSL), parent company of Washington Federal Savings, today announced earnings of $33,483,000 or $.38 per diluted share for the quarter ended March 31, 2007, compared to $36,340,000 or $.42 per diluted share for the quarter ended March 31, 2006, a 7.9% decrease in earnings. For the six months ended March 31, 2007, earnings were $66,867,000 or $.76 per diluted share, compared to $72,486,000 or $.83 per diluted share for the six months ended March 31, 2006, a 7.8% decrease in earnings.

The second fiscal quarter produced a return on assets of 1.41%, while return on equity amounted to 10.40% for the quarter. Nonperforming assets totaled $9.2 million or 0.09% of assets as of March 31, 2007. Delinquent loans remain near historic lows with only 125 loans of 45,195 in the portfolio more than 30 days past due.

Chief Executive Officer Roy M. Whitehead commented, "Lower earnings over the same quarter last year were the result of higher deposit costs, which have increased by 42% on a comparable basis. Relative to the first fiscal quarter, earnings increased slightly, reflecting the nearly complete adjustment of deposit costs to current rates. As noted above, asset quality continues to be quite good. We have experienced no systemic deterioration in either the mortgage or the construction loan portfolio. It's also important to note that the company has virtually no exposure to subprime credit or so-called 'exotic mortgages.' Higher operating expenses during the period related primarily to acquisition-related costs and higher organic payroll expense."

During the quarter, 250,000 shares of stock were repurchased as part of an ongoing share repurchase program. As of March 31, 2007, Washington Federal had an existing authorization to repurchase up to 3 million additional shares.

On February 13, 2007, Washington Federal completed its acquisition of First Federal Banc of the Southwest, Inc. ("First Federal"). First Federal had $404 million in loans and $383 million in deposits as of the date of acquisition. As a result of the acquisition, Washington Federal added 180 employees and 13 branches, 11 in New Mexico and two in El Paso, Texas.

On April 20, 2007, Washington Federal will pay a cash dividend of $.205 per share to common stockholders of record on April 6, 2007. This will be the Company's 97th consecutive quarterly cash dividend.

Washington Federal Savings, with headquarters in Seattle, Washington, has 136 offices in eight western states.


                WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                (UNAUDITED)


                                                   March 31,    September
                                                     2007        30, 2006
                                                  -----------  -----------
                                                    (In thousands, except
                                                       per share data)
ASSETS
Cash and cash equivalents                         $   209,500  $    45,722
Available-for-sale securities, including
 mortgage-backed securities of $1,154,352           1,365,900    1,451,038
Held-to-maturity securities, including
 mortgage-backed securities of $139,802               147,921      184,928
Loans receivable, net                               7,773,994    7,078,443
Interest receivable                                    44,462       42,304
Premises and equipment, net                            75,208       62,159
Real estate held for sale                               5,198        3,903
FHLB stock                                            133,981      129,453
Intangible assets, net                                108,392       56,259
Other assets                                           13,239       14,811
                                                  -----------  -----------
                                                  $ 9,877,795  $ 9,069,020
                                                  ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Customer accounts
  Savings and demand accounts                     $ 5,956,366  $ 5,285,708
  Repurchase agreements with customers                 22,739       26,018
                                                  -----------  -----------
                                                    5,979,105    5,311,726
FHLB advances                                       1,670,060    1,500,000
Other borrowings                                      800,167      870,000
Advance payments by borrowers for taxes and
 insurance                                             23,499       29,505
Federal and state income taxes                         46,467       39,667
Accrued expenses and other liabilities                 63,667       55,402
                                                  -----------  -----------
                                                    8,582,965    7,806,300
Stockholders' equity
Common stock, $1.00 par value, 300,000,000 shares
 authorized; 104,661,324 and 104,467,245 shares
 issued; 87,326,643 and 87,338,824 shares
 outstanding                                          104,661      104,467
Paid-in capital                                     1,248,691    1,246,025
Accumulated other comprehensive loss, net of
 taxes                                                 (2,433)      (5,975)
Treasury stock, at cost; 17,334,681 and 17,128,421
 shares                                              (210,260)    (204,930)
Retained earnings                                     154,171      123,133
                                                  -----------  -----------
                                                    1,294,830    1,262,720
                                                  -----------  -----------
                                                  $ 9,877,795  $ 9,069,020
                                                  ===========  ===========

CONSOLIDATED FINANCIAL HIGHLIGHTS
Stockholders' equity per share                    $     14.83  $     14.46
Stockholders' equity to total assets                    13.11%       13.92%
Weighted average rates at period end
  Loans and mortgage-backed securities                   6.56%        6.48%
  Investment securities*                                 4.33         4.10
  Combined loans, mortgage-backed securities and
   investment securities                                 6.44         6.38
  Customer accounts                                      4.24         4.05
  Borrowings                                             4.49         4.55
  Combined cost of customer accounts and borrowings      4.31         4.20
  Interest rate spread                                   2.13         2.18

 *  Includes municipal bonds at tax equivalent yields and cash equivalents




                    WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


                                  Quarter Ended          Six Months Ended
                                     March 31,               March 31,
                                 2007        2006        2007        2006
                                 ----        ----        ----        ----
                                  (In thousands, except per share data)

INTEREST INCOME
Loans                         $ 129,297   $ 106,274   $ 252,472   $ 208,679
Mortgage-backed securities       18,464      15,725      37,539      30,093
Investment securities and
 cash equivalents                 4,241       6,660       7,467      14,449
                              ---------   ---------   ---------   ---------
                                152,002     128,659     297,478     253,221

INTEREST EXPENSE
Customer accounts                59,037      41,459     114,986      80,308
FHLB advances and other
 borrowings                      27,772      21,724      54,910      43,374
                              ---------   ---------   ---------   ---------
                                 86,809      63,183     169,896     123,682
                              ---------   ---------   ---------   ---------

Net interest income              65,193      65,476     127,582     129,539
Provision for loan losses           150          85         200          85
                              ---------   ---------   ---------   ---------
Net interest income after
 provision for loan losses       65,043      65,391     127,382     129,454

OTHER INCOME
Gain (loss) on securities, net       11           -          11           -
Other                             3,280       3,404       6,414       6,796
                              ---------   ---------   ---------   ---------
                                  3,291       3,404       6,425       6,796

OTHER EXPENSE
Compensation and fringe
 benefits                        10,879       9,040      20,414      17,275
Occupancy                         2,194       2,017       4,153       3,930
Other                             2,984       2,458       5,441       4,981
                              ---------   ---------   ---------   ---------
                                 16,057      13,515      30,008      26,186
Gain (loss) on real estate
 acquired through
 foreclosure, net                   (79)          5         157         144
                              ---------   ---------   ---------   ---------
Income before income taxes       52,198      55,285     103,956     110,208
Income taxes                     18,715      18,945      37,089      37,722
                              ---------   ---------   ---------   ---------
NET INCOME                    $  33,483   $  36,340   $  66,867   $  72,486
                              =========   =========   =========   =========

PER SHARE DATA
Basic earnings                $     .38   $     .42   $     .77   $     .83
Diluted earnings                    .38         .42         .76         .83
Cash dividends                     .205        .200        .410        .400

Weighted average number of
 shares outstanding,
 including dilutive stock
 options                     87,571,131  87,363,894  87,608,059  87,378,631


PERFORMANCE RATIOS
Return on average assets          1.41%       1.73%       1.43%       1.74%
Return on average stockholders'
 equity                          10.40%      12.02%      10.45%      12.05%

Net interest margin               2.81%       3.18%       2.81%       3.18%

Contact Information

  • Contact:
    Cathy Cooper
    (206) 777-8246

    Washington Federal, Inc.
    425 Pike Street
    Seattle, WA 98101