SOURCE: Washington Federal Savings

January 12, 2007 18:00 ET

Washington Federal Reports 1st Quarter Results

SEATTLE, WA -- (MARKET WIRE) -- January 12, 2007 -- 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 attributable 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.

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


                                                 December 31, September 30,
                                                      2006         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
                                                  -----------  -----------
                                                  $ 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
                                                  -----------  -----------
                                                    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
                                                  -----------  -----------
                                                    1,279,589    1,262,720
                                                  -----------  -----------
                                                  $ 9,150,828  $ 9,069,020
                                                  ===========  ===========
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



                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
                                                    ----------  ----------
                                                       145,476     124,562

INTEREST EXPENSE
Customer accounts                                       55,949      38,850
FHLB advances and other borrowings                      27,138      21,650
                                                    ----------  ----------
                                                        83,087      60,500
                                                    ----------  ----------

Net interest income                                     62,389      64,062
Provision for loan losses                                   50           -
                                                    ----------  ----------
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
                                                    ----------  ----------
                                                         3,134       3,391

OTHER EXPENSE
Compensation and fringe benefits                         9,535       8,235
Occupancy                                                1,960       1,912
Other                                                    2,456       2,522
                                                    ----------  ----------
                                                        13,951      12,669
Gain on real estate acquired through foreclosure,
 net                                                       236         139
                                                    ----------  ----------
Income before income taxes                              51,758      54,923
Income taxes                                            18,374      18,777
                                                    ----------  ----------
NET INCOME                                          $   33,384  $   36,146
                                                    ==========  ==========

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%

Contact Information

  • Contact:
    Cathy Cooper
    (206) 777-8246

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