Wednesday, January 11, 2012
FOR IMMEDIATE RELEASE
Washington Federal, Inc.
425 Pike Street
Seattle, WA 98101
Contact: Cathy Cooper
206-777-8246
Washington Federal Quarterly Earnings
Increase by 36% to $33.4 Million
SEATTLE, WASHINGTON - Washington Federal, Inc. (Nasdaq: WFSL)
today announced earnings of
$33,418,000, or $.31 per diluted share, for the quarter ended
December 31, 2011, compared to
$24,530,000, or $.22 per diluted share, for the same period
one year ago. Net income increased by 36% and earnings per
share improved by 41%, driven primarily by lower credit
costs. Credit related expenses, which include the provision
for loan losses and charges related to real estate owned
("REO"), were
$21,779,000 for the quarter ended December 31, 2011, a
decrease of $14,774,000, or 40%, from the same
quarter one year ago.
Chairman, President and CEO Roy M. Whitehead commented, "We
are very pleased to report the sixth consecutive quarter of
improved earnings. Loan losses continued to decline, demand
for foreclosed real estate increased noticeably, and improved
economic conditions in virtually all of our markets were
reported. Loan demand and revenue growth remain elusive, but
it's a very good start to our new fiscal year."
During the quarter the Company closed two separate
acquisitions. On October 14th, $254 million in deposits and
six branch locations in New Mexico were acquired from the
former Charter Bank. Two of the acquired branches are in
Santa Fe and four are located in Albuquerque. On December
16th, the Company entered into a transaction with the FDIC to
acquire substantially all of the assets and liabilities of
the former Western National Bank ("WNB"), headquartered in
Phoenix, Arizona. WNB had gross loans of $143 million, along
with $135 million in deposits and three branch locations. The
Agreement with the
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FDIC, which does not include a loss sharing provision,
provided the Company with a discount on assets of
$53 million and no deposit premium. Final purchase accounting
adjustments will be made in the coming quarter, but at this
time the Company does not anticipate recording a significant
upfront gain or goodwill asset as a result of this
transaction. Loans that were classified as non-performing
loans by WNB are no longer classified as non-performing
because, at acquisition, the carrying value of these loans
was adjusted to reflect fair value. Management believes that
the new book value reflects an amount that will ultimately be
collected. Due to the Company's existing presence in the
Phoenix market, it is anticipated that two of the WNB branch
locations will be consolidated into nearby Washington Federal
branches.
During the quarter the Company's loan portfolio decreased by
$126 million or 2% as mortgage loans refinanced elsewhere at
historically low interest rates. Investment securities
increased by $288 million or 9% as management invested the
proceeds from the two acquisitions closed during the quarter.
As of December 31, 2011, the investment portfolio had an
unrealized gain of $136 million, a slight decrease from the
$139 million at September 30, 2011. Deposits increased by
$210 million or 2% as a result of the two acquisitions.
Cash and cash equivalents were $910 million at December 31,
2011, an increase of $94 million from the prior quarter. The
ratio of tangible common equity to tangible assets decreased
slightly during the quarter to 12.35% from 12.52%. During the
quarter the Company repurchased 1,550,000 shares at a
weighted average price of $13.11. Under its existing
authorization, the Company can repurchase an additional
7,533,514 shares.
Net interest margin contracted slightly to 3.27% from 3.36%
on a linked quarter basis. The benefit from decreasing
interest expense on deposits was more than offset by the
reduced yield on assets as a result of repayments and
reinvestment at lower yields.
The Company's efficiency ratio of 31.7% for the quarter
remains among the lowest in the industry. The quarter
produced a return on assets of .98%, while return on equity
amounted to 7.0%, both of these measures are substantial
improvements over the prior year.
Non-performing assets amounted to $344 million, or 2.52% of
total assets, at quarter-end. This represents an improvement
of $99 million or 22% from December 31, 2010, and a $26
million improvement from September 30, 2011. Non-performing
loans totaled $186 million on December 31,
2011, which is a 62% decline from the peak of $492 million on
June 30, 2009. Net loan charge-offs
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decreased from $30 million in the quarter ended December 31,
2010 to $14 million in the current quarter, a $16 million or
53% decrease.
Overall delinquencies declined to 3.13% in the current
quarter from 3.43% at September 30,
2011; the delinquency rate on single-family residential
mortgages, the largest portion of the loan portfolio,
decreased from 3.25% to 3.17%. The total allowance for loan
losses, including specific reserves accounted for under ASC
310-10, amounted to $155 million, or 1.88% of total gross
loans. As of quarter end the general allowance for loan
losses totaled $115 million or 1.44% of loans subject to the
general allowance. One year ago, the general allowance for
loan losses totaled $101 million or 1.25% of loans. This
increase in the general reserve was deemed necessary due to
the elevated level of delinquency in the single family
portfolio, continued high unemployment rates and weakness in
the housing market. The total allowance decreased by $2.6
million, on a linked quarter basis due to improving credit
metrics in the portfolio as described in the preceding
paragraphs.
On January 13, 2012, Washington Federal will pay a cash
dividend of $.08 per share to common stockholders of record
on December 30, 2011. This will be the Company's 116th
consecutive quarterly cash dividend and represents a 33%
increase in the cash dividend of $.06 paid to stockholders in
the preceding four quarters.
The Company's Annual Meeting of Stockholders will be held at
2:00 p.m. on January 18, 2012, at the Westin Hotel, 1900
Fifth Avenue, Seattle, Washington.
states.
Washington Federal, with headquarters in Seattle, Washington,
has 166 offices in eight western
To find out more about the Company, please visit our website.
The Company uses its website to distribute financial and
other material information about the Company, which is
routinely posted on and accessible at www.washingtonfederal.com.
Important Cautionary Statements
The foregoing information should be read in conjunction with
the financial statements, notes and other information
contained in the Company's 2011 Annual Report on Form 10-K,
Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K.
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Financial information contained in this release should be
considered to be an estimate until the Company files its
first fiscal quarter Form 10-Q for 2012 with the Securities
and Exchange Commission. While the Company is not aware of
any need to revise the results disclosed in this release,
accounting literature may require adverse information
received by management on troubled assets between the date of
this release and the filing of the Form 10-Q to be reflected
in the results of this quarter, even though the new
information was received by management subsequent to the date
of this release.
Statements contained herein that are not historical facts
should be considered forward-looking statements with respect
to Washington Federal. Forward-looking statements of this
type speak only as of the date of this report. By nature,
forward-looking statements involve inherent risk and
uncertainties. Various factors, including, but not limited
to, unforeseen local, regional, national or global events,
economic conditions, asset quality, interest rates, loan
demand, changes in business or consumer spending, borrowing
or savings habits, deposit growth, adequacy of the reserve
for loan losses, competition, stock price volatility,
government monetary and economic policy, anticipated expense
levels, changes in laws and regulations, the level of success
of the company's asset/liability management strategies as
well as its marketing, product development, sales and other
strategies, the effect of changes in accounting policies and
practices, as may be adopted by the regulatory agencies as
well as the Financial Accounting Standards Board and other
accounting standard setters, the costs and effects of
litigation and of unexpected or adverse outcomes in such
litigation, and changes in the assumptions used in making the
forward-looking statements, could cause actual results to
differ materially from those contemplated by the
forward-looking statements. Washington Federal undertakes no
obligation to update or revise forward-looking statements to
reflect subsequent circumstances, events or information or
for any other reason.
# # #
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
December 31, 2011 September 30, 2011(In thousands, except per share data)
129,887,559 and 129,853,534 shares issued; 107,460,435 and- 1 -
WASHINGTON FEDERAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
INTEREST INCOMEQuarter Ended December 31,
2011 2010
(In thousands, except per share data)
Loans & covered loans........................................................................................ $
127,480$ 137,916
Mortgage-backed securities................................................................................ 26,296 23,694
Investment securities and cash equivalents.......................................................... 2,1513,980
155,927 165,590 INTEREST EXPENSECustomer accounts.............................................................................................. 23,949 32,734
FHLB advances and other borrowings................................................................ 28,26328,122
52,212 60,856
Net interest income............................................................................................ 103,715 104,734Provision for loan losses...................................................................................... 11,20926,000
Net interest income after provision for loan losses......................................... 92,506 78,734 OTHER INCOMEOther................................................................................................................... 4,6454,426
4,645 4,426 OTHER EXPENSECompensation and benefits.................................................................................. 18,675 17,723
Occupancy .......................................................................................................... 3,931 3,515
FDIC premiums .................................................................................................. 4,193 5,099
Other................................................................................................................... 7,5657,942
34,364 34,279Loss on real estate acquired through foreclosure, net......................................... (10,570) (10,553) Income before income taxes................................................................................ 52,217 38,328
Income taxes provision........................................................................................ 18,79913,798
NET INCOME.................................................................................................. $ 33,418 $24,530
PER SHARE DATABasic earnings..................................................................................................... $
.31 $.22
Diluted earnings.................................................................................................. .31 .22
Cash dividends per share..................................................................................... .08 .06
Basic weighted average number of shares outstanding.......................................
Diluted weighted average number of shares outstanding,
107,845,011 112,499,175including dilutive stock options.........................................................................
107,894,572112,502,134
PERFORMANCE RATIOSReturn on average assets..................................................................................... Return on average common equity......................................................................
.98% .73% 7.02% 5.30%- 2 -
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