Washington Federal Announces Quarterly Earnings Per Share Of $0.63

SEATTLE–(BUSINESS WIRE)–Washington Federal, Inc. (Nasdaq: WAFD) (the “Company”), parent company
of Washington Federal, National Association, today announced quarterly
earnings of $51,098,000 or $0.63 per diluted share for the quarter ended
March 31, 2019, compared to $49,271,000 or $0.57 per diluted share for
the quarter ended March 31, 2018, a $0.06 or 11% increase in fully
diluted earnings per share. Return on equity for the quarter ended
March 31, 2019 was 10.20% compared to 9.81% for the quarter ended
March 31, 2018. Return on assets for the quarter ended March 31, 2019
was 1.24% compared to 1.26% for the same quarter in the prior year.

President and Chief Executive Officer Brent J. Beardall commented, “We
are pleased to report another solid quarter of growth in core earnings,
loans and deposits. Credit quality continues to improve with the
economic expansion. We acknowledge that this is a challenging interest
rate environment. Over the past three and a half years, the Federal
Reserve Bank has increased short-term interest rates from 0.25% to 2.50%
while long-term rates remained relatively flat at around 2.50%. Despite
this flattening of the yield curve, Washington Federal’s net interest
margin declined only 3 basis points from 3.18% to 3.15% and net interest
income grew by 12%1. Those results were possible due
to the progress we have made in growing our commercial banking
capabilities, demonstrated by the significant growth of our transaction
deposits and commercial loans.

“During the quarter we launched a program designed specifically to help
government workers (both current clients and non-clients) impacted by
the government shutdown. In the span of three weeks, the program
generated over 14,000 visits to Washington Federal’s website, 1,700 new
loan approvals totaling $24 million of available credit and 1,700 new
checking account openings. Outstanding loan balances are down to $4
million since, when the government re-opened, most of those clients
chose to repay us immediately. We expect the remaining loan balances
will be repaid over time. Most importantly, by doing the right thing we
were able to help neighbors in their time of need and gain customers for
life. As one client told us in a letter, it is nice to be with a bank
that has ‘heart.’ We believe that making a reasonable profit and doing
what is right to help our communities often go hand-in-hand.”

Total assets were $16.4 billion as of March 31, 2019, compared to $15.9
billion as of September 30, 2018, the Company’s fiscal year-end. Asset
growth since September 30, 2018 is primarily attributable to a $418
million increase in net loans receivable.

Customer deposits increased by $335 million or 2.9% since September 30,
2018, reaching a total of $11.7 billion as of March 31, 2019.
Transaction accounts increased by $201 million or 3.0% during that
period, while time deposits increased $135 million or 2.8%. The Company
continues to focus on growing transaction accounts to lessen sensitivity
to rising interest rates and manage interest expense. As of March 31,
2019, 58% of the Company’s deposits were in transaction accounts. Core
deposits, defined as all transaction accounts and time deposits less
than $250,000, totaled 93.1% of deposits at March 31, 2019.

In 2013 – 2014, the Company acquired 74 branches and $1.9 billion of
deposits from Bank of America in rural areas of Arizona, New Mexico,
Nevada, Idaho and Washington. Since the close of those transactions, the
number of accounts in those branches has fallen by approximately 48%,
but the amount of deposit dollars has increased by 25%.

Borrowings from the Federal Home Loan Bank (“FHLB”) totaled $2.6 billion
as of March 31, 2019, versus $2.3 billion at September 30, 2018. The
weighted average rate of FHLB borrowings was 2.77% as of March 31, 2019,
versus 2.66% at September 30, 2018, the increase being due to higher
rates on short-term FHLB advances.

Loan originations totaled $1.0 billion for the second fiscal quarter
2019, an increase of 22.0% from the $819 million of originations in the
same quarter one year ago. Partially offsetting loan originations in
each of these quarters were loan repayments of $773 million and $744
million, respectively. Commercial loans represented 77% of all loan
originations during the second fiscal quarter 2019 and consumer loans
accounted for the remaining 23%. The Company views organic loan growth,
funded by low cost core deposits, as the highest and best use of its
capital. Commercial loans are preferable in this interest rate
environment because they generally have floating interest rates and
shorter durations. The weighted average interest rate on the loan
portfolio was 4.61% as of March 31, 2019, an increase from 4.48% as of
September 30, 2018, due primarily to variable rate loans increasing in
yield with rising short-term rates.

Asset quality remained strong and the ratio of non-performing assets to
total assets improved to 0.36% as of March 31, 2019, compared to 0.45%
at March 31, 2018 and 0.44% at September 30, 2018. Since September 30,
2018, real estate owned decreased by $4 million, or 33%, and non-accrual
loans decreased by $7 million, or 12%. Delinquent loans were 0.40% of
total loans at March 31, 2019, compared to 0.40% at March 31, 2018 and
0.42% at September 30, 2018. The allowance for loan losses and reserve
for unfunded commitments totaled $139 million as of March 31, 2019, and
was 1.05% of gross loans outstanding, as compared to $137 million, or
1.06%, of gross loans outstanding at September 30, 2018. Net recoveries
were $1.2 million for the second fiscal quarter of 2019, compared to
$1.4 million for the prior year’s quarter. The Company has recorded net
recoveries for 15 consecutive quarters, and in 22 of the last 23

On February 22, 2019, the Company paid a regular cash dividend of $0.20
per share, which represented the 144th consecutive quarterly
cash dividend. During the quarter, the Company repurchased 698,705
shares of common stock at a weighted average price of $29.65 per share
and has authorization to repurchase 9,593,701 additional shares. The
Company varies the pace of share repurchases depending on several
factors, including share price, lending opportunities and capital
levels. Since September 30, 2018, tangible common stockholders’ equity
per share increased by $0.68, or 3.3%, to $21.06, and the ratio of
tangible common equity to tangible assets remained strong at 10.51% as
of March 31, 2019.

Net interest income was $120 million for the quarter, an increase of
$2.8 million or 2.4% from the same quarter in the prior year. The
increase in net interest income from the prior year was primarily due to
higher balances as average earning assets increased by $822 million, or
5.7%. Net interest margin decreased to 3.15% in the second fiscal
quarter of 2019, from 3.25% for the same quarter in the prior year as
the average rate earned on interest-earning assets rose by 26 basis
points while the average rate paid on interest-bearing liabilities
increased 40 basis points. The compression in the net interest margin is
the result of the flat to inverted yield curve.

The Company recorded a provision for loan losses of $750,000 in the
second fiscal quarter of 2019, compared with a release of loan loss
allowance of $950,000 in the same quarter of fiscal 2018. The increased
provision was due to loan growth and a smaller net recovery of prior

Total other income was $12.8 million for the second fiscal quarter of
2019, an increase from $12.6 million in the same quarter of the prior

Total operating expenses were $68.0 million in the second fiscal quarter
of 2019, an increase of $2.2 million, or 3.3%, from the prior year’s
quarter. Increased operating expenses are the result of ongoing
investments in people, process and technology with the objective of
growing market share and ultimately earnings. Compensation and benefits
costs increased by $1.1 million over the prior year quarter primarily
due to headcount increases, the aforementioned salary increases and cost
of living adjustments since last year. Other expenses increased by $1.2
million, primarily due to Bank Secrecy Act (BSA) program enhancements.
In the second fiscal quarter of 2019, the Company had approximately $1.2
million of non-recurring BSA related costs and estimates that it will
incur an additional $1 million of non-recurring costs for BSA
improvements in the third fiscal quarter. The Company’s efficiency ratio
in the second fiscal quarter of 2019 was 51.2%, compared to 50.7% for
the same period one year ago. The increase in the efficiency ratio is
primarily due to the elevated expenses noted above.

Income tax expense totaled $13.9 million for the three months ended
March 31, 2019, as compared to $15.5 million for the same period one
year ago. The effective tax rate for the six months ended March 31, 2019
was 21.35% compared to 19.51% for the six months ended March 31, 2018
and 20.76% for the full fiscal year ended September 30, 2018. The
effective tax rate for the six months ended March 31, 2018 and the full
fiscal year ended September 30, 2018 was lower mainly due to discrete
tax benefits related to the revaluation of deferred tax assets and
liabilities based on the new federal statutory rate enacted in December
2017. The Company estimates that its annual effective tax rate for
fiscal 2019 will be between 20 – 22%.

Washington Federal, a national bank with headquarters in Seattle,
Washington, has 235 branches in eight western states. To find out more
about Washington Federal, please visit our website www.washingtonfederal.com.
Washington Federal uses its website to distribute financial and other
material information about the Company.

1 Periods being compared are the quarters ended
December 31, 2015 and March 31, 2019. The Federal Reserve Bank increased
its target rate upper bound from 0.25% to 0.50% on December 17, 2015 and
the target rate upper bound was 2.50% as of March 31, 2019. The 10-year
Treasury rate was 2.30% on December 16, 2015 versus 2.41% on March 31,

Important Cautionary Statements

The foregoing information should be read in conjunction with the
financial statements, notes and other information contained in the
Company’s 2018 Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K.

This press release contains statements about the Company’s future that
are not statements of historical fact. These statements are “forward
looking statements” for purposes of applicable securities laws, and are
based on current information and/or management’s good faith belief as to
future events. The words “estimate,” “believe,” “expect,” “anticipate,”
“project,” and similar expressions signify forward-looking statements.
Forward-looking statements should not be read as a guarantee of future
performance. By their nature, forward-looking statements involve
inherent risk and uncertainties, which change over time; and actual
performance could differ materially from those anticipated by any
forward-looking statements. The Company undertakes no obligation to
update or revise any forward-looking statement.




March 31, 2019 September 30, 2018
(In thousands, except share and ratio data)
Cash and cash equivalents $ 279,554 $ 268,650
Available-for-sale securities, at fair value 1,545,606 1,314,957
Held-to-maturity securities, at amortized cost 1,553,683 1,625,420
Loans receivable, net of allowance for loan losses of $133,086 and
11,894,836 11,477,081
Interest receivable 50,790 47,295
Premises and equipment, net 277,010 267,995
Real estate owned 7,522 11,298
FHLB and FRB stock 138,390 127,190
Bank owned life insurance 219,167 216,254
Intangible assets, including goodwill of $301,368 and $301,368 310,266 311,286
Federal and state income tax assets, net 1,804
Other assets 158,384   196,494  
$ 16,435,208   $ 15,865,724  
Customer accounts
Transaction deposits $ 6,782,998 $ 6,582,343
Time deposits 4,939,365   4,804,803  
11,722,363 11,387,146
FHLB advances 2,610,000 2,330,000
Advance payments by borrowers for taxes and insurance 25,839 57,417
Federal and state income tax liabilities, net 4,180
Accrued expenses and other liabilities 68,546   94,253  
14,430,928 13,868,816
Stockholders’ equity
Common stock, $1.00 par value, 300,000,000 shares authorized;
135,506,620 and 135,343,417 shares issued; 80,435,217 and 82,710,911
shares outstanding
135,507 135,343
Additional paid-in capital 1,669,860 1,666,609
Accumulated other comprehensive (loss) income, net of taxes 8,634 8,294
Treasury stock, at cost; 55,071,403 and 52,632,506 shares (1,071,957 ) (1,002,309 )
Retained earnings 1,262,236   1,188,971  
2,004,280   1,996,908  
$ 16,435,208   $ 15,865,724  
Common stockholders’ equity per share $ 24.92 $ 24.14
Tangible common stockholders’ equity per share 21.06 20.38
Stockholders’ equity to total assets 12.20 % 12.59 %
Tangible common stockholders’ equity to tangible assets 10.51 % 10.84 %
Weighted average rates at period end
Loans and mortgage-backed securities 4.32 % 4.19 %
Combined loans, mortgage-backed securities and investments 4.20 4.07
Customer accounts 1.09 0.87
Borrowings 2.77 2.66
Combined cost of customer accounts and borrowings 1.39 1.17
Net interest spread 2.81 2.90



Three Months Ended March 31, Six Months Ended March 31,
2019   2018 2019   2018
(In thousands, except share and ratio data) (In thousands, except share and ratio data)
Loans receivable $ 141,061 $ 126,529 $ 278,126 $ 251,040
Mortgage-backed securities 19,343 17,667 38,535 34,566
Investment securities and cash equivalents 7,178   4,883   13,543   9,253  
167,582 149,079 330,204 294,859
Customer accounts 29,666 16,414 56,245 31,052
FHLB advances and other borrowings 17,846   15,364   34,737   30,771  
47,512 31,778 90,982 61,823
Net interest income 120,070 117,301 239,222 233,036
Provision (release) for loan losses 750   (950 ) 250   (950 )
Net interest income after provision (release) 119,320 118,251 238,972 233,986
Gain (loss) on sale of investment securities (9 )
FDIC loss share valuation adjustments (8,550 )
Loan fee income 667 780 1,637 1,815
Deposit fee income 5,886 6,403 12,129 13,089
Other Income 6,257   5,404   18,062   13,028  
12,810 12,587 31,819 19,382
Compensation and benefits 32,774 31,625 66,657 61,244
Occupancy 9,830 9,013 19,098 17,684
FDIC insurance premiums 1,978 2,852 4,840 5,672
Product delivery 3,545 3,665 7,566 7,621
Information technology 8,755 8,781 17,795 16,710
Other 11,085   9,851   23,683   18,797  
67,967 65,787 139,639 127,728
Gain (loss) on real estate owned, net 808   (278 ) 1,128   (232 )
Income before income taxes 64,971 64,773 132,280 125,408
Income tax provision 13,873   15,502   28,240   24,467  
NET INCOME $ 51,098   $ 49,271   $ 104,040   $ 100,941  
Basic earnings per share $ 0.63 $ 0.58 $ 1.28 $ 1.17
Diluted earnings per share 0.63 0.57 1.28 1.17
Cash dividends per share 0.20 0.17 0.38 0.32
Basic weighted average shares outstanding 80,968,050 85,647,494 81,384,456 86,299,885
Diluted weighted average shares outstanding 80,990,126 85,747,167 81,415,697 86,422,077
Return on average assets 1.24 % 1.26 % 1.28 % 1.31 %
Return on average common equity 10.20 9.81 10.42 10.03
Net interest margin 3.15 3.25 3.18 3.26
Efficiency ratio 51.15 50.65 51.52 48.94


Washington Federal, Inc.
Brad Goode, SVP, Director of Communications
[email protected]


Content is the most important part of having quality links to your website. With Area-Info.net, we provide a quality location to share your story and include links to your website to help you grow. If you would like to learn more, visit this page to see how you can use Area-Info.net to rank higher and quicker in search engines. Contact me directly at [email protected] with any questions, or to schedule speaking engagements.

You May Also Like