WFSL Washington Federal, Inc. (MM)

Washington Federal, Inc. (Nasdaq:WFSL), parent company of Washington Federal Savings, today announced earnings of $34,281,000, or $.39 per diluted share, for the quarter ended June 30, 2005, compared to $35,032,000, or $.40 per diluted share, for the quarter ended June 30, 2004, a decrease of 2.1%. For the nine months ended June 30, 2005, earnings were $111,500,000, or $1.27 per diluted share, compared to $100,375,000, or $1.15 per diluted share, for the nine months ended June 30, 2004, an 11.1% increase. The third fiscal quarter produced a return on assets of 1.76%, while return on equity amounted to 11.82% for the quarter. Year-to-date, return on assets measured 1.96% and return on equity was 12.97%. Chief Executive Officer Roy M. Whitehead commented, "Higher deposit costs versus the same period one year ago were offset by interest income attributable to an increase in earning assets and higher yields on construction loans due to increases in the prime rate. However, net income was adversely affected by an increase in operating expenses. The increase in expenses is due primarily to additional personnel and the consolidation of a low-income housing investment. Asset quality continues to be pristine." As announced on June 20, 2005, the Board of Directors of the Company declared a 5.26% increase in the Company's quarterly cash dividend to 20 cents per share from 19 cents per share. The dividend will be payable July 15, 2005, to common stockholders of record on July 1, 2005. This will be Washington Federal's 90th consecutive quarterly cash dividend and represents the 40th increase since Washington Federal began publicly trading in 1982. Washington Federal Savings, with headquarters in Seattle, Washington, has 121 offices in seven western states. -0- *T WASHINGTON FEDERAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) June 30, 2005 September 30, 2004 ------------- ------------------ (In thousands, except per share data) ASSETS Cash and cash equivalents $499,700 $508,361 Securities purchased under agreements to resell - 200,000 Available-for-sale securities, including mortgage-backed securities of $861,964 1,188,487 899,525 Held-to-maturity securities, including mortgage-backed securities of $101,405 138,464 156,373 Securitized assets subject to repurchase, net 79,210 110,607 Loans receivable, net 5,697,437 4,982,836 Interest receivable 33,330 29,832 Premises and equipment, net 62,324 63,049 Real estate held for sale 5,545 8,630 FHLB stock 129,453 137,274 Intangible assets 58,022 58,939 Other assets 38,484 13,779 ------------ ----------- $7,930,456 $7,169,205 ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Customer accounts Savings and demand accounts $4,777,216 $4,569,245 Repurchase agreements with customers 31,469 41,113 ------------ ----------- 4,808,685 4,610,358 FHLB advances 1,200,000 1,200,000 Other borrowings 600,000 100,000 Advance payments by borrowers for taxes and insurance 16,085 25,226 Federal and state income taxes 41,718 62,081 Accrued expenses and other liabilities 89,790 51,352 ------------ ----------- 6,756,278 6,049,017 Stockholders' equity Common stock, $1.00 par value, 300,000,000 shares authorized; 104,009,983 and 103,821,846 shares issued; 86,777,363 and 86,547,557 shares outstanding 104,010 94,383 Paid-in capital 1,238,456 1,161,627 Accumulated other comprehensive income, net of taxes 6,503 17,107 Treasury stock, at cost; 17,232,620 and 17,274,289 shares (206,170) (206,666) Retained earnings 31,379 53,737 ------------ ----------- 1,174,178 1,120,188 ------------ ----------- $7,930,456 $7,169,205 ============ =========== CONSOLIDATED FINANCIAL HIGHLIGHTS Stockholders' equity per share $13.53 $12.94 Stockholders' equity to total assets 14.81% 15.62% Weighted average rates at period end Loans and mortgage-backed securities (a) 6.14% 6.17% Investment securities (b) 3.22 3.01 Combined loans, mortgage-backed securities and investment securities 5.78 5.62 Customer accounts 2.70 1.96 Borrowings 4.66 4.96 Combined cost of customer accounts and borrowings 3.23 2.62 Interest rate spread 2.55 3.00 (a) Includes securitized assets subject to repurchase (b) Includes municipal bonds at tax equivalent yields and cash equivalents WASHINGTON FEDERAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Quarter Ended Nine Months Ended June 30, June 30, ------------- ----------------- 2005 2004 2005 2004 ---- ---- ---- ---- (In thousands, except per share data) INTEREST INCOME Loans and securitized assets subject to repurchase $ 94,206 $ 82,651 $ 271,413 $ 247,434 Mortgage-backed securities 12,244 11,659 48,646 35,773 Investment securities and cash equivalents 7,552 8,900 23,667 25,367 ----------- ----------- ----------- ----------- 114,002 103,210 343,726 308,574 INTEREST EXPENSE Customer accounts 30,593 21,101 81,107 63,971 FHLB advances and other borrowings 20,655 19,939 57,850 64,531 ----------- ----------- ----------- ----------- 51,248 41,040 138,957 128,502 ----------- ----------- ----------- ----------- Net interest income 62,754 62,170 204,769 180,072 Provision (reversal of reserve) for loan losses (134) (231) (134) (231) ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 62,888 62,401 204,903 180,303 OTHER INCOME Gain (loss) on sale of securities, net (121) (596) (3,534) (719) Gain on sale of real estate 120 - 362 - Other 2,567 3,021 8,586 8,570 ----------- ----------- ----------- ----------- 2,566 2,425 5,414 7,851 OTHER EXPENSE Compensation and fringe benefits 8,694 7,797 25,761 22,966 Occupancy 1,912 1,815 6,872 5,489 Other 2,164 1,415 6,079 5,214 ----------- ----------- ----------- ----------- 12,770 11,027 38,712 33,669 Gain (loss) on real estate acquired through foreclosure, net 464 303 1,263 556 ----------- ----------- ----------- ----------- Income before income taxes 53,148 54,102 172,868 155,041 Income taxes 18,867 19,070 61,368 54,666 ----------- ----------- ----------- ----------- NET INCOME $ 34,281 $ 35,032 $ 111,500 $ 100,375 =========== =========== =========== =========== PER SHARE DATA Basic earnings $ .40 $ .41 $ 1.29 $ 1.16 Diluted earnings .39 .40 1.27 1.15 Cash dividends .20 .19 .58 .55 Weighted average number of shares outstanding, including dilutive stock options 87,464,631 87,000,061 87,455,443 87,094,161 PERFORMANCE RATIOS Return on average assets 1.76% 1.91% 1.96% 1.79% Return on average stockholders' equity 11.82% 12.76% 12.97% 12.39% Net interest margin 3.32% 3.51% 3.71% 3.34% *T x