WFSL Washington Federal, Inc. (MM)

Washington Federal, Inc. (Nasdaq:WFSL), parent company of Washington Federal Savings, today announced earnings of $145,889,000 or $1.67 per diluted share for the year ended September 30, 2005, compared to $131,868,000 or $1.51 per diluted share for the same period one year ago, an 11% increase. Earnings for the fourth fiscal quarter amounted to $34,389,000 or $.39 per diluted share compared to $31,493,000 or $.36 per diluted share for the same period one year ago, a 9% increase. Roy M. Whitehead, Chief Executive Officer, commented, "Fiscal 2005 was a very good year for Washington Federal. Record loan production and strong deposit inflows accompanied a healthy increase in earnings which was delivered despite a sharp increase in deposit costs. Overall housing activity remains solid throughout our lending territory and problem assets are negligible. Near-term challenges center primarily on what we expect will be continued pressure on funding costs and a tighter spread between short and long term interest rates." The year produced a return on assets of 1.90%, while return on equity amounted to 12.63%. The company's efficiency ratio (operating expenses as a percentage of net revenue) of 19.16% remains among the best in the industry. Record loan production for the year ended September 30, 2005 totaled $2,436,000,000, an 18% increase over the previous record of $2,070,000,000 produced in fiscal 2004. Total assets of $8.2 billion at September 30, 2005, represents an increase of $1.1 billion or 15% above last year. During the quarter the Company recorded a $2.2 million charge for the early extinguishment of debt, a $1.5 million expense for a state business tax assessment and a $2.5 million reduction of federal income tax expense. As a result of a change in accounting rules, beginning in October 2005, the Company will record an estimated expense of $375,000 per quarter for unvested stock options outstanding as of September 30, 2005. On October 21, 2005, Washington Federal will pay a cash dividend of $.20 per share to common stockholders of record on October 7, 2005. This will be the company's 91st consecutive quarterly cash dividend. During the year the Company opened new branch locations in Klamath Falls, Oregon, Richardson, Texas and Las Vegas, Nevada. Washington Federal Savings, with headquarters in Seattle, Washington, has 122 offices in seven western states. -0- *T WASHINGTON FEDERAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) September 30, September 30, 2005 2004 --------------------------- (In thousands, except per share data) ASSETS Cash and cash equivalents $ 637,791 $ 508,361 Securities purchased under agreements to resell - 200,000 Available-for-sale securities, including mortgage-backed securities of $899,920 1,077,856 899,525 Held-to-maturity securities, including mortgage-backed securities of $175,421 212,479 156,373 Securitized assets subject to repurchase, net 71,257 110,607 Loans receivable, net 5,937,675 4,982,836 Interest receivable 34,048 29,832 Premises and equipment, net 63,287 63,049 Real estate held for sale 5,631 8,630 FHLB stock 129,453 137,274 Intangible assets 57,259 58,939 Other assets 7,714 13,779 ---------- ---------- $8,234,450 $7,169,205 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Customer accounts Savings and demand accounts $5,002,172 $4,569,245 Repurchase agreements with customers 29,333 41,113 ---------- ---------- 5,031,505 4,610,358 FHLB advances 1,230,000 1,200,000 Other borrowings 655,000 100,000 Advance payments by borrowers for taxes and insurance 27,533 25,226 Federal and state income taxes 44,617 62,081 Accrued expenses and other liabilities 58,487 51,352 ---------- ---------- 7,047,142 6,049,017 Stockholders' equity Common stock, $1.00 par value, 300,000,000 shares authorized; 104,140,966 and 103,821,846 shares issued; 86,933,294 and 86,547,557 shares outstanding 104,141 94,383 Paid-in capital 1,240,310 1,161,627 Accumulated other comprehensive income (loss), net of taxes (704) 17,107 Treasury stock, at cost; 17,207,672 and 17,274,289 shares (205,874) (206,666) Retained earnings 49,435 53,737 ---------- ---------- 1,187,308 1,120,188 ---------- ---------- $8,234,450 $7,169,205 ========== ========== CONSOLIDATED FINANCIAL HIGHLIGHTS Stockholders' equity per share $ 13.66 $ 12.94 Stockholders' equity to total assets 14.42% 15.62% Weighted average rates at period end Loans and mortgage-backed securities(1) 6.19% 6.17% Investment securities(2) 3.74 3.01 Combined loans, mortgage-backed securities and investment securities 5.91 5.62 Customer accounts 2.94 1.96 Borrowings 4.51 4.96 Combined cost of customer accounts and borrowings 3.37 2.62 Interest rate spread 2.54 3.00 (1) Includes securitized assets subject to repurchase (2) Includes municipal bonds at tax equivalent yields and cash equivalents WASHINGTON FEDERAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Quarter Ended Year Ended September 30, September 30, ------------------------------------------------ 2005 2004 2005 2004 ----------- ----------- ----------- ----------- (In thousands, except per share data) INTEREST INCOME Loans and securitized assets subject to repurchase $ 97,610 $ 83,534 $ 369,023 $ 330,967 Mortgage-backed securities 12,813 12,781 61,459 48,554 Investment securities and cash equivalents 7,752 8,883 31,419 34,251 ----------- ----------- ----------- ----------- 118,175 105,198 461,901 413,772 INTEREST EXPENSE Customer accounts 34,719 22,127 115,826 86,099 FHLB advances and other borrowings 21,584 19,124 79,434 83,654 ----------- ----------- ----------- ----------- 56,303 41,251 195,260 169,753 ----------- ----------- ----------- ----------- Net interest income 61,872 63,947 266,641 244,019 Provision (reversal of reserve) for loan losses - - (134) (231) ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 61,872 63,947 266,775 244,250 OTHER INCOME Loss on sale of securities, net - (171) (3,534) (890) Loss on extinguishment of debt (2,194) (5,191) (2,194) (5,191) Other 3,188 2,653 12,137 11,224 ----------- ----------- ----------- ----------- 994 (2,709) 6,409 5,143 OTHER EXPENSE Compensation and fringe benefits 8,436 8,118 34,197 31,084 Occupancy 1,915 2,323 8,788 7,813 Other 3,255 2,154 9,334 7,367 ----------- ----------- ----------- ----------- 13,606 12,595 52,319 46,264 Gain on real estate acquired through foreclosure, net 180 28 1,443 583 ----------- ----------- ----------- ----------- Income before income taxes 49,440 48,671 222,308 203,712 Income taxes 15,051 17,178 76,419 71,844 ----------- ----------- ----------- ----------- NET INCOME $ 34,389 $ 31,493 $ 145,889 $ 131,868 =========== =========== =========== =========== PER SHARE DATA Basic earnings $ .40 $ .36 $ 1.68 $ 1.53 Diluted earnings .39 .36 1.67 1.51 Cash dividends .20 .19 .78 .75 Weighted average number of shares outstanding, including dilutive stock options 87,544,855 87,246,302 87,478,708 87,130,787 PERFORMANCE RATIOS Return on average assets 1.71% 1.73% 1.90% 1.78% Return on average stockholders' equity 11.63% 11.37% 12.63% 12.12% Net interest margin 3.18% 3.61% 3.57% 3.41% *T