Washington Federal, Inc. (Nasdaq: WAFD), parent company of
Washington Federal, National Association, today announced quarterly
earnings of $44,112,000 or $0.49 per diluted share for the quarter
ended June 30, 2017 compared to $43,004,000 or $0.47 per diluted
share for the quarter ended June 30, 2016, a $0.02 or 5% increase
in fully diluted earnings per share. Return on equity for the
quarter ended June 30, 2017 was 8.70% compared to 8.71% for the
quarter ended June 30, 2016. Return on assets for the quarter ended
June 30, 2017 was 1.17% compared to 1.16% for the same quarter in
the prior year.
President & Chief Executive Officer Brent J. Beardall
commented, “Our third fiscal quarter results represent a high water
mark for both total assets and earnings per share. Asset quality
improved, customer deposits grew and loan originations remained
strong, exceeding $1 billion for the quarter. We are pleased to
note that our efficiency ratio for the quarter improved to 46.6%
thanks to revenue growth outpacing expenses. Looking forward,
challenges will certainly arise; however, we are optimistic we can
continue our legacy of long-term profitable growth.”
Total assets were $15.1 billion as of June 30, 2017 compared to
$14.9 billion as of September 30, 2016. The Company continued to
shift its asset mix from cash and investment securities to loans
receivable. Since September 30, 2016, available-for-sale securities
decreased $652 million or 33.9%, held-to-maturity securities
increased $234 million or 16.5% and cash and cash equivalents
decreased $91 million or 20.2%. During that same period net loans
receivable increased by $744 million, or 7.5%, driven primarily by
an increase of $253 million in commercial real estate, $181 million
in construction, $137 million in commercial & industrial and
$137 million in multi-family loans.
Customer deposits increased by $33 million or 0.3% since
September 30, 2016 and totaled $10.6 billion as of June 30, 2017.
Transaction accounts increased by $198 million or 3.3% during that
period, while time deposits decreased $165 million or 3.6%. The mix
of customer deposits has continued to shift over the last several
years as the Company focuses on growing transaction accounts to
lessen sensitivity to rising interest rates and reduce interest
expense. As of June 30, 2017, 58.3% of the Company’s deposits were
in transaction accounts. Core deposits, defined as all transaction
accounts and time deposits less than $250,000, totaled 94.6% of
deposits at June 30, 2017.
Borrowings from the Federal Home Loan Bank ("FHLB") totaled $2.3
billion as of June 30, 2017 and $2.1 billion at September 30, 2016.
The weighted average rate for FHLB borrowings was 2.88% as of June
30, 2017 and 3.15% at September 30, 2016.
Loan originations totaled $1,031 million for the 3rd fiscal
quarter 2017, which was in line with originations in the same
quarter one year ago. Partially offsetting loan originations in
each of these respective quarters were loan repayments of $793
million and $776 million. Commercial loans represented 67% of all
loan originations during the 3rd fiscal quarter 2017 with consumer
loans accounting for the remaining 33%. The Company views organic
loan growth as the highest and best use of its capital and prefers
commercial loans in this low-rate environment because of their
shorter duration. The weighted average interest rate on loans was
4.26% as of June 30, 2017 and remained unchanged from September 30,
2016.
Asset quality remains strong and the ratio of non-performing
assets to total assets was 0.50% as of June 30, 2017 compared to
0.53% at March 31, 2017 and 0.48% at September 30, 2016. Since
September 30, 2016, real estate owned decreased by $10 million, or
34%, and non-accrual loans increased by $14 million, or 33%.
Delinquent loans represented 0.50% of total loans at June 30, 2017
compared to 0.65% at March 31, 2017 and 0.68% at September 30,
2016. The allowance for loan losses and reserve for unfunded
commitments totaled $129 million as of June 30, 2017 and was 1.08%
of gross loans outstanding, as compared to $117 million or 1.07% of
gross loans outstanding at September 30, 2016. The slight increase
in the ratio of the total allowance and reserve to gross loans
since the Company's fiscal year end reflects the continued shift in
the mix of the loan portfolio to include a greater proportion of
commercial loans outstanding, which generally require a higher
level of reserves.
On May 19, 2017, the Company paid a regular dividend on common
stock of $0.15 per share, which represented the 137th consecutive
quarterly cash dividend. During the quarter, the Company
repurchased 811,034 shares of common stock at a weighted average
price of $32.14 per share and has authorization to repurchase
approximately 3.2 million 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, 2016, tangible common stockholders’ equity per share
increased by $0.72 or 3.8% to $19.44 and the ratio of tangible
common equity to tangible assets remained strong at 11.67% as of
June 30, 2017.
Net interest income was $109 million for the quarter, an
increase of $4.4 million or 4.2% from the same quarter in the prior
year. The increase in net interest income was primarily due to
average earning assets increasing by $319 million. Net interest
margin increased to 3.13% in the 3rd fiscal quarter of 2017 from
3.07% for same quarter in the prior year. The increase in net
interest margin is primarily due to the shift in asset mix from
cash and investment securities to higher yielding loans
receivable.
The Company did not record any provision for loan losses in the
3rd fiscal quarter of 2017 compared to a release of loan loss
allowance of $1.65 million in the same quarter of 2016. Net
recoveries were $1.3 million for the 3rd fiscal quarter of 2017
compared to $2.9 million for the prior year's quarter.
Total other income was $13.9 million for the 3rd fiscal quarter
of 2017, an increase of $3.4 million from $10.5 million in the same
quarter of the prior year. The increase was primarily due to a gain
recognized on bank owned life insurance this quarter.
Total operating expenses were $57.1 million in the 3rd fiscal
quarter of 2017, an increase of $0.8 million or 1.3% from the prior
year's quarter. Compensation and benefits costs increased by $1.6
million primarily due to higher incentive compensation accruals in
the current quarter. Information technology costs decreased by $1.1
million from the 3rd fiscal quarter of 2016 primarily because of
efficiency gains resulting from the Company's system conversion.
The Company’s efficiency ratio was 46.6% in the 3rd fiscal quarter
2017 and is lower than the 49.1% for the same period one year ago
due primarily to revenue increasing at a greater rate than
expenses.
Net loss on real estate owned was $124,000 for the 3rd fiscal
quarter 2017 compared to a net gain of $5.1 million for the same
quarter last year. Net gain or loss on real estate owned is
expected to vary from quarter to quarter as it includes gains and
losses on sales, ongoing maintenance expenses and any additional
net valuation adjustments.
For the quarter ended June 30, 2017, the Company recorded
federal and state income tax expense of $21.2 million, which
equates to a 32.50% effective tax rate. This compares to an
effective tax rate of 33.89% for the fiscal year ended September
30, 2016. The decline in the effective tax rate from the prior year
is due primarily to increased investments in bank owned life
insurance, low income housing tax credits and tax exempt loans.
As announced on April 11, 2017, we have entered into a merger
agreement with Anchor Bancorp. This transaction will enhance our
presence in southwestern Washington and is expected to be
immediately accretive to tangible book value per share as well as
accretive to earnings per share once fully integrated. Pending the
receipt of requisite regulatory approvals, the approval of Anchor’s
shareholders and the satisfaction of other customary closing
conditions, the merger is expected to close in the fourth calendar
quarter of 2017.
Washington Federal, a national bank with headquarters in
Seattle, Washington, has 236 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.
Important Cautionary
Statements
The foregoing information should be read in conjunction with the
financial statements, notes and other information contained in the
Company’s 2016 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
“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.
WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION
(UNAUDITED)
June 30, 2017
September 30, 2016 (In thousands, except
share data)
ASSETS Cash and cash equivalents
$ 359,252 $ 450,368 Available-for-sale securities, at
fair value
1,270,414 1,922,894 Held-to-maturity securities,
at amortized cost
1,651,528 1,417,599 Loans receivable, net
of allowance for loan losses of $122,229 and $113,494
10,654,425 9,910,920 Interest receivable
38,926
37,669 Premises and equipment, net
269,511 281,951 Real
estate owned
19,112 29,027 FHLB and FRB stock
124,990
117,205 Bank owned life insurance
211,100 208,123 Intangible
assets, including goodwill of $291,503
295,695 296,989
Federal and state income tax assets, net
— 16,047 Other
assets
189,045 199,271
$ 15,083,998
$ 14,888,063 LIABILITIES AND
STOCKHOLDERS’ EQUITY Liabilities Customer accounts
Transaction deposit accounts
$ 6,203,950 $ 6,005,592
Time deposit accounts
4,430,328
4,595,260
10,634,278 10,600,852 FHLB advances
2,275,000 2,080,000 Advance payments by borrowers for taxes
and insurance
33,701 42,898 Accrued expenses and other
liabilities
119,833 188,582
13,062,812 12,912,332
Stockholders’ equity
Common stock, $1.00 par value, 300,000,000
shares authorized; 134,946,383 and 134,307,818 shares
issued; 88,750,133 and 89,680,847 shares outstanding
134,947
134,308
Paid-in capital
1,659,953 1,648,388 Accumulated other
comprehensive (loss) income, net of taxes
2,478 (11,156 )
Treasury stock, at cost;
46,196,250 and 44,626,971 shares
(786,156 ) (739,686 ) Retained earnings
1,009,964 943,877
2,021,186 1,975,731
$ 15,083,998
$ 14,888,063 CONSOLIDATED
FINANCIAL HIGHLIGHTS Common stockholders' equity per share
$ 22.77 $ 22.03 Tangible common stockholders' equity
per share
$ 19.44 $ 18.72 Stockholders' equity to
total assets
13.40 % 13.27 % Tangible common
stockholders' equity to tangible assets
11.67 % 11.51
%
Weighted average rates at period end Loans and
mortgage-backed securities
3.93 % 3.86 % Combined
loans, mortgage-backed securities and investments
3.77 3.58
Customer accounts
0.50 0.50 Borrowings
2.88 3.15
Combined cost of customer accounts and borrowings
0.92 0.93
Net interest spread
2.85 2.65
WASHINGTON
FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
Three Months Ended June 30, Nine Months Ended June
30,
2017
2016
2017 2016
(In thousands, except share data)
(In thousands, except share data)
INTEREST INCOME Loans receivable
$ 117,457 $
113,728
$ 348,326 $ 339,802 Mortgage-backed
securities
15,992 15,297
45,007 49,130 Investment
securities and cash equivalents
4,267
4,710
13,345
14,990
137,716 133,735
406,678 403,922
INTEREST EXPENSE
Customer accounts
12,764 13,274
38,173 39,062 FHLB
advances and other borrowings
16,337
16,221
49,011
47,426
29,101 29,495
87,184 86,488
Net interest income 108,615
104,240
319,494 317,434 Provision (release) for loan losses
—
(1,650
)
(1,600
)
(3,150
)
Net interest income after provision (release) for loan
losses 108,615 105,890
321,094 320,584
OTHER INCOME Gain on sale of investment securities
—
—
968 — Loan fee income
889 1,101
3,310 3,784
Deposit fee income
5,714 5,297
15,803 16,564 Other
Income
7,319 4,088
15,873
11,502
13,922 10,486
35,954 31,850
OTHER
EXPENSE Compensation and benefits
28,947 27,333
84,774 86,217 Occupancy
8,829 8,515
26,370
26,075 FDIC insurance premiums
2,842 2,869
8,591
8,243 Product delivery
3,246 3,822
10,096 13,639
Information technology
6,617 7,669
19,754 23,832
Other
6,581 6,097
19,285
22,034
57,062 56,305
168,870 180,040 Gain
(loss) on real estate owned, net
(124
)
5,087
1,069
10,401 Income before income
taxes
65,351 65,158
189,247 182,795 Income tax
provision
21,239 22,154
61,819
62,970
NET INCOME
$
44,112
$
43,004
$
127,428
$
119,825
PER SHARE DATA Basic earnings per share
$ 0.49 $ 0.47
$ 1.43 $ 1.30 Diluted
earnings per share
0.49 0.47
1.42 1.3 Cash dividends
per share
0.15 0.14
0.69 0.41 Basic weighted average
shares outstanding
89,199,823 90,928,847
89,297,471
91,901,632 Diluted weighted average shares outstanding
89,497,264 91,468,662
89,653,955 92,393,644
PERFORMANCE RATIOS Return on average assets
1.17
% 1.16 %
1.14 % 1.09 % Return on average
common equity
8.7 8.71
8.46 8.12 Net interest margin
3.13 3.07
3.1 3.14 Efficiency ratio
46.57
49.08
47.51 51.55
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170718005272/en/
Washington Federal, Inc.Brad Goode, 206-626-8178SVP, Director of
Communicationsbrad.goode@wafd.com
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