WAFD WaFd Inc

Washington Federal, Inc. (Nasdaq: WAFD) (the "Company"), parent company of Washington Federal, National Association, today announced quarterly earnings of $51,670,000 or $0.59 per diluted share for the quarter ended December 31, 2017 compared to $41,246,000 or $0.46 per diluted share for the quarter ended December 31, 2016, a $0.13 or 28% increase in fully diluted earnings per share. Return on equity for the quarter ended December 31, 2017 was 10.25% compared to 8.31% for the quarter ended December 31, 2016. Return on assets for the quarter ended December 31, 2017 was 1.35% compared to 1.11% for the same quarter in the prior year.

During the quarter, the Company had two unusual events occur that impacted our financial results. First, as a result of the new tax legislation commonly known as the Tax Cuts and Jobs Act (the “Act”), tax expense for the quarter was $9.0 million. Excluding the effects of the Act, tax expense for the quarter would have been $18.0 million, or higher by $9.0 million. Second, during the quarter the Company made the decision to pursue termination of its loss share agreements with the FDIC related to two acquisitions, one in 2010 and one in 2012. Because of this decision, a charge of $8.6 million was recorded in this quarter’s results. Additional information on both of these items is included in the paragraphs below.

President and Chief Executive Officer Brent J. Beardall commented, “As a result of the changes in the tax law there are several unusual items in this quarter's results. Looking beyond those items, we are particularly pleased with the continued improvement in our core banking operations. Excluding the FDIC charge, this quarter produced a record $69.2 million of pre-tax income. As we have previously announced, the tax law reduces the advantage of credit unions and other non-tax paying competitors. It also allows the Company to further boost investments in its people, technology and communities while continuing to perform well for our shareholders. Challenges remain as we make improvements to our client facing systems and enhance our Bank Secrecy Act Program, but we are excited about the momentum we have and future opportunities.”

Total assets were $15.6 billion as of December 31, 2017 compared to $15.3 billion as of September 30, 2017. Asset growth since September 30, 2017 resulted primarily from a $224 million increase in net loans receivable and a $119 million increase in held-to-maturity securities.

Customer deposits increased by $167 million or 1.5% since September 30, 2017 and totaled $11.0 billion as of December 31, 2017. Transaction accounts increased by $121 million or 1.9% during that period, while time deposits increased $45 million or 1.0%. 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 December 31, 2017, 58.9% of the Company’s deposits were in transaction accounts. Core deposits, defined as all transaction accounts and time deposits less than $250,000, totaled 94.0% of deposits at December 31, 2017.

Borrowings from the Federal Home Loan Bank ("FHLB") totaled $2.4 billion as of December 31, 2017 and $2.2 billion at September 30, 2017. The weighted average rate for FHLB borrowings was 2.56% as of December 31, 2017 and 2.80% at September 30, 2017, the decline being due to the maturity of some long-term FHLB advances.

Loan originations totaled $954 million for our first fiscal quarter 2018 compared to $1.2 billion of originations in the same quarter one year ago. Partially offsetting loan originations in each of these respective quarters were loan repayments of $860 million and $896 million. Commercial loans represented 70% of all loan originations during our first fiscal quarter 2018 with consumer loans accounting for the remaining 30%. The Company views organic loan growth as the highest and best use of its capital and prefers commercial loans in this low rate environment due to the fact they generally have floating interest rates and shorter durations. The weighted average interest rate on loans was 4.30% as of December 31, 2017, an increase from 4.28% as of September 30, 2017.

Asset quality remained strong and the ratio of non-performing assets to total assets improved to 0.41% as of December 31, 2017 compared to 0.56% at December 31, 2016 and 0.46% at September 30, 2017. Since September 30, 2017, real estate owned decreased by $3 million, or 13%, and non-accrual loans decreased by $4 million, or 8%. Delinquent loans were 0.43% of total loans at December 31, 2017 compared to 0.74% at December 31, 2016 and 0.40% at September 30, 2017. The allowance for loan losses and reserve for unfunded commitments totaled $134 million as of December 31, 2017 and was 1.08% of gross loans outstanding, as compared to $131 million or 1.07% of gross loans outstanding at September 30, 2017. The slight increase in the ratio of the total allowance and reserve to gross loans since the Company's fiscal year end reflects continued improvement in credit conditions offset by the continued shift in the loan portfolio mix to include a greater proportion of commercial loans outstanding, which generally require a higher level of reserves.

On November 20, 2017, the Company paid a regular cash dividend of $0.15 per share, which represented the 139th consecutive quarterly cash dividend. During the quarter, the Company repurchased 1,147,370 shares of common stock at a weighted average price of $33.98 per share and has authorization to repurchase approximately 754 thousand 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, 2017, tangible common stockholders’ equity per share increased by $0.09 or 0.5% to $19.67 and the ratio of tangible common equity to tangible assets remained strong at 11.12% as of December 31, 2017.

Net interest income was $116 million for the quarter, an increase of $12.6 million or 12.2% from the same quarter in the prior year. The increase in net interest income from the prior year was primarily due to both higher balances and yield. Average earning assets increased by $513 million, or 3.8%. Net interest margin increased to 3.26% in the first fiscal quarter of 2018 from 3.02% for the same quarter in the prior year. The margin increase is primarily due to changes in the mix of interest earning assets, including higher yields on variable rate loans, cash and investments, as well as a lower rate on FHLB advances due to the maturity of some higher cost long-term advances.

The Company did not record any provision for loan losses in the first fiscal quarter of 2018 or 2017 as net recoveries and improvement in credit conditions were offset by strong growth in the loan portfolio. Net recoveries were $3.1 million for the first fiscal quarter of 2018 compared to $5.3 million for the prior year's quarter.

Total other income was $6.8 million for the first fiscal quarter of 2018, a decrease of $5.1 million from $11.9 million in the same quarter of the prior year. The decrease from the prior year was primarily due to $8.6 million of expense from asset and liability valuation adjustments associated with FDIC loss share agreements. The Company is actively pursuing the early termination of all FDIC loss share agreements. The impact of these valuation adjustments was partially offset by a $2.4 million gain recognized on bank-owned life insurance and a $1.5 million increase in deposit fee income, which was driven by the 2017 launch of the Company's new "Green Checking" product.

Total operating expenses were $61.9 million in the first fiscal quarter of 2018, an increase of $7.6 million or 14.0% from the prior year's quarter. Compensation and benefits costs increased by $2.6 million primarily due to headcount increases and cost of living adjustments since last year. Information technology costs increased by $1.5 million and other expenses were elevated due to consulting and audit work to enhance the Company's Bank Secrecy Act Program. Charitable contributions increased by $1 million from the prior year's quarter as the Company fulfilled the first year of its previously announced commitment to fund its foundation by $1 million annually for the next five years. The Company’s efficiency ratio in the first fiscal quarter 2018 was 47.3% (excluding the impact of $8.6 million reduction to noninterest income from the FDIC loss share valuation adjustments) compared to 48.7% for the quarter ended September 30, 2017 and 47.2% for the same period one year ago.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted and it provides for significant changes to the U.S. Internal Revenue Code of 1986, as amended, such as a reduction in the federal corporate tax rate from 35% to 21% effective from January 1, 2018 forward and changes or limitations to certain tax deductions. The Company has a fiscal year end of September 30, so the change to the corporate tax rate resulted in a blended federal statutory tax rate for its fiscal year 2018. The financial statements for the first fiscal quarter 2018 were also impacted by a one-time revaluation of the Company’s deferred tax assets and liabilities and this was recognized as a discrete income tax benefit in the period. For the quarter ended December 31, 2017, the Company recorded federal and state income tax expense of $9.0 million, which equates to a 14.79% effective tax rate. This compares to an effective tax rate of 32.27% for the fiscal year ended September 30, 2017. The Company estimates that its annual effective tax rate for fiscal 2018 (blended rate year) will be approximately 22-23%. The effective tax rate for the current quarter was lower than the new 2018 statutory rate due to discrete tax benefits of $4 million recognized related to the revaluation of deferred tax assets and liabilities expected to be utilized in 2018 as well as tax benefits related to stock based compensation. Looking forward, the Company expects the effective tax rate for fiscal 2019 to be approximately 19.5-20.5%.

Washington Federal, a national bank with headquarters in Seattle, Washington, has 237 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.

Non-GAAP Financial Measures

Adjusted pre-tax income of $69.2 million for the quarter ended December 31, 2017 is calculated by adding back the FDIC loss share valuation adjustments of $8.6 million to pre-tax income of $60.6 million.

Adjusted non-interest income of $15.3 million for the quarter ended December 31, 2017 is calculated by adding back the FDIC loss share valuation adjustments of $8.6 million to non-interest income of $6.8 million.

Adjusted efficiency ratio of 47.3% for the quarter ended December 31, 2017 is calculated by dividing non-interest expense of $61.9 million by adjusted total income of $131.1 million (net interest income of $115.7 million plus adjusted non-interest income of $15.3 million).

Important Cautionary Statements

The foregoing information should be read in conjunction with the financial statements, notes and other information contained in the Company’s 2017 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)

 

 

      December 31, 2017     September 30, 2017 (In thousands, except share data) ASSETS Cash and cash equivalents $ 309,713 $ 313,070 Available-for-sale securities, at fair value 1,245,855 1,266,209 Held-to-maturity securities, at amortized cost 1,765,886 1,646,856 Loans receivable, net of allowance for loan losses of $127,155 and $123,073 11,107,042 10,882,622 Interest receivable 42,146 41,643 Premises and equipment, net 264,643 263,694 Real estate owned 17,928 20,658 FHLB and FRB stock 130,590 122,990 Bank owned life insurance 211,833 211,330 Intangible assets, including goodwill of $300,288 and $293,153 310,578 298,682 Other assets   177,799     185,826   $ 15,584,013   $ 15,253,580   LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities Customer accounts Transaction deposit accounts $ 6,482,612 $ 6,361,158 Time deposit accounts   4,518,967     4,473,850   11,001,579 10,835,008 FHLB advances 2,415,000 2,225,000 Advance payments by borrowers for taxes and insurance 23,924 56,631 Accrued expenses and other liabilities   133,892     131,253   13,574,395 13,247,892 Stockholders’ equity Common stock, $1.00 par value, 300,000,000 shares authorized; 135,274,618 and 134,957,511 shares issued; 86,363,099 and 87,193,362 shares outstanding 135,275 134,958 Paid-in capital 1,661,866 1,660,885 Accumulated other comprehensive (loss) income, net of taxes 8,004 5,015 Treasury stock, at cost; 48,911,519 and 47,764,149 shares (877,044 ) (838,060 ) Retained earnings   1,081,517     1,042,890     2,009,618     2,005,688   $ 15,584,013   $ 15,253,580   CONSOLIDATED FINANCIAL HIGHLIGHTS Common stockholders' equity per share $ 23.27 $ 23.00 Tangible common stockholders' equity per share $ 19.67 $ 19.58 Stockholders' equity to total assets 12.90 % 13.15 % Tangible common stockholders' equity to tangible assets 11.12 % 11.41 %   Weighted average rates at period end Loans and mortgage-backed securities 3.99 % 3.96 % Combined loans, mortgage-backed securities and investments 3.85 3.82 Customer accounts 0.57 0.54 Borrowings 2.56 2.80 Combined cost of customer accounts and borrowings 0.93 0.92 Net interest spread 2.92 2.90     WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

        Three Months Ended December 31, 2017     2016 (In thousands, except share data) INTEREST INCOME Loans receivable $ 124,511 $ 114,835 Mortgage-backed securities 16,899 12,789 Investment securities and cash equivalents   4,370     5,140   145,780 132,764 INTEREST EXPENSE Customer accounts 14,638 13,017 FHLB advances and other borrowings   15,407     16,595   30,045 29,612 Net interest income 115,735 103,152 Provision (release) for loan losses   —     —   Net interest income after provision (release) for loan losses 115,735 103,152   OTHER INCOME Gain on sale of investment securities — 968 FDIC loss share valuation adjustments (8,550 ) — Loan fee income 1,035 1,334 Deposit fee income 6,686 5,185 Other Income   7,624     4,409   6,795 11,896 OTHER EXPENSE Compensation and benefits 29,619 26,994 Occupancy 8,671 8,450 FDIC insurance premiums 2,820 2,839 Product delivery 3,956 3,361 Information technology 7,929 6,451 Other   8,946     6,246   61,941 54,341 Gain (loss) on real estate owned, net   46     398   Income before income taxes 60,635 61,105 Income tax provision   8,965     19,859   NET INCOME $ 51,670   $ 41,246     PER SHARE DATA Basic earnings per share $ 0.59 $ 0.46 Diluted earnings per share 0.59 0.46 Cash dividends per share 0.15 0.14 Basic weighted average shares outstanding 86,938,095 89,310,958 Diluted weighted average shares outstanding 87,082,499 89,731,024   PERFORMANCE RATIOS Return on average assets 1.35 % 1.11 % Return on average common equity 10.25 8.31 Net interest margin 3.26 3.02 Efficiency ratio (a) 47.25 47.23   (a) Efficiency ratio for the quarter ended December 31, 2017 excludes the impact of $8.6 million reduction to other income related to FDIC loss share valuation adjustments.     Washington Federal, Inc. Fact Sheet December 31, 2017 ($ in Thousands)                           As of 06/17 As of 09/17 As of 12/17 Loan Loss Reserve - Total $ 128,779 $ 130,823 $ 133,905 General and Specific Allowance 122,229 123,073 127,155 Commitments Reserve 6,550 7,750 6,750 Allowance and Reserve as a % of Gross Loans 1.08 % 1.07 % 1.08 %   06/17 QTR 06/17 YTD 09/17 QTR 09/17 YTD 12/17 QTR 12/17 YTD Loan Originations - Total $ 1,030,996 $ 3,216,125 $ 1,022,853 $ 4,238,978 $ 953,552 $ 953,552 Single-Family Residential 181,721 567,509 189,607 757,116 158,086 158,086 Construction 268,027 774,048 307,416 1,081,464 279,833 279,833 Construction - Custom 129,077 372,678 157,757 530,435 99,720 99,720 Land - Acquisition & Development 21,559 48,124 31,752 79,876 24,449 24,449 Land - Consumer Lot Loans 10,200 27,423 11,728 39,151 9,279 9,279 Multi-Family 43,716 248,954 50,405 299,359 87,586 87,586 Commercial Real Estate 97,962 340,009 103,678 443,687 64,149 64,149 Commercial & Industrial 258,310 779,910 151,930 931,840 212,064 212,064 HELOC 19,310 54,922 17,991 72,913 17,651 17,651 Consumer 1,114 2,548 589 3,137 735 735   Purchased Loans (including acquisitions) $ — $ 72,856 $ — $ 72,856 $ 143,605 $ 143,605   Net Loan Fee and Discount Accretion $ 2,348 $ 14,874 $ 4,181 $ 19,055 $ 3,509 $ 3,509  

Repayments

Loans $ 793,432 $ 2,400,232 $ 699,619 $ 3,099,851 $ 859,583 $ 859,583 MBS 151,218 426,287 96,156 522,443 92,808 92,808   MBS Premium Amortization $ 2,620 $ 10,651 $ 2,929 $ 13,580 $ 2,206 $ 2,206  

Efficiency

Operating Expenses/Average Assets 1.52 % 1.51 % 1.66 % 1.55 % 1.62 % 1.62 % Efficiency Ratio (%) (a) 46.57 % 47.51 % 48.68 % 47.82 % 47.25 % 47.25 % Amortization of Intangibles $ 375 $ 1,294 $ 2,053 $ 3,347 $ 705 $ 705 (a) Efficiency ratio for the quarter ended December 31, 2017 excludes the impact of $8.6 million reduction to noninterest income related to FDIC loss share valuation adjustments.  

EOP Numbers

Shares Issued and Outstanding 88,750,133 87,193,362 86,363,099  

Share repurchase information

Remaining shares authorized for repurchase (b) 3,468,854 1,900,955 753,585 Shares repurchased 811,034 1,569,279 1,567,899 3,137,178 1,147,370 1,147,370 Average share repurchase price $ 32.14 $ 29.61 $ 33.10 $ 31.36 $ 33.98 $ 33.98

(b) Remaining shares authorized for repurchase reflects a reduction related to TARP warrants repurchased for cash to date.

    Washington Federal, Inc. Fact Sheet December 31, 2017 ($ in Thousands)  

Tangible Common Book Value

      As of 06/17         As of 09/17         As of 12/17     $ Amount $ 1,725,491 $ 1,707,006 $ 1,699,040 Per Share 19.44 19.58 19.67   # of Employees 1,815 1,818 1,829

Investments

Available-for-sale:

Agency MBS

$ 809,702 $ 842,688 $ 839,855 Other   460,712   423,521   406,000 $ 1,270,414 $ 1,266,209 $ 1,245,855 Held-to-maturity: Agency MBS $ 1,651,528 $ 1,646,856 $ 1,765,886 $ 1,651,528 $ 1,646,856 $ 1,765,886   As of 06/17       As of 09/17       As of 12/17      

Loans Receivable by Category

AMOUNT % AMOUNT % AMOUNT % Single-Family Residential $ 5,687,850 47.9 % $ 5,711,004 46.8 % $ 5,693,318 45.7 % Construction 1,436,874 12.1 1,597,996 13.1 1,710,418 13.7 Construction - Custom 561,260 4.7 602,631 4.9 583,580 4.7 Land - Acquisition & Development 119,524 1.0 124,308 1.0 136,938 1.1 Land - Consumer Lot Loans 101,626 0.9 104,405 0.9 105,086 0.8 Multi-Family 1,263,187 10.6 1,303,148 10.7 1,312,695 10.5 Commercial Real Estate 1,346,006 11.3 1,434,610 11.8 1,436,508 11.5 Commercial & Industrial 1,116,860 9.4 1,093,360 9.0 1,120,707 9.0 HELOC 148,584 1.3 144,850 1.2 136,995 1.1 Consumer   95,775 0.8     85,075 0.7     219,971 1.8     11,877,546 100 %   12,201,387 100 %   12,456,216 100 % Less: ALL 122,229 123,073 127,155 Loans in Process 1,054,513 1,149,934 1,175,642 Net Deferred Fees, Costs and Discounts   46,379   45,758   46,377 Sub-Total   1,223,121   1,318,765   1,349,174 $ 10,654,425 $ 10,882,622 $ 11,107,042  

Net Loan Portfolio by Category

AMOUNT % AMOUNT % AMOUNT % Single-Family Residential $ 5,628,508 52.8 % $ 5,652,365 51.9 % $ 5,636,013 50.7 % Construction 656,287 6.2 763,742 7.0 820,969 7.4 Construction - Custom 265,722 2.5 273,520 2.5 288,162 2.6 Land - Acquisition & Development 103,414 1.0 97,587 0.9 104,426 0.9 Land - Consumer Lot Loans 98,592 0.9 101,265 0.9 101,666 0.9 Multi-Family 1,250,730 11.7 1,290,640 11.9 1,300,179 11.7 Commercial Real Estate 1,327,530 12.5 1,416,188 13.0 1,418,364 12.8 Commercial & Industrial 1,082,486 10.2 1,060,304 9.7 1,086,533 9.8 HELOC 147,012 1.4 143,381 1.3 135,623 1.2 Consumer   94,144 0.9     83,630 0.8     215,107 1.9   $ 10,654,425 100 % $ 10,882,622 100 % $ 11,107,042 100 %     Washington Federal, Inc. Fact Sheet December 31, 2017 ($ in Thousands)         As of 06/30/17         As of 09/30/17         As of 12/31/17    

Deposits by State

AMOUNT     % # AMOUNT     % # AMOUNT     % # Washington $ 5,199,590 48.9 % 81 $ 5,383,764 49.7 % 81 $ 5,605,233 50.9 % 81 Idaho 768,049 7.2 24 786,974 7.3 24 771,350 7.0 24 Oregon 1,939,619 18.2 47 1,964,490 18.1 47 1,947,171 17.7 47 Utah 270,224 2.5 10 267,717 2.5 10 263,405 2.4 10 Nevada 328,121 3.1 11 326,436 3.0 11 331,423 3.0 11 Texas 96,264 0.9 5 97,670 0.9 6 97,108 0.9 6 Arizona 1,177,997 11.1 31 1,164,743 10.7 31 1,155,381 10.5 31 New Mexico   854,414   8.0   27   843,214   7.8   27   830,508   7.5   27 Total $ 10,634,278   100 % 236 $ 10,835,008   100 % 237 $ 11,001,579   100 % 237  

Deposits by Type

AMOUNT % AMOUNT % AMOUNT % Checking (non-interest) $ 1,195,152 11.2 % $ 1,258,274 11.6 % $ 1,299,602 11.8 % NOW (interest) 1,703,994 16.0 1,760,821 16.3 1,848,594 16.8 Savings 871,257 8.2 888,881 8.2 894,879 8.1 Money Market 2,433,547 22.9 2,453,182 22.6 2,439,537 22.2 Time Deposits   4,430,328   41.7     4,473,850   41.3     4,518,967   41.1   Total $ 10,634,278   100 % $ 10,835,008   100 % $ 11,001,579   100 %   Deposits greater than $250,000 - EOP $ 2,524,536 $ 2,674,914 $ 2,857,838  

Time Deposit Repricing

Amount Rate Amount Rate Amount Rate Within 3 months $ 879,213 0.65 % $ 668,177 0.65 % $ 730,975 0.74 % From 4 to 6 months 649,962 0.67 % 714,935 0.76 % 871,822 0.83 % From 7 to 9 months 450,756 0.83 % 653,760 0.85 % 525,594 0.98 % From 10 to 12 months 625,472 0.87 % 471,057 0.98 % 677,959 1.08 %  

Non-Performing Assets

AMOUNT % AMOUNT % AMOUNT % Non-accrual loans: Single-Family Residential $ 32,613 57.8 % $ 27,930 56.3 % $ 26,219 57.6 % Construction — — — — 364 0.8 Construction - Custom 536 1.0 91 0.2 — — Land - Acquisition & Development 71 0.1 296 0.6 1,326 2.9 Land - Consumer Lot Loans 1,066 1.9 605 1.2 976 2.1 Multi-Family 682 1.2 139 0.3 250 0.5 Commercial Real Estate 12,983 23.0 11,815 23.8 8,241 18.1 Commercial & Industrial 8,254 14.6 8,082 16.3 7,596 16.7 HELOC 181 0.3 531 1.1 476 1.0 Consumer   22   —     91   0.2     72   0.2   Total non-accrual loans 56,408 100 % 49,580 100 % 45,520 100 % Real Estate Owned   19,112     20,658     17,928   Total non-performing assets $ 75,520   $ 70,238   $ 63,448     Non-accrual loans as % of total net loans 0.53 % 0.46 % 0.41 % Non-performing assets as % of total assets 0.50 % 0.46 % 0.41 %     Washington Federal, Inc. Fact Sheet December 31, 2017 ($ in Thousands)       As of 06/30/17     As of 09/30/17     As of 12/31/17 AMOUNT     % AMOUNT     % AMOUNT     %

Restructured loans:

Single-Family Residential $ 196,575 87.9 % $ 181,941 87.7 % $ 170,601 85.7 % Construction — — — — — — Construction - Custom — — — — — — Land - Acquisition & Development 190 0.1 90 — — — Land - Consumer Lot Loans 8,878 4.0 7,949 3.8 7,405 3.7 Multi-Family 497 0.2 493 0.2 480 0.2 Commercial Real Estate 15,907 7.1 15,079 7.3 11,910 6.0 Commercial & Industrial — — — — 7,256 3.6 HELOC 1,409 0.6 1,728 0.8 1,432 0.7 Consumer   102   —     97   —     91   —   Total restructured loans $ 223,558   100 % $ 207,377   100 % $ 199,175   100 %  

Restructured loans were as follows:

Performing $ 215,178 96.3 % $ 202,272 97.5 % $ 194,359 97.6 % Non-performing (c)   8,380   3.7     5,105   2.5     4,816   2.4   Total restructured loans $ 223,558   100 % $ 207,377   100 % $ 199,175   100 % (c) Included in "Total non-accrual loans" above   AMOUNT

CO %(d)

AMOUNT

CO %(d)

AMOUNT

CO %(d)

Net Charge-offs (Recoveries) by Category

Single-Family Residential $ 186 0.01 % $ 267 0.02 % $ 340 0.02 % Construction — — — — — — Construction - Custom — — 13 0.01 50 0.03 Land - Acquisition & Development (863 ) (2.89 ) (1,729 ) (5.56 ) (3,372 ) (9.85 ) Land - Consumer Lot Loans (118 ) (0.46 ) (113 ) (0.43 ) 47 0.18 Multi-Family — — — — — — Commercial Real Estate (164 ) (0.05 ) — — — — Commercial & Industrial (154 ) (0.06 ) (727 ) (0.27 ) 61 0.02 HELOC (1 ) — (19 ) (0.05 ) — — Consumer   (138 ) (0.58 )   (236 ) (1.11 )   (208 ) (0.38 ) Total net charge-offs (recoveries) $ (1,252 ) (0.04 )% $ (2,544 ) (0.08 )% $ (3,082 ) (0.10 )% (d) Annualized Net Charge-offs (recoveries) divided by Gross Balance  

Interest Rate Risk

One Year GAP (15.8 )% (15.7 )% (12.9 )% NPV post 200 bps shock (e) 14.5 % 14.6 % 14.2 % Change in NII after 200 bps shock (e) 2.0 % 3.0 % 1.3 % (e) Assumes no balance sheet management actions taken     Washington Federal, Inc. Fact Sheet December 31, 2017 ($ in Thousands)   Historical CPR Rates (f)       WAFD     WAFD Average for Quarter Ended: SFR Mortgages GSE MBS   12/31/2015 16.7% 13.4% 3/31/2016 13.9% 12.0% 6/30/2016 17.3% 17.5% 9/30/2016 17.7% 20.0% 12/31/2016 19.3% 24.8% 3/31/2017 13.6% 13.5% 6/30/2017 15.0% 20.9% 9/30/2017 15.1% 14.3% 12/31/2017 15.3% 13.9%   (f) The CPR Rate (conditional payment rate) is the rate that is equal to the proportion of the principal of a pool of loans that is paid off prematurely in each period.     Washington Federal, Inc. Fact Sheet December 31, 2017 Average Balance Sheet ($ in Thousands)         June 30, 2017     September 30, 2017     December 31, 2017 Average         Average Average         Average Average         Average Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets Loans receivable $ 10,579,593 $ 117,457 4.45 % $ 10,747,453 $ 122,197 4.51 % $ 10,984,886 $ 124,511 4.50 % Mortgage-backed securities 2,551,598 15,992 2.51 2,493,604 15,605 2.48 2,521,407 16,899 2.66 Cash & investments 627,197 3,373 2.16 604,198 3,500 2.30 559,370 3,273 2.32 FHLB & FRB Stock   124,968       894     2.87     122,620       938     3.03     126,229       1,097     3.45     Total interest-earning assets 13,883,356 137,716 3.98 % 13,967,875 142,240 4.04 % 14,191,892 145,780 4.08 % Other assets   1,142,899   1,144,200   1,149,607 Total assets $ 15,026,255 $ 15,112,075 $ 15,341,499   Liabilities and Equity Customer accounts $ 10,567,710 12,764 0.48 % $ 10,704,066 13,850 0.51 % $ 10,850,742 14,638 0.54 % FHLB advances 2,274,451 16,337 2.88 2,214,674 15,958 2.86 2,305,978 15,407 2.65 Other borrowings   —       —     —     —       —     —     —       —     —     Total interest-bearing liabilities 12,842,161 29,101 0.91 % 12,918,740 29,808 0.92 % 13,156,720 30,045 0.91 % Other liabilities   155,460   183,542   168,382 Total liabilities 12,997,621 13,102,282 13,325,102 Stockholders’ equity   2,028,634   2,009,793   2,016,397 Total liabilities and equity $ 15,026,255 $ 15,112,075 $ 15,341,499   Net interest income $ 108,615 $ 112,432 $ 115,735   Net interest margin (1) 3.13 % 3.22 % 3.26 %   (1) Annualized net interest income divided by average interest-earning assets     Washington Federal, Inc. Fact Sheet December 31, 2017 Delinquency Summary ($ in Thousands)                 AMOUNT OF LOANS     # OF LOANS     % based         % based

TYPE OF LOANS

#LOANS AVG Size NET OF LIP & CHG-OFFs 30     60     90     Total on # $ Delinquent on $   December 31, 2017 Single-Family Residential 25,325 225 $ 5,692,045 51 35 104 190 0.75 % $ 36,172 0.64 % Construction 675 1,262 852,164 1 3 4 8 1.19 4,371 0.51 Construction - Custom 1,241 235 292,255 — — — — — — — Land - Acquisition & Development 122 920 112,260 — — 4 4 3.28 1,242 1.11 Land - Consumer Lot Loans 1,209 87 104,996 2 1 10 13 1.08 750 0.71 Multi-Family 1,122 1,170 1,312,673 — — 2 2 0.18 250 0.02 Commercial Real Estate 925 1,553 1,436,508 2 — 6 8 0.86 444 0.03 Commercial & Industrial 1,849 606 1,120,707 7 2 23 32 1.73 3,467 0.31 HELOC 2,859 48 136,995 8 4 17 29 1.01 991 0.72 Consumer 3,847 57   219,971 43 15 107 165 4.29     567 0.26   39,174 288 $ 11,280,574 114 60 277 451 1.15 % $ 48,254 0.43 %   September 30, 2017 Single-Family Residential 25,556 223 $ 5,709,690 64 29 109 202 0.79 % $ 37,757 0.66 % Construction 715 1,110 793,959 — — — — — — — Construction - Custom 1,292 215 277,599 — — 1 1 0.08 91 0.03 Land - Acquisition & Development 122 859 104,856 — — 4 4 3.28 330 0.31 Land - Consumer Lot Loans 1,201 87 104,335 3 6 5 14 1.17 946 0.91 Multi-Family 1,135 1,148 1,303,119 2 1 3 6 0.53 399 0.03 Commercial Real Estate 931 1,541 1,434,610 2 — 8 10 1.07 2,558 0.18 Commercial & Industrial 1,820 601 1,093,360 — 2 20 22 1.21 625 0.06 HELOC 2,877 50 144,850 6 4 15 25 0.87 876 0.60 Consumer 4,039 21   85,075 50 24 103 177 4.38     431 0.51   39,688 278 $ 11,051,453 127 66 268 461 1.16 % $ 44,013 0.40 %   June 30, 2017 Single-Family Residential 25,779 221 $ 5,687,169 68 36 123 227 0.88 % $ 44,653 0.79 % Construction 624 1,095 683,273 — 1 — 1 0.16 686 0.10 Construction - Custom 1,218 221 269,612 — — 2 2 0.16 536 0.20 Land - Acquisition & Development 118 941 111,057 — — 4 4 3.39 123 0.11 Land - Consumer Lot Loans 1,187 86 101,584 1 2 6 9 0.76 615 0.61 Multi-Family 964 1,310 1,263,143 1 1 2 4 0.41 329 0.03 Commercial Real Estate 1,073 1,254 1,345,986 2 3 9 14 1.30 2,911 0.22 Commercial & Industrial 1,816 615 1,116,854 3 1 23 27 1.49 2,673 0.24 HELOC 2,914 51 148,581 14 7 6 27 0.93 1,491 1.00 Consumer 4,275 22   95,774 51 18 97 166 3.88     384 0.40   39,968 271 $ 10,823,033 140 69 272 481 1.20 % $ 54,401 0.50 %

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Washington Federal, Inc.Brad Goode, 206-626-8178SVP, Director of Communicationsbrad.goode@wafd.com