Washington Federal, Inc. (Nasdaq: WAFD) (the "Company"), parent
company of Washington Federal, National Association, today
announced quarterly earnings of $49,271,000 or $0.57 per diluted
share for the quarter ended March 31, 2018 compared to
$42,070,000 or $0.47 per diluted share for the quarter ended
March 31, 2017, a $0.10 or 21% increase in fully diluted
earnings per share. Return on equity for the quarter ended
March 31, 2018 was 9.81% compared to 8.37% for the quarter
ended March 31, 2017. Return on assets for the quarter ended
March 31, 2018 was 1.26% compared to 1.13% for the same
quarter in the prior year.
President and Chief Executive Officer Brent J. Beardall
commented, “We are pleased with the continued strength of our core
operations; net interest margin for the quarter grew from 3.15% to
3.25% and other key profitability measures improved markedly versus
the same quarter last year. We are investing heavily in our
employees, our technology and our compliance programs. As a result,
expenses have increased and our efficiency ratio now stands at
50.7%. Next quarter we are delivering a new treasury management
system to our commercial clients that enables them to process
transactions more securely and efficiently than ever before. Our
balance sheet strength and the robust western markets we serve
provide us with reasons to be optimistic about the future.”
Total assets were $15.6 billion as of March 31, 2018
compared to $15.3 billion as of September 30, 2017. Asset
growth since September 30, 2017 resulted primarily from a $341
million increase in net loans receivable and a $70 million increase
in held-to-maturity securities.
Customer deposits increased by $304 million or 2.8% since
September 30, 2017 and totaled $11.1 billion as of
March 31, 2018. Transaction accounts increased by $102 million
or 1.6% during that period, while time deposits increased $202
million or 4.5%. The Company continues to focus on growing
transaction accounts to lessen sensitivity to rising interest rates
and reduce interest expense. As of March 31, 2018, 58.0% of
the Company’s deposits were in transaction accounts. Core deposits,
defined as all transaction accounts and time deposits less than
$250,000, totaled 93.4% of deposits at March 31, 2018.
Borrowings from the Federal Home Loan Bank ("FHLB") totaled $2.3
billion as of March 31, 2018 and $2.2 billion at
September 30, 2017. The weighted average rate for FHLB
borrowings was 2.62% as of March 31, 2018 and 2.80% at
September 30, 2017, the decline being due to the maturity of
some long-term FHLB advances.
Loan originations totaled $819 million for our second fiscal
quarter 2018 compared to $944 million of originations in the same
quarter one year ago. Partially offsetting loan originations in
each of these quarters were loan repayments of $744 million and
$711 million, respectively. Commercial loans represented 64% of all
loan originations during our second fiscal quarter 2018 and
consumer loans accounted for the remaining 36%. The Company views
organic loan growth as the highest and best use of its capital and
prefers commercial loans due to the fact they generally have
floating interest rates and shorter durations. The weighted average
interest rate on loans was 4.35% as of March 31, 2018, 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 0.45% as of March 31, 2018
compared to 0.53% at March 31, 2017 and 0.46% at
September 30, 2017. Since September 30, 2017, real estate
owned decreased by $5 million, or 23%, and non-accrual loans
increased by $4 million, or 9%. Delinquent loans were 0.40% of
total loans at March 31, 2018 compared to 0.65% at
March 31, 2017 and 0.40% at September 30, 2017. The
allowance for loan losses and reserve for unfunded commitments
totaled $134 million as of March 31, 2018 and was 1.07% of
gross loans outstanding, as compared to $131 million or 1.07% of
gross loans outstanding at September 30, 2017.
On February 23, 2018, the Company paid a regular cash
dividend of $0.17 per share, which represented the 140th
consecutive quarterly cash dividend. During the quarter, the
Company repurchased 1,673,436 shares of common stock at a weighted
average price of $34.66 per share and has authorization to
repurchase approximately 4,080,149 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 $0.20 or 1.0% to $19.78 and the ratio of
tangible common equity to tangible assets remained strong at 10.94%
as of March 31, 2018.
Net interest income was $117 million for the quarter, an
increase of $9.6 million or 8.9% 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 $759 million, or 5.5%. Net interest margin
increased to 3.25% in the first fiscal quarter of 2018 from 3.15%
for the same quarter in the prior year. The margin increase is
primarily due to changes in the mix of interest earning assets,
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 recorded a release of loan loss allowance of $950
thousand in the second fiscal quarter of 2018 compared with a
release of $1.6 million in the same quarter of 2017 as net
recoveries in both quarters were largely offset by strong growth in
the loan portfolio. Net recoveries were $1.4 million for the second
fiscal quarter of 2018 compared to $5.2 million for the prior
year's quarter.
Total other income was $12.6 million for the second fiscal
quarter of 2018, an increase of $2.5 million from $10.1 million in
the same quarter of the prior year. The increase from the prior
year was primarily due to a $1.5 million increase in deposit fee
income, which was driven by the 2017 launch of the Company's new
"Green Checking" product. In March 2018, the Company reached a
preliminary agreement with the FDIC to terminate its loss share
agreements. The preliminary agreement is consistent with the
estimates that had been recorded by the Company as of December 31,
2017 and final settlement is expected to occur in the third fiscal
quarter of 2018. All future recoveries, gains, losses and expenses
related to the previously covered assets will now be recognized
entirely by the Company and the FDIC will no longer share in such
gains or losses.
Total operating expenses were $65.8 million in the second fiscal
quarter of 2018, an increase of $8.3 million or 14.5% from the
prior year's quarter. Compensation and benefits costs increased by
$2.8 million primarily due to headcount increases and cost of
living adjustments since last year. Information technology costs
increased by $2.1 million and other expenses increased by $3.4
million as both were elevated due to ongoing initiatives to enhance
the Company's overall technology platform and its Bank Secrecy Act
program. The Company’s efficiency ratio in the second fiscal
quarter of 2018 was 50.7% compared to 48.8% for the same period one
year ago. The increase in the efficiency ratio is due to the
aforementioned elevated expenses. The efficiency ratio was 48.9%
for the six months ended March 31, 2018.
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 results in a blended federal statutory tax rate
for its fiscal year 2018. The financial statements for the first
fiscal quarter of 2018 were impacted by discrete tax benefits of
$3.7 million recognized related to the revaluation of deferred tax
assets and liabilities as well as tax benefits related to stock
based compensation. For the six months ended March 31, 2018,
the Company recorded federal and state income tax expense of $24.5
million, which equates to a 19.5% effective tax rate. The Company
estimates that its annual effective tax rate for its full fiscal
2018 (blended rate year) will be approximately 21-23%. This
compares to an effective tax rate of 32.3% for the fiscal year
ended September 30, 2017. Looking forward, the Company expects
the effective tax rate for fiscal 2019 to be approximately
20-22%.
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 $134.0 million for the six months
ended March 31, 2018 is calculated by adding back the FDIC
loss share valuation adjustments of $8.6 million to pre-tax income
of $125.4 million.
Adjusted other income of $27.9 million for the six months ended
March 31, 2018 is calculated by adding back the FDIC loss
share valuation adjustments of $8.6 million to other income of
$19.4 million.
Adjusted efficiency ratio of 48.9% for the six months ended
March 31, 2018 is calculated by dividing total operating
expense of $127.7 million by adjusted total income of $261.0
million (net interest income of $233.0 million plus adjusted other
income of $27.9 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.
Additional Information
In connection with the proposed transaction with Anchor Bancorp
("Anchor") pursuant to which Anchor will merge with and into the
Company (the "Merger"), the Company has filed a registration
statement on Form S-4 with the Securities and Exchange Commission
(the "SEC") which contains a proxy statement/prospectus to be
distributed to the shareholders of Anchor in connection with their
vote on the Merger. Each party will also file other documents
regarding the proposed transaction with the SEC. Before making any
voting or investment decision regarding the transaction,
shareholders of Anchor are encouraged to read the registration
statement and any other relevant documents filed with the SEC,
including the proxy statement/prospectus that is part of the
registration statement, as well as any amendments or supplements to
these documents, when they become available, because they will
contain important information about the Merger. The final proxy
statement/prospectus will be mailed to shareholders of Anchor.
Investors and security holders will be able to obtain the documents
free of charge at the SEC’s website, www.sec.gov. In addition,
documents filed with the SEC by the Company will be available free
of charge by accessing the Company’s website at
www.washingtonfederal.com or by writing the Company at 425 Pike
Street, Seattle, WA 98101, Attention: Investor Relations or calling
(206) 626-8178, or by writing Anchor at 601 Woodland Square Loop
SE, Lacey, WA 98503, Attention: Corporate Secretary or calling
(360) 537-1388.
Participants in the
Transaction
The Company, Anchor, their directors, executive officers and
certain other persons may be deemed to be participants in the
solicitation of proxies from Anchor shareholders in favor of the
approval of the Merger with Anchor. Information about the directors
and executive officers of the Company and their ownership of
Company stock is included in the proxy statement for its 2018
annual meeting of shareholders, which was filed with the SEC on
December 7, 2017. Information about the directors and executive
officers of Anchor and their ownership of Anchor stock is set forth
in the proxy statement for its 2017 annual meeting of shareholders,
which was filed with the SEC on November 9, 2017, and also will be
included in the proxy statement/prospectus for the Merger.
Additional information regarding the interests of those
participants and other persons who may be deemed participants in
the transaction may be obtained by reading the registration
statement and the proxy statement/prospectus regarding the proposed
Merger when it becomes available. Free copies of this document may
be obtained as described in the preceding paragraph.
WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION
(UNAUDITED)
March 31, 2018 September 30, 2017 (In
thousands, except share data)
ASSETS Cash and cash
equivalents
$ 256,808 $ 313,070 Available-for-sale
securities, at fair value
1,269,271 1,266,209
Held-to-maturity securities, at amortized cost
1,716,566
1,646,856 Loans receivable, net of allowance for loan losses of
$127,576 and $123,073
11,224,088 10,882,622 Interest
receivable
43,931 41,643 Premises and equipment, net
265,388 263,694 Real estate owned
15,904 20,658 FHLB
and FRB stock
126,990 122,990 Bank owned life insurance
213,274 211,330 Intangible assets, including goodwill of
$301,368 and $293,153
312,303 298,682 Federal and state
income tax assets, net
1,414 — Other assets
187,193
185,826
$ 15,633,130 $
15,253,580
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities Customer accounts Transaction deposit accounts
$ 6,463,301 $ 6,361,158 Time deposit accounts
4,675,555 4,473,850
11,138,856
10,835,008 FHLB advances
2,325,000 2,225,000 Advance
payments by borrowers for taxes and insurance
41,285 56,631
Accrued expenses and other liabilities
139,316
131,253
13,644,457 13,247,892
Stockholders’
equity Common stock, $1.00 par value, 300,000,000 shares
authorized; 135,334,158 and 134,957,511 shares issued; 84,749,203
and 87,193,362 shares outstanding
135,334 134,958 Additional
paid-in capital
1,664,275 1,660,885 Accumulated other
comprehensive (loss) income, net of taxes
8,899 5,015
Treasury stock, at cost; 50,584,955 and 47,764,149 shares
(935,039 ) (838,060 ) Retained earnings
1,115,204 1,042,890
1,988,673
2,005,688
$ 15,633,130 $ 15,253,580
CONSOLIDATED FINANCIAL HIGHLIGHTS Common
stockholders' equity per share
$ 23.47 $ 23.00
Tangible common stockholders' equity per share
19.78 19.58
Stockholders' equity to total assets
12.72 % 13.15 %
Tangible common stockholders' equity to tangible assets
10.94 % 11.41 %
Weighted average rates at
period end Loans and mortgage-backed securities
4.06
% 3.96 % Combined loans, mortgage-backed securities and
investments
3.94 3.82 Customer accounts
0.65 0.54
Borrowings
2.62 2.80 Combined cost of customer accounts and
borrowings
0.99 0.92 Net interest spread
2.95 2.90
WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
Three Months Ended March 31, Six Months Ended
March 31,
2018 2017
2018 2017 (In
thousands, except share data) (In thousands, except share data)
INTEREST INCOME Loans receivable
$ 126,529 $
116,034
$ 251,040 $ 230,869 Mortgage-backed
securities
17,667 16,226
34,566 29,015 Investment
securities and cash equivalents
4,883 3,938
9,253 9,078
149,079 136,198
294,859 268,962
INTEREST EXPENSE Customer accounts
16,414 12,392
31,052 25,409 FHLB advances and other
borrowings
15,364 16,079
30,771
32,674
31,778 28,471
61,823 58,083
Net
interest income 117,301 107,727
233,036 210,879
Provision (release) for loan losses
(950 ) (1,600 )
(950 ) (1,600 )
Net interest income after
provision (release) for loan losses 118,251 109,327
233,986 212,479
OTHER INCOME Gain on sale of
investment securities
— —
— 968 FDIC loss share
valuation adjustments
— —
(8,550 ) — Loan fee
income
780 1,087
1,815 2,421 Deposit fee income
6,403 4,904
13,089 10,089 Other Income
5,404
4,145
13,028 8,554
12,587
10,136
19,382 22,032
OTHER EXPENSE Compensation and
benefits
31,625 28,833
61,244 55,827 Occupancy
9,013 9,091
17,684 17,541 FDIC insurance premiums
2,852 2,910
5,672 5,749 Product delivery
3,665
3,489
7,621 6,850 Information technology
8,781 6,686
16,710 13,137 Other
9,851 6,458
18,797 12,704
65,787 57,467
127,728 111,808 Gain (loss) on real estate owned, net
(278 ) 795
(232 ) 1,193
Income before income taxes
64,773 62,791
125,408
123,896 Income tax provision
15,502 20,721
24,467 40,580
NET INCOME $
49,271 $ 42,070
$ 100,941
$ 83,316
PER SHARE DATA Basic earnings per
share
$ 0.58 $ 0.47
$ 1.17 $ 0.93
Diluted earnings per share
0.57 0.47
1.17 0.93 Cash
dividends per share
0.17 0.40
0.32 0.54 Basic
weighted average shares outstanding
85,647,494 89,382,416
86,299,885 89,346,294 Diluted weighted average shares
outstanding
85,747,167 89,736,320
86,422,077
89,732,042
PERFORMANCE RATIOS Return on average
assets
1.26 % 1.13 %
1.31 % 1.12 %
Return on average common equity
9.81 8.37
10.03 8.34
Net interest margin
3.25 3.15
3.26 3.08 Efficiency
ratio (a)
50.65 48.76
48.94 48.00 (a) Efficiency
ratio for the six months ended March 31, 2018 excludes the impact
of $8.55 million reduction to other income related to FDIC loss
share valuation adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180411005356/en/
Washington Federal, Inc.Brad Goode, 206-626-8178SVP, Director of
Communicationsbrad.goode@wafd.com
WaFd (NASDAQ:WAFD)
Historical Stock Chart
From Aug 2024 to Sep 2024
WaFd (NASDAQ:WAFD)
Historical Stock Chart
From Sep 2023 to Sep 2024