Market Overview

Washington Federal Announces 5% Increase in Quarterly Earnings Per Share


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

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
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.




      June 30, 2017     September 30, 2016
(In thousands, except share data)
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
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  
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



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  
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



Three Months Ended June 30,     Nine Months Ended June 30,




    2017     2016

(In thousands, except share data)

(In thousands, except share data)

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


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          









Net interest income after provision (release) for loan losses 108,615 105,890 321,094 320,584
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
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  



      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  













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
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

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