Apr. 18--Washington Federal said it earned $8.4 million, or 10 cents a common share, in the first three months of 2009, a 76 percent drop from the same quarter a year earlier.

Net interest income -- essentially the money Washington Federal makes from its core business of taking in deposits and making loans -- was actually up 27 percent in the quarter, to $93.5 million. But the company set aside $54 million in the period as a provision against future loan losses, up from $35 million in the previous quarter and $9.5 million in the year-earlier period.

Roy Whitehead, Washington Federal's CEO, said in a statement that the credit concerns were concentrated in its residential land and construction loan portfolio, and "centered in a few large credits."

Whitehead also warned that the company will make another sizable loan-loss provision in the current quarter, and that revenue likely will be hurt by the wave of home-loan refinancings -- which reduce mortgage-interest income -- and by more loans going into default.

Wall Street had expected a profit of 18 cents a share, according to a consensus of estimates reported by Thomson One. The results were released after the market closed Friday. Washington Federal stock closed at $13.55 Friday, up a penny.

Seattle-based Washington Federal, parent of Washington Federal Savings, was the first locally based banking company to report its quarterly earnings. Others expected to report next week include Everett-based Frontier Financial, Tacoma-based Columbia Banking System and Sterling Financial, in Spokane.

For the first six months of its fiscal year, Seattle-based Washington Federal made $28.6 million, or 32 cents a common share -- down from $68.5 million, or 78 cents a share, in the first half of fiscal 2008. (Unlike most banks, whose fiscal year coincides with the calendar year, Washington Federal's fiscal year ends on Sept. 30.)

As of March 31, Washington Federal had $12.3 billion in assets, down from $12.5 billion as of Dec. 31. Nonperforming assets totaled $492 million, or 4.01 percent of total assets, an increase from $305 million, or 2.44 percent of the total, as of Dec. 31.

Real estate held for sale, a category that includes foreclosures, grew to $84.7 million from $61.9 million at the end of the prior quarter. The company said it owns and is marketing 250 separate properties, and is offering mortgage rates as low as 3.99 percent to help move them more quickly.

But that aggressive marketing comes at a cost: The company recorded a net $1.7 million loss on foreclosed real estate in its fiscal second quarter.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com

-----

To see more of The Seattle Times, or to subscribe to the newspaper, go to http://www.seattletimes.com.

Copyright (c) 2009, Seattle Times

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

NASDAQ-NMS:WFSL, NASDAQ-NMS:FTBK, NASDAQ-NMS:COLB,

A service of YellowBrix, Inc.