SEATTLE, WA, Oct. 22, 2009 (Marketwire) --
SEATTLE, WA -- (Marketwire) -- 10/22/09 -- Washington Federal, Inc. (NASDAQ: WFSL), parent company of Washington Federal Savings, today announced earnings of $9,605,000 or $.11 per diluted share for the quarter ended September 30, 2009. In the same quarter one year ago, the Company reported a loss of $39,337,000 or $.45 per diluted share due to a writedown of $88 million on preferred stock investments in the U.S. Government sponsored entities of Fannie Mae and Freddie Mac. Earnings for the fiscal year ended September 30, 2009 totaled $40,684,000 or $.46 per diluted share, compared to $62,332,000 or $.71 per diluted share for the same period one year ago.
Recession related credit costs and rising FDIC insurance premiums were the primary contributors to the decline in net income of $21,648,000, or 35%, for the full year. The provision for loan losses amounted to $193 million for the year ended September 30, 2009, a $132.5 million increase over the $60.5 million provided for during the prior year. Additionally, FDIC insurance premiums increased by $9.9 million.
In September, the Company completed a follow-on public offering of 24,150,000 shares of common stock. The offering produced net proceeds of $333,177,000 which will be used for general corporate purposes, which may include capital to support future acquisitions. As of September 30, 2009, the Company's ratio of tangible common equity to tangible assets was 12.08%, and its total risk-based capital ratio was 21.57%. Both of these ratios are significantly above regulatory requirements to be classified as well capitalized.
Chairman, President & CEO Roy M. Whitehead commented, "The past year was an extraordinarily difficult time for the industry, marked by nearly unprecedented levels of problem real estate loans. Despite our own high level of troubled assets, we are very gratified to be one of the few financial institutions in the Pacific Northwest to have been solidly profitable. Declining deposit costs contributed significantly to strong core earnings during the year. Perhaps more notably, after nearly three years of consistent increases, this quarter we were able to record a decline in non-performing assets. This is a welcome and encouraging development; however, investors are advised to expect problem assets and credit costs to continue at an elevated level in the new fiscal year. With roughly $500 million in cash equivalents and a capital ratio more than twice the required regulatory minimum, management and the board of the Company feel that Washington Federal is well-positioned to be an industry leader in the new fiscal year."
Non-performing assets declined to $557 million, or 4.43%, of total assets at year-end from $606 million at June 30th, a decrease of $49 million. Compared to September 30, 2008, non-performing assets increased $393 million or 240%. This increase was concentrated in the Company's portfolio of land and speculative construction loans. The net balance of the land and construction portfolio was $593 million, or 6.6% of net loans at September 30th. In response to deteriorating credit conditions, the Company increased its allowance for loan losses from $85 million as of September 30, 2008, to $167 million as of September 30, 2009, an $82 million or 96% increase.
Overall delinquencies were 4.86% as of September 30, 2009, compared to 5.69% for the previous quarter ended June 30, 2009. Delinquencies as of September 30, 2008 were 2.46%. Single family residential mortgage loans, which represent 75% of the net total portfolio, experienced delinquencies of only 2.91%, which compares favorably to the national average mortgage delinquencies of 9.24%(i).
Much of the decline in delinquent loans can be attributed to the migration of troubled loans to Real Estate Owned (REO) due to foreclosures, along with the restructuring of troubled debts. Troubled Debts Restructured (TDR's) increased from $68.3 Million at June 30th to $136.9 Million at September 30th. The increase is due primarily to the restructuring of one large builder/developer relationship and heavy mortgage loan modification volume. At quarter-end, the Company owned 398 properties acquired through, or in lieu of, foreclosure, of which 87 have sales pending. During the quarter, the Company completed the sale of 121 REO properties.
Total assets increased by $752 million or 6% to $12.6 billion from $11.8 billion at September 30, 2008. Specifically, investment securities increased by $704 million or 44% during year, as the Company purchased agency mortgage backed securities in anticipation of a potential increase in refinance activity. As of September 30, 2009, the Company's investment portfolio had net unrealized gains of $90 million, an increase of $87 million from September 30, 2008. During the year, net loans outstanding decreased from $9.5 billion to $9.0 billion as a result of increased loan prepayments stemming from record low interest rates available on 30 year fixed-rate mortgages. Cash and cash equivalents increased by $416 million as the Company built its liquidity position from its equity offering and deposit growth.
Customer deposit accounts increased by $673 million, or 9.4%, and borrowings decreased by $296 million during the year as the Company repaid all of its short term borrowings due to growth in customer deposits and reduced loan demand.
Net interest income increased by 23% or $69 million from the previous year, benefiting from falling deposit costs. The Company's period end spread increased to 3.17% as of September 30, 2009, compared to 2.85% one year ago. In the next quarter the Company has $2.9 billion of deposits that will mature with a weighted average rate of 2.30%.
The Company's efficiency ratio of 27.3% for the year, a slight increase from 27.2% from one year ago, remains among the lowest in the industry. The year produced a return on assets of .33%, while return on equity amounted to 2.87%. These ratios represent historical lows for the Company attributable to reduced earnings caused by significant declines in real estate values throughout the western United States.
On October 23, 2009, Washington Federal will pay a cash dividend of $.05 per share to common stockholders of record on October 9, 2009.
