EX-99.1 2 exhibit991_march2022earnin.htm EX-99.1 Document


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Wednesday, April 13, 2022
FOR IMMEDIATE RELEASE


Washington Federal Announces Quarterly Earnings Per Share Of $0.70

SEATTLE, WASHINGTON – Washington Federal, Inc. (Nasdaq: WAFD) (the "Company"), parent company of Washington Federal Bank ("WaFd Bank"), today announced quarterly earnings of $49,359,000 for the quarter ended March 31, 2022, an increase of 10.0% from $44,871,000 for the quarter ended March 31, 2021. After the effect of dividends on preferred stock, net income available for common shareholders was $0.70 per diluted share for the quarter ended March 31, 2022, compared to $0.56 per diluted share for the quarter ended March 31, 2021, a $0.14 or 25% increase in fully diluted earnings per common share. Return on common shareholders' equity for the quarter ended March 31, 2022 was 9.80% compared to 8.17% for the quarter ended March 31, 2021. Return on assets for the quarter ended March 31, 2022 was 0.98% compared to 0.93% for the same quarter in the prior year.
President and Chief Executive Officer Brent J. Beardall commented, "This was the first full quarter since our exit from the 2018 Bank Secrecy Act ("BSA") Consent Order and we are grateful for the hard work of WaFd bankers throughout our eight western states that made these results possible. In the last year, net loans grew by $2 billion, or 16%, which is even more impressive when you consider that for the majority of that period loan prepayments occurred at record levels. Couple the record loan growth with increasing customer deposits by $1.6 billion, or 11%, over the last year and we see tangible results from the ongoing investments we are making in our bankers, technology and processes. Importantly, our net interest margin improved this quarter and credit quality continues to improve with decreases in non-performing loans, delinquencies and yet another quarter of net recoveries from previously charged off loans.
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While our operating results are strong there are macro-economic factors that give us reason for concern. Inflation is at a 40-year high and it appears the Federal Reserve’s initial assessment that inflation was transitory was incorrect. As a result, interest rates are surging, with the average 30 year mortgage rate increasing to above 5%, up from 2.75% a year ago. This will likely cause mortgage refinancings to dwindle to a fraction of what they have recently been and unfortunately, will exacerbate the housing affordability issues we are facing as a country. In addition, there is the geopolitical risk of the war in Ukraine and impact of related sanctions on commodity prices."
While one never hopes for a credit cycle, we are realistic that they will periodically occur. It has been twelve years since the last credit cycle so it is just a matter of time. As of March 31, 2022, 83% of our loans are secured by real estate and, based on the significant increase in real estate values over the last two years, we believe we have substantial protection should values decline and borrowers experience financial difficulty."
Our goal is to operate WaFd Bank in a way to be prepared for the next credit cycle, so we can once again be a source of strength to our clients if needed. Based on everything we know today we are optimistic that we are well positioned to withstand potential market volatility and continue our organic growth."
Total assets were $20.6 billion as of March 31, 2022, compared to $19.7 billion at September 30, 2021, primarily due to the $1.3 billion increase in loans receivable funded by continued growth in customer deposits (noted below) and cash. Investment securities decreased by $293 million since September 30, 2021.
Customer deposits totaled $16.4 billion as of March 31, 2022, an increase of $849 million or 5.5% since September 30, 2021. Transaction accounts increased by $1.0 billion or 8.5% during that period, while time deposits decreased $183 million or 5.3%. The shift in deposit mix has been the result of a deliberate deposit pricing and customer growth strategy. The focus on transaction accounts is intended to lessen sensitivity to rising interest rates and manage interest expense. As of March 31, 2022, 80.2% of the Company’s deposits were transaction accounts, up from 77.9% at September 30, 2021. Core deposits, defined as all
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transaction accounts and time deposits less than $250,000, totaled 97.0% of deposits at March 31, 2022.
Borrowings from the Federal Home Loan Bank ("FHLB") totaled $1.72 billion as of March 31, 2022, unchanged since September 30, 2021. The weighted average interest rate of FHLB borrowings was 1.55% as of March 31, 2022, an increase from 1.51% at September 30, 2021.
The Company had strong loan originations of $2.23 billion for the second fiscal quarter of 2022, compared to $1.98 billion of originations in the same quarter one year ago. Largely offsetting loan originations in each of these quarters were loan repayments of $1.54 billion and $1.55 billion, respectively. Commercial loans represented 78% of all loan originations during the second fiscal quarter of 2022 and consumer loans accounted for the remaining 22%. The Company views organic loan growth funded by low-cost core deposits as the highest and best use of its capital. Commercial loans are preferable as they generally have floating interest rates and shorter durations. The weighted average interest rate on the loan portfolio was 3.44% as of March 31, 2022, a decrease from 3.47% as of September 30, 2021, due primarily to payoffs of loans at higher than current market interest rates and new loans originated at current market rates.
Credit quality is being monitored closely as economic stimulus comes to an end. As of March 31, 2022, non-performing assets remained low from a historical perspective and totaled $47.2 million, or 0.23% of total assets, compared to 0.22% at September 30, 2021. Delinquent loans were 0.30% of total loans at March 31, 2022, compared to 0.31% at December 31, 2021 and 0.19% at September 30, 2021. The allowance for credit losses (including the reserve for unfunded commitments) totaled $201 million as of March 31, 2022, and was 1.13% of gross loans outstanding (1.14% when excluding PPP loans for which it was determined that no allowance was necessary due to the government guarantee), as compared to $199 million, or 1.22% of gross loans outstanding, at September 30, 2021. Net recoveries were $473 thousand for the second fiscal quarter of 2022, compared to net recoveries of $2.5 million for the prior year same quarter. The Company has recorded net recoveries in 33 of the last 35 quarters.
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The Company recorded a $500 thousand release of allowance for credit losses in the second fiscal quarter of 2022, compared to no provision or release in the same quarter of fiscal 2021. The release of allowance in the quarter ended March 31, 2022 was primarily due to improvements in the credit quality of certain loan portfolios related to strong real estate markets and collateral conditions mostly offset by growth in loans receivable.
The Company paid a quarterly dividend on the 4.875% Series A preferred stock on January 15, 2022. On February 18, 2022, the Company paid a regular cash dividend on common stock of $0.24 per share, which represented the 156th consecutive quarterly cash dividend. If the Board declares a cash dividend on common stock at its May 10, 2022 meeting as anticipated, the record date and payment date are likely to be May 20, 2022 and June 3, 2022, respectively. During the second fiscal quarter of 2022, the Company repurchased 4,684 shares of common stock (related to tax withholding on employee equity awards) at a weighted average price of $34.65 per share and has authorization to repurchase 3,728,320 additional shares. The Company varies the size and pace of share repurchases depending on several factors, including share price, lending opportunities and capital levels. Since September 30, 2021, tangible common shareholders' equity per share increased by $0.96, or 4.1%, to $24.23. The ratio of total tangible shareholders' equity to tangible assets was 9.29% as of March 31, 2022.
Net interest income was $135 million for the second fiscal quarter of 2022, an increase of $11.1 million or 8.9% from the same quarter in the prior year. The increase in net interest income was primarily due to average interest-earning assets increasing by $861 million or 4.77% from the prior year while average interest-bearing liabilities increased $374 million or 2.63%. Average noninterest-bearing deposits grew by $619 million over the same period. The change in net interest income was also impacted by a 6 basis point decline in the average rate earned on interest-earning assets while the average rate paid on interest-bearing liabilities declined by 21 basis points. Net interest margin improved to 2.90% in the second fiscal quarter of 2022 compared to 2.87% for the quarter ended December 31, 2021 and 2.75% for the prior year quarter.
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Total other income was $15.7 million for the second fiscal quarter of 2022 compared to $14.5 million in the prior year same quarter. The increase in other income was primarily due to loan fee income being $1.6 million higher in the quarter ended March 31, 2022 due largely to fees collected on loan early repayments.
Total other expense was $88.4 million in the second fiscal quarter of 2022, an increase of $6.7 million, or 8.2%, from the prior year's quarter. Compensation and benefits costs increased by $3.5 million, or 8.0%, over the prior year quarter primarily due to annual merit increases, higher bonus compensation accruals related to strong deposit and loan growth and investments in top talent and contract staff to support strategic initiatives. The Company’s efficiency ratio in the second fiscal quarter of 2022 was 58.7%, compared to 59.0% for the same period one year ago.
Income tax expense totaled $13.6 million for the second fiscal quarter of 2022, as compared to $11.9 million for the prior year same quarter. The effective tax rate for the quarter ended March 31, 2022 was 21.60% compared to 21.24% for the year ended September 30, 2021. The Company’s effective tax rate may vary from the statutory rate mainly due to state taxes, tax-exempt income and tax-credit investments.
WaFd Bank is headquartered in Seattle, Washington, and has 214 branches in eight western states. To find out more about WaFd Bank, please visit our website www.wafdbank.com. The Company uses its website to distribute financial and other material information about the Company.

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Important Cautionary Statements
The foregoing information should be read in conjunction with the financial statements, notes and other information contained in the Company’s 2021 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 or current 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. Words such as “anticipate,” “believe,” “continue,” “expect,” “goal,” “intend,” “should,” “strategy,” “will,” or 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, including the following risks and uncertainties, and those risks and uncertainties more fully discussed under “Risk Factors” in the Company’s 2021 10-K, which could cause actual performance to differ materially from that anticipated by any forward-looking statements. In particular, any forward-looking statements are subject to risks and uncertainties related to (i) the COVID-19 pandemic and the resulting governmental and societal responses; (ii) current and future economic conditions, including the effects of declines in the real estate market, high unemployment rates, inflationary pressures, and slowdowns in economic growth; (iii) financial stress on borrowers (consumers and businesses) as a result of an uncertain economic environment; (iv) global economic trends, including developments related to Ukraine and Russia, and related negative financial impacts on our borrowers; and (v) fluctuations in interest rate risk and market interest rates, including the effect on our net interest income and net interest margin. The Company undertakes no obligation to update or revise any forward-looking statement.
# # #
Contact:

Washington Federal, Inc.
425 Pike Street, Seattle, WA 98101
Brad Goode, SVP, Chief Marketing Officer
206-626-8178
brad.goode@wafd.com
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
March 31, 2022September 30, 2021
 (In thousands, except share and ratio data)
ASSETS
Cash and cash equivalents$1,947,504 $2,090,809 
Available-for-sale securities, at fair value1,909,605 2,138,259 
Held-to-maturity securities, at amortized cost301,221 366,025 
Loans receivable, net of allowance for loan losses of $171,384 and $171,30015,094,926 13,833,570 
Interest receivable51,440 50,636 
Premises and equipment, net247,166 255,152 
Real estate owned9,509 8,204 
FHLB and FRB stock78,873 102,863 
Bank owned life insurance236,024 233,263 
Intangible assets, including goodwill of $303,457 and $303,457 309,501 310,019 
Federal and state income tax assets, net3,821 3,877 
Other assets370,689 257,897 
$20,560,279 $19,650,574 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Transaction deposits$13,139,606 $12,108,025 
Time deposits3,251,042 3,434,087 
Total customer deposits16,390,648 15,542,112 
FHLB advances1,720,000 1,720,000 
Advance payments by borrowers for taxes and insurance39,426 47,016 
Federal and state income tax liabilities, net— — 
Accrued expenses and other liabilities218,504 215,382 
18,368,578 17,524,510 
Shareholders’ equity
Preferred stock, $1.00 par value, 5,000,000 shares authorized; 300,000 and 300,000 shares issued; 300,000 and 300,000 shares outstanding300,000 300,000 
Common stock, $1.00 par value, 300,000,000 shares authorized; 136,243,712 and 135,993,254 shares issued; 65,306,928 and 65,145,268 shares outstanding136,244 135,993 
Additional paid-in capital1,683,578 1,678,622 
Accumulated other comprehensive income (loss), net of taxes71,478 69,785 
Treasury stock, at cost; 70,936,784 and 70,847,986 shares(1,590,082)(1,586,947)
Retained earnings1,590,483 1,528,611 
2,191,701 2,126,064 
$20,560,279 $19,650,574 
CONSOLIDATED FINANCIAL HIGHLIGHTS
Common shareholders' equity per share$28.97 $28.03 
Tangible common shareholders' equity per share24.23 23.27 
Shareholders' equity to total assets10.66 %10.82 %
Tangible shareholders' equity to tangible assets9.29 %9.39 %
Tangible shareholders' equity + allowance for credit losses to tangible assets10.29 %10.42 %
Weighted average rates at period end
   Loans and mortgage-backed securities3.37 %3.37 %
   Combined loans, mortgage-backed securities and investments2.93 2.80 
   Customer accounts0.24 0.23 
   Borrowings1.55 1.51 
   Combined cost of customer accounts and borrowings0.36 0.35 
   Net interest spread2.57 2.45 




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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)

As of
SUMMARY FINANCIAL DATAMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
(In thousands, except share and ratio data)
Cash1,947,504 1,880,647 2,090,809 2,251,958 2,318,447 
Loans receivable, net15,094,926 14,592,202 13,833,570 13,467,997 13,035,423 
Allowance for credit losses ("ACL")201,384 201,411 198,800 198,284 199,153 
Available-for-sale securities, at fair value1,909,605 1,946,139 2,138,259 2,292,656 2,438,902 
Held-to-maturity securities, at amortized cost301,221 326,387 366,025 415,748 494,089 
Total assets20,560,279 19,973,171 19,650,574 19,649,509 19,533,581 
Transaction deposits13,139,606 12,550,062 12,108,025 11,700,467 11,228,666 
Time deposits3,251,042 3,351,984 3,434,087 3,537,891 3,590,755 
FHLB advances1,720,000 1,720,000 1,720,000 1,950,000 2,150,000 
Total shareholders' equity2,191,701 2,149,126 2,126,064 2,227,240 2,332,953 
FINANCIAL HIGHLIGHTS
Common shareholders' equity per share28.97 28.33 28.03 27.74 27.82 
Tangible common shareholders' equity per share24.23 23.59 23.27 23.30 23.59 
Shareholders' equity to total assets10.66 %10.76 %10.82 %11.33 %11.94 %
Tangible shareholders' equity to tangible assets9.29 %9.35 %9.39 %9.92 %10.53 %
Tangible shareholders' equity + ACL to tangible assets10.29 %10.38 %10.42 %10.94 %11.56 %
Common shares outstanding65,306,928 65,263,738 65,145,268 69,472,423 73,084,591 
Preferred shares outstanding300,000 300,000 300,000 300,000 300,000 
Loans to customer deposits 92.09 %91.76 %89.01 %88.38 %87.96 %
CREDIT QUALITY
ACL to gross loans1.13 %1.18 %1.22 %1.26 %1.30 %
ACL to non-accrual loans598.66 %447.99 %626.16 %582.40 %498.44 %
Non-accrual loans to net loans0.22 %0.31 %0.23 %0.25 %0.31 %
Non-accrual loans33,639 44,959 31,749 34,046 39,955 
Non-performing assets to total assets0.23 %0.27 %0.22 %0.23 %0.25 %
Non-performing assets47,243 54,790 43,625 45,650 48,943 
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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

 Three Months Ended March 31,Six Months Ended March 31,
 2022202120222021
 (In thousands, except share and ratio data)(In thousands, except share and ratio data)
INTEREST INCOME
Loans receivable$139,260 $132,757 $277,769 $266,428 
Mortgage-backed securities4,659 6,696 9,451 13,926 
Investment securities and cash equivalents6,919 7,301 14,058 14,222 
150,838 146,754 301,278 294,576 
INTEREST EXPENSE
Customer accounts8,225 10,729 16,686 24,839 
FHLB advances and other borrowings7,525 11,991 15,368 25,189 
15,750 22,720 32,054 50,028 
Net interest income135,088 124,034 269,224 244,548 
Provision (release) for credit losses(500)— — 3,000 
Net interest income after provision (release)135,588 124,034 269,224 241,548 
OTHER INCOME
Gain (loss) on sale of investment securities— — 81 — 
Gain (loss) on termination of hedging derivatives— 14,110 — 14,110 
Prepayment penalty on long-term debt— (13,788)— (13,788)
Loan fee income2,475 872 4,396 3,264 
Deposit fee income6,282 5,960 12,725 11,986 
Other Income6,902 7,323 17,138 12,775 
15,659 14,477 34,340 28,347 
OTHER EXPENSE
Compensation and benefits47,115 43,632 94,540 86,355 
Occupancy11,788 10,473 21,878 20,065 
FDIC insurance premiums2,100 3,755 5,200 7,018 
Product delivery5,044 4,401 9,765 9,338 
Information technology11,722 10,696 23,143 22,527 
Other10,648 8,789 23,504 17,853 
88,417 81,746 178,030 163,156 
Gain (loss) on real estate owned, net129 34 691 (415)
Income before income taxes62,959 56,799 126,225 106,324 
Income tax provision13,600 11,928 26,585 22,502 
Net income49,359 44,871 99,640 83,822 
Dividends on preferred stock3,656 2,722 7,312 2,722 
Net income available to common shareholders$45,703 $42,149 $92,328 $81,100 
PER SHARE DATA
Basic earnings per common share$0.70 $0.56 $1.41 $1.07 
Diluted earnings per common share0.70 0.56 1.41 1.07 
Cash dividends per common share0.24 0.23 0.47 0.45 
Basic weighted average shares outstanding65,301,17175,354,76565,253,99175,576,288
Diluted weighted average shares outstanding65,445,20675,393,46465,397,60175,582,426
PERFORMANCE RATIOS
Return on average assets0.98 %0.93 %1.00 %0.88 %
Return on average common equity9.80 8.17 9.96 7.91 
Net interest margin2.90 2.75 2.89 2.75 
Efficiency ratio58.65 59.02 58.65 59.79 

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WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

 Three Months Ended
 March 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
 (In thousands, except share and ratio data)
INTEREST INCOME
Loans receivable$139,260 $138,509 $137,039 $134,193 $132,757 
Mortgage-backed securities4,659 4,792 5,294 5,488 6,696 
Investment securities and cash equivalents6,919 7,139 7,253 7,767 7,301 
150,838 150,440 149,586 147,448 146,754 
INTEREST EXPENSE
Customer accounts8,225 8,461 8,568 8,906 10,729 
FHLB advances and other borrowings7,525 7,843 9,062 9,937 11,991 
15,750 16,304 17,630 18,843 22,720 
Net interest income135,088 134,136 131,956 128,605 124,034 
Provision (release) for credit losses(500)500 (500)(2,000)— 
Net interest income after provision (release)135,588 133,636 132,456 130,605 124,034 
OTHER INCOME
Gain (loss) on sale of investment securities— 81 14 — — 
Gain (loss) on termination of hedging derivatives— — — — 14,110 
Prepayment penalty on long-term debt— — — — (13,788)
Loan fee income2,475 1,921 1,887 1,748 872 
Deposit fee income6,282 6,443 6,499 6,201 5,960 
Other Income6,902 10,236 10,603 5,262 7,323 
15,659 18,681 19,003 13,211 14,477 
OTHER EXPENSE
Compensation and benefits47,115 47,425 45,910 43,841 43,632 
Occupancy11,788 10,090 9,820 9,725 10,473 
FDIC insurance premiums2,100 3,100 3,450 3,900 3,755 
Product delivery5,044 4,721 5,092 4,075 4,401 
Information technology11,722 11,421 9,814 10,396 10,696 
Other10,648 12,856 11,577 11,703 8,789 
88,417 89,613 85,663 83,640 81,746 
Gain (loss) on real estate owned, net129 562 993 (151)34 
Income before income taxes62,959 63,266 66,789 60,025 56,799 
Income tax provision13,600 12,985 14,418 12,603 11,928 
Net income49,359 50,281 52,371 47,422 44,871 
Dividends on preferred stock3,656 3,656 3,656 3,656 2,722 
Net income available to common shareholders$45,703 $46,625 $48,715 $43,766 $42,149 
PER SHARE DATA
Basic earnings per common share$0.70 $0.72 $0.72 $0.61 $0.56 
Diluted earnings per common share0.70 0.71 0.72 0.61 0.56 
Cash dividends per common share0.24 0.23 0.23 0.23 0.23 
Basic weighted average shares outstanding65,301,17165,207,83767,227,28071,795,15775,354,765
Diluted weighted average shares outstanding65,445,20665,350,17467,235,84671,901,06875,393,464
PERFORMANCE RATIOS
Return on average assets0.98 %1.02 %1.07 %0.97 %0.93 %
Return on average common equity9.80 10.12 10.36 8.71 8.17 
Net interest margin2.90 2.87 2.88 2.82 2.75 
Efficiency ratio58.65 58.64 56.75 58.98 59.02 
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