EX-99.1 2 exhibit991_june2022earning.htm EX-99.1 Document


wafdbank_logoxrgba.jpg
Wednesday, July 13, 2022
FOR IMMEDIATE RELEASE


Washington Federal Announces Quarterly Earnings Per Share Of $0.91

SEATTLE, WASHINGTON – Washington Federal, Inc. (Nasdaq: WAFD) (the "Company"), parent company of Washington Federal Bank ("WaFd Bank"), today announced quarterly earnings of $63,295,000 for the quarter ended June 30, 2022, an increase of 33.5% from $47,422,000 for the quarter ended June 30, 2021. After the effect of dividends on preferred stock, net income available for common shareholders was $0.91 per diluted share for the quarter ended June 30, 2022, compared to $0.61 per diluted share for the quarter ended June 30, 2021, a $0.30 or 49.2% increase in fully diluted earnings per common share. Return on common shareholders' equity for the quarter ended June 30, 2022 was 12.50% compared to 8.71% for the quarter ended June 30, 2021. Return on assets for the quarter ended June 30, 2022 was 1.25% compared to 0.97% for the same quarter in the prior year.
President and Chief Executive Officer Brent J. Beardall commented, "We are pleased to report what is the best quarter in our 105-year history. Our bankers have worked diligently over the last decade to reposition our balance sheet to take advantage of rising interest rates and this quarter’s results reflect those ongoing efforts. Building our franchise by growing core deposits and expanding our commercial banking capabilities directly contributed to our net interest margin expanding from 2.82% a year ago to 3.22% this quarter, which was the primary driver of earnings growth. In addition to margin expansion, we benefited from continued growth of our loan portfolio, with net loans outstanding increasing by 15.6% since June 30, 2021. We believe that this growth rate will moderate going forward as rising costs and interest rates temper activity in the housing market.
"Inflation recently hit a 40-year high and the related cost pressures are real. We are actively managing operating expenses, including the consolidation of 25 branch locations over
1


the last 18 months. Our efficiency ratio decreasing from 59% to 52% is tangible evidence of the operating leverage we've achieved over the last year by controlling expenses and growing revenue. Importantly, even as we focus on operating expenses, we continue to make strategic investments in technology. So far this year, we completed our migration from an on-premise data center to the cloud, built and launched our own internally developed consumer online banking platform and implemented the MX mobile banking solution. Couple these meaningful upgrades with future enhancements and we believe significant strides are being made toward becoming a digital first bank.
"From a macro-economic perspective, we recognize the risks on the horizon and expect future volatility as the Federal Reserve attempts to restore price stability. Given market expectations that a near-term recession is likely, we believe WaFd Bank is well positioned as our asset quality metrics remain very strong. At June 30, 2022, delinquencies totaled just 0.26% of loans outstanding, non-performing assets were only 0.25% of total assets, and net recoveries were $595,000 for the third fiscal quarter of 2022, marking eight consecutive years of net recoveries. At quarter's end, we had credit loss reserves of $203 million and $2.2 billion of shareholders' equity.
"Despite potential short-term challenges, the economic vitality of the markets we operate in is strong and we take pride in being a source of strength and consistent support for our clients."
Total assets were $20.2 billion as of June 30, 2022, compared to $19.7 billion at September 30, 2021, primarily due to the $1.7 billion increase in loans receivable funded by continued growth in customer deposits (noted below) and the $1.5 billion decline in cash. Investment securities increased by $124 million since September 30, 2021.
Customer deposits totaled $16.0 billion as of June 30, 2022, an increase of $424 million or 2.7% since September 30, 2021. Transaction accounts increased by $560 million or 4.6% during that period, while time deposits decreased $137 million or 4.0%. 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
2


manage interest expense. As of June 30, 2022, 79.3% of the Company’s deposits were transaction accounts, up from 77.9% at September 30, 2021. Core deposits, defined as all transaction accounts and time deposits less than $250,000, totaled 96.3% of deposits at June 30, 2022.
Borrowings from the Federal Home Loan Bank ("FHLB") totaled $1.70 billion as of June 30, 2022, a decrease from $1.72 billion at September 30, 2021. The weighted average effective interest rate of FHLB borrowings was 1.43% as of June 30, 2022, a decrease from 1.51% at September 30, 2021. The decline in the weighted average effective interest rate was the result of replacing high-yielding, long-term FHLB borrowings with new borrowings at lower rates.
The Company had record loan originations of $2.74 billion for the third fiscal quarter of 2022, compared to $2.10 billion of originations in the same quarter one year ago. Largely offsetting loan originations in each of these quarters were loan repayments of $1.69 billion and $1.96 billion, respectively. Commercial loans represented 77% of all loan originations during the third fiscal quarter of 2022 and consumer loans accounted for the remaining 23%. 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 3.77% as of June 30, 2022, an increase from 3.47% as of September 30, 2021, due primarily to higher rates on adjustable rate loans as well as higher rates on newly originated loans.
Credit quality is being monitored closely as economic stimulus comes to an end. As of June 30, 2022, non-performing assets remained low from a historical perspective and totaled $50.4 million, or 0.25% of total assets, compared to 0.23% at March 31, 2022 and 0.22% at September 30, 2021. Delinquent loans were 0.26% of total loans at June 30, 2022, compared to 0.30% at March 31, 2022 and 0.19% at September 30, 2021. The allowance for credit losses (including the reserve for unfunded commitments) totaled $203 million as of June 30, 2022, and was 1.08% of gross loans outstanding, as compared to $199 million, or 1.22% of gross loans outstanding, at September 30, 2021. Net recoveries were $595 thousand for the
3


third fiscal quarter of 2022, compared to net recoveries of $1.1 million for the prior year same quarter. The Company has recorded net recoveries in 34 of the last 36 quarters.
The Company recorded a $1.5 million provision for credit losses in the third fiscal quarter of 2022, compared to a $2.0 million release of allowance for credit losses in the same quarter of fiscal 2021. The provision in the quarter ended June 30, 2022 was primarily due to growth in loans receivable partially offset by improvements in the credit quality of certain loan portfolios related to strong real estate markets and collateral conditions.
The Company paid a quarterly dividend on the 4.875% Series A preferred stock on April 15, 2022. On June 3, 2022, the Company paid a regular cash dividend on common stock of $0.24 per share, which represented the 157th consecutive quarterly cash dividend. If the Board declares a cash dividend on common stock at its August 9, 2022 meeting as anticipated, the record date and payment date are likely to be August 19, 2022 and September 2, 2022, respectively. During the third fiscal quarter of 2022, the Company repurchased 2,446 shares of common stock (related to tax withholding on employee equity awards) at a weighted average price of $31.36 per share and has authorization to repurchase 3,725,874 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 $1.39, or 6.0%, to $24.66. The ratio of total tangible shareholders' equity to tangible assets was 9.63% as of June 30, 2022.
Net interest income was $152 million for the third fiscal quarter of 2022, an increase of $23.1 million or 18.0% from the same quarter in the prior year. The increase in net interest income was due primarily to growth in average interest-earning assets outpacing growth in average interest-bearing liabilities as well as the impact of rising rates on adjustable rate assets. Average interest-earning assets increased by $684 million or 3.75% from the prior year while average interest-bearing liabilities increased $484 million or 3.44%. Average noninterest-bearing deposits grew by $387 million over the same period. The average rate earned on interest-earning assets increased by 30 basis points while the average rate paid on interest-bearing liabilities declined by 12 basis points. Net interest margin improved to 3.22%
4


in the third fiscal quarter of 2022 compared to 2.90% for the quarter ended March 31, 2022 and 2.82% for the prior year quarter.
Total other income was $17.6 million for the third fiscal quarter of 2022 compared to $13.2 million in the prior year same quarter. The increase in other income was primarily due to an unrealized gain of $2.7 million that was recorded for certain equity investments in the quarter ended June 30, 2022.
Total other expense was $87.4 million in the third fiscal quarter of 2022, an increase of $3.8 million, or 4.5%, from the prior year's quarter. Compensation and benefits costs increased by $4.2 million, or 9.7%, 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 third fiscal quarter of 2022 improved to 51.6%, compared to 59.0% for the same period one year ago due to income growth outpacing expense growth.
Income tax expense totaled $17.5 million for the third fiscal quarter of 2022, as compared to $12.6 million for the prior year same quarter. The effective tax rate for the quarter ended June 30, 2022 was 21.70% compared to 21.00% in the prior year same quarter and 21.24% for the full 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 209 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.

5


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 higher interest rates or 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
6

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
June 30, 2022September 30, 2021
 (In thousands, except share and ratio data)
ASSETS
Cash and cash equivalents$607,421 $2,090,809 
Available-for-sale securities, at fair value2,150,732 2,138,259 
Held-to-maturity securities, at amortized cost477,884 366,025 
Loans receivable, net of allowance for loan losses of $170,979 and $171,30015,565,165 13,833,570 
Interest receivable55,985 50,636 
Premises and equipment, net244,232 255,152 
Real estate owned9,656 8,204 
FHLB and FRB stock78,073 102,863 
Bank owned life insurance237,407 233,263 
Intangible assets, including goodwill of $303,457 and $303,457 309,254 310,019 
Federal and state income tax assets, net— 3,877 
Other assets423,022 257,897 
$20,158,831 $19,650,574 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Transaction deposits$12,668,251 $12,108,025 
Time deposits3,297,369 3,434,087 
Total customer deposits15,965,620 15,542,112 
FHLB advances1,700,000 1,720,000 
Advance payments by borrowers for taxes and insurance30,251 47,016 
Federal and state income tax liabilities, net4,394 — 
Accrued expenses and other liabilities238,455 215,382 
17,938,720 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; 136,261,099 and 135,993,254 shares issued; 65,321,869 and 65,145,268 shares outstanding136,261 135,993 
Additional paid-in capital1,685,219 1,678,622 
Accumulated other comprehensive income (loss), net of taxes54,227 69,785 
Treasury stock, at cost; 70,939,230 and 70,847,986 shares(1,590,159)(1,586,947)
Retained earnings1,634,563 1,528,611 
2,220,111 2,126,064 
$20,158,831 $19,650,574 
CONSOLIDATED FINANCIAL HIGHLIGHTS
Common shareholders' equity per share$29.39 $28.03 
Tangible common shareholders' equity per share24.66 23.27 
Shareholders' equity to total assets11.01 %10.82 %
Tangible shareholders' equity to tangible assets9.63 %9.39 %
Tangible shareholders' equity + allowance for credit losses to tangible assets10.65 %10.42 %
Weighted average rates at period end
   Loans and mortgage-backed securities3.67 %3.37 %
   Combined loans, mortgage-backed securities and investments3.50 2.80 
   Customer accounts0.32 0.23 
   Borrowings1.43 1.51 
   Combined cost of customer accounts and borrowings0.43 0.35 
   Net interest spread3.07 2.45 




7

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

As of
SUMMARY FINANCIAL DATAJune 30, 2022March 31, 2022December 31, 2021September 30, 2021June 30, 2021
(In thousands, except share and ratio data)
Cash$607,421 $1,947,504 $1,880,647 $2,090,809 $2,251,958 
Loans receivable, net15,565,165 15,094,926 14,592,202 13,833,570 13,467,997 
Allowance for credit losses ("ACL")203,479 201,384 201,411 198,800 198,284 
Available-for-sale securities, at fair value2,150,732 1,909,605 1,946,139 2,138,259 2,292,656 
Held-to-maturity securities, at amortized cost477,884 301,221 326,387 366,025 415,748 
Total assets20,158,831 20,560,279 19,973,171 19,650,574 19,649,509 
Transaction deposits12,668,251 13,139,606 12,550,062 12,108,025 11,700,467 
Time deposits3,297,369 3,251,042 3,351,984 3,434,087 3,537,891 
FHLB advances1,700,000 1,720,000 1,720,000 1,720,000 1,950,000 
Total shareholders' equity2,220,111 2,191,701 2,149,126 2,126,064 2,227,240 
FINANCIAL HIGHLIGHTS
Common shareholders' equity per share29.39 28.97 28.33 28.03 27.74 
Tangible common shareholders' equity per share24.66 24.23 23.59 23.27 23.30 
Shareholders' equity to total assets11.01 %10.66 %10.76 %10.82 %11.33 %
Tangible shareholders' equity to tangible assets9.63 %9.29 %9.35 %9.39 %9.92 %
Tangible shareholders' equity + ACL to tangible assets10.65 %10.29 %10.38 %10.42 %10.94 %
Common shares outstanding65,321,869 65,306,928 65,263,738 65,145,268 69,472,423 
Preferred shares outstanding300,000 300,000 300,000 300,000 300,000 
Loans to customer deposits 97.49 %92.09 %91.76 %89.01 %88.38 %
CREDIT QUALITY
ACL to gross loans1.08 %1.13 %1.18 %1.22 %1.26 %
ACL to non-accrual loans554.76 %598.66 %447.99 %626.16 %582.40 %
Non-accrual loans to net loans0.24 %0.22 %0.31 %0.23 %0.25 %
Non-accrual loans36,679 33,639 44,959 31,749 34,046 
Non-performing assets to total assets0.25 %0.23 %0.27 %0.22 %0.23 %
Non-performing assets50,430 47,243 54,790 43,625 45,650 
8

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

 Three Months Ended June 30,Nine Months Ended June 30,
 2022202120222021
 (In thousands, except share and ratio data)(In thousands, except share and ratio data)
INTEREST INCOME
Loans receivable$149,113 $134,193 $426,882 $400,621 
Mortgage-backed securities8,618 5,488 18,069 19,414 
Investment securities and cash equivalents9,417 7,767 23,475 21,989 
167,148 147,448 468,426 442,024 
INTEREST EXPENSE
Customer accounts9,284 8,906 25,970 33,745 
FHLB advances and other borrowings6,118 9,937 21,486 35,126 
15,402 18,843 47,456 68,871 
Net interest income151,746 128,605 420,970 373,153 
Provision (release) for credit losses1,500 (2,000)1,500 1,000 
Net interest income after provision (release)150,246 130,605 419,470 372,153 
OTHER INCOME
Gain (loss) on sale of investment securities— — 81 — 
Gain (loss) on termination of hedging derivatives— — — 14,110 
Prepayment penalty on long-term debt— — — (13,788)
Loan fee income1,618 1,748 6,014 5,012 
Deposit fee income6,613 6,201 19,338 18,187 
Other income9,319 5,262 26,457 18,037 
17,550 13,211 51,890 41,558 
OTHER EXPENSE
Compensation and benefits48,073 43,841 142,613 130,196 
Occupancy10,053 9,725 31,931 29,790 
FDIC insurance premiums2,100 3,900 7,300 10,918 
Product delivery4,667 4,075 14,432 13,413 
Information technology11,831 10,396 34,974 32,923 
Other expense10,679 11,703 34,183 29,556 
87,403 83,640 265,433 246,796 
Gain (loss) on real estate owned, net448 (151)1,139 (566)
Income before income taxes80,841 60,025 207,066 166,349 
Income tax provision17,546 12,603 44,131 35,105 
Net income63,295 47,422 162,935 131,244 
Dividends on preferred stock3,656 3,656 10,969 6,378 
Net income available to common shareholders$59,639 $43,766 $151,966 $124,866 
PER SHARE DATA
Basic earnings per common share$0.91 $0.61 $2.33 $1.68 
Diluted earnings per common share0.91 0.61 2.32 1.68 
Cash dividends per common share0.24 0.23 0.71 0.68 
Basic weighted average shares outstanding65,315,48171,795,15765,274,48874,315,911
Diluted weighted average shares outstanding65,395,66671,901,06865,397,57974,326,693
PERFORMANCE RATIOS
Return on average assets1.25 %0.97 %1.08 %0.91 %
Return on average common equity12.50 8.71 10.82 8.17 
Net interest margin3.22 2.82 3.00 2.77 
Efficiency ratio51.63 58.98 56.13 59.51 

9

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

 Three Months Ended
 June 30, 2022March 31, 2022December 31, 2021September 30, 2021June 30, 2021
 (In thousands, except share and ratio data)
INTEREST INCOME
Loans receivable$149,113 $139,260 $138,509 $137,039 $134,193 
Mortgage-backed securities8,618 4,659 4,792 5,294 5,488 
Investment securities and cash equivalents9,417 6,919 7,139 7,253 7,767 
167,148 150,838 150,440 149,586 147,448 
INTEREST EXPENSE
Customer accounts9,284 8,225 8,461 8,568 8,906 
FHLB advances and other borrowings6,118 7,525 7,843 9,062 9,937 
15,402 15,750 16,304 17,630 18,843 
Net interest income151,746 135,088 134,136 131,956 128,605 
Provision (release) for credit losses1,500 (500)500 (500)(2,000)
Net interest income after provision (release)150,246 135,588 133,636 132,456 130,605 
OTHER INCOME
Gain (loss) on sale of investment securities— — 81 14 — 
Loan fee income1,618 2,475 1,921 1,887 1,748 
Deposit fee income6,613 6,282 6,443 6,499 6,201 
Other income9,319 6,902 10,236 10,603 5,262 
17,550 15,659 18,681 19,003 13,211 
OTHER EXPENSE
Compensation and benefits48,073 47,115 47,425 45,910 43,841 
Occupancy10,053 11,788 10,090 9,820 9,725 
FDIC insurance premiums2,100 2,100 3,100 3,450 3,900 
Product delivery4,667 5,044 4,721 5,092 4,075 
Information technology11,831 11,722 11,421 9,814 10,396 
Other expense10,679 10,648 12,856 11,577 11,703 
87,403 88,417 89,613 85,663 83,640 
Gain (loss) on real estate owned, net448 129 562 993 (151)
Income before income taxes80,841 62,959 63,266 66,789 60,025 
Income tax provision17,546 13,600 12,985 14,418 12,603 
Net income63,295 49,359 50,281 52,371 47,422 
Dividends on preferred stock3,656 3,656 3,656 3,656 3,656 
Net income available to common shareholders$59,639 $45,703 $46,625 $48,715 $43,766 
PER SHARE DATA
Basic earnings per common share$0.91 $0.70 $0.72 $0.72 $0.61 
Diluted earnings per common share0.91 0.70 0.71 0.72 0.61 
Cash dividends per common share0.24 0.24 0.23 0.23 0.23 
Basic weighted average shares outstanding65,315,48165,301,17165,207,83767,227,28071,795,157
Diluted weighted average shares outstanding65,395,66665,445,20665,350,17467,235,84671,901,068
PERFORMANCE RATIOS
Return on average assets1.25 %0.98 %1.02 %1.07 %0.97 %
Return on average common equity12.50 9.80 10.12 10.36 8.71 
Net interest margin3.22 2.90 2.87 2.88 2.82 
Efficiency ratio51.63 58.65 58.64 56.75 58.98 
10