v2.4.0.6
Document and Entity Information
 3 Months Ended
Dec. 31, 2012
Feb. 01, 2013
Document and Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Dec. 31, 2012  
Document Fiscal Year Focus 2013  
Document Fiscal Period Focus Q1  
Trading Symbol WAFD  
Entity Registrant Name WASHINGTON FEDERAL INC  
Entity Central Index Key 0000936528  
Current Fiscal Year End Date --09-30  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   105,203,448
v2.4.0.6
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2012
Sep. 30, 2012
ASSETS    
Cash and cash equivalents $ 637,298 $ 751,430
Available-for-sale securities, at fair value 2,003,777 1,781,705
Held-to-maturity securities, at amortized cost 1,407,246 1,191,487
Loans receivable, net 7,614,910 7,451,998
Covered loans, net 380,594 288,376
Interest receivable 47,830 46,857
Premises and equipment, net 207,185 178,845
Real estate held for sale 101,103 99,478
Covered real estate held for sale 36,030 29,549
FDIC indemnification asset 90,415 87,571
FHLB stock 153,542 149,840
Intangible assets, net 267,389 256,076
Federal and state income tax assets, net 26,519 22,513
Other assets 133,004 137,219
Assets 13,106,842 12,472,944
Customer accounts    
Transaction deposit accounts 3,571,987 2,946,453
Time deposit accounts 5,662,104 5,630,165
Savings and Demand Accounts and Repurchase Agreements with Customers 9,234,091 8,576,618
FHLB advances 1,880,000 1,880,000
Advance payments by borrowers for taxes and insurance 16,552 40,041
Federal and State income tax liabilities, net 0 0
Accrued expenses and other liabilities 61,521 76,533
Liabilities 11,192,164 10,573,192
Stockholders’ equity    
Common stock, $1.00 par value, 300,000,000 shares authorized; 131,966,720 and 129,950,223 shares issued; 105,498,098 and 106,177,615 shares outstanding 131,967 129,950
Paid-in capital 1,619,026 1,586,295
Accumulated other comprehensive income, net of taxes 11,639 13,306
Treasury stock, at cost; 26,468,622 and 23,772,608 shares (355,326) (310,579)
Retained earnings 507,372 480,780
Stockholders' Equity Attributable to Parent 1,914,678 1,899,752
Liabilities and Equity $ 13,106,842 $ 12,472,944
v2.4.0.6
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) (Parentheticals) (USD $)
Dec. 31, 2012
Sep. 30, 2011
Common stock, par value (in dollars per share) $ 1 $ 1
Common stock, shares authorized (in shares) 300,000,000 300,000,000
Common stock, shares issued (in shares) 131,966,720 129,950,223
Common stock, shares outstanding (in shares) 105,498,098 106,177,615
Treasury stock, shares (in shares) 26,468,622 23,772,608
v2.4.0.6
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)
In Thousands, except Share data, unless otherwise specified
 3 Months Ended
Dec. 31, 2012
Dec. 31, 2011
INTEREST INCOME    
Loans $ 116,843 $ 127,479
Mortgage-backed securities 11,732 26,296
Investment securities and cash equivalents 2,734 2,151
Investment Income, Interest and Dividend 131,309 155,926
INTEREST EXPENSE    
Customer accounts 18,772 23,949
FHLB advances and other borrowings 17,103 28,263
Interest Expense 35,875 52,212
Net interest income 95,434 103,714
Provision for loan losses 3,600 11,210
Net interest income after provision for loan losses 91,834 92,504
OTHER INCOME    
Gain on sale of investments 0 0
Other 4,957 4,645
Noninterest Income 4,957 4,645
OTHER EXPENSE    
Compensation and benefits 21,072 18,675
Occupancy 4,446 3,931
FDIC insurance premiums 3,342 4,193
Other 9,438 7,564
Noninterest Expense 38,298 34,363
Loss on real estate acquired through foreclosure, net (3,319) (10,570)
Income before income taxes 55,174 52,216
Income tax provision 19,892 18,798
NET INCOME $ 35,282 $ 33,418
PER SHARE DATA    
Basic earnings (in dollars per share) $ 0.33 $ 0.31
Diluted earnings (in dollars per share) $ 0.33 $ 0.31
Cash dividends per share (in dollars per share) $ 0.08 $ 0.08
Basic weighted average number of shares outstanding (in shares) 105,998,184 107,845,011
Diluted weighted average number of shares outstanding, including dilutive stock options (in shares) 106,043,914 107,894,572
v2.4.0.6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $)
In Thousands, unless otherwise specified
 3 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Net income $ 35,282 $ 33,418
Other comprehensive income (loss) net of tax:    
Net unrealized losses on available-for-sales securities (2,636) (2,519)
Related tax benefit 969 926
Reclassification adjustment of net gain from sale of available-for-sale securities included in net income 0 0
Related tax benefit (expense) 0 0
Other comprehensive loss (1,667) (1,593)
Comprehensive income $ 33,615 $ 31,825
v2.4.0.6
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)
In Thousands, unless otherwise specified
 3 Months Ended
Dec. 31, 2012
Dec. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES    
Net income $ 35,282 $ 33,418
Adjustments to reconcile net income to net cash provided by operating activities:    
Amortization (accretion) of fees, discounts, premiums and intangible assets, net 536 6,890
Cash received from FDIC under loss share 4,566 6,761
Depreciation 2,300 1,875
Stock option compensation expense 300 300
Provision for loan losses 3,600 11,210
Loss on real estate held for sale, net 1,193 19,859
Decrease (increase) in accrued interest receivable 1,058 (1,391)
Increase in FDIC loss share receivable 0 (1,356)
Increase (decrease) in income taxes payable (3,038) 18,813
Decrease in other assets 30,191 3,868
Increase (decrease) in accrued expenses and other liabilities (15,437) 2,021
Net cash provided by operating activities 60,551 102,268
CASH FLOWS FROM INVESTING ACTIVITIES    
Net principal collections (loan originations) 187,382 203,949
FHLB stock redemptions 1,382 0
Available-for-sale securities purchased (261,966) (581,337)
Principal payments and maturities of available-for-sale securities 31,404 276,982
Available-for-sale securities sold 43,899 3,500
Held-to-maturity securities purchased (264,781) 0
Principal payments and maturities of available-for-sale securities 50,522 4,845
Net cash received from acquisition 202,308 50,451
Proceeds from sales of real estate held for sale 30,145 28,801
Proceeds from sales of covered REO 3,043 11,881
Premises and equipment purchased and REO improvements (12,185) (9,308)
Net cash provided (used) by investing activities 11,153 (10,236)
CASH FLOWS FROM FINANCING ACTIVITIES    
Net increase (decrease) in customer accounts (77,942) 73,982
Net decrease in borrowings (22,471) (18,873)
Proceeds from exercise of common stock options 63 2
Dividends paid on common stock (17,250) (8,517)
Treasury stock purchased (44,747) (20,311)
Decrease in advance payments by borrowers for taxes and insurance (23,489) (24,406)
Net cash provided (used) by financing activities (185,836) 1,877
Increase (decrease) in cash and cash equivalents (114,132) 93,909
Cash and cash equivalents at beginning of period 751,430 816,002
Cash and cash equivalents at end of period 637,298 909,911
Non-cash investing activities    
Non-covered real estate acquired through foreclosure 22,762 42,774
Covered real estate acquired through foreclosure 3,096 5,472
Cash paid during the period for    
Interest 37,457 53,776
Income taxes 0 0
The following summarizes the non-cash activities related to acquisitions    
Fair value of assets acquired 810,766 124,594
Fair value of liabilities assumed (766,871) (154,493)
Net fair value of assets (liabilities) $ 43,895 $ (29,899)
v2.4.0.6
Summary of Significant Accounting Policies
 3 Months Ended
Dec. 31, 2012
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
The consolidated unaudited interim financial statements included in this report have been prepared by Washington Federal, Inc. (“The Company”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect amounts reported in the financial statements. Actual results could differ from these estimates. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation are reflected in the interim financial statements. The September 30, 2012 Consolidated Statement of Financial Condition was derived from audited financial statements.
The information included in this Form 10-Q should be read in conjunction with Company’s 2012 Annual Report on Form 10-K (“2012 Form 10-K”) as filed with the SEC. Interim results are not necessarily indicative of results for a full year.
The significant accounting policies used in preparation of our consolidated financial statements are disclosed in our 2012 Form 10-K. Other than as discussed below, there have not been any material changes in our significant accounting policies compared to those contained in our 2012 Form 10-K.
Off-Balance-Sheet Credit Exposures – The only material off-balance-sheet credit exposures are loans in process and unused lines of credit, which had a combined balance at December 31, 2012, excluding covered loans, of $252,553,000. The Company estimates losses on off-balance-sheet credit exposures by including the exposures with the related principal balance outstanding and then applying its general reserve methodology.
Certain reclassifications have been made to the financial statements to conform prior periods to current classifications.
v2.4.0.6
Acquisitions
 3 Months Ended
Dec. 31, 2012
Business Combinations [Abstract]  
Acquisitions
Acquisitions

South Valley Bank and Trust
Effective as of the close of business October 31, 2012, Washington Federal completed the acquisition of South Valley Bank and Trust, headquartered in Klamath Falls, Oregon (“South Valley”). The acquisition provided $383 million of net loans, $107 million of net covered loans, $735 million of deposit accounts, including $533 million in transaction deposit accounts and 24 branch locations in Central and Southern Oregon. Total consideration at closing of $44 million, including $33 million of Washington Federal, Inc. stock and $10 million of cash resulting from the collection of certain earn-out assets. If other earn out assets are collected over time, the total purchase price could be reduced by up to $14 million.

The acquisition was accounted for under the acquisition method of accounting. The purchased assets and assumed liabilities were recorded at their respective acquisition date estimated fair values. The purchase accounting for acquired assets and liabilities is subject to future adjustment based on the completion of valuations. All fair adjustment amounts currently recognized in the financial statements at December 31, 2012 were determined provisionally as the purchase accounting fair value analysis was incomplete as of December 31, 2012. The determination of whether a loan is impaired and accounted for under ASC 310 was still in process as part of the acquisition date loan valuation; therefore, all loans are categorized as acquired loans without differentiation between non-impaired and credit impaired at December 31, 2012.

Loans that were classified as non-performing loans by South Valley are no longer classified as non-performing because, at acquisition, the carrying value of the loans was adjusted to reflect fair value. Management believes that the new book value reflects an amount that will ultimately be collected.

The operating results of the Company include the operating results produced by the acquired assets and assumed liabilities for the period from November 1, 2012 to December 31, 2012.
 
The table below displays the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed:

 
 
 
 
 
Fair Value Recorded by
 
 
Washington Federal
 
 
(In thousands)
 Assets:
 
 
 Cash and cash equivalents
 
$
212,711

 Available for sale securities
 
43,899

 FHLB stock
 
5,211

 Loans receivable, net
 
343,510

 Covered loans receivable, net
 
107,075

 FDIC indemnification asset
 
17,364

 Property and equipment, net
 
24,561

 Core deposit intangible
 
3,000

 Real estate held for sale
 
10,857

 Covered real estate held for sale
 
6,031

 Goodwill
 
8,692

 Other assets
 
27,855

   Total Assets
 
810,766

 
 
 
 Liabilities:
 
 
 Customer accounts
 
735,415

 FHLB advances
 
22,471

 Other liabilities
 
8,985

   Total Liabilities
 
766,871

 
 
 
 Net assets acquired
 
$
43,895

 
 
 
Consideration provided:
 
 
 Equity Issued
 
$
33,492

 Cash paid
 
10,403

 
 
$
43,895
v2.4.0.6
Dividends
 3 Months Ended
Dec. 31, 2012
Dividends [Abstract]  
Dividends
Dividends
On December 31, 2012, the Company paid its 120th consecutive quarterly cash dividend on common stock. Dividends per share were $.08 and $.08 for the quarters ended December 31, 2012 and 2011, respectively.
v2.4.0.6
Loans Receivable (excluding Covered Loans)
 3 Months Ended
Dec. 31, 2012
Loans Receivable [Abstract]  
Loans Receivable (excluding Covered Loans)
– Loans Receivable (excluding Covered Loans)

 
December 31, 2012
 
September 30, 2012
 
(In thousands)
Non-acquired loans
 
 
 
 
 
 
 
  Single-family residential
$
5,573,590

 
69.4
%
 
$
5,778,922

 
73.5
%
  Construction - speculative
123,871

 
1.5

 
129,637

 
1.6

  Construction - custom
228,140

 
2.9

 
211,690

 
2.7

  Land - acquisition & development
109,458

 
1.4

 
124,677

 
1.6

  Land - consumer lot loans
137,106

 
1.7

 
141,844

 
1.8

  Multi-family
721,802

 
9.0

 
710,140

 
9.0

  Commercial real estate
347,564

 
4.3

 
319,210

 
4.1

  Commercial & industrial
171,644

 
2.1

 
162,823

 
2.1

  HELOC
111,986

 
1.4

 
112,902

 
1.4

  Consumer
59,131

 
0.7

 
63,374

 
0.8

Total non-acquired loans
7,584,292

 
94.4

 
7,755,219

 
98.6

Acquired loans
 
 
 
 
 
 
 
  Single-family residential
15,495

 
0.2

 
—

 
—

  Construction - speculative
90

 
—

 
—

 
—

  Construction - custom
994

 
—

 
—

 
—

  Land - acquisition & development
3,520

 
—

 
—

 
—

  Land - consumer lot loans
3,891

 
0.1

 
—

 
—

  Multi-family
9,333

 
0.2

 
—

 
—

  Commercial real estate
178,727

 
2.2

 
—

 
—

  Commercial & industrial
106,931

 
1.3

 
—

 
—

  HELOC
13,810

 
0.2

 
—

 
—

  Consumer
10,759

 
0.1

 
—

 
—

Total credit-impaired acquired loans
343,550

 
4.3

 
—

 
—

Credit-impaired acquired loans
 
 
 
 
 
 
 
  Single-family residential
340

 
—

 
342

 
—

  Construction - speculative
1,755

 
—

 
1,889

 
—

  Land - acquisition & development
2,677

 
—

 
3,702

 
0.1

  Multi-family
—

 
—

 
601

 
—

  Commercial real estate
83,657

 
1.1

 
87,154

 
1.1

  Commercial & industrial
1,883

 
—

 
3,292

 
—

  HELOC
12,849

 
0.2

 
14,040

 
0.2

  Consumer
90

 
—

 
97

 
—

Total credit-impaired acquired loans
103,251

 
1.3

 
111,117

 
1.4

Total loans
 
 
 
 
 
 
 
   Single-family residential
5,589,425

 
69.6

 
5,779,264

 
73.5

   Construction - speculative
125,716

 
1.5

 
131,526

 
1.6

   Construction - custom
229,134

 
2.9

 
211,690

 
2.7

   Land - acquisition & development
115,655

 
1.4

 
128,379

 
1.7

   Land - consumer lot loans
140,997

 
1.8

 
141,844

 
1.8

   Multi-family
731,135

 
9.2

 
710,741

 
9

   Commercial real estate
609,948

 
7.6

 
406,364

 
5.2

   Commercial & industrial
280,458

 
3.4

 
166,115

 
2.1

   HELOC
138,645

 
1.8

 
126,942

 
1.6

   Consumer
69,980

 
0.8

 
63,471

 
0.8

Total loans
8,031,093

 
100
%
 
7,866,336

 
100
%
Less:
 
 
 
 
 
 
 
Allowance for probable losses
126,827

 
 
 
133,147

 
 
Loans in process
204,566

 
 
 
213,286

 
 
Discount on acquired loans
50,817

 
 
 
33,484

 
 
Deferred net origination fees
33,973

 
 
 
34,421

 
 
 
416,183

 
 
 
414,338

 
 
 
$
7,614,910

 
 
 
$
7,451,998

 
 
The following table presents the changes in the accretable yield for credit impaired acquired loans as of December 31, 2012:
 
Credit impaired acquired loans
 
Accretable
Yield
 
Carrying
Amount of
Loans
 
(In thousands)
Balance as of October 1, 2012
$
16,928

 
$
77,613

Additions
—

 
—

Accretion
(1,360
)
 
1,360

Transfers to REO
—

 
(957
)
Payments received, net
—

 
(8,677
)
Balance as of December 31, 2012
$
15,568

 
$
69,339



The following table sets forth information regarding non-accrual loans held by the Company as of the dates indicated:
 
 
December 31, 2012
 
September 30, 2012
 
(In thousands)
Non-accrual loans:
 
 
 
 
 
 
 
Single-family residential
$
108,570

 
66.6
%
 
$
131,193

 
75.7
%
Construction - speculative
9,471

 
5.8

 
10,634

 
6.1

Construction - custom
39

 
—

 
539

 
0.3

Land - acquisition & development
14,318

 
8.8

 
13,477

 
7.8

Land - consumer lot loans
4,024

 
2.5

 
5,149

 
3.0

Multi-family
7,907

 
4.8

 
4,185

 
2.4

Commercial real estate
16,958

 
10.4

 
7,653

 
4.4

Commercial & industrial
987

 
0.6

 
16

 
—

HELOC
489

 
0.3

 
198

 
0.1

Consumer
353

 
0.2

 
383

 
0.2

Total non-accrual loans
$
163,116

 
100
%
 
$
173,427

 
100
%

The following tables provide an analysis of the age of loans in past due status as of December 31, 2012 and September 30, 2012, respectively.
 
December 31, 2012
Amount of Loans
 
Days Delinquent Based on $ Amount of Loans
 
% based
on $
Type of Loan
Net of LIP & Chg.-Offs
 
Current
 
30
 
60
 
90
 
Total
 
 
(In thousands)
Non-acquired loans
 
 
 
 
 
 
 
 
 
 
 
 
 
Single-Family Residential
$
5,570,390

 
$
5,414,979

 
$
36,484

 
$
25,122

 
$
93,805

 
$
155,411

 
2.79
%
Construction - Speculative
86,902

 
78,536

 
1,373

 
1,911

 
5,082

 
8,366

 
9.63

Construction - Custom
120,382

 
120,164

 
32

 
147

 
39

 
218

 
0.18

Land - Acquisition & Development
106,679

 
94,278

 
557

 
231

 
11,613

 
12,401

 
11.62

Land - Consumer Lot Loans
136,928

 
132,135

 
776

 
45

 
3,972

 
4,793

 
3.50

Multi-Family
689,164

 
681,849

 
3,102

 
130

 
4,083

 
7,315

 
1.06

Commercial Real Estate
326,551

 
311,428

 
7,471

 
767

 
6,885

 
15,123

 
4.63

Commercial & Industrial
171,634

 
170,760

 
223

 
636

 
15

 
874

 
0.51

HELOC
111,986

 
111,473

 
112

 
—

 
401

 
513

 
0.46

Consumer
59,131

 
57,104

 
1,282

 
393

 
352

 
2,027

 
3.43

Total non-acquired loans
7,379,747

 
7,172,706

 
51,412

 
29,382

 
126,247

 
207,041

 
2.81

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquired loans
 
 
 
 
 
 
 
 
 
 
 
 
 
Single-Family Residential
15,495

 
15,306

 
$
108

 
26

 
55

 
189

 
1.22
%
Construction - Speculative
90

 
90

 
—

 
—

 
—

 
—

 
—
%
Construction - Custom
994

 
994

 
—

 
—

 
—

 
—

 
—
%
Land - Acquisition & Development
3,520

 
3,520

 
—

 
—

 
—

 
—

 
—
%
Land - Consumer Lot Loans
3,891

 
3,839

 
—

 
—

 
52

 
52

 
—
%
Multi-Family
9,333

 
5,659

 
—

 
—

 
3,674

 
3,674

 
—
%
Commercial Real Estate
178,727

 
175,712

 
—

 
1,661

 
1,354

 
3,015

 
1.69
%
Commercial & Industrial
106,931

 
101,134

 
5,130

 
—

 
667

 
5,797

 
5.42
%
HELOC
13,810

 
13,706

 
16

 
—

 
88

 
104

 
0.75
%
Consumer
10,759

 
10,640

 
84

 
35

 
—

 
119

 
1.11
%
Total credit-impaired acquired loans
343,550

 
330,600

 
5,338

 
1,722

 
5,890

 
12,950

 
3.77
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit-impaired acquired loans
 
 
 
 
 
 
 
 
 
 
 
 
 
Single-Family Residential
340

 
340

 
—

 
—

 
—

 
—

 
—

Construction - Speculative
1,755

 
1,755

 
—

 
—

 
—

 
—

 
—

Construction - Custom
—

 
—

 
—

 
—

 
—

 
—

 
—

Land - Acquisition & Development
2,676

 
2,612

 
—

 
—

 
64

 
64

 
2.39

Land - Consumer Lot Loans
—

 
—

 
—

 
—

 
—

 
—

 
—

Multi-Family
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial Real Estate
83,637

 
77,474

 
—

 
722

 
5,441

 
6,163

 
7.37

Commercial & Industrial
1,883

 
1,527

 
51

 
—

 
305

 
356

 
18.91

HELOC
12,849

 
12,849

 
—

 
—

 
—

 
—

 
—

Consumer
90

 
89

 
—

 
—

 
1

 
1

 
1.11

Total credit-impaired acquired loans
103,230

 
96,646

 
51

 
722

 
5,811

 
6,584

 
6.38

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans
$
7,826,527

 
$
7,599,952

 
$
56,801

 
$
31,826

 
$
137,948

 
$
226,575

 
2.89


September 30, 2012
Amount of Loans
 
Days Delinquent Based on $ Amount of Loans
 
% based
on $
Type of Loan
Net of LIP & Chg.-Offs
 
Current
 
30
 
60
 
90
 
Total
 
 
(In thousands)
Single-Family Residential
$
5,776,002

 
$
5,618,261

 
$
34,035

 
$
16,276

 
$
107,430

 
$
157,741

 
2.73
%
Construction - Speculative
88,849

 
85,785

 
142

 
190

 
2,732

 
3,064

 
3.45

Construction - Custom
107,882

 
107,215

 
128

 
—

 
539

 
667

 
0.62

Land - Acquisition & Development
119,192

 
106,321

 
853

 
1,004

 
11,014

 
12,871

 
10.80

Land - Consumer Lot Loans
141,772

 
134,560

 
1,688

 
375

 
5,149

 
7,212

 
5.09

Multi-Family
676,917

 
672,263

 
718

 
67

 
3,869

 
4,654

 
0.69

Commercial Real Estate
292,261

 
284,427

 
699

 
3,153

 
3,982

 
7,834

 
2.68

Commercial & Industrial
162,802

 
162,778

 
8

 
—

 
16

 
24

 
0.01

HELOC
112,902

 
112,482

 
158

 
64

 
198

 
420

 
0.37

Consumer
63,374

 
61,405

 
1,155

 
431

 
383

 
1,969

 
3.11

Total non-acquired loans
$
7,541,953

 
$
7,345,497

 
$
39,584

 
$
21,560

 
$
135,312

 
$
196,456

 
2.60
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit-impaired acquired loans
 
 
 
 
 
 
 
 
 
 
 
 
 
Single-Family Residential
342

 
342

 
—

 
—

 
—

 
—

 
—
%
Construction - Speculative
1,889

 
1,889

 
—