Exhibit 99.1

exhibit991logoa05.gif                

Tuesday, October 16, 2018
FOR IMMEDIATE RELEASE


Washington Federal Reports Record Earnings



SEATTLE, WASHINGTON – Washington Federal, Inc. (Nasdaq: WAFD) (the "Company"), parent company of Washington Federal, N.A. today announced record annual earnings of $203,850,000 or $2.40 per diluted share for the fiscal year ended September 30, 2018, compared to $173,532,000 or $1.94 per diluted share for the year ended September 30, 2017, a $0.46 or 23.7% increase in earnings per diluted share. Return on equity for the fiscal year ended September 30, 2018 was 10.16% compared to 8.64% for the year ended September 30, 2017. Return on assets for the year ended September 30, 2018 was 1.31% compared to 1.16% for the prior year.
President and Chief Executive Officer Brent J. Beardall commented, “We are pleased to report that Washington Federal closed its 101st year in business with record earnings due to strong loan and deposit growth, top line revenue growth, lower tax expense, solid credit quality and technological improvements to better serve our clients. It is gratifying to see that efforts to reposition the Company's interest rate risk over the last decade are paying dividends. Our net interest income increased by 9.31% for the year despite rising short-term interest rates. Strong financial performance enabled the Company to return 108% of earnings to shareholders during fiscal year 2018 in the form of cash dividends and share repurchases and still finish the year with a tangible common equity to tangible asset ratio of 10.84%, which ranked us in the top 10% of the largest 100 publicly traded banks in the United States."

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Total assets were $15.9 billion as of September 30, 2018, a $612 million or 4.0% increase from September 30, 2017. Asset growth since September 30, 2017 resulted primarily from a $594 million or 5.5% increase in net loans receivable.
Customer deposits were $11.4 billion as of September 30, 2018, an increase of $552 million or 5.1% since September 30, 2017. Transaction accounts increased by $221 million or 3.5% during the fiscal year 2018, while time deposits increased $331 million or 7.4%. As of September 30, 2018, 57.8% of the Company's deposits were in transaction accounts. Core deposits, defined as all transaction accounts and time deposits less than $250,000, totaled 93.4% of deposits at September 30, 2018.
Borrowings from the Federal Home Loan Bank ("FHLB") totaled $2.3 billion as of September 30, 2018, a net increase of $105 million or 4.7% since September 30, 2017. The weighted average rate for FHLB borrowings was 2.66% as of September 30, 2018 and 2.80% at September 30, 2017. The decline of 14 basis points is due to the maturity of some higher cost long-term FHLB advances. $650 million of the $2.3 billion advances outstanding at September 30, 2018 have effective maturities greater than one year.
Loan originations totaled $3.8 billion for fiscal year 2018, a decrease from the total of $4.2 billion in fiscal year 2017. Partially offsetting the loan origination volume in 2018 were loan repayments of $3.3 billion. During fiscal 2017, loan repayments totaled $3.1 billion. Commercial loans represented 67% of all loan originations during fiscal 2018 with consumer loans accounting for the remaining 33%. The Company views organic loan growth as the highest and best use of its capital and prefers commercial loans in this low-rate environment due to the fact they generally have floating interest rates and shorter durations. The weighted average interest rate on loans increased to 4.48% as of September 30, 2018 from 4.28% at September 30, 2017, due primarily to variable rate loans increasing in yield with rising short-term interest rates.
Asset quality remained strong as the ratio of non-performing assets to total assets improved to 0.44% as of September 30, 2018, compared to 0.46% at September 30, 2017. Since September 30, 2017, real estate owned decreased by $9.4 million, other property owned increased by $3.1 million and non-accrual loans increased by $6.1 million. Delinquencies on loans were

2




0.42% of total loans at September 30, 2018 compared to 0.40% at September 30, 2017. The Company realized net recoveries on loans (as opposed to charge-offs) of $11.1 million for fiscal year 2018. The allowance for loan losses and reserve for unfunded commitments increased by $5.7 million to $136.5 million as of September 30, 2018 and was 1.06% of gross loans outstanding, as compared to 1.07% of gross loans as of September 30, 2017.
On August 24, 2018, the Company paid a cash dividend of $0.18 per share to common stockholders of record on August 10, 2018. This was the Company’s 142nd consecutive quarterly cash dividend. During fiscal 2018, the Company repurchased 4.9 million shares of common stock at a weighted average price of $33.74 per share and has authorization to repurchase approximately 2.0 million additional shares. The Company varies the pace of share repurchases depending on several factors, including share price, business opportunities and capital levels. Tangible common stockholders’ equity per share increased by $0.80 or 4.10% during fiscal 2018 to $20.38 and the ratio of tangible common equity to tangible assets was 10.84% as of September 30, 2018.
Net interest income was $472.1 million for fiscal 2018, an increase of $40.2 million or 9.3% from the prior year. The increase in net interest income was primarily due to both higher average balances and higher rates on interest-earning assets in fiscal 2018. Average earning assets increased by $655.8 million or 4.75%. Net interest margin increased to 3.27% in fiscal 2018 from 3.13% for the prior year. The margin increase is primarily due to changes in the mix of interest earning assets, higher yields on variable rate loans, cash and investments, as well as a lower rate on FHLB advances due to the maturity of some higher cost long-term advances.
The Company recorded a release of loan loss allowance of $5.5 million for fiscal 2018 compared to a release of $2.1 million for the prior year. The release in fiscal 2018 was a result of continued strong credit quality, including net recoveries of $11.1 million, partially offset by growth in loans outstanding.
Total other income was $44.1 million for fiscal year 2018, a decrease of $8.1 million from $52.2 million in the prior year. The decrease from the prior year was primarily due to $8.6 million of expense from asset and liability valuation adjustments associated with the termination of the Company's FDIC loss-share agreements in fiscal year 2018. Deposit fee income was $3.3

3




million higher in fiscal year 2018 than in 2017. Fiscal year 2017 included a gain of $3.5 million on the sale of available-for-sale investment securities, while there were no such sales in fiscal year 2018.
Total operating expenses were $264.3 million for fiscal 2018, an increase of $32.8 million or 14.2% from the prior year. The Company took the opportunity allotted by the change in the tax law to make several strategic investments that resulted in higher operating expenses for the year. Those investments included a 5% salary increase for all employees earning less than $100,000; the establishment of a second technology team located in Boise, Idaho; the creation of an internal training team; and several new processes and systems. Compensation and benefits costs increased $11.3 million year-over-year primarily due to headcount increases and cost-of-living adjustments. Information technology costs increased by $5.8 million and other expenses increased by $11.9 million as both were elevated primarily due to Bank Secrecy Act ("BSA") program enhancements and other technology platform improvements. Operating expenses were $69.6 million for the 4th fiscal quarter of 2018, an increase of $7.0 million or 11.1% from the same quarter a year ago. In the 4th fiscal quarter of 2018, the Company had approximately $4.1 million of non-recurring BSA related costs and estimates that it will incur an additional $6.0 million of non-recurring costs for BSA program improvements spread over the next three quarters. Compensation and benefits costs were $3.6 million higher in the 4th fiscal quarter of 2018 than they were in the same quarter of the prior year primarily due to headcount increases and cost-of-living adjustments. The Company’s efficiency ratio of 50.4% for fiscal 2018 is higher than the 47.8% for the prior year. The efficiency ratio increased to 52.9% for the 4th fiscal quarter of 2018 from 48.7% for the same quarter a year ago. The increased efficiency ratios are due to higher expenses noted above partially offset by higher revenue in the respective periods.
On December 22, 2017, a new tax law was enacted that provides for significant changes to the U.S. Internal Revenue Code of 1986 (as amended), such as a reduction in the federal corporate tax rate from 35% to 21% effective from January 1, 2018 forward and changes or limitations to certain tax deductions. The Company has a fiscal year end of September 30, resulting in a blended federal statutory tax rate for its fiscal year 2018. Tax expense for fiscal year 2018 includes a number of discrete items, the largest of which is a discrete tax benefit of $5.4 million related to the revaluation of deferred tax assets and liabilities to reflect the change

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in statutory tax rate. For the year ended September 30, 2018, the Company recorded federal and state income tax expense of $53.4 million, which equates to a 20.76% effective tax rate. This compares to an effective tax rate of 32.27% for fiscal year 2017.
Washington Federal, a national bank with headquarters in Seattle, Washington, has 235 branches in eight western states. To find out more about Washington Federal, please visit our website www.washingtonfederal.com. Washington Federal uses its website to distribute financial and other material information about the Company.
Non-GAAP Financial Measures
Adjusted pre-tax income of $265.8 million for fiscal year 2018 is calculated by adding back the FDIC loss-share valuation adjustments of $8.6 million to pre-tax income of $257.2 million. The $8.6 million valuation adjustment was recorded in the quarter ended December 31, 2017.
Adjusted other income of $52.6 million for fiscal year 2018 is calculated by adding back the FDIC loss-share valuation adjustments of $8.6 million to other income of $44.1 million.
Adjusted efficiency ratio of 50.4% for fiscal year 2018 is calculated by dividing total operating expense of $264.3 million by adjusted total income of $524.8 million (net interest income of $472.1 million plus adjusted other income of $52.6 million).
Important Cautionary Statements
The foregoing information should be read in conjunction with the financial statements, notes and other information contained in the Company’s 2017 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 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. The words “believe,” “expect,” “anticipate,” “project,” and similar expressions signify forward-looking statements. Forward-looking statements should not be read as a

5




guarantee of future performance. By their nature, forward-looking statements involve inherent risk and uncertainties, which change over time; and actual performance, could differ materially from those anticipated by any forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statement.
# # #



Contact:

Investor Relations
Washington Federal, Inc.
425 Pike Street, Seattle, WA 98101
Brad Goode, SVP / Director of Communications
206-626-8178
brad.goode@wafd.com

6


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

 
September 30, 2018
 
September 30, 2017
 
(In thousands, except share data)
ASSETS
 
 
 
Cash and cash equivalents
$
268,650

 
$
313,070

Available-for-sale securities, at fair value
1,314,957

 
1,266,209

Held-to-maturity securities, at amortized cost
1,625,420

 
1,646,856

Loans receivable, net of allowance for loan losses of $129,257 and $123,073
11,477,081

 
10,882,622

Interest receivable
47,295

 
41,643

Premises and equipment, net
267,995

 
263,694

Real estate owned
11,298

 
20,658

FHLB and FRB stock
127,190

 
122,990

Bank owned life insurance
216,254

 
211,330

Intangible assets, including goodwill of $301,368 and $293,153
311,286

 
298,682

Federal and state income tax assets, net
1,804

 

Other assets
196,494

 
185,826

 
$
15,865,724

 
$
15,253,580

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Liabilities
 
 
 
Customer accounts
 
 
 
Transaction deposit accounts
$
6,582,343

 
$
6,361,158

Time deposit accounts
4,804,803

 
4,473,850

 
11,387,146

 
10,835,008

FHLB advances
2,330,000

 
2,225,000

Advance payments by borrowers for taxes and insurance
57,417

 
56,631

Accrued expenses and other liabilities
94,253

 
131,253

 
13,868,816

 
13,247,892

Stockholders’ equity
 
 
 
Common stock, $1.00 par value, 300,000,000 shares authorized; 135,343,417 and 134,957,511 shares issued; 82,710,911 and 87,193,362 shares outstanding
135,343

 
134,958

Paid-in capital
1,666,609

 
1,660,885

Accumulated other comprehensive (loss) income, net of taxes
8,294

 
5,015

Treasury stock, at cost; 52,632,506 and 47,764,149 shares
(1,002,309
)
 
(838,060
)
Retained earnings
1,188,971

 
1,042,890

 
1,996,908

 
2,005,688

 
$
15,865,724

 
$
15,253,580

CONSOLIDATED FINANCIAL HIGHLIGHTS
 
 
 
Common stockholders' equity per share
$
24.14

 
$
23.00

Tangible common stockholders' equity per share
$
20.38

 
$
19.58

Stockholders' equity to total assets
12.59
%
 
13.15
%
Tangible common stockholders' equity to tangible assets
10.84
%
 
11.41
%
 
 
 
 
Weighted average rates at period end
 
 
 
   Loans and mortgage-backed securities
4.19
%
 
3.96
%
   Combined loans, mortgage-backed securities and investments
4.07

 
3.82

   Customer accounts
0.87

 
0.54

   Borrowings
2.66

 
2.80

   Combined cost of customer accounts and borrowings
1.17

 
0.92

   Net interest spread
2.90

 
2.90


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


 
Three Months Ended September 30,
 
Twelve Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
 
(In thousands, except share data)
 
(In thousands, except share data)
INTEREST INCOME
 
 
 
 
 
 
 
Loans receivable
$
133,226

 
$
122,197

 
$
515,807

 
$
470,523

Mortgage-backed securities
17,819

 
15,605

 
70,407

 
60,612

Investment securities and cash equivalents
6,107

 
4,438

 
20,869

 
17,783

 
157,152

 
142,240

 
607,083

 
548,918

INTEREST EXPENSE
 
 
 
 
 
 
 
Customer accounts
22,553

 
13,850

 
72,492

 
52,023

FHLB advances and other borrowings
15,348

 
15,958

 
62,452

 
64,969

 
37,901

 
29,808

 
134,944

 
116,992

Net interest income
119,251

 
112,432

 
472,139

 
431,926

Provision (release) for loan losses
(5,500
)
 
(500
)
 
(5,450
)
 
(2,100
)
Net interest income after provision (release) for loan losses
124,751

 
112,932

 
477,589

 
434,026

 
 
 
 
 
 
 
 
OTHER INCOME
 
 
 
 
 
 
 
Gain on sale of investment securities

 
2,531

 

 
3,499

FDIC loss share valuation adjustments

 

 
(8,550
)
 

Loan fee income
895

 
980

 
3,804

 
4,290

Deposit fee income
6,404

 
6,840

 
25,904

 
22,643

Other income
4,946

 
5,910

 
22,920

 
21,783

 
12,245

 
16,261

 
44,078

 
52,215

OTHER EXPENSE
 
 
 
 
 
 
 
Compensation and benefits
31,087

 
27,483

 
123,554

 
112,257

Occupancy
9,674

 
8,890

 
36,453

 
35,260

FDIC insurance premiums
2,970

 
2,819

 
11,592

 
11,410

Product delivery
4,395

 
3,876

 
16,372

 
13,972

Information technology
7,815

 
9,105

 
34,643

 
28,859

Other expense
13,676

 
10,476

 
41,708

 
29,761

 
69,617

 
62,649

 
264,322

 
231,519

Gain (loss) on real estate owned, net
(38
)
 
425

 
(102
)
 
1,494

Income before income taxes
67,341

 
66,969

 
257,243

 
256,216

Income tax provision
15,826

 
20,865

 
53,393

 
82,684

NET INCOME
$
51,515

 
$
46,104

 
$
203,850

 
$
173,532

 
 
 
 
 
 
 
 
PER SHARE DATA
 
 
 
 
 
 
 
Basic earnings
$
0.62

 
$
0.53

 
$
2.40

 
$
1.95

Diluted earnings
0.62

 
0.52

 
2.40

 
1.94

Cash dividends per share
0.18

 
0.15

 
0.67

 
0.84

Basic weighted average number of shares outstanding
83,280,730

 
87,742,200

 
85,008,040

 
88,905,457

Diluted weighted average number of shares outstanding
83,361,122

 
87,952,087

 
85,109,843

 
89,224,207

PERFORMANCE RATIOS
 
 
 
 
 
 
 
Return on average assets
1.31
%
 
1.22
%
 
1.31
%
 
1.16
%
Return on average common equity
10.29

 
9.18

 
10.16

 
8.64

Net interest margin
3.26

 
3.22

 
3.27

 
3.13

Efficiency ratio (a)
52.94

 
48.68

 
50.37

 
47.82

(a) Efficiency ratio for the year ended September 30, 2018 excludes the impact of $8.55 million reduction to non-interest income related to FDIC loss share valuation adjustments.

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