Washington Federal Inc. (WAFD): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
We are downgrading our recommendation on Washington Federal to Underperform due to its mounting operating expenses. The company's fiscal second-quarter (ended Mar 31) 2014 earnings were in line with the Zacks Consensus Estimate. A rise in revenues and benefit from provisions were offset by higher expenses. Steady capital deployment activities, inorganic growth strategy and balance sheet restructuring initiatives are expected to benefit the company's financials in the long run. However, the company's deposit re-pricing effort will likely be challenged once the interest rates start rising. Also, significant exposure to risky loan portfolio makes us apprehensive.

Overview:

Headquartered in Seattle, WA, Washington Federal Inc. operates as a non-diversified unitary savings and loan holding company. The company conducts operations through its federally insured savings and loan association subsidiary, Washington Federal Savings, with 231 offices in 8 western states.

Washington Federal's business primarily consists of attracting deposits from general public and investing these funds in loans of various types, including first-lien mortgages on single-family dwellings, construction loans, land acquisition and development loans, loans on multi-family and other income producing properties, home equity loans and business loans. It also invests in certain U.S. government and agency obligations, among others.

Washington Federal's deposit products include checking accounts, passbook and statement accounts, money market accounts and time deposits or certificate accounts. The company also engages in real estate investment and insurance brokerage activities.

In 2007, Washington Federal acquired First Federal Banc of the Southwest Inc. Further, in 2008, the company acquired First Mutual Bancshares Inc. In 2010, the company acquired all the deposits of Horizon Bank of Bellingham, Washington.

In 2011, Washington Federal acquired six branches from Charter Bank in New Mexico and three branches of Phoenix, AZ-based failed Western National Bank.

In Jun 2012, Washington Federal completed the divestiture of two of its branches located in El Paso, TX. The sale included $19 million of deposits. In Oct 2012, the company acquired Oregon-based South Valley Bancorp Inc.

In Jul 2013, Washington Federal announced its conversion to a national bank charter after receiving approval from the Office of the Comptroller of the Currency (OCC). The company also received approval from the Federal Reserve Bank of San Francisco to become a bank holding company.

In 2013, Washington Federal completed the acquisition of 51 retail branches of Bank of America located in Washington, Idaho, Oregon and New Mexico for $39 million.

In May 2014, Washington Federal completed the acquisition of 23 branches from Bank of America. These branches are located in Arizona and Nevada.

Washington Federal operates with Sep 30 as its fiscal year-end. As of Mar 31, 2014, the company had total assets of $14.4 billion, cash and cash equivalents of $608.2 million and stockholders' equity of $2.0 billion.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: OCC , WAFD

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