Washington Federal's Earnings Per Share Increase 12%

    Business Editors

    SEATTLE--(BUSINESS WIRE)--Jan. 13, 2005--Washington Federal, Inc. (Nasdaq:WFSL), parent company of Washington Federal Savings, today announced earnings of $36,259,000 or $.46 per diluted share for the quarter ended December 31, 2004, compared to $32,823,000 or $.41 per diluted share for the same period one year ago, a 12.2% per share increase.
    Washington Federal's total assets increased to $7,543,302,000 as of December 31, 2004, a 5.2% increase from September 30, 2004. The Company's efficiency ratio improved to 17.6% for the quarter, compared to 18.1% for the same quarter last year. The first fiscal quarter produced a return on assets of 1.96%, while return on equity amounted to 12.84%.
    Chief Executive Officer Roy M. Whitehead commented, "Earnings benefited from an increase in our net interest spread to 2.85% at December 31, 2004 from 2.43% at December 31, 2003, as a result of a shift in our asset mix from short-term assets to longer-term higher yielding assets. Additionally, we borrowed $300 million in long-term debt during the quarter to protect against rising rates. We continue to focus our attention on providing superior long-term rewards to our customers, stockholders and employees."
    On January 14, 2005, Washington Federal will pay a cash dividend of $.21 per share to common stockholders of record on December 31, 2004. This will be the Company's 88th consecutive quarterly cash dividend. For the calendar year ended December 31, 2004, an investment in Washington Federal common stock produced a total return of 7.1%.
    The Company's Annual Meeting of Stockholders will be held at 2 p.m. on January 19, 2005, at the Seattle Westin Hotel.
    Washington Federal Savings, with headquarters in Seattle, Washington, has 120 offices in eight western states.

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

December 31, 2004 September 30, 2004 ------------------ -------------------- (In thousands, except per share data) ASSETS Cash and cash equivalents $ 521,060 $ 508,361 Securities purchased under agreements to resell 200,000 200,000 Available-for-sale securities, including mortgage-backed securities of $705,755 1,071,369 899,525 Held-to-maturity securities, including mortgage-backed securities of $113,039 150,099 156,373 Securitized assets subject to repurchase, net 98,537 110,607 Loans receivable, net 5,250,975 4,982,836 Interest receivable 34,217 29,832 Premises and equipment, net 62,975 63,049 Real estate held for sale 6,948 8,630 FHLB stock 81,066 137,274 Intangible assets 58,621 58,939 Other assets 7,435 13,779 ---------- ----------- $7,543,302 $ 7,169,205 ========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Customer accounts Savings and demand accounts $4,626,855 $ 4,569,245 Repurchase agreements with customers 37,476 41,113 ---------- ----------- 4,664,331 4,610,358 FHLB advances 1,200,000 1,200,000 Other borrowings 400,000 100,000 Advance payments by borrowers for taxes and insurance 11,029 25,226 Federal and state income taxes 79,389 62,081 Accrued expenses and other liabilities 52,446 51,352 ---------- ----------- 6,407,195 6,049,017 Stockholders' equity Common stock, $1.00 par value, 100,000,000 shares authorized; 94,446,723 and 94,383,496 shares issued; 78,742,824 and 78,679,597 shares outstanding 94,457 94,383 Paid-in capital 1,162,714 1,161,627 Accumulated other comprehensive income, net of taxes 12,330 17,107 Treasury stock, at cost; 15,703,899 shares (206,666) (206,666) Retained earnings 73,272 53,737 ---------- ----------- 1,136,107 1,120,188 ---------- ----------- $7,543,302 $ 7,169,205 ========== =========== CONSOLIDATED FINANCIAL HIGHLIGHTS Stockholders' equity per share $ 14.43 $ 14.24 Stockholders' equity to total assets 15.06% 15.62% Weighted average rates at period end Loans and mortgage-backed securities (a) 6.16% 6.17% Investment securities (b) 2.86 3.01 Combined loans, mortgage- backed securities and investment securities 5.63 5.62 Customer accounts 2.11 1.96 Borrowings 4.74 4.96 Combined cost of customer accounts and borrowings 2.78 2.62 Interest rate spread 2.85 3.00

(a) Includes securitized assets subject to repurchase (b) Includes municipal bonds at tax equivalent yields and cash equivalents

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

Quarter Ended December 31, ---------------------------- 2004 2003 ----------- ------------- (In thousands, except per share data) INTEREST INCOME Loans and securitized assets subject to repurchase $ 86,885 $ 82,395 Mortgage-backed securities 12,834 11,734 Investment securities and cash equivalents 7,824 8,553 ----------- ------------- 107,543 102,682

INTEREST EXPENSE Customer accounts 23,892 21,637 FHLB advances and other borrowings 18,254 22,419 ----------- ------------- 42,146 44,056 ----------- -------------

Net interest income 65,397 58,626 Provision for loan losses - - ----------- ------------- Net interest income after provision for loan losses 65,397 58,626

OTHER INCOME Gain on sale of securities, net 64 536 Other 2,515 2,569 ----------- ------------- 2,579 3,105

OTHER EXPENSE Compensation and fringe benefits 8,334 7,559 Occupancy 1,836 1,805 Other 1,808 1,796 ----------- ------------- 11,978 11,160 Gain (loss) on real estate acquired through foreclosure, net 218 125 ----------- ------------- Income before income taxes 56,216 50,696 Income taxes 19,957 17,873 ----------- ------------- NET INCOME $ 36,259 $ 32,823 =========== =============

PER SHARE DATA Basic earnings $ .46 $ .42 Diluted earnings .46 .41 Cash dividends .21 .20 Weighted average number of shares outstanding, including dilutive stock options 79,491,074 79,124,444 Return on average assets 1.96% 1.74%

--30--APG/se*

CONTACT: Washington Federal, Inc. Cathy Cooper, 206-777-8246

KEYWORD: WASHINGTON INDUSTRY KEYWORD: BANKING EARNINGS DIVIDEND SOURCE: Washington Federal, Inc.

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