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A Guide to Applying for a Bank Loan

Washington Federal sees boost in earnings

Washington Federal, Inc. parent company of Washington Federal, announced earnings of $40,361,000 or $0.42 per diluted share for the quarter ended March 31, 2015, compared to $38,657,000 or $0.38 per diluted share for the quarter ended March 31, 2014, an increase of 10.5%.   The quarter produced a return on average assets of 1.11% and a return on average equity of 8.29%.

Washington Federal’s footprint in Arizona also continues to grow. Over the past 18 months, as a result of the Bank of America acquisition whereby Washington Federal acquired 13 Bank of America branches, the bank’s has grown to 35 branches across Arizona. In addition, over the past year, Washington Federal has added its first-ever Arizona Regional President in Mike Brown and developed a business banking initiative via the hiring of banking veteran Ben Danner.

Chairman, President & CEO Roy M. Whitehead commented, “It was a good, solid quarter  for  the  Company,  with  virtually  every  key  measure  of  performance  showing improvement. That enabled us to reward shareholders with more aggressive share repurchases and an 18% increase in the cash dividend during the quarter. Due to improved business conditions in our largest markets, we expect the Company to continue to do well.”

Loans receivable grew by $167 million, or 2.0%, during the quarter to $8.4 billion as of March 31, 2015.  The fiscal year to date increase was $273 million or 3.3%.  Loan originations for the quarter totaled $691 million, a $281 million or 69% increase over the same quarter of the prior year.   Commercial loan originations made up 69% of loan originations for the current quarter.   The weighted average interest rate on loans as of March 31, 2015 was 4.61%, which is a decrease from 4.69% as of December 31, 2014. Actual yield earned on loans will be greater than the weighted average rate due to net deferred loan fees and discounts on acquired loans, which are accreted into income over the term of the loans.

Customer deposits also increased during the quarter, by $114 million to $10.7 billion and have held steady since the fiscal year-end on September 30, 2014. The mix of customer deposits has continued to shift.  Transaction accounts increased by $244 million or 4.5% during the quarter and now represent 53% of total deposits, compared to 51% as of September 30, 2014.  Over the last several years, the Company has focused on growing transaction accounts to lessen sensitivity to rising interest rates.

Due primarily to growth in loans receivable, total assets increased by $116 million this quarter to $14.6 billion.  Since the prior fiscal year-end, total assets have decreased by

$145 million or 1.0%, from $14.8 billion at September 30, 2014, primarily driven by a reduction in cash and investments.  Available for sale investments have decreased $293 million or 9.6%, and held to maturity investments decreased $68 million or 4.4% from the prior year end. During the quarter, the Company had an average balance of cash equivalents of $481 million invested overnight at a yield of approximately 0.25%.  Cash and cash equivalents increased to $675 million as of March 31, 2015.

Net interest income for the quarter was $103.9 million, a $3.2 million or 3.2% increase from the quarter ended March 31, 2014. Net interest income was higher as the mix of carrying assets shifted toward higher yielding loans compared to investments.  Reduced interest expense on customer funds was due to more transaction accounts and the continued downward repricing of time deposits.  Borrowing costs were $0.8 million or 4.5% lower for the quarter due to prepayment of an FHLB advance last quarter.  Net interest margin was 3.10% for the quarter ended March 31, 2015, up from 3.01% for the prior quarter and 3.03% for the quarter ended March 31, 2014. Average earning assets increased $95 million or 0.7% compared to the same quarter of the prior year.

Total non-performing assets, including real estate owned as a result of foreclosure, declined by $11 million during the quarter to $153 million or 1.05% of total assets. This includes the addition of $1 million in non-performing loans and $9 million in real estate owned that were acquired from Horizon Bank in 2010, for which a loss share agreement with the FDIC expired after March 31, 2015.  Excluding the one-time reclassification of covered assets, total non-performing assets decreased by 2.8%, from $147 million at September 30, 2014 to $143 million as of March 31, 2015. Total loan delinquencies were 1.20% as of March 31, 2015, a decrease from 1.44% at September 30, 2014 due to credit quality improvements and the inclusion of the covered loans noted above.   Delinquencies on single family mortgage loans, the largest component of the loan portfolio, declined during the fiscal year to 1.42% from 1.63% at September 30, 2014.

 

The provision for loan losses was a reversal of $3.9 million and $4.3 million for the quarters ended March 31, 2015 and 2014, respectively, as a result of the continued improvement in asset quality.  Net loan recoveries increased to $3.1 million in the most recent quarter from $1.5 million in the quarter ended March 31, 2014.  The Company maintains an allowance for loan losses plus a reserve for unfunded commitments that total $110 million or 1.22% of total gross loans.  This compares to $111 million or 1.26% of total gross loans as of December 31, 2014.

 

Net gain on real estate acquired through foreclosure amounted to $1.5 million during the quarter, as compared to a net gain of $0.3 million for the prior quarter and $0.6 million for the quarter ended March 31, 2014.  The Company expects the amount of gain or loss on real estate acquired to continue to fluctuate in future quarters based primarily on the timing of sales and the amount, if any, of gains or losses related to those sales.  Net gain or loss on real estate acquired through foreclosure includes gains and losses on sales, ongoing maintenance expenses and any additional valuation adjustments.

 

The Company’s efficiency ratio was 49.97% for the quarter as compared to 48.50% in the same quarter of the prior year.  Total operating expenses increased by $5.3 million or

10.1% for the quarter ended March 31, 2014, largely driven by an increase in employees and branch locations provided by the branch acquisitions of the prior fiscal year and the related costs to service the acquired transaction accounts.  Deposit related service fee income increased by $2.0 million as compared to the same quarter of the prior year.

 

On February 16, 2015, the Company paid a cash dividend of $.13 per share to common stockholders of record on February 2, 2015.   This was the Company’s 128th quarterly cash dividend. During the quarter, the Company repurchased 2.5 million shares of stock at a weighted average price of $21.21.  For the fiscal year 2015, the Company has repurchased 3.6 million shares of stock at a weighted average price of $21.39 and has further authorization to repurchase an additional 1.4 million shares.  The Company has returned 162% of earnings to shareholders for the quarter and 132% for the six months ended March 31, 2015 through the combination of cash dividends and share repurchases. The ratio of tangible common equity to tangible assets was 11.65% as of March 31, 2015.

capital

How can companies increase chances of securing capital?

Silicon Valley Bank committed to lend or invest at least $100 million to technology and life science companies based in Arizona over the next five years, yet many experts say lack of money is preventing the state’s tech sector from exploding.

“One area we still need to improve is in the area of capital availability,” said Steven G. Zylstra, president and CEO of the Arizona Technology Council. “Arizona lags behind our competitors in terms of access to capital.”

So what are banks looking for in up-and-coming companies in order to decide if they are worth the risk?

“There is a misconception about business lending, particularly with start-ups, that the application — all of the factual data surrounding the request, the projections, financial statement of the owner and business plans — are the most important things,” said Tim Bruckner, managing director and regional manager of commercial banking for BMO Harris Bank. “Though these items are important in underwriting, we are really looking for entrepreneurs that also show the ability to adapt to a changing environment, demonstrate knowledge and passion for their business and show solid understanding of where their business fits in its competitive environment. Too often, business owners overlook a banker’s interest and understanding in these areas.”

With that said, it is very difficult for a traditional bank to finance a start-up or new business, according to Mike Brown, Arizona regional president at Washington Federal.

“However, the ones that make sense have a well-developed and thought-out business plan, coupled with a strong guarantor,” Brown said.

Ed Zito, president of Alliance Bank of Arizona, the largest locally headquartered bank in Arizona, said Alliance looks at a start-up’s firm capitalization, cash position, “cash burn” rate and cash flow margins.

“Start-up company financing is a risk to be borne by the equity investors,” Zito said. “That said, accounts receivable, support by the ownership or equity investors can mitigate start-up risk.”

So when can a start-up do to increase its chances of getting financed in today’s heavily regulated and competitive economic climate?

Before you get started, Bruckner said to seek counsel from someone who has done it successfully.

“It is always good to hear the success stories, but these individuals will also have great insight into the stumbling blocks and things they would have done differently if they knew then what they know now,” Bruckner said.

Bruckner said first-time borrowers should also demonstrate that they have planned for contingencies, such as a cash shortfall or potential loss of a key customer.

“A start-up’s best chances at securing a loan is having an experienced management team or ownership, knowledge of the industry, proprietary product, service, technology, a demonstrated marketplace acceptance of the product or service and the ability to sustain the start-up until the company is cash-flow positive are crucial factors to consider,” Zito said.

Brown said that it’s imperative for new companies to have well-crafted business plans with reasonable targets to achieve.

“Make sure all financing sources are covered, because everybody has their particular niche or focus and your plan might fit that focus,” Brown said. “Look at traditional sources like banks, but engage all non-traditional sources like independent finance companies.”

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Washington Federal Promotes Christopher Sailus

Christopher SailusWashington Federal has promoted Christopher Sailus to Northeast Arizona Retail Banking Division Manager, Vice President, announced Mike Brown, Washington Federal’s Arizona Regional President. In his new role, Sailus will be responsible for managing all branch activity within the Company’s northeast Arizona footprint, including Scottsdale, Superstition Springs, Fountain Hills, Mesa, Gilbert, Payson, Globe, Show Low, and Safford.

“Chris came to Washington Federal with nearly 30 years of banking expertise. His experience ranges from retail mortgage production to business banking. We are confident his skills and knowledge will be an asset in our expanding Arizona market,” commented Brown.

Most recently, Sailus served as the Branch Manager of Washington Federal’s flagship location in Seattle’s Ballard neighborhood, which is not only the original Washington Federal branch, but also the largest in the Company. He has distinguished himself there with unprecedented consumer loan production. Previous experience also includes working at Umpqua Bank and Alaska USA Federal Credit Union.

Sailus holds a Masters in Business Administration from Wilkes University. He is involved in the local chamber of commerce and serves as the Treasurer of the Northwest Eco Building Guild. In his leisure time he enjoys hiking and kayaking.

Washington Federal, with headquarters in Seattle, Washington, has over 250 branches in eight western states, including 36 locations throughout Arizona, all offering consumer and commercial deposit services, insurance products, financing for small to middle market businesses, commercial and residential real estate, including consumer mortgages and home equity lines of credit. As of June 30, 2014, the Company reported $14.8 billion in assets, $10.8 billion in deposits and $2.0 billion in stockholders’ equity.

To find out more about Washington Federal, please visit our website. Washington Federal uses its website to distribute financial and other material information about the Company, which is routinely posted on and accessible at www.washingtonfederal.com.

A Guide to Applying for a Bank Loan

Washington Federal Promotes Paris Davis

Paris DavisWashington Federal has promoted Paris Davis to Northwest Arizona Retail Banking Division Manager, Vice President, announced Mike Brown, Washington Federal’s Arizona Regional President. In her new role, Davis will be responsible for managing all branch activity and growth within the Company’s northwest Arizona footprint, including Phoenix, Sun City, Sun City West, Glendale, Goodyear, Prescott Valley, Yuma, and Parker.

“Paris has been instrumental in the expansion of Washington Federal’s Arizona presence -which now includes 36 branches. She’s been with Washington Federal for 30 years and has extensive knowledge and experience in a variety of retail areas, specifically branch and deposit operations. We know she’ll continue to be invaluable as our new Northwest Arizona team leader,” commented Brown.

Davis is a longtime Phoenix resident and most recently served as Washington Federal’s Phoenix Deposit Operations Manager, Assistant Vice President. Previous roles also include working as the Phoenix Human Resources Manager, and Accounting Assistant. She enjoys travelling, boating and spending time with friends and family in her leisure.

Washington Federal, with headquarters in Seattle, Washington, has over 250 branches in eight western states, including 36 locations throughout Arizona, all offering consumer and commercial deposit services, insurance products, financing for small to middle market businesses, commercial and residential real estate, including consumer mortgages and home equity lines of credit. As of June 30, 2014, the Company reported $14.8 billion in assets, $10.8 billion in deposits and $2.0 billion in stockholders’ equity.

To find out more about Washington Federal, please visit our website. Washington Federal uses its website to distribute financial and other material information about the Company, which is routinely posted on and accessible at www.washingtonfederal.com.

Paul Sweetland joins Cushman & Wakefield

Paul SweetlandPaul Sweetland has been named Senior Director in the Industrial Properties Division of Cushman & Wakefield of Arizona, Inc.

Sweetland leases and sells industrial properties with a specialization in freestanding owner/user buildings and multi-tenant developments. Clients served by Sweetland include Western Refining, Harsch Investment Properties, Westcore Properties, Washington Federal, MDI Capital, Panattoni Development, Equity Building Services, City National Bank and GE Capital.

Sweetland brings to Cushman & Wakefield more than 16 years of experience in the industrial real estate market.  He spent 13 years practicing in the Las Vegas market and has worked in the Metro Phoenix area for the past three years.

“We are thrilled to have Paul join us as we continue to grow our industrial presence in the greater Phoenix market,” commented Joe Cook, C&W’s COO, U.S. Markets.

Sweetland holds the designation of Society of Industrial and Office Realtors (SIOR). He earned real estate licenses from both the Arizona School of Real Estate and Business and the Nevada School of Real Estate and Business.

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Washington Federal Promotes Hernandez to Assistant VP

Washington Federal announced Debbie Hernandez has been promoted to Assistant Vice President, Branch Manager. Hernandez has been with Washington Federal for more than 12 years.

In her position, Hernandez is responsible for increasing loan production and client base by growing the business checking and savings accounts and consumer checking and savings accounts. She is also responsible for increasing Washington Federal’s presence in the West Valley. Prior to joining Washington Federal, Hernandez was an insurance agent in Ohio.

“Debbie is a huge asset to our team here at Washington Federal,” said Trevor Bush, senior vice president and manager of Arizona retail banking division. “We are excited to see her continue to expand the presence and reach of Washington Federal.”

Hernandez earned her bachelor’s degree with honors in business from the Trumbull Business College in Warren, Ohio. She is also involved with the Arizona Hispanic Chamber of Commerce and is a volunteer for St. Mary’s Food Bank.

Hernandez is a Surprise resident.

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Roberge joins Washington Federal as Branch Manager

Washington Federal has announced that Justin Roberge has joined the bank as branch manager of the Sun City Branch.

In his new role, Roberge will be responsible for providing leadership through employee motivation and development as well as managing the overall success of the branch. He will also be responsible for business development, deposit growth and promoting and selling additional bank products and services at the branch.

Prior to joining Washington Federal, Roberge held several other banking and management positions. Throughout his career, he has helped lead more than 150 employees through new product launches and was responsible for overseeing at risk banking locations, helping them become top producers.

When he’s not working, Roberge remains active in his local community as a volunteer with Hospice of the Valley as a social worker and bereavement counselor.

Roberge is a Phoenix resident.

Todd Hatch

Washington Federal hires local talent

Washington Federal has announced that Todd Hatch has joined the bank as assistant vice president/regional sales manager. With over 14 years in corporate banking, he brings extensive experience to his new position, including a strong background specializing in the financing of transportation and construction equipment.

In his new role, Hatch will oversee equipment finance business development in a variety of markets, including healthcare, transportation, manufacturing and heavy commercial equipment.

Hatch received his bachelor’s degree in Spanish with minor in Latin American literature from Brigham Young University.

He is a Gilbert resident.

Business Credit Score

Washington Federal Names Business Banking Credit Analyst

Washington Federal has announced Brian McCrea as its newest business banking credit analyst. McCrea’s primary focus will be to assist with the origination of business loans to new and existing clients.

McCrea’s prior experience includes serving as a consumer loan underwriter at a major bank in both Des Moines, Iowa and Tempe. He has a breadth of knowledge in consumer loan modification workouts and refinancing, home lending, credit analytics and analysis.

McCrea received his bachelor’s degree in finance from the University of Iowa.

He is a Queen Creek resident.