Washington Federal Reports Increased Earnings After Branch Buys

Washington Federal (WAFD) in Seattle reported increased quarterly earnings after buying dozens of branches from Bank of America (BAC).

The $14.8 billion-asset company said in a press release Tuesday that its second-quarter profit rose 4.3% from a year earlier, to $37.9 million. Earnings per share of 37 cents met the average estimate of analysts polled by Bloomberg.

Net interest income rose 9%, to $103 million, because of higher investment income and reduced deposit costs. Total loans increased 4% from a year earlier, to $8 billion. The net interest margin compressed 10 basis points, to 3.05%.

Washington Federal's noninterest expenses increased by 9%, to $103 million. In recent months, the company has purchased 74 B of A branches in states such as Arizona, Nevada and New Mexico, adding 488 employees, nearly $2 billion in deposits and $13 million in loans.

"Loan growth, deposit mix improvement, and strengthening asset quality were all positive trends during the quarter that we expect to continue," Roy Whitehead, Washington Federal's chief executive, said in the release.

"There are good opportunities to manage costs lower over time," Whitehead added. "During the next few quarters, the company's efforts will be targeted to growing the customer base organically, completing major technology initiatives, the assimilation of recent acquisitions, and improving operational quality and efficiency."

Washington Federal recorded a $3 million reversal of its loan-loss provision during the second quarter. It had no provision a year earlier.