Washington Federal (WAFD) in Seattle reported substantial deposit runoff tied to its purchase of 51 Bank of America (BAC) branches.

The $14.4 billion-asset company said Tuesday that the deposit count at the branches fell $500 million between the deal's July 2013 announcement and completion during the fourth quarter. Washington Federal, which ended up with about $1.3 billion in deposits, said it had added about $4 million in deposits since closing the acquisition.

The decline in deposits was tied to account closures and transferred accounts, Washington Federal said.

Washington Federal said it paid $17.3 million for the branches and a $35.5 million premium for the deposits housed in the branches at the time of closing. The company also picked up $8.3 million in loans from the deal, which included branches in New Mexico and the Pacific Northwest.

The deposit run-off "stood out as the most obvious negative development in the quarter," Joseph Fenech, an analyst at Sandler O'Neill, wrote in a note to clients, adding that the exodus of deposits was "disappointing." Still, he wrote that the longer-term impact of the run-off "is muted given better reinvestment options on excess liquidity deployment than we had previously assumed."

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