Washington Federal (WAFD) in Seattle reported higher quarterly profit because of an improved deposit mix, increased fee income and loan growth.
The $14.4 billion-asset company's first-quarter earnings rose 8% from a year earlier, to $38.7 million. Earnings per share of 38 cents were on par with the average estimate of analysts polled by Bloomberg.
Washington Federal's net interest income rose 8%, to $101 million, because of higher investment income, lower interest expenses on customer accounts and an improved deposit mix. Washington Federal originated $435 million in loans in the first quarter, up 22% from a year earlier. Its net interest margin compressed 7 basis points, to 3.03%.
Noninterest income rose 12%, to $6.7 million.
Washington Federal's noninterest expenses rose 25%, to $52 million, because of higher compensation and benefits costs and an increase in occupancy and information technology expenses.
"We expect expenses to remain elevated for a few quarters due to investments in growth," Roy Whitehead, Washington Federal's chairman, president and chief executive, said in a press release Tuesday. The company said it is starting to generate deposit growth at the 51 branches it bought from Bank of America (BAC) during the fourth quarter. The company plans to buy another 23 B of A branches by the end of the second quarter.
"Costs related to acquired branches will be managed lower over time as we complete consolidations and refine operations," Whitehead said. "Likewise, investments to bring our technology backbone to state-of-the-art require spending today for future efficiencies."
The company recorded a $4 million reversal of its loan-loss provision. It had no loan-loss provision a year earlier.