Washington Federal, Inc., formed in November 1994, is a Washington corporation
headquartered in Seattle, Washington. The Company is a bank holding company
that conducts its operations through a federally-insured national bank subsidiary,
Washington Federal, National Association (“Bank”). As used throughout
this document, the terms “Washington Federal” or the “Company”
refer to Washington Federal, Inc. and its consolidated subsidiaries and the
term "Bank" refers to the operating subsidiary Washington Federal,
National Association.
The Bank is a national bank that began operations in Washington as a state-chartered
mutual company in 1917. In 1935, the Company converted to a federal charter
and became a member of the Federal Home Loan Bank (“FHLB”) system.
On November 9, 1982, Washington Federal converted from a federal mutual to a
federal capital stock savings association. On July 17, 2013, the Bank converted
from a federal savings association to a national bank charter with the Office
of the Comptroller of the Currency (the "OCC") and is now a national
bank; at the same time, Washington Federal, which had previously been a savings
and loan holding company, became a bank holding company under the Bank Holding
Company Act (the "BHCA").
The business of the Bank consists primarily of attracting deposits from the
general public and investing these funds in loans of various types, including
first lien mortgages on single-family dwellings, construction loans, land acquisition
and development loans, loans on multi-family and other income producing properties,
home equity loans and business loans. It also invests in certain United States
government and agency obligations and other investments permitted by applicable
laws and regulations. Washington Federal has 247 branches located in Washington,
Oregon, Idaho, Arizona, Utah, Nevada, New Mexico and Texas. Through its subsidiaries,
the Company is also engaged in real estate investment and insurance brokerage
activities.
The principal sources of funds for the Companys activities are retained earnings,
loan repayments (including prepayments), net deposit inflows, repayments and
sales of investments and borrowings. Washington Federals principal sources
of revenue are interest on loans and interest and dividends on investments.
Its principal expenses are interest paid on deposits, credit costs, general
and administrative expenses, interest on borrowings and income taxes.
The Bank has general authority to lend anywhere in the United States; however,
its primary lending areas are within the states of Washington, Oregon, Idaho,
Arizona, Utah, Nevada, New Mexico and Texas. Loan originations come from a number
of sources. Residential loan originations result from referrals from real estate
brokers, walk-in customers, purchasers of property in connection with builder
projects that are financed by the Bank, mortgage brokers and refinancings for
existing customers. Business purpose loans are obtained primarily by direct
solicitation of borrowers and ongoing relationships.
The Bank also purchases loans and mortgage-backed securities when lending rates
and mortgage volume for new loan originations in its market area do not fulfill
its needs. SFR loan originations, over the past few years were lower than historical
levels due to the low interest rate environment and excessive government participation
in the mortgage market. However, as can be seen in the table below, that trend
has turned around in the last couple of years.
Interest rates charged by the Bank on mortgage loans are primarily determined
by the competitive loan rates offered in its lending areas and in the secondary
market. Mortgage loan rates reflect factors such as general interest rates,
the supply of money available to the industry and the demand for such loans.
These factors are in turn affected by general economic conditions, the regulatory
programs and policies of federal and state agencies, changes in tax laws and
governmental budgetary programs and Federal Reserve monetary policy.
The Bank receives fees for originating loans in addition to various fees and
charges related to existing loans, including prepayment charges, late charges
and assumption fees. In making one-to-four- family home mortgage loans, the
Bank normally charges an origination fee and as part of the loan application,
the borrower pays the Bank for out-of-pocket costs, such as the appraisal fee,
whether or not the borrower closes the loan. The interest rate charged is normally
the prevailing rate at the time the loan application is approved and accepted.
In the case of construction loans, the Bank normally charges an origination
fee. Loan origination fees and other terms of multi-family residential loans
are individually negotiated.
0.35% 