Improved asset quality and declining expenses powered Washington Federal in Seattle to a $34 million profit in the quarter that ended March 31, a 32% increase from the same period in 2011.
Overall loan growth was sluggish as increased demand for commercial mortgages could not offset runoff in its mortgage portfolio, CEO Roy M. Whitehead said in a statement.
But net income was bolstered by a 25% decline in its interest expense as interest rates remained low and a 40% drop in its provision for loan losses, which the $13.6 billion-asset thrift attributed to continued declines in problem loans. Since peaking at $606 million three years ago, nonperforming assets have declined by more than half, to $286 million at March 31.
For the six months that ended March 31 — the company's fiscal year begins Oct. 1 — Washington Federal said that earnings climbed 34% from the same six-month period a year earlier, to $67.5 million.
Washington Federal has nearly 170 branches in eight states and, flush with capital from a stock sale in 2009, intends to continue growing through acquisitions. It recently bought a handful of branches in New Mexico and earlier this month it struck a deal to acquire the $868 million-asset South Valley Bancorp in Klamath Falls, Ore.
