On Sep 15, 2014, we issued an updated research report on Washington Federal Inc. (WAFD). The company’s inorganic growth strategies and a persistent rise in loan demand are expected to benefit its financials in the long run.
Growth in loan and deposit balances indicates a strong business trend for Washington Federal. With the economy undergoing a gradual improvement and investors gaining confidence, the demand for loans is expected to grow further. As of Jun 30, 2014, net loans totaled $8.0 billion, constituting 54% of the company’s total assets.
Further, Washington Federal is an opportunistic acquirer, successfully enhancing its financials through addition of assets, branch network and workforce. Of late, the company has been growing through branch acquisition. Since the beginning of fiscal 2014, Washington Federal has acquired 74 branches from Bank of America Corporation (BAC), thereby adding $1.9 billion in deposit accounts and $13 million of loans. Considering its strong capital and liquidity position, we believe that the company is well poised to continue with its inorganic expansion plans.
On the flip side, a lingering low interest rate environment keeps the net interest margin under persistent pressure. Also, mounting expenses remain a major concern for Washington Federal. We anticipate further rise in expenses, due to the recent acquisitions and continued investment in franchises.
Further, over the last 30 days, the Zacks Consensus Estimates for 2014 and 2015 have remained stable at $1.53 and $1.61 per share, respectively.
Presently, Washington Federal has a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Some better-ranked finance stocks include Great Southern Bancorp Inc. (GSBC) and Mutualfirst Financial Inc. (MFSF). Both these stocks sport a Zacks Rank #1 (Strong Buy).
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