Washington Federal (NASDAQ: WAFD) is the savings and loan subsidiary of Washington Federal, Inc., a bank holding company based in Seattle, Washington. It has operations in Washington, Idaho, Oregon, Nevada, Utah, Arizona, New Mexico, and Texas.
Founded on April 24, 1917, as Ballard Savings and Loan, it kept the name of Bothell's Washington Federal Savings and Loan after merging with it in 1958. WFSL demutualized in 1982, and the present holding company structure was adopted in 1995.
Mergers and acquisitions subsequent to 1958 include the following:
- Seattle Federal Savings and Loan, 1971
- First Federal Savings and Loan Association, Mount Vernon, Washington, 1978
- United First Federal, Boise, Idaho, 1987
- Provident Federal Savings and Loan, Boise, 1987
- Northwest Federal Savings and Loan, Boise, 1988
- Freedom Federal Savings and Loan, Corvallis, Oregon, 1988
- Family Federal Savings and Loan Association, Dallas, Oregon, 1990
- First Federal Savings and Loan Association, Idaho Falls, Idaho, 1991
- Metropolitan Savings Association, Portland and Eugene, Oregon, 1991
- First Federal Savings Bank, Salt Lake City, Utah, 1993
- West Coast Mutual Savings Bank, Centralia, Washington, 1996
Mergers and acquisitions in 2000
- First Mutual Bank, Bellevue, WA, 2008
- Horizon Bank, Bellingham, WA, 2010
On May 20, 2003, Washington Federal announced its planned acquisition of the four-branch, Seattle-based United Savings and Loan Bank. United Savings, founded on July 6, 1960, by Robert and Ruth J. Chinn, was the first Asian American-owned savings and loan in the United States. The completion of the sale was announced that September. The reported purchase price was $65 million.
WAFED acquired First Mutual Bank of Bellevue, WA. First Mutual Bank has had vast experience in making commercial real estate loans, and operates a wholesale residential department with an emphasis in residential construction lending. This transaction closed in the first quarter of 2008. It is believed that this acquisition will give WAFED a commercial lending ability to compliment its residential real estate lending.
On January 11, 2010, Washington Federal acquired the 18-branch, Bellingham-based Horizon Bank. Horizon Bank was seized by state regulators after the bank failed with assets of 1.3 billion dollars and deposits of 1.2 billion. Horizon Bank marked the first bank that regulators shut down in 2010. Washington Federal was able to purchase these assets at a discounted cost due to the number of risky loans on Horizon Bank's books. This transaction can ultimately cost the FDIC 536 million dollars, almost 50% of the bank's assets. Many of the assets were tied to speculative loans for commercial real estate purchased during the height of the real estate bubble in 2006. When this bubble collapsed, many of these risky loans lost their value. Washington Federal has agreed to absorb 20% of these losses with the remainder being covered by the FDIC. These costs can be reduced as the economy recovers due to rising commercial real estate values. If this occurs the losses by the FDIC would be significantly reduced.
Washington Federal stocks dropped 5.9% on the announcement of this deal due to share holder expectations that a larger acquisition deal would have occurred. This acquisition does not rule out the prospect of future mergers as more banks collapse in 2010 and does not preclude a larger acquisition as share holders expect.
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