This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Analyst Touts Washington Federal Upside

Loan loss reserves declined $10.3 million during the third quarter, following the trend for several of the largest U.S. banks which have seen earnings boosted this year from releases of loan loss reserves. Citigroup's (C - Get Report) loan loss reserves declined by $2.5 billion during the third quarter and Bank of America (BAC - Get Report) and JPMorgan Chase (JPM - Get Report) each had reserves declining by $1.7 billion during the quarter.

Washington Federal is one of the most efficient bank or thrift holding companies in the country, with a third-quarter efficiency ratio of 32.19%, according to SNL Financial. A bank or thrift's efficiency ratio is essentially its noninterest expense divided by its interest and noninterest income. Washington Federal has the second-best efficiency ratio among the largest 50 U.S. bank and thrift holding companies, trailing Hudson City Bancorp (HCBK - Get Report) with an efficiency ratio of 22.55%, but ahead of New York Community Bancorp (NYB), which had an efficiency ratio of 35.82%.

Hasan said the company's management indicated that "in an absence of organic or acquisition growth opportunities, it intends to return capital to shareholders through dividends or share buybacks."

While she expressed disappointment that the company entered into a Memorandum of Understanding with the Office of Thrift Supervision in June, Hasan said that "governance-related actions" required of Washington Federal were "substantially complete," and emphasized that the MOU didn't include anything related to the company's capital levels of restrictions on dividend payments or acquisitions.

The MOU required Washington Federal to develop a written enterprise risk management program, enhance its construction lending and portfolio management procedures, improve business continuity, security and information technology planning and improve its compliance with lending rules.

Hasan justified her price target saying that Washington Federal's shares were trading at a discount to her $16.37 projected book value for the end of Fiscal 2011, and that over the previous 20 years the shares had traded in a range of 1.3 to 1.9 times forward book value. "With an enviable competitive position and signs of improvement on the horizon, we find the risk-reward ratio on WFSL to be very attractive," she said.

RELATED STORIES:


-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
C $53.07 0.00%
BAC $15.56 0.00%
HCBK $9.50 0.00%
JPM $62.84 0.00%
AAPL $124.75 0.00%

Markets

DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs