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10 Bank Stocks Turning the Credit Corner

7. Washington Federal

Shares of Washington Federal (WFSL) of Seattle closed at $13.23 Wednesday, down 21% year-to-date. Based on a quarterly payout of six cents, the shares have a dividend yield of 1.81%.

The company had $13.3 billion in total assets as of June 30, with a nonperforming assets ratio of 5.19%, increasing from 5.12% the previous quarter and 5.09% in June 2010, according to SNL Financial.

Washington Federal was included among TheStreet's 10 Big Banks with Solid Revenue because the company's pre-provision net revenue for its fiscal third-quarter ended June 30 increased 68% year-over-year to $68.1 million.

Fiscal third-quarter net income was $30.1 million, or 27 cents a share, increasing from $12.7 million, or 11 cents a share, a year earlier. While the provision for loan losses increased slightly year-over-year, to $21 million, losses on foreclosed real estate declined 74% to $8.2 million.

Net interest income increased 7% year-over-year to $106.1 million. The net interest margin was 3.44%, increasing from 3.14% a year earlier. The fiscal third quarter ROA was 0.90%, according to SNL.

After Washington Federal reported its fiscal third-quarter results in August, Sterne Agee analyst Brett Rabatin reiterated his "Buy" rating for the shares, with a $19 price target, saying "investors should become more focused on names like WFSL in the current environment of pervasively low interest rates."

The shares trade for 10 times the consensus 2012 EPS estimate of $1.34, among analysts polled by FactSet, and 0.9 times their June 30 tangible book value of $14.53, according to SNL.

Out of 13 analysts covering Washington Federal, six rate the shares a buy, while the remaining analysts all have neutral ratings.
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