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) loan loss reserves declined by $2.5 billion during the third quarter and Bank of America ( BAC) and JPMorgan Chase ( JPM) 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) 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.