Sterne Agee Recommends Washington Federal Based On Relation To Peers

Sterne Agee has published a research report on Washington Federal, Inc. WFSL and with the company's current relative valuation to peers, continues to recommend shares based on pricing. In the report, Sterne Agee writes "We continue to recommend WFSL given the relative valuation vis-à-vis peers, likely improvement in credit fundamentals and overall profitability, and expectations for catalysts like a removal of the MOU this year to be positive for the name. Further, we view some credit data as reported in the 10-Q as positive, and note the recent increase in 30-year origination rates bodes very well for the loan portfolio potentially growing near-term. We note management changed the methodology on the reserve for single family TDRs; however, the change was not requested by regulators but rather conservatism by management resulting in an increase of $5.9 million allocated to the reserve. Also, WFSL disclosed $543 million, or 6.4% of the loan portfolio being substandard and only $21 million as special mention. After discussing the numbers with management, overall we are impressed some of the land A&D book remains pass rated." Sterne Agee maintains its Buy rating and $20 price target. Washington Federal closed yesterday at $17.55.