Washington Federal to Buy 51 Bank of America Branches

Washington Federal (WAFD) in Seattle has agreed to buy 51 branches from Bank of America (BAC).

The $13 billion-asset company also plans to buy $1.8 billion in deposits at 2.6% premium, it announced Thursday. The company also plans to acquire $11 million of loans.

The branches are in Washington, Idaho, Oregon and New Mexico, and their addition would give Washington Federal 236 branches. The company said it plans to keep all of the branches' employees. It expects to close the transaction in the fourth quarter.

"The transaction will improve the company's deposit mix, reduce overall funding costs and will be accretive to earnings upon closing," Roy Whitehead, Washington Federal's chairman, president and chief executive, said in a press release.

Community banks have been buying numerous B of A branches in the last year as the Charlotte, N.C., company looks to cut costs. Old National Bancorp (ONB) in Indiana and Chemung Financial (CHMG) in upstate New York have also struck deals recently for B of A's unwanted branches.

Washington Federal also reported Thursday that its second-quarter earnings rose 6% from a year earlier, to $37.3 million, or 36 cents a share.

Better asset quality made up for a dip in loan income. Washington Federal did not record a loan-loss provision, after setting aside $10.4 million a year earlier. Net chargeoffs fell 71% from a year earlier, to $5 million.

Net interest income fell 2% from a year earlier, to $94.7 million, even though the net interest margin expanded by 10 basis points, to 3.15%.

Noninterest income rose 41% from the second quarter of 2012, to $5.1 million. Noninterest expenses rose 16% from a year earlier, to $41.6 million, on higher compensation costs.

Washington Federal also announced Thursday that it has completed its conversion to a national bank from a thrift.