Document

As filed with the Securities and Exchange Commission on May 23, 2017.
Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
WASHINGTON FEDERAL, INC.
 
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
Washington
 
6021
 
91-1661606
(State or other jurisdiction of incorporation or organization)
 
(Primary Standard Industrial Classification Code Number)
 
(I.R.S. Employer Identification No.)
425 Pike Street
Seattle, Washington 98101
(206) 624-7930
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Brent J. Beardall
President and Chief Executive Officer
Washington Federal, Inc.
425 Pike Street
Seattle, Washington 98101
(206) 624-7930
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies of communications to:
Andrew J. Schultheis, Esq.
Davis Wright Tremaine LLP
1201 Third Ave., Ste. 2200
Seattle, WA 98101
(206) 757-8143
 
John F. Breyer, Jr., Esq.
Breyer & Associates PC
8180 Greensboro Drive, Suite 785
McLean, Virginia 22102
(703) 883-1100
 
 
 
Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after the effective date of this Registration Statement and upon consummation of the transactions described herein.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ¨
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”,“smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
x
Accelerated Filer
¨
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
Smaller reporting company
¨
Emerging growth company
¨
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ¨
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ¨




 
 
 
 
 
CALCULATION OF REGISTRATION FEE
 
 
 
 
 
Title of each class of
securities to be registered
Amount to be
registered (1)
Proposed maximum offering
price per share
Proposed maximum aggregate
offering price (2)
Amount of
registration fee (3)
Common Stock, $1.00 par value
2,274,053
N/A
$62,618,500.00
$7,257.48
(1)
Represents an estimate of the maximum number of shares of Washington Federal, Inc. (“Washington Federal”) common stock, $1.00 par value per share, estimated to be issuable, using the maximum exchange ratio of 0.9079, upon consummation of the merger of Anchor Bancorp (“Anchor”) with and into Washington Federal as described herein.
(2)
Calculated in accordance with Rules 457(c) and 457(f)(1) under the Securities Act by multiplying $25.00, the average of the high and low sales prices for Anchor common stock, as reported on the Nasdaq Global Market on May 22, 2017, by 2,504,740, which is the estimated maximum number of shares of Anchor common stock that may be cancelled in the merger.
(3)
Calculated in accordance with Rule 457(f) under the Securities Act by multiplying the proposed maximum aggregate offering price by 0.0001159.
 
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
 






The information in this proxy statement/prospectus is not complete and may be changed. We may not issue the securities offered by this proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This document is not an offer to sell these securities, and we are not soliciting an offer to buy these securities, in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY PROXY STATEMENT/PROSPECTUS—SUBJECT TO COMPLETION—DATED May 23, 2017
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To the Shareholders of Anchor Bancorp:
You are cordially invited to attend the special meeting of shareholders of Anchor Bancorp (“Anchor”). The special meeting will be held at the Lacey Community Center, 6729 Pacific Avenue SE, Lacey, Washington, on [●], 2017, at 10:00 a.m., local time.
As described in the enclosed proxy statement/prospectus, the board of directors of Anchor has approved the merger agreement that provides for the merger of Anchor with and into Washington Federal, Inc. (“Washington Federal”), with Washington Federal being the surviving entity in the merger. We are seeking your vote on this important transaction, as well as the other matters to be considered at the special meeting.
If the merger is completed, each share of Anchor common stock that is outstanding immediately prior to the merger, other than dissenting shares and cancelled shares (as such terms are defined in the merger agreement) will be converted into the right to receive a fraction of a share of Washington Federal common stock (the “Exchange Ratio”) equal to the quotient of $25.75 divided by the average of the volume weighted price for Washington Federal common stock on Nasdaq Global Select Market during the twenty-day period ending on the fifth trading day immediately preceding the effective date of the merger (which we refer to as the “Washington Federal average common stock price”); however the merger agreement stipulates that the Exchange Ratio will be fixed at 0.9079 if the Washington Federal average common stock price is equal to or less than $28.36, and fixed at 0.6990 if the Washington Federal average common stock price is equal to or greater than $36.84. The number of Washington Federal shares Anchor shareholders will receive in the merger will fluctuate with the market price of Washington Federal common stock and will not be known at the time Anchor shareholders vote on the merger agreement. On April 10, 2017, the closing price of Washington Federal’s common stock immediately prior to the public announcement of the merger agreement, was $32.60 and on  [•] , 2017, the most recent trading day practicable before the printing of this proxy statement/prospectus, the closing price of Washington Federal common stock was $[•]. We urge you to obtain current market quotations for Washington Federal common stock (Nasdaq Global Select Market: trading symbol “WAFD”) and Anchor common stock (Nasdaq Global Market: trading symbol “ANCB”).

We cannot complete the merger unless the holders of two-thirds of the outstanding shares of Anchor common stock vote to approve the merger agreement. Your vote is very important. Anchor will hold its special meeting of shareholders on [●], 2017 to vote on the merger agreement. Your board of directors recommends that you vote FOR approval of the merger agreement and the other items to be considered at the special meeting. Whether or not you plan to attend the special meeting, please take the time to vote on the proposal to approve the merger agreement and the other matters to be considered by completing and mailing the enclosed proxy card to us. Please vote as soon as possible to make sure that your shares are represented at the special meeting. If you do not vote, it will have the same effect as voting against the merger agreement.
We encourage you to read carefully the detailed information about the merger contained in this proxy statement/prospectus, including the section entitled “Risk Factors” beginning on page [●]. The proxy statement/prospectus incorporates important business and financial information and risk factors about Washington Federal that are not included in or delivered with this document. See the section entitled “Where You Can Find More Information” on page [●].
We look forward to seeing you at the special meeting.





 
[●]
Jerald L. Shaw
President and Chief Executive Officer
Anchor Bancorp
Neither the Securities and Exchange Commission nor any state securities commission or bank regulatory agency has approved or disapproved the shares of Washington Federal common stock to be issued in the merger or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.
The securities that Washington Federal is offering through this proxy statement/prospectus are not savings or deposit accounts or other obligations of any bank or nonbank subsidiary of Washington Federal or Anchor, and they are not insured by the Federal Deposit Insurance Corporation or any other government agency.
This proxy statement/prospectus is dated [●], 2017 and is first being mailed to Anchor shareholders or otherwise delivered to Anchor shareholders on or about [●], 2017.





REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Washington Federal from documents filed with the Securities and Exchange Commission, or the SEC, that are not included in or delivered with this proxy statement/prospectus. You can obtain any of the documents filed with or furnished to the SEC by Washington Federal at no cost from the SEC’s website at www.sec.gov or by requesting them in writing or by telephone from Washington Federal:

Washington Federal, Inc.
425 Pike Street
Seattle, Washington 98101
Attn: Investor Relations
(206) 624-7930


All website addresses given in this proxy statement/prospectus are for information only and are not intended to be an active link or to incorporate any website information into this proxy statement/prospectus.
You should rely only on the information contained in, or incorporated by reference into, this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated [•], 2017, and you should assume that the information in this proxy statement/prospectus is accurate only as of such date. You should assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of the date of the document that includes such information. Neither the mailing of this proxy statement/prospectus to Anchor shareholders nor the issuance by Washington Federal of shares of Washington Federal common stock in connection with the merger will create any implication to the contrary.

Please note that copies of this proxy statement/prospectus provided to you will not include exhibits, unless the exhibits are specifically incorporated by reference into this proxy statement/prospectus.
This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this proxy statement/prospectus regarding Washington Federal has been provided by Washington Federal and information contained in this proxy statement/prospectus regarding Anchor has been provided by Anchor.

If you would like to request documents, please do so by [●], 2017 in order to receive them before Anchor’s special meeting of shareholders. See the section entitled “Where You Can Find More Information” on page [●].








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Anchor Bancorp
601 Woodland Square Loop SE
Lacey, Washington 98503

NOTICE OF SPECIAL MEETING OF ANCHOR SHAREHOLDERS

Date:    [●], [●], 2017
Time:     10:00 a.m., local time
Place:     Lacey Community Center
6729 Pacific Avenue SE
Lacey, Washington

TO OUR SHAREHOLDERS:
We are pleased to notify you of and invite you to a special meeting of shareholders. At the special meeting, you will be asked to vote on the following matters:
approval of the Agreement and Plan of Merger, dated as of April 11, 2017, by and between Washington Federal, Inc. (“Washington Federal”) and Anchor Bancorp (“Anchor”) (the “merger agreement”). The merger agreement provides the terms and conditions under which it is proposed that Anchor merge with and into Washington Federal, as described in the accompanying proxy statement/prospectus;
a proposal of the Anchor board of directors to adjourn or postpone the special meeting, if necessary or appropriate to solicit additional proxies in favor of the merger agreement (which we refer to as the “adjournment proposal”); and
any other business that may be properly submitted to a vote at the special meeting or any adjournment or postponement of the special meeting.
Only shareholders of record at the close of business on [●], 2017 are entitled to notice of, and to vote at, the special meeting and any adjournments or postponements of the special meeting. The affirmative vote of the holders of two-thirds of the outstanding shares of Anchor common stock as of that date is required to approve the merger agreement. The adjournment proposal will be approved if a majority of the votes cast are voted in favor of the proposal.
In connection with the proposed merger, you may exercise dissenters’ rights as provided under the Revised Code of Washington. If you meet all of the requirements under applicable Washington law, and follow all of its required procedures, you may receive cash in the amount equal to the fair value of your shares of common stock. The procedure for exercising your dissenters’ rights is summarized under the heading “Dissenters’ Rights” in the attached proxy statement/prospectus. The relevant Washington statutory provisions regarding dissenters’ rights are attached to this document as Appendix C.
Anchor’s board of directors has unanimously approved the merger agreement, believes that the merger agreement and the transactions contemplated thereby, including the merger, are in the best interests of Anchor and its shareholders, and unanimously recommends that Anchor shareholders vote “FOR” the approval of the merger agreement and “FOR” the adjournment proposal.
Your vote is very important. To ensure that your shares are voted at the special meeting, please complete, sign and date your proxy card and return it in the enclosed envelope promptly. You can also vote by telephone or through the internet.
 
BY ORDER OF THE BOARD OF DIRECTORS
 
[●]
[●], 2017
Janice Sepulveda
Secretary





TABLE OF CONTENTS
 
 
 
 
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE ANCHOR SPECIAL MEETING
SUMMARY
RISK FACTORS
 
Risks Related to the Merger
 
Risks Related to Anchor and Anchor’s Business
 
Risks Related to Washington Federal and Washington Federal’s Business
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

SELECTED CONSOLIDATED FINANCIAL INFORMATION OF WASHINGTON FEDERAL
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF ANCHOR
UNAUDITED PRO FORMA PER SHARE DATA
MARKET PRICE DATA AND DIVIDEND INFORMATION
 
Comparative Market Price Information
 
Historical Market Prices and Dividend Information
THE SPECIAL MEETING OF ANCHOR SHAREHOLDERS
 
Voting and Proxy Procedure
 
Proxy Solicitation
 
Security Ownership of Management and Certain Beneficial Owners
THE MERGER
 
General
 
Background of the Merger
 
Recommendation of the Anchor Board of Directors and Reasons of Anchor for the Merger
 
Opinion of Anchor’s Financial Advisor
 
Reasons of Washington Federal for the Merger
 
Consideration to be Received in the Merger
 
Conversion of Shares and Exchange of Certificates
 
Regulatory Approvals Required for the Merger
 
Accounting Treatment
 
Interests of Certain Persons in the Merger
 
Method of Effecting the Acquisition
 
Effective Time
 
Declaration and Payment of Dividends
 
No Fractional Shares
 
Stock Matters
 
Public Trading Markets
THE MERGER AGREEMENT
 
The Merger
 
Effective Time and Completion of the Merger
 
Merger Consideration
 
Exchange Procedures
 
Anchor Shareholders Should Not Send In Their Stock Certificates Until They Receive the Letter of Transmittal and Instructions
 
Conduct of Business Pending the Merger
 
Agreement Not to Solicit Other Offers
 
Representations and Warranties
 
Special Meeting and Recommendation of Anchor’s Board of Directors
 
Conditions to Completion of the Merger
 
Termination of the Merger Agreement
 
Employee and Benefit Plan Matters
 
Indemnification and Continuance of Director and Officer Liability Coverage

i


 
Expenses
 
Amendment, Waiver and Extension of the Merger Agreement
 
Voting Agreements
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
 
Tax Consequences of the Merger Generally
 
Cash Received In Lieu of a Fractional Share of Washington Federal Common Stock
 
Cash Received on Exercise of Dissenter’s Rights
 
Information Reporting and Backup Withholding
DESCRIPTION OF WASHINGTON FEDERAL CAPITAL STOCK
COMPARISON OF RIGHTS OF ANCHOR COMMON STOCK AND WASHINGTON FEDERAL COMMON STOCK
DISSENTERS’ RIGHTS
ADJOURNMENT OR POSTPONEMENT OF THE SPECIAL MEETING
OTHER MATTERS
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
 
 
 
 
Appendix A
Agreement and Plan of Merger
 
Exhibit A - Voting Agreement
 
Exhibit B - Resignation, Non-Solicitation and Confidentiality Agreement
Appendix B
Opinion of Keefe, Bruyette & Woods, Inc.
Appendix C
Dissenters’ Rights Under The Washington Business Corporation Act

ii



QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE ANCHOR SPECIAL MEETING
The following are some of the questions that you, as a shareholder of Anchor, may have and answers to those questions. These questions and answers, as well as the following summary, are not meant to be a substitute for the information contained in the remainder of this document, and this information is qualified in its entirety by the more detailed descriptions and explanations contained elsewhere in this document. We urge you to read this document in its entirety prior to making any decision as to your Anchor common stock and the merger agreement.

Q1:
Why do Anchor and Washington Federal want to merge?
A1.
We want to merge because we each believe the merger will benefit our community, customers, employees and shareholders. We each have long been committed to serving the various communities that comprise our local customer bases. In addition, for Anchor, the merger will allow its customers access to a number of products and services that cannot be offered to them now on a cost-effective basis, and will expand the number of branch locations available to them.
Q2:
What will Anchor shareholders receive in the merger?
A2:
Anchor shareholders will receive, in exchange for each share of Anchor common stock they hold, shares of Washington Federal common stock, with the exact number determined after you vote on whether to approve the merger. The exact number of shares to be issued and the exchange ratio will be determined based upon the average of the volume-weighted price of Washington Federal common stock for the twenty (20) trading days ending on the fifth trading day immediately preceding the effective date of the merger, subject to a negotiated collar.
Q3:
What is being voted on at the special meeting?
A3:
Anchor shareholders will be voting on the approval of the merger agreement, as well as any proposal of the Anchor board of directors to adjourn or postpone the Anchor special meeting, if necessary or appropriate to solicit additional proxies in favor of the merger agreement (which we refer to as the “adjournment proposal”).
Q4:
Who is entitled to vote at the Anchor special meeting?
A4:
Anchor shareholders of record at the close of business on [●], 2017, the record date for the Anchor special meeting, are entitled to receive notice of and to vote on matters that come before the special meeting and any adjournments or postponements of the special meeting. However, an Anchor shareholder may only vote his or her shares if he or she is present in person or is represented by proxy at the Anchor special meeting.
Q5:
How do I vote?
A5:
After carefully reading and considering the information contained in this document, please fill out, sign and date the proxy card, and then mail your signed proxy card in the enclosed envelope as soon as possible so that your shares may be voted at the special meeting. You may also vote by telephone or through the internet. Anchor shareholders may also attend the Anchor special meeting and vote in person. Even if you are planning to attend the special meeting, we request that you fill out, sign and return your proxy card. For more detailed information, please see the section entitled “The Special Meeting of Anchor Shareholders” beginning on page [●].
Q6:
How many votes do I have?
A6:
Each share of Anchor common stock that you own as of the record date entitles you to one vote. As of the close of business on [●], 2017, there were [●] outstanding shares of Anchor common stock. As of that date, [●]% of the outstanding shares of Anchor common stock was held by directors and executive officers of Anchor and their respective affiliates.
Q7:
What constitutes a quorum at the Anchor special meeting?
A7:
The presence of the holders of a majority of the shares entitled to vote at the Anchor special meeting constitutes a quorum. Presence may be in person or by proxy. You will be considered part of the quorum if you return a signed and dated proxy card, or if you vote in person at the special meeting.

2



Q8:
Why is my vote important?
A8:
If you do not vote by proxy or in person at the special meeting, it will be more difficult for Anchor to obtain the necessary quorum to hold its special meeting. In addition, if you fail to vote, by proxy or in person, it will have the same effect as a vote against approval of the merger agreement. The merger agreement must be approved by the holders of two-thirds of the outstanding shares of Anchor common stock entitled to vote at the Anchor special meeting. If you are the record holder of your shares (meaning a stock certificate has been issued in your name and/or your name appears on Anchor’s stock ledger) and you respond but do not indicate how you want to vote, your proxy will be counted as a vote in favor of approval of the merger agreement, as well as a vote in favor of approval of the adjournment proposal. If your shares are held in street name with a broker, your broker will vote your shares on the merger agreement proposal only if you provide instructions to it on how to vote. Shares that are not voted because you do not properly instruct your broker will have the effect of votes against approval of the merger agreement.
If you respond and abstain from voting, your abstention will have the same effect as a vote against approval of the merger agreement but will have no effect on the adjournment proposal.
Q9:
What is the recommendation of the Anchor board of directors?
A9:
The Anchor board of directors unanimously recommends a vote “FOR” approval of the merger agreement and “FOR” approval of the adjournment proposal.
Q10:
What if I return my proxy but do not mark it to show how I am voting?
A10:
If your proxy card is signed and returned without specifying your choice, your shares will be voted in favor of approval of both the merger agreement and adjournment proposal in accordance with the recommendation of the Anchor board of directors.
Q11:
Can I change my vote after I have mailed my signed proxy card?
A11:
Yes. If you are a holder of record of Anchor common stock, you may revoke your proxy at any time before it is voted by:
• signing and returning a proxy card with a later date,
• delivering a written revocation to Anchor’s corporate secretary,
• attending the Anchor special meeting in person and voting by ballot at the special meeting, or
• voting by telephone or the internet at a later time but prior to the Anchor special meeting.
Attendance at the Anchor special meeting by itself will not automatically revoke your proxy. A revocation or later-dated proxy received by Anchor after the vote is taken at the Anchor special meeting will not affect your previously submitted proxy. Anchor’s corporate secretary’s mailing address is: Corporate Secretary, Anchor Bancorp, 601 Woodland Square Loop SE, Lacey, Washington 98503. If your shares are held in “street name” through a bank or broker, you should contact your bank or broker to change your voting instructions.
Q12:
What regulatory approvals are required to complete the merger?
A12:
Promptly following the merger, Anchor’s subsidiary bank, Anchor Bank, will be merged with and into Washington Federal’s subsidiary bank, Washington Federal, National Association, which we often refer to in this document as the “bank merger.” In order to complete the merger, Washington Federal and Anchor must first obtain all regulatory approvals, consents and orders required in connection with the merger and the bank merger. Accordingly, the parties must obtain the approval of or waiver by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), the approval of the Office of the Comptroller of the Currency (the “OCC”) and the approval of the Washington State Department of Financial Institutions (the “WDFI”). Applications were filed with the OCC and WDFI on or about May 4, 2017. A waiver request was submitted to the Federal Reserve Board on May 22, 2017.
Q13:
Do I have dissenters’ or appraisal rights with respect to the merger?
A13:
Yes. Under Washington law, you have the right to dissent from the merger. To exercise dissenters’ rights of appraisal you must strictly follow the procedures prescribed by the Washington Business Corporation Act, or the WBCA. To review these procedures in more detail, see the section entitled “Dissenters’ Rights” beginning on page [●], and Appendix C of this proxy statement/prospectus.

3



Q14:
What are the material U.S. federal income tax consequences of the merger to me?
A14:
The merger is expected to qualify for U.S. federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, which we refer to throughout this proxy statement/prospectus as the Code. As a result, we expect that Anchor shareholders receiving Washington Federal common stock in the merger will not recognize gain or loss as a result of the merger, except to the extent they receive cash in lieu of a fractional share of Washington Federal common stock.
For further information concerning U.S. federal income tax consequences of the merger, see the section entitled “Material United States Federal Income Tax Consequences of the Merger” beginning on page [●].
Q15:
What risks should I consider before I vote on the merger?
A15:
We encourage you to read carefully the detailed information about the merger contained in this document, including the section entitled “Risk Factors” beginning on page [●].
Q16:    When do you expect to complete the merger?

A16:
We are working to complete the merger in the quarter ending September 30, 2017. We must first obtain the necessary regulatory approvals and the approval of Anchor’s shareholders at the special meeting. In the event of delays, the date for completing the merger can occur as late as December 31, 2017, after which Anchor and Washington Federal would need to mutually agree to extend the closing date of the merger. We cannot assure you as to if and when all the conditions to the merger will be met nor can we predict the exact timing. It is possible we will not complete the merger.
Q17:    What happens if the merger is not completed?

A17:
If the merger is not completed, holders of Anchor common stock will not receive any consideration for their shares in connection with the merger. Instead, Anchor will remain an independent public company and its common stock will continue to be listed and traded on the Nasdaq Global Market. In addition, if the merger agreement is terminated in certain circumstances, a termination fee may be required to be paid by Anchor. See “The Merger Agreement—Termination of the Merger Agreement” beginning on page [•] for a complete discussion of the circumstances under which a termination fee will be required to be paid.
Q18:    If I am a holder of Anchor common stock in certificated form, should I send in my Anchor stock certificates now?

A18:
No. Please do not send in your Anchor stock certificates with your proxy. After completion of the merger, the exchange agent will send you instructions for exchanging Anchor stock certificates for the merger consideration. See “The Merger Agreement—Exchange Procedures.”
Q19:    What should I do if I hold my shares of Anchor common stock in book-entry form?

A19:
You are not required to take any special additional actions if your shares of Anchor common stock are held in book-entry form. After the completion of the merger, the exchange agent will send you instructions for converting your book entry shares for the merger consideration. See “The Merger Agreement—Exchange Procedures.”
Q20:
Whom should I contact with questions or to obtain additional copies of this document?
A20:    
Anchor Bancorp
601 Woodland Square Loop SE
Lacey,
Attn: Investor Relations
(360) 491-2250

4



SUMMARY
This summary highlights selected information about the merger but may not contain all of the information that may be important to you. You should carefully read this entire document and the other documents to which this document refers for a more complete understanding of the matters being considered at the special meeting. See the section entitled “Where You Can Find More Information” beginning on page [●].Unless we have stated otherwise, all references in this document to Washington Federal are to Washington Federal, Inc., all references to Anchor are to Anchor Bancorp, and all references to the merger agreement are to the Agreement and Plan of Merger, dated as of April 11, 2017, between Washington Federal and Anchor, a copy of which is attached as Appendix A to this document. In this document, we often refer to the “combined company,” which means, following the merger, Washington Federal and its subsidiaries, including Anchor’s subsidiaries. References to “we,” “us” and “our” in this document mean Washington Federal and Anchor together.
The companies

Washington Federal, Inc.
425 Pike Street
Seattle, Washington 98101
Attn: Investor Relations
(206) 624-7930
Washington Federal a bank holding company incorporated under the laws of the State of Washington and the parent company of Washington Federal, National Association, a national banking association with 236 full service banking offices located in Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico and Texas. Washington Federal is subject to regulation by the Federal Reserve Board. Washington Federal, National Association is subject to extensive regulation, supervision and examination by the OCC, its primary federal regulator, by the Consumer Financial Protection Bureau and by the Federal Deposit Insurance Corporation, which insures its deposits up to applicable limits. Washington Federal, National Association is required to have certain reserves set by the Federal Reserve and is a member of the Federal Home Loan Bank of Des Moines (“FHLB” or “FHLB of Des Moines”), which is one of the 11 regional banks in the Federal Home Loan Bank System (“FHLB System”). Washington Federal’s principal asset is all of the capital stock of Washington Federal, National Association. Washington Federal had total consolidated assets of approximately $15.0 billion, total deposits of approximately $10.6 billion and total consolidated shareholders’ equity of approximately $2.0 billion at March 31, 2017. Washington Federal’s principal executive offices are located at 425 Pike Street, Seattle, Washington 98101 and its telephone number is (206) 624-7930. Washington Federal trades on the Nasdaq Global Select Market under the symbol of “WAFD.”

Anchor Bancorp
601 Woodland Square Loop SE
Lacey, Washington 98503
Attn: Investor Relations
(360) 491-2250
Anchor is a bank holding company for Anchor Bank. Anchor’s business activities generally are limited to passive investment activities and oversight of its investment in Anchor Bank. As a bank holding company, Anchor is subject to regulation by the Federal Reserve Board. Anchor Bank is examined and regulated by the WDFI and by the Federal Deposit Insurance Corporation (“FDIC”). Anchor Bank is required to have certain reserves set by the Federal Reserve and is a member of the Federal Home Loan Bank of Des Moines (“FHLB” or “FHLB of Des Moines”), which is one of the 11 regional banks in the Federal Home Loan Bank System (“FHLB System”). Anchor Bank is a community-based savings bank primarily serving Western Washington through its ten full-service banking offices (including one Wal-Mart in-store location) located within Grays Harbor, Thurston, Lewis, Pierce and Mason counties, and one loan production office located in King County, Washington. Anchor Bank is in the business of attracting deposits from the public and utilizing those deposits to originate loans. Anchor had total consolidated assets of approximately $465.4 million, total deposits of approximately $343.3 million and total consolidated stockholders’ equity of approximately $65.0 million at March 31, 2017. Anchor’s principal executive offices are located at 601 Woodland Square Loop SE Lacey, Washington 98503, and its telephone number is (360) 491-2250. Anchor common stock trades on the Nasdaq Global Market under the symbol “ANCB.”


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The merger (Page [●])

We propose a merger in which Anchor will merge with and into Washington Federal and a follow-up merger in which Anchor Bank will merge with and into Washington Federal, National Association. As a result of the mergers, Anchor will cease to exist as a separate corporation and Anchor Bank will cease to exist as a separate financial institution. In the merger, Anchor will merge with and into Washington Federal, with Washington Federal as the surviving corporation. Immediately following the merger, Anchor’s wholly owned subsidiary savings bank, Anchor Bank, will merge with and into Washington Federal’s wholly owned subsidiary bank, Washington Federal, National Association. Anchor Bank plans to dissolve its inactive subsidiary Anchor Financial Services, Inc. prior to the merger.
Based on the number of shares of Washington Federal common stock and Anchor common stock outstanding as of [●], 2017, and the closing price of Washington Federal common stock on such date, Anchor shareholders will collectively own up to approximately [●]% of the outstanding shares of Washington Federal common stock after the merger. See the section entitled “The Merger—Consideration to be Received in the Merger.”
We expect the merger of Anchor and Washington Federal to be completed during the quarter ending September 30, 2017, although the merger could be delayed to as late as December 31, 2017, after which Anchor and Washington Federal would need to mutually agree to extend the closing date of the merger.
Approval of the merger agreement requires the affirmative vote, in person or by proxy, of two-thirds of the outstanding shares of Anchor common stock. No vote of Washington Federal shareholders is required (or will be sought) in connection with the merger.
The merger agreement (Page [●])

The merger agreement is described beginning on page [●]. The merger agreement also is attached as Appendix A to this document. We urge you to read the merger agreement in its entirety because it contains important provisions governing the terms and conditions of the merger.
Consideration to be received in the merger (Page [●])
Each share of Anchor common stock that is outstanding immediately prior to the merger, other than dissenting shares and cancelled shares (as such terms are defined in the merger agreement) will be converted into the right to receive a fraction of a share of Washington Federal common stock (the “Exchange Ratio”) equal to the quotient of $25.75 divided by the average of the volume weighted price for Washington Federal common stock on Nasdaq Global Select Market during the twenty-day period ending on the fifth trading day immediately preceding the effective date of the merger, which we refer to in this document as the “Washington Federal average common stock price”; however the merger agreement stipulates that that the Exchange Ratio will be fixed at 0.9079 if the Washington Federal average common stock price is equal to or less than $28.36, and fixed at 0.6990 if the Washington Federal average common stock price is equal to or greater than $36.84. Washington Federal will not issue any fractional shares of Washington Federal common stock in the merger. Cash will be paid in lieu of any fractional Washington Federal share in an amount equal to the fraction multiplied by the Washington Federal average common stock price. Anchor shareholders who would otherwise be entitled to a fractional share of Washington Federal average common stock upon completion of the merger will instead receive an amount in cash equal to the fractional share interest multiplied by the Washington Federal average common stock price.
Anchor shareholders will own approximately [●]% of the outstanding shares of Washington Federal common stock after the merger (Page [●])

Based on the number of shares of Washington Federal common stock and Anchor common stock outstanding as of [●], 2017, and the closing price of Washington Federal common stock on such date, Anchor shareholders will collectively own up to approximately [●]% of the outstanding shares of Washington Federal common stock after the merger. See the section entitled “The Merger—Consideration to be Received in the Merger.”
Recommendation of the Anchor board of directors and reasons of Anchor for the merger (Page [●])
The Anchor board of directors believes the merger is in the best interests of Anchor and the Anchor shareholders. The Anchor board of directors unanimously recommends that Anchor shareholders vote “FOR” the approval of the merger agreement. For the factors considered by the Anchor board of directors in reaching its decision to

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approve the merger agreement and making its recommendation, see “The Merger—Recommendation of the Anchor Board of Directors and Reasons of Anchor for the Merger.”
Opinion of Anchor’s financial advisor (Page [●])
In connection with the merger, Anchor’s financial advisor, Keefe, Bruyette & Woods, Inc. or KBW, delivered a written opinion, dated April 11, 2017, to the Anchor board of directors as to the fairness, from a financial point of view and as of such date, to the holders of Anchor common stock of the Exchange Ratio in the merger. The full text of the opinion, which describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW in preparing the opinion, is attached as Appendix B to this proxy statement/prospectus. The opinion was for the information of, and was directed to, the Anchor board of directors (in its capacity as such) in connection with its consideration of the financial terms of the merger. The opinion did not address the underlying business decision of Anchor to engage in the merger or enter into the merger agreement or constitute a recommendation to the Anchor board of directors in connection with the merger, and it does not constitute a recommendation to any holder of Anchor common stock or any shareholder of any other person as to how to vote in connection with the merger or any other matter.
Stock price information (Page [●])

Washington Federal common stock is listed on the Nasdaq Global Select Market under the symbol “WAFD.” Anchor common stock is listed on the Nasdaq Global Market under the symbol “ANCB.”

The following table sets forth (a) the last reported sale prices per share of Washington Federal common stock common stock on (i) April 10, 2017, the last trading day preceding public announcement of the signing of the merger agreement and (ii) [●], 2017, the last practicable date prior to the mailing of this proxy statement/prospectus and (b) the equivalent price per Anchor share, determined by dividing $25.75 by such prices.

 
 
Historical market value per share of
Washington Federal
 
Equivalent value per share of
Anchor
April 10, 2017
$
32.60
$
25.75
[•], 2017
 
 
 
 

Anchor’s directors and executive officers have interests in the merger that differ from, or are in addition to, your interests in the merger (Page [●])

You should be aware that some of the directors and executive officers of Anchor have interests in the merger that are different from, or are in addition to, the interests of Anchor shareholders. These interests may create potential conflicts of interest. Anchor’s board of directors was aware of and considered these interests, among other matters, when making its decisions to approve the merger agreement and in recommending that Anchor shareholders vote in favor of approving the merger agreement. These include the following:
Two executive officers will be entitled to receive change in control severance benefits under their employment agreements upon completion of the merger;
Other executive officers may be entitled to receive severance benefits under the Anchor Bank severance plan if their employment is terminated under certain circumstances within one year after completion of the merger;
Directors and executive officers will become fully vested in their outstanding restricted shares upon completion of the merger;
Directors and executive officers will receive a lump sum payment of the total value of their benefits under the Anchor Bank phantom stock plan within 60 days after completion of the merger;
Executive officers will receive enhanced benefits under the Anchor employee stock ownership plan by virtue of the allocation of suspense shares to their accounts upon completion of the merger and their accounts in the plan will become 100% vested immediately prior to the completion of the merger;

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Directors and executive officers will receive indemnification from Washington Federal for their past acts and omissions in their capacities as directors and officers as well as continuing insurance coverage with respect thereto for a period of six years after completion of the merger, to the fullest extent permitted under Anchor’s organizational documents and to the fullest extent otherwise permitted by law;
Each director has entered into a voting agreement in favor of Washington Agreement agreeing to vote his or her shares of Anchor common stock for approval of the merger agreement and approval of the adjournment proposal;
Terri L. Degner, Anchor’s Chief Financial Officer and a director, has entered into a consulting agreement with Washington Federal, National Association, for the provision of transition services at $120 per hour for a period of up to three years following the completion of the merger, which consulting agreement may be terminated by either party at any time for any reason or no reason.
For a more complete description of these interest interests, see “The Merger – Interests of Certain Persons in the Merger” on page [•].
Material United States federal income tax considerations of the merger (Page [●])
The merger is expected to qualify for U.S. federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code. As a result, we expect that Anchor shareholders receiving Washington Federal common stock in the merger will not recognize gain or loss as a result of the merger, except to the extent they receive cash in lieu of a fractional share of Washington Federal common stock.
For further information concerning U.S. federal income tax consequences of the merger, please see “Material United States Federal Income Tax Consequences of the Merger” beginning on page [].
Tax matters are very complicated and the consequences of the merger to any particular Anchor shareholder will depend on that shareholder’s particular facts and circumstances. Anchor shareholders are urged to consult their own tax advisors to determine their own tax consequences from the merger.
Following the merger, you will be entitled to receive any dividends that Washington Federal pays on its common stock (Page [●]).

After the merger, you will receive dividends, if any, that Washington Federal pays on its common stock. During 2017, Washington Federal paid quarterly cash dividends in the amount of $0.15 per share on February 10, 2017 and May 19, 2017, with a one-time special dividend in the amount of $0.25 per share on February 10, 2017.
Accounting treatment (Page [●])

The merger will be accounted for as an acquisition of Anchor by Washington Federal under the acquisition method of accounting in accordance with U.S. generally accepted accounting principles.
In order to complete the merger, we must first obtain certain regulatory approvals (Page [●])

In order to complete the merger, Washington Federal and Anchor must first obtain all regulatory approvals, consents or waivers required in connection with the merger and the bank merger. Accordingly, the parties must obtain the approval of or waiver by the Federal Reserve Board, the approval of the OCC and the approval of the WDFI. The U.S. Department of Justice may review the impact of the merger and the bank merger on competition. Applications with the OCC and the WDFI were filed on or about May 4, 2017. A waiver request was submitted to the Federal Reserve Board on May 22, 2017.
There can be no assurance as to whether all regulatory approvals will be obtained or as to the dates of the approvals. There also can be no assurance that the regulatory approvals received will not contain a condition or requirement that results in a failure to satisfy the conditions to closing set forth in the merger agreement. See the section entitled “The Merger Agreement—Conditions to Completion of the Merger” on page [•].




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Anchor shareholders have dissenters’ rights (Page [●])

Anchor shareholders have the right under Washington law to dissent from the merger, obtain an appraisal of the fair value of their Anchor common stock, and receive cash equal to the appraised fair value of their Anchor common stock (without giving effect to the merger) instead of receiving the merger consideration. To exercise dissenters’ rights, among other things, an Anchor shareholder must (i) provide notice to Anchor that complies with the requirements of Washington law prior to the vote of its shareholders on the transaction of the shareholder’s intent to demand payment for the shareholder’s shares, and (ii) not vote in favor of the merger agreement. Submitting a properly signed proxy card that is received prior to the vote at the special meeting (and is not properly revoked) that does not direct how the shares of Anchor common stock represented by proxy are to be voted will constitute a vote in favor of the merger agreement and a waiver of such shareholder’s statutory dissenters’ rights.
If you dissent from the merger agreement and the conditions outlined above are met, then your shares of Anchor will not be exchanged for shares of Washington Federal common stock in the merger, and your only right will be to receive the fair value of your common stock as determined by mutual agreement between you and Washington Federal or by appraisal if you are unable to agree. The appraised value may be more or less than the consideration you would receive under the terms of the merger agreement, and will be based upon the value of shares of Anchor common stock without giving effect to the merger. If you exercise dissenters’ rights, any cash you receive for your Anchor shares that results in a gain or loss will be immediately recognizable for federal income tax purposes. You should be aware that submitting a signed proxy card without indicating a vote with respect to the merger will be deemed a vote “FOR” the merger agreement and a waiver of your dissenters’ rights. A vote “AGAINST” the merger agreement does not dispense with the other requirements to exercise dissenters’ rights under Washington law.
A shareholder electing to dissent from the merger agreement must strictly comply with all procedures required under Washington law. These procedures are described more fully beginning on page [●] of this proxy statement/prospectus, and a copy of the relevant Washington statutory provisions regarding dissenters’ rights is included as Appendix C to this proxy statement/prospectus.
Additional conditions to consummation of the merger (Page [●])

In addition to the regulatory approvals, the consummation of the merger depends on a number of conditions being met, including, among others:
approval of the merger agreement by the holders of two-thirds of all outstanding shares of Anchor’s common stock;
authorization of the shares of Washington Federal common stock to be issued in the merger for quotation on the Nasdaq stock market;
the effectiveness of a registration statement on Form S-4 with the SEC in connection with the issuance of Washington Federal common stock in the merger;
absence of any order, injunction, decree or law preventing or making illegal completion of the merger or the bank merger;
receipt by each party of an opinion from such party’s tax counsel that the merger will qualify as a tax-free reorganization for U.S. federal income tax purposes;
accuracy of the representations and warranties of Anchor and Washington Federal, subject to the standards set forth in the closing conditions of the merger agreement;
performance in all material respects by Anchor and Washington Federal of all obligations required to be performed by either of them under the merger agreement; and
dissenting shares shall be less than 10% of the issued and outstanding shares of Anchor common stock.
Where the law permits, either Washington Federal or Anchor could elect to waive a condition to its obligation to complete the merger although that condition has not been satisfied. We cannot be certain when (or if) the conditions to the merger will be satisfied or waived or that the merger will be completed.

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In addition, after Anchor’s shareholders have adopted the merger agreement, we may not amend the merger agreement to reduce the amount or change the form of consideration to be received by the Anchor shareholders in the merger without the approval of Anchor shareholders as required by law.
We may decide not to complete the merger (Page [●])

Anchor and Washington Federal, by mutual consent, can agree at any time not to complete the merger, even if the shareholders of Anchor have voted to approve the merger agreement. Also, either party can decide, without the consent of the other, not to complete the merger in a number of other situations, including:
if any governmental entity that must grant a required regulatory approval of the merger or the bank merger has denied such approval and such denial has become final and nonappealable, unless the denial is due to the failure of the party seeking to terminate the merger agreement to perform or observe the covenants and agreements of that party set forth in the merger agreement;
if any governmental entity of competent jurisdiction has issued a final nonappealable order, injunction or decree enjoining or otherwise prohibiting or making illegal the consummation of the merger or the bank merger;
failure to complete the merger by December 31, 2017, unless the failure of the closing to occur by that date is due to the failure of the party seeking to terminate the merger agreement to perform or observe the covenants or agreements of that party;
if the other party has breached any of its covenants, agreements, representations or warranties contained in the merger agreement based on the closing condition standards set forth in the merger agreement, and the party seeking to terminate is not then in material breach of any representation, warranty, covenant or other agreement contained in the merger agreement, and the breach is not cured within twenty (20) days following written notice to the party committing the breach, or which breach, by its nature, cannot be cured within such twenty (20) day period; and
if the approval of the shareholders of Anchor contemplated by the merger agreement is not obtained by reason of the failure to obtain the vote required at the Anchor special meeting, except this right may not be exercised by Anchor if Anchor or its board of directors has committed an act that would entitle Washington Federal to terminate the merger agreement and receive the termination fee specified in the merger agreement.
Washington Federal, without the consent of Anchor, can terminate:
if the board of directors of Anchor fails to recommend to its shareholders the approval of the merger agreement, or adversely changes, or publicly announces its intention to adversely change its recommendation;
Anchor, without the consent of Washington Federal, can terminate:
if the Washington Federal average common stock price is less than $28.36 and the Washington Federal common stock price has also declined from the price of Washington Federal common stock on the day that the merger agreement was signed such that the percentage decline of the Washington Federal common stock price reflects at least 13% underperformance of Washington Federal’s common stock relative to the price performance of the SNL US Bank and Thrift Index during the same interval. Washington Federal, however, would then have the option to avoid the termination by increasing the Exchange Ratio, as provided in the merger agreement; or
prior to obtaining shareholder approval in order to enter into an agreement relating to a superior proposal; provided, however, that Anchor has not materially breached the merger agreement provisions outlined in “The Merger Agreement—Agreement Not to Solicit Other Offers” on page [•].
Under some circumstances, Anchor will be required to pay a termination fee to Washington Federal if the merger agreement is terminated (Page [●])

Anchor must pay Washington Federal a termination fee of $2,236,500 if:
Washington Federal terminates the merger agreement as a result of: (i) the Anchor board of directors failing to recommend the approval of the merger or adversely changing or publicly announcing its intention to adversely

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change its recommendation and the Anchor shareholders failing to approve the merger agreement; (ii) Anchor breaching its nonsolicitation or related obligations as provided in the merger agreement; or (iii) Anchor refuses to call or hold the special meeting for a reason other than that the merger agreement has been previously terminated;
Anchor terminates the merger agreement prior to obtaining shareholder approval in order to enter into an agreement relating to a superior proposal; provided, however, that Anchor has not materially breached its nonsolicitation and related obligations as provided in the merger agreement; and
if the merger agreement is terminated by either party as a result of the failure of Anchor's shareholders to approve the merger agreement and if, prior to such termination, there is publicly announced a proposal for a tender or exchange offer, for a merger or consolidation or other business combination involving Anchor or Anchor Bank or for the acquisition of a majority of the voting power in, or a majority of the fair market value of the business, assets or deposits of, Anchor or Anchor Bank and, within one year of the termination, Anchor or Anchor Bank either enters into a definitive agreement with respect to that type of transaction or consummates that type of transaction.
Comparison of shareholder rights (Page [●])

The conversion of your shares of Anchor common stock into the right to receive shares of Washington Federal common stock in the merger will result in differences between your rights as an Anchor shareholder, which are governed by the WBCA and Anchor’s Articles of Incorporation and Amended and Restated Bylaws, and your rights as a Washington Federal shareholder, which are governed by the WBCA and Washington Federal’s Restated Articles of Incorporation and Amended and Restated Bylaws.
The special meeting (page [●])

Meeting Information and Vote Requirements

The special meeting of Anchor’s shareholders will be held on [●], 2017, at 10:00 a.m., local time, at the Lacey Community Center, located at 6729 Pacific Avenue SE, Lacey, Washington, unless adjourned or postponed. At the special meeting, Anchor’s shareholders will be asked to:

approve the merger agreement; and

approve the adjournment proposal.

Shareholders will also be asked to act on any other business that may be properly submitted to a vote at the special meeting or any adjournments or postponements of the special meeting.

You may vote at the special meeting if you owned Anchor common stock as of the close of business on [●], 2017. You may cast one vote for each share of Anchor common stock you owned at that time. Approval of the merger agreement requires the affirmative vote of the holders of two-thirds of the outstanding shares of Anchor common stock. If you mark “ABSTAIN” on your proxy, or fail to submit a proxy and fail to vote in person at the Anchor special meeting or if your shares are held in street name and you fail to instruct your bank or broker how to vote with respect to the merger agreement, it will have the same effect as a vote “AGAINST” the merger agreement.
Approval of the adjournment proposal requires the affirmative vote of a majority of the votes cast at the special meeting. If you mark “ABSTAIN” on your proxy, or fail to submit a proxy and fail to vote in person at the Anchor special meeting or if your shares are in street name and you fail to instruct your bank or broker how to vote with respect to the adjournment proposal, it will have no effect on such proposal.



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RISK FACTORS
By voting in favor of the merger agreement, you will be choosing to invest in the common stock of Washington Federal as combined with Anchor. An investment in the combined company’s common stock contains a high degree of risk. In addition to the other information included in this proxy statement/prospectus, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” on page [●], you should carefully consider the matters described below in determining whether to vote in favor of approval of the merger agreement.
Risks Related to the Merger
Because the market price of Washington Federal common stock will fluctuate, Anchor shareholders cannot be sure of the value of the merger consideration they will receive.
Upon completion of the merger, each share of Anchor common stock, other than dissenting shares and cancelled shares, will be converted into the right to receive merger consideration equal to a fraction of a share of Washington Federal common stock equal to the Exchange Ratio, which fluctuates within a 13% range based on the Washington Federal average common stock price and then becomes fixed. Any change in the market price of Washington Federal common stock prior to completion of the merger could affect the value of the merger consideration that Anchor shareholders will receive upon completion of the merger. Accordingly, at the time of the Anchor special meeting and prior to the closing of the merger, Anchor shareholders will not necessarily know or be able to calculate the actual value of the merger consideration they would receive upon completion of the merger which could be less than or greater than $25.75 based on the Washington Federal average common stock price and the market value of the Washington Federal common stock at the closing of the merger. Although Anchor will have the right to terminate the merger agreement in the event of a specified decline in the market value of Washington Federal common stock and a specified decline relative to the performance of a designated market index unless Washington Federal elects to increase the aggregate merger consideration (see “The Merger Agreement—Termination of the Merger Agreement”), neither company is otherwise permitted to terminate the merger agreement or resolicit the vote of Anchor’s shareholders solely because of changes in the market prices of either company’s stock. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in our respective businesses, operations and prospects, and regulatory considerations. Many of these factors are beyond the control of both companies. You should obtain current market prices for shares of Washington Federal common stock and for shares of Anchor common stock.
Anchor’s shareholders will have less influence as shareholders of Washington Federal than as shareholders of Anchor.
Anchor’s shareholders currently have the right to vote in the election of the board of directors of Anchor and on other matters affecting Anchor. Following the merger, the shareholders of Anchor as a group will hold a maximum ownership interest of approximately 2% of Washington Federal. When the merger occurs, each Anchor shareholder will become a shareholder of Washington Federal with a percentage ownership of the combined Company much smaller than such shareholder’s percentage ownership of Anchor. Because of this, Anchor’s shareholders will have less influence on the management and policies of Washington Federal than they now have on the management and policies of Anchor.
 
If Washington Federal is unable to integrate the combined operations successfully, its business and earnings may be negatively affected.
The merger involves the integration of companies that have previously operated independently. Successful integration of Anchor’s operations will depend primarily on Washington Federal’s ability to consolidate operations, systems and procedures and to eliminate redundancies and costs. No assurance can be given that Washington Federal will be able to integrate its post-merger operations without encountering difficulties including, without limitation, the loss of key employees and customers, the disruption of its respective ongoing businesses or possible inconsistencies in standards, controls, procedures and policies. Anticipated economic benefits of the merger are projected to come from various areas that Washington Federal’s management has identified through the due diligence and integration planning process. The elimination and consolidation of duplicate tasks are projected to result in annual cost savings. If Washington Federal has difficulties with the integration, it might not fully achieve the economic benefits it expects to result from the merger. In addition, Washington Federal may experience greater than expected costs or difficulties relating to the integration of the business of Anchor, and/or may not realize expected cost savings from the merger within the expected time frame.


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The fairness opinion of Anchor’s financial advisor received by Anchor’s board of directors prior to signing of the merger agreement does not reflect changes in circumstances since the signing of the merger agreement.
Changes in the operations and prospects of Washington Federal or Anchor or general market and economic conditions, and other factors that may be beyond the control of Washington Federal and Anchor, may alter the value of Washington Federal or Anchor or the prices of shares of Washington Federal common stock or Anchor common stock by the time the merger is completed. The opinion of Anchor’s financial advisor, dated April 11, 2017, does not speak as of the time the merger will be completed or as of any date other than the date of such opinion. For a description of the opinion of Anchor’s financial advisor, please refer to “The Merger—Opinion of Anchor’s Financial Advisor.” For a description of the other factors considered by the board of directors of Anchor in determining to approve the merger, please refer to “The Merger—Recommendation of the Anchor Board of Directors and Reasons of Anchor for the Merger.”
The merger agreement limits Anchor’s ability to pursue alternatives to the merger.
The merger agreement contains non-solicitation provisions that, subject to limited exceptions, limit Anchor’s ability to discuss, facilitate or commit to competing third-party proposals to acquire all or a significant part of Anchor. Although Anchor’s board of directors is permitted to take certain actions in connection with the receipt of a competing acquisition proposal if it determines in good faith that the failure to do so would violate its fiduciary duties, taking such actions could, and other actions (such as withdrawing or modifying its recommendation to Anchor shareholders that they vote in favor of approval of the merger agreement) would, entitle Washington Federal to terminate the merger agreement and receive a termination fee of $2,236,500. See the section entitled “The Merger Agreement—Termination of the Merger Agreement” on page [•]. These provisions might discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of Anchor from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share price than that proposed in the merger, or might result in a potential competing acquiror proposing to pay a lower per share price to acquire Anchor than it might otherwise have proposed to pay. The payment of the termination fee could also have an adverse impact on Anchor’s financial condition.
Anchor will be subject to business uncertainties and contractual restrictions while the merger is pending.
Washington Federal and Anchor have operated and, until the completion of the merger, will continue to operate, independently. Uncertainty about the effect of the merger on employees and customers may have an adverse effect on Anchor and consequently on Washington Federal. These uncertainties may impair Anchor’s ability to attract, retain or motivate key personnel until the merger is consummated, and could cause customers and others that deal with Anchor to seek to change existing business relationships with Anchor. Retention of certain employees may be challenging during the pendency of the merger, as certain employees may experience uncertainty about their future roles with Washington Federal. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with Washington Federal, Washington Federal’s business following the merger could be harmed. In addition, the merger agreement restricts Anchor from making certain acquisitions and taking other specified actions until the merger occurs without the consent of Washington Federal. These restrictions may prevent Anchor from pursuing attractive business opportunities that may arise prior to the completion of the merger. See “The Merger Agreement—Conduct of Businesses Pending the Merger.”
Anchor’s directors and executive officers have additional interests in the merger.
In deciding how to vote on the approval of the merger agreement, you should be aware that Anchor’s directors and executive officers might have interests in the merger that are different from, or in addition to, the interests of Anchor shareholders generally. See the section entitled “The Merger—Interests of Certain Persons in the Merger.” Anchor’s board of directors was aware of these interests and considered them when it recommended approval of the merger agreement to the Anchor shareholders.
Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on Washington Federal following the merger.
Before the merger and the bank merger may be completed, Washington Federal and Anchor must obtain approvals from the OCC and WDFI and a waiver from the Federal Reserve Board. Other approvals, waivers or consents from regulators may also be required. An adverse development in either party’s regulatory standing or other factors could result in an inability to obtain approvals or delay their receipt. These regulators may impose conditions on the completion of the merger or the bank merger or require changes to the terms of the merger or the bank merger. While Washington Federal and Anchor do not currently expect that any such conditions or changes will be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the

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revenues of Washington Federal following the merger, any of which might have an adverse effect on Washington Federal following the merger. Washington Federal is not obligated to complete the merger if the regulatory approvals received in connection with the completion of the merger impose any unduly burdensome condition upon Washington Federal following the merger or Washington Federal, National Association following the bank merger. See “The Merger—Regulatory Approvals Required for the Merger” and “the Merger Agreement – Conditions to Completion of the Merger.”

The merger is subject to certain closing conditions that, if not satisfied or waived, will result in the merger not being completed, which may cause the price of Washington Federal common shares or Anchor common shares to decline.
The merger is subject to customary conditions to closing, including the receipt of required regulatory approvals and approval of Anchor’s shareholders. If any condition to the merger agreement is not satisfied or waived, to the extent permitted by law, the merger will not be completed. In addition, Washington Federal and Anchor may terminate the merger agreement under certain circumstances, even if Anchor’s shareholders approve the merger agreement. If Washington Federal and Anchor do not complete the merger, the trading prices of Washington Federal common shares or Anchor common shares may decline. In addition, neither company would realize any of the expected benefits of having completed the merger. If the merger is not completed and Anchor’s board of directors seeks another merger or business combination, Anchor shareholders cannot be certain that Anchor will be able to find a party willing to offer equivalent or more attractive consideration than the consideration Washington Federal has agreed to provide. If the merger is not completed, additional risks could materialize, which could materially and adversely affect the business, financial condition and results of Washington Federal and Anchor, including the recognition of the expenses relating to the merger without realizing the economic benefits of the merger. For more information on closing conditions to the merger agreement, see “The Merger Agreement— Conditions to Completion of the Merger” included elsewhere in this proxy statement/prospectus.
Risks Related to Anchor and Anchor’s Business
Anchor is, and will continue to be, subject to the risks described in Anchor’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016, as amended and as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” included elsewhere in this proxy statement/prospectus.
Risks Related to Washington Federal and Washington Federal’s Business
Washington Federal is, and will continue to be, subject to the risks described in Washington Federal’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016, as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” included elsewhere in this proxy statement/prospectus.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This document, including information included or incorporated by reference in this document, may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Washington Federal and Anchor intend for such forward-looking statements to be covered by the safe harbor provisions for forward looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, (i) statements about the benefits of the merger, including future financial and operating results, cost savings, enhancements to revenue and accretion to reported earnings that may be realized from the merger; (ii) statements about our respective plans, objectives, expectations and intentions and other statements that are not historical facts; (iii) statements about expectations regarding the timing of the closing of the merger and the ability to obtain regulatory approvals on a timely basis; and (iv) other statements identified by words such as “expects,” “projects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “possible, “potential,” “strategy,” or words of similar meaning. These forward-looking statements are based on current beliefs and expectations of Washington Federal’s and Anchor’s respective management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and beyond Washington Federal’s and Anchor’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
our ability to successfully integrate any assets, liabilities, customers, systems, and personnel;

14



the required regulatory approvals for the merger and bank merger and/or the approval of the merger agreement by the shareholders of Anchor might not be obtained or other conditions to the completion of the merger set forth in the merger agreement might not be satisfied or waived;
the growth opportunities and cost savings from the merger may not be fully realized or may take longer to realize than expected;
operating costs, customer losses and business disruption following the merger, including adverse effects of relationships with employees, may be greater than expected;
adverse governmental or regulatory policies may be enacted;
the interest rate environment may change, causing margins to compress and adversely affecting net interest income;
the global financial markets may experience increased volatility;
we may experience adverse changes in our credit rating;
we may experience competition from other financial services companies in our markets; and
an economic slowdown may adversely affect credit quality and loan originations.
Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed under “Risk Factors” beginning on page [●] and in Washington Federal’s reports filed with the SEC.
For any forward-looking statements made in this proxy statement/prospectus or in any documents incorporated by reference into this proxy statement/prospectus, Washington Federal and Anchor claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this proxy statement/prospectus or the date of the applicable document incorporated by reference in this proxy statement/prospectus. Washington Federal and Anchor do not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. All subsequent written and oral forward-looking statements concerning the merger or other matters addressed in this proxy statement/prospectus and attributable to Washington Federal, Anchor or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this proxy statement/prospectus.

SELECTED CONSOLIDATED FINANCIAL INFORMATION OF WASHINGTON FEDERAL
Washington Federal is providing the following information to aid you in your analysis of the financial aspects of the merger. Washington Federal derived the information as of and for the five years ended September 30, 2012 through September 30, 2016 from its historical audited consolidated financial statements for these fiscal years. The audited consolidated financial information contained herein is the same historical information that Washington Federal has presented in its prior filings with the SEC. The historical consolidated financial data for the six months ended March 31, 2017 and 2016 is derived from unaudited consolidated financial statements. However, in the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation at such dates and for such periods have been made.

15



The operating results for the six months ended March 31, 2017 and 2016 are not necessarily indicative of the operating results that may be expected for any future interim period or the year ending September 30, 2017. This information is only a summary, and you should read it in conjunction with Washington Federal’s consolidated financial statements and notes thereto contained in Washington Federal’s 2016 Annual Report on Form 10-K, which has been incorporated by reference into this document. See the section entitled “Where You Can Find More Information” on page [●].
 
At or for the Six Months Ended March 31,
 
At or for the Year Ended September 30,
 
2017
 
2016
 
2016
 
2015
 
2014
 
2013
 
2012
 
(Dollars in thousands, except per share data)
Balance Sheet Summary:
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
$
14,960,676

 
$
14,670,823

 
$
14,888,063

 
$
14,568,324

 
$
14,756,041

 
$
13,082,859

 
$
12,472,944

Loans receivable, net
10,463,022

 
9,545,322

 
9,910,920

 
9,170,634

 
8,324,798

 
7,823,977

 
7,740,374

Mortgage-backed securities
2,613,656

 
2,755,434

 
2,490,510

 
2,906,440

 
3,231,691

 
2,902,655

 
2,360,668

Investment securities
472,776

 
899,739

 
849,983

 
1,117,339

 
1,366,018

 
1,109,772

 
612,524

Cash and cash equivalents
266,397

 
276,084

 
450,368

 
284,049

 
781,843

 
203,563

 
751,430

Customer accounts
10,630,807

 
10,543,384

 
10,600,852

 
10,631,703

 
10,716,928

 
9,090,271

 
8,576,618

FHLB advances
2,150,000

 
1,980,000

 
2,080,000

 
1,830,000

 
1,930,000

 
1,930,000

 
1,880,000

Stockholders’ equity
2,014,762

 
1,962,460

 
1,975,731

 
1,955,679

 
1,973,283

 
1,937,635

 
1,899,752

Stockholders’ equity per share
22.53

 
21.50

 
22.03

 
21.04

 
20.05

 
18.91

 
17.89

Average equity to average assets
13.5
%
 
13.4
%
 
13.3
%
 
13.4
%
 
13.8
%
 
14.8
%
 
14.3
%
Non-performing assets to total assets
0.53
%
 
0.64
%
 
0.48
%
 
0.88
%
 
1.00
%
 
1.63
%
 
2.19
%
Income Statement Summary:
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
268,962

 
$
270,187

 
$
536,793

 
$
530,553

 
$
533,697

 
$
516,291

 
$
590,271

Interest expense
58,083

 
56,993

 
116,544

 
117,072

 
128,077

 
136,159

 
193,249

Net interest income
210,879

 
213,194

 
420,249

 
413,481

 
405,620

 
380,132

 
397,022

Provision (reversal) for loan losses
(1,600
)
 
(1,500
)
 
(6,250
)
 
(11,162
)
 
(15,401
)
 
1,350

 
44,955

Other Income
22,032

 
21,364

 
57,082

 
49,727

 
27,916

 
20,074

 
6,698

Other Expense
110,615

 
118,421

 
235,447

 
224,851

 
204,009

 
164,240

 
142,854

Income before income taxes
123,896

 
117,637

 
248,134

 
249,519

 
244,928

 
234,616

 
215,911

Income taxes
40,580

 
40,816

 
84,085

 
89,203

 
87,564

 
83,111

 
77,728

Net income
$
83,316

 
$
76,821

 
$
164,049

 
$
160,316

 
$
157,364

 
$
151,505

 
$
138,183

Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings
$
0.93

 
$
0.83

 
$
1.79

 
$
1.68

 
$
1.56

 
$
1.45

 
$
1.29

Diluted earnings
0.93

 
0.83

 
1.78

 
1.67

 
1.55

 
1.45

 
1.29

Cash dividends
0.54

 
0.27

 
0.55

 
0.54

 
0.41

 
0.36

 
0.32

Return on average stockholders’ equity
8.34
%
 
7.83
%
 
8.33
%
 
8.21
%
 
7.99
%
 
7.88
%
 
7.23
%
Return on average assets
1.12
%
 
1.05
%
 
1.12
%
 
1.10
%
 
1.10
%
 
1.17
%
 
1.03
%
Efficiency ratio
48.00
%
 
52.75
%
 
50.80
%
 
49.54
%
 
46.76
%
 
40.90
%
 
34.54
%
Average Shares Outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
89,346,294

 
92,385,367

 
91,399,038

 
95,644,639

 
101,154,030

 
104,684,812

 
107,108,703

Diluted
89,732,042

 
92,860,052

 
91,912,918

 
96,053,959

 
101,590,351

 
104,837,470

 
107,149,240


16



SELECTED CONSOLIDATED FINANCIAL INFORMATION OF ANCHOR
The following selected financial data with respect to Anchor’s statements of financial position and its statements of income for the fiscal years ended June 30, 2012 through June 30, 2016 have been derived from its historical audited financial statements for those fiscal years. The audited consolidated financial information contained herein is the same historical information that Anchor has presented in its prior filings with the SEC. The historical consolidated financial data for the nine months ended March 31, 2017 and 2016 is derived from unaudited consolidated financial statements. However, in the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation at such dates and for such periods have been made.
The operating results for the nine months ended March 31, 2017 and 2016 are not necessarily indicative of the operating results that may be expected for any interim period or the year ending June 30, 2017. This information is only a summary, and you should read it in conjunction with Anchor’s consolidated financial statements and notes thereto contained in Anchor’s 2016 Annual Report on Form 10-K, which has been incorporated by reference into this document. See the section entitled “Where You Can Find More Information” on page [●].
 
At or for the 
Nine Months Ended 
March 31,
 
At or for the Year Ended June 30,
 
2017
 
2016
 
2016
 
2015
 
2014
 
2013
 
2012
 
(Dollars in thousands, except per share data)
Balance Sheet Summary:
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
$
465,449

 
$
420,002

 
$
431,504

 
$
379,230

 
$
389,128

 
$
452,179

 
$
470,815

Securities
168

 
177

 
175

 
554

 
573

 
1,591

 
1,798

Mortgage-backed securities
25,697

 
31,245

 
29,781

 
36,628

 
47,109

 
57,012

 
54,098

Loans receivable, net
378,875

 
326,562

 
347,351

 
283,444

 
281,526

 
277,454

 
287,755

Deposits
343,265

 
303,156

 
300,894

 
299,812

 
311,034

 
328,584

 
345,798

FHLB advances
50,500

 
45,500

 
62,000

 
10,000

 
17,500

 
64,900

 
64,900

Total equity
64,989

 
64,101

 
63,196

 
63,722

 
53,674

 
52,367

 
54,024

Income Statement Summary:
 
 
 
 
 
 
 
 
 
 
 
 
 
Total interest income
$
14,775

 
$
12,845

 
$
17,524

 
$
16,886

 
$
17,789

 
$
19,727

 
$
22,464

Total interest expense
2,398

 
2,097

 
2,830

 
3,076

 
3,681

 
4,764

 
6,090

Net interest income before provision for loan losses
12,377

 
10,748

 
14,694

 
13,810

 
14,108

 
14,963

 
16,374

Provision for loan losses
285

 
165

 
340

 
-

 
-

 
750

 
2,735

Net interest income after provision for loan losses
12,092

 
10,583

 
14,354

 
13,810

 
14,108

 
14,213

 
13,639

Noninterest income
3,167

 
3,155

 
4,205

 
4,503

 
4,075

 
4,924

 
6,674

Noninterest expense
12,818

 
13,532

 
18,025

 
16,807

 
17,760

 
19,392

 
22,025

Income (loss) before provision (benefit) for income tax
2,441

 
206

 
534

 
1,506

 
423

 
(255)

 
(1,712)

Total provision (benefit) for income tax
746

 
46

 
39

 
(8,321)

 

 

 

Net income (loss)
$
1,695

 
$
160

 
$
495

 
$
9,827

 
$
423

 
$
(255
)
 
$
(1,712
)
Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings
$
0.71

 
$
0.07

 
$
0.20

 
$
3.97

 
$
0.17

 
$
(0.10
)
 
$
(0.70
)
Diluted earnings
0.70

 
0.07

 
0.20

 
3.97

 
0.17

 
(0.10)

 
(0.70)

Cash dividends

 

 

 

 

 

 

Return on average stockholders’ equity
2.88
%
 
0.28
%
 
0.86
%
 
3.10
%
 
0.83
%
 
(0.49
)%
 
(3.13
)%
Return on average assets
0.39
%
 
0.04
%
 
0.13
%
 
0.43
%
 
0.10
%
 
(0.05
)%
 
(0.36
)%
Efficiency ratio
82.5
%
 
97.3
%
 
95.4
%
 
91.8
%
 
97.7
%
 
97.5
 %
 
95.6
 %
Average Shares Outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
2,400,217

 
2,455,274

 
2,452,455

 
2,477,423

 
2,466,983

 
2,461,033

 
2,454,233

Diluted
2,422,171

 
2,456,459

 
2,459,526

 
2,477,423

 
2,466,983

 
2,461,033

 
2,454,233


17



UNAUDITED PRO FORMA PER SHARE DATA
The following table sets forth for the Washington Federal common stock and the Anchor common stock certain historical, pro forma and pro forma equivalent per share financial information. The pro forma and pro forma equivalent per share information gives effect to the merger as if the transaction had been effective on the dates presented, in the case of book value data, and as if the transaction had been effective at the beginning of each period shown below, in the case of the income and dividend data. The pro forma information in the table assumes that the merger is accounted for under the acquisition method of accounting. The information in the following table is based on, and should be read together with, the historical financial information that Washington Federal and Anchor have presented in prior filings with the SEC. See “Where You Can Find More Information” beginning on page [•].
The pro forma financial information is not necessarily indicative of results that would have occurred had the merger been completed on the date indicated or that may be obtained in the future.
 
For the Six 
Months  Ended 
March 31, 2017
 
 
For the Twelve 
Months  Ended 
September 30, 2016
Net Income Per Common Share:
 
 
 
 
 
Historical:
 
 
 
 
 
Washington Federal
 
 
 
 
 
Basic
$
0.93
 
$
1.79
Diluted
 
0.93
 
 
1.78
Anchor
 
 
 
 
 
Basic
 
0.47
 
 
0.30
Diluted
 
0.46
 
 
0.30
Pro forma combined (1)
 
 
 
 
 
Basic
 
0.93
 
 
1.77
Diluted
 
0.92
 
 
1.76
Equivalent Pro Forma Anchor (2)
 
 
 
 
 
Basic
 
0.75
 
 
1.42
Diluted
 
0.74
 
 
1.41
 
 
 
 
 
 
Dividends Declared Per Common Share:
 
 
 
 
 
Historical:
 
 
 
 
 
Washington Federal (3)
$
0.54
 
$
0.55
Anchor
 
 
 
Equivalent pro forma Anchor (4)
 
0.43
 
 
0.44
 
 
 
 
 
 
Book Value Per Common Share:
 
 
 
 
 
Historical:
 
 
 
 
 
Washington Federal
$
22.53
 
$
22.03
Anchor
 
25.95
 
 
25.46
Pro forma combined (1)
 
22.73
 
 
22.25
Equivalent pro forma amount of Anchor (2)
 
18.27
 
 
17.88

(1)
Pro forma combined amounts are calculated by adding together the historical amounts reported by Washington Federal and Anchor, as adjusted for the estimated acquisition accounting adjustments to be recorded in connection with the merger and an estimated 1.994 million shares of Washington Federal common stock to be issued in connection with the merger based on the terms of the merger agreement.
(2)
The equivalent pro forma per share data for Anchor is computed by multiplying the pro forma combined amounts by the exchange ratio of 0.80.

18



(3)
It is anticipated that the initial pro forma combined dividend rate will be equal to the current dividend rate of Washington Federal. Accordingly, the pro forma combined dividends per share of Washington Federal common stock is equal to the historical dividends per common share paid by Washington Federal. The six months ended March 2017 contain a $0.25 special dividend.
(4)
The equivalent pro forma cash dividends per common share represent the historical cash dividends per common share declared by Washington Federal and assume no change will occur, multiplied by the exchange ratio of 0.80.





19



MARKET PRICE DATA AND DIVIDEND INFORMATION

Comparative Market Price Information
The following table presents trading information for Washington Federal common stock on the Nasdaq Global Select Market and Anchor common stock on the Nasdaq Global Market on April 10, 2017, the last trading day prior to the announcement of the signing of the merger agreement, and on [●], 2017, the last practical trading day for which information was available prior to the date of the printing of this proxy statement/prospectus.

 
Historical market value per share of
Washington Federal
 
Historical market value per share of
Anchor
April 10, 2017
$32.60
 
$25.00
[•], 2017
 
 
 

You should obtain current market quotations for Washington Federal common stock. The market price of Washington Federal common stock will likely fluctuate between the date of this document and the date on which the merger is completed and after the merger. Because the market price of Washington Federal common stock is subject to fluctuation, the value of the shares of Washington Federal common stock that you may receive in the merger may increase or decrease prior to and after the merger.
Historical Market Prices and Dividend Information
Washington Federal common stock is listed on the Nasdaq Global Select Market System under the symbol “WAFD.” Anchor common stock is listed on the Nasdaq Global Market System under the symbol “ANCB.” The following table sets forth, for the calendar quarters indicated, the high and low sales prices per share of Washington Federal common stock and Anchor common stock as reported on the Nasdaq Global Select Market System and the Nasdaq Global Market System, respectively, and the quarterly cash dividends per share declared.

20



 
 
Washington Federal
 
Anchor Bancorp
 
 
Market Price
 
Dividends declared per share
 
Market Price
 
Dividends
 
 
High
 
Low
 
 
High
 
Low
 
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Second calendar quarter through ([•], 2017)
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2017*
$35.15
 
$31.70
 
$0.40
 
$26.95
 
$25.75
 
$—
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
December 30, 2016
35.30
 
26.38
 
0.14
 
27.38
 
24.05
 
 
September 30, 2016
26.98
 
23.73
 
0.14
 
26.24
 
23.11
 
 
June 30, 2016
25.22
 
21.79
 
0.14
 
25.44
 
23.00
 
 
March 31, 2016
23.23
 
19.87
 
0.14
 
25.06
 
22.61
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2015
26.05
 
22.61
 
0.13
 
26.00
 
21.99
 
 
September 30, 2015
23.93
 
21.39
 
0.13
 
22.75
 
21.32
 
 
June 30, 2015
24.16
 
21.46
 
0.13
 
22.92
 
20.85
 
 
March 31, 2015
22.14
 
19.86
 
0.13
 
22.61
 
20.25
 
 
 
 
 
 
 
 
 
 
 
 
 
 

*Includes special dividend of $0.25 per share
As of [●], 2017 there were [●] outstanding shares of Washington Federal common stock held by approximately [●] shareholders of record. As of [●], 2017, there were [●] outstanding shares of Anchor common stock held by approximately [●] holders of record. Anchor has not paid any dividends to its shareholders.
The board of directors of Washington Federal from time to time evaluates the payment of cash dividends. The timing and amount of any future dividends will depend upon earnings, cash and capital requirements, the financial condition of Washington Federal and its subsidiaries, applicable government regulations and other factors deemed relevant by Washington Federal’s board of directors. Washington Federal paid the following historical cash dividends:
On January 18, 2017, Washington Federal announced a quarterly cash dividend of $.15 per share and a one-time special dividend of $.25 per share, payable on February 10, 2017 to shareholders of record as of February 1, 2017. On April 24, 2017, Washington Federal announced a quarterly cash dividend of $.15 per share payable on May 19, 2017 to shareholders of record as of May 5, 2017.

THE SPECIAL MEETING OF ANCHOR SHAREHOLDERS
This proxy statement/prospectus constitutes the proxy statement of Anchor for use at the special meeting of Anchor’s shareholders to be held on [●], 2017, at the Lacey Community Center, 6729 Pacific Avenue SE, Lacey, Washington, at [●], local time, and any adjournments thereof.
At the special meeting, the shareholders of Anchor will consider and vote upon (i) approval of the merger agreement; and (ii) approval of the adjournment proposal.
Pursuant to the merger agreement, Anchor will merge with and into Washington Federal, and Anchor’s wholly owned subsidiary, Anchor Bank, will merge with and into Washington Federal, National Association. We

21



expect to complete the merger of Anchor with and into Washington Federal during the quarter ended September 30, 2017.
When we complete the merger, Anchor shareholders will receive a fractional share of Washington Federal common stock as merger consideration for each share of Anchor common stock they own, as described in “The Merger—Consideration to be Received in the Merger” on page [•].
Anchor has supplied all information contained in this proxy statement/prospectus with respect to Anchor. Washington Federal has supplied all information contained in this proxy statement/prospectus with respect to Washington Federal.
This proxy statement/prospectus is first being mailed to shareholders of Anchor on or about [●], 2017.

Voting and Proxy Procedure
Shareholders Entitled to Vote.
The close of business on [●], 2017 was the record date for determining Anchor shareholders entitled to receive notice of and to vote at the special meeting. On the record date, there were [●] shares of Anchor common stock outstanding held by [●] holders of record. Anchor has no other class of voting securities outstanding. Each holder of Anchor common stock is entitled to one vote for each share of Anchor common stock in that holder’s name on Anchor’s books as of the record date on any matter submitted to the vote of the Anchor shareholders at the special meeting.
If you are a beneficial owner of Anchor common stock held by a broker, bank or other nominee (i.e., in “street name”), you will need proof of ownership to be admitted to the special meeting. A recent brokerage statement or letter from a bank or broker are examples of proof of ownership. If you want to vote your shares of Anchor common stock held in street name in person at the special meeting, you will have to get a written proxy in your name from the broker, bank or other nominee who holds your shares.
Voting Your Shares.
You can vote your shares using one of the following methods:
Vote through the Internet at [www.proxyvote.com];
Vote by telephone using the toll-free number shown on the proxy card; or
Complete and return a written proxy card.
Votes submitted through the Internet or by telephone must be received by 11:59 p.m., Eastern Time, on [●], 2017. Internet and telephone voting are available 24 hours a day, and if you use one of those methods, you do not need to return a proxy card.

You can also vote in person at the special meeting, and submitting your voting instructions by any of the methods mentioned above will not affect your right to attend the special meeting and vote.
Quorum.
The presence, in person or by proxy, of at least a majority of the total number of outstanding shares of Anchor common stock entitled to vote is necessary to constitute a quorum at the special meeting. Abstentions and broker non-votes will be counted as shares present and entitled to vote at the special meeting for purposes of determining the existence of a quorum.

22



Proxies; Proxy Revocation Procedures.
The Anchor board of directors solicits proxies so that each shareholder has the opportunity to vote on the merger agreement and any other proposal to be considered at the special meeting. When a proxy card is returned properly signed and dated, the shares represented thereby will be voted in accordance with the instructions on the proxy card. If a shareholder of record attends the special meeting and wishes to vote in person, he or she may vote by ballot. Where no instructions are indicated, proxies will be voted in accordance with the recommendations of the Anchor board of directors. The board recommends a vote:
FOR approval of the merger agreement; and
FOR the adjournment proposal.
Anchor shareholders may revoke a proxy at any time by: (i) sending written notice of revocation to the corporate secretary of Anchor prior to the special meeting; (ii) executing and delivering a proxy for the special meeting bearing a later date; or (iii) attending the special meeting and voting in person. Attendance at the special meeting will not automatically revoke a proxy, but a shareholder in attendance may request a ballot and vote in person thereby revoking a prior granted proxy.
Written notices of revocation or other communications about revoking your proxy should be addressed to Anchor Bancorp, Attn: Corporate Secretary, 601 Woodland Square Loop SE, Lacey, Washington 98503.
Proxies that do not provide the proxy holders with direction in voting on the merger agreement or with respect to the adjournment proposal will be voted in favor of the merger agreement and the adjournment proposal, in accordance with the recommendation of the board of directors of Anchor. Anchor shareholders who provide no instruction with respect to the merger agreement will not be eligible to assert their dissenters’ rights.
Participants in the Anchor Employee Stock Ownership Plan.
If you hold shares of Anchor common stock through the Anchor employee stock ownership plan, the trustee of the plan will vote the shares in your plan account in accordance with your instructions. Each participant in the plan is being sent a form of voting instructions card for this purpose. Cards properly completed, signed and returned to the trustee will constitute instructions to the trustee as to the manner in which shares of Anchor common stock allocated to the plan accounts of participants are to be voted. Shares of Anchor common stock allocated to accounts in the plan for which no voting instructions are given will be voted by the trustee in the same proportion as the shares for which the trustee has received voting instructions. The deadline for returning your voting instructions to the trustee is [•], 2017. Only the trustee can vote the shares held in the plan, even if a plan participant attends the special meeting in person.
Vote Required; Voting Agreements.
The approval of the merger agreement will require the affirmative vote, in person or by proxy, of two-thirds of the outstanding shares of Anchor common stock. The directors of Anchor and their affiliates hold [●]% of the outstanding shares entitled to vote.
The directors of Anchor have entered into voting agreements with Washington Federal with respect to the shares of Anchor common stock they own, in which they have agreed, among other things, to vote, or cause to be voted, all of their shares of Anchor common stock in favor of the merger agreement. See the section entitled “The Merger Agreement—Voting Agreements” on page [•]. Because approval of the merger agreement requires the affirmative vote of two-thirds of the outstanding shares of Anchor common stock, failure to vote, abstentions and broker non-votes will have the same effect as a vote against the merger agreement.

23



The adjournment proposal will be approved if a majority of the votes cast at the special meeting are voted in favor of the adjournment proposal. The failure to vote, abstentions and broker non-votes on the adjournment proposal will have no effect on such proposal.
Proxy Solicitation
The accompanying proxy is being solicited by the board of directors of Anchor. Anchor will bear the entire cost of solicitation of proxies from holders of its common shares. In addition to the solicitation of proxies by mail, certain officers, directors and employees of Anchor, without extra remuneration, may also solicit proxies in person, by telephone, facsimile or otherwise. Anchor will pay printing, postage and mailing costs of the proxy statement/prospectus. All other costs, including legal and accounting fees, shall be borne by the party incurring such costs. In addition, Anchor has engaged Regan & Associates, Inc. to assist in distributing proxy materials and soliciting proxies and has agreed to pay a fee of $9,000, including out-of-pocket expenses, for its services to be rendered on behalf of Anchor.
Security Ownership of Management and Certain Beneficial Owners
The following table sets forth, as of [•], 2017, the voting record date, information regarding Anchor common stock ownership by:
those persons or entities (or groups of affiliated person or entities) known by management to beneficially own more than five percent of Anchor’s common stock other than directors and executive officers;
each director and director nominee of Anchor;
each executive officer of Anchor or Anchor Bank for whom compensation is required to made under Item 402 of SEC Regulation S-K (known as “named executive officers”); and
all current directors and executive officers of Anchor and Anchor Bank as a group.
Persons and groups who beneficially own in excess of five percent of Anchor’s common stock are required to file with the SEC, and provide Anchor a copy, reports disclosing their ownership pursuant to the Exchange Act. To Anchor’s knowledge, no other person or entity, other than the ones set forth below, beneficially owned more than five percent of the outstanding shares of Anchor’s common stock as of the close of business on the voting record date.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In accordance with Rule 13d-3 of the Exchange Act, a person is deemed to be the beneficial owner of any shares of common stock if he or she has voting and/or investment power with respect to those shares. Therefore, the table below includes shares owned by spouses, other immediate family members in trust, shares held in retirement accounts or funds for the benefit of the named individuals, shares held in the Anchor employee stock ownership plan, and other forms of ownership, over which shares the persons named in the table may possess voting and/or investment power.

As of the voting record date, there were [•] shares of Anchor common stock outstanding.

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Name
Number of Shares Beneficially
Owned (1)
Percent of Shares
Outstanding
 (%)
Beneficial Owners of More Than 5%
 
Joel S. Lawson, IV
225,000 (2)
8.98
2040 Grubbs Mill Road
 
 
Berwyn, Pennsylvania 19312
 
 
 
 
 
Manulife Asset Management (US) LLC
167,336 (3)
6.68
101 Huntington Avenue
 
 
Boston, Massachusetts 02199
 
 
 
Stieven Capital Advisors, L.P.
204,100
8.15
12412 Powerscourt Drive, Suite 250
 
 
St. Louis, Missouri 63131
 
 
 
 
 
Joseph Stilwell
236,466 (5)
9.44
111 Broadway, 12th Floor
 
 
New York, New York 10006
 
 
 
 
 
Directors
 
 
Robert D. Ruecker
22,700 (6)
*
Jerald L. Shaw
41,635 (7)
*
Douglas A. Kay
8,200 (8)
*
George W. Donovan
17,200 (9)
*
Terri L. Degner
33,367 (10)
*
Reid A. Bates
2,250 (8)
*
Gordon Stephenson
3,050 (11)
*
 
 
 
Named Executive Officers Who Are Not Directors
 
 
Matthew F. Moran
13,324 (12)
*
 
 
 
All Executive Officers and Directors as a Group (9 persons)
149,301
5.96
 
 
 
(footnotes on the following page)


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____________________
*
Less than one percent of shares outstanding.
(1)
Shares of restricted stock granted under the Anchor 2015 Equity Incentive Plan, as to which the holders have voting power but not investment power, are included as follows: Messrs. Ruecker, Kay and Donovan, 4,900 shares each; Mr. Shaw and Ms. Degner, 10,667 shares each; Mr. Bates, 800 shares; Mr. Moran, 5,282 shares; and all executive officers and directors as a group, 47,076 shares.
(2)
According to a Schedule 13D/A filed December 10, 2015, Mr. Lawson has sole voting and dispositive power over the shares reported.
(3)
According to a Schedule 13G/A filed February 14, 2017, Manulife Asset Management (US) LLC has sole voting and dispositive power over the shares reported.
(4)
According to a Schedule 13G/A filed February 13, 2017, Stieven Financial Investors, L.P. (“SFI”) and its general partner, Stieven Capital GP, LLC (“SFIGP”), have shared voting and dispositive power over 171,426 shares. Stieven Financial Offshore Investors, Ltd. (“SFOI”) has shared voting and dispositive power over 32,674 shares. Stieven Capital Advisors, L.P. (“SCA”), which serves as investment manager to SFI and SFOI, Stieven Capital Advisors GP, LLC (“SCAGP”), which serves as the general partner of SCA, Joseph A. Stieven, as managing member of SCAGP and SFIGP and CEO of SCA, Stephen L. Covington, as managing director of SCA, and Daniel M. Ellefson, as managing director of SCA, each report shared voting and dispositive power over 204,100 shares.
(5)
According to a Schedule 13D/A filed September 16, 2016, Stilwell Activist Fund, L.P., Stilwell Activist Investments, L.P., Stilwell Partners, L.P., Stilwell Value LLC and Joseph Stilwell have shared voting and dispositive power over the shares reported
(6)
Includes shares of restricted stock noted in footnote (1); remaining shares are held in individual retirement account (“IRA”).
(7)
Includes shares of restricted stock noted in footnote (1), 9,500 shares held jointly with spouse, 849 shares held in IRA, 1,794 shares held in the Anchor employee stock ownership plan (the “ESOP”), 3,245 shares held in spouse’s IRA and 3,406 shares held by Shaw Family I LLC.
(8)
Includes shares of restricted stock noted in footnote (1); remaining shares are held jointly with spouse.
(9)
Includes shares of restricted stock noted in footnote (1), 4,000 shares held jointly with spouse, 4,000 shares held by William M. Donovan Trust as to which Mr. Donovan is trustee, as well as 2,000 shares held for his children.
(10)
Includes shares of restricted stock noted in footnote (1), 10,000 shares held jointly with spouse and 1,117 shares held in the ESOP.
(11)
Consists of 1,000 shares held jointly with spouse, 1,000 shares held in his spouse’s IRA and 1,050 shares held as custodian for minors.
(12)
Includes shares of restricted stock noted in footnote (1).


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THE MERGER
General
The boards of directors of Washington Federal and Anchor have unanimously approved the merger agreement providing for the merger of Anchor with and into Washington Federal, with Washington Federal being the surviving entity, and the merger of Anchor Bank with and into Washington Federal, National Association, with Washington Federal, National Association being the surviving institution. We expect to complete the merger of Anchor with and into Washington Federal during the quarter ending September 30, 2017.
Background of the Merger
Anchor’s board of directors regularly reviews and assesses Anchor’s business strategies and objectives, with the goal of maximizing value for its shareholders. Following its mutual to stock conversion in January 2011, Anchor remained subject to a Cease and Desist Order with the FDIC and the WDFI that was entered into in 2009. In connection with the lifting of the Cease and Desist Order in September 2012, Anchor entered into a Supervisory Directive with the Federal Reserve Bank of San Francisco (“Federal Reserve Bank”) and Anchor Bank entered into a Supervisory Directive with the WDFI.

In April 2014, Anchor engaged Invictus Consulting Group LLC (“Invictus”) to assist it with stress testing Anchor’s and Anchor Bank’s capital. The stress testing Invictus provided was used by Anchor to show the Federal Reserve Bank and the WDFI that Anchor and Anchor Bank had the ability to absorb certain losses in adverse conditions and still meet their respective minimum capital requirements as support for the removal of the Supervisory Directives.

On November 20, 2014, the WDFI terminated its Supervisory Directive with Anchor Bank and on January 13, 2015, the Federal Reserve Bank terminated its Supervisory Directive with Anchor. Thereafter, the Anchor board of directors began assessing Anchor’s business opportunities, including the possible acquisition of other financial institutions. As a result, in May 2015, Anchor retained Invictus to provide Anchor with alternatives for Anchor to increase its shareholder value, including the acquisition of other financial institutions.

During 2015, Anchor’s board of directors continued to review and assess its business strategies and objectives. With the termination of its supervisory directives, the shareholder activists that purchased shares in Anchor’s offering of its common stock as part of its mutual to stock conversion began urging the Anchor board to maximize shareholder value through the sale of Anchor. In particular, two shareholder activists, Joel S. Lawson, and Joseph Stilwell and his affiliates (collectively, the “Stilwell Group”) increased their demands on Anchor to find a potential acquisition partner.

On July 28, 2015, as part of its capital management strategies, Anchor announced the repurchase of up to 5% of its outstanding common stock and such repurchase was completed during the quarter ended June 30, 2016.

During the months of September and October 2015, Mr. Lawson ran a proxy contest in connection with Anchor’s October 2015 annual meeting of shareholders and he was successful in the appointment of his nominee, Varonica S. Ragan, to Anchor’s and Anchor Bank’s respective boards of directors on December 9, 2015. Ms. Ragan was also appointed as chairperson of the Anchor board of directors’ strategic planning committee (the “Committee”). In connection with Ms. Ragan’s appointment to Anchor’s board of directors, Anchor also entered into a standstill agreement with Mr. Lawson and Ms. Ragan.

In March 2016, KBW, which had acted as financial advisor to Anchor in connection with the offering of Anchor’s common stock in the mutual to stock conversion and maintained its relationship with Anchor following the conversion, met with the Anchor board of directors to discuss an analysis prepared by KBW regarding Anchor remaining independent versus a sale of Anchor.

On April 28, 2016, KBW indicated to the Committee that Company A could be a possible merger partner for Anchor. After discussion, the Committee decided to pursue this opportunity and authorized KBW to contact

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Company A regarding a possible transaction. In connection with Anchor’s consideration of this potential transaction, Anchor’s special counsel Silver Freedman Taff & Tiernan LLP, which we refer to in this document as “SFT&T”, discussed with the Anchor board of directors its fiduciary duties regarding a potential transaction for the sale of Anchor.

On May 5, 2016, KBW provided Anchor with an engagement letter in connection with a possible transaction with Company A. Anchor provided a copy of the KBW engagement letter to SFT&T for review.

On May 6, 2016, Anchor Bank received a mutual non-disclosure agreement from Company B for the purpose of a possible purchase of branches by Anchor Bank. Anchor Bank did not pursue the branch purchase.

On May 9, 2016, KBW provided a revised engagement letter to Anchor for its consideration relating to a possible transaction with Company A. Anchor provided a copy of the revised KBW engagement letter to SFT&T for review.

On May 17, 2016, at a regularly scheduled meeting and following lengthy analysis and discussion, the Anchor board of directors approved and caused an engagement letter with KBW to be executed by Anchor retaining KBW as Anchor’s financial advisor in connection with a transaction with Company A. During the latter part of May and early June 2016, due diligence was conducted by Company A.

On June 15, 2016, Anchor’s President and Chief Executive Officer, Jerald L. Shaw, and Anchor’s Executive Vice President and Chief Financial Officer, Terri L. Degner, met with representatives of the Stilwell Group. The meeting followed an advance phone call to Anchor’s counsel Breyer & Associates PC, which we refer to in this document as “B&A”, by Joseph Stilwell indicating that he had concluded it was time for Anchor to be sold. During June and July 2016, discussions between Anchor, B&A and representatives of the Stilwell Group continued.

On June 24, 2016, Anchor received a non-binding letter of intent from Company A with a proposed price to Anchor shareholders of $27.00 per share with 30% of the total consideration paid in cash and 70% in Company A’s common stock. A copy of the letter was provided to each of Anchor’s directors and the Committee for review. A copy of the letter was also provided to SFT&T to review on Anchor’s behalf.

On July 1, 2016, Anchor’s management updated the board and the Committee on the status of the letter of intent from Company A. Representatives of KBW and SFT&T provided comments to the Company A letter of intent over the next several days. The managements of Anchor and Company A continued due diligence discussions during late June through mid-July 2016 and further negotiation of the letter of intent.

On July 1, 2016, a demand for a shareholder list from the Stilwell Group was sent to Anchor.

On July 8, 2016, Anchor provided the shareholder list to a representative of the Stilwell Group. Discussions with representatives of the Stilwell Group continued throughout July and August 2016 concerning the Anchor shareholder meeting in September 2016.

On July 20, 2016, KBW notified Anchor that Company A had determined not to proceed with the transaction. In a conference call with the Anchor board of directors, KBW recommended that the board consider expanding its search for a merger partner and proposed next steps in the process. The Anchor board authorized KBW to develop a recommended list of potential partners, and to prepare a confidential offering memorandum and other documents required to present information on Anchor to potential interested parties. In connection with its determination to pursue other merger partners, the Anchor board decided, after discussions with B&A, to announce Anchor’s engagement of KBW as its financial advisor to evaluate and pursue its strategic alternatives through a press release and filing of a Current Report on Form 8-K with the SEC.

On July 22, 2016, KBW provided Anchor with an amendment to its engagement letter, which expanded the May 19, 2016 engagement letter to include other potential merger partners approved by Anchor.
 
On July 25, 2016, Anchor distributed a press release and filed the press release on a Current Report on Form 8-K with the SEC to announce its engagement of KBW to assist Anchor in identifying and evaluating various

28



strategic options and operating scenarios intended to maximize shareholder value, including the potential sale or merger of Anchor.

On July 27, 2016, the Stilwell Group’s Schedule 13D/A filed with the SEC indicated that they would seek to appoint a nominee to the Anchor board unless Anchor announced a sale transaction prior to its annual meeting of shareholders in September 2016.

On July 28, 2016, KBW was contacted by Brent J. Beardall, then President and Chief Banking Officer of Washington Federal, indicating that Washington Federal might possibly be interested in a transaction with Anchor.

On August 1, 2016, Anchor signed the amended engagement letter with KBW pursuant to which KBW was engaged to contact other potential merger partners in its capacity as financial advisor to Anchor.

On August 5, 2016, the Committee and B&A participated in a conference call with KBW to discuss potential interested parties. KBW identified five potential institutions to contact on a confidential basis to ascertain their respective level of interest in acquiring Anchor. Discussion followed regarding each party and its ability to complete a proposed transaction.

On August 16, 2016, Invictus provided Anchor’s board of directors with a “Kelley Blue Book Valuation” (the “Invictus Presentation”), which provided its estimate for the amount to be received on a sale of Anchor, based on an all cash offer. The Invictus Presentation concluded that Anchor had an estimated stand-alone value of $25.00 per share, plus an estimated acquisition premium of $2.50 per share.

On August 16, 2016, the Committee participated in a conference call with B&A and KBW to discuss the Stilwell Group nominee to the Anchor board and the Stilwell Group’s desire to sell Anchor. The Committee discussed the options available to Anchor regarding putting the Stilwell Group’s nominee on the Anchor board. KBW provided an update on calls it had received from potential interested parties, including a credit union. The Committee also discussed (i) a potential branch acquisition from Company B for $32 or $33 million in deposits with a 2% deposit premium, (ii) the Invictus Presentation, and (iii) contacting Company C, a smaller bank, regarding a potential transaction with Anchor.

During the August 16, 2016 conference call, the Committee determined that the valuation reached by Invictus in the Invictus Presentation was based on a number of assumptions, including that Anchor’s growth would be funded by deposits. Management of Anchor stated that it did not believe the growth assumptions contained in the Invictus Presentation were sustainable for 2017 without the use of wholesale sources of funds, which they did not want to pursue. Management also indicated that it did not believe that the basis of the model prepared by Invictus was consistent with current economic conditions. Further, the Invictus analysis was made without the results of any discussion with potential acquirors, which ultimately produced lower proposed prices, and the Invictus Presentation specifically noted the result could be different if stock of an acquirer was the basis for the consideration.

On August 23, 2016, Mr. Shaw discussed with a representative of the Stilwell Group the possibility of the appointment of a Stilwell Group nominee to the Anchor board of directors. That same day a representative of the Stilwell Group provided forms of a standstill agreement and a non-disclosure agreement to B&A for its review on behalf of Anchor. Negotiation of these agreements between B&A and representatives of the Stilwell Group followed.

On August 29, 2016, the Anchor board of directors appointed Gordon Stephenson, the nominee of the Stilwell Group, to the Anchor board. Mr. Stephenson’s appointment was pursuant to a standstill agreement and a non-disclosure agreement between Anchor and the Stilwell Group, which also were approved by the Anchor board and executed by the parties. Anchor and the Stilwell Group distributed a joint press release announcing Mr. Stephenson’s appointment, which was filed as an exhibit to a Current Report on Form 8-K and filed with the SEC.

During late August and early September 2016, in order to facilitate the process on behalf of Anchor, KBW prepared a confidential memorandum to be provided to interested parties to assist them in deciding whether to pursue a possible transaction with Anchor. The memorandum was compiled by KBW working with Anchor management and B&A.


29



On September 6, 2016, KBW provided the Committee, with B&A in attendance, with an expanded list of potential interested parties, which included a total of 13 financial institutions. Of the 13 potential institutions, KBW indicated that Company D might be a strong candidate, but had antitrust issues, as measured by the Herfindahl Hirschman Index (“HHI”), because it had a market overlap with Anchor. Committee chairperson, Ms. Ragan, requested that B&A provide her materials on HHI so she could better understand this issue. Materials were provided to her later that day. The Committee authorized KBW to contact the 13 financial institutions.

On September 13, 2016, KBW provided the Anchor board with an update of the non-disclosure agreements that had been requested and executed. Of the 13 institutions contacted, seven had requested non-disclosure agreements and four had signed non-disclosure agreements. This was in addition to the non-disclosure agreement previously signed by Company A and does not include the non-disclosure agreement signed at a later date by Company E that is described below.

On September 15, 2016, Company C indicated to KBW that based on Company C’s analysis a transaction with Anchor was not a probability.

On October 5, 2016, the electronic data room was opened with access provided only to parties that had signed non-disclosure agreements. Due diligence ensued and four parties logged into the electronic data room.

On October 7, 2016, KBW provided the Anchor board of directors with an update regarding the level of interest of the four parties conducting due diligence in the electronic data room.

On October 11, 2016, KBW provided the Anchor board with an update on the level of interest of the five parties it had spoken with since October 7, 2016, including the four that had logged into the data room.

On October 16, 2016, Anchor received a letter of intent from Company D for $28.00 per share with 50% stock and 50% cash consideration. KBW indicated that it would prepare a model based on the HHI issue and related divestures. The Committee indicated that the HHI issue and divestiture consequences needed to be further reviewed and evaluated. The Committee also discussed whether contacting another bank and following up with Company A would be feasible.

On October 20, 2016, KBW and B&A participated in a conference call with Company D and its financial advisor to review the financial assumptions used in assessing a proposed transaction and to discuss the HHI issue.

On October 24 and 28, 2016, KBW provided the Committee with an update on the interest of the various parties it had contacted. KBW also indicated that it had provided a model based on public information to a new party, Company E.

On November 3 and 8, 2016, KBW provided the Committee with a further update regarding the various parties it had contacted.

On November 13, 2016, Ms. Degner met with the Chief Executive Officer and Chief Financial Officer of Company D as Company D began its due diligence of Anchor. Company D completed its due diligence of Anchor’s loan portfolio on November 15, 2016.

On November 15, 2016, Director Ragan resigned from the Anchor and Anchor Bank boards of directors. As a result of her resignation, Director Stephenson was made chairperson of the Committee.

On November 28, 2016, the Committee and KBW held a conference call to discuss materials KBW had provided on November 25, 2016. The discussion included an update on the progress of Company D in its due diligence review of Anchor and a report that Company E had submitted a non-disclosure agreement and had been active in the data room. KBW reported that on November 22, 2016, Company D’s Chief Executive Officer provided his board with an update of the proposed transaction and the results of Company D’s due diligence. The Company D board also discussed the HHI issue, the disgorgement of deposits and loans and determined to continue to move the HHI analysis along. The Company D board was surprised by the amount needed to fund Anchor Bank’s phantom

30



stock plan and indicated because of this expense, that the $28 price may not hold, but wanted to pay a fair price and indicated it would like to have more support on this analysis.

KBW also reported that the Chief Financial Officer of Company E had spent some time reviewing the materials in the data room and had provided KBW with a number of comments. KBW stated that it would work with Anchor to provide the information Company E requested on the modeling for a potential transaction. The Chief Financial Officer of Company E raised concerns regarding Anchor’s pro forma liquidity and capital, since the transaction could increase Company E’s size to over $1.0 billion in assets.

On December 13, 2016, the Committee and KBW held a conference call during which KBW provided an update regarding Company D and Company E. KBW reported that Company D had expressed concern about Anchor’s level of construction lending. KBW also reported that Company E was considering the transaction, but did not appear to be strongly interested. Company E also had expressed concern about Anchor’s level of construction loans, and Company E’s President also had expressed caution, since Company E had not previously done a whole bank acquisition. The Committee and KBW discussed contacting Company A again and a group that advised financial institutions.

On December 16, 2016, KBW provided a status report to the Committee regarding Company D and Company E. Company D’s Chief Executive Officer had discussed the transaction with the FDIC, WDFI and the Federal Reserve Bank and received positive feedback. The banking regulators’ primary concern was the deposit concentration/HHI issue. Any application submitted for a transaction would be required to be submitted to the Federal Reserve Board in Washington, D.C. The HHI issue could be addressed with or without mediation and Company D’s anti-trust counsel would continue to work with the U.S. Department of Justice regarding this issue. KBW also provided an update on Company E and indicated that although the pro forma results for the transaction look favorable, this would probably take some time to develop.

On January 9, 2017, KBW provided a further update via email to the Committee regarding Company D and Company E. Again, discussion regarding the Company D transaction centered on overcoming the HHI issues and Company D’s anti-trust’s efforts in its discussion with the U.S. Department of Justice. KBW also reported that Company E’s board of directors had authorized its management to continue with its analysis and that Company E had engaged an investment banker to perform additional modeling.

On January 28, 2017, KBW provided the Committee with a copy of Company D’s revised letter of intent that was received on January 27, 2017. The Company D revised letter of intent provided for a transaction value of approximately $67.6 million or $27.00 per share with the consideration to be paid 50% in stock with a fixed exchange ratio and 50% in cash. The letter of intent was not signed by Anchor pending resolution of the HHI issue. Discussions by Company’s D’s anti-trust counsel continued with the U.S. Department of Justice and the Federal Reserve Bank regarding the HHI issue.

On January 31, 2017, KBW and the Committee held a conference call. KBW reported that Company D had informed KBW that Company D was continuing to work with the U.S. Department of Justice and the Federal Reserve Bank regarding the HHI issue and would keep KBW updated. KBW also indicated that it had received no feedback from Company E. Discussion followed as to whether KBW should approach other parties. The Committee authorized KBW to follow up with Company F, Washington Federal and Company A to see if they would have any interest in a transaction with Anchor at a lower pricing.

On February 2, 2017, KBW reported to the Committee that each of Company F and Washington Federal had indicated an interest in a transaction with Anchor at a lower price and that these companies were once again given access to the data room. In addition, Washington Federal’s President, Brent J. Beardall, contacted Ms. Degner to obtain updated information on Anchor’s financials.

On February 6, 2017, KBW received a non-binding letter of intent from Washington Federal with an offer of $57.1 million, with the consideration to be paid solely in Washington Federal stock. On February 7, 2017, Washington Federal submitted a revised letter of intent, but with no change to the offer of $57.1 million, with the same stock consideration. The letter of intent included an exclusivity provision.


31



On February 8, 2017, Company F submitted a verbal proposal to KBW at 95% of Anchor’s book value, with the consideration to be paid solely in Company F stock.

On February 9, 2017, KBW indicated to Anchor that it had contacted Company A and that Company A had decided to pass.

On February 14, 2017, KBW and the Committee held a conference call to discuss materials prepared by KBW on the various proposals received from Company D, Company F and Washington Federal. KBW provided an analysis of each of the potential parties and their respective proposals. Included in KBW’s materials was an analysis of the alternative of Anchor continuing on a stand-alone basis. After discussion, the Committee determined to make a counter proposal to Washington Federal.

On February 15, 2017, Anchor counter-proposed to Washington Federal a $25.50 per share purchase price for a transaction value of $63.9 million, with the purchase price representing approximately 99.7% of stated tangible common equity and 117.9% of adjusted tangible common equity. Anchor also requested that the requirement for exclusivity be eliminated. Later that same day, KBW advised the Committee that Washington Federal had accepted the revised pricing terms.

On February 16, 2017, at a special meeting, the Anchor board approved the modified Washington Federal letter of intent and discussed next steps. The Anchor board elected not to continue discussions with Company D because of the execution risk of completing a transaction with Company D as a result of the HHI issues and also elected not to proceed with Company F. Ms. Degner indicated that Washington Federal would be contacting her on the loan review, which was expected to commence in five to seven business days and then take one to two weeks to complete.

On February 23, 2017, Washington Federal began its review of Anchor’s loan portfolio.

On February 24, 2017, KBW and B&A participated in a due diligence call with Mr. Beardall and Arian Colachis, General Counsel of Washington Federal. The purpose of the call was to discuss if there were any regulatory issues that could cause a problem for Washington Federal to obtain regulatory approval of the proposed transaction.

On February 28, 2017, a representative from the Stilwell Group contacted B&A regarding the expiration of the non-disclosure agreement with Anchor and a proposed extension for 30 days. The Anchor board of directors voted in favor of accepting the extension agreement. The Stilwell Group provided a signed copy of the extension agreement to Anchor, which was signed by Mr. Shaw.

On March 3, 2017, Ms. Degner discussed Anchor’s regulatory status with Ms. Colachis.

On March 4, 2017, Mr. Beardall contacted KBW to indicate that Washington Federal had completed its due diligence on the items that were of concern to it and nothing had come to its attention that would require an adjustment to Washington Federal’s February 15, 2017 letter of intent. He further indicated that Washington Federal was ready to move forward with the negotiation of a definitive merger agreement.

On March 8, 2017, the Anchor board held a regular meeting to discuss the transaction with Washington Federal. KBW provided materials for the meeting and discussed financial aspects of the transaction. B&A also participated in the meeting by telephone and discussed the board’s fiduciary duties and provisions to be included in the merger agreement for the transaction. That evening, KBW discussed with Mr. Beardall a proposed floating exchange ratio, which Mr. Beardall tentatively agreed with pending review of the proposed merger agreement in its entirety. The proposed floating exchange ratio provided for fixed pricing per share within a 20% collar. They also verbally agreed upon a walkaway right for Anchor in the event Washington Federal’s stock price decreased in value more than 20% and such decrease exceeded an agreed upon index by more than 20%.

On March 9, 2017, Mr. Beardall contacted KBW to indicate Washington Federal’s preference for a fixed exchange ratio rather than a floating exchange ratio with a 20% collar. KBW indicated that the Anchor board felt strongly about a floating exchange ratio and provided Mr. Beardall with Anchor’s reasons therefor. Later that

32



evening, Mr. Beardall contacted KBW and indicated that Washington Federal proposed changing the floating exchange ratio collar from 20% to 10%. KBW presented the Washington Federal proposal to Anchor management, suggesting a compromise of a 15% floating exchange ratio collar.

On March 10, 2017, the Anchor board of directors approved the KBW compromise of a 15% collar on the floating exchange ratio and authorized KBW to contact Mr. Beardall to counter with this change. KBW provided the compromise to Mr. Beardall and he indicated that Washington Federal would consider it in connection with its review of the proposed merger agreement.

On March 11, 2017, B&A provided a draft of the merger agreement to the Committee and KBW for discussion purposes. From March 11 through March 13, 2017, discussions took place between Anchor, B&A and KBW regarding the provisions of the proposed merger agreement. During this time, Anchor continued to provide information to Washington Federal through discussions and with updates provided to the electronic data room.

On March 13, 2017, KBW provided Washington Federal with a request for information for Anchor’s reverse due diligence and proposed scheduling for management interviews.

On March 14, 2017, B&A participated in a call with Anchor’s board and reviewed the proposed merger agreement in detail with them. Following discussion regarding the merger agreement and questions to B&A regarding the agreement, B&A indicated that it would circulate a new draft to reflect the board’s proposed changes.
On March 15, 2017, B&A provided a revised draft of the merger agreement to the Anchor board of directors for its review, which, among other revisions, reflected a change in the per share price from $25.50 to $25.75 as a result of the cancellation of certain shares in the transaction that were held by but unallocated under the Anchor employee stock ownership plan. The per share price increase did not change the aggregate consideration to be paid by Washington Federal in the transaction. This adjustment had been discussed with Washington Federal by KBW and was agreed to by Washington Federal.
On March 16, 2017, after discussion and review of the revised draft merger agreement by the Anchor board of directors, with questions to B&A regarding the agreement and further clarification by B&A, the Anchor board approved the proposed merger agreement and authorized B&A to share the draft with Washington Federal.

On March 17, 2017, B&A provided the proposed merger agreement to Washington Federal for its review. Washington Federal management commenced its review of the merger agreement and provided a copy to its special counsel, Davis, Wright Tremaine LLP, which we refer to herein as “Davis Wright,” for its review. Over the next several days, Washington Federal management and Davis Wright held discussions regarding the proposed merger agreement.

On March 20, 2017, the Washington Federal board of directors and management reviewed and considered the proposed terms of the transaction, and approved and authorized management to execute and deliver the merger agreement, with any further revisions thereto deemed advisable by Washington Federal management, and delegated authority to Washington Federal management to take such further actions necessary to consummate the transaction.

On March 22, 2017, the Anchor board of directors met with representatives of the Washington Federal board of directors and management in Seattle, Washington to discuss the proposed transaction. KBW representatives also attended the meeting. During this meeting the Anchor board and KBW were given the opportunity to ask due diligence questions about Washington Federal and its operations and future prospects. Washington Federal indicated that it would be working with Davis Wright and would be reviewing the proposed merger agreement with them.

On March 23, 2017, Washington Federal management met with Davis Wright to review and consider the proposed merger agreement, after which Mr. Beardall contacted KBW to indicate that Washington Federal would like to have the floating exchange ratio collar changed to 10%.

On March 24, 2017, Washington Federal management and Davis Wright held a conference call to further discuss certain provisions of the proposed merger agreement. On that same day, Mr. Beardall discussed with KBW the prospect of engaging Ms. Degner as an independent contractor through the data conversion following the closing

33



of the proposed transaction. Mr. Beardall indicated that he would speak with Ms. Degner directly and offer her a consulting contract for retaining her through this period. In addition, B&A and Davis Wright discussed the proposed merger agreement, the transaction and timing of the related regulatory filings.

During the period March 28 through April 6, 2017, the parties through their respective counsel exchanged multiple drafts of the merger agreement. Each draft was circulated for review and comment by both parties and their representatives. During this period, KBW on behalf of Anchor and Mr. Beardall on behalf of Washington Federal negotiated the terms of the floating exchange ratio collar and the Anchor walkaway provision. The parties agreed to a 13% floating exchange ratio collar and a 13% double trigger walkaway provision.

During the period April 6, 2017 through April 10, 2017, the parties exchanged and updated their respective disclosure schedules to the merger agreement.

On April 11, 2017, the Anchor board of directors and Washington Federal management reviewed, discussed and approved the final merger agreement and it was executed by the parties. At the Anchor meeting, KBW reviewed the financial aspects of the proposed merger and rendered to Anchor’s board of directors an opinion to the effect that, as of that date and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW as set forth in such opinion, the exchange ratio in the proposed merger was fair, from a financial point of view, to the holders of Anchor common stock.

Recommendation of the Anchor Board of Directors and Reasons of Anchor for the Merger
After careful consideration, at a meeting held on April 11, 2017, Anchor’s board of directors unanimously determined that the merger agreement, including the merger and the other transactions contemplated thereby, is in the best interests of Anchor and its shareholders. Accordingly, Anchor’s board of directors unanimously approved the merger agreement and recommends that Anchor’s shareholders vote “FOR” approval of the merger agreement and “FOR” approval of the  adjournment proposal.
In reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement and recommend that its shareholders vote “FOR” the approval of the merger agreement, the Anchor board of directors evaluated the merger agreement, the merger and the other transactions contemplated by the merger agreement in consultation with Anchor management, as well as Anchor’s independent financial and legal advisors, and considered a number of factors, including the following material factors:
its knowledge of Anchor’s business, operations, financial condition, asset quality, earnings, loan portfolio, capital and prospects both as an independent organization, and as a part of a combined company with Washington Federal;
the public announcement by Anchor on July 25, 2016 that it was exploring strategic options, including the potential sale or merger of Anchor, and the process undertaken by Anchor, with the assistance of KBW, to identify and solicit potential merger partners;
its understanding of Washington Federal’s business, operations, regulatory and financial condition, asset quality, earnings, capital and prospects taking into account publicly available information and information furnished by Washington Federal;
its belief that the merger will result in a stronger commercial banking franchise with a diversified revenue stream, strong capital ratios, a well-balanced loan portfolio and an attractive funding base that has the potential to deliver enhanced value to Anchor’s shareholders as compared to continuing to operate as a stand-alone entity;
its belief that the two companies share a common vision of the importance of customer service and local decision-making and that management and employees of Anchor and Washington Federal possess complementary skills and expertise, which it believes should facilitate integration and implementation of the transaction;

34



the expanded possibilities, including organic growth and future acquisitions, that would be available to Washington Federal, given its larger size, asset base, capital, market capitalization, trading liquidity and footprint;
the anticipated pro forma financial impact of the merger on Washington Federal, including potential synergies, and the expected impact on financial metrics such as earnings and tangible equity per share, as well as on regulatory capital levels;
the financial presentation, dated April 11, 2017, of KBW to the Anchor board of directors and the opinion, dated April 11, 2017, of KBW to the Anchor board of directors as to the fairness, from a financial point of view and as of the date of the opinion, to the holders of Anchor common stock of the exchange ratio in the proposed merger, as more fully described below under “--Opinion of Anchor’s Financial Advisor;”
the benefits to Anchor and its customers of operating as a larger organization, including enhancements in products and services, higher lending limits, and greater financial resources;
the increasing importance of operational scale and financial resources in maintaining efficiency and remaining competitive over the long term and in being able to capitalize on technological developments which significantly impact industry competitive conditions;
the expected social and economic impact of the merger on the constituencies served by Anchor, including its borrowers, customers, depositors, employees, suppliers and communities;
its understanding of the current and prospective environment in which Anchor and Washington Federal operate, including national and local economic conditions, that portions of Anchor’s primary market are experiencing challenging economic conditions and higher unemployment and slower population growth than the rest of Western Washington, the interest rate environment, increasing operating costs resulting from regulatory initiatives and compliance mandates. The continued rapid consolidation in the financial services industry and the competitive effects of the increased consolidation on smaller financial institutions such as Anchor;
the ability of Washington Federal to complete the merger from a financial and regulatory perspective;
the equity interest in the combined company that Anchor’s existing shareholders will receive in the merger, which allows such shareholders to continue to participate in the future success of the combined company;
the greater market capitalization and trading liquidity of Washington Federal common stock in the event that Anchor shareholders desired to sell the shares of Washington Federal common stock to be received by them following completion of the merger;
that Washington Federal has paid cash dividends on its common stock every year since 1983;
its understanding that the merger will qualify as a “reorganization” under the Code, providing favorable tax consequences to Anchor’s shareholders in the merger; and
Anchor’s review with Anchor’s independent legal advisor, B&A, of the material terms of the merger agreement, including the board’s ability, under certain circumstances, to withhold, withdraw, qualify or modify its recommendation to Anchor’s shareholders and to consider and pursue a better unsolicited acquisition proposal, subject to the payment by Anchor of a termination fee of approximately $2.24 million to Washington Federal, which the board of directors concluded was reasonable in the context of termination fees in comparable transactions and in light of the overall terms of the merger agreement, as well as the nature of the covenants, representations and warranties and termination provisions in the merger agreement.

35



The Anchor board of directors also considered a number of potential risks and uncertainties associated with the merger in connection with its deliberation of the proposed transaction, including, without limitation, the following:
the potential risk of diverting management attention and resources from the operation of Anchor’s business and towards the completion of the merger;
the restrictions on the conduct of Anchor’s business prior to the completion of the merger, which are customary for public company merger agreements involving financial institutions, but which, subject to specific exceptions, could delay or prevent Anchor from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of Anchor absent the pending merger;
the potential risks associated with achieving anticipated cost savings and successfully integrating Anchor’s business, operations and workforce with those of Washington Federal;
the merger-related costs;
the fact that the interests of Anchor’s directors and executive officers may be different from, or in addition to, the interests of Anchor’s other shareholders as described below under the heading “–Interests of Certain Persons in the Merger”;
the fact that, while Anchor expects that the merger will be consummated, there can be no assurance that all conditions to the parties’ obligations to complete the merger agreement will be satisfied, including the risk that necessary regulatory approvals of the merger and the bank merger or the Anchor shareholder approval of the merger agreement might not be obtained and, as a result, the merger may not be consummated;
the risk of potential employee attrition and/or adverse effects on business and customer relationships as a result of the pending merger;
the fact that: (i) Anchor would be prohibited from affirmatively soliciting acquisition proposals after execution of the merger agreement; and (ii) Anchor would be obligated to pay to Washington Federal a termination fee of approximately $2.24 million if the merger agreement is terminated under certain circumstances, all of which may discourage other parties potentially interested in a strategic transaction with Anchor from pursuing such a transaction; and
the other risks described under the section entitled “Risk Factors.”
The foregoing discussion of the information and factors considered by the Anchor board of directors is not intended to be exhaustive, but includes the material factors considered by the Anchor board of directors. In  
reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, the Anchor board of directors did not quantify or assign any relative weights to the specific factors it considered, and individual directors may have given different weights to different factors. The Anchor board of directors considered all these factors as a whole, and overall considered the factors to be favorable to, and to support, its determination.
Anchor’s board of directors unanimously approved the merger agreement and recommends that Anchor’s shareholders vote “FOR” approval of the merger agreement and “FOR” approval of the  adjournment proposal. Anchor shareholders should be aware that Anchor’s directors and executive officers have interests in the merger that are different from, or in addition to, those of other Anchor shareholders. The Anchor board of directors was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement, and in recommending that the shareholders of Anchor approve the merger agreement. See “—Interests of Certain Persons in the Merger.”

36



This summary of the reasoning of Anchor’s board of directors and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Opinion of Anchor’s Financial Advisor
Anchor engaged KBW to render financial advisory and investment banking services to Anchor, including an opinion to the Anchor board of directors as to the fairness, from a financial point of view, to the holders of Anchor common stock of the exchange ratio in the proposed merger. Anchor selected KBW because KBW is a nationally recognized investment banking firm with substantial experience in transactions similar to the merger and because of KBW’s familiarity with Anchor and its business. As part of its investment banking business, KBW is continually engaged in the valuation of financial services businesses and their securities in connection with mergers and acquisitions.
    
As part of its engagement, representatives of KBW attended the meeting of the Anchor board of directors held on April 11, 2017, at which the Anchor board evaluated the proposed merger. At this meeting, KBW reviewed the financial aspects of the proposed merger and rendered to the Anchor board an opinion to the effect that, as of such date and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW as set forth in its opinion, the exchange ratio in the proposed merger was fair, from a financial point of view, to the holders of Anchor common stock. The Anchor board of directors approved the merger agreement at this meeting.

The description of the opinion set forth herein is qualified in its entirety by reference to the full text of the opinion, which is attached as Appendix B to this document and is incorporated herein by reference, and describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW in preparing the opinion.

KBW’s opinion speaks only as of the date of the opinion. The opinion was for the information of, and was directed to, the Anchor board (in its capacity as such) in connection with its consideration of the financial terms of the merger. The opinion addressed only the fairness, from a financial point of view, of the exchange ratio in the merger to the holders of Anchor common stock. It did not address the underlying business decision of Anchor to engage in the merger or enter into the merger agreement or constitute a recommendation to the Anchor board in connection with the merger, and it does not constitute a recommendation to any holder of Anchor common stock or any shareholder of any other entity as to how to vote in connection with the merger or any other matter, nor does it constitute a recommendation regarding whether or not any such shareholder should enter into a voting, shareholders’ or affiliates’ agreement with respect to the merger or exercise any dissenters’ or appraisal rights that may be available to such shareholder.

KBW’s opinion was reviewed and approved by KBW’s Fairness Opinion Committee in conformity with its policies and procedures established under the requirements of Rule 5150 of the Financial Industry Regulatory Authority.

In connection with the opinion, KBW reviewed, analyzed and relied upon material bearing upon the financial and operating condition of Anchor and Washington Federal and bearing upon the merger, including, among other things:

a draft of the merger agreement dated April 10, 2017 (the most recent draft then made available to KBW);
the audited financial statements and the Annual Reports on Form 10-K for the three fiscal years ended June 30, 2016 of Anchor;
the unaudited quarterly financial statements and Quarterly Reports on Form 10-Q for the fiscal quarters ended September 30, 2016 and December 31, 2016 of Anchor;
the audited financial statements and Annual Reports on Form 10-K for the three fiscal years ended September 30, 2016 of Washington Federal;
the unaudited quarterly financial statements and Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2016 of Washington Federal;

37



certain regulatory filings of Anchor and Washington Federal and their respective subsidiaries, including the quarterly reports on Form FR Y-9C and call reports filed with respect to each quarter during the three-year period ended June 30, 2016 (in the case of Anchor) and the three-year period ended September 30, 2016 (in the case of Washington Federal), as well as the quarter ended September 30, 2016 (in the case of Anchor) and the quarter ended December 31, 2016 (in the case of Anchor and Washington Federal);
certain other interim reports and other communications of Anchor and Washington Federal to their respective shareholders; and
other financial information concerning the businesses and operations of Anchor and Washington Federal that was furnished to KBW by Anchor and Washington Federal or which KBW was otherwise directed to use for purposes of KBW’s analyses.

KBW’s consideration of financial information and other factors that it deemed appropriate under the circumstances or relevant to its analyses included, among others, the following:

the historical and current financial position and results of operations of Anchor and Washington Federal;
the assets and liabilities of Anchor and Washington Federal;
the nature and terms of certain other merger transactions and business combinations in the banking industry;
a comparison of certain financial and stock market information for Anchor and Washington Federal with similar information for certain other companies the securities of which were publicly traded;
publicly available consensus “street estimates” of Anchor for 2017 - 2019, as well as assumed long-term Anchor growth rates provided to KBW by Anchor management, all of which information was discussed with KBW by such management and used and relied upon by KBW based on such discussions, at the direction of Anchor management and with the consent of the Anchor board;
publicly available consensus “street estimates” of Washington Federal for 2017 – 2019, which information was discussed with KBW by Washington Federal management and used and relied upon by KBW based on such discussions, at the direction of Anchor management and with the consent of the Anchor board; and
estimates regarding certain pro forma financial effects of the merger on Washington Federal (including, without limitation, the cost savings and related expenses expected to result or be derived from the merger) that were prepared by, and provided to and discussed with KBW by, the management of Washington Federal, and used and relied upon by KBW based on such discussions, at the direction of Anchor management and with the consent of the Anchor board.

KBW also performed such other studies and analyses as it considered appropriate and took into account its assessment of general economic, market and financial conditions and its experience in other transactions, as well as its experience in securities valuation and knowledge of the banking industry generally. KBW also participated in discussions with the managements of Anchor and Washington Federal regarding the past and current business operations, regulatory relations, financial condition and future prospects of their respective companies and such other matters as KBW deemed relevant to its inquiry. In addition, KBW considered the results of the efforts undertaken, with KBW’s assistance, by or on behalf of and at the direction of Anchor, to solicit indications of interest from third parties regarding a potential transaction with Anchor.

In conducting its review and arriving at its opinion, KBW relied upon and assumed the accuracy and completeness of all of the financial and other information that was provided to it or that was publicly available and KBW did not independently verify the accuracy or completeness of any such information or assume any responsibility or liability for such verification, accuracy or completeness. KBW relied upon the management of Anchor as to the reasonableness and achievability of the publicly available consensus “street estimates” of Anchor and the assumed Anchor long-term growth rates referred to above, and KBW assumed that such information was reasonably prepared and represented, or in the case of the publicly available consensus “street estimates” of Anchor that such information was consistent with, the best currently available estimates and judgments of Anchor management and that such forecasts, projections and estimates would be realized in the amounts and in the time

38



periods estimated. KBW further relied, with the consent of Anchor, upon Washington Federal management as to the reasonableness and achievability of the publicly available consensus “street estimates” of Washington Federal and the estimates regarding certain pro forma financial effects of the merger on Washington Federal (and the assumptions and bases therefor, including without limitation the cost savings and related expenses expected to result or be derived from the merger) referred to above, and KBW assumed, with the consent of Anchor, that all such information was reasonably prepared and represented, or in the case of the publicly available consensus “street estimates” of Washington Federal that such information was consistent with, the best currently available estimates and judgments of Washington Federal management and that such forecasts, projections and estimates would be realized in the amounts and in the time periods estimated.

It is understood that the forecasts, projections and estimates of Anchor and Washington Federal that were provided to KBW were not prepared with the expectation of public disclosure and that such information, together with the publicly available consensus “street estimates” of Anchor and Washington Federal referred to above that KBW was directed to use, was based on numerous variables and assumptions that are inherently uncertain, including, without limitation, factors related to general economic and competitive conditions and that, accordingly, actual results could vary significantly from those set forth in such information. KBW assumed, based on discussions with the respective managements of Anchor and Washington Federal and with the consent of the Anchor board, that all such information provided a reasonable basis upon which KBW could form its opinion and KBW expressed no view as to any such information or the assumptions or bases therefor. KBW relied on all such information without independent verification or analysis and did not in any respect assume any responsibility or liability for the accuracy or completeness thereof.

KBW also assumed that there were no material changes in the assets, liabilities, financial condition, results of operations, business or prospects of either Anchor or Washington Federal since the date of the last financial statements of each such entity that were made available to KBW. KBW is not an expert in the independent verification of the adequacy of allowances for loan and lease losses and KBW assumed, without independent verification and with Anchor’s consent, that the aggregate allowances for loan and lease losses for Anchor and Washington Federal are adequate to cover such losses. In rendering its opinion, KBW did not make or obtain any evaluations or appraisals or physical inspection of the property, assets or liabilities (contingent or otherwise) of Anchor or Washington Federal, the collateral securing any of such assets or liabilities, or the collectability of any such assets, nor did KBW examine any individual loan or credit files, nor did it evaluate the solvency, financial capability or fair value of Anchor or Washington Federal under any state or federal laws, including those relating to bankruptcy, insolvency or other matters. Estimates of values of companies and assets do not purport to be appraisals or necessarily reflect the prices at which companies or assets may actually be sold. Because such estimates are inherently subject to uncertainty, KBW assumed no responsibility or liability for their accuracy.

KBW assumed, in all respects material to its analyses:

that the merger and any related transaction (including the bank merger) would be completed substantially in accordance with the terms set forth in the merger agreement (the final terms of which KBW assumed would not differ in any respect material to KBW’s analyses from the draft reviewed and referred to above) with no adjustments to the exchange ratio and with no other consideration or payments in respect of the Anchor common stock;
that the representations and warranties of each party in the merger agreement and in all related documents and instruments referred to in the merger agreement were true and correct;
that each party to the merger agreement and all related documents would perform all of the covenants and agreements required to be performed by such party under such documents;
that there were no factors that would delay or subject to any adverse conditions, any necessary regulatory or governmental approval for the merger or any related transactions (including the bank merger) and that all conditions to the completion of the merger and any related transaction would be satisfied without any waivers or modifications to the merger agreement or any of the related documents; and
that in the course of obtaining the necessary regulatory, contractual, or other consents or approvals for the merger and any related transaction (including the bank merger), no restrictions, including any divestiture requirements, termination or other payments or amendments or modifications, would be imposed that would have a material adverse effect on the future results of operations or

39



financial condition of Anchor, Washington Federal or the pro forma combined company, or the contemplated benefits of the merger, including without limitation the cost savings and related expenses expected to result or be derived from the merger.

KBW assumed that the merger would be consummated in a manner that complies with the applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and all other applicable federal and state statutes, rules and regulations. KBW was further advised by representatives of Anchor that Anchor relied upon advice from its advisors (other than KBW) or other appropriate sources as to all legal, financial reporting, tax, accounting and regulatory matters with respect to Anchor, Washington Federal, the merger and any related transaction (including the bank merger), and the merger agreement. KBW did not provide advice with respect to any such matters.

KBW’s opinion addressed only the fairness, from a financial point of view, as of the date of the opinion, of the exchange ratio in the merger to the holders of Anchor common stock. KBW expressed no view or opinion as to any other terms or aspects of the merger or any term or aspect of any related transaction (including the bank merger), including without limitation, the form or structure of the merger or any related transaction, any consequences of the merger or any related transaction to Anchor, its shareholders, creditors or otherwise, or any terms, aspects, merits or implications of any employment, consulting, voting, support, shareholder or other agreements, arrangements or understandings contemplated or entered into in connection with the merger or otherwise. KBW’s opinion was necessarily based upon conditions as they existed and could be evaluated on the date of such opinion and the information made available to KBW through such date. Developments subsequent to the date of KBW’s opinion may have affected, and may affect, the conclusion reached in KBW’s opinion and KBW did not and does not have an obligation to update, revise or reaffirm its opinion. KBW’s opinion did not address, and KBW expressed no view or opinion with respect to:

the underlying business decision of Anchor to engage in the merger or enter into the merger agreement;
the relative merits of the merger as compared to any strategic alternatives that are, have been or may be available to or contemplated by Anchor or the Anchor board;
the fairness of the amount or nature of any compensation to any of Anchor’s officers, directors or employees, or any class of such persons, relative to the compensation to the holders of Anchor common stock;
the effect of the merger or any related transaction on, or the fairness of the consideration to be received by, holders of any class of securities of Anchor (other than the holders of Anchor common stock solely with respect to the exchange ratio, as described in KBW’s opinion and not relative to the consideration to be received by holders of any other class of securities) or holders of any class of securities of Washington or any other party to any transaction contemplated by the merger agreement;
any adjustment (as provided in the merger agreement) to the exchange ratio assumed for purposes of KBW’s opinion;
the actual value of Washington Federal common stock to be issued in the merger;
the prices, trading range or volume at which Anchor common stock or Washington Federal common stock would trade following the public announcement of the merger or the prices, trading range or volume at which Washington Federal common stock would trade following the consummation of the merger;
any advice or opinions provided by any other advisor to Anchor or Washington Federal or any other transaction contemplated by the merger agreement; or
any legal, regulatory, accounting, tax or similar matters relating to Anchor, Washington Federal, their respective shareholders, or relating to or arising out of or as a consequence of the merger or any related transaction (including the bank merger), including whether or not the merger would qualify as a tax-free reorganization for United States federal income tax purposes.

In performing its analyses, KBW made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, which are beyond the control of KBW, Anchor and Washington Federal. Any estimates contained in the analyses performed by KBW are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than

40



suggested by these analyses. Additionally, estimates of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty. In addition, KBW’s opinion was among several factors taken into consideration by the Anchor board in making its determination to approve the merger agreement and the merger. The type and amount of consideration payable in the merger were determined through negotiation between Anchor and Washington Federal and the decision to enter into the merger agreement was solely that of the Anchor board.

The following is a summary of the material financial analyses presented by KBW to the Anchor board in connection with its opinion. The summary is not a complete description of the financial analyses underlying the opinion or the presentation made by KBW to the Anchor board, but summarizes the material analyses performed and presented in connection with such opinion. The financial analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex analytic process involving various determinations as to appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, KBW did not attribute any particular weight to any analysis or factor that it considered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, KBW believes that its analyses and the summary of its analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the process underlying its analyses and opinion.

Anchor Selected Companies Analysis - Nationwide. Using publicly available information, KBW compared the financial performance, financial condition and market performance of Anchor to 27 selected U.S. banks and thrifts that were publicly traded and which had total assets between $250 million and $750 million and had latest 12 months (“LTM”) return on average assets (“ROAA”) between 0.00% and 0.40%. Merger targets and mutual holding companies were excluded from the selected companies.

The selected companies were as follows:

Bank of Labor Bancshares, Inc.
Highlands Bankshares, Inc.
Bay Bancorp, Inc.
Iowa First Bancshares Corp.
Blue Ridge Bankshares, Inc.
Mars National Bancorp, Inc.
Blue Valley Ban Corp.
MCNB Banks, Inc.
Carolina Trust BancShares, Inc.
MSB Financial Corp.
Community 1st Bancorp
National Bank of Coxsackie
Community First Bancorporation
New Peoples Bankshares, Inc.
First Colebrook Bancorp, Inc.
PB Bancorp, Inc.
First Federal of Northern Michigan Bancorp, Inc.
Peoples Financial Corporation
First US Bancshares, Inc.
Randolph Bancorp, Inc.
Frederick County Bancorp, Inc.
Royal Financial, Inc.
FSB Bancorp, Inc.
SBT Bancorp, Inc.
Glen Burnie Bancorp
Scottdale Bank & Trust Company
Hamilton Bancorp, Inc.
 

To perform this analysis, KBW used profitability and other financial information as of or for the period ended December 31, 2016 and market price information as of April 7, 2017. Where consolidated holding company level financial data for the selected companies was unreported, subsidiary bank level data was utilized to calculate ratios. Certain financial data prepared by KBW, and as referenced in the tables presented below, may not correspond to the data presented in Anchor’s historical financial statements as a result of the different periods, assumptions and methods used by KBW to compute the financial data presented.

41




KBW’s analysis showed the following concerning the financial performance of Anchor and the selected companies:

 
Anchor Bancorp
 
Selected Companies 25th Percentile
 
Selected Companies Median
 
Selected Companies Average
 
Selected Companies 75th Percentile
LTM Return on Average Assets
0.33
%
 
0.21
%
 
0.29
%
 
0.26
%
 
0.34
%
LTM Return on Average Equity
2.24
%
 
1.73
%
 
2.84
%
 
2.64
%
 
3.69
%
LTM Return on Average Tangible Common Equity(1)
2.24
%
 
1.56
%
 
2.78
%
 
2.64
%
 
3.71
%
LTM Net Interest Margin
4.11
%
 
2.98
%
 
3.13
%
 
3.32
%
 
3.59
%
LTM Noninterest Income / Average Assets
0.97
%
 
0.36
%
 
0.65
%
 
0.74
%
 
0.9
%
LTM Noninterest Expense / Average Assets
4.15
%
 
3.64
%
 
3.11
%
 
3.29
%
 
2.61
%
LTM Efficiency Ratio
88.85
%
 
90.45
%
 
85.27
%
 
84.83
%
 
81.76
%
(1) If ROATCE was not available on SNL Financial, it was calculated using (Net Income to Common) / (HoldCo Total Common Equity - Bank Level Intangibles).

KBW’s analysis also showed the following concerning the financial condition of Anchor and the selected companies:

 
Anchor Bancorp
 
Selected Companies 25th Percentile
 
Selected Companies Median
 
Selected Companies Average
 
Selected Companies 75th Percentile
Tangible Common Equity / Tangible Assets (1)
14.53
%
 
7.82
%
 
9.24
%
 
10.07
%
 
11.25
 %
Total Risk-Based Capital Ratio
16.20
%
 
13.01
%
 
15.59
%
 
16.57
%
 
19.24
 %
Loans / Deposits
109.89
%
 
68.22
%
 
81.16
%
 
80.87
%
 
96.52
 %
Loan Loss Reserve / Gross Loans
1.07
%
 
0.88
%
 
1.08
%
 
1.09
%
 
1.27
 %
Nonperforming Assets / Assets (2)
1.83
%
 
2.1
%
 
1.28
%
 
1.67
%
 
0.78
 %
LTM Net Charge-Off / Average Loans
0.12
%
 
0.29
%
 
0.08
%
 
0.20
%
 
(0.01
)%
(1) If TCA / TA was not available on SNL Financial, it was calculated using (HoldCo Total Common Equity - Bank Level In tangibles) / (Holdco Total Assets - Bank Level Intangibles)
(2) Nonperforming assets included loans 90+ days past due.

In addition, KBW’s analysis showed the following concerning the market performance of Anchor and, to the extent publicly available, the selected companies (excluding the impact of the LTM earning per share (“EPS”) multiples of 18 of the selected companies, which multiples were considered to be not meaningful because they were negative or greater than 30.0x, and excluding the impact of the LTM dividend payout ratio of one of the selected companies that was also considered to be not meaningful):

 
Anchor Bancorp
 
Selected Companies 25th Percentile
 
Selected Companies Median
 
Selected Companies Average
 
Selected Companies 75th Percentile
One - Year Stock Price Change
3.57
 %
 
6.17
 %
 
18.67
%
 
22.67
%
 
30.92
%
One - Year Total Return
3.57
 %
 
9.12
 %
 
20.59
%
 
23.69
%
 
30.92
%
YTD Stock Price Change
(7.20
)%
 
(0.26
)%
 
5.58
%
 
10.07
%
 
11.86
%
Stock Price / Book Value per Share
.99x

 
.87x

 
0.99x

 
1.02x

 
1.16x

Stock / Tangible Book Value per Share (1)
.99x

 
.89x

 
1.03x

 
1.04x

 
1.21x

Stock Price / LTM EPS (2)
NM

 
21.7x

 
23.1x

 
24.0x

 
28.7x

Dividend Yield
0.00
 %
 
0.00
 %
 
0.00
%
 
0.85
%
 
1.66
%
LTM Dividend Payout Ratio
0.00
 %
 
0.00
 %
 
0.00
%
 
26.08
%
 
46.91
%
(1) If tangible book value per share was not available on SNL Financial, it was calculated using (HoldCo Total Common Equity - Bank Level Intangibles) / (Most Recently Reported Common Shares Outstanding).
(2) If earnings per share was unavailable, it was calculated using (Net Income to Common) / (Most Recently Reported Common Shares Outstanding).

42




No company used as a comparison in the above selected companies analysis is identical to Anchor. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

Anchor Selected Companies Analysis – Western U.S. Using publicly available information, KBW compared the financial performance, financial condition and market performance of Anchor to 8 selected banks and thrifts that were publicly traded and headquartered in metropolitan statistical areas (“MSAs”) located in the Western U.S. with median household incomes below $55,000 and which banks and thrifts had total assets between $100 million and $750 million and had LTM ROAA less than 0.75%. Merger targets and mutual holding companies were excluded from the selected companies.

The selected companies were as follows:

Citizens Bancorp
Northern California National Bank
Community 1st Bank
Oregon Pacific Bancorp
Cornerstone Community Bancorp
People's Bank of Commerce
Idaho Independent Bank
Suncrest Bank

To perform this analysis, KBW used profitability and other financial information as of or for the period ended December 31, 2016 and market price information as of April 7, 2017. Where consolidated holding company level financial data for the selected companies was unreported, subsidiary bank level data was utilized to calculate ratios. Certain financial data prepared by KBW, and as referenced in the tables presented below, may not correspond to the data presented in Anchor’s historical financial statements as a result of the different periods, assumptions and methods used by KBW to compute the financial data presented.

KBW’s analysis showed the following concerning the financial performance of Anchor and the selected companies:

 
Anchor Bancorp
 
Selected Companies 25th Percentile
 
Selected Companies Median
 
Selected Companies Average
 
Selected Companies 75th Percentile
LTM Return on Average Assets
0.33
%
 
0.56
%
 
0.65
%
 
0.63
%
 
0.72
%
LTM Return on Average Equity
2.24
%
 
6.11
%
 
6.72
%
 
6.58
%
 
7.22
%
LTM Return on Average Tangible Common Equity (1)
2.24
%
 
6.11
%
 
6.68
%
 
6.46
%
 
7.05
%
LTM Net Interest Margin
4.11
%
 
3.44
%
 
3.58
%
 
3.53
%
 
3.83
%
LTM Noninterest Income / Average Assets
0.97
%
 
0.31
%
 
0.43
%
 
0.58
%
 
0.82
%
LTM Noninterest Expense / Average Assets
4.15
%
 
3.31
%
 
3.00
%
 
2.86
%
 
2.71
%
LTM Efficiency Ratio
88.85
%
 
77.39
%
 
72.70
%
 
71.78
%
 
67.57
%
(1) If ROATCE was not available on SNL Financial, it was calculated using (Net Income to Common) / (HoldCo Total Common Equity - Bank Level Intangibles).

KBW’s analysis also showed the following concerning the financial condition of Anchor and the selected companies:


43



 
Anchor Bancorp
 
Selected Companies 25th Percentile
 
Selected Companies Median
 
Selected Companies Average
 
Selected Companies 75th Percentile
Tangible Common Equity / Tangible Assets (1)
14.53
%
 
8.66
%
 
9.45
%
 
9.60
%
 
10.60
%
Total Risk-Based Capital Ratio
16.20
%
 
15.20
%
 
15.96
%
 
16.42
%
 
16.89
%
Loans / Deposits
109.89
%
 
63.26
%
 
75.83
%
 
73.14
%
 
84.81
%
Loan Loss Reserve / Gross Loans
1.07
%
 
1.04
%
 
1.25
%
 
1.26
%
 
1.41
%
Nonperforming Assets / Assets (2)
1.83
%
 
0.54
%
 
0.39
%
 
0.54
%
 
0.25
%
LTM Net Charge-Off / Average Loans
0.12
%
 
0.08
%
 
0.00
%
 
0.10
%
 
0.00
%
(1) If TCE / TA was not available on SNL Financial, it was calculated using (HoldCo Total Common Equity - Bank Level Intangible) / (HoldCo Total Assets - Bank Level Intangibiles)
(2) Nonperforming assets included loans 90+ days past due.

In addition, KBW’s analysis showed the following concerning the market performance of Anchor and the selected companies:
 
Anchor Bancorp
 
Selected Companies 25th Percentile
 
Selected Companies Median
 
Selected Companies Average
 
Selected Companies 75th Percentile
One - Year Stock Price Change
3.57
 %
 
21.48
 %
 
26.65
%
 
29.00
%
 
39.48
%
One - Year Total Return
3.57
 %
 
22.29
 %
 
25.88
%
 
29.63
%
 
39.97
%
YTD Stock Price Change
(7.20
)%
 
(0.43
)%
 
4.95
%
 
6.19
%
 
15.52
%
Stock Price / Book Value per Share
0.99x

 
1.02x

 
1.11x

 
1.10x

 
1.17x

Stock Price / Tangible Book Value per Share (1)
0.99x

 
1.03x

 
1.11x

 
1.12x

 
1.17x

Stock Price / LTM EPS (2)
NM

 
15.9x

 
17.0x

 
18.2x

 
19.3x

Dividend Yield
0.00
 %
 
0.00
 %
 
0.00
%
 
0.45
%
 
0.33
%
LTM Dividend Payout Ratio
0.00
 %
 
0.00
 %
 
0.00
%
 
7.67
%
 
5.64
%
(1) If tangible book value per share was not available on SNL Financial, it was calculated using (HoldCo Total Common Equity - Bank Level Intangibles) / (Most Recently Reported Common Shares Outstanding).
(2) If earning per share was unavailable, it was calculated using (Net Income to Common) / (Most Recently Reported Common Shares Outstanding).

No company used as a comparison in the above selected companies analysis is identical to Anchor. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

Washington Federal Selected Companies Analysis. Using publicly available information, KBW compared the financial performance, financial condition and market performance of Washington Federal to 16 selected bank and thrifts which were traded on a major exchange (defined as Nasdaq, the New York Stock Exchange or the New York Stock Exchange Market) with assets between $12.0 billion and $20.0 billion. Merger targets and mutual holding companies were excluded from the selected companies.

The selected companies were as follows:

BancorpSouth, Inc.
Hilltop Holdings Inc.
Bank of Hawaii Corporation
Hope Bancorp, Inc.
Bank of the Ozarks, Inc.
MB Financial, Inc.
Cathay General Bancorp
Old National Bancorp
Chemical Financial Corporation
Sterling Bancorp
First Hawaiian, Inc.
Trustmark Corporation
Flagstar Bancorp, Inc.
United Bankshares, Inc.
Fulton Financial Corporation
Western Alliance Bancorporation

To perform this analysis, KBW used profitability and other financial information as of or for the period ended December 31, 2016 and market price information as of April 7, 2017. KBW also used 2017 and 2018 EPS

44



estimates taken from consensus “street estimates” for Washington Federal and the selected companies. Where consolidated holding company level financial data for the selected companies was unreported, subsidiary bank level data was utilized to calculate ratios. Certain financial data prepared by KBW, and as referenced in the tables presented below, may not correspond to the data presented in Washington Federal historical financial statements as a result of the different periods, assumptions and methods used by KBW to compute the financial data presented.

KBW’s analysis showed the following concerning the financial performance of Washington Federal and the selected companies:

 
Washington Federal
 
Selected Companies 25th Percentile
 
Selected Companies Median
 
Selected Companies Average
 
Selected Companies 75th Percentile
LTM Return on Average Assets
1.15
%
 
0.97
%
 
1.10
%
 
1.15
%
 
1.22
%
LTM Return on Average Equity
8.62
%
 
7.69
%
 
8.14
%
 
9.47
%
 
10.33
%
LTM Return on Average Tangible Common Equity
10.24
%