WaFd Continues Tracking to Plan Post-Acquisition; Announces Quarterly Earnings Per Share of $0.75

WaFd, Inc. (Nasdaq: WAFD) (the "Company"), parent company of Washington Federal Bank ("WaFd Bank" or the "Bank"), today announced quarterly earnings of $64,560,000 for the quarter ended June 30, 2024, the first full quarter after successfully completing the acquisition of California-based Luther Burbank Corporation ("LBC"). This represents an increase of 306% from net earnings of $15,888,000 for the quarter ended March 31, 2024 and an increase of 5% from net earnings of $61,775,000 for the quarter ended June 30, 2023. After the effect of dividends on preferred stock, net income available for common shareholders was $0.75 per diluted share for the quarter ended June 30, 2024, compared to $0.17 per diluted share for the quarter ended March 31, 2024, a $0.58 or 341% increase, and $0.89 per diluted share for the quarter ended June 30, 2023, a $0.14 or 16% decrease in fully diluted earnings per common share. For the quarter ended June 30, 2024, return on common shareholders' equity was 9.2% and return on assets was 0.87%. These results reflect acquisition-related costs of $2.3 million for the quarter. Adjusted for these expenses, return on common shareholders' equity for the quarter ended June 30, 2024 was 9.4% compared to 8.7% for the adjusted quarter ended March 31, 2024 and 11.1% for the quarter ended June 30, 2023. Adjusted, return on assets for the quarter ended June 30, 2024 was 0.9% compared to 0.9% for the adjusted previous quarter and 1.1% for the same quarter in the prior year. For a reconciliation, see the Non-GAAP Financial Measures section below.

President and CEO Brent Beardall commented, "We are very pleased to report solid results for the first full quarter following the largest acquisition in our history. In addition to successfully integrating Luther Burbank into our operations, we also executed what we believe to be the largest Commercial Real Estate ('CRE') loan sale ever in US banking (excluding FDIC transactions), proving the quality and liquidity of our loans and we did it at no loss to WaFd. Initially, we used the net proceeds of approximately $2.6 billion to pay down $1.6 billion of borrowings with the remainder invested overnight in our Federal Reserve account at 5.40%. Over the next several quarters we plan on redeploying the liquidity into new loans at higher rates. In addition, we have entered into a commitment to sell, with no anticipated P&L impact, approximately $450 million of single-family mortgage loans. We expect that sale to close in late August.

"Our margin for the quarter was 2.56% which we expect to be the nadir for this cycle (assuming no further interest rate increases) as we believe the benefits of both loan sales to be accretive to the margin going forward.

"Contrary to many headlines that are predicting credit challenges for banks, our asset quality is holding up very well. Loan delinquencies decreased from 0.36% at March 31, 2024 to 0.22% at June 30, 2024, while non-performing loans were flat. For CRE, delinquencies are just 0.09% on a portfolio of $9.9 billion.

"Tangible book value per share is a key metric for our management team and we took some dilution in completing the Luther Burbank acquisition in the March quarter. For the June quarter, tangible book value per share grew at a 8.2% annualized rate to $27.18. Our share repurchase plan currently has an authorization of 11 million shares, which provides what we believe is a compelling investment alternative.

"We continue to invest in improvements to our technology to better serve our clients. Over the next few months, we will launch two new apps, a new mobile banking app and a new online account opening app, both built by our affiliate Archway Software. Features will include real time notifications to clients, richer transaction data, five-minute account opening, enhanced fraud detection and prevention and voice authentication. Banking is about relationships, and technology is the front door for our clients. We believe our technology will provide a competitive advantage with our goal being to make banking simple, reliable and fast so our clients can live their lives knowing their financial house is in order."

As a result of the acquisition on February 29, 2024, the Company's balances as of June 30, 2024 reflect a full quarter of the newly combined entity. Given this, the Company's financial results are not directly comparable to prior reported periods. Total assets were $28.6 billion as of June 30, 2024, compared to $22.5 billion at September 30, 2023. Net loans held for investment increased by $3.4 billion, or 19.4%, from September 30, 2023 to June 30, 2024 reflecting the addition of LBC loans. The Company sold $2.8 billion in acquired multifamily loans in the June 2024 quarter and has identified approximately $0.5 billion single family loans to sell and have reclassified them as Held for Sale as of June 30, 2024. Cash and cash equivalents as of June 30, 2024 increased by $1.5 billion, or 154.2%, since September 30, 2023 as a result of the LBC acquisition and the completion of the multifamily loan sale during the quarter. Investment securities increased by $457.7 million compared to September 30, 2023 due to the addition of $529.2 million in securities obtained in the acquisition offset by normal activity during the year.

Customer deposits totaled $21.2 billion as of June 30, 2024, an increase of 31.8% since September 30, 2023 due to deposits obtained in the acquisition. Transaction accounts increased by $1.2 billion or 10.8% during the period, while time deposits increased $4.0 billion or 74.5% as 66% of the LBC deposit portfolio was time deposits. As a result of this mix, the Company’s transaction accounts as a percentage of total customer deposits decreased to 56.3% compared to 67.0% at September 30, 2023. Core deposits, defined as all transaction accounts and time deposits less than $250,000, totaled 81.8% of deposits at June 30, 2024. Deposits that are uninsured or not collateralized were 24.7% as of June 30, 2024, down from 25.7% as of September 30, 2023.

Borrowings totaled $3.9 billion as of June 30, 2024, up from $3.7 billion at September 30, 2023, a net increase of $200 million. The Company utilized proceeds from the multifamily loan sale to pay off $1.6 billion of borrowings which matured during the quarter. The acquisition added $1.4 billion in borrowings to the balance sheet in addition to net borrowing activity of $400 million fiscal year to date. The effective weighted average interest rate of the combined borrowings and other debt was 4.10% as of June 30, 2024, compared to 3.98% at September 30, 2023.

The Company had loan originations of $1.0 billion for the third fiscal quarter of 2024, compared to $0.9 billion of originations in the same quarter one year ago. Offsetting loan originations in each of these quarters were loan repayments of $1.0 billion and $1.1 billion, respectively. The Bank has intentionally slowed new loan production to temper net loan growth. Commercial loans represented 67% of all loan originations during the third fiscal quarter of 2024 and consumer loans accounted for the remaining 33%. Commercial loans are viewed by the Bank as preferable; they generally have floating interest rates and shorter durations. The weighted average period end interest rate on the loan portfolio was 5.29% as of June 30, 2024, an increase from 5.22% as of September 30, 2023.

Credit quality continues to be monitored closely in light of the shifting economic and monetary environment. As of June 30, 2024, non-performing assets were $69 million, or 0.2% of total assets compared to $58 million, or 0.3% of total assets, at September 30, 2023. The percentage of delinquent loans was 0.2% of total loans at June 30, 2024 compared to 0.4% at September 30, 2023. The following table shows the changes in non-performing assets and delinquencies during the current fiscal year including the effect of the LBC acquisition.

 

Non-Performing

Assets

 

Delinquencies

 

(In thousands)

Balance at September 30, 2023

$

57,924

 

 

$

63,315

 

Decrease in balance

 

(2,536

)

 

 

(5,258

)

Balance at December 31, 2023

 

55,388

 

 

 

58,057

 

Acquisition-related additions

 

13,487

 

 

 

23,258

 

Decrease in balance

 

(514

)

 

 

(5,267

)

Balance at March 31, 2024

 

68,361

 

 

 

76,048

 

Increase (decrease) in balance

 

426

 

 

 

(29,328

)

Balance at June 30, 2024

$

68,787

 

 

$

46,720

 

The allowance for credit losses including the reserve for unfunded commitments ("ACL") totaled $225 million as of June 30, 2024, representing 1.00% of gross loans outstanding, as compared to $202 million, or 1.03% of gross loans outstanding, as of September 30, 2023. The increase in the ACL reflects the $16.0 million provision recorded on LBC loans held for investment that are not credit deteriorated and the $7.4 million estimated lifetime credit losses for those that are considered purchased credit deteriorated ("PCD"). Net charge-offs were $1 million for the third fiscal quarter of 2024, compared to net charge-offs of $10 million for the prior year same quarter.

The Company paid quarterly dividends on Series A preferred stock on April 15, 2024 and July 15, 2024. On June 7, 2024, the Company paid a regular cash dividend on common stock of $0.26 per share, which represented the 165th consecutive quarterly cash dividend. During the quarter, the Company repurchased 357,303 shares of common stock at a weighted average price of $26.63 per share and has authorization to repurchase 11,501,005 additional shares. Tangible common shareholders' equity per share decreased by $0.87, or 3.1%, to $27.18 since September 30, 2023. Over the past 12 months, tangible book value per share decreased by $0.40 or 1.4%. The ratio of total tangible shareholders' equity to tangible assets decreased to 8.91% as of June 30, 2024. See the reconciliation for these non-GAAP measures starting on page 12.

Net interest income was $177 million for the third fiscal quarter of 2024, an increase of $8.5 million or 5.0% from the same quarter in the prior year. The increase in net interest income was due to overall growth of the Bank's assets despite the decrease in net interest margin compared to prior year. The net interest margin was 2.56% in the third fiscal quarter of 2024 compared to 3.27% for the same quarter in the prior year. This decrease was the result of the combination of greater growth in interest-bearing liabilities balances than in interest-paying assets and a larger increase in the rate paid on those liabilities compared to the rates earned on interest-earning assets. Average interest-bearing liabilities grew by 43.3% while average interest-earning assets grew by 34.8%. Rates on interest-bearing liabilities increased by 112 basis points outpacing the 37 basis point increase in the average rate on interest-earning assets. Similarly, net interest income was 11.7% higher than the quarter ended March 31, 2024, reflecting three full months post-acquisition, despite a decrease in the net interest margin for the quarter to 2.56%. This drop in margin resulted from an increase of 31 basis points in the rate paid on interest-bearing liabilities versus an increase of 16 basis points on the rate on interest-earning assets.

Total non-interest income was $17.3 million for the third fiscal quarter of 2024 compared to $13.8 million in the prior year same quarter. The increase is largely due to recording unrealized gains for certain equity method investments compared to unrealized gains in the same quarter prior year.

Total non-interest expense was $110.1 million in the third fiscal quarter of 2024, an increase of $15.4 million, or 16.2%, from the prior year's quarter. Compensation expense increased by $6.7 million as a result of $1.4 million in acquisition-related retention costs combined with a larger post-acquisition workforce. Information technology costs increased by $1.8 million due to increased telephone and data lines combined with lingering conversion costs and termination fees on LBC software. FDIC premiums increased $2.3 million compared to the same period last year. Other expense also increased by $3.3 million compared to the same quarter in the prior year. This is largely due to a full quarter of intangible amortization resulting from the Core Deposit Intangible created in the acquisition.

The Company recorded a provision for credit losses of $1.5 million in the third fiscal quarter of 2024, compared to a provision for credit losses of $9.0 million in the same quarter of fiscal 2023. The provision for loan losses in the quarter ended June 30, 2024 was due to prolonged and increased borrower sensitivity to high interest rates and operating costs resulting from inflationary pressures in the C&I portfolio. This was offset by a reduction in balance resulting from reclassifying a portion of the LBC single-family loans as Held for Sale.

The Company’s efficiency ratio in the third fiscal quarter of 2024 was 55.7% (as adjusted, see Non-GAAP Financial Measures below), compared to 58.5% as adjusted in the prior quarter and 51.9% for the same period one year ago.

Income tax expense totaled $18.2 million for the third fiscal quarter of 2024, as compared to $17.7 million for the prior year same quarter. The effective tax rate for the quarter ended June 30, 2024 was 21.97% compared to 20.81% for the year ended September 30, 2023. Although the Company’s effective tax rate may vary from the statutory rate mainly due to state taxes, tax-exempt income and tax-credit investments, much of the change in the current quarter resulted specifically from the LBC acquisition and consideration of California State and Local taxes. The effective tax rate for the quarter ended June 30, 2024 decreased compared to 24.20% for the quarter ended March 31, 2024 due to the size of non-deductible acquisition costs incurred compared to pre-tax income in the March quarter.

WaFd Bank is headquartered in Seattle, Washington, and has 210 branches in nine western states. To find out more about WaFd Bank, please visit our website www.wafdbank.com. The Company uses its website to distribute financial and other material information about the Company.

WAFD, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

 

June 30, 2024

 

September 30, 2023

 

(In thousands, except share and ratio data)

ASSETS

 

 

 

Cash and cash equivalents

$

2,492,504

 

 

$

980,649

 

Available-for-sale securities, at fair value

 

2,428,769

 

 

 

1,995,097

 

Held-to-maturity securities, at amortized cost

 

447,638

 

 

 

423,586

 

Loans receivable, net of allowance for loan losses of $203,824 and $177,207

 

20,873,919

 

 

 

17,476,550

 

Loans held for sale

 

468,527

 

 

 

—

 

Interest receivable

 

103,410

 

 

 

87,003

 

Premises and equipment, net

 

244,529

 

 

 

237,011

 

Real estate owned

 

4,209

 

 

 

4,149

 

FHLB stock

 

107,282

 

 

 

126,820

 

Bank owned life insurance

 

265,819

 

 

 

242,919

 

Intangible assets, including goodwill of $412,213 and $304,750

 

452,255

 

 

 

310,619

 

Federal and state income tax assets, net

 

129,044

 

 

 

8,479

 

Other assets

 

562,895

 

 

 

581,793

 

 

$

28,580,800

 

 

$

22,474,675

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Liabilities

 

 

 

Transaction deposits

$

11,929,005

 

 

$

10,765,313

 

Time deposits

 

9,255,760

 

 

 

5,305,016

 

Total customer deposits

 

21,184,765

 

 

 

16,070,329

 

Borrowings

 

3,934,514

 

 

 

3,650,000

 

Junior subordinated deferrable debentures

 

50,485

 

 

 

—

 

Senior debt

 

 

 

$95,000 face amount, 6.5% interest rate, due September 30, 2024

 

94,361

 

 

 

—

 

Advance payments by borrowers for taxes and insurance

 

38,898

 

 

 

52,550

 

Accrued expenses and other liabilities

 

319,438

 

 

 

275,370

 

 

 

25,622,461

 

 

 

20,048,249

 

Shareholders’ equity

 

 

 

Preferred stock, $1.00 par value, 5,000,000 shares authorized; 300,000 and 300,000 shares issued; 300,000 and 300,000 shares outstanding

 

300,000

 

 

 

300,000

 

Common stock, $1.00 par value, 300,000,000 shares authorized; 153,939,952 and 136,466,579 shares issued; 81,157,173 and 64,736,916 shares outstanding

 

153,940

 

 

 

136,467

 

Additional paid-in capital

 

2,146,149

 

 

 

1,687,634

 

Accumulated other comprehensive income (loss), net of taxes

 

54,916

 

 

 

46,921

 

Treasury stock, at cost; 72,782,779 and 71,729,663 shares

 

(1,638,943

)

 

 

(1,612,345

)

Retained earnings

 

1,942,277

 

 

 

1,867,749

 

 

 

2,958,339

 

 

 

2,426,426

 

 

$

28,580,800

 

 

$

22,474,675

 

CONSOLIDATED FINANCIAL HIGHLIGHTS

 

 

 

Common shareholders' equity per share

$

32.76

 

 

$

32.85

 

Tangible common shareholders' equity per share1

 

27.18

 

 

 

28.05

 

Shareholders' equity to total assets

 

10.35

%

 

 

10.80

%

Tangible shareholders' equity to tangible assets1

 

8.91

%

 

 

9.55

%

Tangible shareholders' equity + allowance for credit losses to tangible assets1

 

9.63

%

 

 

10.35

%

WEIGHTED AVERAGE RATES AS OF PERIOD END

 

 

 

Loans and mortgage-backed securities

 

5.18

%

 

 

5.08

%

Combined loans, mortgage-backed securities and investments

 

5.17

 

 

 

5.07

 

Customer accounts

 

2.91

 

 

 

2.12

 

Combined cost of borrowings, junior debentures, senior debt

 

4.10

 

 

 

3.98

 

Combined cost of customer accounts and borrowings

 

3.10

 

 

 

2.46

 

Net interest spread

 

2.07

 

 

 

2.61

 

1Metric is a non-GAAP Financial Measure. See page 12 for additional information on our use of Non-GAAP Financial Measures.

WAFD, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

As of

SUMMARY FINANCIAL DATA

June 30,

2024

 

March 31,

2024

 

December 31,

2023

 

September 30,

2023

 

June 30,

2023

 

(In thousands, except share and ratio data)

Cash

$

2,492,504

 

 

$

1,505,771

 

 

$

1,144,774

 

 

$

980,649

 

 

$

1,139,643

 

Loans receivable, net

 

20,873,919

 

 

 

20,795,259

 

 

 

17,584,622

 

 

 

17,476,550

 

 

 

17,384,188

 

Allowance for credit losses ("ACL")

 

225,324

 

 

 

225,077

 

 

 

201,820

 

 

 

201,707

 

 

 

204,569

 

Loans held for sale

 

468,527

 

 

 

2,993,658

 

 

 

—

 

 

 

—

 

 

 

—

 

Available-for-sale securities, at fair value

 

2,428,768

 

 

 

2,438,114

 

 

 

2,018,445

 

 

 

1,995,097

 

 

 

2,036,233

 

Held-to-maturity securities, at amortized cost

 

447,638

 

 

 

457,882

 

 

 

415,079

 

 

 

423,586

 

 

 

434,172

 

Total assets

 

28,580,800

 

 

 

30,140,288

 

 

 

22,640,122

 

 

 

22,474,675

 

 

 

22,552,588

 

Transaction deposits

 

11,929,005

 

 

 

12,338,862

 

 

 

10,658,064

 

 

 

10,765,313

 

 

 

11,256,575

 

Time deposits

 

9,255,760

 

 

 

9,000,911

 

 

 

5,380,723

 

 

 

5,305,016

 

 

 

4,863,849

 

Borrowings, senior debt and junior subordinated debentures

 

4,079,360

 

 

 

5,489,501

 

 

 

3,875,000

 

 

 

3,650,000

 

 

 

3,750,000

 

Total shareholders' equity

 

2,958,339

 

 

 

2,921,906

 

 

 

2,452,004

 

 

 

2,426,426

 

 

 

2,394,066

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL HIGHLIGHTS

 

 

 

 

 

 

 

 

 

Common shareholders' equity per share

$

32.76

 

 

$

32.21

 

 

$

33.49

 

 

$

32.85

 

 

$

32.36

 

Tangible common shareholders' equity per share2

$

27.18

 

 

$

26.64

 

 

$

28.65

 

 

$

28.05

 

 

$

27.58

 

Shareholders' equity to total assets

 

10.35

%

 

 

9.69

%

 

 

10.83

%

 

 

10.80

%

 

 

10.62

%

Tangible shareholders' equity to tangible assets2

 

8.91

%

 

 

8.31

%

 

 

9.59

%

 

 

9.55

%

 

 

9.37

%

Tangible shareholders' equity + ACL to tangible assets2

 

9.63

%

 

 

8.99

%

 

 

10.39

%

 

 

10.35

%

 

 

10.17

%

Common shares outstanding

 

81,157,173

 

 

 

81,405,391

 

 

 

64,254,700

 

 

 

64,736,916

 

 

 

64,721,190

 

Preferred shares outstanding

 

300,000

 

 

 

300,000

 

 

 

300,000

 

 

 

300,000

 

 

 

300,000

 

Loans to customer deposits 1

 

98.53

%

 

 

97.45

%

 

 

109.64

%

 

 

108.75

%

 

 

107.84

%

 

 

 

 

 

 

 

 

 

 

CREDIT QUALITY1

 

 

 

 

 

 

 

 

 

ACL to gross loans

 

1.00

%

 

 

1.00

%

 

 

1.04

%

 

 

1.03

%

 

 

1.03

%

ACL to non-accrual loans

 

367.77

%

 

 

370.16

%

 

 

445.93

%

 

 

400.04

%

 

 

370.09

%

Non-accrual loans to net loans

 

0.29

%

 

 

0.29

%

 

 

0.26

%

 

 

0.29

%

 

 

0.32

%

Non-accrual loans

$

61,268

 

 

$

60,806

 

 

$

45,258

 

 

$

50,422

 

 

$

55,276

 

Non-performing assets to total assets

 

0.24

%

 

 

0.23

%

 

 

0.24

%

 

 

0.26

%

 

 

0.30

%

Non-performing assets

$

68,787

 

 

$

68,361

 

 

$

55,388

 

 

$

57,924

 

 

$

67,000

 

Criticized loans to net loans

 

3.01

%

 

 

2.59

%

 

 

2.27

%

 

 

2.33

%

 

 

2.42

%

Criticized loans

$

628,699

 

 

$

537,802

 

 

$

399,895

 

 

$

407,086

 

 

$

421,507

 

Substandard loans to net loans

 

1.84

%

 

 

1.48

%

 

 

1.74

%

 

 

1.75

%

 

 

1.71

%

Substandard loans

$

384,843

 

 

$

307,412

 

 

$

305,606

 

 

$

305,179

 

 

$

296,541

 

 

 

 

 

 

 

 

 

 

 

1Metrics include only loans held for investment. Loans held for sale are not included.

2Metric is a non-GAAP Measure. See page 12 for additional information on our use of Non-GAAP Financial Measures.

WAFD, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended June 30,

 

Nine Months Ended June 30,

 

2024

 

2023

 

2024

 

2023

 

(In thousands, except share and ratio data)

INTEREST INCOME

 

 

 

 

 

 

 

Loans receivable

$

337,118

 

 

$

232,167

 

 

$

857,251

 

 

$

659,070

 

Mortgage-backed securities

 

17,523

 

 

 

10,454

 

 

 

41,694

 

 

 

31,489

 

Investment securities and cash equivalents

 

37,300

 

 

 

29,859

 

 

 

98,668

 

 

 

70,686

 

 

 

391,941

 

 

 

272,480

 

 

 

997,613

 

 

 

761,245

 

INTEREST EXPENSE

 

 

 

 

 

 

 

Customer accounts

 

154,359

 

 

 

70,062

 

 

 

367,194

 

 

 

153,831

 

Borrowings, senior debt and junior subordinated debentures

 

60,396

 

 

 

33,718

 

 

 

142,399

 

 

 

80,877

 

 

 

214,755

 

 

 

103,780

 

 

 

509,593

 

 

 

234,708

 

Net interest income

 

177,186

 

 

 

168,700

 

 

 

488,020

 

 

 

526,537

 

Provision for credit losses

 

1,500

 

 

 

9,000

 

 

 

17,500

 

 

 

15,000

 

Net interest income after provision (release)

 

175,686

 

 

 

159,700

 

 

 

470,520

 

 

 

511,537

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

Gain (loss) on sale of investment securities

 

80

 

 

 

—

 

 

 

251

 

 

 

—

 

Gain (loss) on termination of hedging derivatives

 

54

 

 

 

(926

)

 

 

169

 

 

 

(900

)

Loan fee income

 

594

 

 

 

1,000

 

 

 

1,988

 

 

 

3,154

 

Deposit fee income

 

6,960

 

 

 

6,660

 

 

 

20,460

 

 

 

19,201

 

Other income

 

9,567

 

 

 

7,037

 

 

 

21,946

 

 

 

16,412

 

 

 

17,255

 

 

 

13,771

 

 

 

44,814

 

 

 

37,867

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

Compensation and benefits

 

57,169

 

 

 

50,456

 

 

 

180,165

 

 

 

150,970

 

Occupancy

 

10,904

 

 

 

10,444

 

 

 

31,193

 

 

 

31,464

 

FDIC insurance premiums

 

7,600

 

 

 

5,350

 

 

 

22,070

 

 

 

13,025

 

Product delivery

 

6,090

 

 

 

5,217

 

 

 

17,680

 

 

 

15,154

 

Information technology

 

13,428

 

 

 

11,661

 

 

 

39,177

 

 

 

36,775

 

Other expense

 

14,888

 

 

 

11,571

 

 

 

50,046

 

 

 

36,470

 

 

 

110,079

 

 

 

94,699

 

 

 

340,331

 

 

 

283,858

 

Gain (loss) on real estate owned, net

 

(124

)

 

 

722

 

 

 

387

 

 

 

411

 

Income before income taxes

 

82,738

 

 

 

79,494

 

 

 

175,390

 

 

 

265,957

 

Income tax provision

 

18,178

 

 

 

17,719

 

 

 

36,489

 

 

 

58,739

 

Net income

 

64,560

 

 

 

61,775

 

 

 

138,901

 

 

 

207,218

 

Dividends on preferred stock

 

3,656

 

 

 

3,656

 

 

 

10,969

 

 

 

10,969

 

Net income available to common shareholders

$

60,904

 

 

$

58,119

 

 

$

127,932

 

 

$

196,249

 

PER SHARE DATA

 

 

 

 

 

 

 

Basic earnings per common share

$

0.75

 

 

$

0.89

 

 

$

1.78

 

 

$

3.00

 

Diluted earnings per common share

 

0.75

 

 

 

0.89

 

 

 

1.78

 

 

 

3.00

 

Cash dividends per common share

 

0.26

 

 

 

0.25

 

 

 

0.77

 

 

 

0.74

 

Basic weighted average shares outstanding

 

81,374,811

 

 

 

65,194,880

 

 

 

71,905,924

 

 

 

65,348,709

 

Diluted weighted average shares outstanding

 

81,393,708

 

 

 

65,212,846

 

 

 

71,930,215

 

 

 

65,442,910

 

PERFORMANCE RATIOS

 

 

 

 

 

 

 

Return on average assets

 

0.87

%

 

 

1.12

%

 

 

0.72

%

 

 

1.28

%

Return on average common equity

 

9.20

 

 

 

11.09

 

 

 

7.18

 

 

 

12.72

 

Net interest margin

 

2.56

 

 

 

3.27

 

 

 

2.72

 

 

 

3.49

 

Efficiency ratio

 

56.61

 

 

 

51.90

 

 

 

63.87

 

 

 

50.29

 

WAFD, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended

 

June 30,

2024

 

March 31,

2024

 

December 31,

2023

 

September 30,

2023

 

June 30,

2023

 

(In thousands, except share and ratio data)

INTEREST INCOME

 

 

 

 

 

 

 

 

 

Loans receivable

$

337,118

 

 

$

274,341

 

 

$

245,792

 

 

$

240,998

 

 

$

232,167

 

Mortgage-backed securities

 

17,523

 

 

 

12,905

 

 

 

11,266

 

 

 

11,695

 

 

 

10,454

 

Investment securities and cash equivalents

 

37,300

 

 

 

31,580

 

 

 

29,788

 

 

 

29,017

 

 

 

29,859

 

 

 

391,941

 

 

 

318,826

 

 

 

286,846

 

 

 

281,710

 

 

 

272,480

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Customer accounts

 

154,359

 

 

 

116,164

 

 

 

96,671

 

 

 

83,402

 

 

 

70,062

 

Borrowings, senior debt and jr. subordinated debentures

 

60,396

 

 

 

44,065

 

 

 

37,938

 

 

 

34,611

 

 

 

33,718

 

 

 

214,755

 

 

 

160,229

 

 

 

134,609

 

 

 

118,013

 

 

 

103,780

 

Net interest income

 

177,186

 

 

 

158,597

 

 

 

152,237

 

 

 

163,697

 

 

 

168,700

 

Provision for credit losses

 

1,500

 

 

 

16,000

 

 

 

—

 

 

 

26,500

 

 

 

9,000

 

Net interest income after provision (release)

 

175,686

 

 

 

142,597

 

 

 

152,237

 

 

 

137,197

 

 

 

159,700

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

 

 

Gain (loss) on sale of investment securities

 

80

 

 

 

90

 

 

 

81

 

 

 

33

 

 

 

—

 

Gain (loss) on termination of hedging derivatives

 

54

 

 

 

6

 

 

 

109

 

 

 

33

 

 

 

(926

)

Loan fee income

 

594

 

 

 

550

 

 

 

844

 

 

 

731

 

 

 

1,000

 

Deposit fee income

 

6,960

 

 

 

6,698

 

 

 

6,802

 

 

 

6,849

 

 

 

6,660

 

Other income

 

9,567

 

 

 

6,048

 

 

 

6,331

 

 

 

6,688

 

 

 

7,037

 

 

 

17,255

 

 

 

13,392

 

 

 

14,167

 

 

 

14,334

 

 

 

13,771

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

57,169

 

 

 

73,155

 

 

 

49,841

 

 

 

45,564

 

 

 

50,456

 

Occupancy

 

10,904

 

 

 

10,918

 

 

 

9,371

 

 

 

10,115

 

 

 

10,444

 

FDIC insurance premiums

 

7,600

 

 

 

7,900

 

 

 

6,570

 

 

 

7,000

 

 

 

5,350

 

Product delivery

 

6,090

 

 

 

5,581

 

 

 

6,009

 

 

 

5,819

 

 

 

5,217

 

Information technology

 

13,428

 

 

 

12,883

 

 

 

12,866

 

 

 

12,672

 

 

 

11,661

 

Other expense

 

14,888

 

 

 

23,275

 

 

 

11,883

 

 

 

11,007

 

 

 

11,571

 

 

 

110,079

 

 

 

133,712

 

 

 

96,540

 

 

 

92,177

 

 

 

94,699

 

Gain (loss) on real estate owned, net

 

(124

)

 

 

(1,315

)

 

 

1,826

 

 

 

(235

)

 

 

722

 

Income before income taxes

 

82,738

 

 

 

20,962

 

 

 

71,690

 

 

 

59,119

 

 

 

79,494

 

Income tax provision

 

18,178

 

 

 

5,074

 

 

 

13,237

 

 

 

8,911

 

 

 

17,719

 

Net income

 

64,560

 

 

 

15,888

 

 

 

58,453

 

 

 

50,208

 

 

 

61,775

 

Dividends on preferred stock

 

3,656

 

 

 

3,656

 

 

 

3,656

 

 

 

3,656

 

 

 

3,656

 

Net income available to common shareholders

$

60,904

 

 

$

12,232

 

 

$

54,797

 

 

$

46,552

 

 

$

58,119

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.75

 

 

$

0.17

 

 

$

0.85

 

 

$

0.72

 

 

$

0.89

 

Diluted earnings per common share

 

0.75

 

 

 

0.17

 

 

 

0.85

 

 

 

0.72

 

 

 

0.89

 

Cash dividends per common share

 

0.26

 

 

 

0.26

 

 

 

0.25

 

 

 

0.25

 

 

 

0.25

 

Basic weighted average shares outstanding

 

81,374,811

 

 

 

70,129,072

 

 

 

64,297,499

 

 

 

64,729,006

 

 

 

65,194,880

 

Diluted weighted average shares outstanding

 

81,393,708

 

 

 

70,164,558

 

 

 

64,312,110

 

 

 

64,736,864

 

 

 

65,212,846

 

PERFORMANCE RATIOS

 

 

 

 

 

 

 

 

 

Return on average assets

 

0.87

%

 

 

0.26

%

 

 

1.04

%

 

 

0.90

%

 

 

1.12

%

Return on average common equity

 

9.20

 

 

 

2.09

 

 

 

10.21

 

 

 

8.73

 

 

 

11.09

 

Net interest margin

 

2.56

 

 

 

2.73

 

 

 

2.91

 

 

 

3.13

 

 

 

3.27

 

Efficiency ratio

 

56.61

 

 

 

77.74

 

 

 

58.02

 

 

 

51.78

 

 

 

51.90

 

Non-GAAP Financial Measures and Management Projections

The Company has presented certain non-GAAP measures within this document to remove the effect of certain income and expenses to provide investors with information useful in understanding our financial performance. The Company considers these items to be non-operating in nature as they are items that Management does not consider indicative of the Company's on-going financial performance. We believe that the tables presented reflect our on-going performance in the periods presented and, accordingly, are useful to consider in addition to our GAAP financial results. These measures should not be considered a substitution for GAAP basis disclosures.

Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way they are calculated herein. Because of this, our non-GAAP financial measures may not be comparable to similar measures used by others. We caution investors not to place undue reliance on such measures. See the following unaudited tables for reconciliations of our non-GAAP measures to the most directly comparable GAAP financial measures.

Tangible Measures

June 30,

2024

 

March 31,

2024

 

September 30,

2023

 

(Unaudited - In thousands, except for ratio data)

Shareholders equity - GAAP

$

2,958,339

 

 

$

2,921,906

 

 

$

2,426,426

 

Less intangible assets - GAAP

 

452,255

 

 

 

453,539

 

 

 

310,619

 

Tangible shareholders' equity

$

2,506,084

 

 

$

2,468,367

 

 

$

2,115,807

 

Less preferred stock - GAAP

 

300,000

 

 

 

300,000

 

 

 

300,000

 

Tangible common shareholders' equity

$

2,206,084

 

 

$

2,168,367

 

 

$

1,815,807

 

 

 

 

 

 

 

Total assets - GAAP

$

28,580,800

 

 

$

30,140,288

 

 

$

22,474,675

 

Less intangible assets - GAAP

 

452,255

 

 

 

453,539

 

 

 

310,619

 

Tangible assets

$

28,128,545

 

 

$

29,686,749

 

 

$

22,164,056

 

 

 

 

 

 

 

Tangible Metrics

 

 

 

 

 

Common shares outstanding - GAAP

 

81,157,173

 

 

 

81,405,391

 

 

 

64,736,916

 

Tangible common equity per share

$

27.18

 

 

$

26.64

 

 

$

28.05

 

Tangible equity to tangible assets

 

8.91

%

 

 

8.31

%

 

 

9.55

%

Allowance for credit losses

$

203,824

 

 

$

201,577

 

 

$

177,207

 

Tangible shareholders' equity + allowance for credit losses to tangible assets

 

9.63

%

 

 

8.99

%

 

 

10.35

%

Net Income Adjusted for Acquisition Expenses and Other Non-Operating Items

Three Months

Ended June 30,

2024

 

Three Months

Ended March 31,

2024

 

Three Months

Ended December 31,

2023

 

(Unaudited - In thousands, except for ratio data)

Non-interest income adjustments

 

 

 

 

 

Distribution received on LBC equity method investment

$

(299

)

 

$

(287

)

 

$

—

 

(Gain)Loss on WaFd Bank equity method investment

 

(748

)

 

 

2,195

 

 

 

693

 

Total non-interest income adjustments

$

(1,047

)

 

$

1,908

 

 

$

693

 

 

 

 

 

 

 

Non-interest expense adjustments

 

 

 

 

 

Acquisition-related expenses

$

2,285

 

 

$

25,120

 

 

$

516

 

Select non-operating expenses:

 

 

 

 

 

FDIC Special Assessment

 

—

 

 

 

1,800

 

 

 

500

 

Legal and Compliance Accruals

 

—

 

 

 

3,000

 

 

 

—

 

Charitable Donation

 

—

 

 

 

2,000

 

 

 

—

 

 

 

—

 

 

 

6,800

 

 

 

500

 

Total non-interest expense adjustments

$

2,285

 

 

$

31,920

 

 

$

1,016

 

 

 

 

 

 

 

Net Income - GAAP

$

64,560

 

 

$

15,888

 

 

$

58,453

 

Preliminary ACL provision on LBC loans

 

—

 

 

 

16,000

 

 

 

—

 

Non-interest income adjustments

 

(1,047

)

 

 

1,908

 

 

 

693

 

Non-interest expense adjustments

 

2,285

 

 

 

31,920

 

 

 

1,016

 

REO adjustments

 

124

 

 

 

1,315

 

 

 

(1,826

)

Income tax adjustment

 

(299

)

 

 

(12,274

)

 

 

22

 

Net Income - non-GAAP

$

65,623

 

 

$

54,757

 

 

$

58,358

 

 

 

 

 

 

 

Dividend on preferred stock

$

3,656

 

 

$

3,656

 

 

$

3,656

 

 

 

 

 

 

 

Net Income available to common shareholders - non-GAAP

$

61,967

 

 

$

51,101

 

 

$

54,702

 

 

 

 

 

 

 

Basic weighted average number of shares outstanding - GAAP

 

81,374,811

 

 

 

70,129,072

 

 

 

64,297,499

 

Diluted weighted average number of shares outstanding - GAAP

 

81,393,708

 

 

 

70,164,558

 

 

 

64,312,110

 

 

 

 

 

 

 

Basic EPS - non-GAAP

 

0.76

 

 

 

0.73

 

 

 

0.84

 

Diluted EPS - non-GAAP

 

0.76

 

 

 

0.73

 

 

 

0.84

 

Adjusted Efficiency Ratio

Three Months

Ended June 30,

2024

 

Three Months

Ended March 31,

2024

 

Three Months

Ended December 31,

2023

 

(Unaudited - In thousands, except for ratio data)

Efficiency ratio - GAAP

 

56.6

%

 

 

77.7

%

 

 

58.0

%

 

 

 

 

 

 

Non-interest expense - GAAP

$

110,079

 

 

$

133,712

 

 

$

96,540

 

Deduct acquisition-related expenses

 

2,285

 

 

 

25,120

 

 

 

516

 

Deduct select non-operating expenses

 

—

 

 

 

6,800

 

 

 

500

 

Non-interest Expenses - non-GAAP

$

107,794

 

 

$

101,792

 

 

$

95,524

 

 

 

 

 

 

 

Non-interest income - GAAP

$

17,255

 

 

$

13,392

 

 

$

14,167

 

Total non-interest income adjustments

 

(1,047

)

 

 

1,908

 

 

 

693

 

Non-interest income - non-GAAP

$

16,208

 

 

$

15,300

 

 

$

14,860

 

 

 

 

 

 

 

Net Interest Income - GAAP

$

177,186

 

 

$

158,597

 

 

$

152,237

 

Non-interest income - non-GAAP

 

16,208

 

 

 

15,300

 

 

 

14,860

 

Total Income - non-GAAP

$

193,394

 

 

$

173,897

 

 

$

167,097

 

 

 

 

 

 

 

Adjusted Efficiency Ratio

 

55.7

%

 

 

58.5

%

 

 

57.2

%

Adjusted ROA and ROE

Three Months

Ended June 30,

2024

 

Three Months

Ended March 31,

2024

 

Three Months

Ended December 31,

2023

 

(Unaudited - In thousands, except for ratio data)

Net Income - GAAP

$

64,560

 

 

$

15,888

 

 

$

58,453

 

Net income available to common shareholders - GAAP

$

60,904

 

 

$

12,232

 

 

$

54,797

 

 

 

 

 

 

 

Average Assets

 

29,703,337

 

 

 

24,907,376

 

 

 

22,381,459

 

Return on Assets

 

0.87

%

 

 

0.26

%

 

 

1.04

%

 

 

 

 

 

 

Average Common Equity

 

2,647,056

 

 

 

2,338,483

 

 

 

2,147,580

 

Return on common equity

 

9.20

%

 

 

2.09

%

 

 

10.21

%

 

 

 

 

 

 

 

 

 

 

 

 

Net Income - non-GAAP

$

65,623

 

 

$

54,757

 

 

$

58,358

 

Net income available to common shareholders - non-GAAP

$

61,967

 

 

$

51,101

 

 

$

54,702

 

 

 

 

 

 

 

Average Assets

 

29,703,337

 

 

 

24,907,376

 

 

 

22,381,459

 

Adjusted Return on Assets

 

0.88

%

 

 

0.88

%

 

 

1.04

%

 

 

 

 

 

 

Average Common Equity

 

2,647,056

 

 

 

2,338,483

 

 

 

2,147,580

 

Adjusted Return on common equity

 

9.36

%

 

 

8.74

%

 

 

10.19

%

Important Cautionary Statements

The foregoing information should be read in conjunction with the financial statements, notes and other information contained in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

This press release contains statements about the Company’s future that are not statements of historical or current fact. These statements are “forward-looking statements” for purposes of applicable securities laws and are based on current information and/or management's good faith belief as to future events. Words such as “expects,” “anticipates,” “believes,” “estimates,” “intends,” “forecasts,” “may,” “potential,” “projects,” and other similar expressions or future or conditional verbs such as “will,” “should,” “would,” and “could” are intended to help identify such forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements related to the potential sale of approximately $0.5 billion of single-family real estate loans categorized as Held for Sale, and statements relating to the benefits to the Company and our shareholders of the LBC merger, including its anticipated effect on earnings per share. Although the Company believes any such statements are based on reasonable assumptions, forward-looking statements should not be read as a guarantee of future performance, and you are cautioned not to place undue reliance on any forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statement.

By their nature, forward-looking statements involve inherent risk and uncertainties including the following risks and uncertainties, and those risks and uncertainties more fully discussed under “Risk Factors” in the Company’s September 30, 2023 10-K, and Quarterly Reports on Form 10-Q which could cause actual performance to differ materially from that anticipated by any forward-looking statements. In particular, forward-looking statements relating to the potential sale of approximately $0.5 billion of single-family real estate loans categorized as Held for Sale are subject to risks and uncertainties that affect our ability to sell the loans, the anticipated timing of the sale, and the final purchase price for the assets, including, without limitation continued fluctuations in interest rates, deteriorating economic conditions or declines in the real estate market, and regulatory limitations. Other forward-looking statements relating to our financial condition or operations are subject to risks and uncertainties related to (i) fluctuations in interest rate risk and market interest rates, including the effect on our net interest income and net interest margin; (ii) current and future economic conditions, including the effects of declines in the real estate market, high unemployment rates, inflationary pressures, a potential recession, the monetary policies of the Federal Reserve, and slowdowns in economic growth; (iii) risks related to the integration of the operations of Luther Burbank Corporation; (iv) financial stress on borrowers (consumers and businesses) as a result of higher interest rates or an uncertain economic environment; (v) changes in deposit flows or loan demands; (vi) the impact of bank failures or adverse developments at other banks and related negative press about regional banks and the banking industry in general; (vii) the effects of natural or man-made disasters, calamities, or conflicts, including terrorist events and pandemics (such as the COVID-19 pandemic) and the resulting governmental and societal responses; (viii) global economic trends, including developments related to Ukraine and Russia, and the evolving conflict in Israel and Gaza, and related negative financial impacts on our borrowers; (ix) litigation risks resulting in significant expenses, losses and reputational damage; (x) our ability to identify and address cyber-security risks, including security breaches, “denial of service attacks,” “hacking” and identity theft; and (xi) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240716784466/en/

WaFd, Inc. 425 Pike Street, Seattle, WA 98101 Brad Goode, SVP, Chief Marketing Officer 206-626-8178 [e-mail]