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Dec 31, 2024
WaFd Q1 2025 Earnings Report
WaFd reported quarterly earnings with a net income of $47.3 million and an EPS of $0.54, impacted by margin compression and restructuring charges.
Key Takeaways
WaFd Inc. reported a net income of $47.3 million, or $0.54 per diluted share, for the quarter ended December 31, 2024. Results were impacted by greater than expected margin compression and $5.4 million in one-time restructuring charges related to exiting the single-family mortgage lending market. The company is shifting its focus to business banking and commercial real estate lending.
Net income for the quarter was $47.3 million, a decrease of 23% compared to the previous quarter and 19% year-over-year.
Diluted earnings per share were $0.54, down from $0.71 in the previous quarter and $0.85 year-over-year.
Net interest margin contracted to 2.39% from 2.62% in the previous quarter due to variable rate assets repricing quickly while liabilities repriced slower.
The company is exiting the single-family mortgage lending market, resulting in $5.4 million in restructuring charges this quarter but anticipates $17 million in annual expense savings by the end of June 2025.
WaFd
WaFd
Forward Guidance
WaFd is focusing on business banking and commercial real estate lending after exiting the single-family mortgage market, expecting annual expense savings of approximately $17 million by the end of June 2025.
Positive Outlook
- Focusing on business banking and commercial real estate lending.
- Anticipating annual expense savings of approximately $17 million by the end of June 2025.
- Retaining all existing home loans and HELOC’s on the books, ensuring no disruption for current customers.
- Capital has grown nicely over the last three quarters, with tangible common equity to tangible assets increasing from 8.31% to 9.45% since acquisition in March of last year.
- Offering SBA lending products to broaden offerings for small businesses.
Challenges Ahead
- Exiting the single-family mortgage lending market, resulting in restructuring expense of $5.4 million this quarter.
- Margin compression impacting results due to Federal Reserve interest rate cuts.
- Received a “Needs to Improve” rating regarding Community Reinvestment Act (“CRA”) compliance.
- Delinquent loans were slightly increased at 0.30% of total loans at December 31, 2024, compared to 0.25% at September 30, 2024.
- Exiting mortgage lending and right sizing other support areas will result in an 8% reduction in our workforce.