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Jun 30, 2023
WaFd Q3 2023 Earnings Report
Reported quarterly earnings with a slight decrease compared to the same quarter last year, while experiencing net deposit inflows and managing credit quality.
Key Takeaways
Washington Federal announced quarterly earnings of $61.775 million, a 2.4% decrease from the previous year. Despite a challenging interest rate environment, the company experienced net deposit inflows of $259 million and maintained a stable efficiency ratio.
Net deposit inflows totaled $259 million, resulting in positive deposit growth for the fiscal year-to-date.
Net income was slightly below the same quarter last year, despite the challenging interest rate environment.
Net interest margin contracted only 5 basis points from March to June 2023, showing a slowing pace of contraction.
Credit quality remains strong, with over 85% of loans secured by real estate and an estimated average loan to value ratio under 45%.
WaFd
WaFd
Forward Guidance
The current environment is shaping up to be a "reset" for regional banks, and WaFd believes they are well positioned to capitalize on disruptions in the market. The company will need to demonstrate to investors that their margin is sustainable over the long-term.
Positive Outlook
- Experienced net deposit inflows totaling $259 million.
- Slowing pace of margin contraction.
- Over 85% of loans are secured by real estate with an estimated average current loan to value ratio under 45%.
- Increased tangible book value per share by $2.92 or 11.8% over the past 12 months.
- Well positioned to capitalize on disruptions in the market.
Challenges Ahead
- Net income is slightly below the same quarter last year.
- Experienced net loan charge-offs during the last two quarters.
- Rapid rise in interest rates causing stress for a limited sub-set of borrowers.
- WaFd stock was trading at 7.4 times annualized quarterly earnings, which they believe trades below their intrinsic value.
- Need to demonstrate to investors that their margin is sustainable over the long-term.