WAFD Gains as Q3 Earnings Beat on Fee Income, Weak Lending Hurts NII

Core Viewpoint - WaFd, Inc. (WAFD) reported better-than-expected quarterly results, with adjusted earnings of 73 cents per share, surpassing the Zacks Consensus Estimate of 67 cents, although this represented a 3.9% year-over-year decline [1][9] Financial Performance - The company's net income available to common shareholders was $58.3 million, down 4.3% from the prior-year quarter, while the estimate was $51.9 million [2] - Quarterly net revenues were $186.261 million, a decrease of 4.2% year over year, but exceeded the Zacks Consensus Estimate of $185.7 million [3] - Net interest income (NII) was $160.9 million, declining 5.2% year over year, primarily due to a lower loan balance, while net interest margin (NIM) increased by 13 basis points to 2.69% [3] - Total non-interest income rose 5.9% to $18.3 million, surpassing the estimate of $17.2 million, while total non-interest expenses fell 5.2% to $104.3 million [4] Efficiency and Returns - The efficiency ratio improved to 56.01%, down from 56.61% in the prior-year quarter, indicating enhanced profitability [5] - Return on average common equity was 8.54%, down from 9.20%, while return on average assets increased to 0.92% from 0.87% [5] Loans and Deposits - As of June 30, 2025, net loans receivable were $20.28 billion, down 3.1% from the prior quarter, while total customer deposits were $21.39 billion, showing a slight decline [6] Credit Quality - The allowance for credit losses increased to 1.03% of gross loans outstanding, up from 1.00% in the prior-year quarter, with non-performing assets to total assets ratio rising to 0.36% from 0.24% [7] - Provision for credit losses was $2 million, a significant increase of 33.3% from the year-ago quarter [7] Share Repurchase Activity - During the reported quarter, WAFD repurchased 1.66 million shares at an average price of $29.08 per share [10] Strategic Outlook - The company is expected to benefit from relatively higher interest rates, business restructuring, and a strong balance sheet, with the acquisition of Luther Burbank Corporation enhancing its presence in California [11]