WaFd Bank(US:WAFD)2026-01-16 16:00Financial Data and Key Metrics Changes - WaFd Inc. reported net income available to common shareholders of $60.5 million or $0.79 per diluted share for Q1 2026, an increase from $0.54 per share in Q1 2025 and $0.72 per share in the previous quarter [6][10] - Net interest income increased by $1.2 million from the prior quarter, with a net interest margin of 2.7% for the December quarter, slightly down from 2.71% in the September quarter [9][10] - Total non-interest income increased by $1.9 million to $20.3 million, driven by a $3.2 million gain on the sale of a branch property [11] Business Line Data and Key Metrics Changes - Loan originations for active loan types were $1.1 billion, outpacing repayments of $1 billion, with significant contributions from commercial and industrial loans [7][13] - Total loans receivable decreased by $240 million, primarily due to a decline in inactive loan types [6][7] - Non-performing assets increased to $203 million, or 0.75% of total assets, reflecting a rise in non-accrual loans [14][15] Market Data and Key Metrics Changes - Total deposits decreased by $21 million, with non-interest-bearing deposits increasing by 4.9% and interest-bearing deposits by 4.5%, while time deposits decreased by 6.4% [9] - The loan-to-deposit ratio ended the quarter at 92.7%, down from over 110% two years ago [9] Company Strategy and Development Direction - The strategic plan, BUILD 2030, aims to increase non-interest-bearing deposits from 11% to 20% of total deposits by 2030 [20] - The company is focusing on serving small businesses to achieve a lower cost of funds, with a goal of growing active loan portfolios by 8%-12% over the next one to two years [21][24] - WaFd Wealth Management was launched to grow assets under management, targeting $1 billion in the first two years [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future prospects, citing a 10% linked quarter EPS growth and a 40% year-over-year growth [20] - The company anticipates continued pressure on margins due to the economic environment but expects to benefit from a shift to lower-cost deposits [10][19] - Management noted that credit quality metrics remain healthy despite some increases in delinquencies and non-performing assets [18] Other Important Information - The company repurchased 1.95 million shares at a weighted average price of $29.75, with a remaining authorization of 6.3 million shares [12][26] - WaFd is appealing its CRA rating to improve its standing, which could facilitate future branching and acquisition activities [27] Q&A Session Summary Question: Margin outlook and plans for borrowings - Management plans to replace $800 million of borrowings due within the next three months with current borrowings, expecting rates to decrease if the Fed cuts rates [28][29] Question: Interest income reversals - Non-accrual interest for the quarter amounted to just over $5 million [29] Question: Expense growth and hiring plans - Management indicated no significant plans for large team increases but will continue to make strategic technology investments [32][33] Question: Margin pressure and growth expectations - Management expects further margin pressure but growth in net interest income dollars, with optimism for future quarters [36][37] Question: Loan portfolio and inactive runoff - Inactive runoff is expected to be around $200 million-$250 million per quarter, with hopes for active loan growth of 8%-10% [38][39] Question: CRA rating and branching opportunities - Improving the CRA rating would ease branching activities and potential mergers and acquisitions, although the company is not actively seeking deals [55][56]