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 brad.goode@wafd.com
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