WAFD — WaFd, Inc.

WaFd Inc. Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Income: $61.9 million, or $0.82 per diluted share, up from $0.65 per share in Q2 2025 and $0.79 per share in Q1 2026.
• Net Interest Income: Increased by $6.5 million from the prior quarter, with a net interest margin of 2.81%, compared to 2.7% in Q1 2026.
• Loan Growth: Total loans receivable increased by $119 million, with active loan types growing by $359 million. Loan originations were $1.5 billion, outpacing repayments of $900 million.
• Deposits: Total deposits decreased by $292 million, attributed to seasonal patterns. Noninterest-bearing deposits decreased by 4.3% but core deposits increased to 80.4%.
• Capital Ratios: CET1 ratio at 11.4%, total risk-based capital ratio at 14.4%.

2. Strategic Updates and Business Highlights

• Growth Strategy: The "Build 2030" plan aims to increase noninterest-bearing deposits from 11% to 20% by 2030. WaFd has reorganized its banking teams to focus on small and medium-sized businesses.
• Loan Portfolio: Significant growth in Commercial and Industrial (C&I) loans, with a 12% increase in the active portfolio on a linked-quarter basis.
• Wealth Management: The newly launched wealth management division aims to reach $1 billion in assets under management, currently at $450 million.
• Technology Investments: WaFd is enhancing its technology infrastructure, including a new mobile app and AI-driven customer service solutions.

3. Forward Guidance and Outlook

• Margin Expectations: The bank aims to reach a net interest margin of 3% within two years, contingent on organic growth and improved deposit costs.
• Loan Growth Projections: Management anticipates active loan portfolio growth of 8% to 12% going forward, supported by a strong lending pipeline.
• Regulatory Changes: Proposed changes to capital calculations could potentially increase WaFd's regulatory capital levels by approximately $400 million.

4. Bad News, Challenges, or Points of Concern

• Deposit Competition: Increased competition for low-cost deposits, particularly from larger banks and new entrants like Elon Musk's X Money, which could pressure margins.
• Credit Quality Risks: While credit metrics are improving, concerns remain regarding the impact of elevated interest rates and economic uncertainty on borrowers, particularly in commercial segments.
• Nonperforming Assets: Nonperforming assets decreased, but the bank noted that delinquencies are still elevated compared to historical levels, influenced by a large commercial relationship over 90 days past due.

5. Notable Q&A Insights

• Margin Improvement: CFO Kelli Holz clarified that the margin improvement included a positive impact from nonaccrual loans being brought current.
• Loan Growth Sources: CEO Brent Beardall indicated that the recent loan growth did not come from club deals, and the bank is focused on organic growth.
• Fee Income Sustainability: Management expressed confidence that the current fee income run rate of approximately $20 million is sustainable moving forward.
• Expense Management: Expenses increased due to merit increases and technology investments, but management views current expense levels as a solid run rate for future quarters.

Overall, WaFd Inc. reported a strong quarter with notable loan growth and strategic advancements, while also facing challenges from competitive pressures and credit quality concerns.