WAFDP — WaFd, Inc.

Summary of WAFDP Q3 2026 Earnings Call

1. Key Financial Results and Metrics:

• Net Income: $62.5 million, or $0.84 per diluted share, up from $0.73 per share in Q3 2025 and $0.82 in Q2 2026.
• Loan Growth: Loans receivable increased by $51 million; active loan types rose by $315 million, with total originations at $1.5 billion against repayments of $1 billion.
• Net Interest Income: Increased by $3.8 million from the prior quarter, maintaining a net interest margin of 2.81%.
• Deposits: Total deposits decreased by $192 million; however, non-interest-bearing deposits rose by 2.7%.
• Capital Ratios: CET1 ratio at 11.4% and total risk-based capital ratio at 14.4%.

2. Strategic Updates and Business Highlights:

• The company reported a 10% linked quarter growth in the active loan portfolio, with a significant contribution from commercial and industrial (C&I) loans.
• The strategic plan, "Build 2030," aims to increase non-interest-bearing deposits from 11% to 20% by 2030.
• The bank is focusing on organic growth and maintaining a disciplined approach to underwriting and credit risk management.

3. Forward Guidance and Outlook:

• Management expects stable net interest margins in the near term, with potential upside if interest rates rise.
• Loan growth is projected at 8%-12% going forward, supported by a robust lending pipeline of $2.9 billion.
• The effective tax rate is anticipated to be around 21.8% for FY 2026.

4. Bad News, Challenges, or Points of Concern:

• Credit Quality: Adversely classified loans increased to 2.59% of net loans, and total criticized loans rose to 4.9%. Non-performing assets slightly increased to 0.49% of total assets.
• Deposit Competition: The bank faces intense competition for deposits, with non-interest-bearing deposits declining in the broader market.
• Economic Headwinds: Elevated interest rates and economic uncertainty are impacting borrowers, leading to increased credit risk.

5. Notable Q&A Insights:

• Management acknowledged the challenges in maintaining deposit levels and the competitive landscape affecting deposit costs.
• The potential sale of a large C&I non-performing loan was discussed, with no specific reserves set aside for it, indicating a proactive approach to managing credit risk.
• The company remains open to M&A opportunities but emphasizes a disciplined approach to avoid diluting shareholder value.

Overall, WAFDP demonstrated solid financial performance in Q3 2026, with strategic initiatives focused on loan growth and deposit management, while navigating challenges related to credit quality and competitive pressures in the banking sector.