WaFd Announces Quarterly Earnings Per Share of $0.54

SEATTLE--(BUSINESS WIRE)--WaFd, Inc. (Nasdaq: WAFD): Q1 Highlights $47 Million $0.54 0.69% 6.42% Net Income Diluted Earnings per Common Share Return on Average Assets Return on Average Common Equity Net Interest Income and NIM $155 million net interest income for the quarter compared to $173 million in Q4 FY24. Net interest margin at 2.39% for the quarter compared to 2.62% for Q4 FY24. Credit Quality Non-performing assets at 0.3% of total assets - similar to prior quarter. No provision booked for the quarter and NCOs were minimal. Non-Interest Income and Expense Non-interest expense up due to $5.4 million in one-time restructuring charges, partially offset by lower FDIC insurance premiums due to a smaller balance sheet. Shareholder Returns and Stock Activity On December 6, 2024, the Company paid a cash dividend of $0.26 per share, 167th consecutive quarterly dividend paid. WaFd, Inc. (Nasdaq: WAFD) (the "Company"), parent company of Washington Federal Bank ("WaFd Bank" or the "Bank"), today announced quarterly earnings of $47,267,000 for the quarter ended December 31, 2024, a decrease of 23% from net earnings of $61,140,000 for the quarter ended September 30, 2024 and a decrease of 19% from net earnings of $58,453,000 for the quarter ended December 31, 2023. After the effect of dividends on preferred stock, net income available for common shareholders was $0.54 per diluted share for the quarter ended December 31, 2024, compared to $0.71 per diluted share for the quarter ended September 30, 2024, a $0.17 or 24% decrease, and $0.85 per diluted share for the quarter ended December 31, 2023, a $0.31 or 36% decrease in fully diluted earnings per common share. The current quarter results reflect one-time charges of $5,390,000 as a result of restructuring activities described below. After adjusting for these charges and other non-operating items, earnings per share for the quarter was $0.62 per diluted share. For a reconciliation, see the Non-GAAP Financial Measures section below. "In the first quarter of fiscal 2025 our results were impacted by greater than expected margin compression. On a linked quarter basis our margin contracted from 2.62% to 2.39%. Excluding a valuation adjustment to hedges obtained in the Luther Burbank acquisition, the Q1 margin would have been 2.45%. The Federal Reserve started reducing interest rates with a 50 basis point cut on September 18, 2024, followed by two 25 basis point cuts in October and December. With each cut, our variable rate assets (loans and investments) repriced quickly, while the repricing of our liabilities has lagged, causing margin compression. On a linked quarter basis, the yield on earning assets declined by 36 basis points, while the yield on paying liabilities decreased by only 14 basis points. We are pleased to report that credit quality remains strong with minimal net charge-offs and delinquencies of only 0.30%. Capital has grown nicely over the last three quarters, with tangible common equity to tangible assets increasing from 8.31% to 9.45% since our acquisition in March of last year. Today we are announcing a significant shift in focus for our business model. After over 100 years of making home loans, we are exiting the single-family mortgage lending market and have recorded a restructuring expense of $5.4 million this quarter. As a result, by the end of June 2025, we anticipate annual expense savings of approximately $17 million. Importantly, we will retain all existing home loans and HELOC’s on our books, ensuring no disruption for our current customers. We have come to this conclusion after thoughtful deliberation for two primary reasons. First, home loans are seen as a commodity with nearly 70% of originations sold to US government sponsored enterprises like Freddie Mac and Fannie Mae, which has caused profitability to decrease and credit risk to increase. Second, technology has made it easy for consumers to refinance (which is a good thing for homeowners), but it increases the interest rate risk for banks that hold mortgages. Our aim is to always offer products and services to our customers where WaFd Bank can add value, and we have concluded that we no longer do so in the mortgage sector. Exiting mortgage lending and right sizing other support areas will result in an 8% reduction in our workforce. While not the primary factor, but certainly a contributing factor, the regulatory burden associated with mortgage lending also played a role in our decision. Recently we were notified that WaFd Bank has received an overall “Needs to Improve” rating regarding our Community Reinvestment Act (“CRA”) compliance because we did not make enough loans to low and moderate income ("LMI") borrowers and communities. For the individual components of the exam, we received a “High Satisfactory” rating in both the investment and service tests, and a “Needs to Improve” on the lending test. We are committed to serving all of our communities and have done so as a portfolio lender since 1917. Today, we compete against government-sponsored financing programs with less stringent underwriting than we are comfortable offering as a lender that retains all loans on our balance sheet. For example, there are multiple government programs that require no down payment, and our performance is being compared to lenders who offer these programs and originate to sell. We strongly disagree with this rating and plan to appeal this conclusion. Through our involvement in the PPP program during the Pandemic, we have seen just how important small business is to us, and to the communities we serve, and how underserved many small businesses are when it comes to their banking needs. Technology is excellent and abundant; what small businesses need is a trusted advisor to help them navigate complex financial matters and exercise professional skepticism. We aim to fill that need. Going forward, in addition to serving consumers, WaFd will concentrate its focus, offerings and efforts on business banking and commercial real estate lending. We will also begin offering SBA lending products that will allow us to broaden our offerings for small businesses. We have also re-aligned our management structure. On the executive team, Cathy Cooper will transition to the role of Chief Experience Officer, responsible for enhancing overall client experience through digital channels and in person processes. James Endrizzi will step aside from his current role and will assume leadership responsibility for Commercial Real Estate in both Utah and Nevada in a non-executive role. The Business Bank Division will be led by Michelle Coons, Dan LaCoste and Doron Joseph. The Commercial Real Estate Division will be led by Tony Barnard and Tom Pozarycki. All five of these leaders have been promoted to the role of Executive Director but are not deemed executive officers under SEC rules. Here at WaFd, we strive to be a bank with heart. That does not mean we ignore issues or avoid difficult decisions. We firmly believe the actions being announced today will position us to better serve our clients and deliver solid returns to our shareholders for years to come." Brent Beardall President and CEO of WaFd Bank The Company acquired Luther Burbank Corporation ("LBC") on February 29, 2024. As such, the Company's financial results are not directly comparable to the results of periods prior to that date. The following table provides the Company's financial scorecard for the last five quarters: As of (In thousands, except share and ratio data) December 31,| 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 BALANCE SHEET Cash $ 1,507,735 $ 2,381,102 $ 2,492,504 $ 1,505,771 $ 1,144,774 Loans receivable, net 21,060,501 20,916,354 20,873,919 20,795,259 17,584,622 Allowance for credit losses ("ACL") 225,022 225,253 225,324 225,077 201,820 Loans held for sale — — 468,527 2,993,658 — Available-for-sale securities, at fair value 2,743,731 2,572,709 2,428,768 2,438,114 2,018,445 Held-to-maturity securities, at amortized cost 537,348 436,972 447,638 457,882 415,079 Total investments 3,281,079 3,009,681 2,876,406 2,895,996 2,433,524 Total assets 27,684,454 28,060,330 28,580,800 30,140,288 22,640,122 Transaction deposits 11,853,859 11,817,185 11,929,005 12,338,862 10,658,064 Time deposits 9,584,918 9,556,785 9,255,760 9,000,911 5,380,723 Total deposits 21,438,777 21,373,970 21,184,765 21,339,773 16,038,787 Borrowings 2,914,627 3,318,307 4,079,360 5,489,501 3,875,000 Total shareholders' equity 3,021,636 3,000,300 2,958,339 2,921,906 2,452,004 Loans to customer deposits2 98.24 % 97.86 % 98.53 % 97.45 % 109.64 % PROFITABILITY Net income $ 47,267 $ 61,140 $ 64,560 $ 15,888 $ 58,453 Net income to common shareholders 43,611 57,484 60,904 12,232 54,797 Earnings per common share 0.54 0.71 0.75 0.17 0.85 Return on tangible common equity1 7.69 % 10.24 % 11.10 % 2.47 % 11.93 % Return on tangible assets1 0.70 % 0.89 % 0.88 % 0.26 % 1.06 % Net interest margin 2.39 % 2.62 % 2.56 % 2.73 % 2.91 % Efficiency ratio 65.04 % 57.21 % 56.61 % 77.74 % 58.02 % FINANCIAL HIGHLIGHTS Common shareholders' equity per share $ 33.45 $ 33.25 $ 32.76 $ 32.21 $ 33.49 Tangible common shareholders' equity per share1 27.93 27.73 27.18 26.64 28.65 Shareholders' equity to total assets 10.91 % 10.69 % 10.35 % 9.69 % 10.83 % Tangible shareholders' equity to tangible assets1 9.45 % 9.24 % 8.91 % 8.31 % 9.59 % Common shares outstanding 81,373,760 81,220,269 81,157,173 81,405,391 64,254,700 Preferred shares outstanding 300,000 300,000 300,000 300,000 300,000 CREDIT QUALITY2 ACL to gross loans 1.00 % 1.01 % 1.00 % 1.00 % 1.04 % Non-accrual loans to net loans 0.34 % 0.33 % 0.29 % 0.29 % 0.26 % Delinquencies to net loans 0.30 % 0.25 % 0.22 % 0.36 % 0.33 % Non-performing assets to total assets 0.29 % 0.28 % 0.24 % 0.23 % 0.24 % Criticized loans to net loans 2.54 % 2.41 % 3.01 % 2.59 % 2.27 % Substandard loans to net loans 1.96 % 2.04 % 1.84 % 1.48 % 1.74 % (1) Metric is a non-GAAP Financial Measure. See page 10 for additional information on our use of non-GAAP Financial Measures. (2) Metrics include only loans held for investment. Loans held for sale are not included. Balance Sheet Total assets were $27.7 billion as of December 31, 2024, compared to $28.1 billion at September 30, 2024, primarily due to cash used to reduce borrowings during the quarter. Net loans increased by $144 million, or 0.7%, and cash decreased $873 million, or 36.7%. Investment securities increased by $271 million, or 9.0%, during the quarter. Customer deposits totaled $21.4 billion as of December 31, 2024, largely unchanged from September 30, 2024. Transaction accounts increased by $37 million or 0.3% during the quarter, while time deposits increased $28 million, also 0.3%. As of December 31, 2024, 55.3% of the Company’s deposits were transaction accounts, unchanged from September 30, 2024. Core deposits, defined as all transaction accounts and time deposits less than $250,000, totaled 78.3% of deposits at December 31, 2024. Deposits that are uninsured or not collateralized were 24.8% as of December 31, 2024, a slight increase from 24.0% as of September 30, 2024. Borrowings totaled $2.9 billion as of December 31, 2024, down from $3.3 billion at September 30, 2024. The effective weighted average interest rate of borrowings was 3.62% as of December 31, 2024, compared to 3.93% at September 30, 2024. Loan originations totaled $0.9 billion for the first fiscal quarter of 2025, 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 $1.2 billion, respectively. The Bank had intentionally slowed new loan production to temper net loan growth. Commercial loans represented 68% of all loan originations during the first fiscal quarter of 2025 and consumer loans accounted for the remaining 32%. Commercial loans are viewed by the Bank as preferable as they generally have floating interest rates and shorter durations. The weighted average period end interest rate on the loan portfolio was 5.16% as of December 31, 2024, a decrease from 5.26% as of September 30, 2024. Credit Quality Credit quality continues to be monitored closely in light of the shifting economic and monetary environment. As of December 31, 2024, non-performing assets increased slightly to $79 million, or 0.3% of total assets, from $77 million, or 0.3%, at September 30, 2024. The change fiscal year to date is due primarily to non-accrual loans increasing by $2.9 million, or 4%, since September 30, 2024. Delinquent loans were slightly increased at 0.30% of total loans at December 31, 2024, compared to 0.25% at September 30, 2024. The allowance for credit losses (including the reserve for unfunded commitments) totaled $225 million as of December 31, 2024, and was 1.00% of gross loans outstanding, as compared to $225 million, or 1.01% of gross loans outstanding, as of September 30, 2024. Net charge-offs were $231,000 for the first fiscal quarter of 2025, compared to $70,000 for the prior quarter. Profitability Net interest income was $155 million for the first fiscal quarter of 2025, a decrease of $17.4 million or 10% from the prior quarter. The decrease in net interest income was primarily due to a 36 basis point decrease in the rate earned on interest earning assets offset by a smaller 14 basis point decrease in the average rate paid on interest bearing liabilities. Interest income was also affected by a valuation adjustment to hedges obtained in the Luther Burbank acquisition resulting in a reduction of $3.9 million. Net interest margin was 2.39% in the first fiscal quarter of 2025 compared to 2.62% for the quarter ended September 30, 2024. Total non-interest income was $15.7 million for the first fiscal quarter of 2025 compared to $15.9 million the prior quarter. The small decrease in other income compared to prior quarter was primarily due to slightly decreased commission income from the Bank's insurance subsidiary. Total non-interest expense was $111.3 million in the first fiscal quarter of 2025, an increase of $3.4 million, or 3.1%, from the prior quarter. The overall increase is the result of the $5.4 million of restructuring costs incurred in the quarter offset by a decrease in FDIC premiums of $2.0 million in the same period. Increased expenses combined with decreased net interest income resulted in an increase in the Company’s efficiency ratio in the first fiscal quarter of 2025 to 65.0%, compared to 57.2% in the prior quarter. The Company is also in the process of restarting its wholly owned technology subsidiary Pike Street Labs and will bring back in-house its custom online, mobile and digital account opening technology and teams from Archway Software. We anticipate this transition will aid us in becoming more efficient over time. The Company did not record a provision for credit losses in the first fiscal quarter of 2025, consistent with the prior quarter. The lack of provision for loan losses in the quarter ended December 31, 2024 was primarily due to a stable loans receivable balance and stable credit performance. Return on common shareholders' equity for the quarter ended December 31, 2024 was 6.42% compared to 8.53% for the quarter ended September 30, 2024. Adjusted for certain non-operating items relating to the merger and restructuring, return on equity for the quarter is 7.45% compared to adjusted return on equity of 8.18% the prior quarter. Return on assets for the quarter ended December 31, 2024 was 0.7% compared to 0.9% for the previous quarter. Adjusted for certain non-operating items relating to the merger and restructuring, return on assets for the quarter is 0.8% compared to adjusted return on equity of 0.8% the prior quarter. For a reconciliation of these adjusted ratios, see the Non-GAAP Financial Measures section below. Income tax expense totaled $13.0 million the first fiscal quarter of 2025, as compared to $13.2 million for the prior year same quarter. The effective tax rate for the quarter ended December 31, 2024 was 21.55% compared to 24.21% for the quarter ended September 30, 2024. The Company’s effective tax rate may vary from the statutory rate mainly due to state taxes, tax-exempt income and tax-credit investments. 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. December 31, 2024 September 30, 2024 (In thousands, except share and ratio data) ASSETS Cash and cash equivalents $ 1,507,735 $ 2,381,102 Available-for-sale securities, at fair value 2,743,731 2,572,709 Held-to-maturity securities, at amortized cost 537,348 436,972 Loans receivable, net of allowance for loan losses of $204,522 and $203,753 21,060,501 20,916,354 Interest receivable 103,147 102,827 Premises and equipment, net 248,924 247,901 Real estate owned 3,316 4,567 FHLB stock 128,396 95,617 Bank owned life insurance 269,473 267,633 Intangible assets, including goodwill of $414,722 and $411,360 449,213 448,425 Deferred tax assets, net 111,830 119,248 Other assets 520,840 466,975 $ 27,684,454 $ 28,060,330 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Transaction deposits $ 11,853,859 $ 11,817,185 Time deposits 9,584,918 9,556,785 Total customer deposits 21,438,777 21,373,970 Borrowings 2,863,675 3,267,589 Junior subordinated debentures 50,952 50,718 Advance payments by borrowers for taxes and insurance 20,188 61,330 Accrued expenses and other liabilities 289,226 306,423 24,662,818 25,060,030 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; 154,247,734 and 154,007,429 shares issued; 81,373,760 and 81,220,269 shares outstanding 154,248 154,007 Additional paid-in capital 2,154,929 2,150,675 Accumulated other comprehensive income (loss), net of taxes 53,353 55,851 Treasury stock, at cost; 72,873,974 and 72,787,160 shares (1,642,480 ) (1,639,131 ) Retained earnings 2,001,586 1,978,898 3,021,636 3,000,300 $ 27,684,454 $ 28,060,330 Weighted average rates as of period end Loans and mortgage-backed securities 5.06 % 5.16 % Combined loans, mortgage-backed securities and investments 4.98 5.11 Customer accounts 2.92 3.09 Borrowings 3.62 3.93 Combined cost of customer accounts and borrowings 3.00 3.20 Net interest spread 1.98 1.91 WAFD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended December 31, 2024 2023 (In thousands, except share and ratio data) INTEREST INCOME Loans receivable $ 286,597 $ 245,792 Mortgage-backed securities 18,337 11,266 Investment securities and cash equivalents 40,183 29,788 345,117 286,846 INTEREST EXPENSE Customer accounts 162,150 96,671 Borrowings and junior subordinated debentures 27,536 37,938 189,686 134,609 Net interest income 155,431 152,237 Provision (release) for credit losses — — Net interest income after provision (release) 155,431 152,237 NON-INTEREST INCOME Gain (loss) on sale of investment securities 20 81 Gain (loss) on termination of hedging derivatives 5 109 Loan fee income 1,345 844 Deposit fee income 7,046 6,802 Other income 7,286 6,331 Total non-interest income 15,702 14,167 NON-INTEREST EXPENSE Compensation and benefits 59,927 49,841 Occupancy 10,788 9,371 FDIC insurance premiums 4,850 6,570 Product delivery 5,785 6,009 Information technology 14,192 12,866 Other expense 15,769 11,883 Total non-interest expense 111,311 96,540 Gain (loss) on real estate owned, net 429 1,826 Income before income taxes 60,251 71,690 Income tax provision 12,984 13,237 Net income 47,267 58,453 Dividends on preferred stock 3,656 3,656 Net income available to common shareholders $ 43,611 $ 54,797 PER SHARE DATA Basic earnings per common share $ 0.54 $ 0.85 Diluted earnings per common share 0.54 0.85 Cash dividends per common share 0.26 0.25 Basic weighted average shares outstanding 81,294,227 64,297,499 Diluted weighted average shares outstanding 81,401,599 64,312,110 PERFORMANCE RATIOS Return on average assets 0.69 % 1.04 % Return on average common equity 6.42 % 10.21 % WAFD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 (In thousands, except share and ratio data) INTEREST INCOME Loans receivable $ 286,597 $ 308,598 $ 337,118 $ 274,341 $ 245,792 Mortgage-backed securities 18,337 18,088 17,523 12,905 11,266 Investment securities and cash equivalents 40,183 47,411 37,300 31,580 29,788 345,117 374,097 391,941 318,826 286,846 INTEREST EXPENSE Customer accounts 162,150 165,240 154,359 116,164 96,671 Borrowings, senior debt and junior subordinated debentures 27,536 36,045 60,396 44,065 37,938 189,686 201,285 214,755 160,229 134,609 Net interest income 155,431 172,812 177,186 158,597 152,237 Provision for credit losses — — 1,500 16,000 — Net interest income after provision 155,431 172,812 175,686 142,597 152,237 NON-INTEREST INCOME Gain on sale of investment securities 20 91 80 90 81 Gain on termination of hedging derivatives 5 72 54 6 109 Loan fee income 1,345 757 594 550 844 Deposit fee income 7,046 7,047 6,960 6,698 6,802 Other income 7,286 7,911 9,567 6,048 6,331 Total non-interest income 15,702 15,878 17,255 13,392 14,167 NON-INTEREST EXPENSE Compensation and benefits 59,927 53,983 57,169 73,155 49,841 Occupancy 10,788 10,843 10,904 10,918 9,371 FDIC insurance premiums 4,850 6,800 7,600 7,900 6,570 Product delivery 5,785 6,306 6,090 5,581 6,009 Information technology 14,192 14,129 13,428 12,883 12,866 Other expense 15,769 15,880 14,888 23,275 11,883 Total non-interest expense 111,311 107,941 110,079 133,712 96,540 Gain (loss) on real estate owned, net 429 (83 ) (124 ) (1,315 ) 1,826 Income before income taxes 60,251 80,666 82,738 20,962 71,690 Income tax provision 12,984 19,526 18,178 5,074 13,237 Net income 47,267 61,140 64,560 15,888 58,453 Dividends on preferred stock 3,656 3,656 3,656 3,656 3,656 Net income available to common shareholders $ 43,611 $ 57,484 $ 60,904 $ 12,232 $ 54,797 WAFD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 (In thousands, except share and ratio data) PER SHARE DATA Basic earnings per common share $ 0.54 $ 0.71 $ 0.75 $ 0.17 $ 0.85 Diluted earnings per common share 0.54 0.71 0.75 0.17 0.85 Cash dividends per common share 0.26 0.26 0.26 0.26 0.25 Basic weighted average shares outstanding 81,294,227 81,208,683 81,374,811 70,129,072 64,297,499 Diluted weighted average shares outstanding 81,401,599 81,353,644 81,393,708 70,164,558 64,312,110 PERFORMANCE RATIOS Return on average assets 0.69 % 0.87 % 0.87 % 0.26 % 1.04 % Return on average common equity 6.42 8.53 9.20 2.09 10.21 Net interest margin 2.39 2.62 2.56 2.73 2.91 Efficiency ratio 65.04 57.21 56.61 77.74 58.02 WAFD, INC. AND SUBSIDIARIES NON-GAAP MEASURES (UNAUDITED) Non-GAAP Financial Measures 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 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 (Unaudited - In thousands, except for ratio data) Shareholders equity - GAAP $ 3,021,636 $ 3,000,300 $ 2,958,339 $ 2,921,906 $ 2,452,004 Less intangible assets - GAAP 449,213 448,425 452,255 453,539 311,103 Tangible shareholders' equity $ 2,572,423 $ 2,551,875 $ 2,506,084 $ 2,468,367 $ 2,140,901 Less preferred stock - GAAP 300,000 300,000 300,000 300,000 300,000 Tangible common shareholders' equity $ 2,272,423 $ 2,251,875 $ 2,206,084 $ 2,168,367 $ 1,840,901 Total assets - GAAP $ 27,684,454 $ 28,060,330 $ 28,580,800 $ 30,140,288 $ 22,640,122 Less intangible assets - GAAP 449,213 448,425 452,255 453,539 311,103 Tangible assets $ 27,235,241 $ 27,611,905 $ 28,128,545 $ 29,686,749 $ 22,329,019 Tangible Metrics Common shares outstanding - GAAP 81,373,760 81,220,269 81,157,173 81,405,391 64,254,700 Tangible common equity per share $ 27.93 $ 27.73 $ 27.18 $ 26.64 $ 28.65 Tangible equity to tangible assets 9.45 % 9.24 % 8.91 % 8.31 % 9.59 % WAFD, INC. AND SUBSIDIARIES NON-GAAP MEASURES (UNAUDITED) Three Months Ended Average Tangible Measures December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 (Unaudited - In thousands, except for ratio data) Average shareholders equity - GAAP $ 3,015,197 $ 2,996,093 $ 2,947,056 $ 2,638,483 $ 2,447,580 Less average preferred stock - GAAP 300,000 300,000 300,000 300,000 300,000 Less average intangible assets - GAAP 447,754 451,204 453,142 360,251 311,022 Average tangible common equity $ 2,267,443 $ 2,244,889 $ 2,193,914 $ 1,978,232 $ 1,836,558 Average Assets - GAAP $ 27,504,576 $ 28,000,482 $ 29,703,337 $ 24,907,376 $ 22,381,459 Less average intangible assets - GAAP 447,754 451,204 453,142 360,251 311,022 Average tangible assets $ 27,056,822 $ 27,549,278 $ 29,250,195 $ 24,547,125 $ 22,070,437 Average Tangible Metrics Net income - GAAP 47,267 61,140 64,560 15,888 58,453 Net income available to common shareholders - GAAP 43,611 57,484 60,904 12,232 54,797 Return on tangible common equity 7.69 % 10.24 % 11.10 % 2.47 % 11.93 % Return on tangible assets 0.70 % 0.89 % 0.88 % 0.26 % 1.06 % WAFD, INC. AND SUBSIDIARIES NON-GAAP MEASURES (UNAUDITED) Three Months Ended Net Income Adjusted for Acquisition Expenses and Other Non-Operating Items December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 (Unaudited - In thousands, except for ratio data) Interest income LBC Hedge Valuation Adj $ 3,933 $ — $ — $ — $ — Non-interest income Distribution received on LBC equity method investment $ (279 ) $ (288 ) $ (299 ) $ (287 ) $ — (Gain)Loss on WaFd Bank equity method investment 48 (896 ) (748 ) 2,195 693 Total non-interest income $ (231 ) $ (1,184 ) $ (1,047 ) $ 1,908 $ 693 Non-interest expense Acquisition-related expenses $ 239 $ (1,602 ) $ 2,285 $ 25,120 $ 516 Non-operating expenses: Restructuring Charges 5,390 — — — — FDIC Special Assessment — (216 ) — 1,800 500 Legal and Compliance — (182 ) — 3,000 — Charitable Donation — — — 2,000 — 5,390 (398 ) — 6,800 500 Total non-interest expense $ 5,629 $ (2,000 ) $ 2,285 $ 31,920 $ 1,016 Net Income - GAAP $ 47,267 $ 61,140 $ 64,560 $ 15,888 $ 58,453 Preliminary ACL provision on LBC loans — — — 16,000 — Interest income adjustments 3,933 — — — — Non-interest income adjustments (231 ) (1,184 ) (1,047 ) 1,908 693 Non-interest expense adjustments 5,629 (2,000 ) 2,285 31,920 1,016 REO adjustments (429 ) 83 124 1,315 (1,826 ) Income tax adjustment (1,918 ) 751 (299 ) (12,274 ) 22 Net Income - non-GAAP $ 54,251 $ 58,790 $ 65,623 $ 54,757 $ 58,358 Dividend on preferred stock 3,656 3,656 3,656 3,656 3,656 Net Income available to common shareholders - non-GAAP $ 50,595 $ 55,134 $ 61,967 $ 51,101 $ 54,702 Basic weighted average number 81,294,227 81,208,683 81,374,811 70,129,072 64,297,499 Diluted weighted average 81,401,599 81,353,644 81,393,708 70,164,558 64,312,110 Basic EPS - non-GAAP $ 0.62 $ 0.68 $ 0.76 $ 0.73 $ 0.84 Diluted EPS - non-GAAP 0.62 0.68 0.76 0.73 0.84 WAFD, INC. AND SUBSIDIARIES NON-GAAP MEASURES (UNAUDITED) Three Months Ended Adjusted Efficiency Ratio December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 (Unaudited - In thousands, except for ratio data) Efficiency ratio - GAAP 65.0 % 57.2 % 56.6 % 77.7 % 58.0 % Net interest income - GAAP $ 155,431 $ 172,812 $ 177,186 $ 158,597 $ 152,237 Total interest income adjustments 3,933 — — — — Net interest income - non-GAAP $ 159,364 $ 172,812 $ 177,186 $ 158,597 $ 152,237 Non-interest expense - GAAP $ 111,311 $ 107,941 $ 110,079 $ 133,712 $ 96,540 Less merger related expenses 239 (1,602 ) 2,285 25,120 516 Less non-operating expenses 5,390 (398 ) — 6,800 500 Non-interest Expenses - non-GAAP $ 105,682 $ 109,941 $ 107,794 $ 101,792 $ 95,524 Non-interest income - GAAP $ 15,702 $ 15,878 $ 17,255 $ 13,392 $ 14,167 Total other income (231 ) (1,184 ) (1,047 ) 1,908 693 Non-interest income - non-GAAP $ 15,471 $ 14,694 $ 16,208 $ 15,300 $ 14,860 Net Interest Income - non-GAAP $ 159,364 $ 172,812 $ 177,186 $ 158,597 $ 152,237 Non-interest income - non-GAAP 15,471 14,694 16,208 15,300 14,860 Total Income - non-GAAP $ 174,835 $ 187,506 $ 193,394 $ 173,897 $ 167,097 Adjusted Efficiency Ratio 60.4 % 58.6 % 55.7 % 58.5 % 57.2 % WAFD, INC. AND SUBSIDIARIES NON-GAAP MEASURES (UNAUDITED) Three Months Ended Adjusted ROA and ROE December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 (Unaudited - In thousands, except for ratio data) Reported: Net Income - GAAP $ 47,267 $ 61,140 $ 64,560 $ 15,888 $ 58,453 Net income available to common shareholders - GAAP $ 43,611 $ 57,484 $ 60,904 $ 12,232 $ 54,797 Average Assets 27,504,576 28,000,482 29,703,337 24,907,376 22,381,459 Return on Assets 0.69 % 0.87 % 0.87 % 0.26 % 1.04 % Average Common Equity $ 2,715,197 $ 2,696,093 $ 2,647,056 $ 2,338,483 $ 2,147,580 Return on common equity 6.42 % 8.53 % 9.20 % 2.09 % 10.21 % Adjusted: Net Income - non-GAAP $ 54,251 $ 58,790 $ 65,623 $ 54,757 $ 58,358 Net income available to common shareholders - non-GAAP $ 50,595 $ 55,134 $ 61,967 $ 51,101 $ 54,702 Average Assets 27,504,576 28,000,482 29,703,337 24,907,376 22,381,459 Adjusted Return on Assets 0.79 % 0.84 % 0.88 % 0.88 % 1.04 % Average Common Equity 2,715,197 2,696,093 2,647,056 2,338,483 2,147,580 Adjusted Return on common equity 7.45 % 8.18 % 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. 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, 2024 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. 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 either nationally or locally in some or all of the areas in which we conduct business; (iii) financial stress on borrowers (consumers and businesses) as a result of higher interest rates or an uncertain economic environment; (iv) changes in deposit flows or loan demands; (v) our ability to identify and address cyber-security risks, including security breaches, "denial of service attacks," "hacking" and identity theft; (vi) the Company's exit from the mortgage lending business; (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) the results of examinations by regulatory authorities, including a "Needs to Improve" CRA rating, which may impose restrictions or penalties on the Company's activities; (ix) expectations regarding key growth initiatives and strategic priorities; (x) global economic trends, including developments related to Ukraine and Russia, and the evolving conflict in the Middle East, and related negative financial impacts on our borrowers; (xi) litigation risks resulting in significant expenses, losses and reputational damage; (xii) the impact of bank failures or adverse developments at other banks and related negative press about regional banks and the banking industry in general; and (xiii) other economic, competitive, governmental, environmental, regulatory, and technological factors affecting our operations, pricing, products and services.

WaFd Announces Quarterly Earnings Per Share of $0.54

FAQ

Why Bearish?

How important is it?

Why Short Term?

Related Companies

Related News