WaFd, Inc.’s WAFD second-quarter fiscal 2026 (ended March 31) adjusted earnings of 83 cents per share beat the Zacks Consensus Estimate of 74 cents. The bottom line also jumped 27.7% year over year.
Results reflected higher net interest income (NII) and non-interest income. However, elevated expenses and provisions were the undermining factors. A decline in loans and deposits was another headwind.
The quarterly results excluded certain notable items. After considering these, net income available to common shareholders (GAAP basis) was $61.9 million, up 17.7% from the prior-year quarter. Our estimate for the metric was $55.6 million.
WaFd’s Revenues Rise, Expenses Increase
Quarterly net revenues (net interest income plus total non-interest income) were $197.4 million, up from $179.8 million in the prior-year quarter. The top line outpaced the Zacks Consensus Estimate of $190.7 million.
NII for the quarter was $177.6 million, rising 10.4% year over year. The net interest margin (NIM) was 2.81%, up 26 basis points (bps) from 2.55% in the year-ago quarter. Our estimates for NII and NIM were $169.7 million and 2.69%, respectively.
Total non-interest income of $19.8 million increased 5.0% year over year. The rise was primarily driven by higher deposit fee income, loan fee income and gain on termination of hedging derivatives, partially offset by lower other income. Our estimate for the metric was $20.8 million.
Total non-interest expenses were $109.9 million, up 4.5% from the prior-year quarter. The increase was mainly due to higher compensation, product delivery, occupancy and technology expenses. Our estimate for the metric was $109.5 million.
The company’s efficiency ratio was 55.66%, down from 58.31% in the prior-year quarter. A fall in the efficiency ratio reflects improved profitability.
Return on average common equity was 9.05%, up from 7.68% in the prior-year quarter. Return on average assets was 0.96%, up from 0.82%.
WAFD’s Loans & Deposits Decrease
As of March 31, 2026, net loans receivable were $19.97 billion, down 4.6% from the year-ago quarter. We projected the metric to be $20.22 billion.
Total deposits were $21.12 billion, down from $21.43 billion in the prior-year quarter. Our estimate for the metric was $21.29 billion.
WaFd’s Credit Quality Worsens
As of March 31, 2026, allowance for credit losses (including the reserve for unfunded commitments) was 1.05% of gross loans outstanding, up from 1.01% in the prior-year quarter.
The ratio of non-performing assets to total assets was 0.48%, up from 0.26% in the previous-year quarter.
In the reported quarter, provision for credit losses was $4.0 million, up from $2.8 million in the year-ago quarter. We had projected the metric to be $5.2 million.
Update on WAFD’s Share Repurchases
In the reported quarter, WAFD repurchased 2.74 million shares at an average price of $31.85 per share.
Our View on WAFD
Higher NII, margin expansion and improving operating efficiency are expected to support WAFD’s financial performance. However, declining loans and deposit balances, rising expenses and elevated credit costs remain key near-term concerns.
WaFd, Inc. Price, Consensus and EPS Surprise
WaFd, Inc. price-consensus-eps-surprise-chart | WaFd, Inc. Quote
Currently, WAFD carries a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Earnings Date & Expectations of WAFD’s Peers
Hancock Whitney HWC is slated to announce first-quarter 2026 results on April 21.
Over the past seven days, the Zacks Consensus Estimate for Hancock Whitney’s quarterly earnings has remained unchanged at $1.48. This implies 7.2% growth from the prior-year quarter.
Bank OZK OZK is also scheduled to announce first-quarter 2026 results on April 21.
Over the past seven days, the Zacks Consensus Estimate for Bank OZK’s quarterly earnings has remained unchanged at $1.46. This implies a slight decline from the prior-year quarter.
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This article originally published on Zacks Investment Research (zacks.com).