WAFD, INC. (WAFD) - 10-Q Summary
Business Context and Reporting Period
Company: WAFD, Inc. (WaFd Bank), a Washington state chartered commercial bank headquartered in Seattle.
Reporting Period: Quarterly period ended March 31, 2026 (Fiscal Q2 2026).
Business Overview: The Company provides lending, depository, and insurance services. It operates 208 branches across nine states. In January 2025, the Bank ceased originating consumer single-family home loans and home equity lines of credit. The Bank formally changed its name from Washington Federal Bank to WaFd Bank effective September 25, 2025.
Key Financial Metrics
| Metric | Three Months Ended March 31, 2026 |
Six Months Ended March 31, 2026 |
|---|---|---|
| Net Interest Income | $177.57 million | $348.68 million |
| Net Income | $65.55 million | $129.74 million |
| Diluted EPS | $0.82 | $1.60 |
| Net Interest Margin (NIM) | 2.81% | 2.76% |
| Provision for Credit Losses | $4.00 million | $7.50 million |
| Total Assets | $27.57 billion (as of Mar 31, 2026) | N/A |
| Loans Receivable (Net) | $19.97 billion (as of Mar 31, 2026) | N/A |
| Customer Accounts | $21.12 billion (as of Mar 31, 2026) | N/A |
| Borrowings | $3.06 billion (as of Mar 31, 2026) | N/A |
| Cash and Cash Equivalents | $669.80 million (as of Mar 31, 2026) | N/A |
| Shareholders' Equity | $2.98 billion (as of Mar 31, 2026) | N/A |
Material Changes vs. Prior Comparable Period
- Profitability: Net income increased 16.5% year-over-year (Q2 2026 vs. Q2 2025) to $65.55 million, driven primarily by a $16.66 million increase in net interest income.
- Net Interest Margin: NIM expanded to 2.81% in Q2 2026 from 2.55% in Q2 2025. This was due to a 50 basis point decrease in the cost of interest-bearing liabilities, which outpaced a 19 basis point decrease in the yield on interest-earning assets.
- Asset Composition: Total assets increased $869 million from the prior fiscal year-end (Sept 30, 2025), primarily due to a $919 million increase in investment securities. Conversely, net loans receivable decreased $122 million due to principal repayments outpacing originations.
- Deposit Mix: Customer accounts decreased $313 million from the prior fiscal year-end. Transaction accounts increased 3.6%, while time deposits decreased 8.3%, reflecting a strategic shift away from time deposits.
- Asset Quality: Non-performing assets (NPAs) decreased to $132.0 million (0.48% of total assets) from $143.0 million (0.54%) at the prior fiscal year-end. Non-accrual loans decreased to $123.9 million (0.61% of total loans).
- Provisioning: The provision for credit losses increased to $4.0 million for the quarter (from $2.75 million in the prior year quarter) due to increased commercial loan originations.
Guidance, Outlook, Risks, and Unusual Items
- Capital Position: The Company remains "well capitalized" under regulatory standards. The Tier 1 leverage ratio was 9.10% as of March 31, 2026. Shareholders' equity decreased slightly from the prior fiscal year-end due to dividends and share repurchases, offset by net income.
- Share Repurchases: The Company repurchased 2.74 million shares in Q2 2026 at an average price of $31.85. As of March 31, 2026, approximately 8.0 million shares remained authorized under the repurchase program.
- Dividends: The Company paid a quarterly common dividend of $0.27 per share and a preferred dividend of $12.1875 per share.
- Interest Rate Risk: Management is actively managing interest rate risk by growing shorter-term loans and transaction deposits. The Company utilizes interest rate swaps to hedge fair value risk on the investment portfolio and cash flow risk on borrowings.
- Regulatory Update: The Bank successfully appealed a "Needs to Improve" Community Reinvestment Act (CRA) rating. On January 16, 2026, the FDIC upgraded the overall CRA rating to "Satisfactory."
- Risks: Key risks include fluctuating interest rates, credit deterioration in commercial real estate and multi-family sectors, cybersecurity threats, and economic uncertainty. The Company notes that forward-looking statements are subject to these uncertainties.
Investor Verification Checklist
- Asset Quality Trends: Verify the stability of the Commercial & Industrial (C&I) and Multi-family loan segments, which saw increases in non-accrual balances compared to the prior fiscal year-end.
- Deposit Stability: Monitor the continued shift from time deposits to transaction accounts and the associated impact on funding costs and liquidity.
- Investment Portfolio: Review the unrealized losses on Available-for-Sale (AFS) securities ($16.8 million net unrealized loss) and Held-to-Maturity (HTM) securities ($33.6 million net unrealized loss) and their impact on Other Comprehensive Income (OCI).
- Provision Adequacy: Assess the sufficiency of the allowance for credit losses (1.05% of gross loans) given the increase in the provision expense and the specific reserve increases in the C&I category.
- Capital Ratios: Confirm that regulatory capital ratios remain well above the "well capitalized" thresholds despite the reduction in equity from buybacks and dividends.