WAFD, INC. (WAFD) - 10-Q Summary
Business Context and Reporting Period
Company: WAFD, Inc. (WaFd Bank), a Washington state-chartered commercial bank holding company headquartered in Seattle, Washington.
Reporting Period: Quarterly period ended June 30, 2026 (Fiscal Q3 2026).
Operations: The Company provides lending, depository, insurance, and other banking services to consumers, businesses, and commercial real estate developers across nine states. In January 2025, the Bank ceased originating consumer single-family home loans and home equity lines of credit, though existing loans remain a significant portfolio component.
Key Financial Metrics
| Metric | Q3 2026 (3 Months) | Q3 2025 (3 Months) | YTD 2026 (9 Months) | YTD 2025 (9 Months) |
|---|---|---|---|---|
| Net Interest Income | $181.34 million | $167.99 million | $530.02 million | $484.33 million |
| Net Income | $66.13 million | $61.95 million | $195.87 million | $165.47 million |
| Diluted EPS | $0.84 | $0.73 | $2.45 | $1.91 |
| Net Interest Margin (NIM) | 2.81% | 2.69% | 2.77% | 2.54% |
| Provision for Credit Losses | $11.00 million | $2.00 million | $18.50 million | $4.75 million |
| Total Assets | $27.60 billion | $26.81 billion | $27.60 billion | $27.23 billion |
| Shareholders' Equity | $3.02 billion | $3.03 billion | $3.02 billion | $3.03 billion |
| Cash & Equivalents | $676.47 million | $657.31 million | $676.47 million | $809.25 million |
Material Changes vs. Prior Period
- Profitability Growth: Net income increased 6.7% quarter-over-quarter and 18.4% year-over-year (YTD), driven by higher net interest income and non-interest income.
- Net Interest Income: Increased $13.35 million in Q3 and $45.69 million YTD. The NIM expanded due to a 34 basis point decrease in the cost of interest-bearing liabilities, which outpaced a 15 basis point decrease in the yield on earning assets.
- Provision Increase: The provision for credit losses rose significantly to $11.0 million in Q3 (from $2.0 million prior year) and $18.5 million YTD (from $4.75 million). This was attributed to growth in the Commercial & Industrial (C&I) and Construction loan portfolios and concerns regarding adversely classified loans.
- Asset Composition: Total assets grew $897 million since the prior fiscal year-end, primarily due to investment purchases. Loans receivable decreased slightly ($70.7 million) as repayments outpaced originations, while investment securities increased by $869.5 million.
- Deposit Mix: Total customer accounts decreased $505.6 million. Time deposits fell 10.3% while transaction accounts increased 3.6%, reflecting a strategic shift away from time deposits.
- Asset Quality: Non-performing assets (NPAs) decreased to $135.7 million (0.49% of total assets) from $143.0 million (0.54%) at the prior fiscal year-end. Non-accrual loans remained stable at approximately 0.6% of total loans.
Guidance, Outlook, and Risks
- 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 AFS portfolio and cash flow risk on borrowings. As of June 30, 2026, the Company held $104.4 million in unrealized gains on borrowings cash flow hedges.
- Capital Position: The Company remains "Well Capitalized" under regulatory standards. The Tier 1 Leverage Ratio was 9.19% for the Company and 9.21% for the Bank. Shareholders' equity decreased slightly due to dividends and share repurchases, offset by net income.
- Dividends and Buybacks: The Company paid a quarterly common dividend of $0.27 per share (173rd consecutive quarter). During the nine months ended June 30, 2026, the Company repurchased 4.7 million shares for $145.5 million. Approximately 8.0 million shares remain authorized under the repurchase program.
- Regulatory Update: The Bank successfully appealed its Community Reinvestment Act (CRA) rating, upgrading from "Needs to Improve" to "Satisfactory" in January 2026.
- Risks: Key risks include fluctuating interest rates, credit deterioration in the commercial real estate and construction sectors, cybersecurity threats, and potential impacts from global economic trends. The Company noted that the "One Big Beautiful Bill Act" (H.R. 1) enacted in July 2025 is not expected to have a material impact on financial results.
Investor Verification Checklist
- Provision Drivers: Verify the specific composition of the increased provision for credit losses, particularly regarding the C&I and Construction loan segments and the status of adversely classified loans.
- Deposit Stability: Monitor the trend of time deposit outflows versus transaction account growth to assess funding cost stability in a changing rate environment.
- Asset Quality Trends: Track the migration of loans from "Watch" or "Special Mention" to "Substandard" or "Non-accrual" status, given the recent increase in provisions.
- Investment Portfolio: Review the unrealized losses on Available-for-Sale (AFS) securities ($39.5 million net loss) and the impact of hedging activities on earnings volatility.
- Capital Ratios: Confirm that capital ratios remain well above the "Well Capitalized" thresholds despite ongoing share repurchases and dividend payments.