WaFd Inc.’s WAFD third-quarter fiscal 2026 (ended June 30) adjusted earnings of 81 cents per share lagged the Zacks Consensus Estimate by a penny. However, the bottom line jumped 11% year over year.
Results were hurt by a substantial rise in provisions and higher expenses. Further, lower loan and deposit balances acted as a spoilsport. These were partially offset by higher net interest income (NII) and non-interest income.
The quarterly results excluded certain notable items. After considering these, net income available to common shareholders was $62.5 million, up 7.2% from the prior-year quarter. Our estimate for the metric was $60.2 million.
WaFd’s Revenues Rise, Expenses Increase
Quarterly net revenues (net interest income plus total non-interest income) were $205.5 million, up 10.3% from the prior-year quarter. The top line outpaced the Zacks Consensus Estimate of $198.9 million.
NII for the quarter was $181.3 million, rising 7.9% year over year. The net interest margin (NIM) was 2.81%, up 12 basis points (bps) from 2.69% in the year-ago quarter. Our estimates for NII and NIM were $176.1 million and 2.80%, respectively.
Total non-interest income of $24.2 million increased 32.3% year over year. The rise was primarily driven by higher other income, deposit fee income and loan fee income. Excluding certain one-time gains, adjusted non-interest income rose 13% to $20.7 million. Our estimate for the metric was $20.1 million and did not include any one-time gain numbers.
Total non-interest expenses were $110.3 million, up 5.8%. The increase was mainly due to higher compensation, technology, product delivery, occupancy and FDIC insurance expenses. Our estimate for the metric was $111.6 million.
The company’s efficiency ratio was 53.69%, down from 56.01% in the prior-year quarter. A fall in the efficiency ratio reflects improved profitability.
Return on average common equity was 9.23% at the end of the third quarter of fiscal 2026, up from 8.54% in the prior-year quarter. Return on average assets was 0.96%, up from 0.92%.
WAFD’s Loans & Deposits Decrease
As of June 30, 2026, net loans receivable were $20.02 billion, down 1.3% from the year-ago quarter. We projected the metric to be $20.08 billion.
Total deposits were $20.93 billion, down 2.1% from $21.39 billion in the prior-year quarter. Our estimate for the metric was $21.25 billion.
WaFd’s Credit Quality Deteriorates
As of June 30, 2026, allowance for credit losses (including the reserve for unfunded commitments) was 1.08% of gross loans outstanding, up from 1.03% in the prior-year quarter.
The ratio of non-performing assets to total assets was 0.49%, up from 0.36% in the previous-year quarter.
In the reported quarter, provision for credit losses was $11.0 million, up from $2.0 million in the year-ago quarter. We had projected the metric to be $3.1 million.
Update on WAFD’s Share Repurchases
In the reported quarter, WAFD repurchased 8,806 shares at a weighted average price of $36.20 per share. The company’s share buyback plan had a remaining authorization of 8.0 million shares as of June 30, 2026.
Our Viewpoint on WAFD
Higher NII, margin expansion and rising non-interest income are expected to support WAFD’s financial performance as interest rates remain unchanged. However, declining loans and deposit balances, elevated expenses and weak asset quality are 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 second-quarter 2026 results on July 21.
Over the past seven days, the Zacks Consensus Estimate for Hancock Whitney’s quarterly earnings has remained unchanged at $1.55. This implies 13.1% growth from the prior-year quarter.
Bank OZK OZK is also scheduled to announce second-quarter 2026 results on July 21.
Over the past seven days, the Zacks Consensus Estimate for Bank OZK’s quarterly earnings has remained unchanged at $1.46. This implies 7.6% decline from the prior-year quarter.
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WaFd, Inc. (WAFD): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).