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Washington Federal (WAFD) Stock Up 2.2% on Q4 Earnings Beat

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Shares of Washington Federal (WAFD - Free Report) gained 2.2% since the announcement of fourth quarter and fiscal 2021 (ended Sep 30) results late last week. Quarterly earnings of 72 cents per share surpassed the Zacks Consensus Estimate of 63 cents. The figure reflects a year-over-year jump of 60%.

Results primarily benefited from an increase in revenues, provision benefits, and robust loan balance. The company’s balance-sheet position remained strong during the quarter. However, an increase in expenses was the undermining factor.
Net income was $52.4 million, surging 52.5% from the prior year.

In fiscal 2021, earnings were $2.39 per share, up 5.8% year over year. Net income came in at $183.6 million, rising 5.9%.

Revenues & Expenses Up

Quarterly net revenues were $151 million, up 19.9% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $144 million.

In fiscal 2021, net revenues grew 1.7% to $565.7 million.

Net interest income was $132 million, up 14.9% from the year-earlier period. Net interest margin was 2.82%, rising 21 basis points.

Total other income of $19 million soared 71.6%. This jump was mainly driven by drastic improvement in other income.

Other expenses amounted to $85.7 million, up 9.6% year over year. Higher compensation and benefits, and product delivery charges largely led to this rise.

The company’s efficiency ratio was 56.75%, down from 62.09% recorded a year ago. A fall in efficiency ratio indicates improved profitability.

At the end of the fiscal fourth quarter, return on average common equity was 10.36%, up from the 6.83% witnessed at the end of the year-earlier quarter. Return on average assets was 1.07%, up from 0.74%.

Loans and Deposit Rise

As of Sep 30, 2021, net loans receivables amounted to $13.8 billion, up from $12.8 billion recorded on Sep 30, 2020. Also, total customer deposits were $15.5 billion, up from $13.8 billion as of Sep 30, 2020.

Credit Quality Improves

As of Sep 30, 2021, the allowance for credit losses (including reserve for unfunded commitments) was 1.22% of gross loans outstanding, down from 1.33% recorded on Sep 30, 2020. The ratio of non-performing assets to total assets was 0.22% compared with 0.20% on Sep 30, 2020.

During the quarter, the company recorded a provision release of $0.5 million against the provision for credit losses of $6.5 million in the prior-year quarter.

Share Repurchase Update

During the quarter, Washington Federal repurchased 4.3 million shares at an average price of $32.44 per share.

Our Take

Solid loans and deposit balances, along with a strong balance-sheet position, will likely continue to support Washington Federal’s profitability. However, elevated operating expenses, along with low rates, remain major headwinds.

Washington Federal, Inc. Price, Consensus and EPS Surprise

Washington Federal, Inc. Price, Consensus and EPS Surprise

Washington Federal, Inc. price-consensus-eps-surprise-chart | Washington Federal, Inc. Quote

Currently, Washington Federal carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Release Schedule of Other Banks

Hancock Whitney Corporation (HWC - Free Report) is scheduled to release quarterly numbers on Oct 19. Both Associated Banc-Corp (ASB - Free Report) and Bank OZK (OZK - Free Report) will announce results on Oct 21.

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