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Washington Federal (WAFD) Q2 Earnings Lag Estimates, Costs Up

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Washington Federal’s (WAFD - Free Report) second-quarter fiscal 2022 (ended Mar 31) earnings of 70 cents per share missed the Zacks Consensus Estimate by a penny. The figure, however, reflects a year-over-year jump of 25%.

Results primarily benefited from higher revenues, provision benefits and a robust loan balance. However, an increase in expenses was the undermining factor.

Net income available to common shareholders was $45.7 million, rising 8.4% from the prior-year period.

Revenues & Expenses Rise

Net revenues were $150.7 million, up 8.8% from the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $148.8 million.

Net interest income was $135.1 million, up 8.9% from the year-earlier period. Net interest margin was 2.90%, rising 15 basis points (bps).

Total other income of $15.7 million grew 8.2%. This increase was mainly driven by a rise in loan fee income and deposit fee income.

Other expenses amounted to $88.4 million, up 8.2% year over year. Higher compensation and benefits, occupancy, product delivery and other expenses largely led to this rise.

The company’s efficiency ratio was 58.65%, down from 59.02% recorded a year ago. A fall in efficiency ratio indicates improved profitability.

At the end of the fiscal second quarter, the return on average common equity was 9.80%, up from 8.17% at the end of the year-earlier quarter. Return on average assets was 0.98%, up from 0.93%.

Loans and Deposit Rise

As of Mar 31, 2022, net loans receivables amounted to $15.1 billion, up from 13.8 billion as of Sep 30, 2021. Also, total customer deposits were $16.4 billion, up from $15.5 billion as of Sep 30, 2021.

Credit Quality Improves

As of Mar 31, 2022, the allowance for credit losses (including reserve for unfunded commitments) was 1.13% of gross loans outstanding, down 17 bps year over year. The ratio of non-performing assets to total assets was 0.23%, down 2 bps.

During the quarter, provision for credit losses was a benefit of $0.5 million against no provision in the year-ago quarter.

Share Repurchase Update

During the quarter, Washington Federal repurchased 4,684 shares at an average price of $34.65 per share.

Our Viewpoint

Solid loans and deposit balances, along with impressive credit quality, will likely continue to support Washington Federal’s profitability. However, elevated operating expenses remain a major headwind.
 

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 & Expectations of Other Banks

Hancock Whitney Corporation (HWC - Free Report) is scheduled to release first-quarter 2022 results on Apr 19.

Over the past 30 days, the Zacks Consensus Estimate for Hancock’s quarterly earnings has moved 1.5% lower to $1.32. This indicates a 9.1% increase from the prior-year quarter.

Associated Banc-Corp (ASB - Free Report) is scheduled to release first-quarter 2022 numbers on Apr 21.

Over the past 30 days, the Zacks Consensus Estimate for Associated Banc-Corp’s quarterly earnings has remained unchanged at 37 cents. This implies a 36.2% decrease from the prior-year quarter.


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