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Washington Federal (WAFD) Q1 Earnings Beat, Revenues Rise
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Washington Federal’s (WAFD - Free Report) first-quarter fiscal 2023 (ended Dec 31, 2022) earnings of $1.16 per share surpassed the Zacks Consensus Estimate of $1.11 per share. The bottom line reflects a year-over-year jump of 63.4%.
Results were primarily supported by robust loan balances and an increase in net interest income (NII). However, a substantial increase in provision for credit losses, rising expenses and decrease in other income were headwinds.
Net income available to common shareholders was $75.9 million, up 62.7% from the prior-year quarter.
Revenues Improve, Expenses Rise
Net revenues in the quarter were $196.8 million, up 28.8% from the year-ago quarter. The top line also outpaced the Zacks Consensus Estimate of $194.5 million.
NII was $182.8 million, rising 36.3%. The net interest margin was 3.69%, expanding 82 basis points (bps).
Total other income of $14 million plunged 24.9%. The decrease was mainly due to substantial decline in other income.
Total other expenses amounted to $92.3 million, up 3%. Higher compensation and benefits, FDIC insurance premiums & information technology largely led to the rise.
The company’s efficiency ratio was 46.78%, down from 58.64% a year ago. A fall in the efficiency ratio indicates improved profitability.
As of Dec 31, 2022, net loans receivable amounted to $16.99 billion, up 5.5% from the end of the prior quarter. Total customer deposits were $15.96 billion, down marginally.
At the end of the fiscal first quarter, the return on average common equity was 15.15%, up from 10.12% at the end of the prior-year quarter. Return on average assets was 1.50%, up from 1.02%.
Credit Quality: A Mixed Bag
As of Dec 31, 2022, the allowance for credit losses (including reserve for unfunded commitments) was 1.03% of gross loans outstanding, down 15 bps from the prior-year quarter. Also, the ratio of non-performing assets to total assets was 0.18%, down 9 bps.
In the reported quarter, the provision for credit losses was $2.5 million, substantially higher than $0.5 million in the year-ago quarter.
Share Repurchase Update
During the quarter, Washington Federal repurchased 44,845 shares at an average price of $38.53 per share.
Our Viewpoint
Growth in loans, higher interest rates and a robust balance sheet will likely continue aiding Washington Federal’s financials.
In November 2022, WAFD announced a deal to acquire Luther Burbank Corporation for $654 million. This acquisition helped the company to enter the lucrative and “fast-growing” California market. At present, LBC operates in California, Washington and Oregon through 11 full-service branches and 7 loan-production offices.
However, elevated operating expenses and a worsening economic backdrop are major near-term headwinds.
Washington Federal, Inc. Price, Consensus and EPS Surprise
Hancock Whitney Corporation (HWC - Free Report) is slated to announce fourth-quarter and full-year 2022 results on Jan 17.
Over the past 30 days, the Zacks Consensus Estimate for HWC’s quarterly earnings has moved marginally south to $1.63 per share. The estimate indicates an 8% rise from the prior-year quarter.
Associated Banc-Corp (ASB - Free Report) is scheduled to release fourth-quarter and full-year 2022 numbers on Jan 26.
Over the past 30 days, the Zacks Consensus Estimate for Associated Banc-Corp’s quarterly earnings has moved up 1.6% to 65 cents per share. The figure implies a 32.7% increase from the prior-year quarter.
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Washington Federal (WAFD) Q1 Earnings Beat, Revenues Rise
Washington Federal’s (WAFD - Free Report) first-quarter fiscal 2023 (ended Dec 31, 2022) earnings of $1.16 per share surpassed the Zacks Consensus Estimate of $1.11 per share. The bottom line reflects a year-over-year jump of 63.4%.
Results were primarily supported by robust loan balances and an increase in net interest income (NII). However, a substantial increase in provision for credit losses, rising expenses and decrease in other income were headwinds.
Net income available to common shareholders was $75.9 million, up 62.7% from the prior-year quarter.
Revenues Improve, Expenses Rise
Net revenues in the quarter were $196.8 million, up 28.8% from the year-ago quarter. The top line also outpaced the Zacks Consensus Estimate of $194.5 million.
NII was $182.8 million, rising 36.3%. The net interest margin was 3.69%, expanding 82 basis points (bps).
Total other income of $14 million plunged 24.9%. The decrease was mainly due to substantial decline in other income.
Total other expenses amounted to $92.3 million, up 3%. Higher compensation and benefits, FDIC insurance premiums & information technology largely led to the rise.
The company’s efficiency ratio was 46.78%, down from 58.64% a year ago. A fall in the efficiency ratio indicates improved profitability.
As of Dec 31, 2022, net loans receivable amounted to $16.99 billion, up 5.5% from the end of the prior quarter. Total customer deposits were $15.96 billion, down marginally.
At the end of the fiscal first quarter, the return on average common equity was 15.15%, up from 10.12% at the end of the prior-year quarter. Return on average assets was 1.50%, up from 1.02%.
Credit Quality: A Mixed Bag
As of Dec 31, 2022, the allowance for credit losses (including reserve for unfunded commitments) was 1.03% of gross loans outstanding, down 15 bps from the prior-year quarter. Also, the ratio of non-performing assets to total assets was 0.18%, down 9 bps.
In the reported quarter, the provision for credit losses was $2.5 million, substantially higher than $0.5 million in the year-ago quarter.
Share Repurchase Update
During the quarter, Washington Federal repurchased 44,845 shares at an average price of $38.53 per share.
Our Viewpoint
Growth in loans, higher interest rates and a robust balance sheet will likely continue aiding Washington Federal’s financials.
In November 2022, WAFD announced a deal to acquire Luther Burbank Corporation for $654 million. This acquisition helped the company to enter the lucrative and “fast-growing” California market. At present, LBC operates in California, Washington and Oregon through 11 full-service branches and 7 loan-production offices.
However, elevated operating expenses and a worsening economic backdrop are major near-term headwinds.
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.
Expected Earnings Release Dates of Other Banks
Hancock Whitney Corporation (HWC - Free Report) is slated to announce fourth-quarter and full-year 2022 results on Jan 17.
Over the past 30 days, the Zacks Consensus Estimate for HWC’s quarterly earnings has moved marginally south to $1.63 per share. The estimate indicates an 8% rise from the prior-year quarter.
Associated Banc-Corp (ASB - Free Report) is scheduled to release fourth-quarter and full-year 2022 numbers on Jan 26.
Over the past 30 days, the Zacks Consensus Estimate for Associated Banc-Corp’s quarterly earnings has moved up 1.6% to 65 cents per share. The figure implies a 32.7% increase from the prior-year quarter.