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WaFd, Inc.’s (WAFD - Free Report) first-quarter fiscal 2024 (ended Dec 31) earnings of 85 cents per share surpassed the Zacks Consensus Estimate of 72 cents. However, the bottom line declined 26.7% year over year.
Results primarily benefited from the rise in other income and steady loan balance. In the reported quarter, the company did not record any provision for credit losses. However, a fall in net interest income (NII) and an increase in other expenses amid an uncertain macroeconomic outlook acted as a spoilsport.
Net income available to common shareholders was $54.8 million, down 27.8% from the prior-year quarter.
Revenues Down & Expenses Rise
Net revenues in the quarter were $166.4 million, down 15.5% from the year-ago quarter. Moreover, the top line lagged the Zacks Consensus Estimate of $181.8 million.
NII came in at $152.2 million, falling 16.7% from the year-ago quarter. The net interest margin (NIM) was 2.91%, contracting 78 basis points (bps). Our estimates for NII and NIM were $166.5 million and 3.29%, respectively.
Total other income of $14.2 million rose 1%. The increase was mainly due to a rise in deposit fee income and other income. Our estimate for total other income was $15.3 million.
Total other expenses amounted to $96.5 million, up 4.6% from the year-ago quarter. Higher compensation and benefits, FDIC insurance premiums, product delivery and information technology led to the rise. Our estimate for total other expenses was $94.5 million.
The company’s efficiency ratio was 58.02%, up from 46.78% a year ago. A rise in the efficiency ratio reflects lower profitability.
As of Dec 31, 2023, net loans receivable amounted to $17.58 billion, up marginally from the prior quarter's end. Total customer deposits were $16.04 billion, slightly lower than the previous quarter.
At the end of the fiscal first quarter, the return on average common equity was 10.21%, down from 15.15% at the end of the prior-year quarter. Return on average assets was 1.04%, down from 1.50% at the end of the prior-year quarter.
Credit Quality Improves
In the reported quarter, the company did not record any provision for credit losses compared with the $26.5 million provision recorded at the previous quarter's end. The ratio of non-performing assets to total assets was 0.24%, down 2 bps.
However, as of Dec 31, the allowance for credit losses (including reserve for unfunded commitments) was 1.04% of gross loans outstanding, up 1 bps from the prior quarter end.
Share Repurchase Update
During the quarter, WAFD repurchased 697,893 shares at a weighted average price of $24.45 per share.
Our Viewpoint
Decent loan growth, higher interest rates and a robust balance sheet will likely continue aiding WAFD’s financials. The company’s plan to foray into California by acquiring Luther Burbank will be accretive to earnings going forward.
However, elevated expenses amid an uncertain macroeconomic backdrop are major near-term headwinds.
Bank of Hawaii (BOH - Free Report) is slated to announce its fourth-quarter 2023 results on Jan 22.
Over the past seven days, the Zacks Consensus Estimate for BOH’s quarterly earnings has moved 2.3% up to 89 cents per share. The estimate indicates a 40.7% decrease from the prior-year quarter.
East West Bancorp (EWBC - Free Report) is scheduled to release its fourth-quarter 2023 numbers on Jan 23.
Over the past 30 days, the Zacks Consensus Estimate for EWBC’s quarterly earnings has moved 1.6% down to $1.89 per share. The figure implies a 20.3% decrease from the prior-year quarter.
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WAFD's Q1 Earnings Surpass Estimates, Expenses Rise Y/Y
WaFd, Inc.’s (WAFD - Free Report) first-quarter fiscal 2024 (ended Dec 31) earnings of 85 cents per share surpassed the Zacks Consensus Estimate of 72 cents. However, the bottom line declined 26.7% year over year.
Results primarily benefited from the rise in other income and steady loan balance. In the reported quarter, the company did not record any provision for credit losses. However, a fall in net interest income (NII) and an increase in other expenses amid an uncertain macroeconomic outlook acted as a spoilsport.
Net income available to common shareholders was $54.8 million, down 27.8% from the prior-year quarter.
Revenues Down & Expenses Rise
Net revenues in the quarter were $166.4 million, down 15.5% from the year-ago quarter. Moreover, the top line lagged the Zacks Consensus Estimate of $181.8 million.
NII came in at $152.2 million, falling 16.7% from the year-ago quarter. The net interest margin (NIM) was 2.91%, contracting 78 basis points (bps). Our estimates for NII and NIM were $166.5 million and 3.29%, respectively.
Total other income of $14.2 million rose 1%. The increase was mainly due to a rise in deposit fee income and other income. Our estimate for total other income was $15.3 million.
Total other expenses amounted to $96.5 million, up 4.6% from the year-ago quarter. Higher compensation and benefits, FDIC insurance premiums, product delivery and information technology led to the rise. Our estimate for total other expenses was $94.5 million.
The company’s efficiency ratio was 58.02%, up from 46.78% a year ago. A rise in the efficiency ratio reflects lower profitability.
As of Dec 31, 2023, net loans receivable amounted to $17.58 billion, up marginally from the prior quarter's end. Total customer deposits were $16.04 billion, slightly lower than the previous quarter.
At the end of the fiscal first quarter, the return on average common equity was 10.21%, down from 15.15% at the end of the prior-year quarter. Return on average assets was 1.04%, down from 1.50% at the end of the prior-year quarter.
Credit Quality Improves
In the reported quarter, the company did not record any provision for credit losses compared with the $26.5 million provision recorded at the previous quarter's end. The ratio of non-performing assets to total assets was 0.24%, down 2 bps.
However, as of Dec 31, the allowance for credit losses (including reserve for unfunded commitments) was 1.04% of gross loans outstanding, up 1 bps from the prior quarter end.
Share Repurchase Update
During the quarter, WAFD repurchased 697,893 shares at a weighted average price of $24.45 per share.
Our Viewpoint
Decent loan growth, higher interest rates and a robust balance sheet will likely continue aiding WAFD’s financials. The company’s plan to foray into California by acquiring Luther Burbank will be accretive to earnings going forward.
However, elevated expenses amid an uncertain macroeconomic backdrop are major near-term headwinds.
WaFd, Inc. Price, Consensus and EPS Surprise
WaFd, Inc. price-consensus-eps-surprise-chart | WaFd, 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 Dates of Other Banks
Bank of Hawaii (BOH - Free Report) is slated to announce its fourth-quarter 2023 results on Jan 22.
Over the past seven days, the Zacks Consensus Estimate for BOH’s quarterly earnings has moved 2.3% up to 89 cents per share. The estimate indicates a 40.7% decrease from the prior-year quarter.
East West Bancorp (EWBC - Free Report) is scheduled to release its fourth-quarter 2023 numbers on Jan 23.
Over the past 30 days, the Zacks Consensus Estimate for EWBC’s quarterly earnings has moved 1.6% down to $1.89 per share. The figure implies a 20.3% decrease from the prior-year quarter.