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Why Is WaFd (WAFD) Up 1.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for WaFd (WAFD - Free Report) . Shares have added about 1.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is WaFd due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
WaFd’s second-quarter fiscal 2024 (ended Mar 31) adjusted earnings of 73 cents per share handily surpassed the Zacks Consensus Estimate of 31 cents. However, the bottom line declined 13.1% sequentially.
During the reported quarter, WAFD completed the acquisition of California-based Luther Burbank Corporation (LBC).
The results reflected a rise in net interest income (NII) and other income, which aided the top line. Also, higher loan and deposit balances were another positive. However, a rise in expenses and higher provisions acted as spoilsports.
Results in the reported quarter excluded merger-related costs and certain non-operating expenses. After considering those, net income available to common shareholders (GAAP basis) was $12.2 million or 17 cents per share, down from $54.8 million or 85 cents per share in the prior quarter.
Revenues Rise, Expenses Up
Adjusted net revenues in the quarter were $173.9 million, up 4.1% from the prior quarter. Moreover, the top line surpassed the Zacks Consensus Estimate of $168.22 million.
NII came in at $158.6 million, growing 4.2% sequentially. The net interest margin (NIM) was 2.73%, contracting 18 basis points (bps). Our estimates for NII and NIM were $149.5 million and 2.47%, respectively.
Total adjusted other income of $15.3 million increased 3%. Our estimate for the metric was $14.6 million.
Total adjusted other expenses were $101.8 million, up 6.6%. The rise was led by an increase in all the components. Our estimate for the metric was $102.3 million. During the reported quarter, WaFd recorded $25.1 million of merger-related expenses for the LBC deal.
The company’s adjusted efficiency ratio was 58.5%, up from 57.2% sequentially. A rise in the efficiency ratio reflects lower profitability.
As of Mar 31, 2024, net loans receivable amounted to $20.8 billion, up 18.3% from the prior quarter. Total customer deposits were $21.34 billion, jumping 33.1%. The rise in both metrics was driven by the LBC deal completion.
At the end of the fiscal second quarter, the adjusted return on average common equity was 8.74%, down from 10.19% at the end of the prior quarter. Adjusted return on average assets was 0.88%, down from 1.04% at the end of the previous quarter.
Credit Quality: A Mixed Bag
As of Mar 31, 2024, the allowance for credit losses (including reserve for unfunded commitments) was 1% of gross loans outstanding, down 4 bps from the prior quarter end. Also, the ratio of non-performing assets to total assets was 0.23%, down 1 bp.
In the reported quarter, the provision for credit losses was $16 million, compared with nil provisions in the previous quarter.
Share Repurchase Update
During the quarter, WAFD repurchased 7,837 shares at an average price of $30.38 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -5.56% due to these changes.
VGM Scores
Currently, WaFd has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, WaFd has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is WaFd (WAFD) Up 1.2% Since Last Earnings Report?
A month has gone by since the last earnings report for WaFd (WAFD - Free Report) . Shares have added about 1.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is WaFd due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
WaFd Q2 Earnings & Revenues Beat, LBC Deal Boosts Loans
WaFd’s second-quarter fiscal 2024 (ended Mar 31) adjusted earnings of 73 cents per share handily surpassed the Zacks Consensus Estimate of 31 cents. However, the bottom line declined 13.1% sequentially.
During the reported quarter, WAFD completed the acquisition of California-based Luther Burbank Corporation (LBC).
The results reflected a rise in net interest income (NII) and other income, which aided the top line. Also, higher loan and deposit balances were another positive. However, a rise in expenses and higher provisions acted as spoilsports.
Results in the reported quarter excluded merger-related costs and certain non-operating expenses. After considering those, net income available to common shareholders (GAAP basis) was $12.2 million or 17 cents per share, down from $54.8 million or 85 cents per share in the prior quarter.
Revenues Rise, Expenses Up
Adjusted net revenues in the quarter were $173.9 million, up 4.1% from the prior quarter. Moreover, the top line surpassed the Zacks Consensus Estimate of $168.22 million.
NII came in at $158.6 million, growing 4.2% sequentially. The net interest margin (NIM) was 2.73%, contracting 18 basis points (bps). Our estimates for NII and NIM were $149.5 million and 2.47%, respectively.
Total adjusted other income of $15.3 million increased 3%. Our estimate for the metric was $14.6 million.
Total adjusted other expenses were $101.8 million, up 6.6%. The rise was led by an increase in all the components. Our estimate for the metric was $102.3 million. During the reported quarter, WaFd recorded $25.1 million of merger-related expenses for the LBC deal.
The company’s adjusted efficiency ratio was 58.5%, up from 57.2% sequentially. A rise in the efficiency ratio reflects lower profitability.
As of Mar 31, 2024, net loans receivable amounted to $20.8 billion, up 18.3% from the prior quarter. Total customer deposits were $21.34 billion, jumping 33.1%. The rise in both metrics was driven by the LBC deal completion.
At the end of the fiscal second quarter, the adjusted return on average common equity was 8.74%, down from 10.19% at the end of the prior quarter. Adjusted return on average assets was 0.88%, down from 1.04% at the end of the previous quarter.
Credit Quality: A Mixed Bag
As of Mar 31, 2024, the allowance for credit losses (including reserve for unfunded commitments) was 1% of gross loans outstanding, down 4 bps from the prior quarter end. Also, the ratio of non-performing assets to total assets was 0.23%, down 1 bp.
In the reported quarter, the provision for credit losses was $16 million, compared with nil provisions in the previous quarter.
Share Repurchase Update
During the quarter, WAFD repurchased 7,837 shares at an average price of $30.38 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -5.56% due to these changes.
VGM Scores
Currently, WaFd has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, WaFd has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.