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WaFd Shares Dip 7.8% in 3 Months: How to Play the Stock Now?
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Key Takeaways
WAFD shares dropped 7.8% in 3 months amid weak sentiment and broader market sell-off.
WaFd growth is supported by loan expansion, rising NIM and 29% jump in non-interest income.
WAFD faces risks from rising costs, weak asset quality and high commercial loan exposure.
Over the past three months, WaFd, Inc. (WAFD - Free Report) shares have declined 7.8%. In comparison, the industry fell 9.9% and the S&P 500 Index slipped 2%. Within its peer group, Columbia Banking System, Inc. (COLB - Free Report) shares have dropped 8.7%, whereas Bank of Hawaii Corporation (BOH - Free Report) has gained 1.3% over the same time frame.
3-Month Price Performance
Image Source: Zacks Investment Research
Subdued investor interest in WaFd stems from heightened geopolitical tensions, mainly in the Middle East. This has triggered a risk-off environment, leading to a sell-off across the broader markets.
Against this backdrop, the recent decline raises the question of whether the current dip in WAFD’s shares offers a potential buying opportunity. Let us assess the company’s fundamentals before making any decision.
What’s Supporting WaFd’s Performance?
Strong Loan Growth: WaFd’s growth trajectory remains closely tied to its loan portfolio expansion. Over the past three years, net loans saw a compound annual growth rate (CAGR) of 7.6% (2022-2025). Though loan balances declined recently due to the company’s strategic exit from single-family mortgage lending, the increasing focus on commercial loan origination is expected to drive sustainable growth. Driven by this, the company’s revenues witnessed a CAGR of 3.2% over the last three fiscal years (2022-2025).
Net Interest Margin Expansion: Continued loan growth and lower interest rates are expected to support WaFd’s net interest margin (NIM). WaFd’s NIM expanded 31 basis points to 2.70% in the first quarter of fiscal 2026, marking a strong driver of revenue growth. This is a rebound from earlier pressure, when NIM contracted to 2.58% in fiscal 2025 from 2.69% in fiscal 2024 and 3.40% in fiscal 2023 due to elevated funding costs.
Looking ahead, a relatively lower interest rate environment, declining funding costs and the company’s focus on increasing non-interest-bearing deposits (targeting 20% of total deposits by fiscal 2030 from 12.6% as of Dec. 31, 2025) are expected to support NIM expansion.
Growing Non-Interest Income: WaFd is actively expanding its fee-based operations, including wealth management and insurance, to strengthen and diversify its revenue streams. Its non-interest income witnesses a three-year CAGR of 2.4% (ended 2025). The trend continued into the first quarter of fiscal 2026 and the metric increased 29% to $20.3 million, reflecting solid traction in these segments. Continued expansion of non-interest income streams is expected to support more stable revenues and drive long-term growth.
Solid Liquidity Aids Strong Capital Returns: As of Dec. 31, 2025, WaFd had total borrowings of $2.44 billion, and cash and cash equivalents of $734.9 million, reflecting a stable liquidity position.
Supported by its healthy liquidity position, WaFd has been rewarding its shareholders with consistent dividend payments. The company has raised its quarterly dividend steadily since fiscal 2011, with the most recent increase announced in 2025. Currently, the company offers a payout ratio of 38% and has a dividend yield of 3.49%.
WAFD Dividend Yield
Image Source: Zacks Investment Research
Apart from dividends, WaFd returns capital to its shareholders through share repurchases. As of Dec. 31, 2025, 6.3 million shares were available under its existing authorization, and in February, the company increased the repurchase authorization by 4.5 million shares.
What’s Hurting WaFd’s Growth
Elevated Expense Base: WaFd continues to face pressure from rising operating expenses. Over the past three fiscal years, the metric saw a CAGR of 6% (2022-2025) due to higher compensation and technology costs. Although expenses declined in the first quarter of fiscal 2026, ongoing expansion initiatives, technology upgrades and inflationary pressures are expected to keep operating expenses elevated in the near term.
Deteriorating Asset Quality: Weak asset quality will remain concerning for WaFd. Its net charge-offs rose sharply to $11.8 million in fiscal 2025 from $1.4 million in the prior year, and both provisions and charge-offs increased in the first quarter of fiscal 2026. Provisions declined in fiscal 2024 and 2025 after rising in earlier periods as the company built reserves amid a weakening macro backdrop. Given ongoing economic uncertainty, credit costs are expected to remain elevated in the near term.
High Reliance on Commercial Loans: WaFd’s significant concentration in commercial loans adds to its risk exposure. As of Dec. 31, 2025, these loans accounted for 57.6% of total net loans receivable. While such loans generally benefit from floating rates, a rapidly changing economic environment could pressure borrowers’ creditworthiness. This may pressure the company’s financial performance if economic conditions weaken.
How to Approach WaFd Stock Now
Over the past 30 days, the Zacks Consensus Estimate for the company’s fiscal 2026 and fiscal 2027 earnings has been unchanged. The projected figures imply growth of 13.6% and 4.1% for fiscal 2026 and fiscal 2027, respectively.
Earnings Estimates
Image Source: Zacks Investment Research
In terms of valuation, WaFd’s price-to-earnings (P/E) forward 12 months ratio of 9.83X is higher than the industry’s 9.27X. This indicates that the stock is expensive.
P/E Forward 12-Month Ratio
Image Source: Zacks Investment Research
WaFd is currently trading at a discount to BOH, which has a forward 12-month P/E ratio of 12.01X, while it is trading at a premium to Columbia Banking, which has a forward 12-month P/E ratio of 8.47X.
Steady loan growth, improving NIM, rising non-interest income and benefits from its strategic acquisition are likely to support WaFd's overall performance. Its strong liquidity position, along with consistent shareholder returns through dividends and share repurchases, strengthens its long-term growth prospects.
However, rising operating expenses, stemming from continued expansion efforts and technology investments, are expected to weigh on near-term profitability. Deteriorating asset quality and high exposure to commercial loans amid a volatile economic environment pose additional challenges.
Hence, investors should not rush to buy WaFD stock now. Those who already own it can hold on to the stock as it is less likely to disappoint over the long term, given its strong fundamentals.
View the Zacks #1 Rank List
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WaFd Shares Dip 7.8% in 3 Months: How to Play the Stock Now?
Key Takeaways
Over the past three months, WaFd, Inc. (WAFD - Free Report) shares have declined 7.8%. In comparison, the industry fell 9.9% and the S&P 500 Index slipped 2%. Within its peer group, Columbia Banking System, Inc. (COLB - Free Report) shares have dropped 8.7%, whereas Bank of Hawaii Corporation (BOH - Free Report) has gained 1.3% over the same time frame.
3-Month Price Performance
Image Source: Zacks Investment Research
Subdued investor interest in WaFd stems from heightened geopolitical tensions, mainly in the Middle East. This has triggered a risk-off environment, leading to a sell-off across the broader markets.
Against this backdrop, the recent decline raises the question of whether the current dip in WAFD’s shares offers a potential buying opportunity. Let us assess the company’s fundamentals before making any decision.
What’s Supporting WaFd’s Performance?
Strong Loan Growth: WaFd’s growth trajectory remains closely tied to its loan portfolio expansion. Over the past three years, net loans saw a compound annual growth rate (CAGR) of 7.6% (2022-2025). Though loan balances declined recently due to the company’s strategic exit from single-family mortgage lending, the increasing focus on commercial loan origination is expected to drive sustainable growth. Driven by this, the company’s revenues witnessed a CAGR of 3.2% over the last three fiscal years (2022-2025).
Net Interest Margin Expansion: Continued loan growth and lower interest rates are expected to support WaFd’s net interest margin (NIM). WaFd’s NIM expanded 31 basis points to 2.70% in the first quarter of fiscal 2026, marking a strong driver of revenue growth. This is a rebound from earlier pressure, when NIM contracted to 2.58% in fiscal 2025 from 2.69% in fiscal 2024 and 3.40% in fiscal 2023 due to elevated funding costs.
Looking ahead, a relatively lower interest rate environment, declining funding costs and the company’s focus on increasing non-interest-bearing deposits (targeting 20% of total deposits by fiscal 2030 from 12.6% as of Dec. 31, 2025) are expected to support NIM expansion.
Growing Non-Interest Income: WaFd is actively expanding its fee-based operations, including wealth management and insurance, to strengthen and diversify its revenue streams. Its non-interest income witnesses a three-year CAGR of 2.4% (ended 2025). The trend continued into the first quarter of fiscal 2026 and the metric increased 29% to $20.3 million, reflecting solid traction in these segments. Continued expansion of non-interest income streams is expected to support more stable revenues and drive long-term growth.
Solid Liquidity Aids Strong Capital Returns: As of Dec. 31, 2025, WaFd had total borrowings of $2.44 billion, and cash and cash equivalents of $734.9 million, reflecting a stable liquidity position.
Supported by its healthy liquidity position, WaFd has been rewarding its shareholders with consistent dividend payments. The company has raised its quarterly dividend steadily since fiscal 2011, with the most recent increase announced in 2025. Currently, the company offers a payout ratio of 38% and has a dividend yield of 3.49%.
WAFD Dividend Yield
Image Source: Zacks Investment Research
Apart from dividends, WaFd returns capital to its shareholders through share repurchases. As of Dec. 31, 2025, 6.3 million shares were available under its existing authorization, and in February, the company increased the repurchase authorization by 4.5 million shares.
What’s Hurting WaFd’s Growth
Elevated Expense Base: WaFd continues to face pressure from rising operating expenses. Over the past three fiscal years, the metric saw a CAGR of 6% (2022-2025) due to higher compensation and technology costs. Although expenses declined in the first quarter of fiscal 2026, ongoing expansion initiatives, technology upgrades and inflationary pressures are expected to keep operating expenses elevated in the near term.
Deteriorating Asset Quality: Weak asset quality will remain concerning for WaFd. Its net charge-offs rose sharply to $11.8 million in fiscal 2025 from $1.4 million in the prior year, and both provisions and charge-offs increased in the first quarter of fiscal 2026. Provisions declined in fiscal 2024 and 2025 after rising in earlier periods as the company built reserves amid a weakening macro backdrop. Given ongoing economic uncertainty, credit costs are expected to remain elevated in the near term.
High Reliance on Commercial Loans: WaFd’s significant concentration in commercial loans adds to its risk exposure. As of Dec. 31, 2025, these loans accounted for 57.6% of total net loans receivable. While such loans generally benefit from floating rates, a rapidly changing economic environment could pressure borrowers’ creditworthiness. This may pressure the company’s financial performance if economic conditions weaken.
How to Approach WaFd Stock Now
Over the past 30 days, the Zacks Consensus Estimate for the company’s fiscal 2026 and fiscal 2027 earnings has been unchanged. The projected figures imply growth of 13.6% and 4.1% for fiscal 2026 and fiscal 2027, respectively.
Earnings Estimates
Image Source: Zacks Investment Research
In terms of valuation, WaFd’s price-to-earnings (P/E) forward 12 months ratio of 9.83X is higher than the industry’s 9.27X. This indicates that the stock is expensive.
P/E Forward 12-Month Ratio
Image Source: Zacks Investment Research
WaFd is currently trading at a discount to BOH, which has a forward 12-month P/E ratio of 12.01X, while it is trading at a premium to Columbia Banking, which has a forward 12-month P/E ratio of 8.47X.
Steady loan growth, improving NIM, rising non-interest income and benefits from its strategic acquisition are likely to support WaFd's overall performance. Its strong liquidity position, along with consistent shareholder returns through dividends and share repurchases, strengthens its long-term growth prospects.
However, rising operating expenses, stemming from continued expansion efforts and technology investments, are expected to weigh on near-term profitability. Deteriorating asset quality and high exposure to commercial loans amid a volatile economic environment pose additional challenges.
Hence, investors should not rush to buy WaFD stock now. Those who already own it can hold on to the stock as it is less likely to disappoint over the long term, given its strong fundamentals.
Currently, WaFd carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.