WaFd Bank-WAFD Misses on Q1 Earnings, Exits Single-Family Mortgage Lending

Core Viewpoint - WaFd, Inc. (WAFD) experienced a 3.4% decline in after-hours trading due to lower-than-expected first-quarter fiscal 2025 results, with adjusted earnings of 62 cents per share falling short of the Zacks Consensus Estimate of 69 cents and a year-over-year decline of 26.2% [1][4] Financial Performance - The quarterly net revenues were $171.1 million, reflecting a 2.8% increase from the prior-year quarter but below the Zacks Consensus Estimate of$ 193 million [5] - Net interest income (NII) was reported at $155.4 million, a 2.1% year-over-year growth, while the net interest margin (NIM) contracted by 52 basis points to 2.39% due to valuation adjustments related to the Luther Burbank acquisition [6] - Total non-interest income rose by 10.8% to$ 15.7 million, although it was below the estimate of $17.8 million [6] - Total non-interest expenses increased by 15.3% to$ 111.3 million, influenced by a rise in all components except FDIC insurance premiums and product delivery charges, including a restructuring charge of $5.4 million [7] - The efficiency ratio worsened to 65.04%, up from 58.02% in the prior-year quarter, indicating a decline in profitability [7] Strategic Initiatives - The company recorded a restructuring charge of$ 5.4 million as it shifts focus away from the single-family mortgage lending market, projecting annual cost savings of nearly $17 million by the end of June 2025 [3] - The workforce is expected to reduce by 8% as part of the restructuring, while the company will retain all existing home loans and HELOCs on its books [3] Credit Quality and Loan Performance - As of December 31, 2024, net loans receivable stood at$ 20.1 billion, showing marginal growth from the prior quarter, while total customer deposits remained stable at $21.4 billion [9] - The allowance for credit losses was 1% of gross loans outstanding, a slight decrease from 1.03% in the prior-year quarter, with no provisions for credit losses recorded in both the reported and last year's quarter [10] Shareholder Actions - During the reported quarter, WAFD repurchased 0.09 million shares at an average price of$ 38.09 per share [11] Market Outlook - The acquisition of Luther Burbank Corporation is expected to enhance WAFD's presence in the California market and contribute positively to earnings, despite elevated expenses posing a near-term challenge [12]