WaFd, Inc.’s (WAFD – Free Report) fourth-quarter fiscal 2024 (ended Sept. 30) earnings of 71 cents per share surpassed the Zacks Consensus Estimate of 68 cents. Also, the bottom line declined 1.4% year over year.
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The results reflected a rise in net interest income (NII) and non-interest income, driven by the acquisition of Luther Burbank Corporation (“LBC”) In February. This supported WAFD’s top line. Higher loan balances and nil provisions were other positives. However, a rise in expenses acted as a spoilsport.
Net income available to common shareholders was $57.5 million, up 23.5% from the prior-year quarter.
For fiscal 2024, adjusted earnings of $3.02 per share outpaced the Zacks Consensus Estimate of $3.00 but decreased 20.5% year over year. After considering non-recurring items, net income available to common shareholders (GAAP basis) was $185.4 million or $2.50 per share, down from $242.8 million or $3.72 per share in the prior year.
WaFd’s Revenues Rise, Expenses Up
Quarterly net revenues were $188.7 million, rising 6% from the prior-year quarter. However, the top line lagged the Zacks Consensus Estimate of $190.4 million.
For fiscal 2024, net revenues were $721.5 million, declining 2.8% from the prior year. Also, the top line missed the Zacks Consensus Estimate of $722.54 million.
NII came in at $172.8 million, growing 5.6% year over year. The net interest margin (NIM) was 2.62%, contracting 51 basis points (bps). Our estimates for NII and NIM were $170.5 million and 2.59%, respectively.
The total non-interest income of $15.9 million rose 10.8%. Our estimate for the metric was $18.3 million.
Total non-interest expenses were $107.9 million, climbing 17.1%. The rise was due to an increase in all the components except the FDIC insurance premiums. Our estimate for the metric was $112.4 million.
The company’s efficiency ratio was 57.21%, up from 51.78% in the prior-year quarter. A rise in the efficiency ratio reflects a deterioration in profitability.
At the end of the fiscal fourth quarter, the return on average common equity was 8.53%, down from 8.73% at the end of the prior-year quarter. Return on average assets was 0.87%, declining from 0.90%.
WAFD’s Loans & Deposit Balance Rise
As of Sept. 30, 2024, net loans receivable was $20.9 billion, growing 19.7% year over year. During the year, the company sold $2.8 billion of acquired multifamily loans and $0.4 billion of acquired single-family loans.
Total customer deposits were $21.4 billion, recording a 33% surge.
WaFd’s Credit Quality Improves
As of Sept. 30, 2024, allowance for credit losses (including reserve for unfunded commitments) was 1.01% of gross loans outstanding, down from 1.03% in the prior-year quarter.
In the reported quarter, the provision for credit losses was nil compared with $26.5 million in the year-ago quarter. We had projected the metric to be $2.5 million.
The ratio of non-performing assets to total assets was 0.3%, stable year over year.
Update on WAFD’s Share Repurchases
During the year, WAFD repurchased 1.07 million shares at an average price of $25.29 per share.
Our Viewpoint on WAFD
Decent loan growth, relatively higher interest rates and a robust balance sheet are likely to continue aiding WAFD’s financials. The LBC acquisition expanded the company’s presence in the lucrative California market and will be accretive to earnings in fiscal 2025. However, elevated expenses and an expected economic slowdown are near-term headwinds.
Currently, WAFD carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates & Expectations of WaFd’s Peers
BankUnited (BKU – Free Report) is scheduled to announce third-quarter 2024 numbers on Oct. 22.
Over the past 30 days, the Zacks Consensus Estimate for BKU’s quarterly earnings has been revised 1.4% down to 73 cents. This shows a 15.9% rise from the prior-year reported number.
Hilltop Holdings (HTH – Free Report) is set to announce third-quarter 2024 numbers on Oct. 24.
Over the past month, the Zacks Consensus Estimate for HTH’s quarterly earnings has moved 2.6% north to 39 cents. This implies a 31.6% decrease from the prior-year quarter.
