Executive Summary

EPS was $0.54, down 24% QoQ and 36% YoY; adjusted EPS was $0.62 after restructuring/non-operating items. Net interest margin compressed to 2.39% (vs. 2.62% in Q4) due to faster asset repricing than liabilities as the Fed cut rates .
Management announced an exit from single‑family mortgage originations and HELOCs, targeting approximately $17 million annual expense savings by June 2025 and an 8% workforce reduction; Pike Street Labs technology will be brought in‑house to drive efficiency .
Credit quality remained strong: non‑performing assets were 0.29% of total assets, delinquencies 0.30%, and net charge‑offs were minimal ($0.231 million) .
Dividend raised to $0.27 per share (paid March 7, 2025), up from $0.26 in December, extending the streak to the 168th consecutive quarterly dividend; deposits held steady at $21.4B, and borrowings declined to $2.9B .

What Went Well and What Went Wrong

What Went Well

Credit quality resilient: NPA at 0.29% of assets, delinquencies at 0.30%, and no provision booked; net charge‑offs were minimal. “Credit quality remains strong with minimal net charge‑offs” .
Capital strengthened: tangible equity to tangible assets increased from 8.31% to 9.45% since the LBC acquisition; TCE per share reached $27.93 .
Operational streamlining: exit from mortgage lending and in‑house tech via Pike Street Labs expected to enhance efficiency and reduce FDIC costs as balance sheet shrinks; ~$17M annual savings by June 2025 .

Quotes:

“Our results were impacted by greater than expected margin compression… Excluding a valuation adjustment… margin would have been 2.45%” .
“We are exiting the single‑family mortgage lending market… anticipate annual expense savings of approximately $17 million” .
“We will bring back in‑house… digital account opening technology and teams from Archway Software… aid us in becoming more efficient” .

What Went Wrong

Margin compression: NIM fell to 2.39% from 2.62%, driven by 36 bps decline in asset yields vs. only 14 bps decline in liability costs following Fed rate cuts .
Higher operating costs: non‑interest expense rose to $111.3M (+3.1% QoQ) due to $5.4M restructuring charges; efficiency ratio deteriorated to 65.0% (vs. 57.2%) .
Earnings decline: net income fell to $47.3M (-23% QoQ; -19% YoY); diluted EPS to $0.54 (-24% QoQ; -36% YoY) before adjustments .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Net Income ($MM)	$64.560	$61.140	$47.267
Net Income to Common ($MM)	$60.904	$57.484	$43.611
Diluted EPS ($)	$0.75	$0.71	$0.54
Diluted EPS (Adjusted, $)	$0.76	$0.68	$0.62
Net Interest Income ($MM)	$177.186	$172.812	$155.431
Total Non‑Interest Income ($MM)	$17.255	$15.878	$15.702
Net Interest Margin (%)	2.56%	2.62%	2.39%
Efficiency Ratio (%)	56.61%	57.21%	65.04%
ROA (%)	0.87%	0.87%	0.69%
ROE (%)	9.20%	8.53%	6.42%

Segment composition (loans held for investment, period‑end):

Category ($MM)	Jun 2024	Sep 2024	Dec 2024
Single‑Family Residential	$8,364.415	$8,399.030	$8,520.833
Multi‑Family	$4,616.359	$4,658.119	$4,829.736
Commercial Real Estate	$3,781.247	$3,757.040	$3,637.986
Commercial & Industrial	$2,394.978	$2,337.139	$2,408.693
Construction	$2,247.530	$2,174.254	$2,062.116

Loan originations (Q1 FY25):

Type	Q1 FY25 Originations ($000)
Total	$930,789
Commercial & Industrial	$405,877
Commercial Real Estate	$47,826
Construction	$162,662
Single‑Family Residential	$156,117
HELOC	$43,030
Consumer	$44,978

KPIs and balance sheet:

KPI	Q3 2024	Q4 2024	Q1 2025
Total Assets ($MM)	$28,580.800	$28,060.330	$27,684.454
Total Deposits ($MM)	$21,184.765	$21,373.970	$21,438.777
Borrowings ($MM)	$4,079.360	$3,267.589	$2,863.675
Non‑performing assets / assets (%)	0.24%	0.28%	0.29%
Non‑accrual loans / net loans (%)	0.29%	0.33%	0.34%
Delinquencies / net loans (%)	0.22%	0.25%	0.30%
ACL / gross loans (%)	1.00%	1.01%	1.00%
Uninsured or uncollateralized deposits (%)	24.7%	24.0%	24.8%
Effective rate on borrowings (%)	4.10%	3.93%	3.62%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Exit single‑family mortgage & HELOC originations	By June 2025	Not provided	Exiting origination; retaining existing loans on books	New strategic shift
Annual expense savings	By June 2025 run‑rate	Not provided	Approximately $17 million	Raised/initiated
Workforce reduction	FY25	Not provided	~8% reduction	Initiated
Technology platform (Pike Street Labs)	FY25	Third‑party (Archway)	Bringing online/mobile/account opening tech in‑house	Strategic transition
Dividend	Mar 2025	$0.26 (Dec 6, 2024)	$0.27 per share (paid Mar 7, 2025)	Raised
Effective tax rate	Q1 FY25	24.21% (Q4 FY24)	21.55% (Q1 FY25)	Lower

Earnings Call Themes & Trends

Note: A Q1 FY25 earnings call transcript was not available in the company document catalog.

Topic	Previous Mentions (Q3 & Q4)	Current Period (Q1 FY25)	Trend
Net interest margin trajectory	Q3: “margin… 2.56%… expect… nadir” post CRE sale; Q4: 2.62%	NIM compressed to 2.39% due to Fed cuts and faster asset repricing than deposits	Down near‑term; management cites temporary pressures
Balance sheet repositioning	Q3: $2.8B CRE loan sale; reclassified ~$0.5B SFR HFS; cash up	Cash used to reduce borrowings; investments up $271M QoQ	Continued de‑risking/liquidity management
Credit quality	Q3/Q4: NPA ~0.24–0.28%; delinquencies fell QoQ	NPA 0.29%; delinquencies 0.30%; minimal NCOs	Stable
Technology & efficiency	Q3: planned new mobile and account opening apps via Archway	Restart Pike Street Labs; in‑house digital/account opening teams	Increased in‑house tech focus
Strategic focus	Q4: Optionality to adapt; growth across nine states	Shift toward business banking, CRE lending, and offering SBA products	Refocus on higher‑margin, advisory‑driven lines
Regulatory/CRA	—	CRA rating “Needs to Improve”; company plans to appeal	New regulatory headwind disclosed

Management Commentary

“Our results were impacted by greater than expected margin compression… yield on earning assets declined by 36 bps, while the yield on paying liabilities decreased by only 14 bps” — Brent Beardall, President & CEO .
“We are exiting the single‑family mortgage lending market… anticipate annual expense savings of approximately $17 million” .
“We will bring back in‑house… technology and teams from Archway Software… aid us in becoming more efficient over time” .
Q4 tone on balance‑sheet resilience: “Optionality is a beautiful thing… capacity to be relevant and a nimbleness to adapt” .

Q&A Highlights

A Q1 FY25 earnings call transcript was not found, so Q&A specifics are unavailable.

Estimates Context

Wall Street consensus estimates (EPS/revenue) from S&P Global could not be retrieved due to access limitations at the time of analysis; therefore, comparisons to consensus are unavailable. We attempted to fetch current and forward quarterly EPS and revenue consensus for WAFD but were unable to obtain data.*

Key Takeaways for Investors

Margin pressure was the primary driver of the EPS decline; management frames compression as driven by rapid asset repricing post‑Fed cuts and slower deposit repricing, suggesting relief as deposit costs catch up and hedging impacts normalize .
Strategic exit from mortgage originations and HELOCs plus in‑house tech should lower run‑rate expenses (~$17M by June 2025) and improve efficiency ratios over time; monitor execution milestones (workforce reduction, Pike Street Labs transition) .
Credit quality remains a support: NPA at 0.29%, minimal net charge‑offs, and ACL steady at 1.00%; limits downside risk as business mix shifts toward floating‑rate commercial loans .
Funding remains stable with core deposits at ~78% and uninsured deposits ~25%; borrowings fell ~$0.4B QoQ and effective borrowing rate declined to 3.62% — positive for funding cost trajectory .
Dividend increase to $0.27 signals confidence in capital/earnings durability despite near‑term margin pressures; watch capital ratios and tangible equity trends for continued support .
Regulatory scrutiny (CRA rating “Needs to Improve”) adds an overhang; management plans to appeal — assess any operational constraints or reputational impacts that could affect growth objectives .
Near‑term trading lens: sensitivity to NIM headlines remains high; any signs of deposit cost catch‑up, fee growth, or early efficiency gains could catalyze sentiment, while further rate declines without liability repricing would be a negative .

Citations:

*Estimates unavailable: Values would be retrieved from S&P Global if accessible.

WAFD INC (WAFD)·Q1 2025 Earnings Summary