Sign in
WI

WAFD INC (WAFD)·Q2 2025 Earnings Summary

Executive Summary

  • EPS of $0.65 beat S&P Global consensus of ~$0.59*, driven by net interest margin recovery to 2.55% and lower operating expenses; ROA 0.82% and ROE 7.68% improved sequentially .
  • Total revenue (net interest + non-interest income) rose to ~$179.79M, above S&P consensus of ~$174.58M*, on stronger loan prepayment fees and insurance commissions; efficiency ratio improved to 58.31% from 65.04% .
  • Strategic pivot toward business banking showed early traction: 382 new small business loans, 125% QoQ increase in merchant referrals, and 53% YoY profit growth in insurance; 726,082 shares repurchased and quarterly dividend increased to $0.27 per share .
  • Key catalysts: margin expansion from lower rates on interest-bearing liabilities, non-interest income uplift (insurance), continued credit discipline despite higher net charge-offs ($5.1M); further upside from SBA lending buildout and Pike Street Labs efficiency initiatives .

What Went Well and What Went Wrong

What Went Well

  • Margin recovery and expense decline lifted profitability: net interest margin rose to 2.55% (from 2.39%), efficiency ratio improved to 58.31% (from 65.04%) .
  • Business banking pivot delivering early results: “382 new small business loans… merchant processing referrals increasing 125%… insurance subsidiary delivering 53% year over year growth in profit” .
  • Shareholder returns: repurchased 726,082 shares at $29.39 average; dividend raised to $0.27 per share (168th consecutive) .

What Went Wrong

  • Credit costs ticked up: provision of $2.8M and net charge-offs of $5.063M vs $0.231M in prior quarter .
  • Criticized loans increased vs September quarter; non-accrual loans rose vs December but improved YoY, requiring close monitoring in CRE/multi-family .
  • Uninsured deposits increased to 25.6% (from 24.8% in December and 24.0% in September), modestly elevating liquidity sensitivity .

Financial Results

Income Statement and Profitability (USD Millions unless noted)

MetricQ2 2024Q1 2025Q2 2025
Net Interest Income$158.60 $155.43 $160.91
Non-Interest Income$13.39 $15.70 $18.88
Total Revenue (NII + Non-Interest)$171.99 $171.13 $179.79
Diluted EPS (GAAP)$0.17 $0.54 $0.65
Diluted EPS (non-GAAP)$0.73 $0.62 $0.65
Net Interest Margin (%)2.73% 2.39% 2.55%
Efficiency Ratio (%)77.74% 65.04% 58.31%
ROA (%)0.26% 0.69% 0.82%
ROE (%)2.09% 6.42% 7.68%

EPS vs S&P Global Consensus

PeriodConsensus EPS ($)*Actual Diluted EPS ($)
Q2 20240.49*0.17
Q1 20250.63*0.54
Q2 20250.5875*0.65

Values retrieved from S&P Global.

Revenue vs S&P Global Consensus

PeriodConsensus Revenue ($USD Millions)*Actual Total Revenue ($USD Millions)
Q2 2024170.84*171.99
Q1 2025185.80*171.13
Q2 2025174.58*179.79

Values retrieved from S&P Global.

Balance Sheet and Credit KPIs

KPIQ2 2024Q1 2025Q2 2025
Total Assets ($B)$30.14 $27.68 $27.64
Total Deposits ($B)$21.34 $21.44 $21.43
Uninsured Deposits (% of Deposits)24.0% 24.8% 25.6%
Non-Performing Assets / Total Assets (%)0.23% 0.29% 0.26%
Delinquencies / Net Loans (%)0.36% 0.30% 0.27%
ACL / Gross Loans (%)1.00% 1.00% 1.01%
TCE per Share ($)$26.64 $27.93 $28.31
Share Repurchases (shares)n/a89,528 726,082

Loan Portfolio Mix (Net Loans)

Category (% of Net Loans)Sep 30, 2024Dec 31, 2024Mar 31, 2025
Single-Family Residential39.4% 39.5% 39.3%
Multi-Family21.7% 22.4% 23.2%
Commercial Real Estate17.7% 17.0% 17.2%
Commercial & Industrial10.9% 11.1% 11.1%
Construction6.7% 6.5% 5.7%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per ShareQ2 FY25 payout (paid Mar 7, 2025)$0.26 (prior quarterly payout) $0.27 Raised
Annual OpEx Savings (from restructuring, mortgage exit)By end of June 2025n/a~$17M annual savings target New
Formal revenue/margin guidanceFY25/Q2NoneNone providedMaintained (no formal guidance)

Earnings Call Themes & Trends

Note: A Q2 2025 earnings call transcript was not found; MarketBeat lists a call on April 11, 2025 at 4:00 PM ET .

TopicPrevious Mentions (Q4 FY24 and Q1 FY25)Current Period (Q2 FY25)Trend
Margin dynamicsMargin compressed to 2.39% in Q1; asset yields fell faster than liability costs; hedge valuation adjustment impacted NII Margin rebounded to 2.55% on 19 bps decrease in cost of interest-bearing liabilities; NII up 4% QoQ Improving
Strategic pivot (business banking)Announced exit from single-family mortgage origination; shift to business banking focus and SBA lending buildout Early traction: 382 small business loans, merchant referrals +125% QoQ; hiring SBA leaders Executing
Non-interest income (Insurance)Slightly lower insurance commissions vs prior quarter Non-interest income +20% QoQ; insurance commissions increased $1.7M vs Dec and $1.3M vs Mar 2024 Positive
Credit qualityNPA 0.29% (Q1); minimal NCOs; no provision in Q1 NPA 0.26%; provision $2.8M; net charge-offs $5.063M; delinquencies improved vs Q1 Mixed (monitoring)
Deposit mix/liquidityCore deposits 78.3%; uninsured deposits 24.8% (Dec) Core deposits 78.8%; uninsured deposits 25.6% (Mar) Stable core, slightly higher uninsured
Technology/efficiencyRestarting Pike Street Labs; in-house digital channels to improve efficiency Efficiency ratio improved to 58.31%; continued tech investments (ongoing) Improving

Management Commentary

  • “In the second quarter of fiscal 2025 our margin bounced back, expenses declined, and bottom-line results improved for shareholders… 382 new small business loans… merchant processing referrals increasing 125%… insurance subsidiary delivering 53% year over year growth in profit.” — Brent Beardall, President & CEO .
  • “We are exiting the single-family mortgage lending market… anticipate annual expense savings of approximately $17 million… we will begin offering SBA lending products.” — Brent Beardall .
  • “Net interest income was $161 million… increase primarily due to a 19 bps decrease in rate paid on interest bearing liabilities… NIM 2.55%.” .

Q&A Highlights

  • Transcript unavailable. MarketBeat lists the conference call at 4:00 PM ET on April 11, 2025 .
  • No call Q&A detail could be verified from primary sources.

Estimates Context

  • EPS beat: $0.65 vs ~$0.5875* consensus; prior quarter was in-line-to-slight miss vs ~$0.63* after non-GAAP adjustments .
  • Revenue beat: ~$179.79M vs $174.58M* consensus; prior quarter revenue missed consensus ($171.13M actual vs ~$185.80M* estimate) reflecting margin compression in Q1 .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Margin trajectory turning up with liability cost declines; further modest expansion would support EPS resilience even amid slower loan growth .
  • Business banking pivot is gaining momentum; SBA lending buildout and insurance platform can diversify fee income and reduce rate sensitivity .
  • Credit costs normalized higher (provision/NCOs) from very low levels; CRE/multi-family exposures warrant continued monitoring despite stable ACL coverage (1.01%) and low NPA ratio (0.26%) .
  • Liquidity and deposits: core deposits improved to 78.8%, but uninsured deposits rose to 25.6%; maintain focus on deposit mix optimization .
  • Execution on cost program (target ~$17M annual savings by June) and Pike Street Labs tech insourcing underpin efficiency gains (58.31% in Q2) .
  • Capital return intact: dividend at $0.27 and buybacks continue, supported by tangible book per share growth to $28.31 .
  • Near-term trading: expect shares to react to evidence of sustained NIM expansion and fee momentum; medium-term thesis hinges on business banking shift, disciplined credit, and deposit mix improvement .