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WAFD INC (WAFD)·Q3 2025 Earnings Summary

Executive Summary

  • WaFd delivered EPS of $0.73, up 12% QoQ and down 3% YoY, with net income of $61.95M; margin expansion drove core earnings as cost of funds fell and borrowings declined .
  • Net interest income rose 4% QoQ to $168.0M and NIM improved 14 bps to 2.69%; efficiency ratio fell to 56.01% as expenses stabilized .
  • Credit metrics mixed: non‑performing assets increased to 0.36% of total assets, while delinquencies improved to 0.26% of loans QoQ; criticized loans rose to 4.07% of net loans .
  • EPS and revenue both beat S&P Global consensus; EPS $0.73 vs $0.675 and revenue $184.26M vs $183.95M; share repurchases (1.66M shares at $29.08) contributed to EPS lift and TBV growth *.

What Went Well and What Went Wrong

What Went Well

  • Margin expansion: NIM rose to 2.69% (from 2.55%) driven by a 16 bps decrease in rates on interest‑bearing liabilities; net interest income increased to $168.0M .
  • Operating efficiency: Efficiency ratio improved to 56.01% from 58.31% as expenses stabilized and net interest income increased .
  • Capital returns: Repurchased 1,662,508 shares at $29.08 (≈1.01x TBV) and paid $0.27 dividend; CEO: “aggressively repurchased shares… contributing to the 12% increase in EPS” .

What Went Wrong

  • Credit pressure: Non‑performing assets increased to $97M (0.36% of assets) with criticized loans up to 4.07% and substandard loans to 3.52% of net loans .
  • Loan demand remains tepid as borrowers await macro certainty, constraining originations ($0.70B vs $0.91B prior quarter) .
  • Non‑interest income dipped QoQ ($18.27M vs $18.88M) as insurance subsidiary contingency fees benefited Q2 seasonally .

Financial Results

Results vs prior periods (oldest → newest)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Diluted EPS ($)0.75 0.54 0.65 0.73
Net Interest Income ($MM)177.19 155.43 160.91 167.99
Non‑Interest Income ($MM)17.26 15.70 18.88 18.27
Total Income – non‑GAAP ($MM)193.39 174.84 179.38 186.31
Net Interest Margin (%)2.56 2.39 2.55 2.69
Efficiency Ratio (%)56.61 65.04 58.31 56.01

Credit KPIs (oldest → newest)

KPIQ3 2024Q1 2025Q2 2025Q3 2025
Non‑performing assets / total assets (%)0.24 0.29 0.26 0.36
Non‑accrual loans / net loans (%)0.29 0.34 0.29 0.41
Delinquencies / net loans (%)0.22 0.30 0.27 0.26
ACL / gross loans (%)1.00 1.00 1.01 1.03

Segment mix (income components)

MetricQ3 2025
Net Interest Income ($MM)167.99
Non‑Interest Income ($MM)18.27

Actual vs consensus (S&P Global; Q3 2025)

MetricConsensusActualSurprise
EPS ($)0.675*0.73*+0.06 (beat)*
Revenue ($MM)183.95*184.26*+0.31 (beat)*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal financial guidanceFY/Q4None providedNone providedMaintained: no guidance
Dividend per shareQ3 2025$0.27 (Q2 payout) $0.27 (paid Jun 7, 2025) Maintained
Share Repurchase Authorization (shares remaining)Q3 202510.78M (as of Q2) 9.13M (as of Q3) Reduced by repurchases (program ongoing)

Earnings Call Themes & Trends

Note: A full Q3 2025 earnings call transcript was not available in the document set; themes reflect prepared remarks and prior quarter releases.

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Business banking pivot/SBA lendingShift toward business banking and SBA build‑out; 382 new small business loans; insurance subsidiary profit +53% YoY Loan demand “tepid”; focus on cost of funds and margin; continued capital returns Execution continues; macro demand soft
Exit mortgage lendingExited single‑family mortgage origination to reduce risk and improve profitability; workforce -8%; CRA appeal disclosed Portfolio retention, no new origination; mix shifting toward commercial Strategy maintained
Technology initiatives (Pike Street Labs)Restarting Pike Street Labs; insourcing digital platforms to improve efficiency Efficiency ratio improved with stabilized expenses and higher NII Operational efficiency improving
Funding/cost of funds19 bps decline in rates paid on interest‑bearing liabilities in Q2 aided margin Cost of funds decreased 6.5% QoQ in dollars; borrowings reduced; NIM +14 bps Positive
Credit qualityNPA 0.26% (Q2); delinquencies 0.27%; net charge‑offs $5.06M NPA 0.36%; delinquencies 0.26%; net charge‑offs $5.4M; criticized loans rising Deteriorating modestly
Deposit mix/uninsured depositsCore deposits 78.8%; uninsured deposits 25.6% (Q2) Core deposits 77.3%; uninsured 23.8% (improved) Mixed: core slightly lower; uninsured improved

Management Commentary

  • “The third quarter delivered strong core earnings driven by improved margin and resultant net interest income… cost of funds in dollars decreased 6.5% on a linked quarter basis… we aggressively repurchased shares… contributing to the 12% increase in earnings per share” — Brent Beardall, President & CEO .
  • “Margin bounced back, expenses declined, and bottom‑line results improved for shareholders… early successes including 382 new small business loans… merchant processing referrals increasing 125%” — Q2 management remarks .
  • “We are exiting the single‑family mortgage lending market… we anticipate annual expense savings of approximately $17 million… [and] will concentrate… on business banking and commercial real estate lending” — Q1 strategic update .

Q&A Highlights

A full Q3 2025 earnings call transcript was not available in our document set; no Q&A details to report [MarketBeat notes call date: 7/18/2025; resource links provided but transcript not retrieved: https://www.marketbeat.com/earnings/reports/2025-7-17-washington-federal-inc-stock/].

Estimates Context

  • EPS beat: Actual $0.73 vs S&P Global consensus $0.675; +$0.06, driven by lower cost of funds, reduced borrowings, and higher NIM; share repurchases also supportive *.
  • Revenue beat: Actual $184.26M vs S&P Global consensus $183.95M; +$0.31M, as net interest income increased QoQ despite a slight dip in non‑interest income *.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Margin trajectory improving: NIM expanded to 2.69% as funding costs fell and borrowings declined; watch for continued liability repricing benefits into Q4 .
  • Operating leverage emerging: Efficiency ratio at 56.01% with stable expenses and higher NII; additional gains could come from tech insourcing (Pike Street Labs) .
  • Credit watch: Rising NPA (0.36%), criticized loans (4.07%), and net charge‑offs ($5.4M) warrant caution despite low overall delinquency ratios; underwriting discipline remains key .
  • Capital returns remain a catalyst: 1.66M shares repurchased at ~1.01x TBV and continued $0.27 dividend support EPS/TBV accretion; authorization balances support ongoing buybacks .
  • Loan growth subdued: Originations slowed ($0.70B) amid “tepid” demand; mix still shifting toward commercial lending consistent with strategy .
  • Funding profile improving: Uninsured deposits declined to 23.8% and transaction accounts rose to 56.0%, reducing liquidity risk and cost of funds .
  • Near‑term trading bias: Stock may react positively to EPS/revenue beats and margin expansion; monitor credit headlines and any further moves in borrowings/cost of funds that could sustain NIM *.

References:
Press release and 8‑K Q3 2025 .
Q2 2025 8‑K and Fact Sheet .
Q1 2025 8‑K and Fact Sheet .
MarketBeat resource page (call scheduling) .
S&P Global consensus and actuals via GetEstimates.*