WAFD Q1 Earnings Beat Estimates on Higher NII, Expenses Decline

WaFd, Inc.’s WAFD first-quarter fiscal 2026 (ended Dec. 31) earnings of 79 cents per share beat the Zacks Consensus Estimate of 76 cents. The bottom line also jumped 46% year over year. 

Results reflected higher net interest income (NII), a surge in non-interest income and lower expenses. However, credit costs remained elevated, with provisions for credit losses recorded in the quarter.

Quarterly net income available to common shareholders was $60.5 million, up 38.8% from the prior-year quarter. Our estimate for the metric was $57.3 million.

WaFd’s Revenues Rise, Expenses Decline

Quarterly net revenues (net interest income plus total non-interest income) were $191.4 million, up 11.8% from the prior-year quarter. However, the top line fell short of the Zacks Consensus Estimate of $193.5 million.

NII for the quarter was $171.1 million, rising 10.1% year over year. The net interest margin (NIM) was 2.70%, up 31 basis points (bps) from 2.39% in the year-ago quarter. Our estimates for NII and NIM were $172.5 million and 2.74%, respectively.

The total non-interest income of $20.3 million increased 29% year over year. The rise was primarily driven by higher other income (including a gain on the sale of a branch property) and an increase in deposit fee income. Our estimate for the metric was $19.8 million.

Total non-interest expenses were $105.7 million, down 5% from the prior-year quarter. Our estimate for the metric was $110.2 million.

The company’s efficiency ratio was 55.25%, down from 65.04% in the prior-year quarter. A fall in the efficiency ratio reflects improved profitability.
 
Return on average common equity was 8.86%, up from 6.42% in the prior-year quarter. Return on average assets was 0.96%, increasing from 0.69%.

WAFD’s Loans Decrease, Deposits Appear Stable

As of Dec. 31, 2025, net loans receivable were $19.85 billion, down 5.8% from the year-ago quarter. We projected the metric to be $20.3 billion.

Total customer deposits were $21.42 billion, almost flat year over year. Our estimate for the metric was $21.67 billion.

WaFd’s Credit Quality Worsens

As of Dec. 31, 2025, allowance for credit losses (including the reserve for unfunded commitments) was 1.05% of gross loans outstanding, up from 1.00% in the prior-year quarter. 

The ratio of non-performing assets to total assets was 0.75%, up from 0.29%. 

In the reported quarter, provision for credit losses was $3.5 million against none in the year-ago quarter. We had projected the metric to be $3.3 million.

Update on WAFD’s Share Repurchases

In the reported quarter, WAFD repurchased 1.95 million shares at a weighted average price of $29.75 per share.

Our View on WAFD

Declining interest rates, business restructuring and a decent balance sheet position are likely to continue aiding WAFD’s financials. However, a tough macroeconomic backdrop and deteriorating asset quality are near-term headwinds.
 

WaFd, Inc. Price, Consensus and EPS Surprise

WaFd, Inc. price-consensus-eps-surprise-chart | WaFd, Inc. Quote

Currently, WAFD carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Earnings Date & Earnings Expectations of WAFD’s Peers

Hancock Whitney HWC is slated to announce fourth-quarter and full-year 2025 results on Jan. 20.

Over the past seven days, the Zacks Consensus Estimate for Hancock Whitney’s quarterly earnings has remained unchanged at $1.48. This implies 5.7% growth from the prior-year quarter.

Bank OZK OZK is also scheduled to announce fourth-quarter and full-year 2025 results on Jan. 20.

Over the past seven days, the Zacks Consensus Estimate for Bank OZK’s quarterly earnings has been revised marginally upward to $1.56. This implies no change from the prior-year quarter.

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This article originally published on Zacks Investment Research (zacks.com).

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