Washington Federal, Inc. (WAFD) | Investment Case

1. Company Snapshot

1.a. Company Description

Washington Federal, Inc.operates as the bank holding company for Washington Federal Bank, National Association that provides lending, depository, insurance, and other banking services in the United States.The company offers deposit products, including business and personal checking accounts, and term certificates of deposit, as well as money market accounts and passbook savings accounts.

It also provides single-family residential, construction, land acquisition and development, consumer lot, multi-family residential, commercial and industrial, commercial real estate, home equity, business and consumer loans.In addition, the company offers insurance brokerage services, such as individual and business insurance policies; holds and markets real estate properties; mobile and internet banking services; and debit and credit cards, as well as acts as the trustee.It serves consumers, mid-sized and large businesses, and owners and developers of commercial real estate.

As of September 30, 2021, the company had 219 branches located in Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico, and Texas.Washington Federal, Inc.was founded in 1917 and is headquartered in Seattle, Washington.

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1.b. Last Insights on WAFD

WaFd, Inc.'s recent performance was positively driven by its improving margin and significant return on tangible common equity of 9.99% in Q4. The company's fiscal year highlights included $226 million in net income and a return on average assets of 0.84%. Additionally, WaFd's management team expressed optimism about the company's trajectory, citing a trending improvement in the right direction. The company also exhibits a strong capital position, with a focus on shareholder value.

1.c. Company Highlights

Last Price	33.2
Change Percentage	-0.24%
Open	33.07
Previous Close	33.28
Market Cap ( Millions)	2538
Volume	576130
Year High	34.3
Year Low	23.75
M A 50	32.86
M A 200	30.76

FCF Yield	8.48%
Dividend Yield	3.25%
ROE	8.02%
Debt / Equity	82.14%
Net Debt / EBIDTA	632.89%
Price To Book	0.84
Price Earnings Ratio	10.52
Price To FCF	11.79
Price To sales	1.82
EV / EBITDA	15.49

2. WaFd's Q4 Earnings: A Closer Look at Financial Performance

WaFd, Inc. reported net income available to common shareholders of $60.5 million or $0.79 per diluted share for the quarter ended December 31, 2025. The increase in earnings per share was due to improvements in income and expense, with net interest income increasing $1.2 million from the prior quarter, and a net interest margin of 2.7%. The actual EPS came out at $0.79, slightly higher than the previous quarter's $0.72, and close to but below estimates of $0.80 wasn't available however '0.75' relative to '0.76' was, indicating a stable performance. The company's efficiency ratio decreased to 55.3% compared to 56.8% in the prior quarter, showing cost control. With a P/E Ratio of 10.26 and a P/B Ratio of 0.82, the stock appears to be reasonably valued.

Publication Date: Jan -18

                                    📋 Highlights
                                    Earnings Growth:
                                                EPS rose 13.0% to $0.79 from $0.72 in the prior quarter, driven by higher net interest income (+$1.2M) and improved efficiency.
Capital Management:
                                                Share repurchases totaled 1.95M shares at $29.75, reflecting confidence in capital allocation and undervalued stock.
Liquidity Strength:
                                                Loan-to-deposit ratio of 92.7% remains balanced, supported by robust core funding and $728M increase in investments/MBS.
Credit Quality:
                                                Nonperforming assets at 0.75% of assets with $3.5M credit loss provision, indicating stable asset quality despite $203M NPA increase.
Growth Pipeline:
                                                Active loan portfolio growth target of 8-12% annually, with a $697M ($28% QoQ) lending pipeline and new $400M wealth management division.

                                

Loan Portfolio and Credit Quality

Loans receivable decreased $240 million during the quarter, primarily due to a decrease in inactive loan types, while total investments and mortgage-backed securities increased $728 million. The loan-to-deposit ratio ended the quarter at 92.7%. Credit quality metrics remain modest, with nonperforming assets increasing to $203 million or 0.75% of total assets. The net provision for credit losses in the quarter was $3.5 million, and the allowance for credit losses provides coverage of 1.05% of gross loans.

Growth Initiatives and Capital Management

The company is focused on growing its active loan portfolios by 8% to 12% over the next 1 to 2 years, with the lending pipeline up $697 million or 28% over the last quarter. WaFd Wealth Management was launched on August 31, with assets under management amounting to just over $400 million as of December 31. The company repurchased 1.95 million shares of common stock at a weighted average price of $29.75, indicating a commitment to returning capital to shareholders. As Kelli Holz mentioned, "they expect further margin pressure but growth in NII dollars" with the current strategy to replace single-family runoff with mortgage-backed securities.

Margin Expectations and Outlook

Brent Beardall stated that they are working to get to a 3% margin over the short term, helped by a shift in their balance sheet to lower-cost deposits. The company is baking in 1-2 rate cuts this year to achieve this target. With a Dividend Yield of 3.33%, the stock offers an attractive income stream. Analysts estimate next year's revenue growth at 4.2%, indicating a positive outlook for the company.

3. NewsRoom

Fiserv Inc: A Significant Move in Jeff Auxier's Portfolio

Feb -17

Source: gurufocus.com

WaFd: 7.3% Yielding Preferred Share Good For Income Investors

Feb -09

Source: seekingalpha.com

WaFd, Inc. Announces Cash Dividend of 27 cents per share and Increase in Share Repurchase Authorization

Feb -03

Source: businesswire.com

WaFd Bank Prevails on its CRA Rating Appeal

Jan -21

Source: businesswire.com

Artisan Mid Cap Value Fund Q4 2025 Performance Discussion And Portfolio Activity

Jan -21

Source: seekingalpha.com

WaFd Looks Cheap For A Reason, And That's Why I'm Interested

Jan -19

Source: seekingalpha.com

WaFd, Inc. (WAFD) Q1 2026 Earnings Call Transcript

Jan -16

Source: seekingalpha.com

WAFD Q1 Earnings Beat Estimates on Higher NII, Expenses Decline

Jan -16

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.00%)

6. Segments

Banking and Related Activities

Expected Growth: 10.0%

Washington Federal, Inc.'s 10.0% growth in Banking and Related Activities is driven by increasing loan demand, expansion of commercial banking services, and strategic acquisitions. Additionally, the company's focus on digital transformation, cost savings initiatives, and a strong capital position have contributed to its growth momentum.

7. Detailed Products

Consumer Banking

Washington Federal, Inc. offers a range of consumer banking products and services, including checking and savings accounts, credit cards, personal loans, and home loans.

Commercial Banking

The company provides commercial banking services, including business checking and savings accounts, commercial loans, and cash management services.

Home Loans

Washington Federal, Inc. offers a range of home loan products, including fixed-rate and adjustable-rate mortgages, refinancing options, and home equity loans.

Wealth Management

The company provides wealth management services, including investment management, financial planning, and retirement planning.

Insurance Services

Washington Federal, Inc. offers insurance services, including life insurance, disability insurance, and long-term care insurance.

8. Washington Federal, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Washington Federal, Inc. operates in a highly competitive industry, with many substitutes available to customers. However, the company's strong brand reputation and customer loyalty help to mitigate the threat of substitutes.

Bargaining Power Of Customers

Washington Federal, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products and services are often customized to meet specific customer needs, making it difficult for customers to switch to alternative providers.

Bargaining Power Of Suppliers

Washington Federal, Inc. relies on a network of suppliers to provide goods and services. While the company has some bargaining power due to its size and scale, suppliers still have some negotiating power, particularly in industries where there are few alternative suppliers.

Threat Of New Entrants

The banking and financial services industry has high barriers to entry, including regulatory hurdles and significant capital requirements. This makes it difficult for new entrants to enter the market and compete with established players like Washington Federal, Inc.

Intensity Of Rivalry

The banking and financial services industry is highly competitive, with many established players competing for market share. Washington Federal, Inc. faces intense competition from other banks and financial institutions, which can lead to pricing pressure and reduced profitability.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	75.06%
Debt Cost	8.10%
Equity Weight	24.94%
Equity Cost	8.10%
WACC	8.10%
Leverage	300.93%

11. Quality Control: Washington Federal, Inc. passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Five Star Bank

A-Score: 6.4/10

Value: 5.5

Growth: 5.4

Quality: 8.1

Yield: 5.0

Momentum: 7.0

Volatility: 7.3

1-Year Total Return ->

Finward

A-Score: 5.8/10

Value: 6.0

Growth: 3.6

Quality: 4.3

Yield: 4.0

Momentum: 8.5

Volatility: 8.7

1-Year Total Return ->

Southern Missouri Bancorp

A-Score: 5.8/10

Value: 7.0

Growth: 6.7

Quality: 6.7

Yield: 4.0

Momentum: 3.0

Volatility: 7.3

1-Year Total Return ->

WaFed

A-Score: 5.6/10

Value: 6.3

Growth: 3.8

Quality: 5.7

Yield: 6.0

Momentum: 4.0

Volatility: 8.0

1-Year Total Return ->

Coastal Financial

A-Score: 5.6/10

Value: 3.3

Growth: 9.6

Quality: 6.8

Yield: 0.0

Momentum: 9.0

Volatility: 5.0

1-Year Total Return ->

National Bankshares

A-Score: 5.3/10

Value: 4.8

Growth: 3.3

Quality: 4.7

Yield: 8.0

Momentum: 4.5

Volatility: 6.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

1.24%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.10%

Washington Federal, Inc. - US9388241096

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on WAFD

1.c. Company Highlights

Average Growth

Stable Momentum

Average Yield

Earnings Beats

Revenues Beats

Average Quality

Weak Momentum

Revenues Miss

Fairly Valued

Earnings Miss

Higher Growth

2. WaFd's Q4 Earnings: A Closer Look at Financial Performance

Loan Portfolio and Credit Quality

Growth Initiatives and Capital Management

Margin Expectations and Outlook

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.00%)

6. Segments

Banking and Related Activities

Expected Growth: 10.0%

7. Detailed Products

Consumer Banking

Commercial Banking

Home Loans

Wealth Management

Insurance Services

8. Washington Federal, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Washington Federal, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

33.2$

Current Price

33.2$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA