Advertisement
U.S. markets closed
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow 30

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Russell 2000

    2,124.55
    +10.20 (+0.48%)
     
  • Crude Oil

    83.04
    +1.69 (+2.08%)
     
  • Gold

    2,241.00
    +28.30 (+1.28%)
     
  • Silver

    24.99
    +0.24 (+0.96%)
     
  • EUR/USD

    1.0791
    -0.0039 (-0.36%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • GBP/USD

    1.2622
    -0.0016 (-0.13%)
     
  • USD/JPY

    151.3940
    +0.1480 (+0.10%)
     
  • Bitcoin USD

    70,674.37
    +1,757.31 (+2.55%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

Washington Federal (WAFD) Q1 Earnings Lag, Revenues Beat

Washington Federal’s WAFD first-quarter fiscal 2020 (ended Dec 31) adjusted earnings came in at 58 cents per share, missing the Zacks Consensus Estimate of 60 cents. Results exclude the net positive impact of two significant non-recurring items.

Including such items, net income was $65.7 million or 84 cents per share compared with $52.9 million or 65 cents per share in the year-ago quarter.

Results reflect increase in revenues and improving credit quality. However, higher expenses, decline in loan and deposit balances, and shrinking margins were the undermining factors.

Revenues Up, Expenses Rise

Net revenues came in at $166.1 million, up 20.2% from the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $135.3 million by a wide margin.  

Net interest income was $119.7 million, marginally up from the year-ago quarter. However, net interest margin declined 6 basis points (bps) to 3.15%.

Total other income of $46.4 million increased considerably from the prior-year quarter. This upside was mainly driven by increase in other income and loan fee income.

Operating expenses were up 15.3% year over year to $82.6 million. Higher compensation and benefits, occupancy, product delivery and information technology expenses led to this rise.

The company’s adjusted efficiency ratio was 57.05% up from 51.88% recorded a year ago. A rise in efficiency ratio indicates deterioration in profitability.

At the end of the fiscal first quarter, return on average common equity was 12.89%, up from 10.64% witnessed at the end of the prior-year quarter. Return on average assets was 1.60%, up from 1.32%.

As of Dec 31, 2019, both net loans receivables and customer deposit accounts amounted to $11.9 billion, marginally down from the prior quarter.

Credit Quality Improves

As of Dec 31, 2019, the ratio of non-performing assets to total assets was 0.24%, down 3 bps sequentially. Furthermore, release for loan losses increased to $1 million from $0.5 million recorded a year ago.

Additionally, allowance for loan losses and reserve for unfunded commitments were 1.04% of gross loans outstanding, unchanged from the figure recorded in the prior quarter.

Share Repurchase Update

During the quarter, Washington Federal repurchased 0.9 million shares at weighted average price of $36.62 per share.

Our View

Washington Federal’s efforts to grow organically, an improving economy and rising loan demand are likely to support revenues. Also, the company’s impressive credit quality will support financials. However, persistently rising expenses are expected to hamper the bank’s bottom-line growth.

Washington Federal, Inc. Price, Consensus and EPS Surprise

 

Washington Federal, Inc. Price, Consensus and EPS Surprise
Washington Federal, Inc. Price, Consensus and EPS Surprise

Washington Federal, Inc. price-consensus-eps-surprise-chart | Washington Federal, Inc. Quote

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

Earnings Release Dates of Peers

Associated Banc-Corp ASB and BankUnited, Inc. BKU are scheduled to announce fourth-quarter 2019 results on Jan 23, while Prosperity Bancshares, Inc. PB is slated to report on Jan 29.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q3 2019, while the S&P 500 gained +39.6%, five of our strategies returned +51.8%, +57.5%, +96.9%, +119.0%, and even +158.9%.

This outperformance has not just been a recent phenomenon. From 2000 – Q3 2019, while the S&P averaged +5.6% per year, our top strategies averaged up to +54.1% per year.

See their latest picks free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
BankUnited, Inc. (BKU) : Free Stock Analysis Report
 
Associated Banc-Corp (ASB) : Free Stock Analysis Report
 
Washington Federal, Inc. (WAFD) : Free Stock Analysis Report
 
Prosperity Bancshares, Inc. (PB) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Advertisement