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Washington Federal (WAFD) Q3 Earnings Beat as Revenues Rise

·3 min read

Washington Federal’s WAFD third-quarter fiscal 2021 (ended Jun 30) earnings of 61 cents per share surpassed the Zacks Consensus Estimate of 52 cents. The figure reflects a year-over-year rise of 32.6%.

Results primarily gained from an increase in revenues, provision benefits and rise in loan balance. The company’s balance-sheet position remained strong during the quarter. However, elevated expenses and lower other income were the headwinds.

Net income was $47.4 million, up 36.1% from the prior year.

Revenues & Expenses Up

Net revenues were $141.8 million, up 8.5% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $137.1 million.

NII was $128.6 million, up 9.6% from the year-earlier period. Net interest margin was 2.82%, in line with the prior-year quarter.

Total other income of $13.2 million declined marginally from the prior-year quarter. This decrease was due to lower other income.

Other expenses amounted to $83.6 million, up 11% year over year. Higher compensation and benefits, and FDIC insurance premiums mainly led to this upswing.

The company’s efficiency ratio was 58.98%, up from 57.65% recorded a year ago. A rise in efficiency ratio indicates lower profitability.

At the end of the fiscal third quarter, return on average common equity was 8.71%, up from the 7.01% witnessed at the end of the year-earlier quarter. Return on average assets was 0.97%, up from 0.78%.

Loans and Deposit Rise

As of Jun 30, 2021, net loans receivables amounted to $13.5 billion, up from the $12.8 billion recorded on Sep 30, 2020. Also, total customer deposits were $15.2 billion, up from $13.8 billion as of Sep 30, 2020.

Credit Quality Improves

As of Jun 30, 2021, the ratio of non-performing assets to total assets was 0.23%, down from 0.25% on Mar 31, 2021. Allowance for credit losses (including reserve for unfunded commitments) was 1.26% of gross loans outstanding, down from the 1.33% recorded on Sep 30, 2020.

During the reported quarter, the company recorded provision release of $2 million against the provision for credit losses of $10.8 million in the prior-year quarter.

Share Repurchase Update

During the reported quarter, Washington Federal repurchased 3.6 million shares at an average price of $32.69 per share.

Our Take

Solid loans and deposit balances, along with a strong balance-sheet position, will likely continue to support Washington Federal’s profitability. Nevertheless, elevated operating expenses, along with low rates, remain major headwinds.

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

Earnings Release Schedule of Other Banks

Hancock Whitney Corporation HWC is scheduled to release quarterly number on Jul 20. Both Associated Banc-Corp ASB and Bank OZK OZK will announce results on Jul 22.

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Washington Federal, Inc. (WAFD) : Free Stock Analysis Report

Associated BancCorp (ASB) : Free Stock Analysis Report

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Bank OZK (OZK) : Free Stock Analysis Report

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