If we can get our margin up to a little bit higher to 3%, which is our short-term goal over the next 2 years, everything else being equal, ROE or ROTCE would be 12.5%.
— Brent Beardall
03Detailed Report
WAFD
Company WAFD
Period
Q2 2026
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 26, 2026
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Executive Summary
WaFd Inc (WAFD) reported a solid QQ2 2026 with net income of $65.55 million and diluted EPS of $0.87, marking a 4% linked-quarter increase in EPS and a 26% year-over-year improvement. Net interest income rose by $6.5 million, lifting the NIM to 2.81% from 2.70% in the prior quarter, supported by favorable funding dynamics and higher originations (active portfolio originations of $1.5 billion). The quarter featured meaningful loan growth—loans receivable rose $119 million, with active loan types expanding by $359 million and a 12% linked-quarter gain in the active portfolio. Management highlighted accretion income of $167 million related to the Luther Burbank loan portfolio, accreting at $6 million per quarter and expected to accelerate as those loans adjust or repay. The balance sheet remains well-capitalized (CET1 ~11.4%; total risk-based ~14.4%), with solid liquidity ($4.2 billion on-balance sheet) and an 80.4% core deposit mix. Noninterest income was $19.8 million, led by WaFd Insurance commissions ($6.7 million), while noninterest expense rose modestly (up 3.9% QoQ). Management emphasized a disciplined path to growth under the Build 2030 program, including a push for higher noninterest-bearing deposits (target 20% by 2030 from 12.2% currently) and a commitment to growing direct C&I loans and CRE, aided by technology investments (WaFd Labs, AI initiatives) and wealth-management expansion. Near-term guidance centers on maintaining a flat or modestly higher margin absent rate shifts, with a longer-term goal of approximately 3% net interest margin and ROTCE around 12.5% if achieved. The market backdrop includes robust deposit competition and evolving regulatory capital treatment that could lift regulatory capital by roughly $400 million if approved, potentially enabling more loan growth or capital returns.
Key Performance Indicators
Revenue
Decreasing
344.83M
QoQ: 0.56% | YoY: -11.54%
Gross Profit
Decreasing
193.66M
56.16% margin
QoQ: 3.00% | YoY: -50.32%
Operating Income
Increasing
83.81M
QoQ: 1.83% | YoY: 3.89%
Net Income
Increasing
65.55M
QoQ: 2.11% | YoY: 7.21%
EPS
Increasing
0.87
QoQ: 10.13% | YoY: 150.58%
Revenue Trend
Margin Analysis
Financial Highlights
Key QQ2 2026 metrics and context (USD unless stated):
- Revenue: $344.83 million; YoY -11.54%; QoQ +0.56%
- Gross profit: $193.66 million; YoY -50.32%; QoQ +3.00%
- Net interest income: up $6.5 million QoQ; NIM 2.81% in Q2 2026 vs. 2.70% in Q1 2026 (Dec 2025 quarter)
- Operating income: $83.81 million; YoY +3.89%; QoQ +1.83%
- Net income: $65.55 million; YoY +7.21%; QoQ +2.11%
- EPS (diluted): $0.87; YoY +150.58%; QoQ +10.13%
- Loans receivable: +$119 million in the quarter; active loan types up $359 million (C&I, CRE, multifamily, construction, land A&D, consumer)
- Originations: $1.50 billion in the quarter; repayments: $0.90 billion; inactive loans: advances $21 million; repayments $276 million
- Yield on originations: 6.22%; yield on repayments: 6.12%
- Investments/MBS: +$191 million; discount-priced agency MBS; effective yield 4.8%
- Deposits: -$292 million; noninterest-bearing deposits -$115 million (4.3%); core deposits 80.4% (Dec 2025 79.7%); noninterest-bearing deposits 12.2% of total deposits
- Loan-to-deposit ratio: 94.5%
- Capital: CET1 ~11.4%; total risk-based ~14.4%
- Liquidity: on-balance sheet liquidity of $4.2 billion; strong core funding; limited wholesale reliance; off-balance sheet capacity
- Noninterest income: $19.8 million; WaFd Insurance commissions $6.7 million; equity-method losses $1.1 million; December quarter included a $3.2 million branch sale gain
- Noninterest expenses: +3.9% QoQ; efficiency ratio 55.7%
- Accretion and one-time items: $167 million of deferred income accreting into income (Luther Burbank loan portfolio) at $6 million/quarter, expected to accelerate
- Credit quality (as of 3/31/2026): NPAs $132 million (0.48% of total assets); delinquencies 0.78% of total loans; adverse/ criticized loans trending lower (A/C loans down $65m to 2.6% of net loans; total criticized loans 4.2% of net loans); allowance for credit losses 1.05% of gross loans; commercial allowance 1.33% of net loans; moderate stress environment due to rates and macro conditions
- Guidance/targets embedded in transcript: Margin target ~3% over the next 2 years (absent rate changes); active loan growth 8-12% (and higher possible); deposit growth through core relationships; gross pipeline of $3.2 billion loans; deposit pipeline up 66% QoQ to $439 million
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
344.83M
-11.54%
0.56%
Gross Profit
193.66M
-50.32%
3.00%
Operating Income
83.81M
3.89%
1.83%
Net Income
65.55M
7.21%
2.11%
EPS
0.87
150.58%
10.13%
Key Financial Ratios
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