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Washington Federal (WAFD)
NASDAQ:WAFD
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Washington Federal
(NASDAQ:WAFD)
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Rating:57Neutral
Price Target:
$34.00
▲(4.97% Upside)
Overall score reflects mixed financial performance (strong margins but weakened revenue and cash-flow trends) and a balanced earnings-call picture with improving operations and capital returns tempered by rising credit stress and near-term margin headwinds. Valuation is a clear positive (moderate P/E and solid dividend), while technical indicators are broadly neutral.
Positive Factors
High Profitability
Sustained high net and EBIT margins indicate strong operating leverage and disciplined expense management. Over 2–6 months this supports durable cash generation to fund lending, reserves and buybacks, and provides a buffer against cyclical loan losses or NIM compression.
Growing Loan Pipeline
A materially larger, diversified pipeline signals sustainable loan growth capacity as the firm shifts toward commercial banking. Over months this can translate into higher interest income and better asset mix, supporting revenue recovery and reduced reliance on investment securities.
Capital & Liquidity Strength
Excess capital and ongoing buybacks reflect both regulatory cushion and shareholder return optionality. Strong capital plus improving core deposit ratios support lending capacity, cushion credit stress, and preserve strategic flexibility for growth or opportunistic returns over the medium term.
Negative Factors
Rising Nonperforming Assets
A near-term surge in NPAs and nonaccruals signals credit migration that can durably depress interest income via nonaccrual reversals, increase provisioning needs, and constrain lending. Persistent elevated NPAs would erode earnings power and capital over several quarters.
Higher Delinquencies & Criticized Loans
Rising delinquencies and criticized exposures indicate broader borrower stress and potential concentration risks, especially amid a pivot to commercial lending. This reduces credit quality headroom and increases the probability of future charge-offs and higher regulatory scrutiny over the medium term.
Weak Revenue & Cash‑flow Trends
A sharp revenue decline and weakening free cash flow growth undermine earnings durability and internal funding. Low operating cash flow to net income suggests earnings quality risk and could force greater reliance on borrowings or limit capital returns if trends persist over several quarters.
Washington Federal (WAFD) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.58B
Dividend Yield3.27%
Average Volume (3M)506.91K
Price to Earnings (P/E)11.7
Beta (1Y)0.55
Revenue Growth-1.58%
EPS Growth6.34%
CountryUS
Employees2,018
SectorFinancial
Sector Strength70
IndustryBanks - Regional
Share Statistics
EPS (TTM)0.79
Shares Outstanding76,434,810
10 Day Avg. Volume540,448
30 Day Avg. Volume506,909
Financial Highlights & Ratios
PEG Ratio1.92
Price to Book (P/B)0.80
Price to Sales (P/S)1.72
P/FCF Ratio11.66
Enterprise Value/Market Cap1.37
Enterprise Value/Revenue2.51
Enterprise Value/Gross Profit4.93
Enterprise Value/Ebitda11.82
Forecast
1Y Price Target
$32.50Price Target Upside0.34% Upside
Rating ConsensusHold
Number of Analyst Covering3
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Washington Federal Business Overview & Revenue Model
Company DescriptionWaFd, Inc. engages in the provision of lending, depository, insurance, and other banking services to consumers. It also offers banking services to mid-sized to large businesses, and owners and developers of commercial real estate. The company was founded on November 15, 1994 and is headquartered in Seattle, WA.
How the Company Makes MoneyWashington Federal primarily generates revenue through interest income from loans, which is the largest component of its earnings. The bank issues various types of loans, including residential mortgages, commercial real estate loans, and consumer loans, charging interest on these products. Additionally, WAFD earns money from non-interest income sources such as service charges on deposit accounts, mortgage servicing fees, and investment advisory services. The company also benefits from net interest margin, which is the difference between the interest earned on loans and the interest paid on deposits. Significant partnerships and factors contributing to its earnings include a strong focus on community banking, a diverse loan portfolio, and a commitment to customer service, which helps attract and retain clients.
Washington Federal Earnings Call Summary
Earnings Call Date:Jan 08, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Apr 09, 2026
Earnings Call Sentiment Neutral
The call presented a mix of solid operating and capital results alongside emerging credit and margin headwinds. Positive elements include strong EPS growth (40% YoY), active loan production ($1.1B) and a 28% increase in the lending pipeline, improved deposit composition (core deposits 79.7%) and a tighter efficiency ratio (55.3%). Offsetting these strengths are meaningful increases in nonaccrual loans and NPAs (nonaccruals +49%), higher delinquencies, a modest level of net charge-offs, near-term margin pressure from MBS purchases and nonaccrual reversals, and increased borrowings to fund the investment portfolio. Management emphasized capital adequacy, strategic shift to business banking (Build 2030), and confidence in loan pipeline conversion, but also acknowledged regulatory (CRA) limitations and deposit challenges. Overall, the positives and negatives are balanced — the company is executing strategic initiatives and returning capital while navigating elevated credit migration and margin pressure.Q1-2026 Updates
Positive Updates
Strong EPS and Net Income Growth
Net income available to common shareholders of $60.5 million, or $0.79 diluted EPS for the quarter (vs $0.54 in Q1 FY2025 and $0.72 in prior quarter) — management cited 40% year-over-year EPS growth and 10% linked-quarter EPS growth.
Active Loan Production and Expanding Pipeline
Active loan originations of $1.1 billion in the quarter (outpacing $1.0 billion of repayments/payoffs). Production mix: 46% C&I, 23% commercial real estate, 25% construction. Total lending pipeline increased $697 million (28% quarter-over-quarter) to $3.2 billion (from $2.5 billion).
Deposit Composition and Liquidity Improvements
Noninterest-bearing deposits increased $125 million (+4.9% QoQ). Interest-bearing deposits increased $434 million (+4.5% QoQ) while time deposits decreased $580 million (-6.4% QoQ). Core deposits rose to 79.7% of total deposits (from 77.9% prior quarter). Loan-to-deposit ratio improved to 92.7% (down materially from >110% two years ago).
Investment Strategy Producing Incremental NII
Purchased discount-priced agency mortgage-backed securities (MBS) with an effective yield of 4.93%, increasing investment securities and MBS by $728 million during the quarter; these purchases generated approximately $1.2 million of net interest income in the quarter and are being used to offset single-family mortgage runoff.
Improved Expense Efficiency
Total noninterest expense decreased $1.3 million (-1.2% QoQ) due to reduced compensation and technology expenses. Efficiency ratio improved to 55.3% from 56.8% in the prior quarter.
Capital Strength and Share Repurchase Activity
All capital ratios exceed regulatory well-capitalized levels. Repurchased 1.95 million shares at a weighted average price of $29.75 this quarter (2.0 million cited), adding ~ $0.02 to EPS for the quarter; remaining repurchase authorization for ~6.3 million shares. Management views stock at ~1.1x tangible book value and continues opportunistic buybacks.
New Wealth Management Channel and Early AUM Traction
Launched WaFd Wealth Management on August 31; AUM reached just over $400 million at quarter end with a target of $1 billion within two years — management described early indications as positive for noninterest income diversification.
Allowance Coverage and Reserve Position
Allowance for credit losses (including reserve for unfunded commitments) of 1.05% of gross loans (up from 1.00% year-over-year). For commercial loans, allowance is 1.33% of net loans (up from 1.26% year-over-year), supporting credit coverage amid rising stressed credits.
Negative Updates
Increase in Nonperforming Assets and Nonaccrual Loans
Nonperforming assets rose to $203 million (0.75% of total assets) from $143 million (0.54% prior quarter). Nonaccrual loans increased by $62.7 million (49% since September 30, 2025), pressuring interest income recognition and reported NIM.
Rising Delinquencies and Criticized Loans
Delinquent loans increased to 1.07% of total loans (from 0.6% prior quarter and 0.3% year-ago). Criticized loans increased to 4.6% of net loans (from 4.39% prior quarter and 2.54% year-ago), indicating broader stress across borrower segments.
Net Charge-offs and Sector-Specific Stress
Net charge-offs totaled $3.7 million in the quarter (annualized ~7 basis points of total loans), driven by a C&I energy relationship affected by depressed oil prices and working capital constraints. Management noted this as a primary driver of the quarter's charge-offs.
Margin Pressure from Nonaccruals and MBS Purchases
Reported net interest margin was 2.7% (vs 2.71% prior quarter). Management attributed a 9 basis-point gap from spot margin to nonaccrual interest reversals (nonaccrual interest roughly $5 million this quarter) and 3 basis points to accelerated MBS purchases — expecting near-term margin pressure though NII dollars may still grow.
Deposit Headwinds and Increased Borrowings
Total deposits decreased $21 million in the quarter, and management increased borrowings by $671 million to fund investment purchases. Reliance on borrowings rose in the near term, and management noted deposits remained challenging despite growth in transaction accounts.
Regulatory Rating Uncertainty (CRA)
Company received an FDIC 'Needs to Improve' CRA rating and appealed to the SARC; management expects the appeal may not be successful and anticipates moving forward with the Needs to Improve designation, which can complicate branch moves and make future M&A or branching more difficult.
Noninterest Income Volatility
Total noninterest income rose $1.9 million QoQ to $20.3 million, but included a $3.2 million gain on sale of a branch property and offset losses on certain equity method investments of $408,000 (vs gains of $815,000 prior quarter), indicating some volatility in noninterest income drivers.
Company Guidance
Management's guidance focused on margin and loan growth: they target lifting net interest margin to ~3.0% within the next two years (current quarter NIM 2.70%, spot margin 2.77%; yield on interest‑earning assets 5.05%, cost of interest‑bearing liabilities 2.76%), while flagging near‑term headwinds from mortgage‑backed security purchases (securities +$728M this quarter, effective yield 4.93%, contributed ~$1.2M this quarter and ~1.03% annualized on balances) and a ~$5M nonaccrual interest reversal. They expect active loan growth of 8–12% over 1–2 years (management noted 6–10% for FY26) with a $3.2B lending pipeline (up $697M, +28% QoQ), plan to increase noninterest‑bearing deposits to 20% of total by 2030 (currently 12.6%; NIB +$125M, +4.9% QoQ; NIB accounts +5,800 or +2.5% YoY), target operating efficiency near the ~55% top end (current 55.3%) and higher return on tangible common equity (10.6% today; ~12.9% at a 3% margin), while maintaining strong liquidity and capital (loan‑to‑deposit 92.7%, core deposits 79.7%) and continuing opportunistic buybacks (≈1.95–2.0M shares repurchased at $29.75; 6.3M shares remaining authorization; stock ~1.1x tangible book).Washington Federal Financial Statement Overview
Summary
Washington Federal shows a mixed financial performance. Strong profitability margins are overshadowed by a significant drop in revenue growth and free cash flow growth. The balance sheet is stable with a manageable debt level, but improvements in revenue and cash flow growth are needed to enhance financial health.Income Statement
The income statement shows a significant decline in revenue growth rate by 50.7% in the latest year, which is concerning. However, the company maintains a strong gross profit margin of 100% and a healthy net profit margin of 31.5%. The EBIT margin is also robust at 40.4%, indicating efficient cost management. Despite these strengths, the sharp revenue decline poses a risk to future profitability.45
Neutral
Balance Sheet
The balance sheet reflects a moderate debt-to-equity ratio of 0.60, which is a positive sign of financial stability compared to previous years. Return on equity is relatively low at 7.4%, suggesting limited efficiency in generating returns from equity. The equity ratio stands at 11.4%, indicating a stable capital structure, but there is room for improvement in leveraging equity for growth.60
Neutral
Cash Flow
Cash flow analysis reveals a decline in free cash flow growth by 6% in the latest year, which is a concern. The operating cash flow to net income ratio is low at 1.9%, suggesting potential liquidity issues. However, the free cash flow to net income ratio is strong at 100%, indicating that the company is generating sufficient cash to cover its net income.50
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.41B | 1.41B | 1.43B | 1.10B | 733.38M | 652.60M |
| Gross Profit | 717.96M | 717.73M | 704.33M | 701.11M | 658.61M | 565.60M |
| EBITDA | 299.36M | 299.36M | 390.16M | 348.05M | 364.09M | 267.05M |
| Net Income | 226.07M | 226.07M | 200.04M | 257.43M | 236.33M | 183.62M |
Balance Sheet | ||||||
| Total Assets | 26.70B | 26.70B | 28.06B | 22.47B | 20.77B | 19.65B |
| Cash, Cash Equivalents and Short-Term Investments | 4.19B | 4.19B | 4.95B | 2.98B | 2.74B | 4.23B |
| Total Debt | 1.82B | 1.82B | 3.32B | 3.65B | 2.13B | 1.72B |
| Total Liabilities | 23.66B | 23.66B | 25.06B | 20.05B | 18.50B | 17.52B |
| Stockholders Equity | 3.04B | 3.04B | 3.00B | 2.43B | 2.27B | 2.13B |
Cash Flow | ||||||
| Free Cash Flow | 208.25M | 208.25M | 414.55M | 198.89M | 256.68M | 284.98M |
| Operating Cash Flow | 236.95M | 236.95M | 439.23M | 213.96M | 268.46M | 314.45M |
| Investing Cash Flow | -318.41M | -318.41M | 3.29B | -1.38B | -2.49B | -579.75M |
| Financing Cash Flow | -1.64B | -1.64B | -2.33B | 1.46B | 817.86M | 653.12M |
Washington Federal Technical Analysis
Neutral
32.39
Price Trends
32.07
Positive
31.04
Positive
29.75
Positive
Market Momentum
0.20
Positive
47.91
Neutral
54.82
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WAFD, the sentiment is Neutral. The current price of 32.39 is below the 20-day moving average (MA) of 32.90, above the 50-day MA of 32.07, and above the 200-day MA of 29.75, indicating a neutral trend. The MACD of 0.20 indicates Positive momentum. The RSI at 47.91 is Neutral, neither overbought nor oversold. The STOCH value of 54.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WAFD.
Washington Federal Risk Analysis
Washington Federal disclosed 1 risk factors in its most recent earnings report. Washington Federal reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Washington Federal Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $2.23B | 9.65 | 9.90% | 3.72% | -1.76% | 32.44% | |
80 Outperform | $2.65B | 10.33 | 9.51% | 4.69% | 38.34% | 89.73% | |
79 Outperform | $2.25B | 12.02 | 10.28% | 2.97% | 6.98% | 15.08% | |
74 Outperform | $2.80B | 9.93 | 10.16% | 3.79% | 5.15% | 16.42% | |
68 Neutral | $2.47B | 11.27 | 10.87% | 2.38% | 17.95% | ― | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
57 Neutral | $2.58B | 11.68 | 7.49% | 3.27% | -1.58% | 6.34% |
* Financial Sector Average
WAFD
Washington Federal
32.39
3.57
12.39%
BANR
Banner
64.87
-3.66
-5.34%
FFBC
First Financial Bancorp
26.65
-0.36
-1.33%
FRME
First Merchants
38.08
-0.98
-2.51%
PFS
Provident Financial Services
20.15
1.69
9.15%
TRMK
Trustmark
41.31
6.74
19.50%
Washington Federal Corporate Events
Financial Disclosures
WaFd Schedules Fiscal Q1 2026 Earnings Release Call
Neutral
Jan 5, 2026
On January 5, 2026, WaFd Inc. announced it will report financial results for its first quarter of fiscal 2026, covering the period ended December 31, 2025, after the market close on January 15, 2026, and will discuss those results with investors and analysts on a conference call the following morning, January 16, 2026. The scheduled earnings release and call underscore the company’s regular financial reporting cycle and provide a forum for stakeholders to hear management’s commentary on recent performance and outlook, which may influence investor sentiment and market expectations around WaFd’s near-term business trajectory.
The most recent analyst rating on (WAFD) stock is a Hold with a $33.50 price target. To see the full list of analyst forecasts on Washington Federal stock, see the WAFD Stock Forecast page.
Business Operations and StrategyFinancial Disclosures
WaFd Highlights Strategic Shift in Investor Presentation
Positive
Nov 12, 2025
WaFd, Inc. has released a slide presentation intended for institutional investors and industry analysts, highlighting its financial performance and strategic initiatives as of September 30, 2025. The presentation underscores WaFd’s transition towards a commercial banking focus, with commercial loans now constituting a larger portion of its portfolio compared to mortgage and consumer loans. The bank has maintained strong credit quality with low non-performing assets, and its investments in customer service and technology have resulted in high customer satisfaction scores. WaFd continues to emphasize community development, with significant investments in affordable housing and local community initiatives.
The most recent analyst rating on (WAFD) stock is a Hold with a $31.00 price target. To see the full list of analyst forecasts on Washington Federal stock, see the WAFD Stock Forecast page.
Dividends
Washington Federal Declares Dividend for Preferred Stock
Neutral
Nov 12, 2025
On November 11, 2025, WaFd, Inc.’s Board of Directors announced a cash dividend of $12.1875 per share for its 4.875% Fixed Rate Series A Non-Cumulative Perpetual Preferred Stock. This dividend, amounting to $0.30468750 per depositary share, is scheduled for payment on January 15, 2026, to shareholders recorded by December 31, 2025.
The most recent analyst rating on (WAFD) stock is a Hold with a $31.00 price target. To see the full list of analyst forecasts on Washington Federal stock, see the WAFD Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.