Wafd Inc 8-K, filed Oct 15, 2020

Wafd Inc (WAFD)

8-K 2020-10-15 For: 2020-10-14

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Added on April 05, 2026

About this 8-K

Wafd Inc filed this 8-K on October 15, 2020, reporting on events of October 14, 2020.

Items reported

Item 2.02: Financial results
Item 9.01: Financial statements and exhibits

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	September 30, 2020			September 30, 2019
	(In thousands, except share and ratio data)
ASSETS
Cash and cash equivalents	$	1,702,977		$	419,158
Available-for-sale securities, at fair value	2,249,492			1,485,742
Held-to-maturity securities, at amortized cost	705,838			1,443,480
Loans receivable, net of allowance for loan losses of $166,955 and $131,534	12,792,317			11,930,575
Interest receivable	53,799			48,857
Premises and equipment, net	252,805			274,015
Real estate owned	4,966			6,781
FHLB and FRB stock	141,990			123,990
Bank owned life insurance	227,749			222,076
Intangible assets, including goodwill of $302,707 and $301,368	309,906			309,247
Federal and state income tax assets, net	5,708			—
Other assets	346,508			210,989
	$	18,794,055		$	16,474,910
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Customer accounts
Transaction deposits	$	9,806,432		$	7,083,801
Time deposits	3,973,192			4,906,963
	13,779,624			11,990,764
FHLB advances	2,700,000			2,250,000
Advance payments by borrowers for taxes and insurance	49,462			57,830
Federal and state income tax liabilities, net	—			5,104
Accrued expenses and other liabilities	250,836			138,217
	16,779,922			14,441,915
Stockholders’ equity
Common stock, $1.00 par value, 300,000,000 shares authorized; 135,727,237 and 135,539,806 shares issued; 75,689,364 and 78,841,463 shares outstanding	135,727			135,540
Paid-in capital	1,678,843			1,672,417
Accumulated other comprehensive (loss) income, net of taxes	16,953			15,292
Treasury stock, at cost; 60,037,873 and 56,698,343 shares	(1,238,296)			(1,126,163)
Retained earnings	1,420,906			1,335,909
	2,014,133			2,032,995
	$	18,794,055		$	16,474,910
CONSOLIDATED FINANCIAL HIGHLIGHTS
Common stockholders' equity per share	$	26.61		$	25.79
Tangible common stockholders' equity per share	22.52			21.86
Stockholders' equity to total assets	10.72		%	12.34		%
Tangible common stockholders' equity to tangible assets	9.22			10.66
TCE + allowance for credit losses to tangible assets	10.12			11.48

Weighted average rates at period end
Loans and mortgage-backed securities	3.55		%	4.25		%
Combined loans, all interest-earning assets	3.03			4.10
Customer accounts	0.48			1.08
Borrowings	1.79			2.49
Combined cost of customer accounts and borrowings	0.69			1.30
Net interest spread	2.34			2.80


	Three Months Ended September 30,									Twelve Months Ended September 30,
	2020			2019			2020			2019
	(In thousands, except share and ratio data)									(In thousands, except share and ratio data)
INTEREST INCOME
Loans receivable	$	132,165		$	144,480		$	545,708		$	568,096
Mortgage-backed securities	8,516			17,231			49,312			74,485
Investment securities and cash equivalents	6,433			7,725			26,245			28,885
	147,114			169,436			621,265			671,466
INTEREST EXPENSE
Customer accounts	18,800			33,640			100,312			122,216
FHLB advances and other borrowings	13,482			15,624			51,445			68,190
	32,282			49,264			151,757			190,406
Net interest income	114,832			120,172			469,508			481,060
Provision (release) for credit losses	6,500			(1,900)			21,750			(1,650)
Net interest income after provision (release)	108,332			122,072			447,758			482,710
OTHER INCOME
Gain (loss) on sale of investment securities	—			—			15,028			(9)
Prepayment penalty on long-term debt	—			—			(13,809)			—
Loan fee income	1,062			970			7,293			3,941
Deposit fee income	5,854			6,495			23,691			24,882
Other income	4,155			8,992			54,757			33,504
	11,071			16,457			86,960			62,318
OTHER EXPENSE
Compensation and benefits	36,290			32,634			147,596			133,588
Occupancy	9,164			9,797			39,570			38,579
FDIC insurance premiums	3,634			2,409			10,939			9,808
Product delivery	4,450			4,456			17,010			15,934
Information technology	12,141			11,225			52,902			38,955
Other expense	12,488			12,005			47,541			46,199
	78,167			72,526			315,558			283,063
Gain (loss) on real estate owned, net	1,100			(671)			26			810
Income before income taxes	42,336			65,332			219,186			262,775
Income tax provision	7,993			12,970			45,748			52,519
NET INCOME	$	34,343		$	52,362		$	173,438		$	210,256
PER SHARE DATA
Basic earnings	$	0.45		$	0.66		$	2.26		$	2.61
Diluted earnings	0.45			0.66			2.26			2.61
Cash dividends per share	0.22			0.21			0.87			0.79
Basic weighted average shares outstanding	75,705,930			79,154,252			76,721,969			80,471,316
Diluted weighted average shares outstanding	75,711,494			79,201,083			76,731,464			80,495,163
PERFORMANCE RATIOS
Return on average assets	0.74		%	1.26		%	1.00		%	1.28		%
Return on average common equity	6.83			10.32			8.63			10.46
Net interest margin	2.67			3.12			2.93			3.16
Efficiency ratio (a)	62.09			53.08			58.99			52.09
(a) Efficiency ratio for the twelve months ended September 30, 2020 excludes the impact of $31.6 million gain on sales of fixed assets and $5.9 million impairment charge on computer hardware and software.


	As of 03/20						As of 06/20						As of 09/20
Allowance for Credit Losses (ACL) - Total	$	175,751					$	184,849					$	191,955
ACL - Loans	157,101						165,349						166,955
ACL Unfunded Commitments	18,650						19,500						25,000
Total ACL as a % of Gross Loans	1.31		%				1.29		%				1.33		%

	03/20 QTR			03/20 YTD			06/20 QTR			06/20 YTD			09/20 QTR			09/20 YTD
Loan Originations - Total	$	1,236,664		$	2,607,979		$	2,117,035		$	4,725,014		$	1,495,586		$	6,220,600
Multi-Family	127,289			214,018			118,060			332,078			71,040			403,118
Commercial Real Estate	106,906			179,933			55,845			235,778			230,544			466,322
Commercial & Industrial	347,969			761,584			1,143,166			1,904,750			264,158			2,168,908
Construction	338,748			771,192			294,063			1,065,255			392,347			1,457,602
Land - Acquisition & Development	12,796			53,488			14,695			68,183			20,196			88,379
Single-Family Residential	149,076			316,220			308,571			624,791			285,780			910,571
Construction - Custom	117,313			241,299			149,265			390,564			185,778			576,342
Land - Consumer Lot Loans	10,771			21,786			12,768			34,554			17,124			51,678
HELOC	24,864			46,975			20,190			67,165			26,120			93,285
Consumer	932			1,484			412			1,896			2,499			4,395

Purchased Loans (including acquisitions)	$	—		$	—		$	15,456		$	15,456		$	—		$	15,456

Net Loan Fee and Discount Accretion	$	4,918		$	9,843		$	7,204		$	17,047		$	8,013		$	25,060

Repayments
Loans	$	1,203,182		$	2,504,601		$	1,248,747		$	3,753,348		$	1,343,274		$	5,096,622
MBS	120,852			263,361			179,121			442,482			237,234			679,716

MBS Net Premium Amortization	$	2,292		$	4,827		$	3,250		$	8,077		$	3,890		$	11,967

Efficiency
Operating Expenses/Average Assets	1.94		%	1.98		%	1.68		%	1.87		%	1.69		%	1.82		%
Efficiency Ratio (%) (a)	59.34		%	58.19		%	57.65		%	58.02		%	62.09		%	58.99		%
Amortization of Intangibles	$	552		$	1,047		$	552		$	1,599		$	552		$	2,151
(a) Efficiency ratios for the year to date periods exclude the impact of $31.6 million gain on sales of fixed assets and $5.9 million impairment charge on computer hardware and software.

EOP Numbers
Shares Issued and Outstanding	75,706,100						75,706,026						75,689,364

Share repurchase information
Remaining shares authorized for repurchase	4,628,987						4,627,393						4,627,231
Shares repurchased	2,423,613			3,337,774			1,594			3,339,368			162			3,339,530
Average share repurchase price	$	32.43		$	33.58		$	24.90		$	33.58		$	23.34		$	33.58


Tangible Common Book Value	As of 03/20			As of 06/20			As of 09/20
$ Amount	$	1,653,635		$	1,680,051		$	1,704,227
Per Share	21.84			22.19			22.52

# of Employees	2,060			2,062			2,080

Investments
Available-For-Sale:
Agency MBS	$	1,073,165		$	1,034,014		$	968,252
Other	619,882			1,029,946			1,281,240
	$	1,693,047		$	2,063,960		$	2,249,492
Held-To-Maturity:
Agency MBS	$	920,255		$	827,316		$	705,838
	$	920,255		$	827,316		$	705,838

	As of 03/31/20					As of 06/30/20				As of 09/30/20
Loans Receivable by Category	AMOUNT		%	AMOUNT		%	AMOUNT		%
Multi-Family	$	1,467,231	10.9%	$	1,510,099	10.6%	$	1,538,762	10.6%
Commercial Real Estate	1,717,535		12.8	1,707,893		11.9	1,895,086		13.1
Commercial & Industrial	1,371,128		10.2	2,158,000		15.1	2,132,160		14.7
Construction	2,204,283		16.4	2,328,987		16.3	2,403,276		16.6
Land - Acquisition & Development	197,010		1.5	195,212		1.4	193,745		1.3
Single-Family Residential	5,582,244		41.5	5,461,605		38.2	5,304,689		36.7
Construction - Custom	547,731		4.1	607,329		4.2	674,879		4.7
Land - Consumer Lot Loans	96,579		0.7	100,102		0.7	102,263		0.7
HELOC	145,761		1.1	140,636		1.0	139,703		1.0
Consumer	105,147		0.8	91,495		0.6	83,159		0.6
	13,434,649		100%	14,301,358		100%	14,467,722		100%
Less:
Allowance	157,101			165,349			166,955
Loans in Process	1,289,812			1,353,774			1,456,072
Net Deferred Fees, Costs and Discounts	31,095			48,809			52,378
Sub-Total	1,478,008			1,567,932			1,675,405
	$	11,956,641		$	12,733,426		$	12,792,317

Net Loan Portfolio by Category	AMOUNT		%	AMOUNT		%	AMOUNT		%
Multi-Family	$	1,455,688	12.2%	$	1,497,749	11.7%	$	1,524,387	11.9%
Commercial Real Estate	1,707,894		14.3	1,684,761		13.2	1,862,173		14.6
Commercial & Industrial	1,321,271		11.0	2,095,768		16.5	2,076,848		16.2
Construction	1,206,794		10.1	1,309,255		10.3	1,328,258		10.4
Land - Acquisition & Development	141,519		1.2	141,592		1.1	142,838		1.1
Single-Family Residential	5,522,027		46.2	5,405,783		42.4	5,248,774		41.0
Construction - Custom	262,381		2.2	274,846		2.2	292,398		2.3
Land - Consumer Lot Loans	93,251		0.8	96,584		0.8	98,665		0.8
HELOC	144,036		1.2	138,578		1.1	137,652		1.1
Consumer	101,780		0.8	88,510		0.7	80,324		0.6
	$	11,956,641	100%	$	12,733,426	100%	$	12,792,317	100%


	As of 03/31/20									As of 06/30/20								As of 09/30/20
Deposits by State	AMOUNT			%		#	AMOUNT			%		#	AMOUNT			%		#
Washington	$	5,418,762		44.8	%	80	$	5,789,748		44.2	%	80	$	5,914,476		42.9	%	80
Idaho	873,164			7.2		24	918,614			7.0		24	949,920			6.9		24
Oregon	2,436,763			20.2		46	2,591,126			19.8		46	2,627,720			19.1		46
Utah	318,227			2.6		10	576,795			4.4		10	988,498			7.2		10
Nevada	399,659			3.3		11	440,065			3.4		11	442,772			3.2		11
Texas	174,066			1.4		6	220,979			1.7		6	225,819			1.6		6
Arizona	1,401,451			11.6		31	1,429,184			10.9		31	1,481,603			10.8		31
New Mexico	1,066,328			8.8		26	1,143,083			8.7		26	1,148,816			8.3		26
Total	$	12,088,420		100%		234	$	13,109,594		100%		234	$	13,779,624		100%		234


Deposits by Type	AMOUNT			%			AMOUNT			%			AMOUNT			%
Non-Interest Checking	$	1,664,707		13.8	%		$	2,235,689		17.1	%		$	2,164,071		15.7	%
Interest Checking	2,210,387			18.3			2,410,041			18.4			3,029,576			22.0
Savings	759,604			6.3			832,383			6.3			872,087			6.3
Money Market	3,029,341			25.0			3,422,335			26.1			3,740,698			27.1
Time Deposits	4,424,381			36.6			4,209,146			32.1			3,973,192			28.9
Total	$	12,088,420		100%			$	13,109,594		100%			$	13,779,624		100%

Deposits greater than $250,000 - EOP	$	3,953,908					$	4,781,447					$	5,491,395

Time Deposit Repricing	Amount			Rate			Amount			Rate			Amount			Rate
Within 3 months	$	925,549		1.79	%		$	925,920		1.78	%		$	1,178,602		1.27	%
From 4 to 6 months	927,835			1.79	%		1,192,090			1.29	%		1,282,051			1.14	%
From 7 to 9 months	875,111			1.61	%		919,329			1.47	%		371,896			0.78	%
From 10 to 12 months	809,660			1.61	%		262,359			0.95	%		235,286			0.70	%

Non-Performing Assets	AMOUNT			%			AMOUNT			%			AMOUNT			%
Non-Accrual Loans:
Multi-Family	$	—		—%			$	224		0.6%			$	—		—%
Commercial Real Estate	4,374			13.4			3,416			9.7			3,771			13.0
Commercial & Industrial	470			1.4			1,847			5.3			329			1.1
Construction	3,353			10.3			3,353			9.6			1,669			5.8
Land - Acquisition & Development	82			0.3			78			0.2			—			—
Single-Family Residential	22,859			70.1			24,876			71.1			22,431			77.2
Construction - Custom	—			—			—			—			—			—
Land - Consumer Lot Loans	408			1.2			277			0.8			243			0.8
HELOC	1,064			3.3			866			2.5			553			1.9
Consumer	—			—			64			0.2			60			0.2
Total non-accrual loans	32,610			100%			35,001			100%			29,056			100%
Real Estate Owned	5,463						5,956						4,966
Other Property Owned	3,314						3,673						3,673
Total Non-Performing Assets	$	41,387					$	44,630					$	37,695

Non-performing loans as % of total net loans	0.27		%				0.27		%				0.23		%
Non-performing assets as % of total assets	0.24		%				0.25		%				0.20		%


Historical CPR Rates (e)
	WAFD		WAFD
Average for Quarter Ended:	SFR Mortgages		GSE MBS











9/30/2018	12.3	%	12.0	%
12/31/2018	10.4	%	10.3	%
3/31/2019	9.3	%	9.4	%
6/30/2019	13.8	%	11.4	%
9/30/2019	18.2	%	16.9	%
12/31/2019	22.0	%	21.7	%
3/31/2020	19.8	%	19.7	%
6/30/2020	28.1	%	30.3	%
9/30/2020	31.2	%	42.8	%

(e) The CPR Rate (conditional payment rate) is the rate that is equal to the proportion of the principal of a pool of loans that is paid off prematurely in each period.


	Quarter Ended
	March 31, 2020										June 30, 2020								September 30, 2020
	Average				Average		Average				Average		Average				Average
	Balance		Interest		Rate		Balance		Interest		Rate		Balance		Interest		Rate
Assets
Loans receivable	$	11,890,545	$	138,549	4.67	%	$	12,470,825	$	132,847	4.27	%	$	12,777,706	$	132,165	4.10	%
Mortgage-backed securities	2,194,479		14,341		2.62		1,931,826		10,843		2.25		1,756,588		8,516		1.92
Cash & investments	951,719		5,281		2.23		2,093,965		4,696		0.90		2,526,684		4,710		0.74
FHLB & FRB Stock	122,320		1,447		4.74		152,122		1,322		3.49		142,207		1,723		4.81

Total interest-earning assets	15,159,063		159,618		4.22	%	16,648,738		149,708		3.61	%	17,203,185		147,114		3.39	%
Other assets	1,204,060						1,294,675						1,327,413
Total assets	$	16,363,123					$	17,943,413					$	18,530,598

Liabilities and Equity
Interest-bearing customer accounts	10,309,374		28,638		1.11	%	10,692,697		21,393		0.80	%	11,335,819		18,800		0.66	%
FHLB advances	2,208,242		13,368		2.43		2,953,297		10,938		1.49		2,705,435		13,482		1.98
Other borrowings	77		—		—		—		—		—		—		—		—

Total interest-bearing liabilities	12,517,693		42,006		1.35	%	13,645,994		32,331		0.95	%	14,041,254		32,282		0.91	%
Noninterest-bearing customer accounts	1,610,077						2,045,305						2,182,773
Other liabilities	212,129						262,108						295,544
Total liabilities	14,339,899						15,953,407						16,519,571
Stockholders’ equity	2,023,224						1,990,006						2,011,027
Total liabilities and equity	$	16,363,123					$	17,943,413					$	18,530,598

Net interest income			$	117,612					$	117,377					$	114,832

Net interest margin (1)					3.10	%					2.82	%					2.67	%

(1) Annualized net interest income divided by average interest-earning assets


			AMOUNT OF LOANS		# OF LOANS										% based	% based
TYPE OF LOANS	#LOANS	AVG Size	NET OF LIP & CHG-OFFs		30	60	90	Total	on #		$ Delinquent		on $

September 30, 2020
Multi-Family	1,103	1,395	$	1,538,240	—	—	—	—	—	%	$	—	—	%
Commercial Real Estate	1,103	1,709	1,884,688		—	1	2	3	0.27		478		0.03
Commercial & Industrial	8,629	245	2,115,513		—	2	4	6	0.07		863		0.04
Construction	549	2,463	1,352,414		—	—	2	2	0.36		1,662		0.12
Land - Acquisition & Development	122	1,259	153,571		—	—	—	—	—		—		—
Single-Family Residential	21,918	242	5,293,962		30	13	99	142	0.65		26,354		0.50
Construction - Custom	1,161	255	295,953		—	—	—	—	—		—		—
Land - Consumer Lot Loans	1,123	90	101,394		1	—	3	4	0.36		365		0.36
HELOC	3,090	45	140,222		10	4	9	23	0.74		731		0.52
Consumer	2,825	29	83,315		22	5	21	48	1.70		356		0.43
	41,623	311	$	12,959,272	63	25	140	228	0.55	%	$	30,809	0.24	%
June 30, 2020
Multi-Family	1,091	1,384	$	1,509,837	—	—	1	1	0.09	%	$	224	0.01	%
Commercial Real Estate	1,101	1,545	1,700,568		1	1	6	8	0.73		3,266		0.19
Commercial & Industrial	8,524	251	2,138,462		—	7	11	18	0.21		3,736		0.17
Construction	556	2,401	1,334,948		—	—	2	2	0.36		3,353		0.25
Land - Acquisition & Development	118	1,290	152,234		—	—	—	—	—		—		—
Single-Family Residential	22,746	240	5,452,424		27	25	93	145	0.64		29,122		0.53
Construction - Custom	1,069	260	278,182		—	—	—	—	—		—		—
Land - Consumer Lot Loans	1,117	89	99,255		3	2	5	10	0.90		482		0.49
HELOC	3,042	46	141,165		4	1	12	17	0.56		720		0.51
Consumer	2,952	31	91,700		23	25	13	61	2.07		702		0.77
	42,316	305	$	12,898,775	58	61	143	262	0.62	%	$	41,605	0.32	%
March 31, 2020
Multi-Family	1,103	1,330	$	1,467,430	1	—	—	1	0.09	%	$	356	0.02	%
Commercial Real Estate	1,107	1,556	1,722,533		2	3	5	10	0.90		4,642		0.27
Commercial & Industrial	1,824	746	1,359,847		16	—	7	23	1.26		2,273		0.17
Construction	529	2,325	1,230,142		—	—	2	2	0.38		3,353		0.27
Land - Acquisition & Development	115	1,321	151,919		1	—	—	1	0.87		394		0.26
Single-Family Residential	23,347	239	5,568,843		40	20	74	134	0.57		26,182		0.47
Construction - Custom	993	267	265,556		—	—	—	—	—		—		—
Land - Consumer Lot Loans	1,109	86	95,829		2	2	6	10	0.90		777		0.81
HELOC	3,086	47	146,282		4	2	10	16	0.52		1,052		0.72
Consumer	3,133	34	105,361		42	65	13	120	3.83		630		0.60
	36,346	333	$	12,113,742	108	92	117	317	0.87	%	$	39,659	0.33	%


Item 2.02			Results of Operations and Financial Condition


Item 9.01			Financial Statements and Exhibits


	As of 03/31/20						As of 06/30/20						As of 09/30/20
	AMOUNT		%		AMOUNT		%		AMOUNT		%
Restructured loans:
Multi-Family	$	316	0.3%		$	310	0.3%		$	304	0.3%
Commercial Real Estate	1,883		1.8		1,849		1.9		1,462		1.6
Commercial & Industrial	396		0.4		433		0.4		51		0.1
Construction	—		—		—		—		—		—
Land - Acquisition & Development	82		0.1		78		0.1		—		—
Single-Family Residential	97,025		93.2		91,290		93.1		85,607		93.6
Construction - Custom	—		—		—		—		—		—
Land - Consumer Lot Loans	3,418		3.3		3,206		3.3		3,106		3.4
HELOC	843		0.8		835		0.9		826		0.9
Consumer	56		0.1		55		0.1		52		0.1
Total restructured loans	$	104,019	100%		$	98,056	100%		$	91,408	100%

Restructured loans were as follows:
Performing	$	101,076	97.2%		$	95,093	97.0%		$	89,072	97.4%
Non-performing (b)	2,943		2.8		2,963		3.0		2,336		2.6
Total restructured loans	$	104,019	100%		$	98,056	100%		$	91,408	100%
(b) Included in "Total non-accrual loans" above

	AMOUNT		CO % (c)		AMOUNT		CO % (c)		AMOUNT		CO % (c)
Net Charge-offs (Recoveries) by Category
Multi-Family	$	—	—%		$	—	—%		$	—	—%
Commercial Real Estate	(1,007)		(0.23)		(193)		(0.05)		(866)		(0.18)
Commercial & Industrial	72		0.02		2,860		0.53		915		0.17
Construction	(5)		—		—		—		(129)		(0.02)
Land - Acquisition & Development	(126)		(0.26)		(433)		(0.89)		(51)		(0.11)
Single-Family Residential	(192)		(0.01)		(377)		(0.03)		(447)		(0.03)
Construction - Custom	—		—		—		—		—		—
Land - Consumer Lot Loans	(399)		(1.65)		(17)		(0.07)		(46)		(0.18)
HELOC	(1)		—		(1)		—		(1)		—
Consumer	(130)		(0.49)		(137)		(0.60)		19		0.09
Total net charge-offs (recoveries)	$	(1,788)	(0.05)%		$	1,702	0.05%		$	(606)	(0.02)%
(c) Annualized Net Charge-offs (recoveries) divided by Gross Balance

FHLB Advances (Effective Maturity)	Amount		Rate		Amount		Rate		Amount		Rate
Within 1 year	$	450,000	1.51	%	$	300,000	1.59	%	$	630,000	2.69	%
1 to 3 years	850,000		2.49	%	950,000		2.72	%	520,000		2.21	%