Wafd, Inc. · NASDAQ:WAFD
Wafd — Washington Federal — D.A. Davidson West Coast Bank Tour (August 2021)
29 slides from Wafd's conference presentation, Aug 17, 2021
Slide 1: D.A. Davidson West Coast Bank Tour
D.A. Davidson West Coast Bank Tour August 17, 2021 This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of Washington Federal’s management and are subject
Slide 2: Contents
Contents Overview 3 Vision 6 Asset Quality 11 Liability Trends 16 Interest Rate Risk 18 Profitability 19 Capital 24 2
Slide 3: Overview of Washington Federal
Overview of Washington Federal Overview Geographic Overview • Established in 1917; IPO in 1982 • National Bank Charter – OCC, FRB, CFPB Regulated • Headquartered in Seattle, WA; is the second largest bank headquartered in the Pacific Northwest • 224 branches across 8 western states • Full-service co
Slide 4: WaFd Bank Executive Management Committee
WaFd Bank Executive Management Committee Brent Beardall Vincent Beatty Cathy Cooper President and Chief Executive EVP Chief Financial Officer EEVP Retail Banking Group Officer Manager James Endrizzi Kim Robison Ryan Mauer EVP of Commercial Banking EVP of Operations EVP Chief Credit Officer 4 4
Slide 5: WaFd Bank Demographics
WaFd Bank Demographics Our markets are among the most desirable in the US and create a foundation for loan growth without excessive risk Projected Median Projected Company Deposit Percent of Total Population Population HH HH Income Number Deposits Market National Population Change Change Income Chan
Slide 6: Vision 2025
Vision 2025 Our Objective: A highly-profitable, digital-first bank that leverages data to anticipate financial needs and empower our clients by creating frictionless experiences across all interactions and devices. Our Values: Integrity, Teamwork, Ownership, Service, Simplicity & Discipline 6
Slide 7: Evolution of Our Franchise
Evolution of Our Franchise 10 years of investment has put us on glide path to an even stronger balance sheet and deeper client relationships 2025 Vision 2007-2018 Digital Focus Leverage data 1917-2007 to anticipate financial needs Commercial and empower Relationship our clients deposits and diversif
Slide 8: Net Promoter Score Approaching Best In Class
Net Promoter Score Approaching Best In Class Our investments in customer service, usability and technology are translating into high customer satisfaction levels Peer Net Promoter Score 1 WaFdaa Net Promoter Score 1 75 51 51 48 34 17 8 2 3 2017 2018 2019 2020 (5) (5) (12) (10) Source: Customer Guru
Slide 9: Speed Matters – Website is the New Storefront
Speed Matters – Website is the New Storefront New wafdbank.com Google page speed scores 9
Slide 10: Commitment to ESG & Diversity
Commitment to ESG & Diversity We believe our enduring franchise comes from core principles focused on helping the neighborhoods we serve and creating long- term value for all stakeholders led by a Board, management and employee base that bring together a diversity of backgrounds Board Composition Ge
Slide 11: Loan Growth – Through Different Interest Rate Environments
Loan Growth – Through Different Interest Rate Environments $ in millions. New Loan Originations Loan Growth $8,000 $12,000 $10,000 $6,000 $8,000 $6,000 $4,000 $4,000 $2,000 $2,000 $0 $- 2014 2015 2016 2017 2018 2019 1Q20 2Q20 3Q20 2020 2014 2015 2016 2017 2018 2019 2020 2021 (est) Mortgage & Consume
Slide 12: Helping Small Businesses and Individuals
Helping Small Businesses and Individuals Deferred loan payments now resuming • Using nimbleness, technology and hard work to serve clients and Paycheck Protection Program communities 8,500 approved loans Over $1 billion in lending • PPP efforts providing benefit of strong organic growth and happy cu
Slide 13: Non-Performing Assets Near Record Lows
Non-Performing Assets Near Record Lows We have retained a strong ACL while NPAs have declined since 2010 • ACL at 6/30/2021 amounted to $170.7 million, representing 374% of total NPAs 1 • Non-performing assets $45.7 million as of 6/30/2021 Non-Performing Assets to Total Assets and ACL to Total Loans
Slide 14: Strong Credit Quality
Strong Credit Quality Strong Credit Quality Characterized by Limited Charge-Offs • Net Recoveries since 2013 total $70 million • The Bank continues to work $82 million of loans previously charged off Net Loan Charge-offs (Recoveries) Average NCOs Per Year – Last 20 Years For Fiscal Year End 9/30 2.0
Slide 15: Significant Liquidity and High-Quality Securities Portfolio
Significant Liquidity and High-Quality Securities Portfolio High quality, $5 billion cash and investment portfolio with $10.1 billion remaining collateral and lines as a source of additional potential liquidity Cash & Securities / Total Assets FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Qtr-End
Slide 16: Deposit Trends
Deposit Trends $ in millions. Shifting away from time deposits in favor of transaction accounts. Checking accounts now make up over 40%. As of 6/30/2011 18,000 5.00% Transaction Accounts Transaction Accounts Time Deposits 16,000 4.50% $2,618 WTD Rate 30% Time 4.00% Deposits 14,000 $6,096 70% 3.50% 1
Slide 17: Borrowings Outstanding & Weighted Rate
Borrowings Outstanding & Weighted Rate Borrowings are 100% FHLB and are used in part to manage interest rate risk. Rates have declined with market rates. Increase in borrowings for 2020 was from locking in $1 billion of funding at a fixed rate of 66 bps for 10 years $3,500 4.50% 4.00% $3,000 3.50% $
Slide 18: Balanced Interest Rate Risk
Balanced Interest Rate Risk Interest Rate Risk is well managed and skewed toward the upside in the current environment given asset sensitivity Change in NPV (%) Net Interest Margin Sensitivity vs. Base Case IRR measures as of June 30, 2021: • Net Interest Income (NII) would increase by 9.2% in +200
Slide 19: Income Statement Comparison
Income Statement Comparison 19 19
Slide 20: Income Statement Comparison
Income Statement Comparison Efficiency Ratio of 59.51% for fiscal year 2021 up from 58.02% for the same period of prior year. Effective tax rate year to date ended June 2021 is 21.0% compared to 21.35% from the same period ended June 2020 20
Slide 21: Net Income and Common Earnings Per Share
Net Income and Common Earnings Per Share Annual Quarterly 70,000 $1.00 Net Income EPS $0.90 60,000 $0.80 50,000 $0.70 $0.60 40,000 $0.50 30,000 $0.40 $0.30 20,000 $0.20 10,000 $0.10 - $- Issued $300 million of Preferred Stock in February 2021 with a dividend of 4.875% 21
Slide 22: Non-Interest Income
Non-Interest Income Diverse sources of Non-Interest Income provide steady growth and balance our revenue profile Non-Interest Income for Quarter-Ended 6/30/2021 Other Income includes: Loan Fee • BOLI income Income • Rental income 13% Other • Gains on property sales Income • WAFD Insurance Income 40%
Slide 23: Non-Interest Expense
Non-Interest Expense Non-Interest Expense Over Time ($MM) Other Expense includes: • FDIC Premiums • Product Delivery • Information Technology • Miscellaneous ‘Other’ line-item expenses include professional services, marketing and administrative costs. Breakout of Other Expense $47.5 $41.7 $34.6 $29.
Slide 24: Market Cap Yield
Market Cap Yield As of March 31, 2021 Peer Median: 7.9% 11.3% 10.9% 9.4% 7.9% 6.8% 6.9% 6.3% 5.9% 6.2% UMPQ WAFD HMST HFWA COLB BANR WAL UMPQ ZION Top 100 Banks Average 24
Slide 25: Capital Ratios
Capital Ratios WAFD does not seek to maximize leverage. Rather, we aspire to be the bank that can best weather the next storm on the horizon. • Source: SNL Financial, Company Filings 25
Slide 26: Returning Capital to Shareholders
Returning Capital to Shareholders Common Dividend as a % of Net Income 42.9% 38.3% 31.9% 30.4% 30.1% 27.5% 2015 2016 2017 2018 2019 2020 Recent Capital Activities • Current cash dividend of $0.23 provides a yield of 2.78% based on the current stock price • Since 2013, 36.3 million shares repurchased
Slide 27: Stock Price & Book Value Per Share
Stock Price & Book Value Per Share $40 $35 $30 Stock Price $25 Book Value per Share $20 $15 $10 $5 $0 As of 6/30/2021: Book Value per Share $27.74 Tangible Book Value per Share $23.30 Price to BV: 1.15 Price to TBV: 1.36 27
Slide 28: Perspective through the last Credit Cycle
Perspective through the last Credit Cycle Stock Performance Comparison as of 6/30/2021 3.50 3.00 2.50 2.00 1.50 Managing Capital 1.00 Text 0.50 Text Text 0.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 Tex 2016 2017 2018 2019 2020 2021 *Stock prices obtained from Yahoo! Finance and reflect monthly
Slide 29: Forward-looking statements
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of Washington Federal’s management and are subject to significant risks and uncertainties. The forward
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