Slide 1: Investor Presentation September 30th, 2022
Investor Presentation September 30th, 2022 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 signi
Slide 2: Contents
Contents Overview 3 Vision 6 Asset Quality 14 Liability Trends 17 Interest Rate Risk 19 Profitability 20 Capital 25 2
Slide 3: Overview of WaFd Bank
Overview of WaFd Bank Overview Geographic Overview • Established in 1917; IPO in 1982 • Washington State Charter Commercial Bank – WA DFI, FDIC, FRB, CFPB Regulated • Headquartered in Seattle, WA; is the second largest bank headquartered in the Pacific Northwest • Exited BSA Consent Order Dec 2021 •
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 Chief Consumer Banker Officer James Endrizzi Kim Robison Ryan Mauer EVP Chief Commercial EVP Chief Operating Officer EVP Chief Credit Officer Banker 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 48 48 48 34 17 2 3 (1) 2017 2018 2019 2020 2021 (5) (5) (12) (10) Source: Cust
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: Getting Customers to Your Website is Mission Critical
Getting Customers to Your Website is Mission Critical Back links to WAFDbank.com vs. Washingtonfederal.com 10
Slide 11: 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 12: Loan Growth – Through Different Interest Rate Environments
Loan Growth – Through Different Interest Rate Environments $ in millions. New Loan Originations Loan Growth $10,000 $18,000 $16,000 $8,000 $14,000 $12,000 $6,000 $10,000 $8,000 $4,000 $6,000 $2,000 $4,000 $2,000 $- $0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2014 2015 2016 2017 2018 2019 2020 20
Slide 13: 5 Year Change by Percentage in Each Geographical Area
5 Year Change by Percentage in Each Geographical Area From September 30, 2017, to September 30, 2022 13
Slide 14: Loan and Deposit Balances by Geographical Area
Loan and Deposit Balances by Geographical Area As of September 30, 2022 $ In Millions 14
Slide 15: 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 9,000 approved loans Over $1 billion in lending • PPP efforts providing benefit of strong organic growth and happy cu
Slide 16: 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 9/30/2022 amounted to $172.8 million, representing 388% of total NPAs 1 • Non-performing assets $44.5 million as of 9/30/2022 Non-Performing Assets to Total Assets and ACL to Total Loans
Slide 17: Strong Credit Quality
Strong Credit Quality Strong Credit Quality Characterized by Limited Charge-Offs • Net Recoveries since 2013 total $74.8 million • The Bank continues to work $50 million of loans previously charged off • 9 Consecutive years of Net Recoveries Net Loan Charge-offs (Recoveries) Average NCOs Per Year –
Slide 18: Significant Liquidity and High-Quality Securities Portfolio
Significant Liquidity and High-Quality Securities Portfolio High quality, $3.2 billion cash and investment portfolio with $9.8 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 FY 2021
Slide 19: Deposit Trends
Deposit Trends Shifting away from time deposits in favor of transaction accounts. Checking accounts now make up 42%. As of 9/30/2012 In Millions 18,000 5.00% Transaction Accounts Time Deposits 4.50% 16,000 Transaction WTD Rate Accounts Time $2,946 4.00% Deposits 34% 14,000 $5,630 66% 3.50% 12,000 3.
Slide 20: 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 4.00% 3.50% $3,000 FHLB E
Slide 21: 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 -50% 0.40% 0.35% -40% 0.30% -30% 0.25% Up500 0.20% Up400 -20% 0.15% Up300 0.10% -10% Up200 0.
Slide 22: AOCI vs our Peers
AOCI vs our Peers Total Accumulated Other Comprehensive Income as a percent of Equity 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% -35% -40% WAFD BANR ZION WAL UMPQ COLB 22
Slide 23: Income Statement Comparison
Income Statement Comparison Fiscal YTD 9/30/2022 9/30/2022 $ Change % Change INTEREST INCOME Loans.............................................................................................. $ 601,592 $ 537,660 $ 63,932 11.9% Mortgage-backed securities..............................................
Slide 24: Income Statement Comparison
Income Statement Comparison Fiscal YTD 9/30/2022 9/30/2022 $ Change % Change OTHER INCOME $ 66,372 $ 60,561 $ 5,811 9.6% OTHER EXPENSE Compensation and benefits........................................................... 193,917 176,106 17,811 10.1% Occupancy..........................................
Slide 25: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin Net interest income in thousands. $190,000 3.75% $180,000 3.50% $170,000 3.25% $160,000 $150,000 3.00% $140,000 2.75% $130,000 2.50% $120,000 2.25% $110,000 $100,000 2.00% $90,000 1.75% $80,000 1.50% $70,000 1.25% $60,000 $50,000 1.00% $40,000 0.75% $30,00
Slide 26: Net Income and Common Earnings Per Share
Net Income and Common Earnings Per Share Annual Quarterly 80,000 $1.20 $250,000 $4.00 Net Income (in thousands) Net Income EPS EPS 70,000 $3.50 $1.00 $200,000 $3.00 60,000 $0.80 $2.50 50,000 $150,000 $2.00 40,000 $0.60 $100,000 $1.50 30,000 $0.40 $1.00 20,000 $50,000 $0.20 $0.50 10,000 $0 $- - $- 20
Slide 27: 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 9/30/2022 Loan Other Income includes: Fees • BOLI income 8% • Rental income Other • Gains on property sales Income 46% • WAFD Insurance Income Deposi
Slide 28: Non-Interest Expense Over Time
Non-Interest Expense Over Time Annual and Quarterly - Expenses in millions Annual Quarterly $400,000 70.0% $100,000 58.6% 58.7% 70% 58.8% 59.3% 62.1% 60.6% 59.0% 51.6% 59.0% 57.1% 59.0% 56.8% $350,000 $90,000 57.7% 60.0% 60% 52.1% 50.4% 54.3% $80,000 $300,000 50.8% 49.5% 46.9% 47.8% 50.0% 50% $70,00
Slide 29: Breakout of Other Expense
Breakout of Other Expense $47.5 $45.9 $41.1 $41.7 $34.6 $29.8 $52.9 $42.7 $47.2 $34.6 $38.9 $28.9 $18.5 $16.4 $17.0 $19.5 $14.0 $15.9 $11.6 $14.4 $11.4 $9.8 $10.9 $9.5 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FDIC Premiums Product Delivery Information Technology Other Expense Other Expense in
Slide 30: Capital Ratios
Capital Ratios Common Equity Tier 1 Ratio 18.00% 16.00% 14.00% WAFD does not seek to maximize leverage. 12.00% 10.00% Rather, we aspire to be the bank that can 8.00% 6.00% best weather the next storm on the horizon. 4.00% 2.00% 0.00% Sep 2017 Sep 2018 Sep 2019 Sep 2020 Sep 2021 Sep 2022 Washington F
Slide 31: Impact of February 2021 Preferred Stock Issuance
Impact of February 2021 Preferred Stock Issuance 31
Slide 32: Returning Capital to Shareholders
Returning Capital to Shareholders Return of Income to Common Shareholders Common Dividend as a % of Net Income Percent of Income Stock Buyback & returned to 42.9% Net Income Dividends Shareholders 38.3% 38.0% 2015 $160,316 $177,791 111% 30.4% 30.1% 2016 $164,049 $137,808 84% 27.5% 27.8% 2017 $173,53
Slide 33: Stock Price & Book Value Per Share
Stock Price & Book Value Per Share $45 $40 $35 Stock Price $30 Book Value per Share $25 $20 $15 $10 $5 $0 As of 9/30/2022: Book Value per Share $30.22 Tangible Book Value per Share $25.49 Price to BV: .99 Price to TBV: 1.18 33
Slide 34: Perspective through the last Credit Cycle
Perspective through the last Credit Cycle Stock Performance Comparison as of 9/30/2022 4.00 3.50 3.00 2.50 2.00 Managing 1.50 Capital 1.00 Text Text 0.50 Text 0.00 Tex 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 *Stock prices obtained from Yahoo! Finance and refle
Slide 35: This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform
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