Wafd, Inc. · NASDAQ:WAFD
Wafd — Investor Presentation (August 2023)
38 slides from Wafd's investor presentation, Aug 18, 2023
Slide 1: Investor Presentation
Investor Presentation As of August 18, 2023 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 sign
Slide 2: 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 • 199 branches across 8 western state
Slide 3: WaFd Bank Executive Management Committee
WaFd Bank Executive Management Committee Brent Beardall Kelli Holz Cathy Cooper President and Chief Executive SEVP 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 3 3
Slide 4: 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 5: 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 5
Slide 6: 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 7: WAFD's Evolution from Thrift to Bank Funding
WAFD’s Evolution from Thrift to Bank Funding $ in millions $16,030 $10,835 $8,577 $5,979 2007Y 2012Y 2017Y 2022Y Time Deposits Money Market Savings Checking Note: Balances as of fiscal year ending September 30. Note: Balances shown as of fiscal year ended September 30. 7
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 57 51 57 48 48 44 34 17 15 3 (1) 2017 2018 2019 2020 2021 2022 2023 (6) (12) (24)
Slide 9: Speed Matters – Website Is the New Storefront
Speed Matters – Website Is the New Storefront 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 Backlink Referring Domains to WaFd Bank 4000 WaFd Bank's online presence 3500 and domain authority have been growing significantly year 3000 over year. 2500 2000 1500 The number of referring 1000 domains has seen consistent increase over time – 3
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 Composition1 G
Slide 12: 5 Year Change by Percentage in Each Geographical Area
5 Year Change by Percentage in Each Geographical Area From June 30, 2018, to June 30, 2023 12
Slide 13: Loan and Deposit Balances by Geographical Area
Loan and Deposit Balances by Geographical Area As of June 30, 2023 $ In Millions $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 13
Slide 14: Loan Growth – Through Different Interest Rate Environments
Loan Growth – Through Different Interest Rate Environments $ in millions. New Loan Originations Loan Growth • Originations overall are reduced due to both rising • Although originations are slowing, they are interest rates and an intentional slowing to temper keeping up with repayments largely throu
Slide 15: 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 6/30/2023 amounted to $178.07 million, representing 266% of total NPAs 1 • Non-performing assets $67.0 million as of 6/30/2023 Non-Performing Assets to Total Assets and ACL to Total Loan
Slide 16: Strong Credit Quality
Strong Credit Quality Strong Credit Quality Characterized by Limited Charge-Offs The Bank experienced nine consecutive years of net recoveries, fiscal 2014 through fiscal 2022, during which net recoveries totaled $74.8 million. Although we have experienced net charge-offs YTD 2023, these have been t
Slide 17: Net Loan Portfolio Average Current LTV
Net Loan Portfolio Average Current LTV As of June 30, 2023 $ In Thousands WTD Avg % with Avg LTV % of Current Current when above Net Balance Loans LTV LTV >75% 75% Multifamily $ 2,845,457 16% 45% 5% 78% CRE - Office 793,792 5% 57% 47% 81% CRE - Other 2,396,527 14% 43% 16% 81% CRE Construction - Mult
Slide 18: Significant Liquidity and High-Quality Securities Portfolio
Significant Liquidity and High-Quality Securities Portfolio High quality, $3.6 billion cash and investment portfolio with $9.8 billion remaining collateral and lines as a source of additional potential liquidity Cash and Securities Composition Cash & Securities / Total Assets1 Sept 30, 2022 Source:
Slide 19: Investment Portfolio
Investment Portfolio High quality, $2.5 Billion investment portfolio with a duration of 3.6 years. Portfolio is 40% variable rate. HTM Investments Fair Value Gain/Loss WAL Expected Yield Agency MBS $ 384,311 $ (49,861) 6.5 2.77% AFS Investments Fair Value Gain/Loss WAL Expected Yield Agency MBS $ 95
Slide 20: Highly Diversified Deposit Base
Highly Diversified Deposit Base Wholesale Trade, % of Deposits by Industry Management of Companies and 1.40% Information, 0.90% Enterprises, 0.60% Waste Management and Utilities, 0.90% Transportation and Warehousing, Remediation Services, 1.30% 1.90% Mining, 1.60% Arts, Entertainment, and Recreation
Slide 21: Deposit Trends
Deposit Trends Shifting away from time deposits in favor of transaction accounts. Checking accounts now make up 43%. In Millions As of 6/30/2013 18,000 5.00% Transaction Accounts Time Deposits 4.50% 16,000 WTD Rate Time Transaction 4.00% Deposits Accounts 14,000 $5,615 $3,449 62% 38% 3.50% 12,000 3.
Slide 22: Deposit Flows
Deposit Flows Overall changes by quarter and balances by type Customer Deposit Accounts 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 7/31/2023 8/17/2023 Checking - Noninterest Bearing 3,279,841 3,251,603 3,269,773 3,266,734 3,070,895 2,856,165 2,729,888 2,663,384 2,656,024
Slide 23: Borrowings Outstanding & Weighted Rate
Borrowings Outstanding & Weighted Rate Borrowings are 80% FHLB and 20% Fed’s Bank Term Funding and are used in part to manage interest rate risk. Current period increase reflects increased use of short-term borrowings to fund loan growth. Rates have increased with market rates. Increase in borrowing
Slide 24: 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% 0.25% Up500 0.20% -40% 0.15% Up400 -30% 0.10% -20% 0.05% Up300 0.00% -10% Year 1 Year 2
Slide 25: Cost of Deposits in the Rising Rate Environment
Cost of Deposits in the Rising Rate Environment 25
Slide 26: AOCI vs our Peers
AOCI vs our Peers Total Accumulated Other Comprehensive Income as a percent of Equity 20% 10% 0% -10% -20% -30% -40% -50% -60% -70% WAFD BANR ZION WAL COLB 26
Slide 27: Income Statement Comparison
Income Statement Comparison In thousands Three Months Ended, 6/30/2023 6/30/2022 $ Change % Change INTEREST INCOME Loans.............................................................................................. $ 232,167 $ 149,113 $ 83,054 56% Mortgage-backed securities..........................
Slide 28: Income Statement Comparison
Income Statement Comparison In thousands Three Months Ended, 6/30/2023 6/30/2022 $ Change % Change OTHER INCOME $ 13,771 $ 17,550 $ (3,779) -21.5% OTHER EXPENSE Compensation and benefits........................................................... 50,456 48,073 2,383 5.0% Occupancy....................
Slide 29: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin Net interest income in thousands. $200,000 4.00% $190,000 3.75% $180,000 3.50% $170,000 $160,000 3.25% $150,000 3.00% $140,000 2.75% $130,000 2.50% $120,000 $110,000 2.25% $100,000 2.00% $90,000 1.75% $80,000 1.50% $70,000 $60,000 1.25% $50,000 1.00% $40,0
Slide 30: Net Income and Common Earnings Per Share
Net Income and Common Earnings Per Share Annual Quarterly 80,000 $1.40 $250,000 $4.00 Net Income (in thousands) Net Income (in thousands) 70,000 $1.20 EPS EPS $3.50 $200,000 60,000 $3.00 $1.00 50,000 $2.50 $150,000 $0.80 40,000 $2.00 $0.60 $100,000 30,000 $1.50 $0.40 $1.00 20,000 $50,000 $0.20 $0.50
Slide 31: 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 6/30/2023 Loan Other Income includes: Fees 7% • BOLI income • Rental income Other Income • Gains on property sales 48% Deposit Fees • WAFD Insurance
Slide 32: Non-Interest Expense Over Time
Non-Interest Expense Over Time Annual and Quarterly - Expenses in thousands Annual Quarterly $120,000 62% 61% 65% 59% 59% 59% 59% 57% 52% 52% 52% 55% $100,000 50% 47% 45% $80,000 35% $60,000 25% $40,000 15% $20,000 5% $0 -5% Other expense Occupancy Compensation Efficiency Ratio 32
Slide 33: Breakout of Other Expense
Breakout of Other Expense Expenses in millions $47.5 $45.9 $41.1 $41.7 $34.6 $36.5 $29.8 $52.9 $42.7 $47.2 $34.6 $38.9 $36.8 $28.9 $18.5 $16.4 $17.0 $19.5 $15.2 $14.0 $15.9 $11.6 $14.4 $13.0 $11.4 $9.8 $10.9 $9.5 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 2023 YTD FDIC Premiums Product Delivery
Slide 34: 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. TCE+ACL/Tang Assets 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Sep 2017 Sep 2018 Sep 2019 Sep 2020 Sep 2021 Sep 2022 Jun 2023 • Source: SNL Financial,
Slide 35: 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% 25.0% 2017 $
Slide 36: 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 6/30/2023: Book Value per Share $32.36 Tangible Book Value per Share $27.58 Price to BV: 0.82 Price to TBV: 1.12 36
Slide 37: Perspective through the last Credit Cycle
Perspective through the last Credit Cycle Stock Performance Comparison as of 6/30/2023 Managing Capital Text Text Text Tex 37
Slide 38: 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