Wafd, Inc. · NASDAQ:WAFD
Wafd — Washington Federal, Inc. (WaFd Bank) — Piper Sandler Virtual West Coast Tour 2022
35 slides from Wafd's conference presentation, Sep 14, 2022
Slide 1: Piper Sandler Virtual West Coast Tour
Piper Sandler Virtual West Coast Tour September 14th, 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
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 Washington Federal
Overview of Washington Federal 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 D
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 • Mortgage and Consumer loans - 41 % of total • C&I and Commercial Real Estate loans made net loans up 77% of all originations in 2021 compared to 49% in 2014 • Commercial loans growing fastes
Slide 13: 5 Year Change by Percentage in Each Geographical Area
5 Year Change by Percentage in Each Geographical Area From September 30, 2016, to September 30, 2021 13
Slide 14: Loan and Deposit Balances by Geographical Area
Loan and Deposit Balances by Geographical Area As of September 30, 2021 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 6/30/2022 amounted to $170.9 million, representing 339% of total NPAs 1 • Non-performing assets $50.4 million as of 6/30/2022 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 $74.5 million • The Bank continues to work $50 million of loans previously charged off • 8 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 $9.9 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%. Core Deposits = 96% of Total 19
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. In 2021, strong growth in deposi
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% -40% -30% -20% -10% 0% 10% Base Up 100 Up 200 Up 300 Up 400 FY 2017 FY 2018 FY 2019 FY 2
Slide 22: AOCI vs our Peers
AOCI vs our Peers Total Accumulated Other Comprehensive Income as a percent of Equity In Thousands
Slide 23: Income Statement Comparison
Income Statement Comparison Fiscal YTD 6/30/2022 6/30/2021 $ Change % Change INTEREST INCOME Loans.............................................................................................. $ 426,882 $ 400,621 $ 26,261 6.6% Mortgage-backed securities...............................................
Slide 24: Income Statement Comparison
Income Statement Comparison Fiscal YTD 6/30/2022 6/30/2021 $ Change % Change OTHER INCOME $ 51,890 $ 41,558 $ 10,332 24.9% OTHER EXPENSE Compensation and benefits........................................................... 142,613 130,196 12,417 9.5% Occupancy.........................................
Slide 25: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin Net interest income in thousands. 25
Slide 26: Net Income and Common Earnings Per Share
Net Income and Common Earnings Per Share Annual Quarterly $250,000 $3.00 Net Income (in thousands) EPS $2.50 $200,000 $2.00 $150,000 $1.50 $100,000 $1.00 $50,000 $0.50 $0 $- 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Issued $300 million of Preferred Stock in February 2021
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 6/30/2022 Loan Other Income includes: Fees • BOLI income 9% • Rental income Other • Gains on property sales Income 53% • WAFD Insurance Income Deposi
Slide 28: Non-Interest Expense Over Time
Non-Interest Expense Over Time Annual and Quarterly - Expenses in millions Annual Quarterly 28
Slide 29: Breakout of Other Expense
Breakout of Other Expense $47.5 $41.1 $41.7 $34.6 $29.1 $29.8 $52.9 $42.7 $34.6 $38.9 $31.0 $28.9 $18.5 $17.0 $16.4 $17.0 $14.0 $15.9 $11.8 $11.4 $11.6 $14.4 $9.8 $10.9 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FDIC Premiums Product Delivery Information Technology Other Expense Other Expense i
Slide 30: Capital Ratios
Capital Ratios Common Equity Tier 1 Ratio 20.00% 18.00% WAFD does not seek to maximize leverage. 16.00% 14.00% 12.00% Rather, we aspire to be the bank that can 10.00% 8.00% best weather the next storm on the horizon. 6.00% 4.00% 2.00% 0.00% Sep 2016 Sep 2017 Sep 2018 Sep 2019 Sep 2020 Sep 2021 Washi
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% 31.9% 30.4% 30.1% 2016 $164,049 $137,808 84% 27.5% 2017 $173,53
Slide 33: Stock Price & Book Value Per Share
Stock Price & Book Value Per Share As of 6/30/2022: Book Value per Share $29.39 Tangible Book Value per Share $24.66 Price to BV: 1.04 Price to TBV: 1.24 33
Slide 34: Perspective through the last Credit Cycle
Perspective through the last Credit Cycle Stock Performance Comparison as of 6/30/2022 Managing Capital Text Text Text Tex 34
Slide 35: 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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