Wafd, Inc. · NASDAQ:WAFD

Wafd — Washington Federal — Investor Presentation (September 2019)

36 slides from Wafd's investor presentation, Sep 30, 2019

  1. Slide 1: Investor Presentation, September 30, 2019

    Investor Presentation, September 30, 2019 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 signif

  2. Slide 2: WAFD Bank Profile

    WAFD Bank Profile • Established in 1917; IPO in 1982; • National Bank Charter – OCC, Fed, CFPB Regulated • 2nd Largest Bank Headquartered in the Pacific Northwest • 234 Branches • Consumer & Commercial Banking • Strong Capital, High Asset Quality, Low-Cost Provider • Portfolio Mortgage Lender • Prof

  3. Slide 3: Washington Federal Bank

    Washington Federal NASDAQ: WAFD Bank Headquarters Seattle, WA President & Brent Beardall Chief Executive Officer Chief Financial Officer Vince Beatty Assets $16.47 billion Deposits $11.99 billion Stockholder Equity $2.03 billion Branches 234 Footprint 8 states ATMs 293 Employees 1,971 Efficiency Rat

  4. Slide 4: WAFD Bank Demographics

    WAFD Bank Demographics Demographic Profile (Washington Federal, Inc) Projected Median Projected Company Deposit Percent of Total Population Population HH HH Income Number Deposits Market National Population Change Change Income Change of in Market Share Franchise 2020 2010-2020 2020-2025 2020 2020-2

  5. Slide 5: History of Acquisitions

    History of Acquisitions $547M $945M $1.02B $253M $150M $634M $1.3B $539M 2007 2008 2010 2011 2011 2012 2013 2014 Bank Bank Bank Deposits Bank Bank Deposits Deposits NM Bellevue Bellingham NM AZ OR WA, OR, AZ, NV ID, NM WA WA Since going public in 1982 we have successfully integrated 19 acquisitions

  6. Slide 6: Deposit Mix

    Deposit Mix As of 9/30/2008 As of 9/30/2019 Time Transaction Deposits Accounts $4,907 $1,937 41% 58% Time Transaction Deposits Accounts $5,232 $7,084 73% 59% Core Deposits = 92.6% of Total 6

  7. Slide 7: Total Net Loans

    Total Net Loans (in millions) $12,000 • Mortgage and Consumer are 54 % of total net $10,000 loans $8,000 • Commercial segments growing fastest over last $6,000 three years $4,000 • Will invest primarily in Commercial growth $2,000 $0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Commercial & Industrial (C&I) C

  8. Slide 8: New Loan Originations

    New Loan Originations (in millions) $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- 2011 2012 2013 2014 2015 2016 2017 2018 2019 Commercial & Industrial (C&I) Commercial Real Estate Mortgage & Consumer • C&I and Commercial Real Estate loans made • Mortgage and Consumer Loans are larg

  9. Slide 9: New Loan Originations (Quarterly)

    New Loan Originations (in millions) $1,200 $1,000 $800 $600 $400 $200 $- 12/17 QTR 03/18 QTR 06/18 QTR 09/18 QTR 12/18 QTR 03/19 QTR 06/19 QTR 09/19 QTR Mortgage & Consumer Commercial Real Estate Commercial & Industrial (C&I) • Fiscal year to date originations are 11% date originations are 1% lower

  10. Slide 10: Non-Performing Assets & Allowance Trends

    Non-Performing Assets & Allowance Trends 5.50% Non-Performing Assets to 4.43% Total Assets 4.50% ALLL to Loans 3.50% 2.50% 1.50% 1.04% ALLL 0.50% 0.27% Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 -0.50% • Steady annual improvement in credit quality • Non perfo

  11. Slide 11: Net Loan Charge-offs (Recoveries)

    Net Loan Charge-offs (Recoveries) 2.50% As a % of Loans Outstanding 2.00% 1.50% 1.00% 0.50% 0.00% -0.50% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 • Recoveries are not budgeted going forward but the Bank continues to work $92 million of loans that were previously charged off • Net

  12. Slide 12: Net Charge-offs

    Net Charge-offs: • Recoveries are not budgeted going forward but the Bank continues to work $92 million of loans that were previously charged off • Net Recoveries since 2013 total $59 million 12

  13. Slide 13: Cash and Investments

    Cash and Investments as of September 30, 2019 • Investment Portfolio targets low High Quality credit risk / moderate duration Cash Bonds 13% 7% • 93% Cash, US Government backed Agency Bonds and MBS • Current yield on the Investment Portfolio is 3.0% and duration is 4 years US Govt Backed 81% US Govt

  14. Slide 14: Interest Rate Risk Sensitivity

    Interest Rate Risk Sensitivity IRR measures as of -50% % Change in NPV September 30, 2019: -40% • Net Interest Income (NII) would -30% increase by 1.35% in +200 bps -20% immediate and parallel shock -10% • Net Portfolio Value after +200 0% Up 100 Up 200 Up 300 Up 400 bps shock is 10.45% lower at 13.

  15. Slide 15: Interest Rate Risk Sensitivity

    Interest Rate Risk Sensitivity Net Interest Margin Sensitivity vs Base Case 0.15% 0.10% Up100 0.05% Up200 Up300 Up400 0.00% Year 1 Year 2 Year 3 Up500 -0.05% -0.10% -0.15% • These scenarios assume no management actions taken to proactively manage the balance sheet in the changing interest rate scena

  16. Slide 16: Interest Rate Spread vs Net Interest Income

    Interest Rate Spread vs Net Interest Income 5.00% $600 Net Interest Spread and Net Interest Income 4.50% 4.14% $500 4.00% 3.81% $400 3.50% 3.17% 3.02% 2.90% 3.00% 2.80% $300 2.65% 2.50% 2.57% 2.47% $200 2.00% 2.16% 2.17% 2.04% 2.05% $100 1.50% 1.00% $0 • Proactively managing interest rate risk has r

  17. Slide 17: Borrowings Outstanding

    Borrowings Outstanding $4,000 4.50% $3,500 Due within 1 year Borrowings 4.00% Rate $3,000 $2,500 3.50% $2,000 3.00% $1,500 $1,000 2.50% $500 $0 2.00% 17

  18. Slide 18: Net Income and Earnings Per Share - Annual

    Net Income and Earnings Per Share - Annual $250,000 $2.80 $2.60 Net Income $2.40 $200,000 $2.20 EPS $2.00 $150,000 $1.80 $1.60 $100,000 $1.40 $1.20 $1.00 $50,000 $0.80 $0.60 $0 $0.40 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 • Net income and EPS increasing 18

  19. Slide 19: Net Income and Earnings Per Share - Quarterly

    Net Income and Earnings Per Share - Quarterly $60,000 $0.80 Net Income EPS $0.70 $50,000 $0.60 $40,000 $0.50 $30,000 $0.40 $0.30 $20,000 $0.20 $10,000 $0.10 $0 $- Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 • Net income and EPS increasing 19

  20. Slide 20: Yield Curve

    Yield Curve 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Overnight 1 Year 5 Year 10 Year 12/31/2015 9/30/2019 • Despite this flattening of the yield curve, net interest margin is unchanged at 3.18% when comparing the quarter ended December 31, 2015 to September 30, 2019. 20

  21. Slide 21: Calendar 2018 Net Income/Market Cap

    Calendar 2018 Net Income/Market Cap 21

  22. Slide 22: Income Statement Comparison

    Income Statement Comparison Fiscal YTD 9/30/2019 9/30/2018 $ Change % Change INTEREST INCOME Loans....................................................................... $ 568,096 $ 515,807 $ 52,289 10.1% Mortgage-backed securities.................................... 74,485 70,407 4,078 5.8% Investm

  23. Slide 23: Income Statement Comparison

    Income Statement Comparison Fiscal YTD 9/30/2019 9/30/2018 $ Change % Change OTHER INCOME $ 62,318 $ 44,078 $ 18,240 41.4% OTHER EXPENSE Compensation and benefits.................................... 133,588 123,554 10,034 8.1% Occupancy...............................................................

  24. Slide 24: Non-Interest Income

    Non-Interest Income Other Income Deposit Fees Loan Fees Gain on Sale of Investments • Non-Interest Income growth driven by deposit $70,000 transaction fees + BOLI Thousands and the Sale of Buildings $60,000 • Strategic Objective to $50,000 grow non-interest income $40,000 $30,000 $20,000 $10,000 $0

  25. Slide 25: Expenses

    Expenses • Other expense includes Other expense Occupancy Compensation marketing, printing, professional services, and $300,000 regulatory fees $250,000 • 2016 Efficiency Ratio: 50.8% $200,000 • 2017 Efficiency Ratio: 47.8% $150,000 $100,000 • 2018 Efficiency Ratio: $50,000 50.4% $0 • 2019 Efficienc

  26. Slide 26: BSA Improvements

    BSA Improvements • BSA Consent order was issued in February 2018 • Recognized $1.1 million in non-recurring BSA related costs during Q4 2019 • Management is committed to turning a weakness into a strength. • Over 30 WAFD Employees ACAMS Certified. • Over 65 FTE in our BSA team currently. 26

  27. Slide 27: Capital Ratios

    Capital Ratios Capital Management WAFD does not seek to maximize leverage. Sep 2015 Sep 2016 Sep 2017 Sep 2018 Sep 2019 Rather, we aspire to be the bank that can Tangible Common best weather the Equity + Allowance for next storm on the Loan Loss Reserve 12.36% 12.28% 12.24% 11.67% 11.48% horizon. /T

  28. Slide 28: Returning Capital to Shareholders

    Returning Capital to Shareholders Return of Income to Shareholders Percent of Recent Capital Activities Stock Buyback & Income returned WAFD will pay its 146th consecutive Net Income Dividends to Shareholders quarterly cash dividend on August 9th 2014 157,364 146,347 93% 2015 160,316 177,791 111% Cu

  29. Slide 29: Next Step in Our Evolution – Organic Growth

    Next Step in Our Evolution – ORGANIC GROWTH We aspire to organically grow deposits by substantially increasing checking accounts while replacing wholesale borrowings and reducing CDs 2025 Vision Employer of Choice 2007-2018 Great work culture that attracts and Deposit Focus retains superior Leverage

  30. Slide 30: Who do we want to be in 7 years?

    Who do we want to be in 7 years? 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. 30 ©2018 Washington Federal. All Right Reserved www.washingtonfederal.com

  31. Slide 31: z ©2018 Washington Federal. All Right Reserved www.washingtonfederal.com

    z 31 ©2018 Washington Federal. All Right Reserved www.washingtonfederal.com

  32. Slide 32: Our Vision

    • To be the most trusted and highly recommended bank in the markets we serve. • How? – Technology that makes banking with WAFD simple, reliable and fast. Technology should enable a real-time understanding of our clients so we can anticipate their needs and risks – Relationships matter! We work proac

  33. Slide 33: Government shutdown client support offer

    % 1,700 0 loan 0% Interest approvals For 90 Days % 1,700 5 checking 5% Interest Through account 12/31/2019 openings % 10 10% Interest $24 million After available 1/1/2020 with final credit payment by Washington Federal offered our neighbors who are Federal government 12/31/2022 employees a solution

  34. Slide 34: Stock Price & Book Value Per Share

    Stock Price & Book Value Per Share $40 $35 $30 $25 Stock Price Book Value per Share $20 $15 $10 $5 $0 As of 9/30/2019: Book Value per Share $25.79 Tangible Book Value per Share $21.86 Price to BV: 1.43 Price to TBV: 1.69 34

  35. Slide 35: Perspective through the last Credit Cycle

    Perspective through the last Credit Cycle Stock Performance Comparison as of 9/30/2019 2.50 2.00 1.50 Managing 1.00 Capital Text 0.50 Text Text 0.00 Tex 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 *Stock prices obtained from Yahoo! Finance and reflect monthly adjusted (stock spl

  36. Slide 36: 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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