Wafd, Inc. · NASDAQ:WAFD
Wafd — Investor Presentation (May 2023)
40 slides from Wafd's investor presentation, May 15, 2023
Slide 1: Investor Presentation As of March 31, 2023
Investor Presentation As of March 31, 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 signi
Slide 2: Contents
Contents Overview 3 Vision 6 Asset Quality 13 Liability Trends 21 Interest Rate Risk 26 Profitability 29 Capital 36 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 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 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: 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. 8
Slide 9: 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 44 44 34 17 15 3 (1) 2017 2018 2019 2020 2021 2022 (6) (12) (24) (41) So
Slide 10: Speed Matters – Website Is the New Storefront
Speed Matters – Website Is the New Storefront New wafdbank.com Google page speed scores 100 90 80 70 60 50 40 30 20 10 0 Desktop Mobile 10
Slide 11: 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 12: 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 13: 5 Year Change by Percentage in Each Geographical Area
5 Year Change by Percentage in Each Geographical Area From March 31, 2017, to March 31, 2023 13
Slide 14: Loan and Deposit Balances by Geographical Area
Loan and Deposit Balances by Geographical Area As of March 31, 2023 $ In Millions 14
Slide 15: Loan Growth – Through Different Interest Rate Environments
Loan Growth – Through Different Interest Rate Environments $ in millions. New Loan Originations Loan Growth $20,000 $10,000 $18,000 $16,000 $8,000 $14,000 $12,000 $6,000 $10,000 $4,000 $8,000 $6,000 $2,000 $4,000 $2,000 $- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 YTD $0 2014 2015 2016 2017
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 3/31/2023 amounted to $177.4 million, representing 379% of total NPAs 1 • Non-performing assets $46.7 million as of 3/31/2023 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 $69.4 million • The Bank continues to work $50 million of loans previously charged off • 9 Consecutive years of Net Recoveries until 3/31/2023 Net Loan Charge-offs (Recoveries) Average
Slide 18: Net Loan Portfolio Average Current LTV
Net Loan Portfolio Average Current LTV As of March 31, 2023 $ In Thousands WTD Avg % with Avg LTV % of Current Current when above Net Balance Loans LTV LTV >75% 75% Multifamily $ 2,846,956 16% 43% 2% 77% CRE - Office 839,179 5% 56% 38% 80% CRE - Other 2,391,323 14% 41% 13% 80% CRE Construction - Mul
Slide 19: Significant Liquidity and High-Quality Securities Portfolio
Significant Liquidity and High-Quality Securities Portfolio High quality, $3.5 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 December 31, 2022 1 So
Slide 20: Investment Portfolio
Investment Portfolio High quality, $2.5 Billion investment portfolio with a duration of 3.6 years. Portfolio is 37% variable rate. HTM Investments Fair Value Gain/Loss WAL Expected Yield Agency MBS $ 401,076 $ (44,147) 6.5 2.73% AFS Investments Fair Value Gain/Loss WAL Expected Yield Agency MBS $ 89
Slide 21: Highly Diversified Deposit Base
Highly Diversified Deposit Base Top 20 depositors make up 11% of total deposits. 26.7% of total deposits are uninsured as of March 31, 2023. 21
Slide 22: Deposit Trends
Deposit Trends Shifting away from time deposits in favor of transaction accounts. Checking accounts now make up 44%. As of 3/31/2013 In Millions 18,000 5.00% Transaction Accounts Time Deposits 4.50% 16,000 Time WTD Rate Deposits Transaction Accounts 4.00% $5,628 14,000 61% $3,525 39% 3.50% 12,000 3.
Slide 23: Deposit Flows
Deposit Flows Customer Deposit Accounts 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 4/30/2023 5/10/2023 Checking - Noninterest Bearing $ 3,279,841 $ 3,251,603 $ 3,269,773 $ 3,266,734 $ 3,070,895 $ 2,856,165 $ 2,770,925 $ 2,775,067 Checking - Interest Bearing 3,688,822 3,897,185 3,4
Slide 24: Borrowings Outstanding & Weighted Rate
Borrowings Outstanding & Weighted Rate Borrowings are 90% FHLB and 10% 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 25: Utilization of Fed's Bank Term Funding Program
Utilization of Fed’s Bank Term Funding Program Due to the highly favorable terms of the program WaFd has elected to borrow from the program and use savings relative to other wholesale costs to subsidize further actions to strengthen fortress liquidity position. Sources and Uses of Funds & Net Intere
Slide 26: 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% 0.30% 0.25% -40% Up500 0.20% -30% 0.15% Up400 -20% 0.10% Up300 0.05% -10% Up200 0.00% Ye
Slide 27: Cost of Deposits in the Rising Rate Environment
Cost of Deposits in the Rising Rate Environment Cumulative Beta (Current Cycle) Avg Fed Funds Cost of Interest- Cost of All Actual Cumulative Quarterly Beta (Upper) bearing Deposits Deposits Beta 12/31/2021 0.25% 0.27% 0.21% -- -- 3/31/2022 0.29% 0.26% 0.21% -- -- 6/30/2022 0.94% 0.29% 0.23% 3% 3% 9
Slide 28: 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 28
Slide 29: Income Statement Comparison
Income Statement Comparison Three Months Ended, 3/31/2023 3/31/2022 $ Change % Change INTEREST INCOME Loans................................................................................... $ 222,957 $ 139,260 $ 83,697 60% Mortgage-backed securities............................................... 10
Slide 30: Income Statement Comparison
Income Statement Comparison Three Months Ended, 3/31/2023 3/31/2022 $ Change % Change OTHER INCOME $ 10,072 $ 15,659 $ (5,587) -35.7% OTHER EXPENSE Compensation and benefits............................................... 51,444 47,115 4,329 9.2% Occupancy.............................................
Slide 31: 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 32: 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 EPS Net Income (in thousands) 70,000 EPS $1.20 $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 10,000 $0 $- -
Slide 33: 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 3/31/2023 Loan Other Income includes: Fees 6% • BOLI income Other Income • Rental income 32% • Gains on property sales Deposit Fees • WAFD Insurance
Slide 34: Non-Interest Expense Over Time
Non-Interest Expense Over Time Annual and Quarterly - Expenses in millions Annual Quarterly 34
Slide 35: 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 $24.9 $34.6 $38.9 $28.9 $25.1 $18.5 $16.4 $17.0 $19.5 $14.0 $15.9 $9.9 $11.6 $14.4 $9.5 $11.4 $9.8 $10.9 $7.7 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 2023 YTD FDIC Premiums Product Delivery Information Technology
Slide 36: 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 Mar 2023 Was
Slide 37: 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 38: 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 3/31/2023: Book Value per Share $31.54 Tangible Book Value per Share $26.85 Price to BV: 0.96 Price to TBV: 1.12 38
Slide 39: Perspective through the last Credit Cycle
Perspective through the last Credit Cycle Stock Performance Comparison as of 3/31/2023 Managing Capital Text Text Text Tex 39
Slide 40: 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