Wafd, Inc. · NASDAQ:WAFD
Wafd — Washington Federal — Piper Jaffray Western Bank Symposium 2018
27 slides from Wafd's conference presentation, November 2018
Slide 1: Piper Jaffray Western Bank Symposium
We're celebrating our first 100 years! Hear our clients’ stories at tinyurl.com/wafd100. Piper Jaffray Western Bank Symposium Newport Coast, CA November 7-8 2018 This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such sta
Slide 2: WAFD Profile
WAFD PROFILE • Established in 1917; IPO in 1982; • National Bank Charter – OCC, Fed, CFPB Regulated • 2nd Largest Bank Headquartered in the Pacific Northwest • 235 Branches • Consumer & Commercial Banking • Strong Capital, High Asset Quality, Low-Cost Provider • Portfolio Mortgage Lender • Profitabl
Slide 3: Washington Federal NASDAQ: WAFD
Washington Federal NASDAQ: WAFD Headquarters Seattle, WA President & Brent Beardall Chief Executive Officer Chief Financial Officer Vince Beatty Assets $15.87 billion Deposits $11.39 billion Stockholder Equity $2.0 billion Branches 235 Footprint 8 states ATMs 293 Employees 1877 Efficiency Ratio YTD
Slide 4: WAFD Demographics
WAFD 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 2018 2010-2018 2018-2023 2018 2018-2023 S
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
Slide 6: Deposit Mix
Deposit Mix • Transaction Accounts represent 57.8% of total deposits As of September 30, 2018 • Contributing to growth in fee income Non Core Deposits 769 Deposit Fees Loan Fees 6.8 % $ 3 5,000 Thousands $ 3 0,000 $ 2 5,000 $ 2 0,000 Core Deposit $ 1 5,000 Accounts 10,618 $ 1 0,000 93.2 % $ 5 ,000 $
Slide 7: Total Net Loans (in millions)
Total Net Loans (in millions) • Mortgage and Consumer $12,000 are 56 % of total net $10,000 loans $8,000 • Commercial segments growing fastest over last $6,000 three years $4,000 • Mortgage originations tempered by Wafd’s $2,000 appetite to portfolio at $0 current rates. FY13 FY14 FY15 FY16 FY17 FY1
Slide 8: New Loan Originations (in millions)
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 Commercial & Industrial (C&I) Commercial Real Estate Mortgage & Consumer • C&I and Commercial Real Estate loans make • Mortgage and Consumer Loans are largely u
Slide 9: New Loan Originations (in millions)
New Loan Originations (in millions) $1,400 $1,200 $1,000 $800 $600 $400 $200 $- 06/16 09/16 12/16 03/17 06/17 09/17 12/17 03/18 06/18 09/18 QTR QT R QTR QTR QTR QT R QTR QTR QTR QT R Mortgage & Consumer Commercial Real Estate Commercial & Industrial (C&I) • Fiscal year to date originations are 19% l
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% 1.06% ALLL 0.44% 0.50% Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 -0.50% • Steady annual improvement in credit quality • Non performing a
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 • Recoveries are not budgeted going forward but the Bank continues to work over $100 million of loans that were previously charged off 11 11
Slide 12: Cash and Investments
Cash and Investments as of September 30, 2018 • Investment Portfolio targets low High Quality credit risk / moderate duration Cash Bonds 11% 6% • 94% Cash, US Government backed Agency Bonds and MBS • Current yield on the Investment Portfolio is 2.96% and duration is 5.2 years US Govt Backed 84% US G
Slide 13: Interest Rate Risk Sensitivity
Interest Rate Risk Sensitivity IRR measures as of Sept 30, 2018: % Change in NPV -5 0% • Net Interest Income (NII) would -4 0% decrease by 1.9% in +200 bps -3 0% immediate and parallel shock -2 0% • Net Portfolio Value after +200 -1 0% bps shock is 18.2% lower at 0% Up 100 Up 200 Up 300 Up 400 12.89
Slide 14: Interest Rate Risk Sensitivity
Interest Rate Risk Sensitivity Net Interest Margin 3.40% 3.30% 3.20% Dn200 3.10% Dn100 3.00% Base 2.90% Up100 2.80% Up200 2.70% Up300 2.60% 2.50% Year 0 Year 1 Year 2 Year 3 • These scenarios assume no management actions taken to proactively manage the balance sheet in the changing interest rate sce
Slide 15: Interest Rate Spread
Interest Rate Spread 5.00% $500 Net Interest Spread and Net Interest Income $450 4.50% 4.14% $400 4.00% 3.81% $350 3.50% $300 3.17% 3.02% 2.90% 3.00% $250 2.65% $200 2.50% 2.57% 2.47% $150 2.00% 2.16% 2.17% 2.04% 2.05% $100 1.50% $50 1.00% $0 • Proactively managing interest rate risk has reduced spr
Slide 16: Borrowings
Borrowings Borrowings Outstanding & Weighted Rate (in Millions) $4,000 5.00% Borrowings RATE $3,500 4.50% $3,000 $2,500 4.00% $2,000 3.50% $1,500 $1,000 3.00% $500 $0 2.50% 16
Slide 17: Net Income and Earnings Per Share
Net Income and Earnings Per Share • Record Annual Earnings 17
Slide 18: Income Statement Comparison
Income Statement Comparison Fiscal YTD 9/30/2018 9/30/2017 $ Change % Change INTEREST INCOME Loans....................................................................... $ 515,807 $ 470,523 $ 45,284 9.6% Mortgage-backed securities.................................... 70,407 60,612 9,795 16.2% Investm
Slide 19: Income Statement Comparison
Income Statement Comparison Fiscal YTD 9/30/2018 9/30/2017 $ Change % Change OTHER INCOME $ 44,078 $ 52,215 $ (8,137) -15.6% OTHER EXPENSE Compensation and benefits.................................... 123,554 112,257 11,297 10.1% Occupancy.............................................................
Slide 20: Non Interest Income
Non Interest Income Other Income Deposit Fees Loan Fees • Non-Interest Income growth driven by deposit $ 6 0,000 transaction fees + BOLI Thousands $ 5 0,000 • Strategic Objective to $ 4 0,000 grow non-interest income $ 3 0,000 $ 2 0,000 $ 1 0,000 $0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 20
Slide 21: Expenses
Expenses • Other expense includes Other expense Occupancy Compensation marketing, printing, $ 3 00,000 professional services, and regulatory fees $ 2 50,000 • 2016 Efficiency Ratio: $ 2 00,000 50.8% $ 1 50,000 • 2017 Efficiency Ratio: $ 1 00,000 47.8% • 2018 Efficiency Ratio: $ 5 0,000 50.4% $0 FY12
Slide 22: Capital Ratios
Capital Ratios Capital Management WAFD does not seek to maximize leverage. Sept 2015 Sept 2016 Sept 2017 Sept 2018 Rather, we aspire to be the bank that can best weather the Tangible Common next storm on the Equity/Tangible 11.61% 11.51% 11.41% 10.84% Assets horizon. Common Equity Tier 1 18.73% 17.3
Slide 23: Returning Capital to Shareholders
Returning Capital to Shareholders Return of Income to Shareholders Recent Capital Activities Percent of Stock Buyback & Income returned Net Income Dividends to Shareholders WAFD paid its 142nd consecutive 2013 151,506 146,398 97% quarterly cash dividend on August 24th 2014 157,364 146,347 93% 2015 1
Slide 24: Strategic Execution Highlights
Strategic Execution Highlights Organic Growth • Emphasis on commercial lending • Growth in Commercial transaction accounts – treasury prime • New “Green” Consumer Checking Managing Capital Shareholder Returns Text Text • Constancy and staying Text power • Efficiency ratio Tex • Capital Management •
Slide 25: 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 Book Value per Share $24.14 Tangible Book Value per Share $20.38 Price to BV: 1.33 Price to TBV: 1.57 25
Slide 26: Stock Performance Comparison
Stock Performance Comparison Stock Performance Comparison as of 9/30/2018 2.50 2.00 1.50 Managing 1.00 Capital Text 0.50 Text Text Tex 0.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 *Stock prices obtained from Yahoo! Finance and reflect monthly adjusted (stock splits and dividends)
Slide 27: Invested here. Since 1917.
We're celebrating our first 100 years! Hear our clients’ stories at tinyurl.com/wafd100. invested here. since 1917.
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