Wafd, Inc. · NASDAQ:WAFD
Wafd — KBW West Coast Field Trip (November 2020)
34 slides from Wafd's conference presentation, Nov 19, 2020
Slide 1: KBW West Coast Field Trip
KBW West Coast Field Trip November 19, 2020 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: Profile
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 • Portfolio Mortgage Lender • Profitable every year since 1982
Slide 3: WaFd Bank key statistics
WaFd Bank NASDAQ: WAFD Headquarters Seattle, WA President & Brent Beardall Chief Executive Officer Chief Financial Officer Vince Beatty Assets $18.79 billion Deposits $13.78 billion Stockholder Equity $2.01 billion Branches 234 Footprint 8 states ATMs 293 Employees 2,080 Efficiency Ratio YTD 58.99%
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 2021 2010-2021 2021-2026 2021 2021-2
Slide 5: Improvements to Website, Mobile & Online Banking
Improvements to Website, Mobile & Online Banking Industry WaFd Bank Net Promoter Scores* Net Promoter Score US Bank 3 2017 17 Wells Fargo -12 2018 34 Chase 8 2019 47 USAA 75 2020 51 Newsweek recently named OnDeck 73 WaFd Bank “Best Big Bank” in Washington, Oregon, Idaho, and New Mexico 5
Slide 6: Deposit Mix
Deposit Mix (in millions) As of 9/30/2010 As of 9/30/2020 Time Deposits $3,973 Transaction 29% Accounts $2,555 29% Transaction Time Accounts Deposits $9,806 $6,298 71% 71% Core Deposits = 95.6% of Total 6
Slide 7: Total Net Loans
Total Net Loans (in millions) $12,000 • Mortgage and $10,000 Consumer loans are 46 $8,000 % of total net loans $6,000 • Commercial loans $4,000 growing fastest over $2,000 last six years $0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 • Will invest primarily in Commercial growth Commercial & Industrial (
Slide 8: New Loan Originations
New Loan Originations (in millions) $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $- 2014 2015 2016 2017 2018 2019 2020 Mortgage & Consumer Commercial Real Estate Commercial & Industrial (C&I) • C&I and Commercial Real Estate loans made • Mortgage and Consumer Loans are largely up 74% of all orig
Slide 9: Ready to Help Small Businesses and Individuals
Ready to Help Small Businesses and Individuals Paycheck Protection 6,500 Approved loans Over $780 million Program (PPP) Consumer mortgage deferrals Processing Payment Commercial deferral requests are typically granted for Deferral Requests for up to 6 months 3 months but can be for up to 6 months Co
Slide 10: Non-Performing Assets & Allowance for Credit Losses
Non-Performing Assets & Allowance for Credit Losses 5.50% Non-Performing Assets to 4.43% Total Assets 4.50% ACL to Gross Loans 3.50% 2.50% 1.33% ACL 1.50% 0.50% 0.20% Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 -0.50% • Steady annua
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 2020 • Recoveries are not budgeted going forward but the Bank continues to work $92 million of loans that were previously charged off •
Slide 12: Cash and Investments
Cash and Investments as of September 30, 2020 High Quality • Investment Portfolio targets low Bonds 17% credit risk / moderate duration • 83% Cash, US Government backed Agency Bonds and MBS Cash 30% US Govt Backed • Current yield on the Investment 53% Portfolio is 1.92% and duration is 3.5 years US
Slide 13: Interest Rate Risk Sensitivity
Interest Rate Risk Sensitivity % Change in NPV IRR measures as of -50% September 30, 2020: -40% -30% • Net Interest Income (NII) would -20% increase by 3.38% in +200 bps -10% immediate and parallel shock 0% • Net Portfolio Value after +200 10% Base Up 100 Up 200 Up 300 Up 400 bps shock is 5.25% high
Slide 14: Interest Rate Risk Sensitivity
Interest Rate Risk Sensitivity Net Interest Margin Sensitivity vs Base Case 0.70% 0.60% 0.50% Up100 Up200 0.40% Up300 0.30% Up400 Up500 0.20% 0.10% 0.00% Year 1 Year 2 Year 3 • These scenarios assume no management actions taken to proactively manage the balance sheet in the changing interest rate sc
Slide 15: Charge off History vs Industry and Peers
off's per year - last 20 year Largest 10 Bank Charge off History vs Industry and Peers 200 Banks Peer Group WaF Ban SFR Mortgage 0.65% 0.34% 0.1 MultiFamily 0.27% 0.09% 0.0 Average net charge Other CRE 0.35% 0.19% 0.0 off's per year - last 20 years WaFd Results as % of Peers Largest 10 Bank Largest
Slide 16: Borrowings Outstanding
Borrowings Outstanding $4,000 4.50% $3,500 Due within 1 year 4.00% Borrowings due after 1 year Rate $3,000 3.50% $2,500 3.00% $2,000 2.50% $1,500 2.00% $1,000 1.50% $500 $0 1.00% • In March 2020 added $1 billion of FHLB advances with Cash Flow Hedge Paying Fixed for 10 years at 66.1 bps 16
Slide 17: Net Income and Earnings Per Share - Annual
Net Income and Earnings Per Share - Annual $250 $3.00 $2.50 $200 Net Income (in millions) EPS $2.00 $150 $1.50 $100 $1.00 $50 $0.50 $0 $- 17
Slide 18: Net Income and Earnings Per Share - Quarterly
Net Income and Earnings Per Share - Quarterly $70,000 $1.00 Net Income EPS $0.90 $60,000 $0.80 $50,000 $0.70 $0.60 $40,000 $0.50 $30,000 $0.40 $20,000 $0.30 $0.20 $10,000 $0.10 $0 $- Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 18
Slide 19: Yield Curve
Yield Curve 1.60% 1.40% 1.20% 1.00% - . 91% decrease 0.80% 0.60% - . 86 % decrease 0.40% - . 25 % decrease - . 47 % decrease 0.20% 0.00% Overnight 1 Year 5 Year 10 Year 9/30/2016 9/30/2020 • Despite this flattening of the yield curve, net interest margin is only down 34 bps at 2.67% when comparing t
Slide 20: Market Cap Yield
Market Cap Yield Peer Median: 9.1% 13.8% 10.9% 11.2% 9.8% 9.1% 8.3% 6.0% 5.3% UMPQ WAFD HMST HFWA COLB BANR WAL UMPQ ZION Top 100 Banks Average -68% 20
Slide 21: Income Statement Comparison
Income Statement Comparison Fiscal YTD 9/30/2020 9/30/2019 $ Change % Change INTEREST INCOME Loans.......................................................................................................... $ 545,708 $ 568,096 $ (22,388) -3.9% Mortgage-backed securities................................
Slide 22: Income Statement Comparison
Income Statement Comparison Fiscal YTD 9/30/2020 9/30/2019 $ Change % Change OTHER INCOME $ 86,960 $ 62,318 $ 24,642 39.5% OTHER EXPENSE Compensation and benefits...................................................................... 147,596 133,588 14,008 10.5% Occupancy.............................
Slide 23: Non-Interest Income
Non-Interest Income Other Income Deposit Fees Loan Fees Gain on Sale of Investments $90,000 Thousands $80,000 • Non-Interest Income growth in 2020 was driven $70,000 primarily by the Sale of $60,000 Buildings $50,000 $40,000 • Strategic Objective to $30,000 grow non-interest income $20,000 $10,000 $
Slide 24: Expenses
Expenses Other expense Occupancy Compensation Efficiency Ratio $350,000 70% $300,000 60% $250,000 50% $200,000 40% $150,000 30% $100,000 20% $50,000 10% $0 0% FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 24
Slide 25: Capital Ratios
Capital Ratios Sep 2016 Sep 2017 Sep 2018 Sep 2019 Sep 2020 Well Capitalized Tangible Common Equity + Allowance for Loan Loss Reserve 12.28% 12.24% 11.67% 11.48% 10.12% /Tangible Assets Common Equity Tier 1 Ratio 17.32% 15.68% 14.55% 13.93% 12.46% 6.5% Total Risk-Based Capital 18.54% 16.91% 15.75% 1
Slide 26: Returning Capital to Shareholders
Returning Capital to Shareholders Return of Income to Shareholders Stock Buyback Percent of Recent Capital Activities Net Income & Dividends Income returned ($) ($) to Shareholders • WAFD paid its 151st consecutive 2015 160,316 177,791 111% quarterly cash dividend on 2016 164,049 137,808 84% Novembe
Slide 27: 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
Slide 28: 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. 28 ©2018 Washington Federal. All Right Reserved www.washingtonfederal.com
Slide 29: z ©2018 Washington Federal. All Right Reserved www.washingtonfederal.com
z 29 ©2018 Washington Federal. All Right Reserved www.washingtonfederal.com
Slide 30: 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
Slide 31: New wafdbank.com Google Page Speed Scores
New wafdbank.com Google Page Speed Scores 100 90 80 WaFd Desktop 70 60 50 40 WaFd Mobile 30 20 10 0 Desktop Mobile 31
Slide 32: 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 9/30/2020: Book Value per Share $26.61 Tangible Book Value per Share $22.52 Price to BV: .78 Price to TBV: .93 32
Slide 33: Perspective through the last Credit Cycle
Perspective through the last Credit Cycle Stock Performance Comparison as of 9/30/2020 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 2019 2020 *Stock prices obtained from Yahoo! Finance and reflect monthly adjusted (stoc
Slide 34: 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