KBRA Assigns Ratings to WaFd, Inc.
KBRA has assigned ratings to WaFd, Inc. (NASDAQ: WAFD) and its main subsidiary, Washington Federal Bank. The company received a BBB+ senior unsecured debt rating, while the bank received an A- deposit and senior unsecured debt rating. The Outlook for all long-term ratings is Stable.
The ratings are supported by WAFD's consistently favorable operating results, conservative credit culture, and high-quality management team. Despite recent industry-wide credit quality normalization, WAFD maintains minimal problem loans and below-peer levels of criticized and classified loans. The company has taken steps to reduce its investor CRE concentration, selling $2.8 billion of multifamily loans in 1Q24.
WAFD's liquidity position is strong, with $2.5 billion in cash (9% of assets) as of 2Q24. The company's deposit base is stable and granular, with uninsured/uncollateralized deposits at just 26% of total. Despite margin pressures, WAFD's profitability remains solid, with a core ROA just under 0.9% for 2Q24.
KBRA ha assegnato valutazioni a WaFd, Inc. (NASDAQ: WAFD) e alla sua principale sussidiaria, Washington Federal Bank. L'azienda ha ricevuto un rating BBB+ per il debito senior non garantito, mentre la banca ha ottenuto un rating A- per i depositi e il debito senior non garantito. Le prospettive per tutte le valutazioni a lungo termine sono Stabili.
Le valutazioni sono supportate dai risultati operativi costantemente favorevoli di WAFD, da una cultura creditizia conservativa e da un team di gestione di alta qualità. Nonostante la recente normalizzazione della qualità creditizia a livello di settore, WAFD mantiene minimi prestiti problematici e livelli di prestiti criticati e classificati inferiori a quelli dei concorrenti. L'azienda ha adottato misure per ridurre la concentrazione degli investimenti in CRE, vendendo prestiti multifamiliari per 2,8 miliardi di dollari nel 1Q24.
La posizione di liquidità di WAFD è forte, con 2,5 miliardi di dollari in contante (9% delle attività) a partire dal 2Q24. La base di depositi dell'azienda è stabile e diversificata, con depositi non assicurati/non collaterizzati che costituiscono solo il 26% del totale. Nonostante la pressione sui margini, la redditività di WAFD rimane solida, con un ROA core appena sotto lo 0,9% per il 2Q24.
KBRA ha asignado calificaciones a WaFd, Inc. (NASDAQ: WAFD) y su principal subsidiaria, Washington Federal Bank. La compañía recibió una calificación BBB+ para deuda senior no asegurada, mientras que el banco obtuvo una calificación A- para depósitos y deuda senior no asegurada. Las perspectivas para todas las calificaciones a largo plazo son Estables.
Las calificaciones están respaldadas por los resultados operativos constantemente favorables de WAFD, una cultura crediticia conservadora y un equipo de gestión de alta calidad. A pesar de la reciente normalización de la calidad crediticia en toda la industria, WAFD mantiene préstamos problemáticos mínimos y niveles de préstamos criticados y clasificados por debajo de los de sus pares. La compañía ha tomado medidas para reducir su concentración de CRE para inversores, vendiendo $2.8 mil millones en préstamos multifamiliares en el primer trimestre de 2024.
La posición de liquidez de WAFD es fuerte, con $2.5 mil millones en efectivo (9% de los activos) a partir del segundo trimestre de 2024. La base de depósitos de la compañía es estable y granular, con depósitos no asegurados/no colateralizados que representan solo el 26% del total. A pesar de la presión sobre los márgenes, la rentabilidad de WAFD sigue siendo sólida, con un ROA núcleo ligeramente por debajo del 0.9% para el segundo trimestre de 2024.
KBRA는 WaFd, Inc. (NASDAQ: WAFD)와 그 주요 자회사인 Washington Federal Bank에 등급을 부여했습니다. 회사는 BBB+급 선순위 무담보 부채 등급을 받았고, 은행은 A-급 예금 및 선순위 무담보 부채 등급을 받았습니다. 모든 장기 등급의 전망은 안정적입니다.
등급은 WAFD의 지속적으로 우수한 운영 결과, 보수적인 신용 문화 및 고품질 경영진에 의해 뒷받침됩니다. 최근 업계 전반에서 신용 품질의 정상화에도 불구하고, WAFD는 최소한의 문제 대출과 동종 업계보다 낮은 비판 및 분류된 대출 수준을 유지하고 있습니다. 회사는 CRE 투자 집중도를 줄이기 위해 2024년 1분기에 28억 달러 규모의 다가구 대출을 판매하는 조치를 취했습니다.
WAFD의 유동성 위치는 강력합니다, 2024년 2분기 기준으로 25억 달러의 현금(자산의 9%)을 보유하고 있습니다. 회사의 예금 기반은 안정적이고 세분화되어 있습니다, 무담보/비담보 예금이 총액의 26%에 불과합니다. 마진 압박에도 불구하고, WAFD의 수익성은 견고하며, 2024년 2분기 기준으로 기본 ROA가 0.9% 약간 미만입니다.
KBRA a attribué des notations à WaFd, Inc. (NASDAQ: WAFD) et à sa principale filiale, Washington Federal Bank. L'entreprise a reçu une notation BBB+ pour sa dette senior non garantie, tandis que la banque a obtenu une notation A- pour les dépôts et la dette senior non garantie. Les perspectives pour toutes les notations à long terme sont stables.
Les notations sont soutenues par les résultats opérationnels constamment favorables de WAFD, une culture de crédit conservatrice et une équipe de direction de haute qualité. Malgré la récente normalisation de la qualité du crédit dans l'industrie, WAFD maintient des prêts problématiques minimaux et des niveaux de prêts critiqués et classés inférieurs à ceux de ses pairs. L'entreprise a pris des mesures pour réduire sa concentration d'investissement dans l'immobilier commercial, en vendant 2,8 milliards de dollars de prêts multifamiliaux au premier trimestre de 2024.
La position de liquidité de WAFD est solide, avec 2,5 milliards de dollars en espèces (9 % des actifs) à la fin du 2ème trimestre 2024. La base de dépôts de l'entreprise est stable et diversifiée, avec des dépôts non assurés/non garantis ne représentant que 26 % du total. Malgré la pression sur les marges, la rentabilité de WAFD reste solide, avec un ROA de base juste en dessous de 0,9 % pour le 2ème trimestre 2024.
KBRA hat Bewertungen für WaFd, Inc. (NASDAQ: WAFD) und deren Haupttochtergesellschaft, die Washington Federal Bank, vergeben. Das Unternehmen erhielt eine BBB+ Bewertung für nachrangige unbesicherte Schulden, während die Bank eine A- Bewertung für Einlagen und nachrangige unbesicherte Schulden erhielt. Der Ausblick für alle langfristigen Bewertungen ist stabil.
Die Bewertungen werden durch konstante positive Betriebsergebnisse von WAFD, eine konservative Kreditkultur und ein hochqualifiziertes Managementteam gestützt. Trotz der jüngsten Normalisierung der Kreditqualität in der Branche hält WAFD minimale Problemkredite und unterdurchschnittliche Werte von kritisierten und klassifizierten Krediten aufrecht. Das Unternehmen hat Maßnahmen ergriffen, um die Konzentration seiner Investoren an CRE zu reduzieren, indem es im 1. Quartal 2024 Kredite in Höhe von 2,8 Milliarden Dollar verkauft hat.
Die Liquiditätsposition von WAFD ist stark, mit 2,5 Milliarden Dollar Bargeld (9 % der Vermögenswerte) zum Stand 2. Quartal 2024. Die Einlagenbasis des Unternehmens ist stabil und diversifiziert, mit nicht versicherten/unbesicherten Einlagen, die nur 26 % des Gesamtvolumens ausmachen. Trotz Margenbelastungen bleibt die Rentabilität von WAFD solide, mit einem Core-ROA von knapp unter 0,9 % im 2. Quartal 2024.
- Consistently favorable operating results over a long period
- Conservative credit culture resulting in minimal problem loans
- Strong liquidity position with $2.5 billion in cash (9% of assets)
- Stable and granular deposit base (26% uninsured/uncollateralized)
- Solid profitability with core ROA just under 0.9% for 2Q24
- Capital ratios improved in 2Q24, with CET1 ratio at 11.0%
- Concentrated loan portfolio in residential mortgage and investor CRE
- Higher interest rate sensitivity in deposit base
- Net Interest Margin (NIM) generally tracks below peers
- Capital ratios decreased considerably since pre-pandemic levels
Insights
KBRA's assignment of ratings to WaFd, Inc. and its subsidiary Washington Federal Bank reflects a stable outlook for the company. The BBB+ senior unsecured debt rating and A- deposit rating indicate a solid financial position. Key strengths include:
- Consistently favorable operating results
- Conservative credit culture leading to excellent asset quality
- Resilient business model across economic cycles
However, challenges exist:
- Concentrated loan portfolio in residential mortgage and investor CRE
- Lower NIM compared to peers due to lower-risk assets
- Higher deposit beta in the current rate environment
The recent
WaFd's market position shows both strengths and potential vulnerabilities:
- Strong regional presence: #2 market share among local banks in the Pacific Northwest
- Diverse footprint: Operations span multiple states, reducing geographic concentration risk
- Conservative lending focus: Emphasis on lower-risk residential and multifamily loans
However, challenges include:
- Interest rate sensitivity: Higher proportion of rate-sensitive deposits compared to peers
- Competitive pressures: Lower NIM may impact ability to compete on pricing
The recent Luther Burbank merger expands WaFd's presence but also increases its exposure to price-sensitive deposits. The company's ability to manage its deposit mix and expand its commercial banking services will be important for maintaining competitiveness in a rising rate environment.
WaFd's risk profile demonstrates several positive attributes:
- Pristine asset quality: Minimal problem loans and below-peer criticized/classified loans
- Conservative underwriting: Low LTVs in residential and multifamily portfolios
- office exposure: Only
4% of loans, primarily in resilient suburban markets
However, potential risk factors include:
- Concentration risk:
~66% of loans in residential mortgage and investor CRE - Energy sector exposure: Recent NCO activity in C&I energy portfolio (
4% of loans)
The proactive
The ratings are supported by WAFD’s consistently favorable operating results over a long period of time; performance that has benefitted from its high quality and long-tenured management team that has implemented a conservative credit culture historically, which has facilitated mostly pristine asset quality measures over the years as the franchise has evolved. In this regard, operating performance has been generated through various economic and interest rate cycles, which further illustrates the durability of its business model. With respect to recent asset quality trends, WAFD is currently positioned with a minimal level of problem loans, and while risk rating migration has been negative over the past year, a trend that has been observed across the industry as credit quality normalizes post-pandemic, the level of criticized and classified loans still remains below peers. NCO activity crept up during 2023, which was due to idiosyncratic events in the company's modest C&I energy portfolio (
Liquidity as measured by the loan-to-deposit ratio has tracked modestly higher than peers historically, though following the recent sale of multifamily loans, there is ample on-balance sheet liquidity (
The higher interest rate environment has put pressure on margins and earnings across the industry, though WAFD has endured the volatility, in our view, with NIM decreasing a modest amount since the start of the Fed’s rate hikes, which has been somewhat due to the acquisition of LBC in 1Q24. We also acknowledge that the company's NIM generally tracks below peers due to its lower risk/lower yielding loan portfolio. Additionally, despite WAFD's well-established presence and strong deposit market share in footprint, most notably, in the Pacific Northwest (#2 among locally headquartered banks), as well as the evolution into a commercial bank that has brought in a higher level of transaction accounts, the deposit composition remains more concentrated in price-sensitive maturity deposits, especially following the LBC acquisition. As such, WAFD has reflected a higher-beta thus far throughout this interest rate cycle. With that said, recent margin headwinds have largely been offset by cost-savings from the merger, which have resulted in a lower level of core operating expenses to average assets that track well below peers despite its expansive retail branch network. As such, profitability has remained solid (core ROA just under
Capital management has varied over the years, including a conservative positioning pre-pandemic, though, since that time, ratios have decreased considerably from stronger loan growth, a significant amount of share buybacks, and the closing of the LBC acquisition. However, capital bounced back in 2Q24 following the loan sales and de-levering, including a CET1 ratio of
To access rating and relevant documents, click here.
Click here to view the report.
Methodologies
- Financial Institutions: Bank & Bank Holding Company Global Rating Methodology
- ESG Global Rating Methodology
Disclosures
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the
Doc ID: 1005407
View source version on businesswire.com: https://www.businesswire.com/news/home/20240822799473/en/
Analytical Contacts
John Rempe, Senior Director (Lead Analyst)
+1 301-969-3045
john.rempe@kbra.com
Brian Ropp, Managing Director
+1 301-969-3244
brian.ropp@kbra.com
Ian Jaffe, Senior Managing Director
+1 646-731-3302
ian.jaffe@kbra.com
Ashley Phillips, Managing Director (Rating Committee Chair)
+1 301-969-3185
ashley.phillips@kbra.com
Business Development Contact
Justin Fuller, Managing Director
+1 312-680-4163
justin.fuller@kbra.com
Source: Kroll Bond Rating Agency, LLC
FAQ
What ratings did KBRA assign to WaFd, Inc. (WAFD)?
How did WaFd's asset quality perform in recent trends?
What significant action did WaFd take regarding its loan portfolio in 1Q24?
What is WaFd's liquidity position as of 2Q24?
How did WaFd's profitability perform in 2Q24?
