WaFd, Inc. reported first‑quarter 2026 results on January 15, 2026, posting earnings per share of $0.79—$0.03 above the consensus estimate of $0.76 and a 10% sequential increase from the $0.72 reported in Q4 2025. Net income rose to $64.2 million, while revenue fell $2.1 million to $191.4 million, missing the $193.5 million consensus estimate by roughly 1.1%. The revenue shortfall reflects weaker top‑line growth in the bank’s legacy mortgage portfolio, offset by modest gains in commercial and small‑business lending.
Net interest income for the quarter was $171.1 million, and the net interest margin held steady at 2.70%, a 1‑basis‑point lift from the 2.69% reported in the prior quarter. The margin stability comes despite a 31‑basis‑point increase in the bank’s mortgage‑backed‑security (MBS) holdings, which have been purchased to replace single‑family loan runoff. Non‑interest income grew to $20.3 million, supported by a $3.2 million gain from the sale of a branch property and incremental fee income from business banking services.
The bank’s loan portfolio mix shifted further toward commercial and small‑business segments, with loan originations falling to $1.1 billion from $1.4 billion in Q4 2025. While the decline in originations signals a slowdown in demand for new loans, the higher‑margin commercial and small‑business loans partially offset the impact on revenue. WaFd’s focus on business banking is intended to diversify its income base and reduce reliance on the more volatile residential mortgage market.
Management highlighted the strategic pivot in a conference call. President and CEO Brent Beardall noted that the bank’s shift away from single‑family mortgages toward commercial and small‑business lending is “well‑aligned with our long‑term growth strategy.” He also emphasized ongoing share‑repurchase activity, which has contributed to the EPS beat, and reiterated that the bank maintains adequate reserves for non‑performing loans. Chief Financial Officer Kelli Holz underscored disciplined cost management and the continued expansion of MBS holdings, which she said are “funded primarily by increased borrowings” and are expected to support margin stability.
While the company did not revise its full‑year guidance, management expressed cautious optimism about loan demand in the coming quarters. The bank remains confident in its ability to maintain a stable net interest margin and to grow its commercial loan portfolio, even as it monitors credit quality and the impact of MBS purchases on short‑term profitability.
Investors reacted cautiously to the results, with market sentiment tempered by the revenue miss and the fact that some analysts reported an EPS miss of $0.75 versus the $0.76 estimate. The mixed reception underscores the importance of the bank’s strategic shift and its ongoing focus on cost control and margin preservation.
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