Shares of Washington Federal WAFD gained nearly 1% in after-hours in response to the announcement of its first-quarter fiscal 2022 (ended Dec 31) results. Earnings of 71 cents per share surpassed the Zacks Consensus Estimate of 69 cents. The figure reflects a year-over-year jump of 39%.

Results primarily benefited from increased revenues, decreased provision for credit losses and a robust loan balance. The company’s balance-sheet position remained strong during the quarter. However, an increase in expenses was the undermining factor.

Net income was $50.3 million, surging 29.1% from the prior-year period.

Revenues & Expenses Rise

Net revenues were $152.8 million, up 13.7% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $147.8 million.

Net interest income was $134.1 million, up 11.3% from the year-earlier period. Net interest margin was 2.87%, rising 12 basis points.

Total other income of $18.7 million soared 34.5%. This jump was mainly driven by a drastic improvement in other income and higher deposit fee income.

Other expenses amounted to $89.6 million, up 10.1% year over year. Higher compensation and benefits, occupancy and other expenses largely led to this rise.

The company’s efficiency ratio was 58.64%, down from 60.58% recorded a year ago. A fall in efficiency ratio indicates improved profitability.

At the end of the fiscal first quarter, return on average common equity was 10.12%, up from the 7.65% witnessed at the end of the year-earlier quarter. Return on average assets was 1.02%, up from 0.83%.

Loans and Deposit Rise

As of Dec 31, 2021, net loans receivables amounted to $14.6 billion, up 5.5% sequentially. Also, total customer deposits were $15.9 billion, up 2.3% from Sep 30, 2021.

Credit Quality Improves

As of Dec 31, 2021, the allowance for credit losses (including reserve for unfunded commitments) was 1.18% of gross loans outstanding, down from 1.22% recorded on Sep 30, 2021. The ratio of non-performing assets to total assets was 0.27% compared with 0.22% as on Sep 30, 2021.

During the quarter, the company recorded a provision for credit losses of $0.5 million, substantially lower than $3 million in the prior-year quarter.

Share Repurchase Update

During the quarter, Washington Federal repurchased 84,114 shares at an average price of $35.34 per share.

Our Viewpoint

Solid loans and deposit balances along with strong credit quality will likely continue to support Washington Federal’s profitability. However, elevated operating expenses remain a major headwind.

Washington Federal, Inc. Price, Consensus and EPS Surprise

Washington Federal, Inc. price-consensus-eps-surprise-chart | Washington Federal, Inc. Quote

Currently, Washington Federal carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Release & Expectations of Other Banks

Hancock Whitney Corporation HWC is scheduled to release fourth quarter and full-year 2021 results on Jan 18.

Over the past 30 days, the Zacks Consensus Estimate for Hancock’s quarterly earnings has moved 1.5% upward to $1.35. This indicates a 40.6% increase from the prior-year quarter.

Associated Banc-Corp ASB is scheduled to release fourth quarter and full-year 2021 results on Jan 20.

Over the past 30 days, the Zacks Consensus Estimate for Associated Banc-Corp’s quarterly earnings has remained unchanged at 43 cents. This implies a 7.5% increase from the prior-year quarter.

Bank OZK OZK is scheduled to release fourth quarter and full-year 2021 results on Jan 20.

Over the past 30 days, the Zacks Consensus Estimate for Bank OZK’s quarterly earnings has remained unchanged at 98 cents. Also, this suggests a 5.4% increase from the prior-year quarter.

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