WAFD, INC. (WAFD): what the price assumes

In the published model solve dated 2026-Q2, anchored at $36.09, WAFD, INC. (WAFD) is priced for 9.9% return on equity. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-28.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/WAFD

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Solve inputs: computed at a 9.9% cost of equity with 4% terminal growth over a 10-year stage, on common book equity (FY2026).

How unusual the bet is: within-range

Valuation X-Ray

The price is supported by asset-based and earnings-power and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 4.7%); the inversion above states its own rate.

Per-Model Detail (n=6)

Economic-Unit Decomposition (Sum Of The Parts)

The issuer is a funded financial business. Debt, interest, and cash flows are operating inputs, so industrial EV, net-debt, WACC, and free-cash-flow lenses do not apply; value the common-equity claim with book, earnings, capital, and payout economics.

No unit-level total common-equity value is stated. Each financial unit requires supported standalone common equity, normalized earnings, capital adequacy, and payout capacity. Consolidated debt, interest, and cash are operating balances, not an enterprise-to-equity bridge; company-level book, earnings, capital, and payout lenses remain the coherent cross-checks.

Solvency

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

• WaFd is a Pacific Northwest savings bank that competes on low operating costs and balance-sheet management; it aims to grow net interest income "through the rate cycles" rather than chase loan volume.
• The defining question is the return on equity: the price near book value assumes the bank sustains a roughly 10% return on its capital, above the about 8% on trailing earnings it has recently earned.
• What to watch is the margin and credit trend: net interest margin improved to about 2.81% in the latest quarter and non-performing assets fell to about 0.48% of total assets.

Bull Case

Valuing a bank means starting with the return on its capital, not an earnings multiple, and WaFd's case is that its return is inflecting upward from a low base. The bank has recently earned a return on equity in the high single digits, and the price near book value assumes it sustains roughly 10%. The most recent quarter shows the path: net income rose about 17% year over year, and the net interest margin expanded to about 2.81%, helped by higher asset yields and lower funding costs. For a bank, margin expansion in a falling-rate environment is the lever that drives the return on equity toward the level the price assumes.

The franchise is built for exactly this kind of disciplined recovery. WaFd describes its edge as managing the balance sheet "through different rate cycles," noting that its low operating costs have "allowed the Company to manage interest rate risk, within guidelines established by the Board, through all interest rate cycles." A low-cost, conservatively run thrift does not need spectacular loan growth to create value; it needs a stable deposit base, a sensible margin, and clean credit, and on the most recent evidence it has all three. The bank actively reshaped its balance sheet after the Luther Burbank acquisition, selling lower-yielding multifamily and single-family loans and using the proceeds to reduce borrowings, a deliberate move to lift the margin and the return on capital.

Credit quality and capital return seal the bull case. Asset quality strengthened in the latest quarter, with non-performing assets falling to about 0.48% of total assets, net charge-offs minimal, and the allowance for credit losses covering well over 150% of non-performing loans, a cushion that means a credit shock would have to be severe to dent capital. Management is returning that capital to shareholders, repurchasing about 3.6% of the shares in a single quarter while maintaining the dividend. At roughly one times book and below the peer group's price-to-book, a bank buying back this much stock at this valuation is compounding book value per share for the owners who stay.

Bear Case

The advantage a low-cost thrift relies on, a cheap and sticky deposit base, is exactly what the modern banking landscape erodes. Depositors now move money at the tap of a phone, and online banks and money-market funds pay rates a branch-based savings bank struggles to match without crushing its own margin. WaFd's net interest margin near 2.81% is recovering but remains thin in absolute terms, well below what a commercial-heavy bank earns, because the deposit franchise has to compete on price for funding it once captured cheaply. The bull case assumes the bank can hold its funding costs down as it grows; the bear case is that holding deposits increasingly means paying up for them, which caps how high the return on equity can climb.

The asset side carries the concentration risk common to thrifts: real estate. WaFd's loan book is weighted toward mortgage and real-estate lending, including the multifamily exposure it inherited and has been actively trimming, and a downturn in Pacific Northwest property values or a rise in commercial-real-estate stress would flow through credit costs. The 10-K is methodical about the mechanics, noting that the bank "does not accrue interest on loans 90 days past due or more" and that non-performing assets are measured against total assets. Credit looks pristine today, but it is a lagging indicator: the cycle reveals problem loans after the economy turns, not before.

The return gap is the bear's arithmetic. The price assumes a roughly 10% return on equity, while the bank has recently earned about 8% on trailing earnings. That is the central bet: the margin recovery and balance-sheet repositioning have to lift the return by two-plus points and keep it there. If the recovery stalls, or deposit competition compresses the margin again, the return stays in the high single digits, and a bank earning below its cost of equity does not deserve to trade at book. The static value methods anchor at or just above book value near $39 per share, but the price-to-book justification rests entirely on the return reaching the assumed level. History is a caution: only about three-quarters of banks earning this return sustained it for a decade, and WaFd has not yet shown it can hold the higher number through a full cycle.

Valuation

A bank is worth the return it earns on its capital, so WaFd is read off price-to-book, not an operating multiple. At about $37 (June 28, 2026) the stock trades near one times book, which inverts to an assumed sustainable return on equity of roughly 10%, against the about 8% on trailing earnings the bank has recently earned. The gap between the assumed and the demonstrated return is the entire bet. The assumed level is within reach of what WaFd has earned in better periods, and the most recent quarter, with the margin expanding, points in the right direction, but the price requires the improvement to stick.

The methods we use to triangulate cluster around book value, which is the signature of a bank priced for a modest return. The excess-return methods, which capitalize the return earned above the cost of equity, land right at the price near $34 to $36. The book-value-based fair value, applying a price-to-tangible-book multiple driven by the return on equity, lands below the price near $25, reflecting that the trailing return sits below the cost of equity. The relative-multiple lens at a sector-typical earnings multiple lands near the price. A few methods reach higher, but they assume the higher growth and return the bank has yet to prove. The pattern is a value-and-recovery bank: priced near book, with the upside resting on the return on equity climbing to the assumed 10% and holding. The peer cohort here, regional and community banks like Commerce Bancshares and Trustmark, sits in the same price-to-book range, and WaFd trades in the lower half of that group.

For a bank the balance-sheet frame is capital-return capacity, not coverage math. WaFd is well capitalized, generating enough capital to repurchase about 3.6% of its shares in a quarter while holding the dividend, and its allowance for credit losses covers non-performing loans comfortably. The downside is bounded by tangible book value and a clean credit book; the risk is that the return on equity, not the solvency, is what the price has paid for, and a stalled margin recovery leaves the stock fairly valued at book rather than cheap.

Catalysts

WaFd's most recent quarter showed the profitability recovery taking hold. The bank reported net income of about $65.5 million, up about 17% year over year, with earnings per share of about $0.83 that beat expectations, as net interest income rose to about $178 million and the net interest margin improved to about 2.81% on higher asset yields and lower funding costs. Credit held up well, with non-performing assets at about 0.48% of total assets, minimal net charge-offs, and the allowance for credit losses covering about 163% of non-performing loans.

Capital return is the steadiest catalyst. The bank repurchased about 2.74 million shares, roughly 3.6% of its common stock, in the quarter and maintained its quarterly dividend of $0.27 per share, the combination that compounds book value per share for continuing holders. The watch items are whether the net interest margin keeps expanding as funding costs ease, whether deposit competition forces the bank to pay up, and whether credit stays clean through the real-estate cycle, the three variables that decide whether the return on equity climbs to the level the price assumes.

Peer Cohorts (Per Segment, With Filing Citations)

WaFd (single reportable segment - banking) (reported)

• CFR (Cullen/Frost Bankers, Inc.)
• FY2025 10-K: …Banking and Frost Wealth Advisors are delineated by the products and services that each segment offers. The Banking operating segment includes both commercial and consumer banking services and Frost Insurance Agency. Commercial banking services are provided to corporations and other business customers and include a…
• FY2025 10-K: …things. 51 Table of Contents Results of Segment Operations We are managed under a matrix organizational structure whereby our two primary operating segments, Banking and Frost Wealth Advisors, overlap a regional reporting structure. A third operating segment, Non-Banks, is for the most part the parent holding…
• TRMK (Trustmark Corporation)
• FY2025 10-K: …and Wealth Management. A description of each segment and the methodologies used to measure financial performance and financial information by reportable segment are included in Note 20 - Segment Information located in Part II. Item 8. - Financial Statements and Supplementary Data of this report. The Insurance Segment…
• FY2025 10-K: General Banking and Wealth Management. The General Banking Segment is responsible for all traditional banking products and services, including loans and deposits. The General Banking Segment also consists of internal operations such as Human Resources, Executive Administration, Treasury (Funds Management), Public…
• FHB (FIRST HAWAIIAN, INC.)
• FY2025 10-K: ) ​ $ 880,788 ​ 153 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2024 ​ ​ Retail ​ Commercial ​ Corporate/ ​ Consolidated (dollars in thousands) ​ ​ ​ Banking ​ ​ ​ Banking ​ ​ ​ Other ​ ​ ​ Total Net interest income (expense) (1) ​ $ 492,408 ​ $ 200,038 ​ $ ( 69,708 ) ​ $ 622,738 ​ ​ ​ ​…
• FY2025 10-K: …other segment items, and noninterest income. (4) Segment earning assets only apply to the Retail Banking and Commercial Banking segments. The Corporate/Other column includes earning assets not associated with a segment (such as investment securities, interest-bearing deposits and federal funds). ​ Segment earning…
• UCB (UNITED COMMUNITY BANKS INC)
• FY2025 10-K: …an assessment of requirements pertaining to Section 112 of the Federal Deposit Insurance Corporation Improvement Act. This section relates to management's evaluation of internal control over financial reporting, including controls over the preparation of financial statements in accordance with the instructions to the…
• FY2025 10-K: …securities, U.S. Treasury, U.S. agency and municipal obligations. Our AFS securities are recorded at fair value on our balance sheet. Changes in fair value on AFS securities are generally recorded in shareholders' equity and are not recognized in our income statement. Our securities classified as HTM are recorded at…
• FNB (FNB CORP/PA/)
• FY2025 10-K: …implemented by Regulation W, banks are subject to restrictions that limit certain types of transactions between banks and their affiliates. In general, banks are subject to quantitative and qualitative limits on extensions of credit, purchases of assets and certain other transactions involving affiliates. Also,…
• FY2025 10-K: …the Year Ended December 31, 2025 Interest income $ 2,320 $ - $ - $ 6 $ 2,326 Interest expense 881 - - 49 930 Net interest income (loss) 1,439 - - ( 43 ) 1,396 Provision for credit losses 86 - - - 86 Non-interest income: Service charges 92 - - - 92 Interchange and card transaction fees 52 - - - 52 Trust services - 48…
• ABCB (Ameris Bancorp)
• FY2025 10-K: INFORMATION The following table sets forth certain consolidated quarterly financial information of the Company. This information is derived from unaudited consolidated financial statements, which include, in the opinion of management, all normal recurring adjustments which management considers necessary for a fair…
• FY2025 10-K: Cash and due from banks $ 253,807 $ 253,807 $ - $ - $ 253,807 Interest-bearing deposits in banks 835,113 835,113 - - 835,113 Debt securities held-to-maturity 203,242 - 189,873 - 189,873 Loans, net 21,128,692 - - 20,957,101 20,957,101 Financial liabilities: Deposits 22,375,995 - 22,370,800 - 22,370,800 Other borrowings…
• PB (PROSPERITY BANCSHARES, INC.)
• FY2025 10-K: …The fair value of restricted stock awards is based on the current market price on the date of grant. Cash and Cash Equivalents -For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks as well as federal funds sold that mature in three days or less. Segment Reporting -The…
• FY2025 10-K: 10-K false FY 0001068851 one year http://fasb.org/srt/2025#ChiefExecutiveOfficerMember P5Y http://xbrl.sec.gov/country/2025#US http://xbrl.sec.gov/country/2025#US http://xbrl.sec.gov/country/2025#US one year 0001068851 pb:ForwardMortgageBackedSecuritiesTradesMember 2024-12-31 0001068851…
• CBU (COMMUNITY FINANCIAL SYSTEM, INC.)
• FY2025 10-K: …period gross charge-offs (1) ​ $ 0 ​ $ 64 ​ $ 119 ​ $ 114 ​ $ 0 ​ $ 23 ​ $ 924 ​ $ 2 ​ $ 1,246 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total business lending: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 492,300 ​ $…
• FY2025 10-K: …Contents Information about reportable segments and reconciliations of the information to the consolidated financial statements follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Employee ​ ​ ​ ​ ​ ​ ​ ​ Wealth ​ ​ ​ ​ ​ ​ ​ Banking and ​ Benefit ​ Insurance ​ Management ​ ​ ​ (000's omitted) ​ Corporate ​…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.