WaFd’s Net Interest Income Growth Slowed Again

The Tip Desk · October 16, 2026 · 3 min read

WaFd’s fourth-quarter net interest income edged up to $182.4 million, while credit charges and merger spending weighed on earnings despite a residential loan-sale gain.

WaFd (WAFD), the Seattle-based bank, saw net interest income growth slow again in its fourth fiscal quarter, leaving loan-sale income to bolster revenue while credit charges and merger spending weighed on earnings. Net interest income was $182.4 million in the three months ended September 30, against $181.3 million in June’s quarter. The smaller increase extended the slowdown visible across the supplied quarters.

The June quarter had delivered a larger increase, from $177.6 million in March to $181.3 million. Net interest margin remained at 2.81% throughout those three quarters. That sequence left the bank earning slightly more net interest income without further margin expansion. In the September quarter, interest income totaled $336.5 million and interest expense was $154.1 million; lending remained the largest source of interest revenue.

A completed loan sale supplied a substantial part of revenue outside the interest business. WaFd sold $543 million of single-family residential loans during the September quarter and recognized a $16.4 million gain. Total non-interest income was $38.1 million. The company identified the sale gain as the principal reason for the quarter’s increase in that revenue category, putting a transaction alongside the modest improvement in net interest income rather than a broad advance in recurring fees.

Expenses absorbed much of that additional revenue. Non-interest expense totaled $121.5 million against $110.3 million in the June quarter. WaFd attributed the increase to investments in employees and technology, together with merger-related spending. Those merger costs totaled $6.2 million, and the reported efficiency ratio was 55.12%. The company had announced its EverBank merger in September; the expense reflected costs incurred during the quarter, rather than evidence that the transaction had closed.

Credit costs provided the other substantial call on earnings. Quarterly net charge-offs were $39.2 million against $1.6 million in June’s quarter. The concentration mattered: WaFd resolved a $53 million classified loan relationship, producing a $36 million charge-off. The bank therefore paired the resolution of a problem exposure with a substantial realized loss. Its credit-loss provision was $20.0 million, which the company attributed to growth in the active loan portfolio and increased charge-offs. That explanation tied the quarter’s expense to both lending activity and the losses recognized during the period.

Reported net income fell to $60.0 million from $66.1 million in the June quarter. Diluted earnings were $0.76 a share, and return on average assets was 0.87%. The result left the final quarter weaker despite the residential loan-sale gain, with the income statement carrying both the provision and merger spending.

The funding base remained predominantly deposit-funded. Customer deposits totaled $21.3 billion at September 30, with transaction accounts representing 60.4% of that balance. The effective weighted-average deposit rate, including non-interest-bearing accounts, was 2.49% as of that date. That was a period-end funding measure, distinct from the quarterly margin that had remained unchanged.

For the full fiscal year ended September 30, WaFd earned $255.9 million, or $3.21 a diluted share. Active-loan originations totaled $5.5 billion for the year. Commercial lending accounted for 95% of annual originations and consumer lending for the remaining 5%. Those annual production figures described where the bank was adding business while it continued to reduce its residential portfolio.

At year-end, net loans were $19.0 billion, while another $428.9 million of multifamily loans had been separately classified as held for sale. Beyond the completed single-family disposal, that designated balance left another substantial block of loans awaiting sale.