| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 29.25 | -10 |
| Intrinsic value (DCF) | 34.42 | 6 |
| Graham-Dodd Method | 30.38 | -7 |
| Graham Formula | 101.29 | 210 |
Washington Federal, Inc. (NASDAQ: WAFD) is a leading regional bank holding company operating through its subsidiary, Washington Federal Bank, National Association. Founded in 1917 and headquartered in Seattle, Washington, the company provides a comprehensive suite of banking services, including lending, depository, insurance, and digital banking solutions across eight Western U.S. states. With 219 branches as of 2021, WAFD serves a diverse clientele, including consumers, mid-sized businesses, and commercial real estate developers. The bank specializes in residential and commercial real estate lending while offering competitive deposit products such as checking accounts, money market accounts, and CDs. Washington Federal distinguishes itself through its conservative lending practices, strong regional presence, and commitment to customer service. As a mid-cap regional bank with $2.28 billion market capitalization, WAFD plays a significant role in the Western U.S. financial services landscape, combining traditional banking with modern digital capabilities.
Washington Federal presents a stable investment opportunity in the regional banking sector, supported by its consistent profitability (FY2023 net income of $200M), diversified loan portfolio, and strong capital position. The bank's 0.835 beta suggests lower volatility than the broader market, appealing to risk-averse investors. Key strengths include a 5.3% dividend yield (based on $1.06 annual dividend) and solid liquidity with $2.38B in cash equivalents. However, investors should monitor the bank's exposure to commercial real estate (27% of loans) amid potential sector headwinds and its relatively high debt-to-equity ratio. The bank's regional concentration in Western states offers growth potential but also geographic risk. With a P/E ratio of approximately 11.4x (based on $2.50 EPS), WAFD trades at a modest valuation compared to peers, potentially offering value for income-focused investors.
Washington Federal competes in the crowded Western U.S. regional banking market by leveraging its specialized real estate lending expertise and conservative underwriting standards. The bank's competitive advantage stems from its deep regional knowledge, developed over 100+ years of operation, allowing for superior credit risk assessment in its core markets. WAFD maintains cost advantages through its efficient branch network (averaging $33M deposits per branch) and low-cost deposit base (72% of funding). However, it faces intensifying competition from both larger national banks with superior digital capabilities and smaller community banks with more localized focus. The bank's commercial real estate specialization differentiates it but also creates concentration risk. WAFD's mobile/online banking offerings lag behind tech-forward competitors, though its personal service remains a strength. The bank's multi-state footprint provides diversification but lacks the scale advantages of coast-to-coast competitors. In the current higher-rate environment, WAFD's disciplined approach to deposit pricing helps protect net interest margins, though deposit betas remain a key monitorable. The bank's insurance brokerage services provide supplementary fee income but represent a small portion of overall revenue.