WAFD

WaFd Financial ($WAFD) President's Consecutive Purchases vs 27% Surge in Bad Assets: Investor Dilemma Amid Mixed Signals

12/03/2025 21:59

$WAFD (WaFd Financial Group) is drawing investor attention, but not necessarily for positive reasons. The regional bank has been in a persistent downtrend since hitting a peak of $36 in July 2024, currently trading around $31, representing approximately a 14% decline from its highs. WaFd Financial Group is a regional bank holding company based in the western United States, providing traditional banking services, mortgage lending, and wealth management to individuals and small-to-medium businesses. With a market cap of $2.47 billion, this mid-cap regional bank maintains a strong presence particularly in Washington and Oregon states. The most intriguing aspect is the shift in insider trading patterns. On November 4, 2024, when shares were trading in the $32-33 range, executives engaged in significant selling. EVP Cathy Cooper sold 7,500 shares for approximately $244,000, while Ryan Mauer disposed of 12,132 shares for about $404,000. These represented substantial sales at the time. However, a completely different picture has emerged recently. In November and December 2025, President Brent Beardall made consecutive preferred stock purchases. He bought 3,000 shares each on November 26 and December 3, totaling 6,000 shares for approximately $100,000. These are 4.875% fixed-rate preferred shares, representing 1/40th interest in common stock equivalent. These contrasting insider trading patterns suggest differing views within management regarding the company's current valuation. Beardall's recent purchases could signal his belief that the company is undervalued at current price levels. Q4 2025 earnings forecasts present mixed signals. Earnings per share (EPS) is expected at $0.75, representing a 7.1% year-over-year increase, but revenue is projected at $190.22 million, reflecting modest 0.8% growth. More concerning is the deterioration in asset quality metrics. Non-performing assets are expected to rise from $77.42 million to $98.38 million year-over-year, a 27% increase. Nevertheless, operational efficiency is improving. The efficiency ratio is expected to improve from 57.2% to 55.5%, while noninterest income is projected to increase from $15.88 million to $18.19 million. This demonstrates successful expansion of fee-based services beyond traditional lending activities. WaFd's situation must be evaluated within the broader challenges facing the regional banking sector. As of late 2025, the U.S. economy is experiencing limited economic data due to government shutdown aftermath, with negative indicators including manufacturing contraction and declining consumer confidence. Inflation remains around 4.5%, creating uncertainty about Federal Reserve policy directions. Investors should pay close attention to the deteriorating asset quality trend. A 27% increase in non-performing assets cannot be dismissed as a temporary phenomenon. For regional banks, this directly correlates with local economic conditions, requiring careful monitoring of western region real estate markets and small business lending environments. In a positive scenario, Federal Reserve rate cuts could alleviate net interest margin pressure, operational efficiency improvements could continue, and the stock could rebound from its currently undervalued state, as suggested by the president's purchases. Sustained growth in noninterest income would represent a positive shift away from traditional banking dependency. Conversely, risk scenarios include continued non-performing asset growth leading to increased provisioning burdens, weakening loan demand due to deteriorating regional economic conditions, and prolonged profitability pressure if interest rate environment changes occur later than expected. The continued share price decline following insider selling also suggests short-term momentum challenges. At the current $31 price level, WaFd stands at a crossroads. While the president's consecutive purchases provide a positive signal, deteriorating asset quality and the declining price trend remain unresolved challenges. For investors, Q4 earnings will be crucial, particularly management's explanation of specific causes behind non-performing asset increases, management plans, and 2026 business strategy will be key variables for investment decisions.