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WaFd & Its Unit Receive Ratings From KBRA With Stable Outlook

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WaFd, Inc. (WAFD - Free Report) and its banking subsidiary Washington Federal Bank (“WaFd Bank”) have been assigned ratings for the first time by the Kroll Bond Rating Agency (“KBRA”). The rating agency has issued a BBB+ rating for senior unsecured debt and BBB for subordinated debt for WaFd.
 
For WaFd Bank, KBRA assigned deposit and senior unsecured debt ratings of A- and a subordinated debt rating of BBB+. Further, the outlook is stable for all long-term ratings.

Reasons Behind WaFd’s Ratings & Outlook

Per KBRA, WaFd’s ratings reflect below-average credit risk in residential mortgage and multi-family portfolios, in which the company has outperformed similar-sized peers over an extended period.
 
These portfolios maintain a conservative loan-to-value (LTV), and when combined with the widespread scarcity of affordable housing in most places where it serves, ensure a sustained outperformance of the company in the future.

Additionally, WAFD’s exposure to the office sector is minimal, primarily comprising small-sized properties in suburban markets, with just 4% of loans. This, thus, demonstrates higher resilience compared with high-rise buildings in central business districts.

Brent Beardall, president and CEO remains satisfied with the ratings issued and stated, “The assignment of these ratings, including the BBB+ rating for our senior unsecured debt and the stable outlook for our long-term ratings, reflects the consistent and prudent approach we take in managing our balance sheet, serving our clients, and driving sustainable growth.”

Price Performance & Zacks Rank

Year to date, shares of WaFd have risen 6.9% compared with the industry’s 3.4% growth.

Zacks Investment Research
Image Source: Zacks Investment Research

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

Rating Outlook for Other Firms

BlackRock Inc.’s (BLK - Free Report) outlook has been downgraded to negative from stable by Moody's Investors Service. The action followed the company’s announcement to acquire Preqin for almost $3.2 billion (£2.55 billion) in cash. This marked the second major deal for the company. In January, it signed an agreement to acquire Global Infrastructure Partners.

The rating agency affirmed the senior unsecured Aa3 ratings of BLK and its subsidiary BlackRock Funding, Inc. The company's long-term and short-term issuer ratings have been affirmed at Aa3 and P-1, respectively.

The change in BlackRock's rating outlook is attributed to the substantial size and scope of two significant acquisitions announced within a brief period. Both deals are set to elevate the company's adjusted debt by more than $6 billion, taking it to approximately $14.7 billion.
 
Bank OZK’s (OZK - Free Report) ratings and outlook have been affirmed by Moody's. This decision underscores the balance between the bank's strong financial metrics and the risks associated with its substantial exposure to commercial real estate (CRE) loans.

The rating agency affirmed all the ratings and assessments of Bank OZK, including its long-term local currency deposit rating of A3 and short-term local currency deposit rating of Prime-2. Despite the affirmation, the outlook on the bank's long-term deposit and issuer ratings remains negative.

The affirmation of these ratings reflects a mix of positive financial performance and significant risk factors. The primary concerns stem from Bank OZK's high concentration in CRE loans, particularly construction loans, amid a challenging interest rate environment.


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