WAFD INC

Previous wording

You should not place undue reliance on any forward-looking statement and should consider the following uncertainties and risks, as well as the risks and uncertainties discussed elsewhere in this report, and including the Risk Factors included in the Company’s 2024 10-K, and in any of the Company's other subsequent Securities and Exchange Commission ("SEC") filings, which could cause the Company's future results to differ materially from the plans, objectives, goals, estimates, intentions and expectations expressed in forward-looking statements:

Current wording

You should not place undue reliance on any forward-looking statement and should consider the following uncertainties and risks, as well as the risks and uncertainties discussed elsewhere in this report, and including the Risk Factors included in the Company’s 2024 10-K, and in any of the Company's other subsequent SEC filings, which could cause the Company's future results to differ materially from the plans, objectives, goals, estimates, intentions and expectations expressed in forward-looking statements:

Previous wording

•economic uncertainty or a deterioration in economic conditions or slowdowns in economic growth, including financial stress on borrowers (consumers and businesses) as a result of higher interest rates or an uncertain economic environment;

Current wording

•economic uncertainty or a deterioration in economic conditions or slowdowns in economic growth, including financial stress on borrowers (consumers and businesses) as a result of high interest rates; inflation; tariffs, including retaliatory tariffs; low consumer confidence; or an uncertain economic environment;

Previous wording

•our ability to make accurate assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the assets securing these loans;

Current wording

•possible additional provisions for loan losses and charge-offs; credit risks of lending activities and deterioration in asset or credit quality; and our ability to make accurate assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the assets securing these loans;

Previous wording

•competition from other financial institutions and new market participants, offering services similar to those offered by the Bank;

Current wording

•competition from other financial institutions and new market participants, offering services similar to those offered by the Bank, and consolidation in the industry resulting in the creation of larger competitors with greater financial resources;

Previous wording

•our ability to continue to pay dividends, including on our outstanding Series A Preferred Stock;

Current wording

•our ability to continue to pay dividends, including on our outstanding Series A Preferred Stock; and make stock repurchases;

Previous wording

•the ability of the Company to obtain external financing to fund its operations or obtain financing on favorable terms;

Current wording

•the ability of the Company to obtain external financing to fund its operations or obtain financing on favorable terms, when needed;

Previous wording

Washington Federal Bank, a federally-insured Washington state chartered commercial bank dba WaFd Bank (the "Bank" or "WaFd Bank"), was founded on April 24, 1917 in Ballard, Washington and is engaged primarily in providing lending, depository, insurance and other banking services to consumers, mid-sized to large businesses, and owners and developers of commercial real estate. WaFd, Inc., a Washington corporation, was formed as the Bank’s holding company in November, 1994. On September 27, 2023, the Company filed Articles of Amendment to its Restated Articles of Incorporation, as amended, with the Washington Secretary of State, to change its name from Washington Federal, Inc. to WaFd, Inc. This change was effective on September 29, 2023. As used throughout this document, the terms "WaFd," the "Company" or "we" or "us" and "our" refer to WaFd, Inc. and its consolidated subsidiaries, and the term "Bank" or "WaFd Bank" refers to its bank operating subsidiary. The Company is headquartered in Seattle, Washington.

Current wording

Washington Federal Bank, a federally-insured Washington state chartered commercial bank dba WaFd Bank (the "Bank" or "WaFd Bank"), was founded on April 24, 1917 in Ballard, Washington and is engaged primarily in providing lending, depository, insurance and other banking services to consumers, mid-sized to large businesses, and owners and developers of commercial real estate. Washington Federal, Inc., a Washington corporation, was formed as the Bank’s holding company in November, 1994. On September 27, 2023, the Company filed Articles of Amendment to its Restated Articles of Incorporation, as amended, with the Washington Secretary of State, to change its name from Washington Federal, Inc. to WaFd, Inc. This change was effective on September 29, 2023. As used throughout this document, the terms "WaFd," the "Company" or "we" or "us" and "our" refer to WaFd, Inc. and its consolidated subsidiaries, and the term "Bank" or "WaFd Bank" refers to its bank operating subsidiary. The Company is headquartered in Seattle, Washington.

Previous wording

Based on management's assessment of the current interest rate environment, the Company has taken steps, including growing shorter-term loans and transaction deposit accounts, to reduce its interest rate risk profile. The mix of transaction and savings accounts is 55% of total deposits as of March 31, 2025 while the composition of the investment securities portfolio is 47% variable and 53% fixed rate. The Company has entered into $400,000,000 of pay fixed interest rate swaps to hedge the fair value risk of the AFS portfolio which effectively converts 11% of fixed securities to variable. When interest rates rise, the fair value of the investment securities with fixed rates will decrease and vice versa when interest rates decline. The Company has $526,502,000 of mortgage-backed securities that it has designated as HTM and are carried at amortized cost. As of March 31, 2025, the net unrealized loss on these securities was $41,910,000. The Company has $3,142,763,000 of AFS securities that are carried at fair value. As of March 31, 2025, the net unrealized loss on these securities was $44,483,000. The Company has executed interest rate swaps to hedge interest rate risk on certain FHLB borrowings. The unrealized gain on these interest rate swaps as of March 31, 2025 was $120,666,000. All of the above are pre-tax net unrealized gains or losses.

Current wording

Based on management's assessment of the current interest rate environment, the Company has taken steps, including growing shorter-term loans and transaction deposit accounts, to reduce its interest rate risk profile. The mix of transaction and savings accounts is 56% and 44%, respectively, of total deposits as of June 30, 2025 while the composition of the investment securities portfolio is 49% variable and 51% fixed rate. The Company entered into $520,000,000 of pay fixed interest rate swaps to hedge the fair value risk of the AFS portfolio which effectively converts 13% of fixed securities to variable as of June 30, 2025. When interest rates rise, the fair value of the investment securities with fixed rates will decrease and vice versa when interest rates decline. The Company has $512,854,000 of mortgage-backed securities that it has designated as HTM and are carried at amortized cost. As of June 30, 2025, the net unrealized loss on these securities was $40,813,000. The Company has $3,387,497,000 of AFS securities that are carried at fair value. As of June 30, 2025, the net unrealized loss on these securities was $38,368,000. The Company recognized in earnings a gain of $13,828,000 on fair value of AFS securities hedged by the fixed interest rate swaps. The Company has executed interest rate swaps to hedge interest rate risk on certain FHLB borrowings. The unrealized gain on these interest rate swaps as of June 30, 2025 was $106,555,000. All of the above are pre-tax net unrealized gains or losses.

Previous wording

The following table shows the potential impact of changing interest rates on net income for one year and compares the current model results to the prior quarter. The Company's focus is primarily on the impact of abrupt upward or downward changes in short term rates. It is important to note that this is not a forecast or prediction of future events, but is used as a tool for measuring potential risk. This analysis assumes zero balance sheet growth and a constant percentage composition of assets and liabilities.

Current wording

The following table models the potential impact of changing interest rates on net income over a twelve-month period and compares the current results to the results as of the prior year end. The Company's focus is primarily on the impact of abrupt upward or downward changes in short term rates. It is important to note that this is not a forecast or prediction of future events, but is used as a tool for measuring potential risk. This analysis assumes zero balance sheet growth and a constant percentage composition of assets and liabilities.

Previous wording

NPV Sensitivity - Another method used to quantify interest rate risk is the NPV analysis. This analysis calculates the difference between the present value of interest-bearing liabilities and the present value of expected cash flows from interest-earning assets and off-balance-sheet contracts. The following tables set forth an analysis of the Company’s interest rate risk as measured by the estimated changes in NPV resulting from instantaneous and sustained parallel shifts in the yield curve (measured in 100-basis-point increments) and compares the current model results to the prior quarter results.

Current wording

NPV Sensitivity - Another method used to quantify interest rate risk is the NPV analysis. This analysis calculates the difference between the present value of interest-bearing liabilities and the present value of expected cash flows from interest-earning assets and off-balance-sheet contracts. The following table sets forth an analysis of the Company’s interest rate risk as measured by the estimated changes in NPV resulting from instantaneous and sustained parallel shifts in the yield curve (measured in 100-basis-point increments) and compares the current model results to the prior quarter results.

Previous wording

Prepayment speeds continue to be low at March 31, 2025 but increasing with the Bank's conditional payment rate ("CPR") for single family mortgages at 8.10%, up from 4.80% the year before.

Current wording

Prepayment speeds continue to be relatively low at June 30, 2025 but increasing with the Bank's conditional payment rate ("CPR") for single-family mortgages at 9.00%, up from 6.60% the year before.

Previous wording

Net Interest Margin - Net interest margin is measured as net interest income divided by average earning assets for the period. Net interest margin was 2.55% for the quarter ended March 31, 2025 compared to 2.73% for the quarter ended March 31, 2024. The yield on interest-earning assets decreased 18 basis points to 5.32% and the cost of interest-bearing liabilities decreased 3 basis points to 3.29% over that same period. The lower yield on interest-earning assets was primarily due to falling rates affecting adjustable rate loans and interest-bearing cash deposits.

Current wording

Net Interest Margin - Net interest margin is measured as net interest income divided by average earning assets for the period. Net interest margin was 2.69% for the quarter ended June 30, 2025 compared to 2.56% for the quarter ended June 30, 2024. The yield on interest-earning assets decreased 36 basis points to 5.30% and the cost of interest-bearing liabilities decreased 50 basis points to 3.13% over that same period. The lower yield on interest-earning assets was primarily due to falling intrest rates affecting adjustable rate loans, net cash settlements on our loan and securities fair value hedge programs and interest-bearing cash deposits.

Previous wording

The following table sets forth the information explaining the changes in the net interest margin for the period indicated compared to the same period one year ago.

Current wording

The following tables set forth the information explaining the changes in the net interest margin for the periods indicated compared to the respective periods one year ago.

Previous wording

As of March 31, 2025, total assets had decreased by $415,693,000 to $27,644,637,000 from $28,060,330,000 at September 30, 2024. During the six months ended March 31, 2025, loans receivable increased $3,647,000, investment securities increased by $659,584,000, and FHLB stock increased by $38,347,000 while cash and cash equivalents decreased by $1,149,641,000.

Current wording

As of June 30, 2025, total assets had decreased by $1,328,415,000 to $26,731,915,000 from $28,060,330,000 at September 30, 2024 primarily due to a reduction in loans receivable and cash used to reduce borrowings and purchase investments during the period. During the nine months ended June 30, 2025, loans receivable decreased $639,190,000, investment and mortgage-backed securities increased by $890,670,000, and FHLB stock increased by $282,000 while cash and cash equivalents decreased by $1,571,850,000, in each case as compared to September 30, 2024.

Previous wording

Cash and cash equivalents of $1,231,461,000 and shareholders’ equity of $3,032,620,000 as of March 31, 2025 provide management with flexibility in managing interest rate risk going forward.

Current wording

Management believes the Company's cash and cash equivalents of $809,252,000 and shareholders’ equity of $3,014,325,000 as of June 30, 2025 will provide flexibility in managing the Company's interest rate risk going forward.

Previous wording

The Bank has a credit line with the Federal Home Loan Bank of Des Moines ("FHLB - DM") of up to 45% of total assets depending on specific collateral eligibility. This line provides the Bank a substantial source of additional liquidity. The Bank has entered into borrowing agreements with the FHLB - DM to borrow funds under a short-term floating rate cash management advance program and fixed-rate term loan agreements. All borrowings are secured by stock of the FHLB - DM, deposits with the FHLB - DM, and a blanket pledge of qualifying loans receivable. The Bank also has a credit line with the Federal Home Loan Bank of San Francisco ("FHLB - SF") in support of LBC borrowings from the FHLB - SF, but the Bank is unable to take down new advances against this line. The FHLB - SF credit line is secured by a line-item pledge of mortgage backed securities.

Current wording

The Bank has a credit line with the Federal Home Loan Bank of Des Moines ("FHLB - DM") of up to 45% of total assets depending on specific collateral eligibility. This line provides the Bank a substantial source of additional liquidity. The Bank has entered into borrowing agreements with the FHLB - DM to borrow funds under a short-term floating rate cash management advance program and fixed-rate term loan agreements. All borrowings are secured by stock of the FHLB - DM, deposits with the FHLB - DM, and a blanket pledge of qualifying loans receivable. The Bank also has a credit line with the Federal Home

Previous wording

Customer account balances have remained stable, increasing by $53,456,000, or 0.3%, to $21,427,426,000 at March 31, 2025 compared with $21,373,970,000 at September 30, 2024. Total borrowings were $2,763,758,000 as of March 31, 2025, a decrease from $3,267,589,000 at September 30, 2024.

Current wording

Customer account balances have remained stable, increasing by $12,601,000, or 0.1%, to $21,386,571,000 at June 30, 2025 compared with $21,373,970,000 at September 30, 2024. Total borrowings were $1,939,675,000 as of June 30, 2025, a decrease from $3,267,589,000 at September 30, 2024.

Previous wording

The Company's cash and cash equivalents totaled $1,231,461,000 at March 31, 2025, a decrease from $2,381,102,000 at September 30, 2024. This decrease served to fund purchases of investment securities and pay down borrowings.

Current wording

The Company's cash and cash equivalents totaled $809,252,000 at June 30, 2025, a decrease from $2,381,102,000 at September 30, 2024. This decrease served to fund purchases of investment securities and pay down borrowings.

Previous wording

The Company’s shareholders' equity at March 31, 2025 was $3,032,620,000, or 10.97% of total assets. This is an increase of $32,320,000 from September 30, 2024 when shareholders' equity was $3,000,300,000, or 10.69% of total assets. The Company’s shareholders' equity was impacted in the six months ended March 31, 2025 by net income of $103,519,000, the payment of $42,541,000 in common stock dividends, payment of $7,313,000 in preferred stock dividends, treasury stock purchases of $24,751,000, as well as the other comprehensive loss of $4,447,000. The ratio of tangible capital to tangible assets at March 31, 2025 was 9.51%. Management believes the Company's strong equity position allows it to manage balance sheet risk and provide the capital support needed for controlled growth in a regulated environment.

Current wording

The Company’s shareholders' equity at June 30, 2025 was $3,014,325,000, or 11.28% of total assets. This is an increase of $14,025,000 from September 30, 2024 when shareholders' equity was $3,000,300,000, or 10.69% of total assets. The Company’s shareholders' equity was impacted in the nine months ended June 30, 2025 by net income of $165,471,000, the payment of $63,785,000 in common stock dividends, the payment of $10,969,000 in preferred stock dividends, treasury stock purchases of $73,092,000, as well as the other comprehensive loss of $14,320,000. The ratio of tangible capital to tangible assets at June 30, 2025 was 9.78%. Management believes the Company's strong equity position allows it to manage balance sheet risk and provide the capital support needed for controlled growth in a regulated environment.

Previous wording

Cash and cash equivalents - Cash and cash equivalents were $1,231,461,000 at March 31, 2025, a decrease of $1,149,641,000, or 48.3%, since September 30, 2024. This decrease served to fund purchases of investment securities and pay down borrowings.

Current wording

Cash and cash equivalents - Cash and cash equivalents were $809,252,000 at June 30, 2025, a decrease of $1,571,850,000, or 66.0%, since September 30, 2024. This decrease served to fund purchases of investment securities and pay down borrowings.

Previous wording

Available-for-sale and held-to-maturity investment securities - AFS securities increased $570,054,000, or 22.2%, during the six months ended March 31, 2025, a result of securities purchases of $809,552,000 offset by unrealized gains during the period of $8,000 and principal repayments and maturities of $239,903,000. During the same period, the balance of HTM securities increased by $89,530,000 primarily due to purchases of $114,182,000 offset by principal pay-downs and maturities of $24,619,000. As of March 31, 2025, the Company had a total net unrealized loss on AFS securities of $44,483,000, which is included on a net of tax basis in accumulated other comprehensive income (loss).

Current wording

Available-for-sale and held-to-maturity investment securities - AFS securities increased $814,788,000, or 31.7%, during the nine months ended June 30, 2025, a result of securities purchases of $1,218,796,000 combined with unrealized gains during the period of $6,123,000 and a reclassification of gain into earnings from AFS securities hedging derivatives of $13,828,000 partially offset by principal repayments and maturities of $412,578,000. During the same period, the balance of HTM securities increased by $75,882,000 primarily due to purchases of $114,182,000 partially offset by principal pay-downs and maturities of $38,269,000. As of June 30, 2025, the Company had a total net unrealized loss on AFS securities of $38,368,000, which is included on a net of tax basis in accumulated other comprehensive income (loss).

Previous wording

Substantially all of the Company’s HTM and AFS debt securities are issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government and have a long history of zero credit loss. The Company did not record an allowance for credit losses for HTM securities as of March 31, 2025 or September 30, 2024 as the investment portfolio consists primarily of U.S. government agency mortgage-backed securities that management deems to have immaterial risk of loss. The impact going forward will depend on the composition, characteristics, and credit quality of the securities portfolios as well as the economic conditions at future reporting periods. The Company does not believe that any of its AFS debt securities had credit loss impairment as of March 31, 2025 or September 30, 2024, therefore, no allowance was recorded.

Current wording

Substantially all of the Company’s HTM and AFS debt securities are issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit or implicit guarantee of the U.S. government and have a long history of zero credit loss. The Company did not record an allowance for credit losses for HTM securities as of June 30, 2025 or September 30, 2024 as the investment portfolio consists primarily of U.S. government agency mortgage-backed securities that management deems to have immaterial risk of loss. The impact going forward will depend on the composition, characteristics, and credit quality of the securities portfolios as well as the economic conditions at future reporting periods. The Company does not believe that any of its AFS debt securities had credit loss impairment as of June 30, 2025 or September 30, 2024; therefore, no allowance was recorded.

Previous wording

Loans receivable - Loans receivable, net of related contra accounts, increased by $3,647,000 to $20,920,001,000 at March 31, 2025, compared to $20,916,354,000 at September 30, 2024. The increase was primarily the net result of originations of $1,844,448,000, and a decrease to loans-in-process of $104,257,000, offset by loan principal repayments of $2,165,471,000. Commercial loan originations accounted for 74% of total originations and consumer loan originations were 26% during the period. The Company continues to focus on commercial lending, coupled with growing economies in all major markets in which we operate.

Current wording

Loans receivable - Loans receivable, net of related contra accounts, decreased by $639,190,000 to $20,277,164,000 at June 30, 2025, compared to $20,916,354,000 at September 30, 2024. The decrease was primarily loan principal repayments of $3,644,554,000 outpacing originations of $2,541,479,000 and decreases in loans-in-process of $336,460,000. Commercial loan originations accounted for 77% of total originations and consumer loan originations were 23% during the year to date. The Company continues to focus on commercial lending, coupled with growing economies in all major markets in which we operate.

Previous wording

The following table shows the loan portfolio by category and the change in the quarter.

Current wording

The following table shows the loan portfolio by category and the change from prior fiscal year end.

Previous wording

The following table shows the change in the geographic distribution by state of the loan portfolio since the prior fiscal year end.

Current wording

The following table shows the geographic distribution by state of the loan portfolio and the change from the prior fiscal year end.

Previous wording

Non-performing assets - Non-performing assets decreased $6,534,000 during the six months ended March 31, 2025 to $70,884,000 from $77,418,000 at September 30, 2024. The change is primarily due to a $9,655,000 decrease in non-accrual loans offset by a $3,121,000 increase in real estate owned. Non-performing assets as a percentage of total assets was 0.26% at March 31, 2025 compared to 0.28% at September 30, 2024.

Current wording

Non-performing assets - Non-performing assets increased $19,742,000 during the nine months ended June 30, 2025 to $97,160,000 from $77,418,000 at September 30, 2024. The change is due to a $13,155,000 increase in non-accrual loans and a $6,587,000 increase in real estate owned. Non-performing assets as a percentage of total assets was 0.36% at June 30, 2025 compared to 0.28% at September 30, 2024.

Previous wording

For the six months ended March 31, 2025, the Company recognized $1,733,000 in interest income on cash payments received from borrowers on non-accrual loans. Recognized interest income on loans for the six months ended March 31, 2025 was higher than what otherwise would have been recognized in the period due to the collection of past due amounts. The Company would have recognized interest income of $1,776,000 for the same period had non-accrual loans performed according to their original contract terms. In addition to the non-accrual loans reflected in the above table, the Company had $506,938,000 of loans that were less than 90 days delinquent at March 31, 2025 but were classified as substandard for one or more reasons. If these loans were deemed non-performing, the Company's ratio of total NPAs as a percent of total assets would have increased to 2.09% at March 31, 2025.

Current wording

$687,436,000 of loans that were less than 90 days delinquent at June 30, 2025 but were classified as substandard for one or more reasons. If these loans were deemed non-performing, the Company's ratio of total NPAs as a percent of total assets would have increased to 2.94% at June 30, 2025. For the nine months ended June 30, 2025, the Company recognized $2,694,000 in interest income on cash payments received from borrowers on non-accrual loans.

Previous wording

Allowance for credit losses - The following table shows the composition of the Company’s allowance for credit losses.

Current wording

Allowance for credit losses - The following table shows the composition of the Company’s allowance for credit losses and the change since the prior fiscal year end.

Previous wording

Management believes the allowance for credit losses of $222,709,000, or 1.01% of gross loans, is sufficient to absorb estimated losses inherent in the portfolio of loans and unfunded commitments. See Note E and Note I for further details of the allowance for loan losses and reserve for unfunded commitments as of and for the period ended March 31, 2025 and September 30, 2024.

Current wording

Management believes the allowance for credit losses of $219,268,000, or 1.03% of gross loans, is sufficient to absorb estimated losses inherent in the portfolio of loans and unfunded commitments. See Note E and Note I for further details of the allowance for loan losses and reserve for unfunded commitments as of and for the periods ended June 30, 2025 and September 30, 2024.

Previous wording

Real estate owned ("REO") - REO increased during the six months ended March 31, 2025 by $3,121,000 to $7,688,000. The increase was due to the foreclosure of two commercial properties and the transfer of a former branch property.

Current wording

Real estate owned ("REO") - REO increased during the nine months ended June 30, 2025 by $6,587,000 to $11,154,000. The increase was due to the foreclosure of two commercial properties and one residential property and the transfer of three former branch properties.

Previous wording

Intangible assets - Intangible assets decreased to $446,660,000 as of March 31, 2025 from $448,425,000 as of September 30, 2024 as the result of an adjustment to purchase accounting related to the Merger combined with normal amortization.

Current wording

Intangible assets - Intangible assets decreased to $444,291,000 as of June 30, 2025 from $448,425,000 as of September 30, 2024 as the result of an adjustment to purchase accounting related to the Merger combined with normal amortization.

Previous wording

Customer accounts - Customer accounts increased $53,456,000, or 0.3%, to $21,427,426,000 at March 31, 2025 compared with $21,373,970,000 at September 30, 2024. Transaction accounts increased by $36,799,000 or 0.3% during that period, while time deposits increased $16,657,000 or 0.2%.

Current wording

Customer accounts - Customer accounts increased $12,601,000, or 0.1%, to $21,386,571,000 at June 30, 2025 compared with $21,373,970,000 at September 30, 2024. Transaction accounts increased by $151,939,000 or 1.3% during that period, while time deposits decreased $139,338,000, or 1.5%, consistent with our strategy to shift away from time deposits in favor of transaction accounts.

Previous wording

Borrowings - Borrowings were $2,763,758,000 as of March 31, 2025 a decrease from $3,267,589,000 as of September 30, 2024 as a result of repayments. The weighted average rate for borrowings was 3.30% as of March 31, 2025 and 3.93% at September 30, 2024.

Current wording

Borrowings - Borrowings were $1,939,675,000 as of June 30, 2025 a decrease from $3,267,589,000 as of September 30, 2024 as a result of repayments. The weighted average effective rate for borrowings was 2.76% as of June 30, 2025 and 3.93% at September 30, 2024.

Previous wording

Shareholders' equity - The Company’s shareholders' equity at March 31, 2025 was $3,032,620,000, or 10.97% of total assets. This is an increase of $32,320,000 from September 30, 2024 when shareholders' equity was $3,000,300,000, or 10.69% of total assets. The Company’s shareholders' equity was impacted in the six months ended March 31, 2025 by net income of $103,519,000, the payment of $42,541,000 in common stock dividends, payment of $7,313,000 in preferred stock dividends, treasury stock purchases of $24,751,000, as well as changes in other comprehensive income of $4,447,000.

Current wording

Shareholders' equity - The Company’s shareholders' equity at June 30, 2025 was $3,014,325,000, or 11.28% of total assets. This is an increase of $14,025,000 from September 30, 2024 when shareholders' equity was $3,000,300,000, or 10.69% of total assets. The Company’s shareholders' equity was impacted in the nine months ended June 30, 2025 by net income of $165,471,000, the payment of $63,785,000 in common stock dividends, payment of $10,969,000 in preferred stock dividends, treasury stock purchases of $73,092,000, as well as changes in other comprehensive income of $14,320,000.

Previous wording

Net Income - The Company recorded net income of $56,252,000 for the three months ended March 31, 2025 compared to $15,888,000 for the prior year quarter. Much of the change is due to the effects of the Merger in the prior year but all driving factors are described below.

Current wording

Net Income - The Company recorded net income of $61,952,000 for the three months ended June 30, 2025 compared to $64,560,000 for the prior year quarter. All driving factors are described below.

Previous wording

Net Interest Income - For the three months ended March 31, 2025, net interest income was $160,910,000, which is $2,313,000 higher than the same quarter of the prior year. This is largely the result of volume as net interest margin was 2.55% for the quarter ended March 31, 2025 compared to 2.73% for the quarter ended March 31, 2024. The increase in net interest income compared to the March 31, 2024 quarter is largely due to growth in interest-earning assets compared to the growth in interest-bearing liabilities for the same period. Average interest-earning assets increased by $2,302,803,000 compared to an increase of $2,201,498,000 in average interest-bearing liabilities. These increases reflect the Merger which occurred on March 1, 2024. The effects of the balance increases were offset by a lower average rate earned on interest-earning assets which decreased by 18 basis points. For the six months ended March 31, 2025, net interest income was $316,341,000, which is an increase of $5,507,000 from the same period of the prior year. Net interest margin was 2.47% for the six months ended March 31, 2025 compared to 2.81% for the prior year same period.

Current wording

Net Interest Income - For the three months ended June 30, 2025, net interest income was $167,988,000, which is $9,198,000 less than the same quarter of the prior year. This is largely the result of decreased loan volume as net interest margin was 2.69% for the quarter ended June 30, 2025 compared to 2.56% for the quarter ended June 30, 2024. The decrease in net interest income compared to the June 30, 2024 quarter is largely due to reduced interest-earning asset balances as a result of loan repayments and decreased demand for new loans compared to the reduction in interest-bearing liabilities for the same period. Average interest-earning assets decreased by $2,760,506,000 compared to a decrease of $2,810,066,000 in average interest-bearing liabilities. Although the reduction in liabilities was larger the effect of the lower assets was magnified by the higher yields. The effects of the balance decreases were partially offset by a lower average rate paid on interest-bearing liabilities which decreased by 50 basis points. For the nine months ended June 30, 2025, net interest income was $484,329,000, which is a decrease of $3,691,000 from the same period of the prior year. Net interest margin was 2.54% for the nine months ended June 30, 2025 compared to 2.72% for the prior year same period.

Previous wording

Provision for Credit Losses - The Company recorded $2,750,000 provision for credit losses for the three months ended March 31, 2025, compared with a provision for credit losses of $16,000,000 for the three months ended March 31, 2024. The provision recorded in the three months ended March 31, 2025 was a result of a stable loan receivable balance offset by net charge-offs taken during the quarter. The provision in 2024 was the initial provision booked on the LBC loan portfolio post-Merger. The increase in overall ACL was offset by a decrease in the reserve for unfunded commitments of $1,000,000. The Company's provision for credit losses for the six months ended March 31, 2025 and March 31, 2024 were the same as the three month figures as no provision was booked for the first quarter in the six month periods. Net charge-offs totaled $5,063,000 for the three months ended March 31, 2025, compared to $146,000 during the three months ended March 31, 2024. Net charge-offs totaled $5,294,000 for the six months ended March 31, 2025, compared to $33,000 during the six months ended March 31, 2024.

Current wording

Provision for Credit Losses - The Company recorded $2,000,000 provision for credit losses for the three months ended June 30, 2025, compared with a provision for credit losses of $1,500,000 for the three months ended June 30, 2024. The provision recorded in the three months ended June 30, 2025 was the net result of a decreased loan receivable balance, mixed credit metrics, including the increasing trends in negative migration of criticized and nonperforming loans, and charge-offs taken during the quarter. The provision in 2024 was due to borrower sensitivity to high interest rates and inflationary pressures within the commercial and industrial portfolio. The Company recorded $4,750,000 provision for credit losses for the nine months ended June 30, 2025 compared to $17,500,000 for the nine months ended June 30, 2024. The provision in the prior period included the initial provision of $16,000,000 recorded for the loans acquired in the Merger. Net charge-offs totaled $5,441,000 for the three months ended June 30, 2025, compared to $1,253,000 during the three months ended June 30, 2024. Net charge-offs totaled $10,735,000 for the nine months ended June 30, 2025, compared to $1,286,000 during the nine months ended June 30, 2024.

Previous wording

Non-Interest Income - The three months ended March 31, 2025 results include total non-interest income of $18,881,000 compared to $13,392,000 for the same period one year ago, a $5,489,000 increase. The increase is primarily due to increased prepayment fees earned on loans and increased commission income from WaFd Insurance, the Company's insurance subsidiary. The results for the six months ended March 31, 2025 include total non-interest income of $34,583,000 compared to $27,559,000 for the six months ended March 31, 2024, a $7,024,000 increase.

Current wording

Non-Interest Income - The three months ended June 30, 2025 results included total non-interest income of $18,273,000 compared to $17,255,000 for the same period one year ago, a $1,018,000 increase. The increase was primarily due to increased prepayments and other fees earned on loans. The results for the nine months ended June 30, 2025 include total non-interest income of $52,856,000 compared to $44,814,000 for the nine months ended June 30, 2024, an $8,042,000 increase. This increase was the result of increased prepayment fees earned on loans plus increased commission income from WaFd Insurance, the Company's insurance subsidiary.

Previous wording

Non-Interest Expense - Non-interest expense was $104,832,000 for the three months ended March 31, 2025, a decrease of $28,880,000 from $133,712,000 for the prior year quarter, largely a result of Merger-related expenses booked in the prior year combined with reduced compensation costs in 2025 due to restructuring arising from management's decision to exit the single family mortgage lending market. Non-interest expense for the three months ended March 31, 2025 and March 31, 2024 equaled 1.53% and 2.15%, respectively, of average assets Non-interest expense was $216,143,000 for the six months ended March 31, 2025, a decrease of $14,109,000 from $230,252,000 for the same period in fiscal 2024. Total non-interest expense for the six months ended March 31, 2025 and March 31, 2024 equaled 1.58% and 1.95%, respectively, of average assets.

Current wording

Non-Interest Expense - Non-interest expense was $104,327,000 for the three months ended June 30, 2025, a decrease of $5,752,000 from $110,079,000 for the prior year quarter, largely a result of reduced compensation costs in the current fiscal year due to restructuring arising from management's decision to exit the single family mortgage lending market combined with reduced FDIC premium costs. Non-interest expense for the three months ended June 30, 2025 and June 30, 2024 equaled 1.56% and 1.48%, respectively, of average assets Non-interest expense was $320,470,000 for the nine months ended June 30, 2025, a decrease of $19,861,000 from $340,331,000 for the same period in fiscal 2024. This decrease was due to the large amount of Merger-related expenses incurred in the first half of fiscal 2024 in addition to the quarter-over-quarter savings described above. Total non-interest expense for the nine months ended June 30, 2025 and June 30, 2024 equaled 1.57% and 1.77%, respectively, of average assets.

Previous wording

Gain (Loss) on Real Estate Owned - Results for the three months ended March 31, 2025 include a net loss on REO of $199,000, compared to a net loss of $1,315,000 for the prior year quarter. The loss in the prior year was the result of losses on the sale of a former branch property. Results for the six months ended March 31, 2025 included a net gain on REO of $230,000, compared to a net gain of $511,000 in the prior year period.

Current wording

Gain (Loss) on Real Estate Owned - Results for the three months ended June 30, 2025 include a net loss on REO of $176,000, compared to a net loss of $124,000 for the prior year quarter. Results for the nine months ended June 30, 2025 included a net gain on REO of $54,000, compared to a net gain of $387,000 in the prior year period.