WAFD INC

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 high interest rates; inflation; tariffs, including retaliatory tariffs; low consumer confidence; 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);

Previous wording

•the effects of natural or man-made disasters, calamities, or conflicts, including terrorist events and pandemics (such as the COVID-19 pandemic), and the resulting governmental and societal responses, including on our asset credit quality and business operations, as well as its impact on general economic and financial market conditions;

Current wording

•the effects of natural or man-made disasters, calamities, or conflicts, including terrorist events and pandemics (such as the COVID-19 pandemic), and related regulations, and potential impact on the creditworthiness of our customers;

Previous wording

•legislative and regulatory limitations, including those arising under the Dodd-Frank Act, the Washington Commercial Bank Act and potential limitations in the manner in which the Company conducts its business and undertakes new investments and activities;

Current wording

•legislative and regulatory limitations on business activities, and potential limitations on the manner in which the Company conducts its business and undertakes new investments and activities;

Previous 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;

Current wording

•competition from other financial institutions and new market participants, and consolidation in the industry resulting in the creation of larger competitors with greater financial resources;

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. 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.

Current wording

WaFd Bank, a federally-insured Washington state chartered commercial bank (the "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. Effective September 25, 2025, the Bank formally changed its name from Washington Federal Bank to WaFd Bank by filing its Second Amended and Restated Articles of Incorporation with the Washington Secretary of State. 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.

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 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.

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 customer deposit accounts is 60% variable and 40% fixed as of December 31, 2025 while the composition of the investment securities portfolio is 36% variable and 64% fixed rate. The Company was a party to $610,000,000 of pay fixed interest rate swaps to hedge the fair value risk of the AFS portfolio which effectively converts 12% of fixed securities to variable as of December 31, 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 $764,794,000 of mortgage-backed securities that it has designated as HTM and are carried at amortized cost. As of December 31, 2025, the net unrealized loss on these securities was $29,433,000. The Company has $4,142,285,000 of AFS securities that are carried at fair value. As of December 31, 2025, the net unrealized loss on these securities was $667,000. The Company recognized in earnings a gain of $2,094,000 on fair value of AFS securities hedged by the fixed interest rate swaps. The Company has also executed interest rate swaps to hedge interest rate risk on certain FHLB borrowings. The unrealized gain on these interest rate swaps as of December 31, 2025 was $94,529,000. All of the above are pre-tax net unrealized gains or losses.

Previous 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.

Current wording

Prepayment speeds continue to be relatively low at December 31, 2025 but increasing with the Bank's conditional payment rate ("CPR") for single-family mortgages at 9.60%, up from 8.10% 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 2.69% 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.

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 2.70% for the quarter ended December 31, 2025 compared to 2.39% for the quarter ended December 31, 2024. The yield on interest-earning assets decreased 22 basis points to 5.09% and the cost of interest-bearing liabilities decreased 60 basis points to 2.88% over that same period. The lower yield on interest-earning assets was primarily due to falling interest rates affecting adjustable rate loans, non-accrual interest adjustments, net cash settlements on our loan and securities fair value hedge programs and interest-bearing cash deposits.

Previous 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.

Current wording

As of December 31, 2025, total assets had increased by $586,045,000 to $27,285,744,000 from $26,699,699,000 at September 30, 2025 primarily due to the purchase of investments during the period. During the three months ended December 31, 2025, loans receivable decreased $240,462,000, investment and mortgage-backed securities increased by $728,076,000, and FHLB stock increased by $30,150,000 while cash and cash equivalents increased by $77,605,000, in each case as compared to September 30, 2025.

Previous 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.

Current wording

Management believes the Company's cash and cash equivalents of $734,915,000 and shareholders’ equity of $3,029,407,000 as of December 31, 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

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 Loan Bank of San Francisco ("FHLB - SF") in support of Luther Burbank Corporation ("LBC") borrowings from the FHLB - SF as a result of the merger with LBC effective March 1, 2024, 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.

Previous 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.

Current wording

Customer account balances have decreased by $20,666,000, or 0.1%, to $21,416,970,000 at December 31, 2025 compared with $21,437,636,000 at September 30, 2025. Total borrowings were $2,436,532,000 as of December 31, 2025, an increase from $1,765,604,000 at September 30, 2025, which funded the securities purchases during the quarter.

Previous 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.

Current wording

The Company’s shareholders' equity at December 31, 2025 was $3,029,407,000, or 11.10% of total assets. This is a decrease of $10,168,000 from September 30, 2025 when shareholders' equity was $3,039,575,000, or 11.38% of total assets. The Company’s shareholders' equity was impacted in the three months ended December 31, 2025 by net income of $64,196,000, the payment of $20,362,000 in common stock dividends, the payment of $3,656,000 in preferred stock dividends, treasury stock purchases of $58,017,000, as well as an increase in other comprehensive income of $4,954,000. The tier 1 leverage ratio at December 31, 2025 was 9.44%. 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

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).

Current wording

Available-for-sale and held-to-maturity investment securities - AFS securities increased $609,084,000, or 17.2%, during the three months ended December 31, 2025, a result of securities purchases of $724,749,000 combined with unrealized gains during the period of $9,924,000, offset by a reclassification of loss into earnings from AFS securities hedging derivatives of $2,094,000 and principal repayments and maturities of $128,421,000. During the same period, the balance of HTM securities increased by $118,992,000 due to purchases of $141,283,000, offset by principal pay-downs and maturities of $22,428,000. As of December 31, 2025, the Company had a total net unrealized gain on AFS securities of $667,000, which is included on a net of tax basis in accumulated other comprehensive income (loss).

Previous 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.

Current wording

Loans receivable - Loans receivable, net of related contra accounts, decreased by $240,462,000 to $19,848,156,000 at December 31, 2025, compared to $20,088,618,000 at September 30, 2025. The decrease was primarily loan principal repayments of $1,343,635,000 outpacing originations of $1,118,549,000 and decreases in loans-in-process of $9,627,000. Commercial loan originations accounted for 94% of total originations and consumer loan originations were 6% for the quarter. The Company continues to focus on commercial lending, coupled with growing economies in all major markets in which we operate.

Previous 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.

Current wording

Non-performing assets - Non-performing assets increased $60,374,000 during the three months ended December 31, 2025 to $203,396,000 from $143,022,000 at September 30, 2025. The change is due to a $62,720,000 increase in non-accrual loans offset by a $2,346,000 decrease in real estate owned. The increase in non-accrual loans is primarily the result of two commercial relationships over 90 days past due. Although appropriately non-accrual based on policy, it was determined no charge-offs were needed for these credits as a result of collateral sufficiency. Management is actively collaborating with the borrowers. Non-performing assets as a percentage of total assets was 0.75% at December 31, 2025 compared to 0.54% at September 30, 2025.

Previous 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.

Current wording

The Company would have recognized interest income of $2,124,000 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 $392,220,000 of loans that were less than 90 days delinquent at December 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 2.18% at December 31, 2025. For the three months ended December 31, 2025, the Company recognized $540,000 in interest income on cash payments received from borrowers on non-accrual loans.

Previous 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.

Current wording

Management believes the allowance for credit losses of $221,039,000, or 1.05% 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 December 31, 2025 and September 30, 2025.

Previous 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.

Current wording

Real estate owned ("REO") - REO decreased during the three months ended December 31, 2025 by $2,346,000 to $8,738,000. The decrease was due to the sale of former branch properties.

Previous 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.

Current wording

Customer accounts - Customer accounts decreased $20,666,000, or 0.1%, to $21,416,970,000 at December 31, 2025 compared with $21,437,636,000 at September 30, 2025. Transaction accounts increased by $559,442,000 or 4.5% during that period, while time deposits decreased $580,108,000, or 6.4%, consistent with our strategy to shift away from time deposits in favor of transaction accounts.

Previous 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.

Current wording

Borrowings - Borrowings were $2,436,532,000 as of December 31, 2025, an increase from $1,765,604,000 as of September 30, 2025. The increase was utilized to support asset growth. The weighted average effective rate for borrowings was 2.74% as of December 31, 2025 and 2.50% at September 30, 2025.

Previous 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.

Current wording

Shareholders' equity - The Company’s shareholders' equity at December 31, 2025 was $3,029,407,000, or 11.10% of total assets. This is a decrease of $10,168,000 from September 30, 2025 when shareholders' equity was $3,039,575,000, or 11.38% of total assets. The Company’s shareholders' equity was impacted in the three months ended December 31, 2025 by net income of $64,196,000, the payment of $20,362,000 in common stock dividends, payment of $3,656,000 in preferred stock dividends, treasury stock purchases of $58,017,000, as well as changes in other comprehensive income of $4,954,000.

Previous 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.

Current wording

Net Income - The Company recorded net income of $64,196,000 for the three months ended December 31, 2025 compared to $47,267,000 for the prior year quarter. All driving factors are described below.

Previous 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.

Current wording

Net Interest Income - For the three months ended December 31, 2025, net interest income was $171,111,000, which is an increase of $15,680,000 from the same quarter of the prior year. Net interest margin increased to 2.70% for the quarter ended December 31, 2025 compared to 2.39% for the quarter ended December 31, 2024. The increase in net interest income is largely due to decreased rates on interest-bearing liabilities partially offset by the decrease in average interest-earning assets. The rate paid on interest-bearing liabilities decreased by 60 basis points while the rate earned on interest-earning assets fell by 22 basis points. Average interest-earning assets decreased by $681,905,000 compared to a decrease of $791,265,000 in average interest-bearing liabilities, which resulted in lower yields. The effect was driven by the reduction in the loans balance and was magnified by interest adjustments on non-accrual loans.

Previous 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.

Current wording

Provision for Credit Losses - The Company recorded $3,500,000 provision for credit losses for the three months ended December 31, 2025, compared with no provision for credit losses for the three months ended December 31, 2024. The provision recorded in the three months ended December 31, 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. This provision increased the reserve to 1.05% of gross loans compared with 1.00% at December 31, 2024.

Previous 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.

Current wording

Non-Interest Expense - Non-interest expense was $105,721,000 for the three months ended December 31, 2025, a decrease of $5,590,000 from $111,311,000 for the prior year quarter, largely a result of restructuring costs recognized in the quarter ended December 31, 2024. Non-interest expense for the three months ended December 31, 2025 and December 31, 2024 equaled 1.57% and 1.62%, respectively, of average assets.

Previous 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.

Current wording

Gain (Loss) on Real Estate Owned - Results for the three months ended December 31, 2025 include a net gain on REO of $156,000, compared to a net gain of $429,000 for the prior year quarter.

Previous wording

Income Tax Expense - Income tax expense totaled $17,806,000 for the three months ended June 30, 2025, compared to $18,178,000 for the prior year quarter. The effective tax rate was 22.33% and 21.97% for the three months ended June 30, 2025 and June 30, 2024, respectively. Income tax expense totaled $46,548,000 for the nine months ended June 30, 2025, compared to $36,489,000 for the prior year period. The effective tax rate was 21.95% and 20.80% for the nine months ended June 30, 2025 and June 30, 2024, respectively. The Company’s effective tax rate varies from the statutory rate mainly due to state taxes, tax-exempt income, tax-credit investments, miscellaneous non-deductible expenses and discrete tax adjustments for prior periods.

Current wording

Income Tax Expense - Income tax expense totaled $18,105,000 for the three months ended December 31, 2025, compared to $12,984,000 for the prior year quarter. The effective tax rate was 22.00% and 21.55% for the three months ended December 31, 2025 and December 31, 2024, respectively. The Company’s effective tax rate varies from the statutory rate mainly due to state taxes, tax-exempt income, tax-credit investments, miscellaneous non-deductible expenses and discrete tax adjustments for prior periods.

Previous wording

On July 4, 2025, the One Big Beautiful Bill Act, officially designated as H.R. 1, was enacted into law. This legislation includes significant changes to federal tax law and other regulatory provisions that may impact the Company. Key provisions include the permanent extension of several business tax benefits originally introduced under the 2017 Tax Cuts and Jobs Act. The Company is currently evaluating the provisions of the new law and the potential effects on its financial position, results of operations and cash flows. At this time, we believe that there will be no significant impact.

Current wording

On July 4, 2025, the One Big Beautiful Bill Act, officially designated as H.R. 1, was enacted into law. This legislation includes significant changes to federal tax law and other regulatory provisions. Key provisions include the permanent extension of several business tax benefits originally introduced under the 2017 Tax Cuts and Jobs Act. The Company has evaluated the provisions of the new law and believes it will generally have no material impact on our financial position, results of operations and cash flows.

Previous wording

We account for our portfolio of LIHTC investments under the proportional amortization method. The tax benefits from pass-through tax credits and losses from our LIHTC investments are included in our estimate of income tax liability for the year, and therefore reflected in the Income Tax Expense line of the statement of operations. We currently estimate that the total amount of tax benefits from our LIHTC investment portfolio that will be recognized during this fiscal year is about $19.7 million.

Current wording

We account for our portfolio of LIHTC investments under the proportional amortization method. The tax benefits from pass-through tax credits and losses from our LIHTC investments are included in our estimate of income tax liability for the year, and therefore reflected in the Income Tax Expense line of the statement of operations. We currently estimate that the total amount of tax benefits from our LIHTC investment portfolio that will be recognized during this fiscal year is about $20.0 million.

Previous wording

The amortization of LIHTC investments is a component of our income tax expense and therefore also reflected in the Income Tax Expense line. We expect the total amount of amortization expense that will be recognized during this fiscal year is about $16.1 million.

Current wording

The amortization of LIHTC investments is a component of our income tax expense and therefore also reflected in the Income Tax Expense line. We expect the total amount of amortization expense that will be recognized during this fiscal year is about $15.9 million.