WaFd Bank(WAFD) - 2026 Q1 - Quarterly Report

Financial Performance - 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, reflecting a significant increase in profitability[252]. - For the three months ended December 31, 2025, net interest income was $171,111,000, an increase of $15,680,000 from the same quarter of the prior year[253]. - Total non-interest income for the three months ended December 31, 2025, was $20,255,000, a $4,553,000 increase from $15,702,000 in the prior year[258]. - Non-interest expense decreased to $105,721,000 for the three months ended December 31, 2025, from $111,311,000 in the prior year, representing a decrease of $5,590,000[259]. - 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, with an effective tax rate of 22.00%[261]. Asset and Liability Management - Total assets increased by $586,045,000 to $27,285,744,000 from $26,699,699,000 at September 30, 2025, primarily due to investment purchases[211]. - The Company's cash and cash equivalents totaled $734,915,000 at December 31, 2025, up from $657,310,000 at September 30, 2025[218]. - Customer account balances decreased by $20,666,000, or 0.1%, to $21,416,970,000 at December 31, 2025 compared to $21,437,636,000 at September 30, 2025[217]. - The Company has $4,142,285,000 of available-for-sale (AFS) securities carried at fair value, with a net unrealized loss of $667,000 as of December 31, 2025[199]. - The Company executed interest rate swaps to hedge interest rate risk, resulting in an unrealized gain of $94,529,000 as of December 31, 2025[199]. Capital Ratios and Equity - Shareholders' equity at December 31, 2025 was $3,029,407,000, or 11.10% of total assets, a decrease of $10,168,000 from the previous quarter[219]. - As of December 31, 2025, the Company reported a Common Equity Tier I risk-based capital ratio of 11.69%, exceeding the minimum requirement of 4.50%[226]. - The Tier 1 leverage ratio for the Company was reported at 9.44%, significantly above the minimum requirement of 4.00%[226]. - The total risk-based capital ratio for the Company was 14.72%, well above the minimum requirement of 8.00%[226]. Loan and Credit Quality - Loans receivable decreased by $240,462,000 to $19,848,156,000, primarily due to loan principal repayments of $1,343,635,000 outpacing originations of $1,118,549,000[230]. - The allowance for credit losses was $221,039,000, or 1.05% of gross loans, deemed sufficient to absorb estimated losses in the loan portfolio[246]. - Non-performing assets increased by $60,374,000 during the three months ended December 31, 2025, totaling $203,396,000, with non-accrual loans rising by $62,720,000[239]. - Total non-performing assets as a percentage of total assets rose to 0.75% at December 31, 2025, up from 0.54% at September 30, 2025[239]. - The provision for credit losses was $3,500,000 for the three months ended December 31, 2025, compared to no provision for the same period in 2024, increasing the reserve to 1.05% of gross loans[257]. Market and Investment Insights - The Company believes there have been no material changes in its quantitative and qualitative information about market risk since September 30, 2025[266]. - The Company expects to recognize approximately $20.0 million in tax benefits from its Low-Income Housing Tax Credit (LIHTC) investment portfolio during the fiscal year[263]. - The total amount of amortization expense related to LIHTC investments expected to be recognized during this fiscal year is about $15.9 million[265]. - Intangible assets increased to $443,085,000 as of December 31, 2025, due to small acquisitions made by the Company's insurance subsidiary[247]. Interest Rates and Margins - As of December 31, 2025, the net interest margin was 2.70%, an increase from 2.39% for the same period in 2024[207]. - The weighted average effective rate for borrowings increased to 2.74% as of December 31, 2025, from 2.50% at September 30, 2025[250]. - Cash and cash equivalents increased by $77,605,000, or 11.8%, to $734,915,000 from September 30, 2025[227]. - Available-for-sale (AFS) securities rose by $609,084,000, or 17.2%, due to purchases of $724,749,000 and unrealized gains of $9,924,000[228]. - The Company continues to focus on commercial lending, with commercial loan originations accounting for 94% of total originations during the quarter[230].