Financial Data and Key Metrics Changes - WaFd Inc. reported net income available to common shareholders of $60.5 million or $0.79 per diluted share for the quarter ended December 31, 2025, compared to $0.54 per share for the first quarter of fiscal 2025 and $0.72 per share for the September 2025 quarter, reflecting a 10% linked quarter EPS growth and a 40% year-over-year growth [6][7][20] - Total non-interest income increased by $1.9 million compared to the prior quarter, reaching $20.3 million, while total non-interest expense decreased by $1.3 million or 1.2% from the prior quarter [11][12] - The net interest margin was 2.7% in the December quarter, slightly down from 2.71% in the September quarter, with a yield on interest-earning assets at 5.05% and the cost of interest-bearing liabilities at 2.76% [10][12] Business Line Data and Key Metrics Changes - Loan originations for active loan types were $1.1 billion, outpacing repayments and payoffs of $1 billion, with active loan types including multifamily, commercial real estate, and construction [8][14] - Loans receivable decreased by $240 million during the quarter, primarily due to a decrease in inactive loan types [7] - The allowance for credit losses provides coverage of 1.05% of gross loans, compared to 1% in December 2024, indicating a slight increase in credit quality management [18] Market Data and Key Metrics Changes - Total deposits decreased by $21 million during the quarter, with non-interest-bearing deposits increasing by 4.9% and interest-bearing deposits increasing by 4.5%, while time deposits decreased by 6.4% [9] - Core deposits ended the quarter at 79.7% of total deposits, up from 77.9% in the September quarter [9] Company Strategy and Development Direction - The strategic plan, BUILD 2030, aims to increase non-interest-bearing deposits from 11% last year to 20% by 2030, currently sitting at 12.6% [20][21] - The company is focusing on serving small businesses to achieve a lower cost of funds, with a goal of growing active loan portfolios by 8%-12% over the next one to two years [20][24] - WaFd Wealth Management was launched with a goal to grow assets under management to $1 billion in the first two years, with early indications showing over $400 million as of December 31 [25] Management's Comments on Operating Environment and Future Outlook - Management noted that the elevated interest rate environment and economic uncertainty are impacting credit quality, but they remain optimistic about future growth as the interest rate environment appears to be easing [18][19] - The company expects further margin pressure in the near term but anticipates growth in net interest income dollars [40][66] Other Important Information - The company repurchased 1.95 million shares of common stock at a weighted average price of $29.75, impacting earnings per share positively by $0.02 for the quarter [12][26] - WaFd is appealing its CRA rating to improve its standing, which could unlock opportunities for branching and mergers in the future [27][63] Q&A Session Summary Question: Margin outlook and plans for borrowings - Management plans to replace $800 million of borrowings due within the next three months with current borrowings, expecting rates to decrease if the Fed cuts rates [29][30] Question: Interest income reversals - Non-accrual interest for the quarter amounted to just over $5 million [32] Question: Details on new C&I non-accruals - One non-accrual is in manufacturing affected by tariffs and labor costs, while the other is a real estate-related entity [34] Question: Expense growth and SBA platform build-out - Management indicated no significant plans for large team increases but will continue strategic investments in technology [36] Question: Further margin pressure and growth expectations - Management expects further margin pressure but is optimistic about reaching a 3% margin in the near term [41][66]