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]

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 $0.07 increase in earnings per share [7] - Total non-interest income increased by $1.9 million compared to the prior quarter, reaching $20.3 million, driven by a $3.2 million gain on the sale of a branch property [11] - 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] Business Line Data and Key Metrics Changes - Loan originations for active loan types were $1.1 billion, while repayments and payoffs were $1 billion, indicating a positive trend in loan production [8] - Loans receivable decreased by $240 million during the quarter, primarily due to a decrease in inactive loan types [7] - Total investments and mortgage-backed securities increased by $728 million during the quarter, funded primarily by an increase in borrowings of $671 million [8] Market Data and Key Metrics Changes - Total deposits decreased by $21 million during the quarter, with non-interest-bearing deposits increasing by $125 million or 4.9% and interest-bearing deposits increasing by $434 million or 4.5% [9] - The loan-to-deposit ratio ended the quarter at 92.7%, down from over 110% two years ago [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] - 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 [21][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future prospects, noting a 10% linked quarter EPS growth and a 40% year-over-year growth [20] - The current economic environment, characterized by elevated interest rates and uncertainty, is impacting credit quality, but management believes the interest rate environment may ease in the near term [18][19] 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 by $0.02 for the quarter [12] - The allowance for credit losses provides coverage of 1.05% of gross loans, compared to 1% in December 2024 [18] Q&A Session Summary Question: Margin outlook and plans for $800 million of borrowings - Management plans to replace the $800 million of borrowings with current borrowings and expects rates to decrease if the Fed cuts rates [29] Question: Interest income reversals dollar amount - Non-accrual interest amounted to just over $5 million for the quarter [31] Question: Types of businesses related to new C&I non-accruals - One business is in manufacturing affected by market conditions, and the other is a real estate-related entity [33] Question: Expense growth and SBA platform build-out - Management indicated no significant plans for large team increases but will continue strategic investments in technology [35] Question: Further margin pressure and growth in NII dollars - Management expects further margin pressure but growth in net interest income dollars due to the current strategy [40] Question: Inactive runoff and active loan growth - Inactive runoff could be around $200 million-$250 million per quarter, with hopes for 8%-10% growth in active loans [42] Question: Buyback price sensitivity - Management indicated they would be more aggressive with buybacks as they approach tangible book value [43] Question: Expectations for growth in the active portfolio - Growth in the active portfolio is expected to be 6%-10% for fiscal year 2026, with higher growth anticipated in fiscal 2027 [61]

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 Q1 2026, an increase from $0.54 per share in Q1 2025 and $0.72 per share in the previous quarter [6][10] - Net interest income increased by $1.2 million from the prior quarter, with a net interest margin of 2.7% for the December quarter, slightly down from 2.71% in the September quarter [9][10] - Total non-interest income increased by $1.9 million to $20.3 million, driven by a $3.2 million gain on the sale of a branch property [11] Business Line Data and Key Metrics Changes - Loan originations for active loan types were $1.1 billion, outpacing repayments of $1 billion, with significant contributions from commercial and industrial loans [7][13] - Total loans receivable decreased by $240 million, primarily due to a decline in inactive loan types [6][7] - Non-performing assets increased to $203 million, or 0.75% of total assets, reflecting a rise in non-accrual loans [14][15] Market Data and Key Metrics Changes - Total deposits decreased by $21 million, with non-interest-bearing deposits increasing by 4.9% and interest-bearing deposits by 4.5%, while time deposits decreased by 6.4% [9] - The loan-to-deposit ratio ended the quarter at 92.7%, down from over 110% two years ago [9] Company Strategy and Development Direction - The strategic plan, BUILD 2030, aims to increase non-interest-bearing deposits from 11% to 20% of total deposits by 2030 [20] - 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 [21][24] - WaFd Wealth Management was launched to grow assets under management, targeting $1 billion in the first two years [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future prospects, citing a 10% linked quarter EPS growth and a 40% year-over-year growth [20] - The company anticipates continued pressure on margins due to the economic environment but expects to benefit from a shift to lower-cost deposits [10][19] - Management noted that credit quality metrics remain healthy despite some increases in delinquencies and non-performing assets [18] Other Important Information - The company repurchased 1.95 million shares at a weighted average price of $29.75, with a remaining authorization of 6.3 million shares [12][26] - WaFd is appealing its CRA rating to improve its standing, which could facilitate future branching and acquisition activities [27] 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 [28][29] Question: Interest income reversals - Non-accrual interest for the quarter amounted to just over $5 million [29] Question: Expense growth and hiring plans - Management indicated no significant plans for large team increases but will continue to make strategic technology investments [32][33] Question: Margin pressure and growth expectations - Management expects further margin pressure but growth in net interest income dollars, with optimism for future quarters [36][37] Question: Loan portfolio and inactive runoff - Inactive runoff is expected to be around $200 million-$250 million per quarter, with hopes for active loan growth of 8%-10% [38][39] Question: CRA rating and branching opportunities - Improving the CRA rating would ease branching activities and potential mergers and acquisitions, although the company is not actively seeking deals [55][56]