Core Insights - The company reported an increase in operating net income by $675,000 compared to the third quarter, attributed to improved net interest margins and strong non-interest income [1] - The company achieved a 1% operating return on assets (ROA) for the fiscal year 2025 and aims for a 1.20% ROA in 2026 [6][7] Financial Performance - Net interest income rose by approximately $3.2 million quarter-over-quarter, with net interest margin widening by 15 basis points to 3.32% [6][7] - Core loan growth for 2025 was strong at 10.5% excluding TC Federal, although competition is expected to push growth closer to the lower end of the target range of 8% to 12% [5][9] Acquisition and Integration - The legal close of the TC Federal acquisition occurred in December, with systems conversion expected in Q1 2026 and most cost savings anticipated to be realized starting in Q2 2026 [4][6] - The company now projects earnback from the acquisition in less than 2.5 years, with tangible book value dilution being less than initially expected [3][6] Credit Quality and Trends - Provision expense for the quarter was $1.65 million, up from $900,000 in the prior quarter, while net charge-offs were $1.6 million, slightly lower than the previous quarter [11] - Classified and criticized loans increased, primarily due to the TC Federal acquisition, with non-performing loans also rising [12] Non-Interest Income and Business Lines - Operating non-interest income was $11.1 million, reflecting strong performance in complementary business lines, particularly mortgage and SBSL [13] - The company expects to sell an additional $30 million of portfolio mortgage loans in Q1 2026, citing improving market conditions [13] Funding and Expenses - Deposits increased by approximately $24.3 million in Q4, with a focus on building a deposit-first relationship banking culture [16] - Operating non-interest expenses were $24.4 million, primarily due to the TC Federal acquisition, with expectations for expenses to decrease post-systems conversion [17] Capital Actions and M&A Outlook - The board declared a quarterly dividend of $0.12 per share, marking consecutive years of dividend growth, and share repurchases totaled $47,000 [18] - The company is actively pursuing additional M&A opportunities, focusing on Georgia and contiguous states, with a preference for negotiated transactions [19]

Core Insights - WaFd reported a fiscal first-quarter 2026 net income of $60.5 million, or $0.79 per diluted share, an increase from $0.54 per share in the same quarter last year and $0.72 per share in the previous quarter [3][6] - The company increased investments in mortgage-backed securities (MBS) by $728 million, primarily funded through a $671 million increase in borrowings, as part of a strategy to replace single-family loan balance runoff [1][5] - Management indicated that credit metrics weakened, with non-performing assets rising to $203 million, or 0.75% of total assets, and delinquencies increasing to 1.07% of total loans [4][13] Financial Performance - The linked-quarter earnings improvement was attributed to higher income and lower expenses, including a modest increase in net interest income and a decrease in total non-interest expense [2] - Non-interest income increased by $1.9 million to $20.3 million, aided by a $3.2 million gain on the sale of a branch property [10] - Non-interest expense declined by $1.3 million, or 1.2%, leading to an improved efficiency ratio of 55.3% [11] Loan and Deposit Trends - Loans receivable decreased by $240 million, primarily due to runoff in inactive loan types, while originations and advances in active portfolio categories totaled $1.1 billion [1][5] - Deposits decreased by $21 million for the quarter, with non-interest-bearing deposits increasing by $125 million (up 4.9%) and interest-bearing deposits increasing by $434 million (up 4.5%) [6] Credit Quality - Non-performing assets increased by $62.7 million (up 49%) since September 30, 2025, largely due to two commercial relationships totaling approximately $58 million [13][14] - The company recorded a $3.5 million provision for credit losses, reflecting decreased loan balances and mixed credit metrics [15] Strategic Initiatives - WaFd's BUILD 2030 strategic plan aims to shift focus toward business banking, with a goal of raising non-interest-bearing deposits to 20% of total deposits by 2030 [16] - The company expects to grow its active loan portfolios by 8% to 12% over the next one to two years, with a lending pipeline increase of $697 million (28%) from $2.5 billion to $3.2 billion [18] - WaFd Wealth Management was launched with a goal to reach $1 billion in assets under management within two years, currently at just over $400 million [18] Regulatory and Compliance - The company is appealing an FDIC Community Reinvestment Act (CRA) "needs to improve" rating, which could affect branching logistics and mergers and acquisitions [19]