Financial Performance - The company reported a strong fourth quarter with EPS growth of 14% year over year, supported by record quarterly fee and total revenue [7][17] - For the full year, EPS was $10.30, up 19% year over year, with total revenue reaching approximately $14 billion, a 7% increase from the prior year [7][18] - Pre-tax margin improved to approximately 31% in Q4 and 29% for the full year, up from 28% in 2024, indicating positive operating leverage [7][19] Business Line Performance - Investment services surpassed $50 trillion in Assets Under Custody and Administration (AUCA) for the first time, with servicing fee revenue growing by 8% year over year [8][20] - Investment management revenue reached a record with management fees increasing 15% year over year, driven by higher average market levels and net inflows of $85 billion [10][22] - State Street Markets saw solid growth in FX trading services and securities finance, with FX trading revenue up 13% year over year [12][22] Market Data - The company achieved record AUCA of $53.8 trillion, a 16% increase year over year, driven by higher market levels and positive client flows [20] - The private markets business demonstrated strong growth of 12% in 2025, now representing approximately 10% of servicing fees [21] Company Strategy and Industry Competition - The company is focused on leveraging AI-enabled capabilities and enhancing client engagement through strategic initiatives in private markets, wealth services, and digital assets [6][15] - A partnership with Apex Fintech Solutions aims to strengthen market position in wealth services, while the digital asset platform is designed to bridge traditional and digital finance [9][10] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism for 2026, highlighting a focus on technology-led innovation and transformation to enhance operations and client service [15][30] - The company anticipates fee revenue growth of 4%-6% in 2026, driven by servicing and management fees, with expectations for net interest income to increase in low single digits [29][30] Other Important Information - The company returned over $2.1 billion in capital to shareholders in 2025, with a total payout ratio of approximately 80% [14][28] - Productivity savings of $500 million were achieved in 2025, enabling reinvestment in strategic growth initiatives [13][27] Q&A Session Summary Question: Insights on operating leverage and AI's impact - Management discussed balancing investments for growth while maintaining operating leverage, emphasizing that AI will play a larger role in enhancing efficiency and margins in the future [32][36] Question: Digital asset strategy and client interest - Management clarified that the focus is on digitalizing transactions rather than cryptocurrencies, with tokenized money market funds being a key area of interest [44][45] Question: Net interest income (NII) expectations - Management indicated that while Q4 NII was strong, some seasonal factors may moderate expectations for 2026, but net interest margin is expected to grow [54][56] Question: Balance sheet optimization and growth - Management confirmed that balance sheet optimization efforts are ongoing, with expectations for stable deposits and a focus on high-quality lending relationships [62][66]

Financial Performance - The company reported a strong fourth quarter with EPS growth of 14% year over year, supported by record quarterly fee and total revenue [7][17] - For the full year, EPS was $10.30, up 19% year over year, with total revenue reaching approximately $14 billion, a 7% increase from the prior year [7][18] - Pre-tax margin improved to approximately 31% in Q4 and 29% for the full year, up from 28% in 2024, indicating positive operating leverage [7][19] Business Line Performance - Investment services surpassed $50 trillion in AUCA for the first time, with servicing fee revenue growing by 8% year over year [8][20] - Investment management revenue reached a record with management fees increasing 15% year over year, driven by higher average market levels and net inflows of $85 billion [10][22] - State Street Markets saw solid growth in FX trading services and securities finance, with FX trading revenue up 13% year over year [12][22] Market Data - The company achieved record AUCA of $53.8 trillion, a 16% increase year over year, driven by higher market levels and positive client flows [20] - The private markets business grew by 12% in 2025, now representing approximately 10% of servicing fees, up from 9% in 2024 [21] Company Strategy and Industry Competition - The company is focused on leveraging AI-enabled capabilities and enhancing client engagement through strategic initiatives [6][15] - Partnerships and investments in technology, such as the digital asset platform, are aimed at bridging traditional and digital finance [9][10] - The company is advancing its capabilities in wealth services through strategic partnerships, positioning itself for long-term growth [10][12] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about 2026, highlighting the importance of investing in capabilities and technology to drive future growth [15][39] - The company anticipates continued positive operating leverage in 2026, with a pre-tax margin target of approximately 30% [30] - Management acknowledged the uncertainty in market conditions but emphasized the importance of preparing for future growth in digital finance [44][48] Other Important Information - The company returned over $2.1 billion in capital to shareholders in 2025, with a total payout ratio of roughly 80% [14][28] - Productivity savings of $500 million were achieved in 2025, enabling reinvestment in strategic growth initiatives [13][27] Q&A Session Summary Question: Operating leverage and investment for growth - Analyst inquired about the balance between operating leverage and investments for growth, particularly regarding AI's potential impact [32] - Management responded that significant productivity savings would offset ongoing costs while allowing for investments in strategic initiatives [34][39] Question: Digital assets and client interest - Analyst asked about client interest in digital assets and the expected financial impact [41] - Management clarified that the focus is on digitizing transactions rather than cryptocurrencies, with a medium-term financial impact expected [44][50] Question: Net interest income (NII) sustainability - Analyst questioned the sustainability of strong NII growth observed in Q4 [54] - Management indicated that seasonal factors may moderate NII growth but expects continued improvement in net interest margin [56] Question: Balance sheet optimization - Analyst sought clarification on balance sheet growth and optimization strategies for 2026 [62] - Management confirmed a focus on optimizing the balance sheet while maintaining stable deposits and enhancing net interest margin [64][67] Question: Fee growth expectations - Analyst inquired about organic growth expectations in fee businesses for 2026 [70] - Management confirmed expectations for organic growth in servicing and management fees, with a strong momentum heading into 2026 [72][73]

Financial Performance - The company reported a strong fourth quarter with EPS growth of 14% year over year, supported by record quarterly fee and total revenue [6][16] - For the full year, EPS was $10.30, up 19% year over year, with total revenue reaching approximately $14 billion, a 7% increase from the prior year [6][17] - Pre-tax margin improved to approximately 31% in Q4 and 29% for the full year, up from 28% in 2024, indicating positive operating leverage [6][17] Business Line Performance - Investment services surpassed $50 trillion in assets under custody and administration (AUCA) for the first time, with servicing fee revenue growing by 8% year over year [7][18] - Investment management revenue reached a record, with management fees increasing 15% year over year to $662 million, and assets under management (AUM) grew to an all-time high of $5.7 trillion [9][21] - State Street Markets saw double-digit growth in both FX trading services and securities finance, with FX trading revenue up 13% year over year [12][21] Market Performance - The company experienced strong client engagement and onboarding, particularly in private markets, which grew by 12% in 2025 [19] - The digital assets ecosystem was highlighted, with the launch of a digital asset platform aimed at tokenizing assets for institutional investors [8][40] Company Strategy and Industry Competition - The company is focused on leveraging AI-enabled capabilities and technology-led transformation to enhance efficiency and client service [5][14] - Strategic partnerships and investments, such as in Apex Fintech Solutions, are aimed at expanding capabilities in wealth services and private markets [9][11] - The company aims to bridge traditional and digital finance, positioning itself as a leader in the evolving financial landscape [8][40] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about 2026, emphasizing the importance of investing in growth opportunities while maintaining strong financial performance [15][29] - The outlook for 2026 includes expectations for fee revenue growth of 4%-6% and net interest income (NII) growth in low single digits, with a focus on maintaining positive operating leverage [28][29] Other Important Information - The company achieved productivity savings of $500 million in 2025, enabling reinvestment in strategic initiatives [12][25] - A total of $2.1 billion was returned to shareholders in 2025 through share repurchases and dividends, with a payout ratio of approximately 80% [14][26] Q&A Session Summary Question: Insights on operating leverage and AI's impact - Management discussed the balance between investing for growth and delivering operating leverage, indicating that AI will play a significant role in enhancing efficiency and margins in the future [31][35] Question: Digital assets strategy - Management clarified that the focus is on digitizing transactions and enabling the transition from traditional to digital finance, rather than solely on cryptocurrencies [39][40] Question: NII expectations and loan growth - Management noted that while NII showed strong performance in Q4, seasonal factors may moderate growth in 2026, with expectations for stable loan growth [48][50]

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 - The company reported full-year earnings of $2.1 billion, with earnings per share (EPS) of $2.30, or $2.33 on an adjusted basis, and a return on tangible common equity of just over 18% [6][9] - Fourth-quarter earnings were $514 million, resulting in EPS of $0.58 and $0.57 on an adjusted basis, with certain items negatively impacting earnings by an additional $0.04 [7][11] - Adjusted non-interest income grew by 5% in 2025, while net interest income increased by 2% linked quarter [9][18] Business Line Data and Key Metrics Changes - Wealth Management and Corporate Bank businesses achieved record fee income, with Treasury management products also reaching a second consecutive record [9][18] - Loan growth was challenged in 2025, with large corporate customers refinancing into Capital Markets, leading to a strategic runoff of over $2 billion [12][19] - Adjusted non-interest expense increased by 2% in 2025, with salaries and benefits rising by 3% due to higher health insurance costs and hiring [19][20] Market Data and Key Metrics Changes - Deposits increased by approximately $800 million, supported by strong customer acquisition and retention, while average deposits were roughly flat [13][14] - The non-interest-bearing mix remained in the low 30% range, consistent with targets [14] - The company expects average loans to be up below single digits versus 2025, with a return to more normal loan growth anticipated in 2026 [12][21] Company Strategy and Development Direction - The company is focused on modernizing its core systems, which is expected to strengthen its competitive position [8][22] - A commitment to hiring approximately 120 bankers over two years is in place to support growth initiatives, with 50 hired in 2025 [30][90] - The company aims to deliver consistent, sustainable long-term performance while managing capital and expense discipline [22][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in improving client sentiment and strengthening loan pipelines, anticipating a return to normal loan growth levels in 2026 [12][29] - The company expects net interest income to grow between 2.5% and 4% in 2026, with a net interest margin projected to be around 3.7% in the first quarter [17][19] - Management noted that many headwinds from 2025 are behind them, with positive trends in loan pipelines, deposit strength, and fee income growth [22][23] Other Important Information - The effective tax rate for the full year was 21.4%, with expectations to return to the 20.5%-21.5% range in 2026 [11] - The allowance for credit losses decreased by $27 million, with the allowance as a percentage of non-performing loans increasing to 242% [21][22] - The company executed $430 million in share repurchases and paid $231 million in common dividends during the quarter [22] Q&A Session Summary Question: Loan growth guidance and pipeline activity - Management indicated positive customer sentiment and increased pipeline activity, expecting lower single-digit loan growth primarily driven by Commercial Banking activities [29][31] Question: Trade-off between growth and returns - Management emphasized a focus on capital allocation and risk-adjusted returns, stating that there is no trade-off between growth and returns [34][36] Question: Capital Markets performance and outlook - Management acknowledged a slower start in Capital Markets for 2026 but expressed confidence in a rebound and growth throughout the year [42][43] Question: Deposit pricing trends and competitive landscape - Management highlighted the importance of remaining competitive while acknowledging the need to adapt to market conditions [44][45] Question: Credit quality trends and expectations - Management reported improvements in credit quality metrics and expressed optimism for continued improvement in 2026 [58][60] Question: Systems conversion and M&A flexibility - Management stated that while the systems conversion is ongoing, it does not technically restrict M&A activities, though it would be challenging [97] Question: Expense outlook and headcount management - Management reiterated a commitment to positive operating leverage while managing expenses and headcount growth [84][86]

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 - The company reported full-year earnings of $2.1 billion, with earnings per share of $2.30 or $2.33 on an adjusted basis, and a return on tangible common equity of just over 18% [6][9] - Fourth-quarter earnings were $514 million, resulting in earnings per share of $0.58 and $0.57 on an adjusted basis, with a negative impact of $0.04 from certain items [7][11] - Adjusted non-interest income grew by 5% in 2025, while net interest income increased by 2% linked quarter [9][18] Business Line Data and Key Metrics Changes - Wealth management and corporate bank businesses achieved record fee income, with treasury management products also reaching a second consecutive record [9][18] - Loan growth was challenged in 2025, with large corporate customers refinancing into capital markets, leading to a strategic runoff of over $2 billion [8][12] - Adjusted non-interest expense increased by 2% in 2025, with salaries and benefits rising by 3% due to higher health insurance costs and hiring [19][20] Market Data and Key Metrics Changes - Ending deposit balances increased by approximately $800 million, supported by strong customer acquisition and retention [13] - Average deposits were roughly flat, outperforming typical year-end seasonality, particularly in consumer banking [14] - The non-interest-bearing mix remained in the low 30% range, consistent with the company's target [15] Company Strategy and Development Direction - The company is focused on modernizing its core systems, which is expected to strengthen its competitive position [7][8] - The hiring of approximately 120 bankers over two years is aimed at supporting growth initiatives, particularly in priority markets [29][30] - The company is committed to maintaining a disciplined approach to capital allocation and risk-adjusted returns while pursuing growth opportunities [34][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to normal loan growth levels in 2026, supported by improving client sentiment and strengthening loan pipelines [12][22] - The company anticipates net interest income growth between 2.5% and 4% for 2026, with a net interest margin expected to stabilize around 3.7% [17][18] - Management noted that many headwinds from 2025 are behind them, with positive trends in loan pipelines, deposit strength, and fee income growth [22] Other Important Information - The company ended the quarter with a common equity tier 1 ratio of 10.8%, executing $430 million in share repurchases and paying $231 million in dividends [21][22] - The allowance for credit losses decreased by $27 million, with the allowance for credit loss ratio declining to 1.76% [20][21] Q&A Session Summary Question: Loan growth guidance and pipeline activity - Management indicated positive customer sentiment and increased pipeline activity, expecting primarily commercial banking to drive loan growth, with a guidance of low single-digit growth for 2026 [27][29] Question: Trade-off between growth and returns - Management emphasized a focus on capital allocation and risk-adjusted returns, stating that there is no trade-off between growth and returns, and they aim to deliver consistent, sustainable performance [34][36] Question: Capital markets performance and outlook - Management acknowledged a slower start in capital markets for 2026 but expressed confidence in a rebound, with expectations for improved activity in M&A and loan syndications [40][42] Question: Deposit beta performance and pricing trends - Management noted a significant improvement in deposit beta performance and indicated a proactive approach to remain competitive in pricing, especially with upcoming CD maturities [44][46] Question: Credit quality trends in higher-risk portfolios - Management reported improvements in credit quality metrics, with expectations for continued improvement in 2026, particularly in trucking and transportation sectors [58][60]

Financial Data and Key Metrics Changes - The company reported strong full-year earnings of $2.1 billion, resulting in earnings per share of $2.30 or $2.33 on an adjusted basis, with a return on tangible common equity of just over 18% [4][5] - Fourth-quarter earnings were $514 million, leading to earnings per share of $0.58 and $0.57 on an adjusted basis, with certain items negatively impacting earnings by an additional $0.04 [5][9] - Adjusted non-interest income grew by 5% in 2025, while net interest income increased by 2% linked quarter [7][12] Business Line Data and Key Metrics Changes - Wealth management and corporate bank businesses achieved record fee income, with treasury management products also reaching a second consecutive record [7][15] - Loan growth was challenged in 2025, with large corporate customers paying down debt, but net interest income benefited from fixed asset turnover and prudent funding cost management [6][12] - Adjusted non-interest expense increased by 2% in 2025, with salaries and benefits rising by 3% due to higher health insurance costs and hiring tied to growth initiatives [16][17] Market Data and Key Metrics Changes - Deposits performed well, with ending balances up approximately $800 million, supported by strong customer acquisition and retention [10][11] - Average deposits were roughly flat, modestly outperforming typical year-end seasonality, particularly in consumer banking [11] - The non-interest-bearing mix remained in the low 30% range, consistent with the company's target [12] Company Strategy and Development Direction - The company is focused on modernizing its core systems, which is expected to strengthen its competitive position [5][6] - The hiring of bankers to support growth initiatives is a priority, with a target of adding 120 bankers over two years [23][24] - The company aims to deliver consistent, sustainable long-term performance while managing capital and expense discipline [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to normal loan growth levels in 2026, with improving client sentiment and strengthening loan pipelines [10][20] - The company expects net interest income to grow between 2.5% and 4% in 2026, supported by a well-protected interest rate risk position [14] - Management noted that many headwinds from 2025 are behind them, with positive trends in loan pipelines, deposit strength, and fee income growth [20] Other Important Information - The company ended the quarter with an estimated common equity tier 1 ratio of 10.8%, executing $430 million in share repurchases and paying $231 million in common dividends [18][19] - The allowance for credit losses decreased by $27 million, with the allowance for credit loss ratio declining to 1.76% [18] Q&A Session Summary Question: Loan growth guidance and pipeline activity - Management noted positive customer sentiment and increased pipeline activity, expecting lower single-digit loan growth primarily driven by commercial banking activities [22][23] Question: Trade-off between growth and returns - The focus remains on capital allocation and risk-adjusted returns, with a commitment to delivering top quartile returns on tangible common equity [26][28] Question: Capital markets performance and outlook - Management expressed confidence in capital markets, expecting a rebound in activity after a slower start in the first quarter of 2026 [31] Question: Deposit beta performance and pricing trends - The company aims to remain competitive while managing deposit costs, with expectations of continued favorable trends in deposit beta [33] Question: Credit quality and higher-risk portfolios - Management indicated ongoing improvement in credit quality, with expectations for continued positive trends in 2026 [38] Question: Capital management and buyback pace - The company plans to balance capital needs for organic growth with share buybacks when loan growth opportunities are not present [40][41] Question: M&A potential and market share risks - Management views competition as an opportunity for growth, emphasizing strong market presence and customer relationships [42][43]

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]

The PNC Financial Services Group (NYSE:PNC) Q4 2025 Earnings call January 16, 2026 09:00 AM ET Company ParticipantsBetsy Graseck - Global Head of Banks and Diversified Finance ResearchGerard Cassidy - Managing DirectorMatt O'Connor - Managing DirectorMike Mayo - Managing Director and Head of U.S. Large-Cap Bank ResearchRob Reilly - EVP and CFOSteven Chubak - Managing DirectorChris McGratty - Managing DirectorEbrahim Poonawala - Managing Director and Head of North American Banks Research (US and Canadian Ban ...