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What changed in WAFD INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of WAFD INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+375 added−394 removedSource: 10-K (2025-11-18) vs 10-K (2024-11-20)

Top changes in WAFD INC's 2025 10-K

375 paragraphs added · 394 removed · 266 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

83 edited+24 added−28 removed117 unchanged
Biggest changeSeptember 30, 2024 September 30, 2023 September 30, 2022 ($ in thousands) Gross loans by category Commercial loans Multi-family $ 4,658,119 20.8 % $ 2,907,086 14.8 % $ 2,645,801 13.6 % Commercial real estate 3,757,040 16.8 3,344,959 17.0 3,133,660 16.2 Commercial & industrial 2,337,139 10.5 2,321,717 11.8 2,350,984 12.1 Construction 2,174,254 9.7 3,318,994 16.9 3,784,388 19.5 Land - acquisition & development 200,713 0.9 201,538 1.0 291,301 1.5 Total commercial loans 13,127,265 58.7 12,094,294 61.6 12,206,134 63.0 Consumer loans Single-family residential 8,399,030 37.6 6,451,270 32.8 5,771,862 29.8 Construction - custom 384,161 1.7 672,643 3.4 974,652 5.0 Land - consumer lot loans 108,791 0.5 125,723 0.6 153,240 0.8 HELOC 266,151 1.2 234,410 1.2 203,528 1.0 Consumer 73,998 0.3 70,164 0.4 75,543 0.4 Total consumer loans 9,232,131 41.3 7,554,210 38.4 7,178,825 37.0 Total gross loans 22,359,396 100 % 19,648,504 100 % 19,384,959 100 % Less: Allowance for credit losses (1) 203,753 177,207 172,808 Loans in process 1,009,798 1,895,940 3,006,023 Net deferred fees, costs and discounts 229,491 98,807 92,564 Total loan contra accounts 1,443,042 2,171,954 3,271,395 Net loans $ 20,916,354 $ 17,476,550 $ 16,113,564 __________________ (1) The ACL within the table does not include the reserve for unfunded commitments which was $21,500,000, $24,500,000 and $32,500,000 as of September 30, 2024, 2023 and 2022, respectively. 7 Lending Programs and Policies.
Biggest changeSeptember 30, 2025 September 30, 2024 September 30, 2023 ($ in thousands) Gross loans by category Commercial loans Multi-family $ 4,718,480 22.2 % $ 4,658,119 20.8 % $ 2,907,086 14.8 % Commercial real estate 3,604,600 16.9 3,757,040 16.8 3,344,959 17.0 Commercial & industrial 2,392,685 11.2 2,337,139 10.5 2,321,717 11.8 Construction 1,756,890 8.3 2,174,254 9.7 3,318,994 16.9 Land - acquisition & development 179,099 0.8 200,713 0.9 201,538 1.0 Total commercial loans 12,651,754 59.5 13,127,265 58.7 12,094,294 61.6 Consumer loans Single-family residential 8,053,771 37.9 8,399,030 37.6 6,451,270 32.8 Construction - custom 150,237 0.7 384,161 1.7 672,643 3.4 Land - consumer lot loans 89,298 0.4 108,791 0.5 125,723 0.6 HELOC 267,871 1.3 266,151 1.2 234,410 1.2 Consumer 61,461 0.3 73,998 0.3 70,164 0.4 Total consumer loans 8,622,638 40.5 9,232,131 41.3 7,554,210 38.4 Total gross loans 21,274,392 100 % 22,359,396 100 % 19,648,504 100 % Less: Allowance for credit losses (1) 199,720 203,753 177,207 Loans in process 773,606 1,009,798 1,895,940 Net deferred fees, costs and discounts 212,448 229,491 98,807 Total loan contra accounts 1,185,774 1,443,042 2,171,954 Net loans $ 20,088,618 $ 20,916,354 $ 17,476,550 __________________ (1) The ACL within the table does not include the reserve for unfunded commitments which was $21,500,000 , $21,500,000 and $24,500,000 as of September 30, 2025 , 2024 and 2023 , respectively. 8 Lending Programs and Policies.
Under the final rule, a bank holding company, such as the Company, and an FDIC-supervised insured depository institution, such as the Bank, are required to notify the Federal Reserve or FDIC, respectively, within 36 hours of incidents that have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade, the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or impact the stability of the financial sector.
Under the final rule, a bank holding company, such as the Company, and an FDIC-supervised insured depository institution, such as the Bank, are required to notify the Federal Reserve or FDIC, respectively, within 36 hours of incidents that have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade, the banking organization’s ability to deliver services to a material portion of its customer base, 21 jeopardize the viability of key operations of the banking organization, or impact the stability of the financial sector.
Extensions of credit by a bank to executive officers, directors and principal shareholders are subject to Section 22(h) of the Federal Reserve Act, which, among other things, generally prohibits loans to any such individual where the aggregate amount exceeds an amount equal to 15% of an institution's unimpaired capital and surplus plus an additional 10% of unimpaired capital and surplus in the case of loans that are fully secured by readily marketable collateral.
Extensions of credit by a bank to executive officers, directors and principal shareholders are subject to Section 22(h) of the Federal Reserve Act, which, among other things, generally prohibits loans to any such individual where the aggregate amount exceeds an amount equal to 15% of an institution's unimpaired capital and surplus plus an additional 10% of 18 unimpaired capital and surplus in the case of loans that are fully secured by readily marketable collateral.
In addition, a bank may not lend to any affiliate engaged in non-banking activities that are not permissible for a bank holding company or acquire 17 shares of any affiliate that is not a subsidiary. Federal law authorizes the imposition of additional restrictions on transactions with affiliates if necessary to protect the safety and soundness of a bank.
In addition, a bank may not lend to any affiliate engaged in non-banking activities that are not permissible for a bank holding company or acquire shares of any affiliate that is not a subsidiary. Federal law authorizes the imposition of additional restrictions on transactions with affiliates if necessary to protect the safety and soundness of a bank.
Loans made to builders are generally tied to an interest rate index and normally have maturities of two years or less or are structured such that they convert to a permanent loan after the completion of construction or stabilization of the property. Loans made to individuals for construction of their home generally are 30-year fixed rate loans.
Loans made to builders are generally tied to an interest rate index and normally have maturities of two years or less or are structured such that they convert to a permanent loan after the completion of construction or stabilization of the property. Legacy loans made to individuals for construction of their home generally are 30- year fixed rate loans.
In addition, without the prior approval of the FRB, bank holding companies are generally prohibited from acquiring more than 5% of the outstanding shares of any class of voting securities of a bank or bank holding company, taking any action that causes a bank to become a subsidiary of the bank holding company, acquiring all or substantially all of the assets of a bank, or merging with another bank holding company.
In addition, without the prior approval of the FRB, bank holding companies are generally prohibited from acquiring more than 5% of the outstanding shares of any class of voting securities of a bank or bank holding company, taking any action 16 that causes a bank to become a subsidiary of the bank holding company, acquiring all or substantially all of the assets of a bank, or merging with another bank holding company.
The AML Act also promotes increased information-sharing and use of technology and increases penalties for violations of the BSA and includes whistleblower incentives, both of which could increase the prospect of regulatory enforcement. Regulatory Capital Requirements. Bank holding companies and federally insured banks are required to maintain minimum levels of regulatory capital.
The AML Act also promotes increased information- sharing and use of technology and increases penalties for violations of the BSA and includes whistleblower incentives, both of which could increase the prospect of regulatory enforcement. 19 Regulatory Capital Requirements. Bank holding companies and federally insured banks are required to maintain minimum levels of regulatory capital.
The description of these laws and regulations, and descriptions of laws and regulations contained elsewhere herein, do not purport to be complete and are qualified in their entirety by reference to applicable laws and regulations. 15 Restrictions on Activities and Acquisitions. Bank holding companies are subject to a variety of restrictions on their activities and the acquisitions they can make.
The description of these laws and regulations, and descriptions of laws and regulations contained elsewhere herein, do not purport to be complete and are qualified in their entirety by reference to applicable laws and regulations. Restrictions on Activities and Acquisitions. Bank holding companies are subject to a variety of restrictions on their activities and the acquisitions they can make.
On at least a quarterly basis, the Company’s CRO, Chief Financial Officer, Chief Information Officer, Chief Information Security Officer, Chief Credit Officer, and other members of management report directly to the RMC to provide reporting on risk levels, key risks, emerging risks and the Company’s compliance with the risk management framework, risk limits and risk appetites adopted by the RMC.
On at least a quarterly basis, the Company’s CRO, Chief Financial Officer, Chief Information Officer, Chief Information Security Officer, Chief Credit Officer, and other members of management report directly to the RMC to provide reporting on 17 risk levels, key risks, emerging risks and the Company’s compliance with the risk management framework, risk limits and risk appetites adopted by the RMC.
The Bank Merger provided a credit line with the Federal Home Loan Bank of San Francisco (FHLB - SF) in support of LBC borrowings from the FHLB - SF, but the Bank is unable to take down new advances against this line as a bank is not allowed to belong to more than one FHLB.
The Bank Merger with LBC provided a credit line with the Federal Home Loan Bank of San Francisco (FHLB - SF) in support of LBC borrowings, but the Bank is unable to take down new advances against this line as the Bank is not allowed to belong to more than one FHLB.
The federal banking agencies have established certain expectations with respect to an institution's information security and cybersecurity programs, with an increasing focus on risk management, processes related to information technology and operational resiliency, and the use of third parties in the provision of financial services.
The federal banking regulatory agencies have established certain expectations with respect to an institution's information security and cybersecurity programs, with an increasing focus on risk management, processes related to information technology and operational resiliency, and the use of third parties in the provision of financial services.
The Anti-Money Laundering Act of 2020 (“AML Act”) was enacted as part of the National Defense Authorization Act and requires the U.S. Treasury Department to issue National Anti-Money Laundering and 18 Countering the Financing of Terrorism Priorities ("AML/CFT"), which occurred in June 2021.
The Anti-Money Laundering Act of 2020 (“AML Act”) was enacted as part of the National Defense Authorization Act and requires the U.S. Treasury Department to issue National Anti-Money Laundering and Countering the Financing of Terrorism Priorities ("AML/CFT"), which occurred in June 2021.
Interest rates charged by the Bank on mortgage loans are primarily determined by the competitive loan rates offered in its lending areas and in the secondary market. Mortgage loan rates reflect factors such as general interest rates, the supply of money available to the industry and the demand for such loans.
Interest rates charged by the Bank on loans are primarily determined by the competitive loan rates offered in its lending areas and in the secondary market. Loan rates reflect factors such as general interest rates, the supply of money available to the industry and the demand for such loans.
The prompt corrective action rules, which apply to the Bank but not the Company, are modified to include a common equity Tier 1 risk-based ratio and to increase certain other capital requirements for the various thresholds.
The prompt corrective action rules, which apply to the Bank but not the Company, are modified to include a common 20 equity Tier 1 risk-based ratio and to increase certain other capital requirements for the various thresholds.
This different credit risk is a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic and societal conditions on income- 8 producing properties, the primary source of cash flow for repayment being spread across multiple tenants, the effects of government orders such as eviction forbearance and the increased difficulty of evaluating and monitoring these types of loans.
This different credit risk is a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic and societal conditions on income- 9 producing properties, the primary source of cash flow for repayment being spread across multiple tenants, the effects of government orders such as eviction forbearance and the increased difficulty of evaluating and monitoring these types of loans.
Subject to certain limitations and restrictions, a bank holding company, with prior approval of the FRB, may acquire an out-of-state bank; banks in states that do not prohibit out-of-state mergers may merge with the approval of the appropriate federal banking agency, and a bank may establish a de novo branch out of state if such branching is permitted by the other state for state banks chartered by such other state.
Subject to certain limitations and restrictions, a bank holding company, with prior approval of the FRB, may acquire an out-of-state bank; banks in states that do not prohibit out-of-state mergers may merge with the approval of the appropriate federal banking agency, and a bank may establish a de novo branch out of state if such branching is permitted by the other state.
Pricing of commercial loans is based on the credit risk of the borrower with consideration given to the overall relationship of the borrower, including deposits and contributed equity/loan-to-value ratio. The acquisition of business deposits is an important focus of this business line. The Bank provides a full line of treasury management products to support the depository needs of its clients.
Pricing of commercial loans is based on the credit risk of the borrower with consideration given to the overall relationship of the borrower, including deposits and contributed equity/loan-to-value ratio. The acquisition of business deposits is an important focus of this business line. The Bank provides a full line of treasury management products to support the depository needs of its customers.
As part of this authority, the Bank is required to file periodic reports with the WDFI and FDIC and is subject to periodic examinations by the WDFI and FDIC.
As part of this authority, the Bank is required to file periodic reports with and is subject to periodic examinations by both the WDFI and FDIC.
For 16 example, the Company’s Asset Liability Committee is responsible for managing interest rate and liquidity risks and the credit administration department tracks credit risks.
For example, the Company’s Asset Liability Committee is responsible for managing interest rate and liquidity risks and the credit administration department tracks credit risks.
The Bank also purchases loans and mortgage-backed securities when lending rates and mortgage volume for new loan originations in its market area do not fulfill its needs. 10 The table below shows the Bank's total loan origination, purchase and repayment activities.
The Bank also purchases loans and mortgage-backed securities when lending rates and volume for new loan originations in its market area do not fulfill its needs. 11 The table below shows the Bank's total loan origination, purchase and repayment activities.
For information regarding compliance with each of these capital requirements by the Company and the Bank as of September 30, 2024, see Note R to the Consolidated Financial Statements included in Item 8 hereof. 19 Prompt Corrective Action. Federal statutes establish a supervisory framework based on five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.
For information regarding compliance with each of these capital requirements by the Company and the Bank as of September 30, 2025 , see Note R to the Consolidated Financial Statements included in Item 8 hereof. Prompt Corrective Action. Federal statutes establish a supervisory framework based on five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.
Mitigation of risk of loss on a land development loan is dependent largely upon the accuracy of the initial estimate of the property's value at completion of development compared to the estimated cost (including interest) of development and the financial strength of the borrower. Permanent land loans .
Mitigation of risk of loss on a land development loan is dependent largely upon the accuracy of the initial estimate of the property's value at completion of development compared to the estimated cost (including interest) of development and the financial strength of the borrower. Consumer loans .
The Company makes available on its website, free of charge, its annual reports on Form 10-K, current quarterly reports on Form 10-Q, reports on Form 8-K, proxy statements and any amendments to those reports (among others), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC).
The Company makes available on its website, free of charge, its annual reports on Form 10-K, current quarterly reports on Form 10-Q, reports on Form 8-K, proxy statements and any amendments to those reports (among others), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We expect this trend of state-level activity in those areas to continue and are continually monitoring developments in the states in which the Company operates. In November 2021, the U.S. federal bank regulatory agencies adopted a rule regarding notification requirements for banking organizations related to significant computer security incidents.
We expect this trend of state-level activity in those areas to continue and are continually monitoring developments in the states in which the Company operates. In November 2021, the federal banking regulatory agencies adopted a rule regarding notification requirements for banking organizations related to significant computer security incidents.
The Bank makes various types of business loans to customers in its market area for working capital, acquiring real estate, equipment or other business purposes, such as acquisitions. The terms of these loans generally range from less than one year to a maximum of ten years.
The Bank makes various types of business loans to customers in its market area for working capital, acquiring real estate, SBA program financing, financing equipment or other business purposes, such as acquisitions. The terms of these loans generally range from less than one year to a maximum of ten years.
The Bank's policies provide that for residential construction loans, loans may be made for 85% or less of the construction cost or 80% of the appraised value of the property upon completion, whichever is less.
The Bank's policies provided that for residential construction loans, loans may be made for 85% or less of the construction cost or 80% of the appraised value of the property upon completion, whichever is less.
In addition, if we do not or are unable to pay quarterly dividends on our Series A Preferred Stock, we may not pay a dividend to the holders of our Common Stock. See “ Washington Federal Bank, wholly-owned operating subsidiary - Restrictions on Dividends ” below.
In addition, if we do not or are unable to pay quarterly dividends on our Series A Preferred Stock, we may not pay a dividend to the holders of our Common Stock. See “ WaFd Bank, wholly-owned operating subsidiary - Restrictions on Dividends ” below.
The information found on our website is not part of this or any other report that we file or furnish to the SEC. 22
The information found on our website is not part of this or any other report that we file or furnish to the SEC. 23
The Bank offers several consumer checking account products, both interest bearing and non-interest bearing and three business checking accounts, two of which target small businesses with relatively simple and straightforward banking needs and one for larger, more complex business depositors with an account that prices monthly based on the volume and type of activity.
The Bank offers several consumer checking account products, both interest bearing and non-interest bearing and several business checking accounts, some of which target small businesses with relatively simple and straightforward banking needs and some for larger, more complex business depositors with an account that prices monthly based on the volume and type of activity.
We strive to build and maintain a high-performing culture and be an “employer of choice” by creating a work environment that attracts and retains outstanding, engaged employees who embody our company mantra of “Love what you do. Make a difference.” Demographics. As of September 30, 2024, we employed 2,208 full and part time employees.
We strive to build and maintain a high-performing culture and be an “employer of choice” by creating a work environment that attracts and retains outstanding, engaged employees who embody our company mantra of “Love what you do. Make a difference.” Demographics. As of September 30, 2025 , we employed 2037 full and part time employees.
As of September 30, 2024 and September 30, 2023, Statewide Mortgage Services Company had total assets of $2,506,000 and $785,000, respectively. Washington Services, Inc. is incorporated under the laws of the state of Washington. It acts as a trustee under deeds of trust as to which the Bank is beneficiary.
As of September 30, 2025 and September 30, 2024 , Statewide Mortgage Services Company had total assets of $2,472,000 and $2,506,000 , respectively. Washington Services, Inc. is incorporated under the laws of the state of Washington. It acts as a trustee under deeds of trust as to which the Bank is beneficiary.
Various laws and regulations prescribe the investment and lending authority of the Bank, and the Bank is prohibited from engaging in any activities not permitted by such laws and regulations. While the Bank has broad authority to engage in all types of lending activities, a variety of restrictions apply to certain other investments by the Bank. Interstate Banking .
Various laws and regulations prescribe the investment and lending authority of the Bank, and the Bank is prohibited from engaging in any activities not permitted by such laws and regulations. While the Bank has broad authority to engage in all types of lending activities, a variety of restrictions apply to certain other investments by the Bank, as discussed below.
The Bank's non-mortgage consumer loan portfolio consists of prime quality student loans acquired from an independent financial investment firm that retains 1% of each loan, plus various other non-mortgage consumer loans including personal lines of credit and credit cards. Home equity loans .
The Bank's non-mortgage consumer loan portfolio consists of prime quality student loans acquired from an independent financial investment firm that retains 1% of each loan, plus various other non-mortgage consumer loans including personal lines of credit and credit cards. Single-family residential loans .
The Bank has three active wholly-owned subsidiaries, discussed further below. 12 WAFD Insurance Group, Inc. is incorporated under the laws of the state of Washington and is an insurance agency that offers a full line of individual and business insurance policies to customers of the Bank, as well as to the general public.
The Company has nine active direct and indirect wholly-owned subsidiaries, discussed further below. WAFD Insurance Group, Inc. is incorporated under the laws of the state of Washington and is an insurance agency that offers a full line of individual and business insurance policies to customers of the Bank, as well as to the general public.
Item 1. Business General Washington Federal Bank, a federally-insured Washington state chartered commercial bank dba WaFd Bank (the "Bank" or "WaFd Bank"), was founded on April 24, 1917 in Ballard, Washington and is engaged primarily in providing lending, depository, insurance and other banking services to consumers, mid-sized to large businesses, and owners and developers of commercial real estate.
Business General WaFd Bank, a federally-insured Washington state chartered commercial bank formerly known as Washington Federal Bank (the "Bank" or "WaFd Bank"), was founded on April 24, 1917 in Ballard, Washington and is engaged primarily in providing lending, depository, insurance and other banking services to consumers, small, mid-sized and large businesses, and owners and developers of commercial real estate.
In the case of a bank or bank holding company the securities of which are registered with the Securities and Exchange Commission ("SEC"), ownership of or power to vote more than 10% of any class of voting securities creates a presumption of control. Source of Strength.
Generally, ownership of, or power to vote, more than 25% of any class of voting securities constitutes control. In the case of a bank or bank holding company the securities of which are registered with the SEC, ownership of or power to vote more than 10% of any class of voting securities creates a presumption of control. Source of Strength.
The WDFI is the Bank's primary state regulator and the FDIC is its primary federal regulatory. The Bank is a member of the FDIC and its deposits are insured up to applicable limits of the Depository Insurance Fund (“DIF”), which is administered by the FDIC. Regulation. The WDFI and FDIC have extensive authority over the operations of the Bank.
The Bank is a member of the FDIC and its deposits are insured up to applicable limits of the Depository Insurance Fund (“DIF”), which is administered by the FDIC. Regulation. The WDFI and FDIC have extensive authority over the operations of the Bank.
As of September 30, 2024 and September 30, 2023, WAFD Insurance Group, Inc. had total assets of $23,174,000 and $20,229,000, respectively. Statewide Mortgage Services Company is incorporated under the laws of the state of Washington and it holds and markets real estate owned.
As of September 30, 2025 and September 30, 2024 , WAFD Insurance Group, Inc. had total assets of $22,465,000 and $23,174,000 , respectively. 13 Statewide Mortgage Services Company is incorporated under the laws of the state of Washington and it holds and markets real estate owned.
The third line of defense is the Company’s internal audit function, which provides independent assessment and assurance regarding the effectiveness of governance, risk management and internal controls. Washington Federal Bank, wholly-owned operating subsidiary General. The Bank is a federally-insured Washington state chartered commercial bank dba WaFd Bank.
The third line of defense is the Company’s internal audit function, which provides independent assessment and assurance regarding the effectiveness of governance, risk management and internal controls. WaFd Bank, wholly-owned operating subsidiary General. The Bank is a federally-insured Washington state chartered commercial bank. The WDFI is the Bank's primary state regulator and the FDIC is its primary federal regulatory.
Under the Gramm-Leach-Bliley Act of 1999, as amended, a financial institution may not disclose non-public personal information about a consumer to unaffiliated third parties unless the institution satisfies various disclosure requirements and the consumer has not elected to opt out of the information sharing. The financial institution must provide its customers with a notice of its privacy policies and practices.
Under the Gramm-Leach-Bliley Act of 1999, as amended, a financial institution may not disclose non- public personal information about a consumer to unaffiliated third parties unless the institution satisfies various disclosure requirements and the consumer has not elected to opt out of the information sharing.
Loan repayments are a relatively stable source of funds, while deposit inflows and outflows are influenced by general interest rates, money market conditions, the availability of FDIC insurance and the market perception of the Company’s financial stability.
Loan repayments are a relatively stable source of funds influenced by prevailing market rates that drive refinancing activity, while deposit inflows and outflows are influenced by both market and offered interest rates, money market conditions, the availability of FDIC insurance and the market perception of the Company’s financial stability.
The following table provides the amortized cost of CRE loans by occupation status: September 30, 2024 September 30, 2023 September 30, 2022 ($ in thousands) Non-owner occupied $ 3,130,637 84 % $ 2,715,693 82 % $ 2,487,568 80 % Owner occupied 601,518 16 % 594,408 18 % 623,544 20 % Total commercial real estate loans $ 3,732,155 100 % $ 3,310,101 100 % $ 3,111,112 100 % In underwriting, the Bank considers a number of factors, which include the projected net cash flow to the loan's debt service requirement, the age and condition of the collateral, the financial resources and income level of the borrower and the borrower's experience in owning or managing similar properties.
The following table provides the amortized cost of CRE loans by occupation status: September 30, 2025 September 30, 2024 September 30, 2023 ($ in thousands) Non-owner occupied $ 2,988,265 83 % $ 3,130,637 84 % $ 2,715,693 82 % Owner occupied 600,685 17 % 601,518 16 % 594,408 18 % Total commercial real estate loans $ 3,588,950 100 % $ 3,732,155 100 % $ 3,310,101 100 % In underwriting, the Bank considers a number of factors, which include the historic and projected net cash flows to the loan's debt service requirement, the age and condition of the collateral, the financial resources and income level of the borrower and the borrower's experience in owning or managing similar properties.
Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements. Many states have also recently implemented or modified their data breach notification and data privacy requirements.
State regulators also continue to be active in implementing privacy and cybersecurity standards and regulations. Several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements. Many states have also implemented or modified their data breach notification and data privacy requirements.
In January 2020, the federal banking agencies jointly issued a statement reminding supervised financial institutions of sound cybersecurity risk management principles that expanded on areas articulated in the Interagency Guidelines Establishing Information Security Standards written in Section 39 of the Federal Deposit Insurance Act and Sections 501 and 505(b) of the Gramm-Leach-Bliley Act. 20 State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations.
In January 2020, these agencies jointly issued a statement reminding supervised financial institutions of sound cybersecurity risk management principles that expanded on areas articulated in the Interagency Guidelines Establishing Information Security Standards written in Section 39 of the Federal Deposit Insurance Act and Sections 501 and 505(b) of the Gramm-Leach-Bliley Act.
Profitable operations have been recorded every year since going public. As of September 30, 2024, the stock traded at 91 times its original 1982 offering price, has paid 166 consecutive quarterly cash dividends and has returned 15,195% total shareholder return to those who invested 42 years ago.
Profitable operations have been recorded every year since going public. As of September 30, 2025 , the stock traded at 82 times its original 1982 offering price, has paid 170 consecutive quarterly cash dividends and has returned 14,253% total shareholder return to those who invested 43 years ago.
The Federal Reserve, the FDIC, and other financial regulatory agencies issued regulations implementing notice requirements and restrictions on a financial institution's ability to disclose non-public personal information about consumers to unaffiliated third parties.
The financial institution must provide its customers with a notice of its privacy policies and practices. The Federal Reserve, the FDIC, and other financial regulatory agencies issued regulations implementing notice requirements and restrictions on a financial institution's ability to disclose non- public personal information about consumers to unaffiliated third parties.
Each FHLB serves members within its assigned region and is funded primarily through proceeds derived from the sale of consolidated obligations of the FHLB system. Loans are made to members in accordance with the policies and procedures established by the Board of Directors of the FHLB. At September 30, 2024, total FHLB advances to the Bank amounted to $2,192,874,000.
Each FHLB serves members within its assigned region and is funded primarily through proceeds derived from the sale of consolidated obligations of the FHLB system. Loans are made to members in accordance with the policies and procedures established by the Board of Directors of the FHLB.
The Bank has general authority to lend anywhere in the United States; however, its primary lending areas are within the states of Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico, California and Texas. Loan originations come from a variety of sources.
The Bank has general authority to lend anywhere in the United States; however, its primary lending areas are within the states of Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico, California and Texas. Loan originations come from a variety of sources, although most business purpose loans are obtained primarily by direct solicitation of borrowers and ongoing relationships.
The business of the Bank consists primarily of accepting deposits from the general public and investing these funds in loans of various types, including first lien mortgages on single-family dwellings, construction loans, land acquisition and development loans, loans on multi-family, commercial real estate and other income producing properties, home equity loans and business loans.
The business of the Bank consists primarily of accepting deposits from the general public and investing these funds in loans of various types, including construction loans, land acquisition and development loans, loans on multi-family, commercial real estate and other income producing properties, and business loans, including U.S. Small Business Administration (“SBA”) loans.
(2) 920,205 1,016,084 (826,335) Net loan activity increase (decrease) $ 3,439,804 $ 1,362,986 $ 2,279,994 Beginning balance $ 17,476,550 $ 16,113,564 $ 13,833,570 Ending balance $ 20,916,354 $ 17,476,550 $ 16,113,564 ___________________ (1) Includes undisbursed loan in process. (2) Includes non-cash transactions.
(2) 248,172 920,205 1,016,084 Net loan activity increase (decrease) $ (827,736) $ 3,439,804 $ 1,362,986 Beginning balance $ 20,916,354 $ 17,476,550 $ 16,113,564 Ending balance $ 20,088,618 $ 20,916,354 $ 17,476,550 ___________________ (1) Includes undisbursed loan in process. (2) Includes non-cash transactions.
These investments may include, among other things, certain certificates of deposit, repurchase 11 agreements, bankers’ acceptances, loans to financial institutions whose deposits are federally-insured, federal funds, United States government and agency obligations and mortgage-backed securities. Sources of Funds General. Deposits are the primary source of the Bank’s funds for use in lending and other general business purposes.
These investments may include, among other things, certain certificates of deposit, repurchase agreements, bankers’ acceptances, loans to financial institutions whose deposits are federally-insured, federal funds, corporate and municipal debt, United States government and agency obligations and mortgage-backed securities. 12 Sources of Funds General.
Through this policy, we strive to carry out our banking activities in a responsible manner, placing the financial needs of our clients and economic health of our communities at the core of our focus.
Through this policy, we strive to carry out our banking activities in a responsible manner, placing the financial needs of our customers and economic health of our communities at the core of our focus. Below is a summary of our community activities and financial contributions in 2025 . 15 The Company General.
The following table provides detail of the amortized cost of non-multi family CRE loans by property type: September 30, 2024 September 30, 2023 September 30, 2022 ($ in thousands) Office $ 783,363 $ 815,776 $ 813,103 Industrial 705,401 591,507 481,473 Retail 399,276 377,300 370,139 Warehouse/Self Storage 295,275 252,677 244,985 Medical/dental 265,495 198,208 167,200 Mixed Use 229,351 232,564 243,430 Hotel/motel 205,895 228,503 219,911 Other 848,099 613,566 570,871 Total commercial real estate loans $ 3,732,155 $ 3,310,101 $ 3,111,112 Within the types listed above, a CRE subject property could be either owner or non-owner occupied.
The following table provides detail of the amortized cost of non-multi family CRE loans by property type: September 30, 2025 September 30, 2024 September 30, 2023 ($ in thousands) Office $ 802,868 $ 783,363 $ 815,776 Industrial 816,758 705,401 591,507 Retail 356,229 399,276 377,300 Warehouse/Self Storage 293,693 295,275 252,677 Medical/dental 231,622 265,495 198,208 Mixed Use 188,298 229,351 232,564 Hotel/motel 192,148 205,895 228,503 Other 707,334 848,099 613,566 Total commercial real estate loans $ 3,588,950 $ 3,732,155 $ 3,310,101 Within the types listed above, a CRE subject property could be either owner or non-owner occupied.
In addition to deposits, the Bank derives funds from loan repayments, advances from the Federal Home Loan Bank of Des Moines ("FHLB - DM"), borrowings from the Federal Reserve Bank ("FRB"), and from investment repayments and sales.
Deposits are the primary source of the Bank’s funds for use in lending and other general business purposes. In addition to deposits, the Bank derives funds from loan repayments, advances from the Federal Home Loan Bank of Des Moines ("FHLB - DM"), borrowings from the Federal Reserve Bank ("FRB"), and from investment repayments and sales.
As a member, the Bank is required to purchase and maintain stock in the FHLB of Des Moines. The Bank also acquired the stock of the FHLB San Francisco in the Merger but is not a member of this FHLB.
At September 30, 2025 , total FHLB advances to the Bank amounted to $1,765,604,000 . As a member, the Bank is required to purchase and maintain stock in the FHLB of Des Moines. The Bank also acquired the stock of the FHLB San Francisco in the Merger but is not a member of this FHLB.
None of these employees are represented by a collective bargaining agreement. During fiscal year 2024 we hired 421 employees. Our voluntary turnover rate was 15.80% in fiscal year 2024, a slight increase from 15.54% in 2023. Diversity, Equity and Inclusion.
None of these employees are represented by a collective bargaining agreement. During fiscal year 2025 we hired 441 employees. Our voluntary turnover rate was 18.12% in fiscal year 2025 , an increase from 15.80% in 2024 .
In addition, we offer our Education Tuition Assistance Program, designed to encourage an employee's advancement and growth. We also offer the Retail Bank Peer Mentor Program and retail banking certifications for our retail employees. These resources provide employees with the skills they need to achieve their career goals, build management skills and become leaders within our Company. Compensation and Benefits.
We also offer the Retail Bank Peer Mentor Program and branch banking certifications for our branch employees. These resources provide employees with the skills they need to achieve their career goals, build management skills and become leaders within our Company. Compensation and Benefits. We provide a competitive compensation and benefits program to help meet the needs of our employees.
Management differentiates multi-family properties from the rest of our CRE portfolio as these loans have key differences in the way they are handled from underwriting through monitoring.
Management differentiates multi-family properties from the rest of our CRE portfolio as these loans have key differences in their risk profile.
Twelve Months Ended September 30, 2024 2023 2022 (In thousands) Commercial loan originations (1) Multi-family $ 60,730 $ 136,788 $ 675,534 Commercial Real Estate 246,930 223,361 880,850 Commercial & Industrial 1,677,371 2,032,460 2,569,682 Construction 603,829 1,046,971 2,486,387 Land – Acquisition & Development 45,406 34,946 175,234 Total commercial loans 2,634,266 3,474,526 6,787,687 Consumer loan originations (1) Single-family residential 430,272 610,130 892,608 Construction – custom 209,781 346,784 765,696 Land – Consumer Lot Loans 21,187 21,133 61,731 HELOC 161,917 154,030 171,393 Consumer 174,648 95,553 57,078 Total consumer loans 997,805 1,227,630 1,948,506 Total loans originated 3,632,071 4,702,156 8,736,193 Loans purchased (3) 6,207,393 80,015 564,584 Loans sold (4) (3,017,506) — — Loan principal repayments (4,302,359) (4,435,269) (6,194,448) Net change in loans in process, discounts, etc.
Twelve Months Ended September 30, 2025 2024 2023 (In thousands) Commercial loan originations (1) Multi-family $ 104,035 $ 60,730 $ 136,788 Commercial Real Estate 384,749 246,930 223,361 Commercial & Industrial 1,667,064 1,677,371 2,032,460 Construction 1,038,182 603,829 1,046,971 Land – Acquisition & Development 94,864 45,406 34,946 Total commercial loans 3,288,894 2,634,266 3,474,526 Consumer loan originations (1) Single-family residential 211,686 430,272 610,130 Construction – custom 95,835 209,781 346,784 Land – Consumer Lot Loans 7,340 21,187 21,133 HELOC 145,501 161,917 154,030 Consumer 206,943 174,648 95,553 Total consumer loans 667,305 997,805 1,227,630 Total loans originated 3,956,199 3,632,071 4,702,156 Loans purchased (3) 113,069 6,207,393 80,015 Loans sold (4) — (3,017,506) — Loan principal repayments (5,145,176) (4,302,359) (4,435,269) Net change in loans in process, discounts, etc.
The principal sources of funds for the Company's activities are retained earnings, loan repayments, net deposit inflows, borrowings and repayments and sales of investments. WaFd's principal sources of revenue are interest on loans and interest and dividends on investments. Its principal expenses are interest paid on deposits, credit costs, general and administrative expenses, interest on borrowings and income taxes.
WaFd's principal sources of revenue are interest on loans and interest and dividends on investments. Its principal expenses are interest paid on deposits, credit costs, general and administrative expenses, interest on borrowings and income taxes.
WaFd, Inc., a Washington corporation, was formed as the Bank’s holding company in November, 1994. On September 27, 2023, the Company filed Articles of Amendment to its Restated Articles of Incorporation, as amended, with the Washington Secretary of State, to change its name from Washington Federal, Inc. to WaFd, Inc. This change was effective on September 29, 2023.
Effective September 25, 2025, the Bank formally changed its name from Washington Federal Bank to WaFd Bank by filing its Second Amended and Restated Articles of Incorporation with the Washington Secretary of State. WaFd, Inc., a Washington corporation, was formed as the Bank’s holding company in November, 1994.
We value our employees by investing in a healthy work-life balance, competitive compensation and benefit packages and a vibrant, team-oriented environment centered on professional service and open communication amongst employees.
Human Capital At WaFd Bank, our culture is defined by our corporate values of integrity, teamwork, ownership, simplicity, service and discipline. We value our employees by investing in a healthy work-life balance, competitive compensation and benefit packages and a vibrant, team-oriented environment centered on professional service and open communication amongst employees.
The total balance for loans with loan-to-value ratios exceeding 80% at origination as of September 30, 2024, was $315,704,000, with allocated reserves of $2,939,000. Consumer loans .
The total balance for loans with loan-to-value ratios exceeding 80% at origination as of September 30, 2025 , was $136,605,000 , with allocated reserves of $1,256,000 . Origination and Purchase of Loans.
The FHLB - SF credit line is secured by a line-item pledge of single-family residential mortgages that are specifically identified. For further information on these activities, see Note L to the Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” of this report.
The FHLB - SF credit line is secured by a line-item pledge of securities. For further information on these activities, see Note L to the Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” of this report. Subsidiaries The Company is a bank holding company that conducts its primary business through its wholly-owned subsidiary, WaFd Bank.
Lending activities include the origination of loans secured by real estate, including long-term fixed-rate and adjustable-rate mortgage loans, adjustable-rate construction loans, adjustable-rate land development loans, fixed-rate and adjustable-rate multi-family loans, fixed-rate and adjustable-rate commercial real estate loans and fixed-rate and adjustable-rate business loans. The following table is a summary of loans receivable by loan portfolio segment and class.
Lending activities include the origination of commercial loans secured by real estate, adjustable-rate construction loans, adjustable-rate land development loans, fixed-rate and adjustable-rate multi-family loans, fixed- rate and adjustable-rate commercial real estate loans and fixed-rate and adjustable-rate business loans.
Notwithstanding these amendments to the stress testing requirements, the federal banking agencies indicated through interagency guidance that the capital planning and risk management practices of institutions with total assets less than $100 billion would continue to be reviewed through the regular supervisory process.
The federal bank regulatory agencies (FRB, FDIC and the Office of the Comptroller of the Currency) have indicated that the capital planning and risk management practices of financial institutions with total assets less than $100 billion will continue to be reviewed through the regular supervisory process.
The Merger expanded WaFd Bank's footprint to nine western states with the addition of ten California branches of Luther Burbank. The Company's fiscal year end is September 30th. All references herein to 2024, 2023 and 2022 represent balances as of September 30, 2024, September 30, 2023 and September 30, 2022, respectively, or activity for the fiscal years then ended.
The Merger expanded WaFd Bank's footprint to nine western states with the addition of ten California branches of Luther Burbank. The Company's fiscal year end is September 30th.
At September 30, 2024, the Bank held $73,910,000 in FHLB of Des Moines stock and $21,707,000 in FHLB of San Francisco stock, which was in compliance with requirements. Community Reinvestment Act and Fair Lending Laws.
At September 30, 2025 , the Bank held $85,301,000 in FHLB-DM stock and $2,767,000 in FHLB-SF stock, which was in compliance with requirements. Community Reinvestment Act and Fair Lending Laws.
Availability of Financial Data Under the Securities Exchange Act of 1934 ("Exchange Act"), the Company is required to file annual, quarterly and current reports, proxy statements and other information with the SEC. We file reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, with the SEC.
We are also dependent upon our ability to attract and retain employees while managing compensation and other costs. Availability of Financial Data Under the Securities Exchange Act of 1934 ("Exchange Act"), the Company is required to file annual, quarterly and current reports, proxy statements and other information with the SEC.
We invest in the growth and development of our employees by providing a multi-dimensional approach to learning that empowers, intellectually grows, and professionally develops our colleagues. Our employees, including leadership, receive continuing education courses that are relevant to the banking industry and their job function within the Company. All new employees attend our two-day new hire orientation, Welcome to WaFd.
Our employees, including leadership, receive continuing education courses that are relevant to the banking industry and their job function within the Company. All new employees attend our two-day new hire orientation, Welcome to WaFd. In addition, we offer our Education Tuition Assistance Program, designed to encourage an employee's advancement and growth.
The public may obtain copies of these reports at the SEC's website: www.sec.gov . The Company has adopted and posted on its website a code of ethics that applies to its senior financial officers. The Company’s website also includes the charters for its audit committee, compensation committee, risk management committee, executive committee, technology committee and nominating and governance committee.
We file reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, with the SEC. The public may obtain copies of these reports at the SEC's website: www.sec.gov . The Company has adopted and posted on its website a code of ethics that applies to its senior financial officers.
In making one-to-four- family home mortgage loans, the Bank normally charges an origination fee and as part of the loan application, the borrower pays the Bank for out-of-pocket costs, such as the appraisal fee, whether or not the borrower closes the loan.
The Bank normally charges an origination fee and as part of the loan application, the borrower paid the Bank for out-of-pocket costs, such as the appraisal fee, whether or not the borrower closes the loan. The interest rate charged is normally the prevailing rate at the time the loan application is approved and accepted.
All of the Bank's mortgage lending is subject to written, nondiscriminatory underwriting standards, loan origination procedures and lending policies approved by the Company's Board of Directors (the "Board"). Property valuations are required 9 on all real estate loans. Appraisals are prepared by independent appraisers, reviewed by staff of the Bank, and approved by the Bank's management.
Mortgage lending prior to exit was subject to written, nondiscriminatory underwriting standards, loan origination procedures and lending policies approved by the Company's Board of Directors (the "Board"). Although the Bank is no longer originating these loans, there are currently no plans to sell loans from the existing portfolio. 10 Property valuations were required on all real estate loans.
Any change in such regulation, whether by the WDFI, the FDIC, the Federal Reserve, the CFPB or the U.S. Congress, could have a significant impact on the Company and its operations. See “Regulation” section below. 6 Lending Activities General. The Company's net loan portfolio totaled $20,916,354,000 at September 30, 2024 and represents 74.5% of total assets.
Any change in such regulation, whether by the WDFI, the FDIC, the Federal Reserve, the CFPB or the U.S. Congress, could have a significant impact on the Company and its operations.
Our ability to compete effectively depends on our ability to provide first-rate, friendly and professional customer service and deliver the banking solutions that our customers want and need. We are also dependent upon our ability to attract and retain employees while managing compensation and other costs.
We compete with some competitors within our geographic market area, and with others on a product specific basis. Our ability to compete effectively depends on our ability to provide first-rate, friendly and professional customer service and deliver the banking solutions that our customers want and need.
In these instances, funds are borrowed from other financial institutions or the Federal Reserve Bank, for periods generally ranging from one to seven days at the then current borrowing rate. The Bank also elected to utilize the FRB's Bank Term Funding Program (the "BTFP") to leverage its highly favorable terms to fortify the Bank's liquidity position.
In these instances, funds are borrowed from other financial institutions or the Federal Reserve Bank, for periods generally ranging from one to seven days at the then current borrowing rate. The Bank also participates in the FRB of San Francisco Borrower-in-Custody program which collateralizes primary credit borrowings and serves as a backstop for the FHLB - DM credit line.
The potential effects of state or federal privacy and data protection laws on the Company’s business cannot be determined at this time and will depend both on whether such laws are adopted by states in which the Company does business and/or at the federal level and the requirements imposed by any such laws. 21 Taxation In addition to federal income tax, the Company is also subject to income, franchise, excise or gross receipts tax in states (and some cities) where the Company has branches or is deemed to have sufficient nexus for tax purposes.
Taxation In addition to federal income tax, the Company is also subject to income, franchise, excise or gross receipts tax in states (and some cities) where the Company has branches or is deemed to have sufficient nexus for tax purposes. The Company generally files consolidated federal and state income tax returns with its subsidiaries.
Property evaluations are sometimes utilized in lieu of appraisals on single-family real estate loans of $250,000 or less and are reviewed by the Bank's staff. Detailed loan applications are obtained to determine the borrower's ability to repay and the more significant items on these applications are verified through the use of credit reports, financial statements or written confirmations.
Appraisals were prepared by independent appraisers, reviewed by staff of the Bank, and approved by the Bank's management. Property evaluations were sometimes utilized in lieu of appraisals on single-family real estate loans of $250,000 or less and were reviewed by the Bank's staff.
The Company generally files consolidated federal and state income tax returns with its subsidiaries. The Company's federal income tax returns are open and subject to potential examination by the IRS for fiscal year 2021 and later. Competition We operate in a highly competitive environment.
The Company's federal income tax returns are open and subject to potential examination by the IRS for fiscal year 2022 and later. 22 Competition We operate in a highly competitive environment. Our competitors include other banks, savings associations, community banks, credit unions, fintech companies and other financial intermediaries, and new market participants offering services similar to those that we offer.
Depending on the size of the loan involved, a varying number of officers of the Bank must approve the loan application before the loan can be granted.
Detailed loan applications were obtained to determine the borrower's ability to repay and the more significant items on these applications are verified through the use of credit reports, financial statements or written confirmations. Depending on the size of the loan involved, a varying number of officers of the Bank must approve the loan application before the loan could be granted.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn recent years, we have made a significant ongoing investment to enhance our technological capabilities with the objectives of enhancing customer experience, growing revenue, and improving operating efficiency. There is a risk that these investments may not provide the anticipated benefits and/or will prove significantly more costly and time consuming to produce.
Biggest changeAny disruption of such services, or an unplanned termination of a third-party license or service agreement related thereto, could adversely affect our ability to provide necessary products and services for our customers. 28 In recent years, we have made a significant ongoing investment to enhance our technological capabilities with the objectives of enhancing customer experience, growing revenue, and improving operating efficiency.
A downturn in the real estate market, accompanied by falling values and increased foreclosures would hurt our business because a large majority of our loans are secured by real estate. If a significant decline in market values occurs, the collateral for loans will provide decreasing levels of security.
A downturn in the real estate market, accompanied by falling values and increased foreclosures would hurt our business because a large majority of our loans are secured by real estate. If a significant decline in real estate market values occurs, the collateral for loans will provide decreasing levels of security.
Our Board of Directors is authorized to cause the Company to issue one or more classes or series of preferred stock junior to our Series A Preferred Stock from time to time without any action on the part of our shareholders, and our Board of Directors also has the power, without shareholder approval, to set the terms of any such classes or series of preferred stock that 35 may be issued, including voting rights, dividend rights, and preferences over the Common Stock with respect to dividends or upon our dissolution, winding up and liquidation and other terms.
Our Board of Directors is authorized to cause the Company to issue one or more classes or series of preferred stock junior to our Series A Preferred Stock from time to time without any action on the part of our shareholders, and our Board of Directors also has the power, without shareholder approval, to set the terms of any such classes or series of preferred stock that may be issued, including voting rights, dividend rights, and preferences over the Common Stock with respect to dividends or upon our dissolution, winding up and liquidation and other terms.
We could be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic substances or chemical releases at such properties.
We could be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic 32 substances or chemical releases at such properties.
We also face additional costs when our customers become the victims of cyber-attacks. For example, various retailers have reported that they have been the victims of a cyber-attack in which large amounts of their customers’ data, including debit and credit card information, is obtained.
We also face additional costs when our customers become the victims of cyber-attacks. For example, various retailers have reported that they have been the victims of a cyber-attack in which large amounts of their customers’ data, including debit 25 and credit card information, is obtained.
Additionally, decreases in interest rates could lead to increased loan refinancing activity, which, in turn, would alter the balance of our interest-earning assets and impact net interest income. Increases in interest rates could reduce loan refinancing activity, which could result in compression of the spread between loan yields and more quickly rising funding rates.
Decreases in interest rates could lead to increased loan refinancing activity, which, in turn, would alter the balance of our interest-earning assets and impact net interest income. Increases in interest rates could reduce loan refinancing activity, which could result in compression of the spread between loan yields and more quickly rising funding rates.
Our failure to comply with data privacy laws could result in potentially significant regulatory or governmental investigations, litigation, fines, or 27 sanctions, or cause damage to our reputation, which could have a material adverse effect on our business, financial condition or results of operations.
Our failure to comply with data privacy laws could result in potentially significant regulatory or governmental investigations, litigation, fines, or sanctions, or cause damage to our reputation, which could have a material adverse effect on our business, financial condition or results of operations.
These actions could lead to losses on these assets or could adversely impact the carrying value of other long-lived assets and may lead to increased expenditures to renovate and reconfigure remaining branches or to otherwise further reform our retail distribution channel.
These actions could lead to losses on these assets or could adversely impact the carrying value 33 of other long-lived assets and may lead to increased expenditures to renovate and reconfigure remaining branches or to otherwise further reform our retail distribution channel.
In such a case, we may incur further write-downs and charge-offs, which could, in turn, adversely affect our business, financial condition and results of operations. 32 Changes in retail distribution strategies and consumer behavior may adversely impact our business, financial condition and results of operations.
In such a case, we may incur further write-downs and charge-offs, which could, in turn, adversely affect our business, financial condition and results of operations. Changes in retail distribution strategies and consumer behavior may adversely impact our business, financial condition and results of operations.
After the five-year period, certain “significant business transactions” are permitted, if they comply with certain “fair price” provisions of the statute or are approved by a majority of the outstanding shares other than those of which the acquiring person has beneficial ownership. As a Washington corporation, the Company is not permitted to “opt out” of this statute.
After the five-year period, certain “significant business transactions” are permitted, if they comply with certain “fair price” provisions of the statute or are approved by a majority of the outstanding shares other than those of which the acquiring person has beneficial ownership. As a Washington corporation, the Company is not permitted to “opt out” of this statute. Item 1B.
A deterioration in economic conditions in the United States and our markets could result in a further increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, all of which, in turn, would adversely affect our business, financial condition and results of operations.
A deterioration in economic conditions in the United States and our markets could result in a further increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, all of which, could adversely affect our business, financial condition and results of operations.
The occurrence of any of these risks could result in a diminished ability for us to operate our business, additional costs to correct defects, potential liability to clients, reputational damage, and regulatory intervention, any of which could adversely affect our business, financial condition and results of operations.
The occurrence of any of these risks could result in a diminished ability for us to operate our business, additional costs to correct defects, potential liability to customers, reputational damage, and regulatory intervention, any of which could adversely affect our business, financial condition and results of operations.
Many of our competitors have substantially greater resources to invest in technological improvements than we do. Our future success will depend, in part, upon our ability to address the needs of our clients by using technology to provide products and services that will satisfy client demands for convenience, as well as to create additional efficiencies in our operations.
Many of our competitors have substantially greater resources to invest in technological improvements than we do. Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and 34 services that will satisfy client demands for convenience, as well as to create additional efficiencies in our operations.
Persistent inflation could lead to higher interest rates, which could, in turn, increase the borrowing costs of our customers, making it more difficult for them to repay their loans or other obligations. High interest rates could also push down asset prices and weaken economic activity.
Higher than expected inflation could lead to higher interest rates, which could, in turn, increase the borrowing costs of our customers, making it more difficult for them to repay their loans or other obligations. High interest rates could also push down asset prices and weaken economic activity.
The Company’s business or the value of its common shares could be negatively affected as a result of actions by activist shareholders. The Company values constructive input from shareholders, and our Board of Directors and management team are committed to acting in the best interests of all of the Company’s shareholders.
Security Ownership Risks The Company’s business or the value of its common shares could be negatively affected as a result of actions by activist shareholders. The Company values constructive input from shareholders, and our Board of Directors and management team are committed to acting in the best interests of all of the Company’s shareholders.
AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential, or proprietary information, that infringes on the intellectual property rights of others, or that is otherwise harmful.
AI models, particularly generative or agentic AI models, may produce outputs or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential, or proprietary information, that infringes on the intellectual property rights of others, or that is otherwise harmful.
Future deterioration in the U.S. credit and financial markets could result in losses or significant deterioration in the fair value of our U.S. government issued, sponsored or guaranteed investments.
Deterioration in the U.S. credit and financial markets could result in losses or significant deterioration in the fair value of our U.S. government issued, sponsored or 26 guaranteed investments.
Deteriorating conditions in the regional economies we serve, or in certain sectors of those economies, in excess of the reasonable and supportable forecasts we used to estimate credit losses, could drive losses beyond that which is provided for in our allowance for loan losses.
Deteriorating conditions in the regional economies we serve, or in certain sectors of those economies, in excess of the reasonable and supportable forecasts we used to estimate credit losses, could drive losses beyond those provided for in our allowance for loan losses.
Rapid changes in interest rates make it difficult for the Bank to balance its loan and deposit portfolios, which may adversely affect our results of operations by, for example, reducing asset yields or spreads, creating operating and system issues, or having other adverse impacts on our business.
Rapid changes in interest rates make it difficult for the Bank to balance its loan and deposit portfolios, which may adversely affect our results of operations by, for example, reducing asset yields or spreads, or having other adverse impacts on our business.
If additional bank failures were to occur, we could face increased regulation of our industry, including increased compliance costs and limitations on our ability to pursue business opportunities; significantly higher Federal Deposit Insurance Corporation premiums or additional special assessments; adverse impacts on our stock price and volatility of our Common Stock; and increased competition for deposits due to a lack of consumer confidence in regional banks.
If additional bank failures were to occur, we could face increased regulation of our industry, including increased compliance costs and limitations on our ability to pursue business opportunities; significantly higher FDIC premiums or additional special assessments; adverse impacts on our stock price and volatility of our Common Stock; and increased competition for deposits due to a lack of consumer confidence in regional banks.
Any of these parties may also attempt to fraudulently induce employees, service providers, customers, partners or other third-party users of our systems or networks to disclose confidential or sensitive information (including personal information) in order to gain access to our systems, networks or data or that of our customers, partners, or third parties with whom we interact, or to unlawfully obtain monetary benefit through misdirected or otherwise improper payment.
Any of these parties may also attempt to fraudulently induce employees, service providers, customers, partners or other third-party users of our systems or networks to disclose confidential or sensitive information (including personal information) in order to gain access to our systems, networks or data or that of our customers, partners, or third parties with whom we interact, or to unlawfully obtain monetary benefit through misdirected or otherwise improper payments or through the creation of false identifies.
Changes in trade policies by the United States or other countries, such as tariffs or retaliatory tariffs, may cause inflation which could impact the prices of products sold by our borrowers and have the potential to reduce demand for their products impacting their profitability and making it difficult for our borrowers to repay their loans.
Changes in trade policies by the United States or other countries, such as tariffs or retaliatory tariffs, may cause inflation which could impact the prices of products sold or purchased by our borrowers or the demand for their products, negatively impacting their profitability and making it difficult for our borrowers to repay their loans.
Security Ownership Risks Our ability to pay dividends is subject to limitations that may affect our ability to continue to pay dividends to shareholders. 34 The Company is a separate legal entity from the bank subsidiary and does not have significant operations of its own.
Our ability to pay dividends is subject to limitations that may affect our ability to continue to pay dividends to shareholders. The Company is a separate legal entity from the bank subsidiary and does not have significant operations of its own.
Some additional factors that may cause the price of our Common Stock to fluctuate include: • general conditions in the financial markets and real estate markets. • bank failures and the regulatory response. • macro-economic and political conditions in the U.
Some additional factors that may cause the price of our Common Stock to fluctuate include: • general conditions in the financial markets and real estate markets. • macro-economic and political conditions in the U.
At September 30, 2024, we had $2.2 billion invested in U.S. government and agency obligations, and further downgrades could affect the stability of securities issued or guaranteed by the federal government and the valuation or liquidity of our portfolio of such investment securities.
At September 30, 2025 , we had $3.5 billion invested in U.S. government and agency obligations, and further downgrades could affect the stability of securities issued or guaranteed by the federal government and the valuation or liquidity of our portfolio of such investment securities.
Due to the nature of this information, and the value it has for internal and external threat actors, we, and our third-party service providers, continue to be subject to cyber-attacks and fraud activity that attempts to gain unauthorized access, misuse information and information systems, steal information, disrupt or degrade information systems, spread malicious software, and other illegal activities.
Due to the nature of this information, and the value it has for internal and external threat actors, we, and our third-party service providers, continue to be subject to cyber-attacks and fraud activity, including through the use of rapidly evolving AI technologies, that attempts to gain unauthorized access, misuse information and information systems, steal information, disrupt or degrade information systems, spread malicious software, and other illegal activities.
These evolving laws and regulations could require changes in our implementation of AI technology and increase our compliance costs and the risk of non-compliance.
These evolving laws and regulations could require changes in our implementation of AI technology and increase our compliance costs and the risks to us of non- compliance.
If another class action lawsuit is filed or determined adversely to us, or we were to enter into a settlement agreement in connection with such a matter, we could be exposed to monetary damages, reputational harm, or subject to limits on our ability to operate our business, which could have an adverse effect on our financial condition, and operating results. 31 Our real estate lending also exposes us to the risk of environmental liabilities.
If another class action lawsuit is filed or determined adversely to us, or we were to enter into a settlement agreement in connection with such a matter, we could be exposed to monetary damages, reputational harm, or subject to limits on our ability to operate our business, which could have an adverse effect on our financial condition, and operating results.
The development and use of Artificial Intelligence (“AI”) presents risks and challenges that may adversely impact our business. We or our third-party (or fourth party) vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to our business.
We or our third-party (or fourth party) vendors, customers or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to our business.
We rely, in part, on external financing to fund our operations and the unavailability of such funding in the future could adversely impact our growth and prospects. We rely on customer deposits, advances from the FHLB and other borrowings to fund our operations.
Ultimately, competition from current and future competitors may affect our business materially and adversely. We rely, in part, on external financing to fund our operations and the unavailability of such funding in the future could adversely impact our growth and prospects. We rely on customer deposits, advances from the FHLB and other borrowings to fund our operations.
We are exposed to risks related to fraud and cyber-attacks. 23 Cybersecurity, and the continued development and enhancement of controls, processes, and practices designed to protect customer information, systems, computers, software, data, and networks from attack, damage, or unauthorized access remain a priority for the Company.
Cybersecurity, and the continued development and enhancement of controls, processes, and practices designed to protect customer information, systems, computers, software, data, and networks from attack, damage, or unauthorized access remain a priority for the Company.
If confidential customer, employee, monetary, or business information were to be mishandled or misused, we could suffer significant regulatory consequences, reputational damage, and financial loss.
Both internal and external fraud and theft are risks. If confidential customer, employee, monetary, or business information were to be mishandled or misused, we could suffer significant regulatory consequences, reputational damage, and financial loss.
Our third-party vendors have been, and may in the future be, subject to security incidents, including those caused by computer viruses, malware, ransomware, phishing attempts, social engineering, hacking or other means of unauthorized access.
These third-party vendors may themselves use other vendors to store or process our data, which further elevates our risk exposure. Our third-party vendors have been, and may in the future be, subject to security incidents, including those caused by computer viruses, malware, ransomware, phishing attempts, social engineering, hacking or other means of unauthorized access.
Unstable global economic conditions may have serious adverse consequences on our business, financial condition, and operations. The global credit and financial markets have from time-to-time experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, high rates of inflation, and uncertainty about economic stability.
The global credit and financial markets have from time-to-time experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, high rates of inflation, and uncertainty about economic stability.
If we are not able to retain or attract key employees, or if we were to suffer the loss of a significant number of employees, we could experience a disruption in our business.
We may also be subject to potentially adverse regulatory consequences. 29 If we are not able to retain or attract key employees, or if we were to suffer the loss of a significant number of employees, we could experience a disruption in our business.
However, if interest rates do not decrease, or if the Federal Reserve were to rapidly increase the target federal funds rate, the increase in rates could continue to constrain our interest rate spread and may adversely affect our business forecasts.
However, the inflationary outlook remains uncertain and if the Federal Reserve were to reverse course and rapidly increase the target federal funds rate, the increase in rates could continue to constrain our interest rate spread and may adversely affect our business forecasts.
Further, our profitability is dependent to a large extent upon net interest income, which is the difference (or “spread”) between the interest earned on loans, securities and other interest-earning assets and the interest paid on deposits, borrowings, and other interest-bearing liabilities.
Our net interest income is the difference (or “spread”) between the interest earned on loans, securities and other interest-earning assets and the interest paid on deposits, borrowings, and other interest-bearing liabilities.
In addition, the Federal Reserve is responsible for regulating the holding company. This regulatory structure is designed primarily for the protection of the deposit insurance funds and consumers and not to benefit our shareholders.
This regulatory structure is designed primarily for the protection of the deposit insurance funds and consumers and not to benefit our shareholders.
The stock markets in general have experienced substantial price and trading fluctuations. These fluctuations have resulted in volatility in the market prices of securities that often has been unrelated or disproportionate to changes in operating performance. These broad market fluctuations are expected to continue for the near future, and may adversely affect the trading price of our Common Stock.
The stock markets in general have experienced substantial price and trading fluctuations. These fluctuations have resulted in volatility in the market prices of securities that often has been unrelated or disproportionate to changes in operating performance.
Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business or the effectiveness of our security measures.
Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business or the effectiveness of our security measures. We are exposed to risks related to our operational, technological, and third-party provided technology infrastructure.
The market price for our Common Stock may be volatile. The market price of our Common Stock could fluctuate substantially in the future in response to a number of factors, including those discussed below. The market price of our Common Stock has in the past fluctuated significantly, including in 2023 as a result of the high-profile bank failures.
The market price for our Common Stock may be volatile. The market price of our Common Stock could fluctuate substantially in the future in response to a number of factors, including those discussed below.
The entry of the Bank into California presents us with different competitive conditions, and we will be required to compete for loans, deposits and customers for financial services with other commercial banks, savings and loan associations, securities and brokerage companies, mortgage companies, insurance companies, finance companies, money market funds, credit unions, fintechs, and other nonbank financial service providers in California.
The banking and financial services business in California is highly competitive and we compete for loans, deposits and customers for financial services with other commercial banks, savings and loan associations, securities and brokerage companies, mortgage companies, insurance companies, finance companies, money market funds, credit unions, fintechs, and other nonbank financial service providers.
This includes internally developed systems, internally managed systems, outsourced systems provided by third-party service providers, internet facing digital products and services, mobile technologies and the on-going operational maintenance of each service.
We rely extensively on the successful and uninterrupted functioning of information technology and telecommunications systems to conduct our business. This includes internally developed systems, internally managed systems, outsourced systems provided by third-party service providers, internet facing digital products and services, mobile technologies and the on-going operational maintenance of each service.
These activities strongly influence our rate of return on certain investments, our hedge effectiveness for mortgage servicing and our mortgage origination pipeline, as well as our costs of funds for lending and investing, all of which may adversely impact our liquidity, results of operations, financial condition and capital position.
These activities strongly influence our rate of return on certain investments, our hedge effectiveness for mortgage servicing and our mortgage origination pipeline, as well as our costs of funds for lending and investing.
The Bank was previously subject to a Consent Order from the Office of the Comptroller of the Currency (“OCC”) for its BSA program that was issued in February 2018 (the “BSA Consent Order”). The BSA Consent Order resulted in the Bank incurring significant expenses to implement an effective AML/CFT Program, including payment of a $2,500,000 civil money penalty.
The Bank has in the past been subject to a Consent Order from the Office of the Comptroller of the Currency (“OCC”) for its BSA program, which required the Bank to incur significant expenses to implement an effective AML/CFT Program, including payment of a $2,500,000 civil money penalty.
Our failure or our inability to comply with the Patriot Act and BSA statutes and regulations could result in fines or penalties, curtailment of expansion opportunities, enforcement actions, intervention or sanctions by regulators and costly litigation or expensive additional controls and systems.
Our failure or our inability to comply with the Patriot Act, BSA statutes and regulation, HMDA or other applicable regulations could have serious business, financial and reputational consequences for the Bank, and could result in enforcement actions, additional fines or penalties, curtailment of expansion opportunities, restrictions on our ability to pay dividends, intervention or sanctions by regulators and costly litigation or expensive additional controls and systems.
There may be future sales or other dilution of the Company's equity, which may adversely affect the market price of our Common Stock or depositary shares.
These broad market fluctuations are expected to continue for the near future, and may adversely affect the trading price of our Common Stock. 36 There may be future sales or other dilution of the Company's equity, which may adversely affect the market price of our Common Stock or depositary shares.
Our general business strategy may be adversely affected by any such economic downturn, volatile business environment, hostile third-party action or continued unpredictable and unstable market conditions. 26 Our allowance for credit losses ("ACL") may not be adequate to cover future loan losses, which could adversely affect our financial condition and results of operations.
Our general business strategy may be adversely affected by any such economic downturn, volatile business environment, hostile third-party action or continued unpredictable and unstable market conditions. 27 Inflationary pressures and rising prices may affect our results of operations and financial condition.
If additional financing sources are unavailable or are not available on reasonable terms, our business, financial condition and results of operations may be adversely affected.
If additional financing sources are unavailable or are not available on reasonable terms, our business, financial condition and results of operations may be adversely affected. We may not be able to continue to grow organically or through acquisitions. Historically, we have expanded through a combination of organic growth and acquisitions.
The perceived uncertainty as to the Company’s future direction resulting from activist strategies could also affect the market price and volatility of the Company’s common shares.
Such activities could interfere with the Company’s ability to execute its strategic plan and to attract and retain qualified executive leadership. The perceived uncertainty as to the Company’s future direction resulting from activist strategies could also affect the market price and volatility of the Company’s common shares.
For example, if the interest rates on interest-bearing liabilities increase at a faster pace than the interest rates on interest-earning assets, the result could be a reduction in our net interest income and with it, a reduction in earnings. The same could be true if interest rates on interest-earning assets decline faster than the rates on interest-bearing liabilities.
The same could be true if the interest rates on interest-bearing liabilities increase at a faster pace than the interest rates on interest-earning assets.
Downturns in the stock market and the market price of our stock, changes in our capital position, and changes in our regulatory standing could each have a negative impact on our ability to complete future acquisitions. Our entry into California may present increased risk that may adversely impact our business, prospects and financial condition.
Downturns in the stock market and the market price of our stock, changes in our capital position, and changes in our regulatory standing, including a “Needs to Improve” CRA rating, could each have a negative impact on our ability to complete future acquisitions.
The loss of qualified and key personnel, or an inability to continue to attract, retain and motivate key personnel could adversely affect our business and consequently impact our financial condition and results of operations. Our risk management framework may not be effective in mitigating risks and losses to us.
The loss of qualified and key personnel, or an inability to continue to attract, retain and motivate key personnel could adversely affect our business and consequently impact our financial condition and results of operations. Climate change and related legislative and regulatory initiatives may materially affect the Company’s business and results of operations.
On the other hand, decreases in interest rates, may result in a change in the mix of noninterest and interest-bearing accounts. We are unable to predict changes in interest rates, which are affected by factors beyond our control, including inflation, deflation, recession, unemployment, money supply and other changes in financial markets.
We are unable to predict changes in interest rates, which are affected by factors beyond our control, including inflation, deflation, recession, unemployment, money supply and other changes in financial markets. 24 We are exposed to risks related to fraud and cyber-attacks.
Any of these results could have a material adverse effect on our business, financial condition and results of operations. We operate in a highly regulated industry, which limits the manner and scope of our business activities. We are subject to extensive supervision, regulation and examination by the WDFI, the FDIC and the CFPB.
We operate in a highly regulated industry, which limits the manner and scope of our business activities. We are subject to extensive supervision, regulation and examination by the WDFI, the FDIC and the CFPB. In addition, the Federal Reserve is responsible for regulating the holding company.
In many instances, the Company’s products and services to customers are dependent upon third-party service providers, who provide necessary, or critical, services and support. Any disruption of such services, or an unplanned termination of a third-party license or service agreement related thereto, could adversely affect our ability to provide necessary products and services for our customers.
In many instances, the Company’s products and services to customers are dependent upon third-party service providers, who provide necessary, or critical, services and support.
In these situations, we incur costs to replace compromised cards and address fraudulent transaction activity affecting our customers, as well as potential increases to insurance premiums for policies we may maintain to cover these losses. 24 Both internal and external fraud and theft are risks.
Our customers may be the victims of phishing scams, providing cyber criminals access to their accounts, or credit or debit card information. In these situations, we incur costs to replace compromised cards and address fraudulent transaction activity affecting our customers, as well as potential increases to insurance premiums for policies we may maintain to cover these losses.
If this occurs, we may see a loss of customers, and our financial results and ability to execute on our strategic plan may be adversely impacted. We are subject to complex state and federal laws, rules, regulations and standards regarding data privacy and cybersecurity, which impact how we conduct our business.
We are subject to complex state and federal laws, rules, regulations and standards regarding data privacy and cybersecurity, which impact how we conduct our business.
The inflation experienced in 2022 and 2023 has led to increased costs to our customers, making it more difficult for them to repay their loans or other obligations increasing our credit risk. The inflationary outlook in the United States is currently uncertain.
Inflation rates remained above the FOMC’s target rate in 2025 and were above the target of 2% as of September 30, 2025. Inflation has led to increased costs for our customers, making it more difficult for them to repay their loans or other obligations and increasing our credit risk.
In the course of our business, it is necessary to foreclose and take title to real estate, which could subject us to environmental liabilities with respect to these properties. Hazardous substances or waste, contaminants, pollutants or sources thereof may be discovered on properties during our ownership or after a sale to a third party.
Our real estate lending also exposes us to the risk of environmental liabilities. In the course of our business, it is necessary to foreclose and take title to real estate, which could subject us to environmental liabilities with respect to these properties.
If the purchase price of the acquired company exceeds the fair value of the acquired net assets, the excess will be included in the 33 Company's Statement of Financial Condition as goodwill.
Impairment of goodwill may adversely impact future results of operations. Accounting standards require that we account for acquisitions using a method that could result in goodwill. If the purchase price of the acquired company exceeds the fair value of the acquired net assets, the excess will be included in the Company's Statement of Financial Condition as goodwill.
We expect to see additional volatility in the financial markets due to the uncertainty caused by the continuing global conflicts, commodity shortages and price fluctuations, recent bank failures, uncertainty over the U.S. government debt ceiling, risks of government shutdowns and changing Federal Reserve policy.
We expect to see additional volatility in the financial markets due to the uncertainty caused by the continuing global conflicts, U.S. trade policy, AI stock valuation corrections, interest rates and changing Federal Reserve policies.
We may also face class action lawsuits for, among other things, alleged violations of employment, state wage and hour and consumer protection laws. These claims could involve large monetary demands, including civil money penalties or fines imposed by government authorities, and significant defense costs.
These claims and legal actions could include supervisory or enforcement actions by our regulators, criminal proceedings by prosecutorial authorities, or civil claims by our customers, former customers, contractual counterparties, and current and former employees. We may also face class action lawsuits for, among other things, alleged violations of employment, state wage and hour and consumer protection laws.
If the Bank ever became “critically undercapitalized,” it would also be subject to the appointment of a conservator or receiver.
If the Bank ever became “critically undercapitalized,” it would also be subject to the appointment of a conservator or receiver. Changes in laws, regulations, government policy, oversight or increased enforcement activities by regulatory agencies may increase our costs and adversely affect our business and operations.
These rules also require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts.
These rules also require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts. Failure to comply with applicable laws and regulations can result in a range of sanctions and enforcement actions, including the imposition of civil money penalties, formal agreements and cease and desist orders.
Net interest income and earnings would be similarly impacted if the interest rates on interest-earning assets decline more quickly than the interest rates on interest-bearing liabilities.
For example, if interest rates on interest-earning assets decline more quickly than the rates on interest-bearing liabilities, as we saw in our recent fiscal year, the result is a reduction in our net interest income and with it, a reduction in earnings.
The Merger with Luther Burbank resulted in the Bank’s initial entry into the state of California. We have no operating experience in California, are new to this market area, and will be relying on the experience and expertise of Luther Burbank’s lending and business development officers to help with our transition. We may be unsuccessful in retaining those existing employees.
We previously had no operating experience in California, relied on the experience and expertise of Luther Burbank’s lending and business development officers to help with our transition.
Our business, reputation and ability to attract and retain employees may also be harmed if our response to climate change is perceived to be ineffective or insufficient. 28 Furthermore, the long-term impacts of climate change have and will continue to have a negative impact on our business, as well as on our customers and their business.
Moreover, climate change may adversely affect regional and local economic activity, harming our customers and the communities in which we operate. In addition, our business, reputation and ability to attract and retain employees may also be harmed if our response to climate change is perceived to be ineffective or insufficient.
If inflationary pressures do not subside, sustained higher interest rates by the Federal Reserve may be needed to tame persistent inflationary price pressures, which could push down asset prices and weaken economic activity.
The inflationary outlook in the United States points to the probability of continued, somewhat elevated inflation, with continued uncertainty around the impact of tariffs. Further reductions in interest rates by the FOMC could exacerbate inflationary pressures. If heightened inflation continues, sustained higher interest rates by the FOMC may be needed, which could push down asset prices and weaken economic activity.
We are subject to additional risk with respect to third-party vendors that process or handle personal and financial data of our customers, partners, suppliers or employees. These third-party vendors may themselves use other vendors to store or process our data, which further elevates our risk exposure.
The use of AI technologies by cybercriminals continues to be a major concern, as deep-fake technologies continue to improve, allowing bad actors to manipulate or fabricate visual and audio content and convincingly fake identities. We are subject to additional risk with respect to third-party vendors that process or handle personal and financial data of our customers, partners, suppliers or employees.
FDIC insurance premiums could increase in the future in response to similar declining economic conditions. A material increase in the Bank's FDIC premiums could have an adverse effect on its business, financial condition and results of operations. We are subject to various claims and litigation, which could result in significant expenses, losses and damage to our reputation.
We are subject to various claims and litigation, which could result in significant expenses, losses and damage to our reputation. We are, from time to time, subject to claims and proceedings related to our operations.
Material additions to the ACL, or losses in excess of the ACL, would adversely affect our results of operations and financial condition. We are exposed to risks related to our operational, technological, and third-party provided technology infrastructure. We rely extensively on the successful and uninterrupted functioning of information technology and telecommunications systems to conduct our business.
Material additions to the ACL, or losses in excess of the ACL, would adversely affect our results of operations and financial condition. Our risk management framework may not be effective in mitigating risks and losses to us.
Responding to some of these actions can be costly and time-consuming, may disrupt the Company’s operations and divert the attention of the Board of Directors and management. Such activities could interfere with the Company’s ability to execute its strategic plan and to attract and retain qualified executive leadership.
In recent months, activist investors have increasingly targeted regional banking institutions, like the Bank, including campaigns at Comerica Incorporated and Eastern Bancshares, 35 Inc. Responding to some of these actions can be costly and time-consuming, may disrupt the Company’s operations and divert the attention of the Board of Directors and management.
In November 2023, the FDIC approved a final rule to impose a special assessment to recover the losses to the deposit insurance fund resulting from the closures of Silicon Valley Bank and Signature Bank.
The deposits of the Bank are insured by the FDIC up to legal limits and, accordingly, subjected to the payment of FDIC deposit insurance assessments, which are determined in accordance with a defined calculation. The FDIC imposed a special assessment to recover the losses in connection with the receiverships of Silicon Valley Bank and Signature Bank.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private 29 class action litigation. Any of these actions could have a material adverse effect on our business, financial condition and results of operations.
The occurrence of any of these natural disasters could negatively impact our performance by disrupting our operations or the operations of our customers, which could have a material adverse effect on our financial condition, results of operations, and cash flows.
Removed
Significant increases in market interest rates on loans, or the perception that an increase may occur, could adversely affect both our ability to originate new loans and our ability to grow. Beginning early in 2022, in response to growing signs of inflation, the Federal Reserve Bank increased interest rates rapidly, causing the federal funds rate to reach a 22-year high.
Added
Our earnings and cash flows are largely dependent upon our net interest income, which is significantly affected by interest rates. Interest rates are highly sensitive to factors beyond our control, such as general economic conditions and policies set by governmental and regulatory bodies.
Removed
Although the FRB reduced its benchmark rates in September 2024, the inflationary outlook in the United States is currently uncertain.
Added
We principally manage interest rate risk by managing our volume and mix of our earning assets and funding liabilities. If we are unable to manage this risk effectively, our business, financial condition and results of operations could be materially affected.
Removed
As a result of the interest rate increases experienced in 2022 and 2023, our interest expense on both deposits and borrowings increased significantly.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+0 added−0 removed10 unchanged
Biggest changeWe employ a defense in depth strategy that incorporates preventive, detective, and administrative safeguards including, but not limited to, advanced anti-malware and firewall technologies, anti-phishing and web filtering controls, robust patch management and vulnerability management processes, configuration hardening, participation with FS-ISAC (Financial Services Information Sharing and Analysis Center) for sharing and consuming threat information, and we perform regular security testing to evaluate our defenses against real-world threats.
Biggest changeWe employ a defense in depth strategy that incorporates preventive, detective, and administrative safeguards including, but not limited to, advanced anti-malware and firewall technologies, anti-phishing and web filtering controls, robust patch management and vulnerability management processes, configuration hardening, participation 37 with the Financial Services Information Sharing and Analysis Center (FS-ISAC) for sharing and consuming threat information, and we perform regular security testing to evaluate our defenses against real-world threats.
We partner with the Cybersecurity and Infrastructure Security Agency (CISA), under the Department of Homeland Security, to conduct regular vulnerability scanning against our public facing assets, and on a recurring basis we partner with outside firms to conduct thorough security assessments against our external and internal environment. Results of those assessments are further evaluated, and remediation activity is prioritized.
We partner with the Cybersecurity and Infrastructure Security Agency (CISA), under the Department of Homeland Security (DHS), to conduct regular vulnerability scanning against our public facing assets, and on a recurring basis we partner with outside firms to conduct thorough security assessments against our external and internal environment. Results of those assessments are further evaluated, and remediation activity is prioritized.
Additionally, Board committee members are encouraged to engage in ongoing, informal conversations with management regarding cybersecurity news and updates to our risk management and strategy initiatives. Material cybersecurity risks are also reviewed during Board discussions on key topics such as enterprise risk management, operational budgeting, business continuity planning, mergers and acquisitions, and brand management.
Additionally, Board committee members are encouraged to engage in ongoing, informal conversations with management regarding cybersecurity news and updates to our risk management and strategy initiatives . Material cybersecurity 38 risks are also reviewed during Board discussions on key topics such as enterprise risk management, operational budgeting, business continuity planning, mergers and acquisitions, and brand management.
While cybersecurity risks have the potential to materially affect the Company’s business, 37 financial condition, and results of operations, the Company does not believe that risks from cybersecurity threats or attacks, including as a result of any previous cybersecurity incidents, have materially affected the Company, including our business strategy, results of operations or financial condition.
While cybersecurity risks have the potential to materially affect the Company’s business, financial condition, and results of operations, the Company does not believe that risks from cybersecurity threats or attacks, including as a result of any previous cybersecurity incidents, have materially affected the Company, including our business strategy, results of operations or financial condition.
These members of management are responsible for overseeing and monitoring the prevention, mitigation, detection, and remediation of cybersecurity incidents as part of their involvement in the cybersecurity risk management and strategy processes, including the execution of our incident response plan. 38
These members of management are responsible for overseeing and monitoring the prevention, mitigation, detection, and remediation of cybersecurity incidents as part of their involvement in the cybersecurity risk management and strategy processes, including the execution of our incident response plan .
We have an extensive information security training program that aims to regularly educate our colleagues on current best practices on handling sensitive information and expectations for protecting the organization and our clients. All employees complete mandatory cybersecurity training on at least a quarterly basis, including how to identify phishing attacks.
We have an extensive information security training program that aims to regularly educate our colleagues on current best practices on handling sensitive information and expectations for protecting the organization and our customers. All employees complete mandatory cybersecurity training on at least a quarterly basis, including how to identify phishing attacks.
On a quarterly basis, the Board committees receive a comprehensive update from management on our cybersecurity risk management strategy. This includes information on emerging threats, the company’s cybersecurity posture, progress toward risk mitigation goals, significant cybersecurity incidents or developments, and the steps management has taken to address these risks.
On a quarterly basis, the Board committees receive a comprehensive update from management on our cybersecurity risk management program. This includes information on emerging threats, the company’s cybersecurity posture, progress toward risk mitigation goals, significant cybersecurity incidents or developments, and the steps management has taken to address these risks.
Three individuals on the Board of Directors have deep technology expertise, while one of those individuals is responsible for leading cloud security at a Fortune 50 technology company.
Four individuals on the Board of Directors have deep technology expertise, while one of those individuals is responsible for leading cloud security at a Fortune 50 technology company.
During these sessions, the Board committees typically review materials detailing current and potential risks, as well as the company’s capacity to mitigate those risks. The committee also engages in discussions with our Chief Information Security Officer and Chief Information Officer about these matters.
During these sessions, the Board committees typically review materials detailing current and potential risks, as well as the company’s capacity to mitigate those risks. The committee members also engage in discussions with our Chief Information Security Officer and Chief Information Officer about these matters.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed7 unchanged
Biggest changePeriod Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs July 1, 2024 to July 31, 2024 1,551 $ 34.69 — 11,501,005 August 1, 2024 to August 31, 2024 3,016 33.80 — 11,501,005 September 1, 2024 to September 30, 2024 2,607 36.08 — 11,501,005 Total 7,174 $ 34.82 — 11,501,005 40 Performance Graphs The following graphs compare the cumulative total return to WaFd shareholders (stock price appreciation plus reinvested dividends) to the cumulative total return of the Nasdaq Stock Market Index (U.S.
Biggest changePeriod Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs July 1, 2025 to July 31, 2025 455,989 $ 29.52 454,561 8,674,927 August 1, 2025 to August 31, 2025 512,971 29.94 512,273 8,162,654 September 1, 2025 to September 30, 2025 693 31.12 — 8,162,654 Total 969,653 $ 29.74 966,834 8,162,654 40 Performance Graphs The following graphs compare the cumulative total return to WaFd shareholders (stock price appreciation plus reinvested dividends) to the cumulative total return of the Nasdaq Stock Market Index (U.S.
The graphs assume that $100 was invested on September 30, 2019, and November 9, 1982, respectively, in WaFd Common Stock, the Nasdaq Stock Market Index and the Nasdaq Financial Stocks Index, and that all dividends were reinvested.
The graphs assume that $100 was invested on September 30, 2020, and November 9, 1982, respectively, in WaFd Common Stock, the Nasdaq Stock Market Index and the Nasdaq Financial Stocks Index, and that all dividends were reinvested.
Companies) and the KBW Bank Index for the five year period ended September 30, 2024, and since WaFd first became a publicly traded company on November 9, 1982, respectively.
Companies) and the KBW Bank Index for the five year period ended September 30, 2025 , and since WaFd first became a publicly traded company on November 9, 1982, respectively.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Common Stock The Company’s Common Stock is traded on the Nasdaq Global Select Market of The Nasdaq Stock Market LLC under the symbol “WAFD.” At September 30, 2024, the number of shareholders of record was 994.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Common Stock The Company’s Common Stock is traded on the Nasdaq Global Select Market of The Nasdaq Stock Market LLC under the symbol “WAFD.” At September 30, 2025 , the number of shareholders of record was 928 .
The following table shows the share repurchases made for the three months ended September 30, 2024.
The following table shows share repurchases made for the three months ended September 30, 2025 .
Issuer Purchases of Equity Securities The Company’s stock repurchase program was publicly announced by the Board of Directors on February 3, 1995 and has no expiration date. Under this program, a total of 86,956,264 shares of the Company’s Common Stock have been authorized for repurchase.
Issuer Purchases of Equity Securities The Company’s stock repurchase program was publicly announced by the Board of Directors on February 3, 1995, amended most recently in May 2024, restated in December 2024, and has no expiration date. Under this program, a total of 86,956,264 shares of the Company’s Common Stock have been authorized for repurchase.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

74 edited+21 added−23 removed30 unchanged
Biggest changeSeptember 30, 2024 September 30, 2023 Change ($ in thousands) ($ in thousands) $ % Gross loans by category Commercial loans Multi-family $ 4,658,119 20.8 % $ 2,907,086 14.8 % $ 1,751,033 60.2% Commercial real estate 3,757,040 16.8 3,344,959 17.0 412,081 12.3 Commercial & industrial 2,337,139 10.5 2,321,717 11.8 15,422 0.7 Construction 2,174,254 9.7 3,318,994 16.9 (1,144,740) (34.5) Land - acquisition & development 200,713 0.9 201,538 1.0 (825) (0.4) Total commercial loans 13,127,265 58.7 12,094,294 61.6 1,032,971 8.5 Consumer loans Single-family residential 8,399,030 37.6 6,451,270 32.8 1,947,760 30.2 Construction - custom 384,161 1.7 672,643 3.4 (288,482) (42.9) Land - consumer lot loans 108,791 0.5 125,723 0.6 (16,932) (13.5) HELOC 266,151 1.2 234,410 1.2 31,741 13.5 Consumer 73,998 0.3 70,164 0.4 3,834 5.5 Total consumer loans 9,232,131 41.3 7,554,210 38.4 1,677,921 22.2 Total gross loans 22,359,396 100 % 19,648,504 100 % 2,710,892 13.8% Less: Allowance for loan losses 203,753 177,207 26,546 15.0 Loans in process 1,009,798 1,895,940 (886,142) (46.7) Net deferred fees, costs and discounts 229,491 98,807 130,684 132.3 Total loan contra accounts 1,443,042 2,171,954 (728,912) (33.6) Net loans $ 20,916,354 $ 17,476,550 $ 3,439,804 19.7% 50 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table summarizes the Bank’s loan portfolio balances, at amortized cost, due for the periods indicated based on contractual terms to maturity or repricing.
Biggest changeThe following table presents loan balances by category and the year-over-year change. 49 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS September 30, 2025 September 30, 2024 Change ($ in thousands) ($ in thousands) $ % Gross loans by category Commercial loans Multi-family $ 4,718,480 22.2 % $ 4,658,119 20.8 % $ 60,361 1.3% Commercial real estate 3,604,600 16.9 3,757,040 16.8 (152,440) (4.1) Commercial & industrial 2,392,685 11.2 2,337,139 10.5 55,546 2.4 Construction 1,756,890 8.3 2,174,254 9.7 (417,364) (19.2) Land - acquisition & development 179,099 0.8 200,713 0.9 (21,614) (10.8) Total commercial loans 12,651,754 59.5 13,127,265 58.7 (475,511) (3.6) Consumer loans Single-family residential 8,053,771 37.9 8,399,030 37.6 (345,259) (4.1) Construction - custom 150,237 0.7 384,161 1.7 (233,924) (60.9) Land - consumer lot loans 89,298 0.4 108,791 0.5 (19,493) (17.9) HELOC 267,871 1.3 266,151 1.2 1,720 0.6 Consumer 61,461 0.3 73,998 0.3 (12,537) (16.9) Total consumer loans 8,622,638 40.5 9,232,131 41.3 (609,493) (6.6) Total gross loans 21,274,392 100 % 22,359,396 100 % (1,085,004) (4.9)% Less: Allowance for loan losses 199,720 203,753 (4,033) (2.0) Loans in process 773,606 1,009,798 (236,192) (23.4) Net deferred fees, costs and discounts 212,448 229,491 (17,043) (7.4) Total loan contra accounts 1,185,774 1,443,042 (257,268) (17.8) Net loans $ 20,088,618 $ 20,916,354 $ (827,736) (4.0)% The following table summarizes the Bank’s loan portfolio balances, at amortized cost, due for the periods indicated based on contractual terms to maturity or repricing.
Business Combinations. The Company applies the acquisition method of accounting for business combinations. Under the acquisition method, the acquiring entity recognizes the assets acquired and liabilities assumed at their acquisition date fair values. Management utilizes prevailing valuation techniques appropriate for the asset or liability being measured in determining these fair values.
The Company applies the acquisition method of accounting for business combinations. Under the acquisition method, the acquiring entity recognizes the assets acquired and liabilities assumed at their acquisition date fair values. Management utilizes prevailing valuation techniques appropriate for the asset or liability being measured in determining these fair values.
These securities carry the explicit and/or implicit guarantee of the U.S. government and have a long history of zero credit loss. The remaining securities are issued by highly-rated municipalities or corporate borrowers. The Company does not believe that any of its AFS debt securities have credit loss impairment as of September 30, 2024, therefore, no allowance was recorded.
These securities carry the explicit and/or implicit guarantee of the U.S. government and have a long history of zero credit loss. The remaining securities are issued by highly-rated municipalities or corporate borrowers. The Company does not believe that any of its AFS debt securities have credit loss impairment as of September 30, 2025 , therefore, no allowance was recorded.
Experience during recent years has indicated that, because of prepayments in connection with refinancing and sales of property, residential loans typically have a weighted average life of approximately eight years. 51 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following tables provide information regarding loans receivable by loan class and geography.
Experience during recent years has indicated that, because of prepayments in connection with refinancing and sales of property, residential loans typically have a weighted average life of approximately eight years. 50 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following tables provide information regarding loans receivable by loan class and geography.
While the Company believes the judgments and assumptions used in the goodwill impairment test are reasonable, different assumptions or changes in general industry, market and macro-economic conditions could change the estimated fair values and, therefore, future impairment charges could be required, which could be material to the consolidated financial statements.
While the Company believes the judgments and assumptions used in the goodwill impairment test are reasonable, different assumptions or changes in general industry, market and macro-economic conditions could change the estimated fair values and, therefore, future impairment charges could be required, which could be material to the consolidated financial statements. Business Combinations.
Based on the results of the annual quantitative evaluation for 2024, the fair value of our single reporting unit exceeded its respective carrying value and did not result in impairment for the reporting unit. The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value.
Based on the results of the annual quantitative evaluation for 2025 , the fair value of our single reporting unit exceeded its respective carrying value and did not result in impairment for the reporting unit. The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value.
These securities carry the explicit and/or implicit guarantee of the U.S. government and have a long history of zero credit loss, thus the Company did not record an allowance for credit losses for HTM securities as of September 30, 2024.
These securities carry the explicit and/or implicit guarantee of the U.S. government and have a long history of zero credit loss, thus the Company did not record an allowance for credit losses for HTM securities as of September 30, 2025 .
(2) Represents the allowance for each respective loan class as a % of loans receivable for that same loan class. The underlying commercial & industrial loan balances for September 30, 2023, 2022, 2021, 2020 include PPP loans for which no allowance was recorded.
(2) Represents the allowance for each respective loan class as a % of loans receivable for that same loan class. The underlying commercial & industrial loan balances for September 30, 2023, 2022 and 2021 include PPP loans for which no allowance was recorded.
(3) This does not include a reserve for unfunded commitments of $21,500,000, $24,500,000, $32,500,000, $27,500,000 and $25,000,000 as of September 30, 2024, 2023, 2022, 2021 and 2020, respectively. 46 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ASSET QUALITY Modifications to Borrowers Experiencing Financial Difficulty.
(3) This does not include a reserve for unfunded commitments of $21,500,000 , $21,500,000 , $24,500,000 , $32,500,000 and $27,500,000 as of September 30, 2025 , 2024 , 2023 , 2022 and 2021 , respectively. 46 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ASSET QUALITY Modifications to Borrowers Experiencing Financial Difficulty.
Management uses various valuation methodologies to estimate the fair value of acquired assets and liabilities which often involve a significant degree of judgement.
Management uses various valuation methodologies to estimate the fair value of acquired assets and liabilities which often involve a significant degree of judgment.
Early withdrawal penalty fee income for the years ended 2024, 2023 and 2022 amounted to $1,082,000, $1,618,000 and $267,000, respectively. For additional details on customer accounts, including uninsured deposits, see Note K to the Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” of this report.
Early withdrawal penalty fee income for the years ended 2025 , 2024 and 2023 amounted to $1,230,000 , $1,082,000 and $1,618,000 , respectively. For additional details on customer accounts, including uninsured deposits, see Note K to the Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” of this report.
September 30, 2024 2023 Change Washington 27.3 % 31.0 % (3.7) Oregon 11.7 13.3 (1.6) Arizona 11.0 13.9 (2.9) Utah 9.9 11.0 (1.1) Texas 11.8 13.6 (1.8) New Mexico 3.6 4.2 (0.6) Idaho 4.3 5.1 (0.8) Nevada 3.7 4.1 (0.4) California 14.4 1.5 12.9 Other (1) 2.3 2.3 — 100 % 100 % (1) Includes loans from outside of our nine state footprint.
September 30, 2025 2024 Change Washington 27.6 % 27.3 % 0.3 California 14.0 14.4 (0.4) Oregon 12.2 11.7 0.5 Arizona 11.3 11.0 0.3 Texas 11.4 11.8 (0.4) Utah 9.4 9.9 (0.5) New Mexico 3.9 3.6 0.3 Idaho 4.5 4.3 0.2 Nevada 4.0 3.7 0.3 Other (1) 1.7 2.3 (0.6) 100 % 100 % (1) Includes loans from outside of our nine state footprint.
The Bank would have recognized interest income of $3,081,000 for the same period had these loans performed according to their original contract terms. The recognized interest income may include more than twelve months of interest for some of the non-accrual loans that were brought current or paid off.
The Bank would have recognized interest income of $4,591,000 for the same period had these loans performed according to their original contract terms. The recognized interest income may include more than twelve months of interest for some of the non-accrual loans that were brought current or paid off.
These PPP loan balances were $1,000,000, $10,000,000, $312,000,000 and $745,000,000 as of September 30, 2023, 2022, 2021 and 2020 respectively.
These PPP loan balances were $1,000,000, $10,000,000 and $312,000,000 as of September 30, 2023, 2022 and 2021 respectively.
Management believes the Company's strong net worth position allows it to manage balance sheet risk and provide the capital support needed for controlled growth in a regulated environment.
Management believes the Company's strong equity position allows it to manage balance sheet risk and provide the capital support needed for controlled growth in a regulated environment.
This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
This section of this Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024 .
(2) Represents contractual maturities of FHLB advances and FRB borrowings. Taking into account cash flow hedges, the weighted average effective maturity of FHLB advances at September 30, 2024 is 2.34 years. These obligations are included in the Consolidated Statements of Financial Condition. The payment amounts of the operating lease obligations represent those amounts contractually due. 58
(2) Represents contractual maturities of FHLB advances and FRB borrowings. Taking into account cash flow hedges, the weighted average effective maturity of FHLB advances at September 30, 2025 is 2.19 years . These obligations are included in the Consolidated Statements of Financial Condition. The payment amounts of the operating lease obligations represent those amounts contractually due. 56
In addition to the non-accrual loans reflected in the above table, the Bank had $356,893,000 of loans that were less than 90 days delinquent at September 30, 2024 but were classified as substandard for one or more reasons.
In addition to the non-accrual loans reflected in the above table, the Bank had $505,815,000 of loans that were less than 90 days delinquent at September 30, 2025 but were classified as substandard for one or more reasons.
The number of staff, including part-time employees on a full-time equivalent basis, was 2,208 and 2,120 at September 30, 2024 and 2023, respectively. Total operating expense for the years ended September 30, 2024, and 2023 were 1.71% and 1.74%, respectively, of average assets.
The number of staff, including part-time employees on a full-time equivalent basis, was 1,979 and 2,208 at September 30, 2025 and 2024 , respectively. Total operating expense for the years ended September 30, 2025 and 2024 were 1.58% and 1.71% , respectively, of average assets.
For the year ended September 30, 2024, the Company returned 50.7% of net income to shareholders in the form of cash dividends and share repurchases as compared to 36.6% for the year ended September 30, 2023.
For the year ended September 30, 2025 , the Company returned 82.5% of net income to shareholders in the form of cash dividends and share repurchases as compared to 50.7% for the year ended September 30, 2024 .
Twelve Months Ended September 30, 2024 2023 2022 2021 2020 (In thousands) Beginning balance $ 177,207 $ 172,808 $ 171,300 $ 166,955 $ 131,534 Charge-offs: Commercial loans Multi-Family — — — — — Commercial Real Estate 203 — 529 — 111 Commercial & Industrial Loans 2,611 45,856 1,202 31 4,196 Construction — — — — — Land – Acquisition & Development 149 — 11 2 11 Total commercial loans 2,963 45,856 1,742 33 4,318 Consumer loans Single-Family Residential 144 34 — 106 131 Construction – Custom — — — — — Land – Consumer Lot Loans — — 27 — 237 HELOC — — — — — Consumer 518 580 370 286 1,069 Total consumer loans 662 614 397 392 1,437 3,625 46,470 2,139 425 5,755 Recoveries: Commercial loans Multi-Family — — — — 498 Commercial Real Estate 4 103 984 2,789 2,447 Commercial & Industrial Loans 1,069 93 73 92 443 Construction — — 2,179 — 188 Land – Acquisition & Development 105 78 70 622 2,070 Total commercial loans 1,178 274 3,306 3,503 5,646 Consumer loans Single-Family Residential 381 568 1,002 2,026 1,394 Construction – Custom 1 — — — — Land – Consumer Lot Loans 58 23 48 168 639 HELOC 4 2 351 52 95 Consumer 647 502 940 1,021 1,252 Total consumer loans 1,091 1,095 2,341 3,267 3,380 2,269 1,369 5,647 6,770 9,026 Net charge-offs (recoveries) 1,356 45,101 (3,508) (6,345) (3,271) ASC 326 Adoption Impact — — — — 17,750 Provision (release) for loan losses and transfers 27,902 49,500 (2,000) (2,000) 14,400 Ending balance (1) $ 203,753 $ 177,207 $ 172,808 $ 171,300 $ 166,955 Ratio of net charge-offs (recoveries) to average loans outstanding 0.01 % 0.26 % (0.02) % (0.05) % (0.03) % (1) This does not include a reserve for unfunded commitments of $21,500,000, $24,500,000, $32,500,000, $27,500,000 and $25,000,000 as of September 30, 2024, 2023, 2022, 2021 and 2020 respectively. 44 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table shows changes in the Company's allowance for credit losses since the prior year.
Twelve Months Ended September 30, 2025 2024 2023 2022 2021 (In thousands) Beginning balance $ 203,753 $ 177,207 $ 172,808 $ 171,300 $ 166,955 Charge-offs: Commercial loans Multi-Family 555 — — — — Commercial Real Estate 9,652 203 — 529 — Commercial & Industrial Loans 1,291 2,611 45,856 1,202 31 Construction — — — — — Land – Acquisition & Development — 149 — 11 2 Total commercial loans 11,498 2,963 45,856 1,742 33 Consumer loans Single-Family Residential 338 144 34 — 106 Construction – Custom — — — — — Land – Consumer Lot Loans — — — 27 — HELOC — — — — — Consumer 1,334 518 580 370 286 Total consumer loans 1,672 662 614 397 392 13,170 3,625 46,470 2,139 425 Recoveries: Commercial loans Multi-Family — — — — — Commercial Real Estate 169 4 103 984 2,789 Commercial & Industrial Loans 252 1,069 93 73 92 Construction — — — 2,179 — Land – Acquisition & Development 33 105 78 70 622 Total commercial loans 454 1,178 274 3,306 3,503 Consumer loans Single-Family Residential 572 381 568 1,002 2,026 Construction – Custom 4 1 — — — Land – Consumer Lot Loans — 58 23 48 168 HELOC 3 4 2 351 52 Consumer 354 647 502 940 1,021 Total consumer loans 933 1,091 1,095 2,341 3,267 1,387 2,269 1,369 5,647 6,770 Net charge-offs (recoveries) 11,783 1,356 45,101 (3,508) (6,345) ASC 326 Adoption Impact — — — — — Provision (release) for loan losses and transfers 7,750 27,902 49,500 (2,000) (2,000) Ending balance (1) $ 199,720 $ 203,753 $ 177,207 $ 172,808 $ 171,300 Ratio of net charge-offs (recoveries) to average loans outstanding 0.06 % 0.01 % 0.26 % (0.02) % (0.05) % (1) This does not include a reserve for unfunded commitments of $21,500,000 , $21,500,000 , $24,500,000 , $32,500,000 and $27,500,000 as of September 30, 2025 , 2024 , 2023 , 2022 and 2021 respectively. 44 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table shows changes in the Company's allowance for credit losses since the prior year.
The ratio of the allowance for loan losses to non-accrual loans decreased to 293% as of September 30, 2024, from 351% as of September 30, 2023. 48 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CHANGES IN FINANCIAL CONDITION Cash and cash equivalents : Cash and cash equivalents increased to $2,381,102,000 at September 30, 2024, as compared to $980,649,000 at September 30, 2023.
The ratio of the allowance for loan losses to non-accrual loans decreased to 155% as of September 30, 2025 , from 293% as of September 30, 2024 . 48 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CHANGES IN FINANCIAL CONDITION Cash and cash equivalents : Cash and cash equivalents decreased to $657,310,000 at September 30, 2025 , as compared to $2,381,102,000 at September 30, 2024 .
September 30, 2024 2023 2022 2021 2020 Allowance Loans to Total Loans (1) Coverage Ratio (2) Allowance Loans to Total Loans (1) Coverage Ratio (2) Allowance Loans to Total Loans (1) Coverage Ratio (2) Allowance Loans to Total Loans (1) Coverage Ratio (2) Allowance Loans to Total Loans (1) Coverage Ratio (2) ($ in thousands) Commercial loans Multi-family $ 25,248 21.7 % 0.6 % $ 13,155 16.4 % 0.5 % $ 12,013 16.2 % 0.5 % $ 16,949 16.3 % 0.8 % $ 13,853 11.8 % 0.9 % Commercial real estate 39,210 17.7 1.1 28,842 18.8 0.9 25,814 19.1 0.8 23,437 17.4 1.0 22,516 14.4 1.2 Commercial & industrial 58,748 10.9 2.6 58,773 12.9 2.6 57,210 14.2 2.5 45,957 16.3 2.0 38,665 16.5 1.8 Construction 22,267 6.7 1.6 29,408 10.4 1.6 26,161 8.7 1.9 25,585 7.9 2.3 24,156 10.5 1.8 Land – acquisition & development 7,900 0.7 5.2 7,016 0.9 4.7 12,278 1.3 5.8 13,447 1.3 7.5 10,733 1.2 7.0 Total commercial loans 153,373 137,194 133,476 125,375 109,923 Consumer loans Single-family residential 40,523 39.4 0.5 28,029 36.4 0.4 25,518 35.4 0.4 30,978 35.5 0.6 45,186 40.8 0.9 Construction – custom 1,427 0.9 0.8 2,781 1.8 0.9 3,410 2.4 0.9 4,907 2.5 1.4 3,555 2.3 1.2 Land – consumer lot loans 2,564 0.5 2.4 3,512 0.7 2.9 5,047 0.9 3.4 4,939 1.0 3.4 2,729 0.8 2.7 HELOC 3,049 1.3 1.1 2,859 1.3 1.2 2,482 1.3 1.2 2,390 1.2 1.5 2,571 1.1 1.8 Consumer 2,817 0.3 4.0 2,832 0.4 4.2 2,875 0.5 4.0 2,711 0.6 3.2 2,991 0.6 3.6 Total consumer loans 50,380 40,013 39,332 45,925 57,032 Total allowance for loan losses (3) $ 203,753 100 % $ 177,207 100 % $ 172,808 100 % $ 171,300 100 % $ 166,955 100 % ___________________ (1) Represents the loans receivable for each respective loan class as a % of total loans receivable.
September 30, 2025 2024 2023 2022 2021 Allowance Loans to Total Loans (1) Coverage Ratio Allowance Loans to Total Loans (1) Coverage Ratio Allowance Loans to Total Loans (1) Coverage Ratio (2) Allowance Loans to Total Loans (1) Coverage Ratio (2) Allowance Loans to Total Loans (1) Coverage Ratio (2) ($ in thousands) Commercial loans Multi-family $ 25,953 22.9 % 0.6 % $ 25,248 21.7 % 0.6 % $ 13,155 16.4 % 0.5 % $ 12,013 16.2 % 0.5 % $ 16,949 16.3 % 0.8 % Commercial real estate 41,988 17.7 1.2 39,210 17.7 1.1 28,842 18.8 0.9 25,814 19.1 0.8 23,437 17.4 1.0 Commercial & industrial 59,163 11.6 2.5 58,748 10.9 2.6 58,773 12.9 2.6 57,210 14.2 2.5 45,957 16.3 2.0 Construction 18,136 5.4 1.7 22,267 6.7 1.6 29,408 10.4 1.6 26,161 8.7 1.9 25,585 7.9 2.3 Land – acquisition & development 6,894 0.7 5.2 7,900 0.7 5.2 7,016 0.9 4.7 12,278 1.3 5.8 13,447 1.3 7.5 Total commercial loans 152,134 153,373 137,194 133,476 125,375 Consumer loans Single-family residential 38,880 39.3 0.5 40,523 39.4 0.5 28,029 36.4 0.4 25,518 35.4 0.4 30,978 35.5 0.6 Construction – custom 610 0.4 0.8 1,427 0.9 0.8 2,781 1.8 0.9 3,410 2.4 0.9 4,907 2.5 1.4 Land – consumer lot loans 2,104 0.4 2.4 2,564 0.5 2.4 3,512 0.7 2.9 5,047 0.9 3.4 4,939 1.0 3.4 HELOC 3,069 1.3 1.1 3,049 1.3 1.1 2,859 1.3 1.2 2,482 1.3 1.2 2,390 1.2 1.5 Consumer 2,923 0.3 5.0 2,817 0.3 4.0 2,832 0.4 4.2 2,875 0.5 4.0 2,711 0.6 3.2 Total consumer loans 47,586 50,380 40,013 39,332 45,925 Total allowance for loan losses (3) $ 199,720 100 % $ 203,753 100 % $ 177,207 100 % $ 172,808 100 % $ 171,300 100 % ___________________ (1) Represents the loans receivable for each respective loan class as a % of total loans receivable.
During 2024, the Bank sold real estate owned properties for total net proceeds of $6,802,000. The majority of REO properties are former bank premises that are expected to be sold.
During 2025 , the Bank sold real estate owned properties for total net proceeds of $2,865,000 . The majority of REO properties are former bank premises that are expected to be sold.
The Bank also has a credit line with the FHLB - SF in support of LBC borrowings from the FHLB - SF, but the Bank is unable to take down new advances against this line.
The Bank also has a credit line with the FHLB - SF in support of LBC borrowings from the FHLB - SF, but the Bank is unable to take down new advances against this line. The FHLB - SF credit line is secured by a line-item pledge of mortgage backed securities.
September 30, 2024 2023 2022 2021 2020 (In thousands) Commercial loans Multi-family 18,743 5,127 5,912 475 — Commercial real estate 26,362 23,435 4,691 8,038 3,771 Commercial & industrial — 6,082 5,693 365 329 Construction 1,120 — — 505 1,669 Land – acquisition & development 74 — — 2,340 — Total commercial loans 46,299 34,644 16,296 11,723 5,769 Consumer loans Single-family residential 21,488 14,918 17,450 19,320 22,431 Construction – custom 848 88 435 — — Land – consumer lot loans — 9 84 359 243 HELOC 596 736 233 287 553 Consumer 310 27 36 60 60 Total consumer loans 23,242 15,778 18,238 20,026 23,287 Total non-accrual loans (1) 69,541 50,422 34,534 31,749 29,056 Real estate owned 4,567 4,149 6,667 8,204 4,966 Other property owned 3,310 3,353 3,353 3,672 3,673 Total non-performing assets $ 77,418 $ 57,924 $ 44,554 $ 43,625 $ 37,695 Total non-performing assets to total assets 0.28 % 0.26 % 0.21 % 0.22 % 0.20 % (1) For the year ended September 30, 2024, the Bank recognized $1,775,000 in interest income on cash payments received from borrowers on non-accrual loans.
September 30, 2025 2024 2023 2022 2021 (In thousands) Commercial loans Multi-family 19,121 18,743 5,127 5,912 475 Commercial real estate 69,972 26,362 23,435 4,691 8,038 Commercial & industrial 11,047 — 6,082 5,693 365 Construction 3,400 1,120 — — 505 Land – acquisition & development — 74 — — 2,340 Total commercial loans 103,540 46,299 34,644 16,296 11,723 Consumer loans Single-family residential 23,741 21,488 14,918 17,450 19,320 Construction – custom 760 848 88 435 — Land – consumer lot loans 23 — 9 84 359 HELOC 412 596 736 233 287 Consumer 152 310 27 36 60 Total consumer loans 25,088 23,242 15,778 18,238 20,026 Total non-accrual loans (1) 128,628 69,541 50,422 34,534 31,749 Real estate owned 11,084 4,567 4,149 6,667 8,204 Other property owned 3,310 3,310 3,353 3,353 3,672 Total non-performing assets $ 143,022 $ 77,418 $ 57,924 $ 44,554 $ 43,625 Total non-performing assets to total assets 0.54 % 0.28 % 0.26 % 0.21 % 0.22 % (1) For the year ended September 30, 2025 , the Bank recognized $3,304,802 in interest income on cash payments received from borrowers on non-accrual loans.
Provision for Credit Losses : The Company recorded a provision for credit losses of $17,500,000 in 2024, compared to a provision of $41,500,000 for 2023.
Provision for Credit Losses : The Company recorded a provision for credit losses of $7,750,000 in 2025 , compared to a provision of $17,500,000 for 2024 .
Other property owned of $3,310,000 as of September 30, 2024 is comprised entirely of a government guarantee related to equipment obtained via a commercial loan foreclosure. As of September 30, 2024, real estate owned totaled $4,567,000, an increase of $418,000, or 10.1%, from $4,149,000 as of September 30, 2023.
Other property owned of $3,310,000 as of September 30, 2025 is comprised entirely of a government guarantee related to equipment obtained via a commercial loan foreclosure. As of September 30, 2025 , real estate owned totaled $11,084,000 , an increase of $6,517,000 , or 142.7% , from $4,567,000 as of September 30, 2024 .
The decrease is mostly due to an 21.2% decrease in pre-tax income. The effective tax rate for 2024 was 21.88% as compared to 20.81% for the year ended September 30, 2023. The Company's effective tax rate varies from the Federal statutory rate of 21% mainly due to state taxes, tax-exempt income and tax-credit investments.
The effective tax rate for 2025 was 21.95% as compared to 21.88% for the year ended September 30, 2024 . The Company's effective tax rate varies from the Federal statutory rate of 21% mainly due to state taxes, tax-exempt income and tax-credit investments.
As of September 30, 2024, the allowance of $203,753,000 is for loans that are evaluated on a pooled basis, which was comprised of $144,848,000 related to the quantitative component and $58,905,000 related to management's qualitative overlays. The fluctuations that resulted in the overall increase from the prior year can be seen in the table above.
As of September 30, 2025 , the allowance of $199,720,000 is for loans that are evaluated on a pooled basis, which was comprised of $131,652,000 related to the quantitative component and $68,068,000 related to management's qualitative overlays. The fluctuations that resulted in the overall decrease from the prior year can be seen in the table above.
In 2024, provisioning included the initial provision of $16,000,000 recorded on LBC loans acquired, as well as adjustments resulting from qualitative considerations such as prolonged and intensified borrower sensitivity to high interest rates and operating costs due to inflationary pressures. For the year ended September 30, 2024, net charge-offs were $1,356,000, compared to charge-offs of $45,101,000 in the prior year.
In 2024, provisioning included the initial provision of $16,000,000 recorded on LBC loans acquired, as well as adjustments resulting from qualitative considerations such as prolonged and intensified borrower sensitivity to high interest rates and operating costs due to inflationary pressures.
Bank Owned Life Insurance : Bank-owned life insurance increased to $267,633,000 as of September 30, 2024 from $242,919,000 as of September 30, 2023, primarily as a result of policies obtained in the Merger. The investments in bank-owned life insurance serve to assist in funding growing employee benefit costs.
Bank Owned Life Insurance : Bank-owned life insurance increased to $275,159,000 as of September 30, 2025 from $267,633,000 as of September 30, 2024 , primarily as a result of increases in the cash surrender value of the policies. The investments in bank-owned life insurance serve to assist in funding growing employee benefit costs.
In 2024, the provision included the initial provision of $16,000,000 recorded on LBC loans acquired, as well as adjustments resulting from qualitative considerations such as prolonged and intensified borrower sensitivity to high interest rates and operating costs due to inflationary pressures. For the year ended September 30, 2024, net charge-offs were $1,356,000, compared to $45,101,000 in the prior year.
In 2024 , the provision included the initial provision of $16,000,000 recorded on LBC loans acquired, as well as adjustments resulting from qualitative considerations such as prolonged and intensified borrower sensitivity to high interest rates and operating costs due to inflationary pressures.
We have determined our goodwill balance is all related to a single reporting unit and perform an annual impairment assessment on August 31st, or sooner if an impairment indicator exists.
Goodwill. Goodwill represents the excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed. We have determined our goodwill balance is all related to a single reporting unit and perform an annual impairment assessment on August 31st, or sooner if an impairment indicator exists.
As of September 30, 2024, the Company had a net unrealized loss on available-for-sale securities of $44,168,000, which is recorded net of tax within AOCI, compared to an unrealized loss of $123,519,000 as of September 30, 2023. Substantially all of the Company’s AFS debt securities are issued by U.S. government agencies or U.S. government-sponsored enterprises.
The net unrealized loss the year ended September 30, 2025 is recorded net of tax within AOCI, and is decreased compared to unrealized losses of $44,168,000 as of September 30, 2024 . Substantially all of the Company’s AFS debt securities are issued by U.S. government agencies or U.S. government-sponsored enterprises.
To ensure ample contingent liquidity the Bank participates in the FRB of San Francisco Borrower-in-Custody program which collateralizes primary credit borrowings and serves as a backstop for the FHLB - DM credit line.
Based on collateral pledged as of September 30, 2025 , the Bank had $6,647,214,000 of additional borrowing capacity at the FHLB - DM. To ensure ample contingent liquidity the Bank participates in the FRB of San Francisco Borrower-in-Custody program which collateralizes primary credit borrowings and serves as a backstop for the FHLB - DM credit line.
The change in interest income and interest expense attributable to changes in both volume and rate has been allocated proportionately to the change due to volume and the change due to rate. 55 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Twelve Months Ended September 30, 2024 vs. 2023 Increase (Decrease) Due to 2023 vs. 2022 Increase (Decrease) Due to 2022 vs. 2021 Increase (Decrease) Due to Volume Rate Total Volume Rate Total Volume Rate Total (In thousands) (In thousands) (In thousands) Interest income: Loan portfolio $ 189,770 $ 76,011 $ 265,781 $ 87,565 $ 210,911 $ 298,476 $ 74,710 $ (10,778) $ 63,932 Mortgage-backed securities 8,129 8,469 16,598 5,760 11,092 16,852 (3,101) 4,725 1,624 Investments (1) 34,219 12,157 46,376 (13,400) 74,668 61,268 (9,347) 18,540 9,193 All interest-earning assets 232,118 96,637 328,755 79,925 296,671 376,596 62,262 12,487 74,749 Interest expense: Customer accounts 75,680 219,521 295,201 570 193,622 194,192 2,170 (1,442) 728 Borrowings 38,609 24,347 62,956 38,084 48,675 86,759 (9,002) (6,457) (15,459) All interest-bearing liabilities 114,289 243,868 358,157 38,654 242,297 280,951 (6,832) (7,899) (14,731) Change in net interest income $ 117,829 $ (147,231) $ (29,402) $ 41,271 $ 54,374 $ 95,645 $ 69,094 $ 20,386 $ 89,480 (1) Includes interest on cash equivalents and dividends on stock of the FHLB of Des Moines, the FHLB of San Francisco and FRB of San Francisco.
Twelve Months Ended September 30, 2025 vs. 2024 Increase (Decrease) Due to 2024 vs. 2023 Increase (Decrease) Due to 2023 vs. 2022 Increase (Decrease) Due to Volume Rate Total Volume Rate Total Volume Rate Total (In thousands) (In thousands) (In thousands) Interest income: Loan portfolio $ 8,703 $ (54,615) $ (45,912) $ 189,770 $ 76,011 $ 265,781 $ 87,565 $ 210,911 $ 298,476 Mortgage-backed securities 37,084 6,205 43,289 8,129 8,469 16,598 5,760 11,092 16,852 Investments (1) (16,317) (13,321) (29,638) 34,219 12,157 46,376 (13,400) 74,668 61,268 All interest-earning assets 29,470 (61,731) (32,261) 232,118 96,637 328,755 79,925 296,671 376,596 Interest expense: Customer accounts 78,911 (6,638) 72,273 75,680 219,521 295,201 570 193,622 194,192 Borrowings (65,594) (32,343) (97,937) 38,609 24,347 62,956 38,084 48,675 86,759 All interest-bearing liabilities 13,317 (38,981) (25,664) 114,289 243,868 358,157 38,654 242,297 280,951 Change in net interest income $ 16,153 $ (22,750) $ (6,597) $ 117,829 $ (147,231) $ (29,402) $ 41,271 $ 54,374 $ 95,645 (1) Includes interest on cash equivalents and dividends on stock of the FHLB of Des Moines, the FHLB of San Francisco and FRB of San Francisco.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES 42 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to use judgment in making estimates and assumptions that affect the reported amounts within the consolidated financial statements. Actual results may differ from these estimates.
GAAP requires management to use judgment in making estimates and assumptions that affect the reported amounts within the consolidated financial statements. Actual results may differ from these estimates.
As of September 30, 2024, the net unrealized loss on held-to-maturity securities was $35,926,000, compared to $68,398,000 the year prior, which management attributes to the change in interest rates since acquisition. Substantially all of the Company’s HTM debt securities are issued by U.S. government agencies or U.S. government-sponsored enterprises.
There were no held-to-maturity securities sold during the year ended September 30, 2025 . As of September 30, 2025 , the net unrealized loss on held-to- maturity securities was $33,063,000 , compared to $35,926,000 the year prior. Substantially all of the Company’s HTM debt securities are issued by U.S. government agencies or U.S. government-sponsored enterprises.
Other items affecting shareholders' equity were net income of $200,041,000, the payment of $74,267,000 in Common Stock dividends, payment of $14,625,000 in preferred stock dividends, $27,069,000 of treasury stock purchases, as well as other comprehensive loss of $8,930,000. The Company paid out 41.2% of its 2024 earnings in cash dividends to common shareholders, compared with 26.6% last year.
Items affecting shareholders' equity were net income of $226,068,000 , the payment of $84,639,000 in Common Stock dividends, the payment of $14,625,000 in preferred stock dividends, $101,931,000 of treasury stock purchases, as well as other comprehensive income of $1,099,000 . The Company paid out 40.7% of its 2025 earnings in cash dividends to common shareholders, compared with 41.2% last year.
Intangible assets : The Bank's intangible assets totaled $448,425,000 at September 30, 2024 compared to $310,619,000 as of September 30, 2023. The increase is largely the result of the Merger which created $104,707,000 in Goodwill and a Core Deposit Intangible balance of $37,022,000.
Intangible assets : The Bank's intangible assets totaled $442,093,000 at September 30, 2025 compared to $448,425,000 as of September 30, 2024 . The decrease is largely the result of the amortization of the core deposit intangible balance created in the Merger.
Changes in the assumptions utilized within these valuations, including downturns in economic or business conditions, could have a significant adverse impact on the carrying value of assets which could result in impairment losses affecting the Company's financial statements as a whole. Goodwill. Goodwill represents the excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed.
Changes in the assumptions utilized within these valuations, including downturns in economic or business conditions, could have a significant adverse impact on the carrying value of assets which could result in impairment losses affecting the Company's financial statements as a whole. Select information regarding the ACL is under the "Allowance for Credit Losses" heading within this section below.
Financial Statements and Supplementary Data.” 43 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ALLOWANCE FOR CREDIT LOSSES The following table provides detail regarding the Company's allowance for credit losses.
For further details on the ACL, business combinations or goodwill, see Notes A, B, and E to the Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data.” 43 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ALLOWANCE FOR CREDIT LOSSES The following table provides detail regarding the Company's allowance for credit losses.
Rates on interest-bearing liabilities increased by 128 basis points outpacing the 46 basis points increase in the average rate on interest-earning assets. Rate/Volume Analysis The table below sets forth certain information regarding changes in interest income and interest expense of the Company for the years indicated.
This effect was partially offset by the greater increase in interest-earning assets compared to interest bearing liabilities. Average interest-bearing liabilities grew by 2.9% while average interest-earning assets grew by 3.2% . Rate/Volume Analysis The table below sets forth certain information regarding changes in interest income and interest expense of the Company for the years indicated.
September 30, 2024 Amortized Cost Weighted Average Yield ($ in thousands) Due in less than 1 year $ 49,384 4.70 % Due after 1 year through 5 years 354,344 5.12 Due after 5 years through 10 years 484,630 4.99 Due after 10 years 2,165,491 4.47 $ 3,053,849 4.63 % For further information on our investment portfolio, see Note C to the Consolidated Financial Statements in “Item 8.
September 30, 2025 Amortized Cost Weighted Average Yield ($ in thousands) Due in less than 1 year $ 21,325 4.82 % Due after 1 year through 5 years 460,375 4.25 Due after 5 years through 10 years 555,355 4.74 Due after 10 years 3,151,184 3.99 $ 4,188,239 4.12 % For further information on our investment portfolio, see Note C to the Consolidated Financial Statements in “Item 8.
Non-interest Income : Non-interest income was $60,692,000 for the year ended September 30, 2024, an increase of $8,491,000, or 16.3%, from $52,201,000 for the year ended September 30, 2023.
Non-interest Income : Non-interest income was $71,247,000 for the year ended September 30, 2025 , an increase of $10,555,000 , or 17.4% , from $60,692,000 for the year ended September 30, 2024 .
The Company recorded a provision for credit losses of $17,500,000 in 2024, compared to a provision of $41,500,000 for 2023. These amounts are net of provision and recapture related to the unfunded commitments reserve.
The Company recorded a provision for credit losses of $7,750,000 in 2025 , compared to a provision of $17,500,000 for 2024 . These amounts are net of provision and recapture related to the unfunded commitments reserve. In 2025, provisioning reflected increasing trends in charge-offs and negative migration of delinquent and nonperforming loans combined with economic concerns.
For management's review of the factors that affected our results of operations for the years ended September 30, 2023 and 2022, refer to our Annual Report on Form 10-K for the year ended September 30, 2023, which was filed with the Securities and Exchange Commission on November 17, 2023.
For management's review of the factors that affected our results of operations for the years ended September 30, 2024 and 2023 , refer to our Annual Report on Form 10-K for the year ended September 30, 2024 , which was filed with the SEC on November 20, 2024. 42 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of consolidated financial statements in conformity with U.S.
September 30, 2024 September 30, 2023 ($ in thousands) Deposit Account Balance As a % of Total Deposits Weighted Average Rate Deposit Account Balance As a % of Total Deposits Weighted Average Rate Non-interest checking $ 2,500,467 11.7 % — % $ 2,706,448 16.8 % — % Interest checking 4,486,444 21.0 2.89 3,882,715 24.2 2.28 Savings 718,560 3.4 0.23 817,547 5.1 0.21 Money market 4,111,714 19.2 2.22 3,358,603 20.9 1.48 Time deposits 9,556,785 44.7 4.58 5,305,016 33.0 3.77 Total $ 21,373,970 100 % 3.09 % $ 16,070,329 100 % 2.12 % The following table shows the geographic distribution by state for customer deposits.
September 30, 2025 September 30, 2024 ($ in thousands) Deposit Account Balance As a % of Total Deposits Weighted Average Rate Deposit Account Balance As a % of Total Deposits Weighted Average Rate Non-interest checking $ 2,567,539 12.0 % — % $ 2,500,467 11.7 % — % Interest checking 4,865,808 22.7 2.55 4,486,444 21.0 2.89 Savings 701,558 3.3 0.22 718,560 3.4 0.23 Money market 4,171,627 19.4 2.14 4,111,714 19.2 2.22 Time deposits 9,131,104 42.6 3.74 9,556,785 44.7 4.58 Total $ 21,437,636 100 % 2.60 % $ 21,373,970 100 % 3.09 % 52 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table shows the geographic distribution by state for customer deposits.
Borrowings : Total borrowings decreased to $3,267,589,000 as of September 30, 2024, as compared to $3,650,000,000 at September 30, 2023. The weighted average rate for borrowings was 3.93% as of September 30, 2024, versus 3.98% at September 30, 2023, the decrease being primarily due to higher rates on new short-term borrowings.
Borrowings : Total borrowings decreased to $1,765,604,000 as of September 30, 2025 , as compared to $3,267,589,000 at September 30, 2024 . The weighted average rate for borrowings was 2.50% as of September 30, 2025 , versus 3.93% at September 30, 2024 .
Non-performing assets increased 33.7% to $77,418,000, or 0.28% of total assets, at September 30, 2024, compared to $57,924,000, or 0.26% of total assets, at September 30, 2023. The increase was primarily a result of an increase of $19,119,000 in non-accrual loans partially offset by a $418,000 increase in real estate owned.
Non-performing assets increased 84.7% to $143,022,000 , or 0.54% of total assets, at September 30, 2025 , compared to $77,418,000 , or 0.28% of total assets, at September 30, 2024 as a result of an increase of $59,087,000 in non-accrual loans combined with a $6,517,000 increase in real estate owned.
Net Interest Income : For the year ended September 30, 2024, net interest income was $660,832,000, a decrease of $29,402,000 or 4.3% from the year ended September 30, 2023. Net interest margin was 2.69% for the year ended September 30, 2024 compared to 3.40% in the prior year.
The change was due to the factors described below. Net Interest Income : For the year ended September 30, 2025 , net interest income was $654,235,000 , a decrease of $6,597,000 or 1.0% from the year ended September 30, 2024 . Net interest margin was 2.58% for the year ended September 30, 2025 compared to 2.69% in the prior year.
If these loans were deemed non-performing, the Company's ratio of total non-performing assets and performing restructured loans as a percent of total assets would have increased to 1.55% at September 30, 2024. For a discussion of the Bank's policy for placing loans on non-accrual status, see Note A to the Consolidated Financial Statements included in Item 8 of this report.
For a discussion of the Bank's policy for placing loans on non-accrual status, see Note A to the Consolidated Financial Statements included in Item 8 of this report.
The Company's shareholders' equity at September 30, 2024, was $3,000,300,000, or 10.69% of total assets, as compared to $2,426,426,000, or 10.80% of total assets, at September 30, 2023. The Company's shareholders' equity was greatly impacted in the year by the stock issued in the Merger valued at $465,504,000.
The Company's shareholders' equity at September 30, 2025 , was $3,039,575,000 , or 11.38% of total assets, as compared to $3,000,300,000 , or 10.69% of total assets, at September 30, 2024 .
The allowance for multi-family and single-family residential loans increased largely as a result of the Merger. The allowance for both consumer and commercial construction loans decreased as projects were completed and transitioned to CRE and single-family loans which also contributed to increases.
The allowance for both commercial construction loans and land A&D loans decreased as projects were completed and paid off or transitioned to CRE. Single-family, residential construction and lot loans decreased as a result of run-off after the Bank's exit of the residential mortgage market..
Financial Statements and Supplementary Data” of this report. Loans receivable: Loans receivable, net of related contra accounts, increased $3,439,804,000, or 19.7%, to $20,916,354,000 at September 30, 2024, from $17,476,550,000 one year earlier. The increase resulted primarily from the addition of loans obtained in the Merger.
Financial Statements and Supplementary Data” of this report. Loans receivable: Loans receivable, net of related contra accounts, decreased $827,736,000 , or 4.0% , to $20,088,618,000 at September 30, 2025 , from $20,916,354,000 one year earlier.
($ in thousands) September 30, 2024 September 30, 2023 $ Change % Change Washington $ 8,528,608 39.9 % $ 7,627,674 47.5 % $ 900,934 11.8 % Oregon 2,696,243 12.6 2,820,338 17.5 (124,095) (4.4) % Arizona 1,619,101 7.6 1,635,345 10.2 (16,244) (1.0) % New Mexico 1,622,534 7.6 1,474,986 9.2 147,548 10.0 % Idaho 949,025 4.4 972,424 6.1 (23,399) (2.4) % Utah 584,001 2.7 662,192 4.1 (78,191) (11.8) % Nevada 527,704 2.5 495,794 3.1 31,910 6.4 % Texas 398,736 1.9 381,576 2.4 17,160 4.5 % California 4,448,018 20.8 — — — — % $ 21,373,970 100 % $ 16,070,329 100 % $ 855,623 5.3 % The following table sets forth, by various interest rate categories, the amount of fixed-rate time deposits that mature during the periods indicated.
($ in thousands) September 30, 2025 September 30, 2024 $ Change % Change Washington $ 8,685,124 40.5 % $ 8,528,608 39.9 % $ 156,516 1.8 % California 3,726,997 17.4 4,448,018 20.8 (721,021) (16.2) % Oregon 2,724,526 12.7 2,696,243 12.6 28,283 1.0 % Arizona 1,641,460 7.7 1,619,101 7.6 22,359 1.4 % New Mexico 1,802,886 8.4 1,622,534 7.6 180,352 11.1 % Idaho 935,047 4.4 949,025 4.4 (13,978) (1.5) % Utah 601,054 2.8 584,001 2.7 17,053 2.9 % Nevada 559,906 2.5 527,704 2.5 32,202 6.1 % Texas 760,636 3.6 398,736 1.9 361,900 90.8 % $ 21,437,636 100 % $ 21,373,970 100 % $ 63,666 0.3 % The following table sets forth, by various interest rate categories, the amount of fixed-rate time deposits that mature during the periods indicated.
Interest receivable : Interest receivable was $102,827,000 as of September 30, 2024, an increase of $15,824,000, or 18.2%, since September 30, 2023. The increase was the result of a 19.7% increase in loans receivable combined with the increase in interest rates.
Interest receivable : Interest receivable was $98,589,000 as of September 30, 2025 , a decrease of $4,238,000 , or 4.1% , since September 30, 2024 . The decrease was the result of a 4.0% decrease in loans receivable combined with the decrease in interest rates.
The balance at September 30, 2024 is comprised of $411,360,000 of goodwill and the unamortized balance of the core deposit and other intangibles of $37,065,000. Customer accounts : As of September 30, 2024, customer deposits totaled $21,373,970,000 compared with $16,070,329,000 at September 30, 2023, a $5,303,641,000, or 33.0%, increase largely due to deposits obtained in the Merger.
The balance at September 30, 2025 is comprised of $414,722,000 of goodwill and the unamortized balance of the core deposit and other intangibles of $27,371,000 . Customer accounts : As of September 30, 2025 , customer deposits totaled $21,437,636,000 compared with $21,373,970,000 at September 30, 2024 , a $63,666,000 , or 0.3% , increase driven by transaction accounts.
The decrease was the result of the combination of greater growth in interest-bearing liabilities balances than in interest-paying assets and a larger increase in the rate paid on those liabilities compared to the rates earned on interest-earning assets. Average interest-bearing liabilities grew by 27.2% while average interest-earning assets grew by 20.8%.
The decrease was the result of the greater decrease in the rate earned on assets compared with the rate paid on liabilities. Rates on interest-bearing liabilities decreased by 22 basis points compared to the 30 basis points decrease in the average rate on interest-earning assets.
Gain on Real Estate Owned : Gain on real estate owned, net was $304,000 for the year ended September 30, 2024, compared to of $176,000 for the year ended September 30, 2023.
Loss on Real Estate Owned : Loss on real estate owned, net was $627,000 for the year ended September 30, 2025 , compared to a net gain of $304,000 for the year ended September 30, 2024 . This amount includes ongoing maintenance expense, periodic valuation adjustments, and gains and losses on sales of REO.
COMPARISON OF 2023 RESULTS WITH 2022 For management's review of the factors that affected our results of operations for the years ended September 30, 2023 and 2022 refer to our Annual Report on Form 10-K for the year ended September 30, 2023, which was filed with the Securities and Exchange Commission on November 17, 2023.
COMPARISON OF 2024 RESULTS WITH 2023 For management's review of the factors that affected our results of operations for the years ended September 30, 2024 and 2023 refer to our Annual Report on Form 10-K for the year ended September 30, 2024 , which was filed with the SEC on November 20, 2024. 55 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The principal sources of funds for the Company's activities are loan repayments (including prepayments), net deposit inflows, borrowings, repayments and sales of investments and retained earnings, if applicable.
The impact going forward will depend on the composition, characteristics, and credit quality of the securities portfolios as well as the economic conditions at future reporting periods. Held-to-maturity investment securities : Held-to-maturity securities increased by $13,386,000 to $436,972,000, or 3.2%, during the year ended September 30, 2024, largely due to the purchase of $47,092,000 of HTM securities.
The impact going forward will depend on the composition, characteristics, and credit quality of the securities portfolios as well as the economic conditions at future reporting periods.
September 30, 2024 September 30, 2023 $ Change % Change (In thousands) Allowance for credit losses: Commercial loans Multi-family $ 25,248 $ 13,155 $ 12,093 92 % Commercial real estate 39,210 28,842 10,368 36 % Commercial & industrial 58,748 58,773 (25) — % Construction 22,267 29,408 (7,141) (24) % Land - acquisition & development 7,900 7,016 884 13 % Total commercial loans 153,373 137,194 16,179 12 % Consumer loans Single-family residential 40,523 28,029 12,494 45 % Construction - custom 1,427 2,781 (1,354) (49) % Land - consumer lot loans 2,564 3,512 (948) (27) % HELOC 3,049 2,859 190 7 % Consumer 2,817 2,832 (15) (1) % Total consumer loans 50,380 40,013 10,367 26 % Total allowance for loan losses 203,753 177,207 26,546 15 % Reserve for unfunded commitments 21,500 24,500 (3,000) (12) % Total allowance for credit losses $ 225,253 $ 201,707 $ 23,546 12 % The allowance for loan losses increased by $26,546,000, or 14.98%, from $177,207,000 as of September 30, 2023, to $203,753,000 at September 30, 2024.
September 30, 2025 September 30, 2024 $ Change % Change (In thousands) Allowance for credit losses: Commercial loans Multi-family $ 25,953 $ 25,248 $ 705 3 % Commercial real estate 41,988 39,210 2,778 7 % Commercial & industrial 59,163 58,748 415 1 % Construction 18,136 22,267 (4,131) (19) % Land - acquisition & development 6,894 7,900 (1,006) (13) % Total commercial loans 152,134 153,373 (1,239) (1) % Consumer loans Single-family residential 38,880 40,523 (1,643) (4) % Construction - custom 610 1,427 (817) (57) % Land - consumer lot loans 2,104 2,564 (460) (18) % HELOC 3,069 3,049 20 1 % Consumer 2,923 2,817 106 4 % Total consumer loans 47,586 50,380 (2,794) (6) % Total allowance for loan losses 199,720 203,753 (4,033) (2) % Reserve for unfunded commitments 21,500 21,500 — — % Total allowance for credit losses $ 221,220 $ 225,253 $ (4,033) (2) % The allowance for loan losses decreased by $4,033,000 , or 1.98% , from $203,753,000 as of September 30, 2024 , to $199,720,000 at September 30, 2025 .
The Company's cash and cash equivalents were $2,381,102,000 at September 30, 2024, which is a 142.8% increase from the balance of $980,649,000 as of September 30, 2023. During the year, the Company completed the sale of approximately $2,800,000,000 in multifamily loans and approximately $400,000,000 in single-family loans from the acquired LBC loan portfolio.
The Company's cash and cash equivalents were $657,310,000 at September 30, 2025 , which is a 72.4% decrease from the balance of $2,381,102,000 as of September 30, 2024 . The prior year end balances reflected cash received from the Luther Burbank multi-family and single-family residential loan portfolio sales.
These purchases were offset by principal repayments and maturities of $36,013,000 during the period. The increase also included $2,570,000 in HTM securities obtained in the Merger. There were no held-to-maturity securities sold during the year ended September 30, 2024.
Held-to-maturity (HTM) investment securities : Held-to-maturity securities increased by $208,830,000 to $645,802,000 , or 47.8% , during the year ended September 30, 2025 , largely due to the purchase of $261,842,000 of HTM securities. These purchases were offset by principal repayments and maturities of $53,030,000 during the period.
The following table presents the Company's significant fixed and determinable contractual obligations, within the categories described below, by contractual maturity or payment amount.
During the year, the Company utilized cash to reduce borrowings and purchase investments. See “Changes in Financial Condition” above and the “Statement of Cash Flows” included in the financial statements for additional details regarding this change. The following table presents the Company's significant fixed and determinable contractual obligations, within the categories described below, by contractual maturity or payment amount.
LIQUIDITY AND CAPITAL RESOURCES The principal sources of funds for the Company's activities are loan repayments (including prepayments), net deposit inflows, borrowings, repayments and sales of investments and retained earnings, if applicable. The Company's principal sources of revenue are interest on loans and interest and dividends on investments.
The Company's principal sources of revenue are interest on loans and interest and dividends on investments. Additionally, the Company earns fee income for loan, deposit, insurance and other services.
During 2024, transaction accounts increased by $1,051,872,000 or 9.8% while time deposits increased by $4,251,769,000 or 80.1% as 66% of the LBC customer accounts were time deposits. 53 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table shows customer deposits by account type.
During 2025 , transaction accounts increased by $489,347,000 or 4.1% while time deposits decreased by $425,681,000 or 4.5% . The following table shows customer deposits by account type.
The ability to retain maturing time deposits is difficult to project; however, the Bank believes that by competitively pricing these certificates, roll-over levels deemed appropriate by management can be achieved on a continuing basis. 54 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS At September 30, 2024, the Bank had $4,024,661,000 of time deposits in amounts of $250,000 or more outstanding, maturing as follows: $1,057,121,000 within 3 months; $1,277,315,000 over 3 months through 6 months; $1,030,587,000 over 6 months through 12 months; and $659,638,000 thereafter.
To ensure a continuity of this trend, the Bank expects to continue to offer market rates of interest. The ability to retain maturing time deposits is difficult to project; however, the Bank believes that by competitively pricing these certificates, roll-over levels deemed appropriate by management can be achieved on a continuing basis.
The Bank has entered into interest rate swaps to hedge interest rate risk and convert certain FHLB advances to fixed rate payments. Taking into account these hedges, the weighted average effective maturity of FHLB advances at September 30, 2024 was 2.34 years.
The decreases in balance and rate are primarily due to the pay-down of higher interest borrowings combined with decreasing interest rates. The Bank has entered into interest rate swaps to hedge interest rate risk and convert certain FHLB advances to fixed rate payments.
The balance change also reflects originations of $3,632,071,000, a decrease to loans-in-process of $886,142,000 and principal repayments of $4,302,359,000 during the year ended September 30, 2024.
The balance change reflects originations of $3,956,199,000 , a decrease to loans-in-process of $236,192,000 and principal repayments of $5,145,176,000 during the year ended September 30, 2025 . Commercial loan originations accounted for 83.1% of total originations and consumer originations were 16.9% as the Bank exited the residential mortgage market mid-year.
Non-interest Expense : Total non-interest expense was $448,272,000 for the year ended September 30, 2024, an increase of $72,237,000, or 19.2%, from the $376,035,000 for the year ended September 30, 2023. Compensation and benefits costs increased $37,614,000 or 19.1% year-over-year primarily due to Merger-related retention, severance and change-in-control expenses combined with a larger post-Merger workforce.
Non-interest Expense : Total non-interest expense was $427,463,000 for the year ended September 30, 2025 , a decrease of $20,809,000 , or 4.6% , from the $448,272,000 for the year ended September 30, 2024 . The 2024 results included $25,000,000 in Merger-related costs.
The ratio of the total ACL to total gross loans decreased to 1.01% as of September 30, 2024, as compared to 1.03% as of September 30, 2023. The decrease was primarily related to a shift in mix of loan types within the portfolio.
For the year ended September 30, 2025 , net charge-offs were $11,783,000 , compared to charge-offs of $1,356,000 in the prior year. The ratio of the total ACL to total gross loans increased to 1.04% as of September 30, 2025 , as compared to 1.01% as of September 30, 2024 .
Removed
Select information regarding the ACL is under the "Allowance for Credit Losses" heading within this section below. For further details on the ACL, business combinations or goodwill, see Notes A, B , and E to the Consolidated Financial Statements in “Item 8.
Added
A shift toward commercial loan originations led to a modified mix of loan types combined with increased qualitative reserve adjustments resulted in this increase. The reserve for unfunded loan commitments was $21,500,000 as of September 30, 2025 , unchanged compared to $21,500,000 as of September 30, 2024 .
Removed
Loan portfolios with lower historical losses, like multi-family and single family residential saw increased balances as a result of the Merger while those with higher historical losses, like construction, saw decreases. The reserve for unfunded loan commitments was $21,500,000 as of September 30, 2024, compared to $24,500,000 as of September 30, 2023.
Added
If these loans were deemed non-performing, the Company's ratio of total non-performing assets and performing restructured loans as a percent of total assets would have increased to 2.43% at September 30, 2025 .
Removed
This increase reflects cash received from LBC as a result of the Merger combined with cash received from the recent LBC multi-family and LBC single-family residential loan portfolio sales, offset by pay-downs on borrowings.
Added
The increase in non-accrual loans is primarily the result of one commercial real estate loan over 90 days past due. Although appropriately non-accrual based on policy, there was no charge-off taken upon revaluation. Management is actively collaborating with the borrower.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

19 edited+5 added−16 removed13 unchanged
Biggest changeThe period end interest rate spread for the last eight fiscal quarters is shown below: SEP 2024 JUN 2024 MAR 2024 DEC 2023 SEP 2023 JUN 2023 MAR 2023 DEC 2022 Interest rate on loans and mortgage-backed securities 5.16 % 5.18 % 4.94 % 5.11 % 5.08 % 4.97 % 4.81 % 4.59 % Interest rate on other interest-earning assets 4.85 5.13 5.02 4.94 4.98 4.74 4.45 3.19 Combined, all interest-earning assets 5.11 5.17 4.94 5.09 5.07 4.94 4.77 4.46 Interest rate on customer accounts 3.09 2.91 2.92 2.35 2.12 1.82 1.48 0.94 Interest rate on borrowings (1) 3.93 4.10 4.48 3.99 3.98 3.93 3.69 3.14 Combined cost of funds 3.20 3.10 3.24 2.67 2.46 2.22 1.91 1.29 Interest rate spread 1.91 % 2.07 % 1.70 % 2.42 % 2.61 % 2.72 % 2.86 % 3.17 % (1) Represents the effective rate taking into consideration cash flow hedges on FHLB borrowings. 60 The chart below shows the volatility of our period end net interest spread (dashed line measured against the right axis) compared to the relatively consistent growth in net interest income (solid line measured against the left axis).
Biggest changeThe period end interest rate spread for the last five fiscal quarters is shown below: SEP 2025 JUN 2025 MAR 2025 DEC 2024 SEP 2024 Interest rate on loans and mortgage-backed securities 5.25 % 5.28 % 5.29 % 5.32 % 5.16 % Interest rate on other interest-earning assets 4.96 5.03 4.62 4.77 4.85 Combined, all interest-earning assets 5.23 5.26 5.22 5.22 5.11 Interest rate on customer accounts 2.95 3.05 3.16 3.30 3.09 Interest rate on borrowings (1) 2.50 2.76 3.30 3.62 3.93 Combined cost of funds 2.91 3.03 3.17 3.34 3.20 Interest rate spread 2.32 % 2.23 % 2.05 % 1.88 % 1.91 % (1) Represents the effective rate taking into consideration cash flow hedges on FHLB borrowings.
The relative consistency of net interest income is accomplished by actively managing the size and composition of the balance sheet through different rate cycles. Net Interest Margin. The net interest margin is measured using net interest income divided by average interest-earning assets for the period.
The relative consistency of net interest growth is accomplished by actively managing the size and composition of the balance sheet through different rate cycles. 59 Net Interest Margin. The net interest margin is measured using net interest income divided by average interest-earning assets for the period.
These accounts make up 55.3% of the deposit portfolio as of September 30, 2024. The Company's balance sheet strategy, in conjunction with low operating costs, has allowed the Company to manage interest rate risk, within guidelines established by the Board, through all interest rate cycles.
These accounts make up 57.4% of the deposit portfolio as of September 30, 2025 as compared with 55.3% as of September 30, 2024 The Company's balance sheet strategy, in conjunction with low operating costs, has allowed the Company to manage interest rate risk, within guidelines established by the Board, through all interest rate cycles.
We estimate the sensitivity of our net interest income to changes in market interest rates using an interest rate simulation model that includes assumptions related to the level of balance sheet growth, deposit repricing characteristics and the rate of prepayments for multiple interest rate change scenarios.
The Company estimates the sensitivity of our net interest income to changes in market interest rates using an interest rate simulation model that includes assumptions related to the level of balance sheet growth, deposit repricing characteristics and the rate of prepayments for multiple interest rate change scenarios.
It is Management's objective to grow the dollar amount of net interest income, through the rate cycles, acknowledging that there will be some periods of time when that will not be feasible. Cash and cash equivalents of $2,381,102,000 and shareholders' equity of $3,000,300,000 provide management with flexibility in managing interest rate risk.
It is Management's objective to grow the dollar amount of net interest income, through the rate cycles, acknowledging that there will be some periods of time when that will not be feasible. Cash and cash equivalents of $657,310,000 and shareholders' equity of $3,039,575,000 provide management with flexibility in managing interest rate risk.
The composition of the investment portfolio was 53.8% variable rate and 46.2% fixed rate as of September 30, 2024 to provide some protection against changing rates. In addition, the Bank is producing more commercial loans that have shorter terms and/or variable rates. There has also been focus on increasing less rate sensitive transaction deposit accounts.
The composition of the investment portfolio was 44.6% variable rate and 55.5% fixed rate as of September 30, 2025 to provide some protection against changing rates. In addition, the Bank is producing more commercial loans that have shorter terms and/or variable rates. There has also been focus on increasing less rate sensitive transaction deposit accounts.
The higher yield on interest-earning assets was primarily due to the impact of rising rates on adjustable rate assets and cash. The higher rate in interest-bearing liabilities was primarily due to higher rates on interest-bearing customer accounts combined with the higher interest rates on borrowings and customer accounts obtained in the Merger.
The lower yield on interest-earning assets was primarily due to the impact of falling rates on adjustable rate assets and cash. The lower rate in interest-bearing liabilities was primarily due to lower rates on interest-bearing customer accounts and combined with the pay-off of higher borrowings.
Improvement in the net interest income sensitivity during the year is primarily the result of interest rate swap activity, as well as increased time deposits and an increased federal funds balances which help reduce sensitivity in rising shock scenarios. Another method used to quantify interest rate risk is the NPV analysis.
Improvement in the net interest income sensitivity during the year is primarily the result of interest rate swap activity, as well as increased time deposits and an increased federal funds balances which help reduce sensitivity in rising shock scenarios. Net Portfolio Value ("NPV") Sensitivity.
The net interest margin decreased to 2.69% for the year ended September 30, 2024, from 3.40% for the year ended September 30, 2023. The yield on interest-earning assets increased 46 basis points to 5.59% and the cost of interest-bearing liabilities increased by 128 basis points to 3.46%.
The net interest margin decreased to 2.58% for the year ended September 30, 2025 , from 2.69% for the year ended September 30, 2024 . The yield on interest-earning assets decreased 30 basis points to 5.29% and the cost of interest- bearing liabilities decreased by 22 basis points to 3.24% .
The following tables set forth an analysis of the Company’s interest rate risk as measured by the estimated changes in NPV resulting from instantaneous and sustained parallel shifts in the yield curve (measured in 100-basis-point increments). The tables below express the NPV under varying interest scenarios.
The following tables set forth an analysis of the Company's interest rate risk as measured by the estimate changes in NPV resulting from instantaneous and sustained parallel shifts in the yield curve.
It is derived by calculating the difference between the present value of expected cash flows from assets and the present value of expected cash flows from liabilities and off-balance-sheet contracts.
The NPV is an estimate of the market value of shareholders' equity at a point in time. It is derived by calculating the difference between the present value of expected cash flows from assets and the present value of expected cash flows from liabilities and off-balance-sheet contracts.
(2) Includes cash equivalents and non-mortgage backed security investments, such as U.S. agency obligations, mutual funds, corporate bonds, and municipal bonds. (3) Net interest income divided by average interest-earning assets. 62 The following table shows the potential impact of changing interest rates on net income for one year.
(2) Includes cash equivalents and non-mortgage backed security investments, such as U.S. agency obligations, mutual funds, corporate bonds, and municipal bonds. (3) Net interest income divided by average interest-earning assets. 61
Net Interest Income and Margin Summary Year Ended September 30, 2024 2023 2022 Average Balance Interest Average Rate Average Balance Interest Average Rate Average Balance Interest Average Rate ($ in thousands) Assets Loans receivable (1) $ 20,500,281 $ 1,165,849 5.69 % $ 17,095,014 $ 900,068 5.27 % $ 15,083,111 $ 601,593 3.99 % Mortgage-backed securities 1,597,566 59,782 3.74 1,362,415 43,184 3.17 1,141,501 26,332 2.31 Cash & Investments (2) 2,330,505 133,608 5.73 1,742,806 91,058 5.22 2,500,008 33,555 1.34 FHLB & FRB stock 131,313 12,471 9.50 127,066 8,645 6.80 87,861 4,879 5.55 Total interest-earning assets 24,559,665 1,371,710 5.59 % 20,327,301 1,042,955 5.13 % 18,812,481 666,359 3.54 % Other assets 1,682,721 1,484,271 1,343,848 Total assets $ 26,242,386 $ 21,811,572 $ 20,156,329 Liabilities and Shareholders’ Equity Interest-bearing customer accounts $ 16,327,208 532,434 3.26 % $ 12,906,383 237,233 1.84 % $ 12,738,719 43,041 0.34 % Borrowings 4,242,431 178,444 4.21 3,261,917 115,488 3.54 1,731,120 28,729 1.66 Total interest-bearing liabilities 20,569,639 710,878 3.46 % 16,168,300 352,721 2.18 % 14,469,839 71,770 0.50 % Noninterest-bearing customer accounts 2,593,567 2,969,970 3,249,120 Other liabilities 322,071 296,840 242,213 Total liabilities 23,485,277 19,435,110 17,961,172 Shareholders’ equity 2,757,109 2,376,462 2,195,157 Total liabilities and shareholders’ equity $ 26,242,386 $ 21,811,572 $ 20,156,329 Net interest income/interest rate spread $ 660,832 2.13 % $ 690,234 2.95 % $ 594,589 3.04 % Net interest margin (3) 2.69 % 3.40 % 3.16 % ___________________ (1) Interest income includes net amortization-accretion of deferred loan fees, costs, discounts and premiums of $37,489,000, $20,130,000 and $29,156,000 for year ended 2024, 2023 and 2022, respectively.
Net Interest Income and Margin Summary Year Ended September 30, 2025 2024 2023 Average Balance Interest Average Rate Average Balance Interest Average Rate Average Balance Interest Average Rate ($ in thousands) Assets Loans receivable (1) $ 20,651,307 $ 1,119,937 5.42 % $ 20,500,281 $ 1,165,849 5.69 % $ 17,095,014 $ 900,068 5.27 % Mortgage-backed securities 2,514,511 103,071 4.10 1,597,566 59,782 3.74 1,362,415 43,184 3.17 Cash & Investments (2) 2,065,658 106,400 5.15 2,330,505 133,608 5.73 1,742,806 91,058 5.22 FHLB & FRB stock 106,338 10,041 9.44 131,313 12,471 9.50 127,066 8,645 6.80 Total interest-earning assets 25,337,814 1,339,449 5.29 % 24,559,665 1,371,710 5.59 % 20,327,301 1,042,955 5.13 % Other assets 1,718,680 1,682,721 1,484,271 Total assets $ 27,056,494 $ 26,242,386 $ 21,811,572 Liabilities and Shareholders’ Equity Interest-bearing customer accounts $ 18,735,390 604,707 3.23 % $ 16,327,208 532,434 3.26 % $ 12,906,383 237,233 1.84 % Borrowings 2,423,244 80,507 3.32 4,242,431 178,444 4.21 3,261,917 115,488 3.54 Total interest-bearing liabilities 21,158,634 685,214 3.24 % 20,569,639 710,878 3.46 % 16,168,300 352,721 2.18 % Noninterest-bearing customer accounts 2,518,248 2,593,567 2,969,970 Other liabilities 352,673 322,071 296,840 Total liabilities 24,029,555 23,485,277 19,435,110 Shareholders’ equity 3,026,939 2,757,109 2,376,462 Total liabilities and shareholders’ equity $ 27,056,494 $ 26,242,386 $ 21,811,572 Net interest income/interest rate spread $ 654,235 2.05 % $ 660,832 2.13 % $ 690,234 2.95 % Net interest margin (3) 2.58 % 2.69 % 3.40 % ___________________ (1) Interest income includes net amortization-accretion of deferred loan fees, costs, discounts and premiums of $12,870,000 , $37,489,000 and $20,130,000 for year ended 2025 , 2024 and 2023 , respectively.
Potential Increase (Decrease) in Net Interest Income Basis Point Increase (Decrease) in Interest Rates September 30, 2024 (In thousands, except percentages) (300) $ (35,155) (4.27) % (200) (8,414) (1.02) (100) 1,702 0.21 100 (274) (0.03) 200 22,686 2.76 Actual results will differ from the assumptions used in this model, as management monitors and adjusts both the size and the composition of the balance sheet in order to respond to changing interest rates.
The Company's focus is primarily on the impact of abrupt upward or downward changes in short term rates. 57 Hypothetical, Immediate and Parallel Potential Increase (Decrease) in Net Interest Income - Year 1 Basis Point Increase (Decrease) in Interest Rates September 30, 2025 September 30, 2024 (In thousands, except percentages) (200) $ 65,287 8.79 % $ (8,284) (1.01) % (100) 35,318 4.76 1,832 0.22 100 (407) (0.05) (144) (0.02) 200 6,298 0.85 22,816 2.79 Actual results will differ from the assumptions used in this model, as management monitors and adjusts both the size and the composition of the balance sheet in order to respond to changing interest rates.
During 2024, average interest-bearing customer deposit accounts increased $3,420,825,000 or 26.5% and the average balance of borrowings increased by $980,514,000, or 30.1%, from 2023, primarily due to the Merger. 61 The following table sets forth the information explaining the changes in the net interest income and net interest margin.
During 2025 , average interest-bearing customer deposit accounts increased $2,408,182,000 or 14.7% and the average balance of borrowings decreased by $1,819,187,000 , or 42.9% , from 2024 . 60 The following table sets forth the information explaining the changes in the net interest income and net interest margin.
The Company measures the difference between the rate on interest-earning assets and the rate on interest-bearing liabilities at the end of each period. The period end interest rate spread was 1.91% at September 30, 2024 and 2.61% at September 30, 2023.
As of September 30, 2025 , the Company was in compliance with all of its interest rate risk policy limits. 58 Interest Rates. The Company measures the difference between the rate on interest-earning assets and the rate on interest- bearing liabilities at the end of each period.
As of September 30, 2024, the weighted-average rate on interest-earning assets increased by 4 basis points to 5.11% compared to September 30, 2023.
The period end interest rate spread was 2.32% at September 30, 2025 and 1.91% at September 30, 2024 . As of September 30, 2025 , the weighted-average rate on interest-earning assets decreased by 12 basis points to 5.23% compared to September 30, 2024 .
The higher rate on interest-earning assets is due primarily to the Federal Reserve Bank's rate increases from March 2022 until September 2024, which have led to higher rates on adjustable rate loans, investment securities and cash as well as asset mix shifting to loans receivable.
The lower rate on interest-earning assets is due primarily to the Federal Reserve Bank's rate decreases since September 2024, which have led to lower rates on adjustable rate loans, investment securities and cash. As of September 30, 2025 , the weighted-average rate on interest-bearing liabilities decreased by 29 basis points to 2.91% compared to September 30, 2024 .
During 2024, average loans receivable increased $3,405,267,000, or 19.9%, while the combined average balances of mortgage-backed securities, other investment securities and cash increased by $822,850,000 or 26.5%.
For the year ended September 30, 2025 , average interest-earning assets increased by 3.2% to $25,337,814,000 , up from $24,559,665,000 for the year ended September 30, 2024 . During 2025 , average loans receivable increased $151,026,000 , or 0.7% , while the combined average balances of mortgage-backed securities, other investment securities and cash increased by $652,098,000 or 16.6% .
Removed
In the event of an immediate and parallel decrease of 200 basis points across all interest rates, the model estimates that net interest income would decrease 1.0% in the next year. This compares to an estimated increase of 7.8% for the same measure as of September 30, 2023.
Added
The following table models the potential impact of changing interest rates on net income over a twelve-month period and compares the current results to the results as of the prior year end. The Company's focus is primarily on the impact of abrupt upward or downward changes in short term rates.
Removed
It is noted that a steepening yield curve where the spread between short-term rates and long-term rates increases would likely result in higher net interest income. In the event of an immediate and parallel increase of 200 basis points across all interest rates, the model estimates that net interest income would increase by 2.8% in the next year.
Added
It is important to note that this is not a forecast or prediction of future events.
Removed
This compares to an estimated decrease of 2.0% for the same measure as of September 30, 2023. 59 Net Portfolio Value ("NPV") Sensitivity. The NPV is an estimate of the market value of shareholders' equity at a point in time.
Added
Hypothetical, Immediate and Parallel Potential Increase (Decrease) in NPV as of Basis Point Increase (Decrease) in Interest Rates September 30, 2025 September 30, 2024 (In thousands, except percentages) (200) $ 550,692 17.96 % $ 393,113 13.35 % (100) 317,236 10.35 256,991 8.73 100 (341,329) (11.13) (293,070) (9.96) 200 (649,066) (21.17) (559,613) (19.01) Hypothetical, Immediate and Parallel September 30, 2025 Basis Point Increase (Decrease) in Interest Rates Estimated NPV Amount NPV as % of Assets (In thousands) (200) $ 3,616,691 13.46 % (100) 3,383,235 12.88 No change 3,065,999 11.96 100 2,724,670 10.89 200 2,416,933 9.89 Prepayment speeds continue to be relatively low at September 30, 2025 with the Bank's conditional payment rate ("CPR") for single-family mortgages at 7.5% , down slightly from 8.6% the year before.
Removed
As of September 30, 2024, in the event of an immediate and parallel decrease of 200 basis points in interest rates, the NPV is estimated to increase by $273,000,000, or 9.2%, and the NPV-to-total assets ratio to increase to 11.6% from a base of 11.0%.
Added
The lower rate on interest-bearing liabilities also primarily resulted from the FRB rate cuts combined with repayments on higher rate borrowings.
Removed
As of September 30, 2023, in the event of an immediate and parallel decrease of 200 basis points in interest rates, the NPV was estimated to increase by $583,000,000, or 22.1%, and the NPV-to-total assets ratio to increase to 14.3% from a base of 12.4%.
Added
The chart below shows the volatility of our period end net interest spread (dashed line measured against the right axis) compared to the relatively consistent growth in net interest income (solid line measured against the left axis).
Removed
The change in the sensitivity of the NPV ratio to this assumed change in interest rates is primarily due to the steepening of the yield curve and changes in balance sheet mix year over year.
Removed
Prepayment speeds for single family mortgages are increasing though still low at September 30, 2024 with the Bank's conditional payment rate ("CPR") for this portfolio segment at 8.6%, up slightly from 7.0% the year before.
Removed
As of September 30, 2024, in the event of an immediate and parallel increase of 200 basis points in interest rates, the NPV is estimated to decrease by $741,000,000, or 24.9%, and the NPV-to-total assets ratio to decline to 8.7% from a base of 11.0%.
Removed
As of September 30, 2023, in the event of an immediate and parallel increase of 200 basis points in interest rates, the NPV was estimated to decrease by $723,000,000, or 27.4%, and the NPV-to-total assets ratio to decline to 9.5% from a base of 12.4%.
Removed
Opposite to the down scenario above, this change in the sensitivity of the NPV ratio to the assumed change in interest rates is due to the flattening of the yield curve and changes in balance sheet mix year over year in this scenario. Interest Rates.
Removed
As of September 30, 2024, the weighted-average rate on interest-bearing liabilities increased by 74 basis points to 3.20% compared to September 30, 2023.
Removed
The higher rate on interest-bearing liabilities primarily resulted from the addition of higher yielding deposits in the Merger which also had a higher concentration of the rate sensitive time deposits, customer deposits repricing and higher rates on new borrowings.
Removed
For the year ended September 30, 2024, average interest-earning assets increased by 20.8% to $24,559,665,000, up from $20,327,301,000 for the year ended September 30, 2023. Balance sheet growth in 2024 was primarily due to the Merger.
Removed
The Company's focus is primarily on the impact of abrupt upward or downward changes in short term rates. It is important to note that this is not a forecast or prediction of future events, but is used as a tool for measuring potential risk. This analysis assumes zero balance sheet growth and a constant percentage composition of assets and liabilities.
Removed
This analysis calculates the difference between the present value of interest-bearing liabilities and the present value of expected cash flows from interest-earning assets and off-balance-sheet contracts.
Removed
September 30, 2024 Change in Interest Rates Estimated NPV Amount Estimated Increase/(Decrease) in NPV Amount NPV as % of Assets (Basis Points) (In thousands) (In thousands) 200 $ 2,236,691 $ (740,588) 8.69 % 100 2,472,251 (505,028) 9.41 No change 2,977,279 — 10.99 (100) 3,045,962 68,683 11.08 (200) 3,249,949 272,670 11.56 (300) 3,232,362 255,083 11.32 As of September 30, 2024, the Company was in compliance with all of its interest rate risk policy limits. 63

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