Q4 2025 WaFd Inc Earnings Call

It will be a question and answer session to ask a question during the session you'll need to press star one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star. One again. Please be advised today's conference is being recorded I would now turn this conference over to your speaker today, Brad. Good. Please go ahead.

Thank you, Kevin and good morning, everybody.

We are excited to have you all attending our first ever earnings conference call. We have listened to the feedback from many of you requesting that we hold a call like this we heard you and so here we are.

Dive into our 2025 fourth quarter and full year earnings report.

Operator: Good day and thank you for standing by. Welcome to the WaFd Inc Q1 and Q3 results call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a Q&A session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised today's conference is being recorded. I would now like to hand this conference over to your speaker today, Brad Goode. Please go ahead.

Speaker #2: Good day, and thank you for standing by. Welcome to the WaFd Q4 2025 Earnings Call. At this time, all participants are in listen-only mode.

Can find our earnings press release, along with our detailed factsheet and Investor Scorecard on our web site I'm sure you all know where that is swap at bank Dot com. During today's call. We will make some forward looking statements, which are subject to risks and uncertainties and are intended to be covered by the safe Harbor provisions of federal Securities Law inferred.

Speaker #2: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone.

Speaker #2: We will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised today's conference is being recorded.

Information on risk factors that could cause actual results to differ are available from the earnings press release that was released yesterday and the recently filed Form 10-Q for the quarter ended June 32025.

Speaker #2: I will now turn it over to our speaker today, Brad Good. Please go ahead.

Brad Goode: Thank you, Kevin. Good morning, everybody. We are excited to have you all attending our first ever earnings conference call. We have listened to the feedback from many of you requesting that we hold a call like this. We've heard you, and here we are. Let's dive into our 2025 Q4 and Q3 earnings report. You can find our earnings press release, along with our detailed fact sheet and investor scorecard, on our website. I'm sure you all know where that is: wafdbank.com. During today's call, we will make some forward-looking statements, which are subject to risks and uncertainties and are intended to be covered by the Safe Harbor provisions of Federal Securities Law. Information on risk factors that could cause actual results to differ is available from the earnings press release that was released yesterday and the recently filed Form 10-Q for the quarter ended June 30, 2025.

Speaker #3: Thank you, Kevin. Good morning, everybody. We are excited to have you all attending our first-ever earnings conference call. We have listened to the feedback from many of you requesting that we hold a call like this.

Forward looking statements are effective only as of the date that they are made and <unk> assumes no obligation to update information concerning its expectations.

Speaker #3: We've heard you and so here we are. Let's dive into our 2025 Q4 INC Q3 earnings report. You can find our earnings press release along with our detailed fact sheet and investor scorecard on our website.

We will also reference non-GAAP financial measures Ben I encourage you to review the non-GAAP reconciliation provided in our earnings materials with US. This morning are president and CEO, Brad <unk>, Chief Financial Officer, Kelly, Holt, Chief Credit Officer, Ryan <unk>, Chief experience Officer, Kathy Cooper.

Speaker #3: I'm sure you all know where that is: wafdbank.com. During today's call, we will make some forward-looking statements, which are subject to risks and uncertainties and are intended to be covered by the Safe Harbor provisions of federal securities law.

I'd now like to hand, the call over to Mr. Baird.

Thank you Mr. Good and good morning, everyone.

Speaker #3: Information on risk factors that could cause actual results to differ are available from the earnings press release that was released yesterday and the recently filed Form 10-Q for the quarter ended June 30, 2025.

Today, we will cover five primary items.

First Kelly Holt, our CFO will provide you with a detailed review of our balance sheet and income statement for the quarter and year ended 2025.

Brad Goode: Forward-looking statements are effective only as of the date that they are made, and WaFd Inc. assumes no obligation to update information concerning its expectations. We will also reference non-GAAP financial measures, and I encourage you to review the non-GAAP reconciliation provided in our earnings materials. With us this morning are President and CEO Brent Beardall, Chief Financial Officer Kelli Holtz, Chief Credit Officer Ryan Mauer, and Chief Experience Officer Cathy Cooper. I'd now like to hand the call over to Mr. Beardall.

Speaker #3: Forward-looking statements are effective only as of the date they are made, and WAFD assumes no obligation to update information concerning its expectations. We will also reference non-GAAP financial measures, and I encourage you to review the non-GAAP reconciliation provided in our earnings materials.

Second Ryan <unk>, our Chief Credit Officer will provide comments on the current status of our loan portfolio and credit quality trends.

Third I will provide you my insight in terms of our future prospects capital management strategies and macro developments that impact whopping.

Speaker #3: With us this morning are President and CEO Brent Beardall, Chief Financial Officer Kelly Holtz, Chief Credit Officer Ryan Mauer, and Chief Experience Officer Cathy Cooper.

Fourth Kathy Cooper, our client experience officer will discuss the progress we are making to improve banking for our clients find.

Speaker #3: I'd now like to hand the call over to Mr. Beardall.

Finally, we will be happy to answer any questions you have at that point.

Brent Beardall: Thank you, Mr. Goode. Good morning, everyone. Today, we will cover five primary items with you. First, Kelli Holtz, our CFO, will provide you with a detailed review of our balance sheet and income statement for the quarter and year ended 2025. Second, Ryan Mauer, our Chief Credit Officer, will provide comments on the current status of our loan portfolio and credit quality trends. Third, I will provide you my insights in terms of our future prospects, capital management strategies, and macro developments that impact WaFd Inc. Fourth, Cathy Cooper, our Chief Experience Officer, will discuss the progress we are making to improve banking for our clients. Finally, we will be happy to answer any questions you have at that point. Kelli, please walk us through the quarter and year-end results.

Speaker #4: Thank you, Mr. Good. Good morning, everyone. Today we will cover five primary items with you. First, Kelly Holtz, our CFO, will provide you with a detailed review of our balance sheet and income statement for the quarter and year ended 2025.

Kelly, Please walk us through the quarter and year end results.

Thank you Brent <unk>.

As announced MOSFET, Inc. Reported net income available to common shareholders of $56 9 million or <unk> 72 cents per diluted share for the quarter ended September 30th.

Speaker #4: Second, Ryan Mauer, our Chief Credit Officer, will provide comments on the current status of our loan portfolio and credit quality trends. Third, I will provide you my insights in terms of our future prospects, capital management, strategies, and macro developments that impact WAFD.

This compares to net income to common shareholders of <unk> 71 per share for the fourth quarter of fiscal 2024, and 73 per share for the third quarter of fiscal 2025.

<unk> decrease in earnings per share for the quarter was primarily due to modest increases in noninterest expense offset by modest increases in net interest income and noninterest income.

Speaker #4: Fourth, Cathy Cooper, our Client Experience Officer, will discuss the progress we are making to improve banking for our clients. Finally, we will be happy to answer any questions you have at that point.

For the full year ended September 32025, well I'll say reported net income available to common shareholders of $211 4 million or $2 63 per diluted share. This compares to fiscal 2024 net income to common shareholders of $2 50.

Speaker #4: Kelly, please walk us through the quarter and year-end results.

Kelli Holtz: Thank you, Brent. As announced, WaFd Inc. reported net income available to common shareholders of $56.9 million or $0.72 per diluted share for the quarter ended September 30. This compares to net income to common shareholders of $0.71 per share for the fourth quarter of fiscal 2024 and $0.73 per share for the third quarter of fiscal 2025. The $0.01 decrease in earnings per share for the quarter was primarily due to modest increases in non-interest expense offset by modest increases in net interest income and non-interest income. For the full year ended September 30, 2025, WaFd Inc. reported net income available to common shareholders of $211.4 million or $2.63 per diluted share. This compares to fiscal 2024 net income to common shareholders of $2.50 per share.

Speaker #5: Thank you, Brent. As announced, WaFd Inc. Q3 reported net income available to common shareholders of $56.9 million, or $72.00 per diluted share, for the quarter ended September 30.

Speaker #5: This compares to net income to common shareholders of $71.00 per share for the fourth quarter of fiscal 2024, and $73.00 per share for the third quarter of fiscal 2025.

Sure.

For the balance sheet loans receivable decreased $188 million during the quarter, primarily due to a decrease in our inactive loan types, which are single family mortgage custom construction.

Speaker #5: The $0.01 decrease in earnings per share for the quarter was primarily due to modest increases in non-interest expense, offset by modest increases in net interest income and non-interest income.

Combined decreased by $216 million.

Loan originations for the quarter outpaced prepayments and payoffs in our active loan types for the first time this fiscal year with originations of $1 4 billion compared to $700 million in the June quarter, and repayments and payoffs of $1 2 billion in both those quarters.

Speaker #5: For the full year-ended September 30, 2025, WAFD reported net income available to common shareholders of $211.4 billion, or $2.63 per diluted share. This compares to fiscal 2024 net income to common shareholders of $2.50.00 per share.

Active loan types include multifamily commercial real estate C&I construction land A&D and consumer as announced earlier. This year, we have exited the single family mortgage lending market, which also includes custom construction consumer lot loans and helocs.

Kelli Holtz: For the balance sheet, loans receivable decreased $188 million during the quarter, primarily due to a decrease in our inactive loan types, which are single-family mortgage and custom construction, which combined decreased by $216 million. Loan originations for the quarter outpaced repayments and payoffs in our active loan types for the first time this fiscal year, with originations of $1.4 billion compared to $700 million in the June quarter and repayments and payoffs of $1.2 billion in both those quarters. Active loan types include multifamily, commercial real estate, C&I, construction, land, A&D, and consumer. As announced earlier this year, we have exited the single-family mortgage lending market, which also includes custom construction, consumer lot loans, and HELOCs. Please see the updated table in our fact sheet that provides a breakdown between our active and inactive loan types.

Speaker #5: For the balance sheet, loans receivable decreased $188.00,000 during the quarter, primarily due to a decrease in our inactive loan types, which are single-family, mortgage, custom construction, which combined decreased by $216.00,000.

Please see the updated table on our fact sheet just provide the breakdown between our active and inactive loan types.

Deposits increased by $51 million during the quarter with noninterest bearing deposits, increasing 80 million or three 2%, while time deposits decreased $286 million or 3%.

Speaker #5: Loan originations for the quarter outpaced repayments and payoffs in our active loan types for the first time this fiscal year. With originations of $1.4 billion, compared to $700 million in the June quarter, and repayments and payoffs of $1.2 billion in both quarters.

For the fiscal year total deposits increased by $64 million, a result of the efforts of our teams across the entire footprint. The former Luther Burbank deposits decreased by $1 billion over the fiscal year.

Speaker #5: Active loan types include multi-family, commercial real estate, C&I, construction, land A&D, and consumer. As announced earlier this year, we have exited the single-family mortgage lending market, which also includes custom construction, consumer lot loans, and HELOCs.

Which was an intentional effort on our part to lower the cost of funds for these higher cost mostly C d's deposits.

Those decreased $4 five debt, which decreased from $4 two 5% at September 2024% to 336% of total deposits today.

Speaker #5: Please see the updated table in our fact sheet that provides a breakdown between our active and inactive loan types. Deposits increased by $51,000,000 during the quarter, with non-interest-bearing deposits increasing $80,000,000, or 3.2%, while time deposits decreased $286,000,000, or 3%.

Kelli Holtz: Deposits increased by $51 million during the quarter, with non-interest-bearing deposits increasing $80 million or 3.2%, while time deposits decreased to $286 million or 3%. For the fiscal year, total deposits increased by $64 million, a result of the efforts of our teams across the entire footprint. The former Luther Burbank deposits decreased by $1 billion over the fiscal year, which was an intentional effort on our part to lower the cost of funds for these higher cost, mostly CDs, deposits. Those decreased 4.5%, which decreased from 4.25% at September 2024 to 3.36% of total deposits today. Core deposits ended the quarter at 78% of total deposits, similar to the June quarter, and increased from 75% as of the prior year-end. Non-interest-bearing deposits ended the quarter at 12% of total deposits. The net loan-to-deposit ratio ended the quarter at 93.7%.

Core deposits ended the quarter at 78% of total deposits similar to the June quarter and increased from 75% as of the prior year end.

Noninterest bearing deposits ended the quarter at 12% of total deposits.

Speaker #5: For the fiscal year, total deposits increased by $64 million, a result of the efforts of our teams across the entire footprint. The former Luther Burbank deposits decreased by $1 billion over the fiscal year, which was an intentional effort on our part to lower the cost of funds for these higher-cost, mostly CDs deposits.

The net loan to deposit ratio ended the quarter at 93, 7%.

Total cash decreased $152 million in the September quarter, and total investments in mortgage backed securities increased to $279 million.

Cash balances were used to pay down borrowings, which decreased $174 million during the quarter.

Speaker #5: Those decreased 4.5%, which decreased from 4.25% at September 2024 to 3.36% of total deposits today. Core deposits ended the quarter at $78.00 of total deposits, similar to the June quarter, and increased from $75.00 as of the prior year-end.

The increase in mortgage backed securities as part of our overall investment strategy currently replacing the single family mortgage loan balance runoff.

<unk> liquidity and capital profile remained strong with a robust core funding base, a low reliance on wholesale borrowings and cigna.

Significant off balance sheet borrowing capacity. In addition, all of our capital ratios are in it are in excess of regulatory well capitalized levels.

Speaker #5: Non-interest-bearing deposits ended the quarter at 12% of total deposits. The net loan-to-deposit ratio ended the quarter at 93.7%. Total cash decreased $152 million in the September quarter, and total investments and mortgage-backed securities increased $279 million.

For the income statement net interest income increased $1 9 million from the prior quarter. The net effect of the reduction in interest paid on liabilities outpacing the reduction on interest earned on assets by three basis points.

Kelli Holtz: Total cash decreased $152 million in the September quarter, and total investments and mortgage-backed securities increased to $279 million. Cash balances were used to pay down borrowings, which decreased $174 million during the quarter. The increase in mortgage-backed securities is part of our overall investment strategy, currently replacing the single-family mortgage loan balance runoff. WaFd Inc.'s liquidity and capital profile remain strong, with a robust core funding base, a low reliance on wholesale borrowings, and a significant off-balance sheet borrowing capacity. In addition, all of our capital ratios are in excess of regulatory well-capitalized levels. For the income statement, net interest income increased $1.9 million from the prior quarter, the net effect of the reduction in interest paid on liabilities outpacing the reduction on interest earned on assets by three basis points. The net interest margin was 2.71% for the September quarter, compared to 2.69% in June.

Speaker #5: Cash balances were used to pay down borrowings, which decreased by $174 million during the quarter. The increase in mortgage-backed securities is part of our overall investment strategy, currently replacing the single-family mortgage loan balance runoff.

The net interest margin was 271% for the September quarter compared to $2 six 9% in June.

As of the October guide and yield on interest, earning assets was five 3%, while the cost of interest bearing liabilities was 291% with a resulting margin at period end of 282%.

Speaker #5: WAFD's liquidity and capital profile remains strong, with a robust core funding base, a low reliance on wholesale borrowings, and significant off-balance sheet borrowing capacity.

Speaker #5: In addition, all of our capital ratios are in excess of regulatory well-capitalized levels. For the income statement, net interest income increased $1.9 million from the prior quarter.

Total noninterest income increased slightly compared to the prior quarter to $18 4 million contributing to non interest income is $4 6 million in revenue for the quarter from an art from our insurance subsidiary at Wharf at insurance.

Speaker #5: The net effect of the reduction in interest paid on liabilities outpacing the reduction in interest earned on assets by three basis points. The net interest margin was 2.71% for the September quarter, compared to 2.69% in June.

For the fiscal year, Washington Insurance revenue was $19 5 million, an increase of 12, 5% over the prior year.

Total noninterest expense increased $2 7 million or two 6% from the prior quarter as a result of strategic investments in our talent and technologies increases in compensation and information technology spend resulted in a small increase to the companys efficiency ratio for the fourth fiscal quarter.

Kelli Holtz: As of the September period end, the yield on interest-earning assets was 5.23%, while the cost of interest-bearing liabilities was 2.91%, with a resulting margin at period end of 2.82%. Total non-interest income increased slightly compared to the prior quarter to $18.4 million. Contributing to non-interest income is $4.6 million in revenue for the quarter from our insurance subsidiary, WaFd Insurance. For the fiscal year, WaFd Insurance revenue was $19.5 million, an increase of 12.5% over the prior year. Total non-interest expense increased $2.7 million or 2.6% from the prior quarter as a result of strategic investments in our talent and technologies. Increases in compensation and information technology spend resulted in a small increase to the company's efficiency ratio for the fourth fiscal quarter to 56.82% compared to 56.01% as of June. Let me now turn the call over to Ryan to share his comments on WaFd Inc.'s credit quality.

Speaker #5: As of the September period end, the yield on interest-earning assets was 5.23%, while the cost of interest-bearing liabilities was 2.91%, resulting in a margin at period end of 2.82%.

$2 50, 682% compared to 56 point or 1% as of June.

Speaker #5: Total non-interest income increased slightly compared to the prior quarter to $18.4 million. Contributing to non-interest income is $4.6 million in revenue for the quarter from our insurance subsidiary of WaFd Insurance.

Let me now turn the call over to Ryan to share his comments on some offense credit quality.

Thank you Kelly and good morning, everyone.

Speaker #5: For the fiscal year, WAFD Insurance revenue was $19.5 million, an increase of $12.5% over the prior year. Total non-interest expense increased 2.7 million, or $2.6% from the prior quarter, as a result of strategic investments in our talent and technologies.

As reflected in our earnings release, we had a solid quarter of new loan production along multiple product lines. This.

As Kelly indicated total production on a quarter over quarter basis increased from $700 million to $1 4 billion.

The increase in production were seeing in the majority of our active loan portfolio types.

Speaker #5: Increases in compensation and information technology spend resulted in a small increase to the company's efficiency ratio for the fourth fiscal quarter to 56.82%, compared to 56.01% as of June.

On a quarter over quarter basis, commercial real estate production increased by 380% from $44 million to $211 million.

Commercial and industrial increased by 56% from $325 million to $507 million.

Speaker #5: Let me now turn the call over to Ryan to share his comments on WaFd's credit quality.

Commercial construction increased by 142% from $206 million to $499 million in land and the increased by 132% from $19 million to $44 million.

Operator: Thank you, Kelli, and good morning, everyone. As reflected in our earnings release, we had a solid quarter of new loan production along multiple product lines. As Kelli indicated, total production on a quarter-over-quarter basis increased from $700 million to $1.4 billion. Increase in production was seen in the majority of our active loan portfolio types. On a quarter-over-quarter basis, commercial real estate production increased by 380% from $44 million to $211 million. C&I increased by 56% from $325 million to $507 million. Commercial construction increased by 142% from $206 million to $499 million, and land, A&D increased by 132% from $19 million to $44 million. Importantly, we were able to achieve the increase in loan production with a consistent approach to underwriting that maintained a moderate risk profile.

Speaker #6: Thank you, Kelly, and good morning, everyone. As reflected in our earnings release, we had a solid quarter of new loan production along multiple product lines.

Speaker #6: As Kelly indicated, total production on a quarter-over-quarter basis increased from $700,000 to $1.4 billion. An increase in production was seen in the majority of our active loan portfolio types.

Accordingly, we were able to achieve the increase in loan production with a consistent approach to underwriting and the maintained our moderate risk profile.

Delinquent loans ended the quarter at 6% up 34 basis points, when compared to the June quarter, and 35 basis points when compared to September of 2024.

Speaker #6: On a quarter-over-quarter basis, commercial real estate production increased by $380.00 from $44.00 to $211.00,000. Commercial and industrial increased by $56.00 from $325.00 to $570.00,000.

Adversely classified loans decreased by $84 million in the quarter and now represent three 1% of net loans compared to three 5% as of the June quarter, and 2% as of September 24.

Speaker #6: Commercial construction increased by $142.00 from $206.00 to $409.00,000. And land A&D increased by $132.00 from $19.00 to $44.00,000. Importantly, we were able to achieve the increase in loan production with a consistent approach to underwriting that maintained a moderate risk profile.

Total criticized loans increased 57 million to four 4% of net loans compared to four 1% as of the June quarter, and two 4% as of September of 2024.

Operator: Delinquent loans ended the quarter at 0.6%, up 34 basis points when compared to the June quarter and 35 basis points when compared to September of 2024. Adversely classified loans decreased by $84 million in the quarter and now represent 3.1% of net loans compared to 3.5% as of the June quarter and 2% as of September of 2024. Total criticized loans increased $57 million to 4.4% of net loans compared to 4.1% as of the June quarter and 2.4% as of September of 2024. It should be noted that the increase in criticized loans is not concentrated in any one business line or industry, and similar to the rise in delinquencies, is reflective of the economic environment where elevated interest rates and economic uncertainty impacted both commercial and consumer borrowers.

Speaker #6: Delinquent loans ended the quarter at 0.6%, up 34 basis points when compared to the June quarter and 35 basis points when compared to September of 2024.

It should be noted that the increase in criticized loans is not concentrated in any one business line or industry and.

And similar to the rise in delinquencies is reflective of the economic environment were elevated interest rates and economic uncertainty impacted both commercial and consumer borrowers.

Speaker #6: Adversely classified loans decreased by $84,000,000 in the quarter and now represent 3.1% of net loans, compared to 3.5% as of the June quarter and 2% as of September of 2024.

Nonperforming assets increased $46 million in the quarter and represent 54% of total assets consisting of $129 million in nonperforming loans.

Speaker #6: Total criticized loans increased $57.00,000 to $4.4% of net loans compared to $4.1% as of the June quarter, and $2.4% as of September of 2024.

$11 1 million in Oreo and $3 million and other repossessed assets.

Elevated in comparison to recent period. These credit metrics remained modest in light of wharfage loan loss reserve and capital position and are indicative of our culture of early and proactive portfolio management.

Speaker #6: It should be noted that the increase in criticized loans is not concentrated in any one business line or industry. Similar to the rise in delinquencies, this is reflective of the economic environment where elevated interest rates and economic uncertainty impacted both commercial and consumer borrowers.

It is important to note here that the increases in delinquencies and nonperforming assets were largely impacted by a single commercial real estate loans over 90 days past due.

Operator: Non-performing assets increased $46 million in the quarter and represent 0.54% of total assets, consisting of $129 million in non-performing loans, $11.1 million in REO, and $3 million in other repossessed assets. While elevated in comparison to the recent period, these credit metrics remain modest in light of WaFd Inc.'s loan loss reserve and capital position and are indicative of our culture of early and proactive portfolio management. It is important to note here that the increases in delinquencies and non-performing assets were largely impacted by a single commercial real estate loan over 90 days past due. Although this loan was appropriately placed on non-accrual per policy, there was no charge-off taken upon revaluation, and we are actively collaborating with the borrower, and recent developments are indicating positive momentum.

Speaker #6: Non-performing assets increased $46 million in the quarter and represent 0.54% of total assets, consisting of $129 million in non-performing loans, $11.1 million in REO, and $3 million in other repossessed assets.

Although this loan was appropriately placed on nonaccrual per policy. There was no charge off taken upon revaluation and we are actively collaborating with the borrower and recent developments are indicating positive momentum.

If nonperforming assets and delinquencies were adjusted for this one loan NPA.

Speaker #6: While elevated in comparison to the recent period, these credit metrics remain modest in light of WAFD's loan loss reserve and capital position and are indicative of our culture of early and proactive portfolio management.

As would be three 6% of total assets, which represents no change from the June quarter end and delinquencies would be three 8% of total loans, which is up from <unk> two excuse me two 6% from June quarter end.

Speaker #6: It is important to note here that the increases in delinquencies and non-performing assets were largely impacted by a single commercial real estate loan over 90 days past due.

The net provision for credit losses for the quarter was $3 million, including a $2 million provision for loan losses, and a provision of $1 million related to unfunded loan commitments.

Speaker #6: Although this loan was appropriately placed on non-accrual per policy, there was no charge-off taken upon revaluation, and we are actively collaborating with the borrower. Recent developments are indicating positive momentum.

The provision is the result of growth in commercial loan balances, including C&I and CRE.

Operator: If non-performing assets and delinquencies were adjusted for this one loan, NPAs would be 0.36% of total assets, which represents no change from the June quarter end, and delinquencies would be 0.38% of total loans, which is up from 0.26% from June quarter end. The net provision for credit losses for the quarter was $3 million, including a $2 million provision for loan losses and a provision of $1 million related to unfunded loan commitments. The provision is the result of growth in commercial loan balances, including C&I and CRE, in addition to mixed credit metrics and negative trends in the migration of criticized, non-performing, and delinquent loans. Net loan charge-offs for the quarter totaled $1 million. For the year, net charge-offs totaled $11.8 million and represented a nominal six basis points of average net loans.

Speaker #6: If non-performing assets and delinquencies were adjusted for this one loan, MPAs would be 0.36% of total assets which represents no change from the June quarter end, and delinquencies would be 0.38% of total loans which is up from 0.26% from June quarter end.

In addition to mixed credit metrics and negative trends in the migration of criticized nonperforming and delinquent loans.

Net loan charge offs for the quarter totaled $1 million for.

For the year net charge offs totaled $11 8 million and represented a nominal six basis points of average net loans.

For reference over the last 10 years net charge offs have averaged a recovery of two basis points per year and over the last three years net charge offs have averaged 10 basis points per year.

Speaker #6: The net provision for credit losses for the quarter was $3 million, which includes a $2 million provision for loan losses and a provision of $1 million related to unfunded loan commitments.

Speaker #6: The provision is the result of growth in commercial loan balances, including C&I and CRE. This is in addition to mixed credit metrics and negative trends in the migration of criticized non-performing and delinquent loans.

Yes.

The allowance for credit losses, including the reserve for unfunded commitments provides coverage of 1.0% to 4% of gross loans at fiscal year end compared to 1.0 or 1% in September of 2024.

Speaker #6: Net loan charge-offs for the quarter totaled $1 million. For the year, net charge-offs totaled $11.8 million and represented a nominal six basis points of average net loans.

For the commercial loan portion of the portfolio. The allowance represents one 3% of net loans compared to $1 two 6% as of September of 2024.

Operator: For reference, over the last 10 years, net charge-offs have averaged a recovery of two basis points per year, and over the last three years, net charge-offs have averaged 10 basis points per year. The allowance for credit losses, including the reserve for unfunded commitments, provides coverage of 1.04% of gross loans at fiscal year end, compared to 1.01% in September of 2024. For the commercial loan portion of the portfolio, the allowance represents 1.3% of net loans compared to 1.26% as of September of 2024. Credit metrics at fiscal year end, while elevated from prior quarters, remain at healthy levels overall and have been impacted by two primary drivers. First, the elevated interest rate environment has impacted loan demand and borrowers' expense structures. Second, the economic uncertainty driven by tariffs continues to impact borrowers' top-line revenue results as well as material costs.

Credit metrics at fiscal year end, while elevated from prior quarters remain at healthy levels overall and have been impacted by two primary drivers.

Speaker #6: For reference, over the last 10 years, net charge-offs have averaged a recovery of 2 basis points per year, and over the last 3 years, net charge-offs have averaged 10 basis points per year.

First the elevated interest rate environment has impacted loan demand and borrowers expense structures.

Speaker #6: The allowance for credit losses, including the reserve for unfunded commitments, provides coverage of 1.04% of gross loans at fiscal year-end, compared to 1.01% in September of 2024.

Second the economic uncertainty driven by tariffs continues to impact borrowers topline revenue results as well as material costs.

Looking forward these factors remain headwinds for credit quality.

Speaker #6: For the commercial loan portion of the portfolio, the allowance represents 1.3% of net loans, compared to 1.26% as of September 2024. Credit metrics at fiscal year-end, while elevated from prior quarters, remain at healthy levels overall and have been impacted by two primary drivers.

While the uncertainty related to tariffs remains elevated the interest rate environment appears to be easing in the near term.

With that I will hand, the microphone over to Brent for his comments.

Excellent.

I wanted to let Kelly and Ryan start this call. So everyone can appreciate it.

Speaker #6: First, the elevated interest rate environment has impacted loan demand and borrowers' expense structures. Second, the economic uncertainty driven by tariffs continues to impact borrowers' top-line revenue results as well as material costs.

I think as a very solid year that we've just completed.

Change is hard, especially for in our organization that has been around for 108 years.

But I am incredibly proud of our team.

All 2000 of us have embraced what needed to be done taking the next step in moving warfare to be a true commercial bank.

Operator: Looking forward, these factors remain headwinds for credit quality. While the uncertainty related to tariffs remains elevated, the interest rate environment appears to be easing in the near term. With that, I will hand the microphone over to Brent for his comments.

Speaker #6: Looking forward, these factors remain headwinds for credit quality. While the uncertainty related to tariffs remains elevated, the interest rate environment appears to be easing in the near term.

You are seeing part of the change with this earnings call.

We recognize the change takes time, but believe that this is the best course of action for all of our constituents.

Speaker #6: With that, I will hand the microphone over to Brent for his comments.

Let me discuss our evolution from a thrift to a commercial bank.

Brent Beardall: Excellent. I wanted to let Kelli and Ryan start this call so everyone can appreciate what I think is a very solid year that we've just completed. Change is hard, especially for an organization that has been around for 108 years. I am incredibly proud of our team. All 2,000 of us have embraced what needed to be done, taking the next step in moving WaFd to be a true commercial bank. You are seeing part of the change with this earnings call. We recognize that change takes time, but believe that this is the best course of action for all of our constituents. Let me discuss our evolution from a thrift to a commercial bank. Most of you on this call will remember our previous strategic plan, which we set out in 2018, was called Vision 2025.

Speaker #3: Excellent. I wanted to let Kelly and Ryan start this call so everyone can appreciate what I think is a very solid year that we've just completed.

Most of you on this call will remember our previous strategic plan, which we set out in 2018 was called vision 2025.

Speaker #3: Change is hard, especially for an organization that has been around for 108 years. But I am incredibly proud of our team. All 2,000 of us have embraced what needed to be done, taking the next step and moving WaFd to be a true commercial bank.

And then focused on becoming a digital first bank grow.

Growing our transaction deposits and building our reputation as the bank of choice for top tier talent in the Western United States.

How did we do in executing that strategic plan.

It would give us a seven out of 10.

Speaker #3: You are seeing part of the change with this earnings call. We recognize that change takes time, but we believe that this is the best course of action for all of our constituents.

Before the 500 basis point increase in interest rates by score would've been nine out of 10, but.

But certainly rising deposit cost and reduced loan demand negatively impacted us.

Speaker #3: Let me discuss our evolution from a thrift to a commercial bank. Most of you on this call will remember that our previous strategic plan, which we set out in 2018, was called Vision 2025.

There is no question in my mind, we are better off today, we're having aimed high with vision 2025.

I would now take our tech stack over any midsized bank peer as.

Brent Beardall: It focused on becoming a digital-first bank, growing our transaction deposits, and building our reputation as the bank of choice for top-tier talent in the Western U.S. How did we do in executing that strategic plan? I would give us a 7 out of 10. Before the 500 basis point increase in interest rates, my score would have been a 9 out of 10. Certainly, rising deposit costs and reduced loan demand negatively impacted us. There is no question in my mind we are better off today for having aimed high with Vision 2025. I would now take our tech stack over any midsize bank peer as we now have a phenomenal digital offering with a combination of strong vendor relationships and control via in-house developed software. We have also learned that technology is a journey with no destination. There is no finish line to cross.

Speaker #3: And it focused on becoming a digital-first bank, growing our transaction deposits and building our reputation as the bank of choice for top-tier talent in the Western United States.

As we now have a phenomenal digital offering with a combination of strong vendor relationships and control via in house developed software.

We have also learned that technology is a journey with no destination. There is no finish line to cross.

Speaker #3: How did we do in executing that strategic plan? I would give us a 7 out of 10. Before the 500 basis point increase in interest rates, my score would have been a 9 out of 10.

As soon as you have implemented a new technology you have to work on what comes next and iterate on what you just launch.

Speaker #3: But certainly, rising deposit costs and reduced loan demand negatively impacted us. There is no question in my mind that we are better off today for having aimed high with Vision 2025.

The key is to be nimble and we believe we have the technology and the team to do exactly that.

Leveraging technology for the benefit of our clients and colleagues is foundational.

Speaker #3: I would now take our tech stack over any mid-sized bank peer, as we now have a phenomenal digital offering with a combination of strong vendor relationships and control via in-house developed software.

Who we are today and for our future.

What is next.

We took a hard look at where our stock was trading even after the events of the last couple of days.

We typically traded just above tangible book value as Youre aware of right now we're below tangible book value.

Speaker #3: We have also learned that technology is a journey with no destination. There is no finish line to cross. As soon as you have implemented a new technology, you have to work on what comes next.

While most of our peers have been trading in a range of about 135 times tangible book value.

Brent Beardall: As soon as you have implemented a new technology, you have to work on what comes next and iterate on what you just launched. The key is to be nimble, and we believe we have the technology and the teams to do exactly that. Leveraging technology for the benefit of our clients and colleagues is foundational to who we are today and for our future. What is next? We took a hard look at where our stock was trading, even after the events of the last couple of days. We typically traded just above tangible book value. As you're aware, right now we're below tangible book value, while most of our peers have been trading in the range of about 1.35 times tangible book value. Why is that? The market may be wrong over the short term, but generally speaking, the market proves right over the long term.

Why is that.

The market may be wrong over the short term.

Speaker #3: And iterate on what you just launched. The key is to be nimble, and we believe we have the technology and the teams to do exactly that.

But generally speaking the market proves right over the long term.

Our stock trades at a relative discount because our profitability lags compared to our peers.

Speaker #3: Leveraging technology for the benefit of our clients and colleagues is foundational to who we are today and for our future. What is next? We took a hard look at where our stock was trading, even after the events of the last couple of days.

By peers I referred to the 62 publicly traded banks between 10 and $50 billion in assets and.

And let me just give you some comparisons that most of you are aware of in terms of profitability.

Our peers are return on assets typically 1% to 2%.

Speaker #3: We typically traded just above tangible book value. As you're aware, right now we're below tangible book value. While most of our peers have been trading in the range of about $1.35 times tangible book value.

Watford was zero point, 91% lag.

In return in terms of return on tangible common equity our peers are at 13% <unk> is at 10%.

Speaker #3: Why is that? The market may be wrong over the short term, but generally speaking, the market proves right over the long term. Our stock trades at a relative discount because our profitability lags compared to our peers.

In terms of efficiency ratio, our peers were at 55% warfare and 57%.

Brent Beardall: Our stock trades at a relative discount because our profitability lags compared to our peers. By peers, I refer to the 62 publicly traded banks between $10 billion and $50 billion in assets. Let me just give you some comparisons that most of you are aware of in terms of profitability. Our peers' return on assets is typically 1.22%. WaFd was 0.91%. We lag. In terms of return on tangible common equity, our peers are at 13%. WaFd is at 10%. In terms of efficiency ratio, our peers are at 55%, WaFd at 57%. We lag in terms of profitability. The biggest single driver for why our profitability is behind our peers is because of our margin. Our peers have a margin of 3.42%, and you can see WaFd has a margin this quarter of 2.71%. That is made up, of course, in terms of yield on loans.

So we lagged in terms of profitability.

The biggest single driver for wire profitability is behind our peers is because of our margin.

Speaker #3: By peers, I refer to the 62 publicly traded banks between $10 billion and $50 billion in assets. And let me just give you some comparisons that most of you are aware of in terms of profitability.

Our peers have a margin of 342%.

<unk> has a margin this quarter of $2 71 per cent.

That is made up of course in terms of yield on loans.

Speaker #3: Our peers' return on assets typically is 1.22%, while WaFd was at 0.91%. We lag. In terms of return on tangible common equity, our peers are at 13%, and WaFd is at 10%.

Our peers had a yield of 6% on their loans and <unk> was $5 38, which is brought down by the significant balance of single family mortgages that I'll address as well as the cost of deposits. Our peers cost of deposits is just about 2% we're at two 6%.

Speaker #3: In terms of efficiency ratio, our peers are at 55%, WAFD at 57%. So we lag in terms of profitability. The biggest single driver for why our profitability is behind our peers is because of our margin.

However, we remained stronger than our peers in terms of TCE ratio with our peers at nine 3% and Lafayette at nine 8% and our net charge offs have remained very.

Speaker #3: Our peers have a margin of 3.42%, and you can see WAFD has a margin this quarter of 2.71%. That is made up, of course, in terms of yield on loans. Our peers had a yield of 6% on their loans, and WAFD was 5.38%, which has been brought down by the significant bounce of single-family mortgages that I'll address.

Very low relative to our peers for this last quarter. Our peers are at 16 basis points of op, Ed at just two basis points of charge offs.

There is no silver bullet.

Brent Beardall: Our peers had a yield of 6% on their loans, and WaFd was 5.38%, which is brought down by the significant balance of single-family mortgages that I'll address, as well as the cost of deposits. Our peers' cost of deposits is just above 2%. We're at 2.6%. However, we remain stronger than our peers in terms of TCE ratio, with our peers at 9.3% and WaFd at 9.8%. Our net charge-offs have remained very, very low relative to our peers. For this last quarter, our peers are at 16 basis points and WaFd at just 2 basis points of charge-offs. There is no silver bullet. The reason for our relative underperformance lies in our thrift heritage. We historically focused on attracting higher cost time deposits to fund mortgage loans, effectively accepting a higher degree of interest rate risk.

The reason for our relative underperformance lies in our threat tariff that we historically focused on attracting higher cost time deposits to fund mortgage loans effectively accepting a higher degree of interest rate risk.

Speaker #3: As well as the cost of deposits, our peers' cost of deposits is just above 2%; we're at 2.6%. However, we remain stronger than our peers in terms of TCE ratio, with our peers at 9.3% and WaFd at 9.8%. Our net charge-offs have remained very low relative to our peers. For this last quarter, our peers are at 16 basis points and WaFd at just 2 basis points of charge-offs.

Our solution is summed up by our next business plan, which we call build 2030 <unk>.

We plan designed to fully shift our focus to where we can add the most value to our clients and shareholders.

Serving the banking needs of businesses.

This shift takes time disciplined and effort and comes with specific goals.

Important goal in my mind is increasing our noninterest bearing deposits to total deposits.

Speaker #3: There is no silver bullet. The reason for our relative underperformance lies in our thrift heritage. We historically focused on attracting higher-cost time deposits to fund mortgage loans, effectively accepting a higher degree of interest rate risk.

From 11% in January when we launched this plan up to 20% by the end of fiscal 2013.

Today, we sit at 12%.

It is an ambitious goal, but it is what we need to do and it will.

Brent Beardall: Our solution is summed up by our next business plan, which we call Build 2030, a plan designed to fully shift our focus to where we can add the most value to our clients and shareholders, serving the banking needs of businesses. This shift takes time, discipline, and effort and comes with specific goals. The most important goal in my mind is increasing our non-interest-bearing deposits to total deposits from 11% in January when we launched this plan up to 20% by the end of fiscal 2030. Today, we sit at 12%. It is an ambitious goal, but it is what we need to do, and it will drive increased loan demand and branch utilization. The way our peers have achieved their lower cost of funds is to focus on serving small businesses, which is exactly what we are doing. Here's what we've accomplished so far.

Speaker #3: Our solution is summed up by our next business plan, which we call Build 2030. A plan designed to fully shift our focus to where we can add the most value to our clients and shareholders.

Drive increased loan demand and branch utilization.

Our peers have achieved their lower cost of funds is to focus on serving small businesses, which is exactly what we are doing.

Speaker #3: Serving the banking needs of businesses. This shift takes time, discipline, and effort, and comes with specific goals. The most important goal in my mind is increasing our non-interest-bearing deposits to total deposits.

Here's what we've accomplished so far and.

In January we reorganized our frontline bankers into three teams the kickoff build 2030 are.

Our business Bank.

Handling commercial credit needs up to $10 million and all small business and consumer deposits. This includes our 208 branches.

Speaker #3: From 11% in January when we launched this plan, up to 20% by the end of fiscal 2030. Today we sit at 12%. It is an ambitious goal, but it is what we need to do and it will drive increased loan demand and branch utilization.

Our corporate bank, which handles all large commercial credits and clients with treasury needs.

Lastly, our commercial real estate bank, recognizing our historical strength and expertise in commercial real estate, we have a dedicated team to serve the credit and treasury needs of real estate investors and operators.

Speaker #3: The way our peers have achieved their lower cost of funds is by focusing on serving small businesses, which is exactly what we are doing.

We have also expanded our product offerings, we now originate SBA 504 loans and <unk> loans.

Speaker #3: Here's what we've accomplished so far. In January, we reorganized our frontline bankers into three teams to kick off Build 2030. Our business bank, handling commercial credit needs up to $10 million and all small business and consumer deposits.

Brent Beardall: In January, we reorganized our frontline bankers into three teams to kick off Build 2030: our business bank, handling commercial credit needs up to $10 million, and all small business and consumer deposits. This includes our 208 branches, our corporate bank, which handles all large commercial credits and clients with treasury needs, and our commercial real estate bank, recognizing our historical strength and expertise in commercial real estate. We have a dedicated team to serve the credit and treasury needs of real estate investors and operators. We have also expanded our product offerings. We now originate SBA 504 loans and 7A loans. Over the last six months, WaFd Bank has earned SBA delegated authority and has been approved as a preferred SBA lender. Being great at serving treasury management needs with all of its requisite tools and controls is our long-term solution for achieving low-cost deposits.

Over the last six months <unk> has earned SBA delegated authority and has been approved as a preferred SBA lender.

Being great at surfing Treasury management needs with all of its requisite tools and controls.

Speaker #3: This includes our $208 branches, our corporate bank, which handles all large commercial credits and clients with treasury needs, and lastly, our commercial real estate bank.

As our long term solution for achieving low cost deposits.

We've all heard about the hype what.

AI can do and.

Speaker #3: Recognizing our historical strength and expertise in commercial real estate, we have a dedicated team to serve the credit and treasury needs of real estate investors and operators.

And we too are excited about the potential.

But AI is also being used extensively by bad actors to commit fraud.

Robust Treasury management controls and automation are a must for all businesses.

Speaker #3: We have also expanded our product offerings. We now originate SBA 504 loans and 7(a) loans. Over the last six months, WAFD has earned SBA delegated authority and has been approved as a preferred SBA lender.

We are very pleased with our Treasury management offering for both small and large businesses that allows our clients to mitigate risk and easily manage their banking.

We're now nine months since we announced Bill 2030.

Speaker #3: Being great at serving treasury management needs, with all of its requisite tools and controls, is our long-term solution for achieving low-cost deposits. We have all heard about the hype that what AI can do.

And here are some of the results.

Our gross loan pipelines have increased 24% in just the last quarter.

Gross new money potential is up to $2 5 billion up from just $2 billion a quarter ago and we have a.

Brent Beardall: We have all heard about the hype that what AI can do, and we too are excited about the potential. AI is also being used extensively by bad actors to commit fraud. Robust treasury management controls and automation are a must for all businesses. We are very pleased with our treasury management offering for both small and large businesses that allows our clients to mitigate risk and easily manage their banking. We are now nine months since we announced Build 2030, and here are some of the results. Our gross loan pipelines have increased 24% in just the last quarter. Gross new money potential is up to $2.5 billion, up from just $2 billion a quarter ago. We have a deposit pipeline of almost $250 million of net new deposits we anticipate.

Speaker #3: And we, too, are excited about the potential. But AI is also being used extensively by bad actors to commit fraud. Robust treasury management controls and automation are a must for all businesses.

Deposit pipeline of almost $250 million of net new deposits, we anticipate.

With our branches focused on attracting small businesses, we are seeing more customer traffic.

Speaker #3: We are very pleased with our treasury management offering, for both small and large businesses, that allows our clients to mitigate risk and easily manage their banking.

Client growth.

And still have significant capacity to grow without adding staff levels.

We are seeing growth in the number of accounts, which is exactly what we want.

Speaker #3: We are now nine months since we announced Build 2030, and here are some of the results. Our gross loan pipelines have increased 24% in just the last quarter.

Specifically non interest bearing accounts were up by 5000 over the year, two 5% increase which is modest but important.

Because it reverses the trend of declining numbers of noninterest bearing deposits that we've seen over the last several years.

Speaker #3: Gross new money potential is up to $2.5 billion, up from just $2 billion a quarter ago. We also have a deposit pipeline of almost $250 million in net new deposits that we anticipate.

C&I loans.

After opening up business lending to our branch teams in the last year, we have more than doubled the number of C&I loans, we have on our books to 3000.

Brent Beardall: With the branches focused on attracting small businesses, we are seeing more customer traffic, client growth, and still have significant capacity to grow without adding staff levels. We are seeing growth in the number of accounts, which is exactly what we want. Specifically, non-interest-bearing accounts are up by 5,000 over the year, a 2.5% increase, which is modest but important because it reverses the trend of declining numbers of non-interest-bearing deposits that we have seen over the last several years. C&I loans, after opening up business lending to our branch teams in the last year, we have more than doubled the number of C&I loans we have on our books to 3,000. With each of these new business relationships, we are planting the seed for additional growth going forward.

Speaker #3: With the branches focused on attracting small businesses, we are seeing more customer traffic. Client growth is strong, and we still have significant capacity to grow without adding staff levels.

With each of these new business relationships, we're planting the seed for additional growth going forward.

Having studied many thrifts that failed in their journey to become commercial banks I believe the most important differentiator is being disciplined especially around credit.

Speaker #3: We are seeing growth in the number of accounts, which is exactly what we want. Specifically, non-interest-bearing accounts are up by 5,000 over the year, a 2.5% increase.

We don't want to get in a hurry and take undue credit risk for the sake of faster growth, we will err on the side of quality over growth.

Speaker #3: which is modest but important because it reverses the trend of declining numbers of non-interest-bearing deposits that we have seen over the last several years.

Looking at the composition of our balance sheet, let me highlight our plan for handling the <unk> loans are single family residential loans, we have on our balance sheet currently $8 $1 billion, earning only four 2%.

Speaker #3: C&I loans. After opening up business lending to our branch teams in the last year, we have more than doubled the number of C&I loans we have on our books to 3,000.

Which is about 40% of our total loans.

Speaker #3: With each of these new business relationships, we are planting the seed for additional growth going forward. Having studied many thrifts that failed in their journey to become commercial banks, I believe the most important differentiator is being disciplined.

Given the rate environment. Our plan is to replace runoff in this portfolio with agency mortgage backed securities.

Brent Beardall: Having studied many thrifts that failed in their journey to become commercial banks, I believe the most important differentiator is being disciplined, especially around credit. We don't want to get in a hurry and take undue credit risk for the sake of faster growth. We will err on the side of quality over growth. Looking at the composition of our balance sheet, let me highlight our plan for handling the single-family residential loans we have on our balance sheet, currently $8.1 billion, earning only 4.2%, which is about 40% of our total loans. Given the rate environment, our plan is to replace runoff in this portfolio with agency mortgage-backed security. Currently, we pick up about 100 basis points with zero credit risk. Last quarter, we had $226 million of single-family loans pay off. On the deposit side, we have largely been treading water over the last 18 months.

Currently we picked up about 100 basis points.

With zero credit risk last quarter, we had $226 million of single family loans pay off.

Speaker #3: Especially around credit. We don't want to get in a hurry and take undue credit risk for the sake of faster growth. We will err on the side of quality over growth.

On the deposits on the deposit side, we have largely been treading water over the last 18 months.

But that does not tell the whole story, nor give credit to our team for what we've accomplished.

Speaker #3: Looking at the composition of our balance sheet, let me highlight our plan for handling the SFR loans to single-family residential loans we have on our balance sheet.

As you recall on March 1st of 2024, we closed the Luther Burbank acquisition, knowing they have a high cost deposit base.

Speaker #3: Currently, $8.1 billion is earning only 4.2%. This represents about 40% of our total loans. Given the rate environment, our plan is to replace runoff in this portfolio with agency mortgage-backed securities.

Since that time, we have loud their deposits to decline by $1 8 billion or 32%.

But importantly in doing so we have decreased the weighted rate on the remaining deposits by 90 basis points.

Speaker #3: Currently, we picked up about 100 basis points with zero credit risk. Last quarter, we had $226 million of single-family loans pay off. On the deposit side, we have largely been treading water over the last 18 months.

We are very pleased to point out that organic growth at Watford deposit franchise over that time more than offsets the one 8 billion.

With the run off.

Another way to look at it is Watford would've grown its deposits by eight 5% over the last 18 months absent the impact of both the Luther Department.

Brent Beardall: That does not tell the whole story, nor give credit to our team for what we have accomplished. As you recall, on March 1, 2024, we closed the Luther Burbank acquisition, knowing they had a high-cost deposit base. Since that time, we have allowed their deposits to decline by $1.8 billion, or 32%. Importantly, in doing so, we have decreased the weighted rate on the remaining deposits by 90 basis points. We are very pleased to point out that organic growth at WaFd Bank, the deposit franchise over that time, more than offsets the $1.8 billion of Luther runoff. Another way to look at it is WaFd Bank would have grown its deposits by 8.5% over the last 18 months, absent the impact of the Luther deposit runoff. That leads to an obvious question. Are we pleased with the results of the Luther Burbank acquisition? The answer is yes.

Speaker #3: But that does not tell the whole story, nor give credit to our team for what we have accomplished. As you recall, on March 1, 2024, we closed the Luther Burbank acquisition.

That leads to an obvious question.

Are we pleased with the results of Luther Burbank acquisition. The answer is yes.

Speaker #3: Knowing they had a high-cost deposit base. Since that time, we have allowed their deposits to decline by $1.8 billion, or 32%. But importantly, in doing so, we have decreased the weighted rate on remaining deposits by 90 basis points.

We got into California at the right price and now have a solid foundation to build a franchise in the state.

I want to also mentioned that we still have $170 million and our rate mark related to Luther Luther Burbank loans that will accrete into income over the life of those loans and with rates coming down I would expect that to accelerate.

Speaker #3: We are very pleased to point out that organic growth at WAFD's deposit franchise over that time more than offsets the $1.8 billion of Luther runoff.

It's also important to note that this last quarter. We finally came to the end of our hub. The consent orders are working with the CFPB. They have now closed out of the two under consent orders. So that is now closed and behind US which is timely considering we are completely out of the mortgage business.

Speaker #3: Another way to look at it is, WAFD would have grown its deposits by 8.5% over the last 18 months absent the impact of the Luther deposit runoff.

Speaker #3: That leads to an obvious question: Are we pleased with the results of the Luther Burbank acquisition? The answer is yes. We got into California at the right price and now have a solid foundation to build the franchise in the state.

Brent Beardall: We got into California at the right price and now have a solid foundation to build a franchise in the state. I want to also mention that we still have $170 million in our rate mark related to Luther Burbank loans that will accrete into income over the life of those loans. With rates coming down, I would expect that to accelerate. It's also important to note that this last quarter, we finally came to the end of our HMDA consent orders. Working with the CFPB, they have now closed out the two HMDA consent orders, so that is now closed and behind us, which is timely considering we are completely out of the mortgage business. Changing topics, we are very pleased to announce that on August 29 of this year, we launched WaFd Wealth Management with a hiring of experienced professionals from a wirehouse here in Seattle.

Changing topics, we are very pleased to announce that on August 29th of this year, we launched warfare wealth management with the hiring of experienced professionals from a wire house here in Seattle.

Speaker #3: I want to also mention that we still have $170 million in our rate mark related to Luther Burbank loans that will accrete into income over the life of those loans.

Our goal is to organically grow wealth management to $1 billion in assets under management in the first two years and then go from there.

Speaker #3: And with rates coming down, I would expect that to accelerate. It's also important to note that this last quarter, we finally came to the end of our HMDA consent orders.

Early indications are very positive and it is nice to fill a hole that we had in our product offering we.

We see wealth as a central element in growing our noninterest income going forward.

Speaker #3: Working with the CFPB, they have now closed out the two HUMDA consent orders, so that is now closed and behind us. This is timely considering we are completely out of the mortgage business.

Two macro items I would address number one bank M&A.

We are all aware of the two large deals announced this last quarter.

Speaker #3: Changing topics, we are very pleased to announce that on August 29th of this year, we launched WAFD Wealth Management, with the hiring of experienced professionals from a wirehouse here in Seattle.

Fifth third acquiring comerica and P&C acquiring first thing.

I think we will see a big pickup in M&A over the next two years as bank valuations improve and management teams look for scale in light of Banking's Unlevel, playing field today.

Brent Beardall: Our goal is to organically grow wealth management to $1 billion in assets under management in the first two years and then go from there. Early indications are very positive, and it is nice to fill a hole that we have had in our product offering. We see wealth as an essential element in growing our non-interest income going forward. Two macro items I would address. Number one, bank M&A. We are all aware of the two large deals announced this last quarter: Fifth Third acquiring Comerica and PNC acquiring First Bank. I think we will see a big pickup in M&A over the next two years as bank valuations improve and management teams look for scale in light of banking's unlevel playing field today.

Speaker #3: Our goal is to organically grow wealth management to $1 billion, and assets under management in the first two years and then go from there.

I thought it was very interesting to hear the P&C CEO said about wanting to get to one trillion of <unk>.

Speaker #3: Early indications are very positive, and it is nice to fill a hole that we have had in our product offering. We see wealth as an essential element in growing our non-interest income going forward.

In order to stay relevant.

There were only 200 banks in the United States greater than $3 billion in assets.

Crazy to think about only 200 banks greater than $3 billion in assets I think by the end of this administration.

Speaker #3: Two macro items I would address. Number one, bank M&A. We are all aware of the two large deals announced this last quarter: the third, acquiring Comerica and P&C acquiring FirstBank.

It could be significantly less than that.

Where we'd be a buyer of course, we would love to be a buyer of the right franchise at the right price, but given our CRA needs to improve rating, which we continue to appeal and we hope to have resolution on that appeal this quarter <unk>.

Speaker #3: I think we will see a big pickup in M&A over the next two years, as bank valuations improve and management teams look for scale in light of banking's unlevel playing field today.

And our relatively low valuation I don't see us participating at a significant level.

Brent Beardall: I thought it was very interesting to hear what the PNC CEO said about wanting to get to $1 trillion of a size in order to stay relevant. There are only 200 banks in the U.S. greater than $3 billion in assets. Crazy to think about only 200 banks greater than $3 billion in assets. I think by the end of this administration, it could be significantly less than that. Will we be a buyer? Of course, we would love to be a buyer of the right franchise at the right price. Given our CRA needs to improve rating, which we continue to appeal, and we hope to have resolution on that appeal this quarter, and our relatively low valuation, I do not see us participating at a significant level. That may not be a bad thing considering most M&A has been destructive to capital for the acquiring institution.

Speaker #3: I thought it was very interesting to hear that the P&C CEO said about wanting to get to $1 trillion in size in order to stay relevant.

That may not be a bad thing considering most M&A has been destructive to capital for the acquiring institution.

Speaker #3: There are only 200 banks in the United States that have greater than $3 billion in assets. It's crazy to think about—only 200 banks greater than $3 billion in assets.

Number two deposit insurance reform.

I'm a board member of the mid sized bank coalition and we have been leading the charge on reforming deposit insurance coverage.

Speaker #3: I think by the end of this administration, it could be significantly less than that. Will we be a buyer? Of course, we would love to be a buyer of the right franchise at the right price.

I think it's evident to everyone. Since the 2023 runs on the banks are Silicon Valley, and first Republic and other mid sized banks. It is the unlevel playing field and it appears we are gaining momentum with the latest proposed legislation, which would provide $10 million of insurance or noninterest bearing.

Speaker #3: But given our CRA needs to improve rating, which we continue to appeal, and we hope to have resolution on that appeal this quarter, and our relatively low valuation, I don't see us participating at a significant level.

Transaction deposits on all banks, except the G sibs and foreign banks.

Speaker #3: That may not be a bad thing, considering most M&A has been destructive to capital for the acquiring institution. Number two, deposit insurance reform. I am a board member of the Mid-Sized Bank Coalition, and we have been leading the charge on reforming deposit insurance coverage.

The banking system is strong today.

The system is broken in my opinion.

As too many deposits are concentrated in the too big to failed banks.

Brent Beardall: Number two, deposit insurance reform. I am a board member of the Midsize Bank Coalition, and we have been leading the charge on reforming deposit insurance coverage. I think it is evident to everyone since the 2023 runs on the banks of Silicon Valley and First Republic and other midsize banks, it is an unlevel playing field. It appears we are gaining momentum with the latest proposed legislation, which would provide $10 million of insurance for non-interest-bearing transaction deposits on all banks except the G-SIBs and foreign banks. The banking system is strong today, but the system is broken, in my opinion, as too many deposits are concentrated in the too big to fail banks. For example, the largest bank in the U.S. grew by 18% in assets on an annualized basis in the second quarter, while the economy grew at only 2.5%.

For example, the largest bank in the U S grew by 18% and assets on an annualized basis in the second quarter.

Speaker #3: I think it's evident to everyone since the 2023 runs on the banks, Silicon Valley and First Republic, and other mid-sized banks, that it is an unlevel playing field.

While the economy grew at only two 5%.

That bank now holds 14% of the deposits in the United States.

There is something wrong with the perception that deposits are safe the too big to fail banks, but less so at the rest of them.

Speaker #3: And it appears we are gaining momentum with the latest proposed legislation, which would provide $10 million of insurance for non-interest-bearing transaction deposits on all banks except the GSIBs and foreign banks.

Now is the time to begin addressing this issue if we want a broad robust and diverse banking system and I am pleased to see the momentum Danny.

Speaker #3: The banking system is strong today, but the system is broken, in my opinion, as too many deposits are concentrated in too-big-to-fail banks.

We are certainly living in interesting times.

But I am grateful to be part of the work that team and what we are building.

Speaker #3: For example, the largest bank in the U.S. grew by 18% in assets on an annualized basis in the second quarter, while the economy grew at only 2.5%.

Next it is my pleasure to introduce Kathy Cooper, our client experience officer to talk about some of the progress in improving our clients' banking experience.

Thank you Brent asked me to take a few moments to describe the way that we're differentiating walks out from the competition.

Brent Beardall: That bank now holds 14% of the deposits in the United States. There is something wrong with the perception that deposits are safe at the too big to fail banks, but less so at the rest of them. Now is the time to begin addressing this issue if we want a broad, robust, and diverse banking system, and I'm pleased to see the momentum gaining. We are certainly living in interesting times, but I'm grateful to be part of the WaFd team and what we are building. Next, it is my pleasure to introduce Cathy Cooper, our Chief Experience Officer, to talk about some of the progress in improving our clients' banking experience.

Speaker #3: That bank now holds 14% of the deposits in the United States. There is something wrong with the perception that deposits are safe at the too-big-to-fail banks, but less so at the rest of them.

First our bankers are expected and empowered to be active members of their local communities via chamber rotary or nonprofit board.

Speaker #3: Now is the time to begin addressing this issue if we want a broad, robust, and diverse banking system, and I'm pleased to see the momentum gaining.

Following up consistently builds credibility at a grassroots level as evidenced by the improvement in our net promoter score from a low of 17 eight years ago to a high of 58 this past year.

Speaker #3: We are certainly living in interesting times, but I’m grateful to be part of the WAFD team and what we are building. Next, it is my pleasure to introduce Cathy Cooper, our Client Experience Officer, to talk about some of the progress we are making in improving our clients' banking experience.

We have also won best bank of warrants from both Newsweek and forums.

Currently named Best Bank in four out of our nine states.

Second is having control of our client facing technology instead of being held hostage by vendors.

Cathy Cooper: Thank you. Brent asked me to take a few moments to describe the ways that we're differentiating WaFd from the competition. First, our bankers are expected and empowered to be active members of their local communities, be it chamber, rotary, or non-profit boards. Showing up consistently builds credibility at a grassroots level, as evidenced by the improvement in our net promoter score from a low of 17 eight years ago to a high of 58 this past year. We have also won Best Bank awards from both Newsweek and Forbes and are currently named Best Bank in four out of our nine states. Second, it's having control over our client-facing technology instead of being held hostage by vendors. Next week, we launch Release 2.8 of our digital banking platform developed in-house by Pike Street Labs, our Pike Street Labs team.

Speaker #7: Thank you. Brent asked me to take a few moments to describe the ways that we're differentiating WaFd from the competition. First, our bankers are expected and empowered to be active members of their local communities.

Next week, we launch released two eight of our digital banking platform developed in house by Pike Street Labs, our packaging lab team.

The mobile App release adds direct deposit switching debit card controls and consumer wire transfers our customers can send a wire verified by the phone device I D plus the client's voiceprint.

Speaker #7: Be it chamber, rotary, or nonprofit boards, showing up consistently builds credibility at a grassroots level. As evidenced by the improvement in our Net Promoter Score, from a low of 17 eight years ago to a high of 58 this past year.

From a mobile for $10.

Speaker #7: We have also won Best Bank Awards from both Newsweek and Forbes and are currently named Best Bank in four out of our nine states.

<unk> Street Labs also built our own consumer deposit account portal that allows you to open a checking account online in as little as 10 minutes.

Speaker #7: Second, it's about having control over our client-facing technology instead of being held hostage by vendors. Next week, we launch Release 2.8 of our digital banking platform.

We continue to optimize the flow to reduce customer friction, while leveraging our robust enterprise solution for identification of clients and fraud risk scoring.

Speaker #7: Developed in-house by Pike Street Labs, our Pike Street Labs team. The mobile app release adds direct deposit switching, debit card controls, and consumer wire transfers.

We have to be able to block synthetic identities and fraudsters without creating undue hurdles for legitimate customers.

Cathy Cooper: The mobile app release adds direct deposit switching, debit card controls, and consumer wire transfers. Our customers can send a wire verified by the phone's device ID plus the client's voice print, all from a mobile phone for $10. Pike Street Labs also built our own consumer deposit account portal that allows you to open a checking account online in as little as 10 minutes. We continue to optimize the flow to reduce customer friction while leveraging a robust enterprise solution for identification of clients and fraud risk scoring. We have to be able to block synthetic identities and fraudsters without creating undue hurdles for legitimate customers. Today, we auto-approve 44% of online deposit account applications and have opened over 4,700 consumer accounts online in the past year.

Today, we auto approved 44% of online deposit account application and have opened over 4700 consumer accounts online in the past year.

Speaker #7: Our customers can send a wire, verified by the phone's device ID plus the client's voice print, all from a mobile phone, for $10. Pike Street Labs also built our own consumer deposit account portal that allows you to open a checking account online in as little as 10 minutes.

One of the most powerful tools under development is a client data platform that recognizes visitors to our website and to our online banking.

Checks to see which badges they earn during prior visits and adjust or personalize. The experience maybe you clicked on the small business lending pages last time you visited so we gave you a small business loan batch and if you logged in while you were on our web site. We can now stitch that matched your login identity.

Speaker #7: We continue to optimize the flow to reduce customer friction while leveraging a robust enterprise solution for the identification of clients and fraud risk scoring. We have to be able to block synthetic identities and fraudsters without creating undue hurdles for legitimate customers.

This allows us to follow that and target activities like E mails and other outreach to improve service and enhance converging.

Speaker #7: Today, we auto-approve 44% of online deposit account applications and have opened over 4,700 consumer accounts online in the past year. One of the most powerful tools under development is a client data platform that recognizes visitors to our website and to our online banking.

And finally, we are focused on solving the pain of small business owners, who according to studies spend as much as 18 hours a week managing their finances.

Cathy Cooper: One of the most powerful tools under development is a client data platform that recognizes visitors to our website and to our online banking, checks to see which badges they earned during prior visits, and adjusts or personalizes the experience. Maybe you clicked on the small business lending page the last time you visited, so we gave you a small business loan badge. If you logged in while you were on our website, we can now stitch that badge to your login identity. This allows us to follow up and target activities like emails and other outreach to improve service and enhance conversion. Finally, we are focused on solving the pain of small business owners who, according to studies, spend as much as 18 hours a week managing their finances. 18 hours is too much. We are creating banking that bridges the gap between commercial and consumer solutions.

18 hour this too much. So we are creating banking that bridges the gap between commercial and consumer solutions, we use encino for origination of all small business loans and deposit accounts.

Speaker #7: Checks to see which badges they earned during prior visits and adjusts or personalizes the experience. Maybe you clicked on the small business lending page the last time you visited, so we gave you a small business loan badge.

We offer Treasury Express a small business digital banking solution that connects to light versions of our Treasury services.

Speaker #7: And if you logged in while you were on our website, we can now stitch that badge to your login identity. This allows us to follow up and target activities like emails and other outreach to improve service and enhance conversion.

And we are one of the earliest adopters of cashless central from Pfizer designed to support payables and receivables for small businesses without having to rely on a separate third party service.

Speaker #7: And finally, we are focused on solving the pain of small business owners, who, according to studies, spend as much as 18 hours a week managing their finances.

With that well close for Q&A.

Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered and we're seeing with yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.

Speaker #7: 18 hours is too much. So we are creating banking that bridges the gap between commercial and consumer solutions. We use Encino for the origination of all small business loans and deposit accounts.

Cathy Cooper: We use Inseno for origination of all small business loans and deposit accounts. We offer Treasury Express, a small business digital banking solution that connects to light versions of our treasury services. We are one of the earliest adopters of Cash Flow Central from BuyServe, designed to support payables and receivables for small businesses without having to rely on a separate third-party service. With that, we'll close for Q&A.

Speaker #7: We offer Treasury Express, a small business digital banking solution that connects to light versions of our treasury services. We are also one of the earliest adopters of Cash Flow Central from Pfizer.

Yeah.

Our first question comes from Geoffrey Loos with D. A Davidson your line is open.

Thanks, Good morning.

I appreciate that.

Speaker #7: Designed to support payables and receivables for small businesses, without having to rely on a separate third-party service. With that, we'll close. For Q&A.

Hosting the call and Brian.

Brian.

Again appreciate the strategic overview that was that was good.

Right.

I guess moving to the loan pipeline.

You mentioned, that's been building for three quarters and Kelly outlined.

Operator: Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star one-one on your telephone. If your question has been answered or you wish to move yourself from the queue, please press star one-one again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Jeff Rulis with D.A. Davidson. Your line is open.

Speaker #8: Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press *11 on your telephone. If your question has been answered or you're wishing to leave yourself in the queue, please press *11 again.

And the undertow of the.

Some of the originations in the active portfolio are starting to outpace that I guess.

Speaker #8: We'll pause for a moment while we compile our Q&A roster. Our first question comes from Jeff Rulis with DA Davidson. Your line is open.

We're simply just looking at kind of your budgeting for fiscal 'twenty six on net growth.

What could you tell us on your expectations.

Yes, so thank you Jeff.

[Analyst 1]: Thanks. Good morning. I appreciate the hosting the call. Brent, I again appreciate the strategic overview. That was great. I guess moving to the loan pipeline, you mentioned that's been building for three quarters, and Kelli outlined kind of the undertow of some of the originations in the active portfolio are starting to outpace that. I guess more simply, just looking at kind of your budgeting for fiscal 2026 on net growth, what could you tell us on your expectations?

Speaker #9: Thanks, good morning. I appreciate you hosting the call, and Brent, again, I appreciate the strategic overview. That was great. I guess moving to the loan pipeline, you mentioned that's been building for three quarters, and Kelly outlined the kind of the undertow of some of the originations, and the active portfolio is starting to outpace that.

Couldn't be with you this morning, and you'll you'll notice we're now kind of breaking the loan segment into two parts the active and inactive.

Breaking out the single family loans in the inactive segment and really we think about that inactive is really an equivalent to a bond portfolio. So as the single family goes away.

We can replace that was born.

With mortgage backed securities. So we think about the active portfolio, we truly believe that we can see.

Speaker #9: I guess, more simply, just looking at kind of your budgeting for fiscal 2026 on net growth, what could you tell us about your expectations?

8% to 12% growth in the next year and active portfolio.

And the pace of runoff in the inactive I understood that you're redeploying it into MBS, but.

Brent Beardall: Thank you, Jeff, good to be with you this morning. You'll notice we're now kind of breaking the loan segment into two parts, the active and the inactive. We're breaking out the single-family loans into the inactive segment. We think about that inactive as really an equivalent to a bond portfolio. As the single-family goes away, we can replace that with bond, with mortgage-backed securities. We think about the active portfolio. We truly believe that we can see 8% to 12% growth in the next year in the active portfolio.

Speaker #3: Yeah, so thank you, Jeff, and good to be with you this morning. You'll notice we're now kind of breaking the loan segment into two parts: the active and the inactive.

Your expectation for net run off in the inactive.

Yeah, Yeah, yeah, the inactive will run off about 200 and $300 million a quarter is our expectation.

Speaker #3: We're breaking out the single-family loans and the inactive segment. And really, we think about that inactive as really an equivalent to a bond portfolio.

Great. Thank you.

And then on the margin.

Kelly you mentioned.

Speaker #3: So, as the single-family market goes away, we can replace that with bonds and mortgage-backed securities. When we think about the active portfolio, we truly believe that we can see 8% to 12% growth in the next year in the active portfolio.

I forget what that 282 number was that of September average or just.

What are your spot rate at the end of the quarter.

Oh go ahead Kelly.

Certainly good morning, definitely 282 is the as of the end of the corner spot rate, So, which we also do we'd like to see because it gives an indication absent.

[Analyst 1]: The pace of runoff in the inactive portfolio, understood that you're redeploying it into MBS, but your expectation for net runoff in the inactive?

Speaker #2: And pace of runoff in the inactive portfolio. Understood that you're redeploying it into MBS, but what's your expectation for net runoff in the inactive?

Any unexpected.

Events or actions that that's where we would have.

Brent Beardall: Yeah. The inactive will run off about $200 million to $300 million a quarter is our expectation.

Speaker #3: Yeah, the inactive will run off at about $200 to $300 million a quarter is our expectation.

Our starting point for the first quarter of fiscal 'twenty six.

Got it.

And I guess, if you wouldn't mind sharing kind of an update on on your rate sensitivity.

[Analyst 1]: Great. Thank you. On the margin, Kelli, you mentioned I forget that that 2.82% number, was that a September average or just where you spot right at the end of the quarter?

Speaker #2: Great, thank you. And then on the margin, Kelly, you mentioned, I forget that 282 number. Was that a September average or just where the spot rate was at the end of the quarter?

Quarter cut in September and expectations for a couple more by the end of the year.

And mindful of that spot rate, indicating upward.

Your expectations as we kind of manage the margin into the into the new year.

Speaker #3: So go ahead, Kelly.

Brent Beardall: Go ahead, Kelli.

Kelli Holtz: Certainly. Good morning, Jeff. 282 is the as-of-the-end-of-the-quarter spot rate, which we also like to see because it gives an indication, absent any unexpected events or actions, that that's where we would have our starting point for the first quarter of fiscal 2026.

Speaker #7: Certainly. Good morning, Jeff. 282 is the as of the end of the quarter spot rate, which we like to see because it gives an indication, absent any unexpected events or actions, that's where we would have our starting point for the first quarter of fiscal 26.

I think it's reasonable to say that you could see the margin expand a bit with future cuts.

Recognize that we have always said in the past and do you think that we lag about a quarter here or full effectiveness on a.

Rate cuts so if we see one in a quarter.

[Analyst 1]: Got it. If you wouldn't mind sharing kind of an update on your rate sensitivity, you know a quarter cut in September and expectations for a couple more by the end of the year, and you know mindful of that spot rate indicating upward your expectations as we kind of manage the margin into the new year.

Speaker #2: Got it. And I guess if you wouldn't mind sharing an update on your rate sensitivity, you know, a quarter-point cut in September and the expectations for a couple more by the end of the year.

We would benefit from that in the December quarter, but December cut my.

March.

June definitely recognize the benefit there and that really is just a repricing on our liabilities.

Spanish.

Okay, well, thank you I'll step back.

Speaker #2: And you know, mindful of that spot rate indicating upward, your expectations as we kind of manage the margin into the new year.

Yeah. Thank you, Jeff and I think the from my perspective, it's good news on the margins as you pointed out the spot rate on the margin is at the end of the quarter as you know $2 82.

Kelli Holtz: I think it's reasonable to say that you could see the margin expand a bit with future cuts. Just recognize that we have always said in the past and do think that we lag about a quarter for full effectiveness on rate cuts. If we see one in October, you know we would benefit from that in the December quarter, but a December cut might take us to March or June to fully recognize the benefit there. That really is just the repricing on our liabilities.

Speaker #7: I think it's reasonable to say that you could see the margin expand a bit with future cuts. Just recognize that we have always said in the past and do think that we lag about a quarter for full effectiveness on rate cuts.

No.

Would bode well for the coming quarter, but it all depends on what happens with the great thing is I think everybody on this call knows that.

The short term impact of rates has been negative for us slightly in terms of margin, but then as the deposit pricing catches up with the asset repricing and it's a net benefit the most important thing for us in terms of rates is that a positive slope of the yield curve.

Speaker #7: So if we see one in October, you know we would benefit from that in the December quarter. But a December cut might take us to March or June to fully recognize the benefit there.

Speaker #7: And that really is just the repricing on our liabilities.

[Analyst 1]: Got it. Got it. Thank you. I'll step back.

It.

Speaker #2: Got it. Okay, well, thank you all. I'll step back.

It appears that that will be the case for the foreseeable future, which is very possible.

Brent Beardall: Thank you, Jeff. I think from my perspective, it's good news on the margin. As you point out, the spot rate on the margin as of the end of the quarter is 2.82%, so that would bode well for the coming quarter, but it all depends on what happens with rates. I think everybody on this call knows the short-term impact of rates has been negative for us just slightly in terms of margin. As the deposit pricing catches up with the asset repricing, it's a net benefit. The most important thing for us in terms of rates is to have a positive slope of the yield curve, and it appears that will be the case for the foreseeable future, which is very positive. We'll go to the next question, operator.

Speaker #3: Yeah, thank you, Jeff. I think from my perspective, it's good news on the margin. As you point out, the spot rate on the margin is at the end of the quarter.

Okay.

We'll go to the next question operator.

Thank you one moment.

Speaker #3: As you know, 282, so that would bode well for the coming quarter. But it all depends on what happens with rates. As I think everybody on this call knows, the short-term impact of rates has been negative for us, just slightly in terms of margin.

Our next question comes from Matthew Clark with Piper Sandler.

Hey, good morning, Thanks for the questions.

Hmm.

Wanted to get a little more color on the on the core loan yields I think they were down about eight basis points this quarter and based on our calculation.

Speaker #3: But then, as the deposit pricing catches up with the asset repricing, it's a net benefit. The most important thing for us, in terms of rates, is to have a positive slope of the yield curve.

The drivers there and then.

Hmm, maybe remind us how much of your loan portfolio re prices with each rate cut.

Speaker #3: And it appears that this will be the case for the foreseeable future, which is very positive. We'll go to the next question, Operator.

Overnight or within the month.

Yeah, I'll I'll I'll, let Kelly take that but that's.

A function of both moving rates and also the increase in non accrual loans as an impact, but I'll, let Kelly talk about that a little bit more.

Operator: Thank you. One moment. Our next question comes from Matthew Clark with Piper Sandler.

Speaker #2: Thank you. One moment. Our next question comes from Matthew Clark with Piper Sandler.

Correct, I mean, the big driver quarter over quarter would be the increase the increase in our non accrual loans, which was primarily as Ryan.

[Analyst 2]: Hey, good morning. Thanks for the questions. I wanted to give a little more color on the core loan yields. I think they were down about 8 basis points this quarter based on our calculation. Just the drivers there, and then maybe remind us how much of your loan portfolio reprices with each rate cut overnight or within the month.

Speaker #8: Hey, good morning. Thanks for the questions. I wanted to give a little more color on the Quarter Loan Yields. I think they were down about 8 basis points.

Ryan mentioned, one one loan.

I would say that had in round numbers, a three basis point impact on our margin.

Speaker #8: This quarter, based on our calculation, just the drivers there, and then maybe remind us how much of your loan portfolio reprices, you know, with each rate cut, you know, overnight or within the month.

We've got about 50, we're about 50 545, 55% of our Orion asset 45.

Percent are fixed.

Brent Beardall: Yeah. I'll let Kelli take that, but that's a function of both moving rates and also the increase in non-accrual loans. It has an impact, but I'll let Kelli talk about that a little bit more.

And we have about Florida.

Speaker #3: Yeah, I'll let Kelly take that, but that's a function of both moving rates and also the increase in nominal loans. It has an impact, but I'll let Kelly talk about that a little bit more.

Same on the loan book too because that's the majority of them already now.

Youre going to see our yield on our loan book not vary depending on how much of our.

Fair value Mark recognized during the quarter on our Luther Burbank loans and it was well it was slightly lower this quarter than it was last quarter and that's simply a function of repayment.

Kelli Holtz: Correct. I mean, the big driver quarter over quarter would be the increase in our non-accrual loans, which was primarily, as Ryan Mauer mentioned, one loan. I would say that had, in round numbers, a 0.03% impact on our margin. We're about 55%, 45%, 55% of our earning assets, 45% are fixed. We have about 40%, and that's about the same on the loan book too because that's the majority of our earning assets. You're going to see our yield on our loan book, Matt, vary depending on how much of our fair value mark is recognized during the quarter on our Luther Burbank loans. It was slightly lower this quarter than it was last quarter, and that's simply a function of repayment in that book.

Speaker #7: Correct. I mean, the big driver quarter over quarter would be the increase in our nominal loans, which was primarily, as Ryan mentioned, one loan.

Huh.

Okay and does that 50 545.

Speaker #7: I would say that had, in round numbers, a three basis point impact on our margin. We've got about 55% of our earning assets and 45% are fixed.

Yeah.

Does the variable piece include.

Does that include arms.

I'm, assuming it's not all truly floating.

It includes our hybrid bonds.

That's correct and it includes the impact of any swaps, we have on the books as well.

Speaker #7: And we have about 40, and that's about the same on the loan book too, because that's the majority of our earning assets. You're going to see our yield on our loan book, Matt, vary depending on how much of our fair value mark recognized during the quarter on our Luther Burbank loans.

Okay. Okay.

Just over 40% of our earning assets will reprice in the next six months.

Okay got it thank you.

And then on the step up in production pretty big pretty Big increase.

Speaker #7: And it was slightly lower this quarter than it was last quarter. And that's simply a function of repayment in that book, so.

Anything anything chunky in there maybe just if there's maybe what what was the largest kind of new commitment or new.

[Analyst 2]: Okay. Is that 55, 45? Does the variable piece include, does that include ARMs, or is, I'm assuming it's not all truly floating?

Speaker #8: Okay. And is that 55% and 45%? Does the variable piece include ARMs, or I'm assuming it's not all truly floating?

New loan.

<unk> origination.

And that $1 4 billion that you put on just trying to get a sense of kind of if there was anything sizable that drove part of that increase and what type of what type of credit it might be.

Kelli Holtz: It includes our hybrid loans. Yes, correct. It includes the impact of any swaps we have on the books as well.

Speaker #7: It includes our hybrid loan, yes, correct. And it includes the impact of any swaps we have on the books as well. We've.

Yeah, I would say I'll, let Ryan talk a little bit about that but.

[Analyst 2]: Okay. Okay.

Speaker #8: Okay, okay.

Kelli Holtz: We've got just over 40% of our earning assets will reprice in the next six months.

Speaker #7: Got four. Just over 40% of our earning assets will reprice in the next six months.

It's really a function of how low our production had come in we're still coming up for you I recall just a couple of years ago, we were doing $8 billion of production here.

[Analyst 2]: Okay. Got it. Thank you. On the step-up in production, pretty big, pretty big increase. Anything chunky in there? Maybe just if there's, if maybe what was the largest kind of new commitment or new loan origination in that $1.4 billion that you put on? Just trying to get a sense of if there was anything sizable that drove part of that increase and what type of credit it might be.

Speaker #8: Okay, got it. Thank you. And then on the step-up in production, pretty big, pretty big increase. Anything chunky in there? Maybe just if there's—maybe what was the largest kind of new commitment or new loan origination?

Hum.

We're typically a keeping our largest loans at jessup.

Just under $50 million, but the requests are picking up and as projects get larger in size, they're picking up and but if we go over that $50 million in terms of loan requests were trying to find the participant to mitigate our risk Brian I'll, let you talk a little bit about the production and the largest funds yourself.

Speaker #8: In that $1.4 billion that you put on, just trying to get a sense of if there was anything sizable that drove part of that increase and what type of credit it might be.

Yeah, Thanks, Brendan and thanks, Matt.

Brent Beardall: Yeah. I'll let Ryan talk a little bit about that, but it's really a function of how low our production had come and we're still coming up. I recall just a couple of years ago, we were doing $8 billion of production a year. We're typically keeping our largest loans at just under $50 million. The requests are picking up, and as projects get larger in size, they're picking up. If we go over that $50 million in terms of loan request, we're trying to find a participant to mitigate our risk. Ryan, I'll let you talk a little bit about the production and the largest loans you saw.

Matthew as well for the question.

Speaker #3: Yeah, I would. I'll let Ryan talk a little bit about that, but it's really a function of how low our production had come, and we’re still coming up.

I think Brent adequately or accurately described really what we're seeing here.

Maintaining our largest loans under $50 million I think the biggest.

Speaker #3: You know, I recall just a couple of years ago we were doing $8 billion of production a year. And so we're typically keeping our largest loans at just under $50 million.

The impact of this is we.

We have seen.

A number of commercial real estate loans, but particularly multifamily loans, but with the move.

Speaker #3: But the requests are picking up, and as projects get larger in size, they're picking up. But if we go over that $50 million in terms of loan requests, we're trying to find a participant to mitigate our risk.

Move on to the downward movement in the rate we have a number of clients where these projects are now penciling.

So we've seen renewed interest for a lot of borrowers that have.

During the first part of the year really been sitting on the sidelines waiting for some more stability.

Speaker #3: Ryan, I'll let you talk a little bit about the production and the largest loans you saw.

[Analyst 1]: Yeah. Thanks, Brent, and thanks, Matthew, as well for the question. I think Brent accurately described really what we're seeing here. We are maintaining our largest loans under $50 million. I think the biggest impact of this is we have seen a number of commercial real estate loans, particularly multifamily loans, that with the downward movement in the rate, we have a number of clients where these projects are now penciling. We've seen renewed interest for a lot of borrowers that have, during the first part of the year, really been sitting on the sidelines waiting for some more stability. It is not just that we're seeing commercial real estate. We're seeing C&I opportunities. There are a number of C&I borrowers also that were not moving forward with larger CapEx projects and things like that because of economic uncertainty.

But it's not we're seeing commercial real estate, we're seeing C&I opportunities.

Speaker #2: Yeah, thanks, Brent. And thanks, Matthew, as well, for the question. I think Brent accurately described really what we're seeing here. We are maintaining our largest loans under $59.

There's a number of C&I borrowers also that we're not.

Moving forward with larger capex projects and things like that because of economic uncertainty.

Speaker #2: I think the biggest impact of this is we have seen a number of commercial real estate loans, but particularly multifamily loans that, with the downward movement in the rate, we have a number of clients where these projects are now penciling.

So as things are stabilizing we're just seeing an increase really across the board, but nothing that is particularly lumpy within that group.

Okay. Thanks for the color and then on the expense run rate.

It looked pretty clean.

Just any comments on the outlook.

Speaker #2: So we've seen renewed interest from a lot of borrowers that, during the first part of the year, really have been sitting on the sidelines waiting for some more stability.

And knowing there's some I think theres some seasonality in the March quarter.

Yeah, correct, its a pretty clean quarter as some of the health insurance expenses were up with this we're self insured. So we had some larger claims come through we'll have some time to find nothing predictable about the seasonality there, but I think we're at a pretty good run rate from an expense standpoint at least until we get to next year.

Speaker #2: But it's not; we're seeing commercial real estate and C&I opportunities. There are a number of C&I borrowers who, you know, we're not moving forward with larger CapEx projects.

Speaker #2: And things like that because of economic uncertainty. So, as things are stabilizing, we're just seeing an increase, really, across the board, but nothing that is particularly lumpy within that group.

[Analyst 1]: As things are stabilizing, we're just seeing an increase really across the board, nothing that is particularly lumpy within that group.

The increase in staying on Brexit.

Okay, and then just big picture question, because we're getting it from clients, but any thoughts on stable coin anything you might be doing any kind of partnerships and just your view on that potential that a potential threat.

[Analyst 2]: Okay. Thanks for the color. On the expense run rate, it looked pretty clean. Just any comments on the outlook, knowing there's some seasonality in the March quarter?

Speaker #8: Okay, thanks for the color. And then on the expense run rate, it looked pretty clean. Just any comments on the outlook and knowing there's some, I think there's some seasonality in the March quarter?

We're paying out what we're.

We're paying a lot of attention to it obviously and it's moving quickly we haven't announced any partnerships, but we're certainly looking into it and I think there will be demand in the marketplace from it I don't see we don't get a lot of questions or demand from our clients today. So I don't feel like our deposit base is at risk, but I do believe it could.

Brent Beardall: Yeah. Correct. It's a pretty clean quarter. Some of the health insurance expenses were up with just we're self-insured, so we had some larger claims come through. It will happen from time to time. Nothing predictable about the seasonality there, but I think we're at a pretty good run rate from an expense standpoint, at least until we get to next year, and then we'll have the increases, the annual increases.

Speaker #3: Yeah, correct. It's a pretty clean quarter. Some of the health insurance expenses were up, and we're self-insured, so we had some larger claims come through. That will happen from time to time; nothing.

Speaker #3: Predictable about the seasonality there, but I think we're at a pretty good run rate from an expense standpoint, at least until we get to next year, and then we'll have the increases staying or increases.

An opportunity if we do it right. So it's something we're looking at.

Okay. Thanks again for all the color and I appreciate the color. Thank.

[Analyst 2]: Okay. Just big-picture question because we're getting it from clients, but any thoughts on stablecoin, anything you might be doing, any kind of partnerships, and just your view on that potential threat?

Speaker #8: Okay, and then just big picture question, because we're getting it from clients, but any thoughts on stablecoin? Anything you might be doing? Any kind of partnerships?

Thank you Matthew.

One moment for our next question.

Speaker #8: And just your view on that potential threat.

Our next question comes from Andrew <unk> with Stephens. Your line is open.

Brent Beardall: We're paying a lot of attention to it, obviously, and it's moving quickly. We haven't announced any partnerships, but we're certainly looking into it. I think there will be demand in the marketplace from it. I don't see we get a lot of questions or demands from our clients today, so I don't feel like our deposit base is at risk, but I do believe it could be an opportunity if we do it right. It's something we're looking at.

Speaker #3: Yeah, we're paying a lot of, we're paying a lot of attention to it. Obviously, and it's moving quickly. We haven't announced any partnerships, but we're certainly looking into it.

Okay.

Hey, good morning.

Good morning, Andrew.

Good morning, Thanks for hosting this call I appreciate it.

Just a couple of quick ones for me.

Speaker #3: And I think there will be demand in the marketplace from it. I don't see, we don't get a lot of questions or demand from our clients today.

Brent.

From a balance sheet size question I guess on the on the targets for 20% noninterest bearing deposits by 2030.

Speaker #3: So, I don't feel like our deposit base is at risk, but I do believe it could be an opportunity if we do it right.

I guess, you can kind of get there two ways right you could you can shrink the time deposit composition or just on an absolute basis.

Speaker #3: So it's something we're looking at.

[Analyst 2]: Okay, thanks again for all the color and appreciate the call.

Speaker #8: Okay, thanks again for all the color, and I appreciate the call.

Brent Beardall: Thank you, Matthew.

Close to double that.

Speaker #3: Thank you, Matthew.

Dollars.

Operator: One moment for our next question. Our next question comes from Andrew Tara with Stephens. Your line is open.

Speaker #2: One moment for our next question. Our next question comes from Andrew Terrell with Stevens. Your line is open.

I'm curious should we expect continued declines in the time deposit book.

Which do you see being the more more of a driving factor on that getting to that 20% non interest bearing mix.

[Analyst 2]: Hey, good morning.

Speaker #8: Hey, good morning.

Brent Beardall: Morning, Andrew.

Speaker #3: Good morning, Andrew.

I see the biggest driving factor is overall growth, we don't want to shrink our way into it at all we want to bring on new clients.

[Analyst 2]: Morning. Thanks for hosting this call. I appreciate it. Just a couple of quick ones for me. Brent, on kind of a balance sheet size question, I guess, on the targets for 20% non-interest-bearing deposits by 2030, I guess you can kind of get there two ways, right? You could shrink the time deposit composition or just on an absolute basis close to double the NIB dollars. I'm curious, should we expect continued declines in the time deposit book? Which do you see being the more of the driving factor on that getting to that 20% non-interest-bearing mix?

Speaker #8: Morning, thanks for hosting this call. I appreciate it. Just a couple of quick ones for me. Brent, on kind of a balance sheet size question, I guess.

Become more relevant in our communities we serve so its overall growth.

Speaker #8: On the target for 20% non-interest-bearing deposits by 2030, I guess you can kind of get there two ways, right? You could shrink the time deposit composition or just, on an absolute basis, close to double the NIB dollars.

Most of the time deposit run off has come from the <unk> franchise and so we think we're at the tail end of that run off so I would hope to be able to breakeven, maybe even slight growth on time deposits, but the outsize growth in non interest bearing checking.

Checking accounts.

Speaker #8: I'm curious, should we expect continued declines in the time deposit book? Which do you see being more of the driving factor in that: getting to that 20% non-interest-bearing mix?

Yeah got it okay.

And then just on deposit costs I mean, the spot margin at the end of the period.

I guess kind of implies that there was some some good progress on deposit moves post the fed cut and I heard your comments about generally lagging and.

Brent Beardall: I see the biggest driving factor is overall growth. We don't want to shrink our way into it at all. We want to bring on new clients and become more relevant in our communities we serve. It's overall growth. Most of the time deposit runoff has come from the Luther Burbank franchise, and we think we're at the tail end of that runoff. I would hope to be able to break even, maybe even slight growth on time deposits, but the outsized growth on the non-interest-bearing and the checking accounts.

Speaker #3: I see the biggest driving factor is overall growth. We don't want to shrink our way to it at all. We want to bring on new clients and become more relevant in the communities we serve.

I just wanted to I would've thought that maybe the client reaction to rate cuts, so far and what you've seen or what you've heard from your clients.

Speaker #3: So it's overall growth, and most of the time, deposit runoff has come from the Luther franchise. So we think we're at the tail end of that runoff.

Pushback wiser or maybe lack thereof, and just how youre approaching.

The most recent rate cut as well as you know many expected incremental rate cuts. How your approach compares to you know the most recent round of 100 basis points, whether you'd like to be more aggressive or less aggressive.

Speaker #3: So, I would hope to be able to break even, maybe even see slight growth on time deposits, but the outsized growth on the non-interest-bearing and the checking accounts.

[Analyst 2]: Got it. Okay. On deposit costs, the spot margin at the end of the period kind of implies that there was some good progress on deposit moves post the Fed cut. I heard your comments about generally lagging, and I just wanted to talk about maybe the client reaction to rate cuts so far and what you've seen or what you've heard from your clients, pushback-wise or maybe lack thereof, and just how you're approaching the most recent rate cut as well as any expected incremental rate cuts, how your approach compares to the most recent round of 100 basis points, whether you'd look to be more aggressive or less aggressive.

Speaker #8: Yep, got it. Okay. And then just on deposit costs, I mean, the spot margin at the end of the period, I guess kind of implies that there was some good progress on deposit moves post the Fed cut.

Yeah, No I think that.

To answer your question directly it will be more aggressive in terms of our cuts and we can do that now that our loan to deposit ratio down.

Low ninety's as Youll recall, we were up about 110% not too long ago. So we've got now as long as deposit ratio will be more aggressive with rate cuts and the it's been telegraphed enough by the fed the clients expect it to.

Speaker #8: And I heard your comments about generally lagging, and I just wanted to talk about maybe the client reaction to rate cuts so far and what you've seen.

Speaker #8: Or what you've heard from your clients: pushback-wise, or maybe lack thereof. Just how you're approaching the most recent rate cut, as well as any expected incremental rate cuts?

To happen, so we're not getting very much pushback.

Yeah.

Your.

Observation is spot on there.

Very aggressive with this latest rate cut and we'll get the benefit of that.

Speaker #8: How does your approach compare to, you know, the most recent round of 100 basis points? Would you look to be more aggressive or less aggressive?

Next quarter, but I think it's expected that the real question for all of US is what what the rates during this last.

Brent Beardall: Yeah. No, I think that to answer your question directly, we'll be more aggressive in terms of our cuts. We can do that now that our loan-to-deposit ratio is down in the low 90%. As you'll recall, we were up about 110% not too long ago. We've gotten that loan-to-deposit ratio where we can be more aggressive with rate cuts. It's been telegraphed enough by the Fed that clients expect it to happen. We're not getting very much pushback. Your observation is spot on. We were very aggressive with this latest rate cut, and we'll get the benefit of that this next quarter. I think it's expected. The real question for all of us is what do rates do in this last quarter of the year? I think if you look at the futures, it's going for a couple more decreases. Personally, I would be surprised if that happened.

Speaker #3: Yeah, no, I think that to answer your question directly, we'll be more aggressive in terms of our cuts. And we can do that now that our learned deposit ratio is down to the low 90s.

Last quarter of the year and I think if you look at the futures, it's going for a couple more decreases.

Personally I would be surprised if that happens.

Speaker #3: As you'll recall, we were up about 110% not too long ago. So we've gotten that learned deposit ratio where we can be more aggressive with rate cuts.

Thank goodness more strength in the economy.

Maybe the futures are giving it credit for and if you look at the fed's dual mandate unemployment.

Speaker #3: And it's been telegraphed enough by the Fed that clients expect it to happen. So we're not getting very much pushback. Your observation is spot on.

We made some very very strongly.

Unemployment remains low and the employment market is strong and inflation is still well above their targets. So.

Speaker #3: We were very aggressive with this latest rate cut, and we'll get the benefit of that this next quarter. But I think it's expected.

I, we're fed board member I don't know how quickly I wouldn't want to move into decreasing rates for them, but obviously I'm not and the market is telling us it's going to happen, but we can see.

Speaker #3: The real question for all of us is, what do rates do in this last quarter of the year? I think if you look at the futures, it’s indicating a couple more decreases.

Yeah.

Great well, thanks again for the call and I appreciate the thoughts.

Thank you Andrew.

One moment for our next question.

Brent Beardall: I think there's more strength in the economy than maybe the futures are giving it credit for. If you look at the Fed's dual mandate, under unemployment.

Our next question comes from Kelly Motta with K VW. Your line is open.

Hey, good morning, Thanks for the question and thanks for holding the call today really appreciate it.

Brad Goode: Unemployment remains low and the employment market is strong, and inflation is still well above their target. If I were a Fed board member, I don't know how quickly I would want to move into decreasing rates further. Obviously, I'm not, and the market is telling us it's going to happen, so we will see.

Youre welcome Kelly good to speak to you and I've never had so much love for holding a phone call. So this is wonderful.

Well very enough you know I guess.

I guess speaking to overtime it sounds like you want to improve the profitability and we're looking at you.

You know over time to do so.

Operator: Great. Thanks again for the call, and I appreciate the thoughts.

And you mentioned you know you guys as partners.

Brad Goode: Thank you, Andrew.

Vision 2025 are in trying to become digital first and have continued to invest in technologies.

Brad Goode: One moment for our next question. Our next question comes from Kelli Holtz with KBW. Your line is open.

Just from a high level provide kind of the what's left to be done and the types of things walk that is interested in order to get that client growth and engagement, that's going to get you to that profitability level over time. Thanks.

Brent Beardall: Hey, good morning. Thanks for the question and thanks for holding the call today. I really appreciate it.

Brad Goode: Yeah, you're welcome, Kelli. Good to speak to you. I've never had so much love for holding a phone call, so this is wonderful.

So it's there's no one thing alright, I I think we have offerings across the board, it's just constantly improving those offerings and giving them better but I think Cathy you spoke to a couple of the improvements that we're going to have.

Brent Beardall: Fair enough. I guess speaking to over time, it sounds like you want to improve the profitability. You're looking over time to do so. You mentioned, as part of Vision 2025, you were trying to become digital-first and have continued to invest in technologies. Can you, from a high level, provide what's left to be done and the types of things WaFd Inc. is interested in to get that client growth and engagement that's going to get you to that profitability level over time? Thanks.

Rolling out a direct deposit switchover feature to make it really easy for people to switch over direct deposit.

We are looking at.

Giving people credit for their paychecks, a couple of days earlier like some others do right. It's it's just doing tweaks here and there on what we offer there's no single technology I'm really pleased with how our mobile offering is going.

Typically with the wire transfers, that's a differentiator for us, but it's really almost impossible to differentiate with technology. If you find something good to others will copy it and vice versa, but we have to be great. We have to have people that just you know what.

Brad Goode: Yeah. There's no one thing, all right? I think we have offerings across the board. It's just constantly improving those offerings and getting them better. I think Cathy spoke to a couple of the improvements that we're going to have, you know, rolling out a direct deposit switchover feature to make it really easy for people to switch over to direct deposit. We are looking at, you know, giving people credit for their paychecks a couple of days earlier, like some others do, right? It's just doing tweaks here and there on what we offer. There's no single technology. I'm really pleased with how our mobile offering is going and, specifically with the wire transfers, that's a differentiator for us. It's really almost impossible to differentiate with technology. If you find something good, others will copy it and vice versa. We have to be great.

They love our technology and in fact recently, we just reached out to our clients and said, okay. What about our technology you want us to improve so.

We're giving away I think a big screen TV for the first thing gives us the best feedback but.

That's one of the phenomenal things about having Pike Street labs as we can develop based on what our clients asking to get it done quickly with releases and were doing typically one or two releases per quarter. So there's nothing specific other than to continue you know.

Improving everything we offer but the most important thing how are we going to improve that profitability, we're going to focus on the business accounts, which has not been our historical focus and we recognize that our peers that we're comparing ourselves to that.

Brad Goode: We have to have people that just, you know, they love our technology. In fact, recently, we just reached out to our clients and said, "Okay, what about our technology do you want us to improve?" We're giving away, I think, a big screen TV for the person that gives us the best feedback. That's one of the phenomenal things about having Pike Street Labs is we can develop based on what our clients ask and get it done quickly, with releases. We're doing typically one or two releases per quarter. There's nothing specific other than to continue, you know, improving everything we offer. The most important thing, how are we going to improve that profitability? We're going to focus on the business accounts, which has not been our historical focus. We recognize that our peers that we're comparing ourselves against have been doing this for decades.

Against have been doing this for decades, and we're relatively new to that game, but as I mentioned in my comments. The most important thing from my perspective as it were conservative with our underwriting. So we don't take undue risk and we will get there.

Got it that's that's really helpful.

Last question for me for Kelly.

I that you guys have hit on the fact that your ERP margin is higher than the average I do believe looking at the <unk> margin from the prior quarter that was a few basis points higher than what it what ended up popping out at four.

Your fiscal fourth quarter aberration I'm, just wondering if there's any light.

Brad Goode: We're relatively new to that game. As I mentioned in my comments, the most important thing from my perspective is that we're conservative with our underwriting so we don't take undue risk. We will get there.

Ended period liquidity or anything like that that could be skewing that E. P. Marshall hire that we should be taking into account or if that was just kind of the three key dynamics and fluctuation.

Brent Beardall: Got it. That's really helpful. Maybe a last kind of question from me, for Kelli. You guys have hit on the fact that your EOP margin is higher than the average. I do believe looking at the EOP margin from the prior quarter, that was a few basis points higher than what it ended up popping out at for your fiscal fourth quarter average. I'm just wondering if there's any end-of-period liquidity or anything like that that could be skewing the EOP margin higher that we should be taking into account, or if that was just kind of the Q3 dynamics and fluctuations. Thanks.

Yeah, certainly I think the end of period margin Jim.

Did come in higher than what we ended June with them and that was primarily a result, as Brent mentioned, some reversal of interest or the large non accrual loans.

Non accrual during the quarter.

Absent that we see.

Hi, Mike.

Alright.

Well, Jim so it really isn't it really a function of.

It did not.

That's really helpful. Thanks for that I'll step back.

Yeah.

And I'm not showing any further questions at this time I'd like to turn the call back over to Brad for any further remarks.

Kelli Holtz: Yeah, certainly. I think the end-of-period margin at June did come in higher than what we ended June with. That was primarily a result, as Brent mentioned, of some reversal of interest for the large non-accrual loans that went non-accrual during the quarter. Absent that, we've seen our margin expand above our end-of-period quote at June. It really is a function of the recent non-accrual that we're going to.

Bradley.

Before you.

Give our partying comments, let me just say thank you to everyone for joining this morning. We appreciate it very much and one point, we did not cover was capital management and obviously with the stock trading today at 27 86.

Below tangible book value. We believe it's one of the best investments, we can make and so I would say, we would be likely to exercise our share repurchase program that the board has given.

Brent Beardall: That's really helpful. Thanks for that. I'll step back.

Given us so it's it's it's.

Brad Goode: I'm not showing any further questions at this time. I'd like to turn the call back over to Brent for any further remarks.

It's not always a bad thing when the stock price goes down it does provide opportunities, but I think as Sandy said C. N D. C. Headline said this morning with regard to regional banks by the day and I truly believe that's the case with.

Brad Goode: Brad, before you give our parting comments, let me just say thank you to everyone for joining this morning. We appreciate it very much. The one point we did not cover was capital management. Obviously, with the stock trading today at $27.86, below tangible book value, we believe it's one of the best investments we can make. I would say we would be likely to exercise our share repurchase program that the board has given us. It's not always a bad thing when the stock price goes down. It does provide opportunities. I think, as CNBC headlines said this morning with regard to regional banks, buy the dip. I truly believe that that's the case with WaFd Inc. Thank you very much. Brad, I'll let you take it from there.

With Wap it so thank you very much and Brad I'll, let you take it from it okay. Yeah. Thanks, Brent and really appreciate everybody joining the call. This morning. Thank you.

I Hope you found it valuable for your time. This morning, you can contact me if you've got any further questions have a great rest of the day and enjoy your weekend.

Thank you ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Cathy Cooper: Okay. Thanks, Brent. I really appreciate everybody joining the call this morning. Thank you. I hope you found it valuable for your time this morning. You can contact me if you've got any further questions. Have a great rest of the day and enjoy your weekend. Thanks.

Brad Goode: Thank you, ladies and gentlemen. This does conclude today's presentation. You may now disconnect and have a wonderful day.