WaFd, Inc. reported net income available to common shareholders of $60.5 million for its fiscal first quarter ended December 31, 2025. That translated to $0.79 per diluted share, an increase from $0.54 per share a year ago and $0.72 per share in the prior quarter.
Management said the linked-quarter improvement stemmed from modestly higher net interest income, increased non-interest income, and lower total non-interest expense. The company also noted share repurchases during the quarter helped lift per-share results. The efficiency ratio improved to 55.3% from 56.8%.
Chief Financial Officer Kelli Holz stated loans receivable decreased by $240 million during the quarter. She attributed the decline primarily to runoff in single-family residential, custom construction, and consumer lot loans, which fell a combined $256 million. In other portfolio categories, originations and advances totaled $1.1 billion while repayments were $1.0 billion.
WaFd increased its investments and mortgage-backed securities by $728 million, funded largely through a $671 million rise in borrowings. Holz said purchases were mainly discount-priced agency MBS with an effective yield of 4.93%. She described this as a strategy to replace single-family loan runoff. Holz added the company "accelerate[d] some" MBS purchases this quarter in excess of runoff to get a head start.
Deposits decreased $21 million for the quarter. Non-interest-bearing deposits increased $125 million, while time deposits declined $580 million. The loan-to-deposit ratio was 92.7%.
Net interest income rose $1.2 million from the prior quarter. The net interest margin was 2.7%, compared to 2.71% in the September quarter. Holz provided a period-end "spot rate" margin of 2.77%. She said the difference between the prior quarter spot rate margin and the reported margin included a nine-basis-point impact from non-accrual interest and reversals. She quantified non-accrual interest for the quarter at "just over $5 million."
Looking ahead, Holz said she would expect "more pressure on the margin from additional mortgage-backed securities purchases," while also pointing to higher net interest income from the added balances. CEO Brent Beardall, asked about $800 million of borrowings due within three months, said the company plans to replace those borrowings rather than shrink the balance sheet.
Non-interest income increased $1.9 million to $20.3 million, helped by a $3.2 million gain on sale of a branch property. Non-interest expense declined $1.3 million, driven by lower compensation and technology costs.
During the quarter, WaFd repurchased 1.95 million shares at a weighted average price of $29.75. Management said this added $0.02 to earnings per share. Beardall said the company has repurchased 5.8 million shares over the last seven quarters.
Chief Credit Officer Ryan Mauer said non-performing assets increased to $203 million, or 0.75% of total assets, from $143 million. Delinquent loans rose to 1.07% of total loans from 0.6%.
Mauer said the increases in delinquencies and NPAs were "largely impacted by two commercial relationships" that were more than 90 days past due, with $58 million in balances collectively. He said the loans were placed on non-accrual, no charge-off was taken, and the bank was working with both borrowers. Excluding those relationships, he said NPAs would have been 0.67% of total assets.
The company recorded a $3.5 million provision for credit losses. Net charge-offs were seven basis points of total loans annualized. The allowance for credit losses provided coverage of 1.05% of gross loans.
CEO Brent Beardall emphasized WaFd's BUILD 2030 strategic plan, designed to shift focus toward business banking. A key goal is raising non-interest-bearing deposits to 20% of total deposits by 2030; the figure was 12.6% at quarter end.
Beardall said the company believes it can grow its active loan portfolios 8% to 12% over the next one to two years. He clarified he expects roughly 6% to 10% growth in fiscal 2026. He said the lending pipeline increased $697 million, or 28%, to $3.2 billion at quarter end.
Beardall also discussed the launch of WaFd Wealth Management, noting a goal to reach $1 billion in assets under management within two years. Assets under management were "just over $400 million" as of December 31.
Finally, Beardall addressed the company's appeal related to an FDIC Community Reinvestment Act "needs to improve" rating. He said WaFd made its case to the Supervisory Appeals Review Committee in early December. He acknowledged it is "a long shot" and said the company expected to hear a final conclusion within about a week while "anticipating moving forward with the needs to improve rating." He said the rating mainly affects branching logistics.