What changed in this filing

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Item 1. Business

2022-11-18 compared with 2021-11-19 · 78 added, 108 removed, 367 unchanged (34% of the section changed)

Washington Federal Bank, National Association, a federally-insured national bank dba WaFd Bank (the “Bank” or “WaFd Bank”), was founded on April 24, 1917 in Ballard, Washington and is engaged primarily in providing lending, depository, insurance and other banking services to consumers, mid-sized to large businesses, and owners and developers of commercial real estate.

Washington Federal, Inc., a Washington corporation (the “Company”), was formed as the Bank’s holding company in November, 1994.

As used throughout this document, the terms “Washington Federal” or the “Company” refer to the Company and its consolidated subsidiaries, including the Bank, and the term “Bank” refers to the operating subsidiary, Washington Federal Bank, National Association.

Washington Federal Bank, a federally-insured Washington state chartered commercial bank dba WaFd Bank (the “Bank” or “WaFd Bank”), was founded on April 24, 1917 in Ballard, Washington and is engaged primarily in providing lending, depository, insurance and other banking services to consumers, mid-sized to large businesses, and owners and developers of commercial real estate.

Washington Federal, Inc., a Washington corporation was formed as the Bank’s holding company in November, 1994.

As used throughout this document, the terms “Washington Federal,” the “Company” or "we" or "us" and "our" refer to the Washington Federal, Inc.

and its consolidated subsidiaries, and the term “Bank” or "WaFd Bank" refers to the operating subsidiary, Washington Federal Bank.

The Company is headquartered in Seattle, Washington.

On January 3, 2022, the Bank announced that it had applied to the Washington State Department of Financial Institutions (the "WDFI") to convert from a national association to a non-Federal Reserve member Washington state-chartered bank.

The Bank completed the conversion of its charter from a national bank charter, supervised by the Office of the Comptroller of the Currency, to a Washington state chartered commercial bank effective February 4, 2022.

The Bank cancelled its holdings of stock in the Federal Reserve Bank of San Francisco as part of the conversion and its legal name changed from “Washington Federal Bank, National Association” to “Washington Federal Bank.” As a result of the conversion, the WDFI is the Bank's primary state regulator and the Federal Deposit Insurance Corporation (the "FDIC") is the Bank's primary federal regulator.

The Federal Reserve will continue to regulate the Bank's holding company, Washington Federal, Inc.

On November 9, 1982 the Company listed and began trading on the NASDAQ.

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The Company's fiscal year end is September 30th.

All references to 2021, 2020 and 2019 represent balances as of September 30, 2021, September 30, 2020 and September 30, 2019, respectively, or activity for the fiscal years then ended.

All references herein to 2022, 2021 and 2020 represent balances as of September 30, 2022, September 30, 2021 and September 30, 2020, respectively, or activity for the fiscal years then ended.

The business of the Bank consists primarily of accepting deposits from the general public and investing these funds in loans of various types, including first lien mortgages on single-family dwellings, construction loans, land acquisition and development loans, loans on multi-family, commercial real estate and other income producing properties, home equity loans and business loans.

It also invests in certain United States government and agency obligations and other investments permitted by applicable laws and regulations.

The Bank also invests in certain United States government and agency obligations and other investments permitted by applicable laws and regulations.

As of September 30, 2022, Washington Federal Bank has 201 branches located in Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico and Texas.

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Its principal expenses are interest paid on deposits, credit costs, general and administrative expenses, interest on borrowings and income taxes.

The Bank is subject to extensive regulation, supervision and examination by the Office of the Comptroller of the Currency ("OCC"), its primary federal regulator, the Consumer Financial Protection Bureau ("CFPB") and the Federal Deposit Insurance Corporation ("FDIC"), which insures its deposits up to applicable limits.

The Company, as a bank holding company, is subject to extensive regulation, supervision and examination by the Board of Governors of the Federal Reserve System (" Federal Reserve").

The regulatory structure gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities.

Any change in such regulation, whether by the OCC, the FDIC, the Federal Reserve, the CFPB or the U.S.

Any change in such regulation, whether by the WDFI, the FDIC, the Federal Reserve, the CFPB or the U.S.

Congress, could have a significant impact on the Company and its operations.

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The terms of these loans generally range from less than one year to a maximum of ten years.

The loans are either negotiated on a fixed-rate basis or carry adjustable interest rates indexed to the LIBOR rate, prime rate or another market rate.

In most cases, these loan agreements include language that will provide for a replacement for LIBOR as the index rate.

The loans are either negotiated on a fixed-rate basis or carry adjustable interest rates indexed to the LIBOR rate, SOFR rate, BSBY rate, prime rate or another market rate.

In most cases, loan agreements indexed to the LIBOR rate include language that will provide for a replacement for LIBOR as the index rate.

Commercial loans are made based upon assessment of the borrower's ability and willingness to repay along with an evaluation of secondary repayment sources such as the value and marketability of collateral.

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The Bank provides a full line of treasury management products to support the depository needs of its clients.

The Company also participated in the Small Business Administration’s Paycheck Protection Program and made various business loans pursuant to this.

The Company also participated in the Small Business Administration’s Paycheck Protection Program and made various business loans under this program.

Construction loans .

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Investment Activities

As a national association, the Bank is obligated to maintain adequate liquidity and does so by holding cash and cash equivalents and by investing in securities.

The Bank is obligated by its regulators to maintain adequate liquidity and does so by holding cash and cash equivalents and by investing in securities.

These investments may include, among other things, certain certificates of deposit, repurchase agreements, bankers’ acceptances, loans to financial institutions whose deposits are federally-insured, federal funds, United States government and agency obligations and mortgage-backed securities.

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Deposits are the primary source of the Bank’s funds for use in lending and other general business purposes.

In addition to deposits, the Bank derives funds from loan repayments, advances from the FHLB, other borrowings, and from investment repayments and sales.

In addition to deposits, the Bank derives funds from loan repayments, advances from the Federal Home Loan Bank of Des Moines ("FHLB"), other borrowings, and from investment repayments and sales.

Loan repayments are a relatively stable source of funds, while deposit inflows and outflows are influenced by general interest rates, money market conditions, the availability of FDIC insurance and the market perception of the Company’s financial stability.

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The Bank’s deposits are obtained primarily from residents of Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico and Texas.

The Bank does not advertise for deposits outside of these states.

The Bank has a credit line with the Federal Home Loan Bank of Des Moines ("FHLB") for up to 45% of total assets, subject to availability of collateral.

The Bank obtains advances from the FHLB upon the security of the FHLB capital stock it owns and certain of its loans, provided certain standards related to credit worthiness have been met.

The Bank has a credit line with the FHLB for up to 45% of total assets, subject to availability of collateral.

The Bank obtains advances from the FHLB based upon the security of the FHLB capital stock it owns and certain of its loans, provided certain standards related to credit worthiness have been met.

Such advances are made pursuant to several different credit programs.

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Depending on the program, such limitations are based either on a fixed percentage of assets or the Company's credit worthiness.

FHLB advances have, from time to time, been available to meet seasonal and other withdrawals of savings accounts and to expand the Bank's lending program.

FHLB advances are used to meet seasonal and other withdrawals of deposit accounts and to fund expansion of the Bank's lending.

The Bank may need to borrow funds for short periods of time to meet day-to-day financing needs.

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Financial Statements and Supplementary Data” of this report.

The Company is a bank holding company that conducts its primary business through its only directly-owned subsidiary, the Bank.

The Bank has a national bank charter with the OCC.

The Company is a bank holding company that conducts its primary business through its only directly-owned subsidiary, WaFd Bank.

The Bank has four active wholly-owned subsidiaries, discussed further below.

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Demographics.

As of September 30, 2021, we employed 2,082 full and part time employees across our eight-state footprint.

As of September 30, 2022, we employed 2,132 full and part time employees.

None of these employees are represented by a collective bargaining agreement.

During fiscal year 2022 we hired 626 employees.

Our voluntary turnover rate was 22.37% in fiscal year 2021.

Our voluntary turnover rate was 21.18% in fiscal year 2022, a slight decrease from 22.37% in 2021.

Diversity, Equity and Inclusion.

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With a commitment to equity, inclusion and workplace diversity, we focus on understanding, accepting, and valuing the differences between people.

To accomplish this, we have established a Diversity & Inclusion Advisory Council made up of a diverse group of employee representatives throughout our footprint.

To accomplish this, we have established Diversity & Inclusion Advisory Councils in each of our regions made up of a diverse group of employee representatives throughout our footprint.

We show our commitment to equal employment opportunity through, among other things, a robust affirmative action plan which includes annual compensation analyses and ongoing reviews of our selection and hiring practices alongside a continued focus on building and maintaining a diverse workforce.

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In addition, we have created learning paths for specific positions that are designed to encourage an employee’s advancement and growth within our organization.

We also offer a peer mentor program, leadership and customer service

We also offer a peer mentor program, leadership and customer service training.

These resources provide employees with the skills they need to achieve their career goals, build management skills and become leaders within our Company.

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The Company implemented technology upgrades that included providing most of our employees with laptops and virtual interaction platforms that allowed many of them to work remotely.

We also created a Response Team in March 2020 that meets regularly to support Company responses to executive orders and, new federal, state and local laws, and changing CDC and OSHA guidelines.

The Response Team also monitors COVID case counts throughout our eight state footprint, reports on operational disruptions due to quarantines and positive COVID tests, and gauges employee morale.

Corporate Social and Environmental Responsibility

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Through this policy, we strive to carry out our banking activities in a responsible manner, placing the financial needs of our clients and economic health of our communities at the core of our focus.

Below is a summary of our community activities in 2021.

Below is a summary of our community activities and financial contributions in 2022.

Additional information will be provided in the Company’s forthcoming 2022 Community and Social Responsibility Report which will be made available on the Company’s website.

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Bank holding companies are subject to a variety of restrictions on their activities and the acquisitions they can make.

Generally, the activities or acquisition of a bank holding company that is not a financial holding company are limited to those that constitute banking or managing or controlling banks or which are closely related to banking.

In addition, without the prior approval of the Federal Reserve, bank holding companies are generally prohibited from acquiring more than 5% of the outstanding shares of any class of voting securities of a bank or bank holding company, taking any action that causes a bank to become a subsidiary of the bank holding company, acquiring all or substantially all of the assets of a bank, or merging with another bank holding company.

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The Company’s ability to pay dividends to its shareholders is affected by several factors.

Since the Company is a separate legal entity from the Bank and its subsidiaries and does not have significant

operations of its own, the Company may not be able to pay dividends to its shareholders if the Bank is unable to pay dividends to the Company.

Since the Company is a separate legal entity from the Bank and its subsidiaries and does not have significant operations of its own, the Company may not be able to pay dividends to its shareholders if the Bank is unable to pay dividends to the Company.

The Bank’s ability to pay dividends is subject to various regulatory restrictions.

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In addition, if we do not or are unable to pay quarterly dividends on our Series A Preferred Stock, we may not pay a dividend to the holders of our common stock.

See “Washington Federal Bank, National Association, wholly-owned subsidiary ("Bank" or "WaFd Bank") - Restrictions on Dividends.”

See “ Washington Federal Bank , wholly-owned operating subsidiary - Restrictions on Dividends .”

Since the Company is a Washington state corporation, it is also subject to restrictions under Washington corporate law relating to dividends.

Generally, under Washington law, a corporation may not pay a dividend if, after giving effect to the dividend, the corporation would be unable to pay its liabilities as they become due in the ordinary course of business or the corporation’s total assets would be less than the sum of its total liabilities plus (with some exceptions) the amount that would be needed, if the corporation were to be dissolved at the time of the dividend payment, to satisfy the dissolution preferences of senior equity securities.

Washington Federal Bank, National Association, wholly-owned operating subsidiary ("Bank" or "WaFd Bank")

The Bank is a federally-chartered national bank and certain deposits of the bank are federally insured and backed by the full faith and credit of the United States government.

Accordingly, the Bank is subject to broad federal regulation and oversight by its primary regulator, the OCC, extending to all aspects of its operations.

Washington Federal Bank, wholly-owned operating subsidiary

The Bank is a federally-insured Washington state chartered commercial bank dba WaFd Bank.

The Bank is a member of the FDIC and its deposits are insured up to applicable limits of the Depository Insurance Fund (“DIF”), which is administered by the FDIC.

As a result, the FDIC has certain regulatory and examination authority over the Bank.

As a national bank, the Bank is required to be a member of the Federal Reserve.

As a member, it is required to purchase and maintain stock in the Federal Reserve Bank of San Francisco (“FRBSF”) in an amount equal to 3.00% of the paid-up capital stock and surplus of the Bank and have available another 3.00% in reserves.

At September 30, 2021, the Bank had $23,990,000 in FRBSF stock, which was in compliance with this requirement.

Federal Institution Regulations.

The Company is a bank holding company registered with the Federal Reserve.

The OCC has extensive authority over the operations of national banks.

As part of this authority, national banks are required to file periodic reports with the OCC and are subject to periodic examinations by the OCC.

Federal laws and regulations prescribe the investment and lending authority of the Bank, and the Bank is prohibited from engaging in any activities not permitted by such laws and regulations.

The WDFI and FDIC have extensive authority over the operations of the Bank.

As part of this authority, the Bank is required to file periodic reports with the WDFI and FDIC and is subject to periodic examinations by the WDFI and FDIC.

As a Washington state chartered commercial bank with branches in the States of Washington, Oregon, Idaho, Utah, Nevada, Arizona, New Mexico and Texas, the Bank is subject not only to the applicable laws and regulations of Washington state, but is also subject to the applicable laws and regulations of these other states in which it does business.

Various laws and regulations prescribe the investment and lending authority of the Bank, and the Bank is prohibited from engaging in any activities not permitted by such laws and regulations.

While the Bank has broad authority to engage in all types of lending activities, a variety of restrictions apply to certain other investments by the Bank.

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Subject to certain limitations and restrictions, a bank holding company, with prior approval of the Federal Reserve, may acquire an out-of-state bank;

banks in states that do not prohibit out-of-state mergers may merge with the approval of the appropriate federal banking agency, and a bank may establish a de novo branch out of state if such branching is permitted by the other state for state banks chartered by such other state.

banks in states that do not prohibit out-of-state mergers may merge with the

approval of the appropriate federal banking agency, and a bank may establish a de novo branch out of state if such branching is permitted by the other state for state banks chartered by such other state.

Insurance of Deposit Accounts.

Under the Dodd-Frank Act, the maximum amount of federal deposit insurance coverage was permanently increased from $100,000 to $250,000 per depositor, per institution.

Due to the significant number of bank failures and the current balance of the DIF, the Company anticipates continued elevated FDIC premiums for the industry going forward.

The Dodd-Frank Act also broadened the base for FDIC insurance assessments.

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The Federal Deposit Insurance Act prohibits an insured depository institution from accepting brokered deposits or offering interest rates on any deposits significantly higher than the prevailing rate in the bank’s normal market area or nationally (depending upon where the deposits are solicited), unless it is well-capitalized or is adequately capitalized and receives a waiver from the FDIC.

A depository institution that is adequately capitalized and accepts brokered deposits under a

waiver from the FDIC may not pay an interest rate on any deposit in excess of 75 basis points over certain prevailing market rates.

A depository institution that is adequately capitalized and accepts brokered deposits under a waiver from the FDIC may not pay an interest rate on any deposit in excess of 75 basis points over certain prevailing market rates.

On December 15, 2020, the FDIC issued a final rule intended to modernize its brokered deposit regulations in light of modern deposit-taking methods.

The final rule establishes a new framework for certain provisions of the “deposit broker” definition and amends the FDIC’s interest rate methodology for calculating the national rate, the national rate cap, and the local market rate cap.

The final rule established a new framework for certain provisions of the “deposit broker” definition and amends the FDIC’s interest rate methodology for calculating the national rate, the national rate cap, and the local market rate cap.

The final rule became effective on April 1, 2021 with an extended compliance date of January 1, 2022.

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Insider Loans.

Under current federal law, all transactions between and among a national bank and its affiliates, including holding companies, are subject to Sections 23A and 23B of the Federal Reserve Act and Regulation W promulgated thereunder.

Under current federal law, all transactions between and among a bank and its affiliates, including holding companies, are subject to Sections 23A and 23B of the Federal Reserve Act and Regulation W promulgated thereunder.

Generally, these requirements limit extensions of credit and certain other such transactions by the bank to affiliates to a percentage of the institution's capital and generally such transactions must be collateralized.

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In addition, a bank may not lend to any affiliate engaged in non-banking activities that are not permissible for a bank holding company or acquire shares of any affiliate that is not a subsidiary.

The OCC is authorized to impose additional restrictions on transactions with affiliates if necessary to protect the safety and soundness of a national bank.

Extensions of credit by a national bank to executive officers, directors and principal shareholders are subject to Section 22(h) of the Federal Reserve Act, which, among other things, generally prohibits loans to any such individual where the aggregate amount exceeds an amount equal to 15% of an institution's unimpaired capital and surplus plus an additional 10% of unimpaired capital and surplus in the case of loans that are fully secured by readily marketable collateral.

Federal law authorizes the imposition of additional restrictions on transactions with affiliates if necessary to protect the safety and soundness of a bank.

Extensions of credit by a bank to executive officers, directors and principal shareholders are subject to Section 22(h) of the Federal Reserve Act, which, among other things, generally prohibits loans to any such individual where the aggregate amount exceeds an amount equal to 15% of an institution's unimpaired capital and surplus plus an additional 10% of unimpaired capital and surplus in the case of loans that are fully secured by readily marketable collateral.

Section 22(h) permits loans to directors, executive officers and principal shareholders made pursuant to a benefit or compensation program that is widely available to employees of a subject bank provided that no preference is given to any officer, director or principal shareholder, or related interest thereto, over any other employee.

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Furthermore, Section 22(g) places additional restrictions on loans to executive officers.

Effective on July 21, 2012, the affiliate transaction rules in Sections 23A and 23B of the Federal Reserve Act were expanded to broaden the definition of affiliate and to apply these rules to securities lending, repurchase agreements and derivatives.

These revisions also strengthened collateral requirements and limited Federal Reserve exemptive authority.

Further, the definition of “extension of credit” for transactions with executive officers, directors and principal shareholders was expanded to include credit exposure arising from a derivative transaction, a repurchase or reverse repurchase agreement or a securities lending or borrowing transaction.

The affiliate transaction rules in Sections 23A and 23B of the Federal Reserve Act broaden the definition of affiliate and apply these rules to securities lending, repurchase agreements and derivatives.

These rules also strengthen collateral requirements and limit Federal Reserve exemptive authority.

Further, the definition of “extension of credit” for transactions with executive officers, directors and principal shareholders includes credit exposure arising from a derivative transaction, a repurchase or reverse repurchase agreement or a securities lending or borrowing transaction.

These provisions have not had a material effect on the Company or the Bank.

Restrictions on Dividends.

OCC regulations govern dividends by a national bank.

A national bank must file an application for approval of a dividend if:

• the total dividends for the applicable calendar year exceed the sum of the institution's net income for that year to date plus the institution's retained net income for the preceding two years;

• the institution would not be at least adequately capitalized following the dividend;

• the dividend would violate any applicable statute, regulation, agreement or OCC imposed condition;

• the dividend is paid in property other than cash or stock of the bank.

Other capital distributions, such as stock repurchases, generally require the approval of the OCC.

Failure to meet minimum capital requirements may place certain restrictions on the payment of dividends and stock repurchases.

The amount of dividends payable by the Bank to the Company depends upon its earnings and capital position, and is limited by federal and state laws, regulations and policies, including the capital conservation buffer requirement.

Federal law further provides that no insured depository institution may make any capital distribution (which includes a cash dividend) if, after making the distribution, the institution would be “undercapitalized,” as defined in the prompt corrective action regulations.

Moreover, the federal bank regulatory agencies also have the general authority to limit the dividends paid by insured banks if such payments should be deemed to constitute an unsafe and unsound practice.

In addition, under Washington law, no bank may declare or pay any dividend in an amount greater than its retained earnings without the prior approval of the WDFI.

WDFI also has the power to require any bank to suspend the payment of any and all dividends.

Federal Home Loan Bank System.

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Loans are made to members in accordance with the policies and procedures established by the Board of Directors of the FHLB.

At September 30, 2021, FHLB advances to the Company amounted to $1,720,000,000.

At September 30, 2022, FHLB advances to the Bank amounted to $2,125,000,000.

As a member, the Bank is required to purchase and maintain stock in the FHLB of Des Moines.

At September 30, 2021, the Company held $78,873,000 in FHLB of Des Moines stock, which was in compliance with this requirement.

At September 30, 2022, the Bank held $95,073,000 in FHLB of Des Moines stock, which was in compliance with this requirement.

Community Reinvestment Act and Fair Lending Laws.

National banks have a responsibility under the Community Reinvestment Act ("CRA") and related regulations of the OCC to help meet the credit needs of their communities, including low- and moderate-income neighborhoods.

In addition, the Equal Credit Opportunity Act and the Fair Housing Act (together,

the "Fair Lending Laws") prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes.

Banks have a responsibility under the Community Reinvestment Act ("CRA") and related regulations of the FDIC to help meet the credit needs of their communities, including low- and moderate-income neighborhoods.

In addition, the Equal Credit Opportunity Act and the Fair Housing Act (together, the "Fair Lending Laws") prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes.

An institution's failure to comply with the provisions of the CRA could, at a minimum, result in regulatory restrictions on its activities.

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Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply satisfactorily with all relevant Patriot Act and BSA requirements, could have serious legal and reputational consequences for the institution.

On February 28, 2018, pursuant to a Stipulation and Consent to the Issuance of a Consent Order (the “Consent Order”), the Office of the Comptroller of the Currency issued a Consent Order relating to the Bank, the terms of which are intended to further enhance its BSA program.

The Consent Order requires, among other things, that the Bank:

(1) maintain a Compliance Committee of at least three directors;

(2) employ a permanent, qualified, and experienced BSA Officer and be provided sufficient staffing and oversight resources;

(3) review, update and implement an ongoing BSA risk assessment;

(4) ensure adherence to a written program of policies and procedures to provide compliance with the BSA;

(5) develop and implement a written program of policies and procedures to ensure timely and appropriate review of transaction activity, disposition of alerts, and timely filing of SARs;

(6) develop and implement a written program of policies and procedures to provide for implementation of an automated suspicious activity monitoring system, including appropriate model governance;

(7) engage an independent consultant to review account and transaction activity (“Look-Back”);

(8) review and update risk-based processes to obtain and analyze appropriate customer due diligence information at the time of account opening and on an ongoing basis;

(9) complete independent testing;

(10) develop and implement a comprehensive, ongoing BSA and OFAC training program;

and (11) submit certain reports to the OCC.

On September 30, 2021, the Bank announced that it had entered into an agreement with the OCC to pay a $2,500,000 civil money penalty associated with the deficiencies identified in the Stipulation and Consent Order which remains in place.

Copies of the Stipulation and the Consent Order were filed with the SEC on March 1, 2018 as exhibits to the Company’s Current Report on Form 8-K.

A copy of the consent order for the civil money penalty was filed with the SEC on October 1, 2021 as an exhibit to the Company’s Current Report on Form 8-K.

Risk Factors for additional details.

Regulatory Capital Requirements.

Bank holding companies and federally insured banks are required to maintain minimum levels of regulatory capital.

The Federal Reserve establishes capital standards applicable to all bank holding companies, and the OCC establishes capital standards applicable to all national banks.

The Federal Reserve and the OCC implemented new capital rules, effective January 1, 2015, that substantially amended the existing capital rules for bank holding companies and banks.

These new rules reflect, in part, certain standards initially adopted by the Basel Committee on Banking Supervision in December 2010 (which standards are commonly referred to as “Basel III”) as well as requirements contemplated by the Dodd-Frank Act.

The rules require a new capital ratio of common equity Tier 1 capital to risk based assets.

The Federal Reserve establishes capital standards applicable to all bank holding companies, and the WDFI and FDIC establish capital standards applicable to Washington state chartered, non-member banks.

The capital rules reflect, in part, certain standards initially adopted by the Basel Committee on Banking Supervision in December 2010 (which standards are commonly referred to as “Basel III”) as well as requirements contemplated by the Dodd-Frank Act.

The capital rules require a capital ratio of common equity Tier 1 capital to risk based assets.

Common equity Tier 1 capital generally consists of retained earnings and common stock instruments (subject to certain adjustments) as well as accumulated other comprehensive income (“AOCI”) except to the extent that the Company and the Bank exercise a one-time irrevocable option to exclude certain components of AOCI, which the Company and the Bank have done.

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Regulatory deductions from capital include goodwill and intangible assets.

The new rules modify the manner in which certain capital elements are determined, including but not limited to, requiring certain deductions related to mortgage servicing rights and deferred tax assets.

The capital rules prescribe the manner in which certain capital elements are determined, including but not limited to, requiring certain deductions related to mortgage servicing rights and deferred tax assets.

Total capital consists of Tier 1 capital and supplementary capital.

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The book value of each asset is multiplied by the risk factor applicable to the asset category, and the sum of the products of this calculation equals total risk-weighted assets.

The rules make changes in the methods of calculating certain risk-based assets, which in turn affects the calculation of risk-based ratios.

The rules set forth the methods of calculating certain risk-based assets, which in turn affects the calculation of risk-based ratios.

Higher or more sensitive risk weights are assigned to various categories of assets, among which are commercial real estate, credit facilities that finance the acquisition, development or construction of real property, certain exposures or credit that are 90 days past due or are nonaccrual, foreign exposures, certain corporate exposures, securitization exposures, equity exposures and in certain cases mortgage servicing rights and deferred tax assets.

Both the Company and the Bank are required to have a common equity Tier 1 capital ratio of 4.5%.

In addition, both the Company and the Bank are required to have a Tier 1 leverage ratio of 4.0%, a Tier 1 risk-based ratio of 6.0% and a total risk-based ratio of 8.0%.

In addition, both the

Company and the Bank are required to have a Tier 1 leverage ratio of 4.0%, a Tier 1 risk-based ratio of 6.0% and a total risk-based ratio of 8.0%.

Both the Company and the Bank are required to establish a “conservation buffer,” consisting of common equity Tier 1 capital, equal to 2.5%.

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An institution that does not meet the conservation buffer will be subject to restrictions on certain activities including payment of dividends, stock repurchases and discretionary bonuses to executive officers.

The Federal Reserve and the OCC are also authorized to impose capital requirements in excess of these standards on individual institutions on a case-by-case basis.

The Federal Reserve and the FDIC are also authorized to impose capital requirements in excess of these standards on individual institutions on a case-by-case basis.

Management believes that the current capital levels of the Company and the Bank are sufficient to be in compliance with the fully phased-in standards under the rules.

Any bank holding company or national bank that fails the capital requirements is subject to possible enforcement actions.

Any bank holding company or bank that fails to meet the capital requirements is subject to possible enforcement actions.

Such actions could include a capital directive, a cease and desist or consent order, civil money penalties, restrictions on an institution's operations and/or the appointment of a conservator or receiver.

Federal Reserve and OCC capital regulations provide that such supervisory actions, through enforcement proceedings or otherwise, could require one or more of a variety of corrective actions.

Federal Reserve and WDFI capital regulations provide that such supervisory actions, through enforcement proceedings or otherwise, could require one or more of a variety of corrective actions.

For information regarding compliance with each of these capital requirements by the Company and the Bank as of September 30, 2022, see Note Q to the Consolidated Financial Statements included in Item 8 hereof.

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Any institution that is neither well capitalized nor adequately capitalized is considered undercapitalized.

Federal law authorizes the OCC to reclassify a well capitalized institution as adequately capitalized and may require an adequately capitalized institution or an undercapitalized institution to comply with supervisory actions as if it were in the next lower category.

The OCC may not reclassify a significantly undercapitalized institution as critically undercapitalized.

Federal law authorizes the FDIC to reclassify a well capitalized institution as adequately capitalized and may require an adequately capitalized institution or an undercapitalized institution to comply with supervisory actions as if it were in the next lower category.

The FDIC may not reclassify a significantly undercapitalized institution as critically undercapitalized.

As of September 30, 2022, the Bank exceeded the requirements of a well capitalized institution.

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Pursuant to direction from the Bank's regulators, the Bank was provided similar relief and is no longer required to submit company-run annual stress tests.

Notwithstanding these amendments to the stress testing requirements, the

federal banking agencies indicated through interagency guidance that the capital planning and risk management practices of institutions with total assets less than $100 billion would continue to be reviewed through the regular supervisory process.

Notwithstanding these amendments to the stress testing requirements, the federal banking agencies indicated through interagency guidance that the capital planning and risk management practices of institutions with total assets less than $100 billion would continue to be reviewed through the regular supervisory process.

Although the Bank will continue to monitor its capital consistent with the safety and soundness expectations of the federal regulators, the Bank will no longer conduct company-run stress testing as a result of the legislative and regulatory amendments.

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The federal banking agencies have established certain expectations with respect to an institution's information security and cybersecurity programs, with an increasing focus on risk management, processes related to information technology and operational resiliency, and the use of third-parties in the provision of financial services.

In October 2016, the federal banking agencies jointly issued an advance notice of proposed rulemaking on enhanced cybersecurity risk management

and resilience standards that would address five categories of cyber standards which include (i) cyber risk governance, (ii) cyber risk management, (iii) internal dependency management, (iv) external dependency management, and (v) incident response, cyber resilience, and situational awareness.

As proposed, these enhanced standards would apply only to depository institutions and depository institution holding companies with total consolidated assets of $50 billion or more;

however, it is possible that if these enhanced standards are implemented, even if the $50 billion threshold is increased, the OCC will consider them in connection with the examination and supervision of banks below the $50 billion threshold.

The federal banking agencies have not yet taken further action on these proposed standards.

In January 2020, the federal banking agencies jointly issued a statement reminding supervised financial institutions of sound cybersecurity risk management principles that expanded on areas articulated in the Interagency Guidelines Establishing Information Security Standards written in Section 39 of the Federal Deposit Insurance Act and Sections 501 and 505(b) of the Gramm-Leach-Bliley Act.

State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations.

4 unchanged sentences

These SEC guidelines, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations.

In December 2020, the U.S.

federal bank regulatory agencies released a proposed rule regarding notification requirements for banking organizations related to significant computer security incidents.

Under the proposal, a bank holding company, such as the Company, and an OCC-supervised insured depository institution, such as the Bank, would be required to notify the Federal Reserve or OCC, respectively, within 36 hours of incidents that could result in the banking organization’s inability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or impact the stability of the financial sector.

The effects on the Company and the Bank will depend on the final form of the rule and how it is implemented.

In November 2021, the U.S.

federal bank regulatory agencies adopted a rule regarding notification requirements for banking organizations related to significant computer security incidents.

Under the final rule, a bank holding company, such as the Company, and an FDIC-supervised insured depository institution, such as the Bank, are required to notify the Federal Reserve or FDIC, respectively, within 36 hours of incidents that have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade, the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or impact the stability of the financial sector.

Service providers are required under the rule to notify any affected bank client it provides services to as soon as possible when it determines it has experienced a computer-security incident that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, covered services provided by that entity to the Bank for four or more hours.

In addition to federal income tax, the Company is also subject to income, franchise, excise or gross receipts tax in states (and some cities) where the Company has branches or is deemed to have sufficient nexus for tax purposes.

2 unchanged sentences

We operate in a highly competitive environment.

Our competitors include other national banks, savings associations, community banks, credit unions and other financial intermediaries, and new market participants offering services similar to those that we offer.

We compete with some competitors within our geographic market area, and with others on a product specific basis, such as the residential mortgage market.

Our competitors include other banks, savings associations, community banks, credit unions and other financial intermediaries, and new market participants offering services similar to those that we offer.

We compete with some competitors within our geographic market area, and with others on a product specific basis, such

as the residential mortgage market.

Our ability to compete effectively depends on our ability to provide first-rate, friendly and professional customer service and deliver the banking solutions that our customers want and need.

8 unchanged sentences

The address for the Company’s website is www.wafdbank.com.

The Company will provide a printed copy of any of the aforementioned documents to any requesting shareholder.

The Company makes available on its website, free of charge, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and any amendments to those reports (among others), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC).

We also make available on our website public financial information for which a report is not required to be filed with or furnished to the SEC.

Our SEC reports and such other information can be accessed through the investor relations section of our website (https://www.wafdbank.com/about-us/investor-relations).

The Company’s website provides a link to all our filings on the SEC’s Edgar website, and the company will provide a printed copy of any of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and any amendments to those reports (among others) to any requesting shareholder, free of charge.

The information found on our website is not part of this or any other report that we file or furnish to the SEC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business