What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-11-17 compared with 2022-11-18 · 221 added, 232 removed, 1615 unchanged (22% of the section changed)

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Washington Federal, Inc.

Seattle, Washington

To the Shareholders and the Board of Directors of WaFd, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial condition of Washington Federal, Inc.

We have audited the accompanying consolidated statements of financial condition of WaFd, Inc.

and subsidiaries (the “Company”) as of September 30, 2023 and 2022, the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended September 30, 2023, and the related notes (collectively referred to as the "financial statements").

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for Loan Losses - Refer to Notes A and E to the financial statements

Critical Audit Matter Description

Estimates of expected credit losses on loans under the current expected credit loss (“CECL”) methodology required under Financial Accounting Standards Board ("FASB") Accounting Standards Codification No.

326, Financial Instruments - Credit Losses ("ASC 326") are based on relevant information about current conditions, past events, and reasonable and supportable forward-looking forecasts regarding collectability of the reported amounts.

In order to estimate the allowance for loan losses ("ALL"), the Company used either a cohort or weighted average remaining maturities (“WARM”) methodology to determine the historical loss rate, by loan portfolio class, then considered whether qualitative adjustments to those historical loss rates were warranted.

As of September 30, 2022, the ALL was $172,808,000.

The estimates of the Company's expected credit losses under the CECL methodology is based on relevant information about current conditions, past events, and reasonable and supportable forecasts regarding collectability of the reported amounts.

In order to estimate the allowance for loan losses ("ALL"), the Company used either a cohort or weighted average remaining maturities methodology to determine the historical loss rate, by loan portfolio class, then considered whether qualitative adjustments to those historical loss rates were warranted.

Significant management judgments are required in determining whether, and to what extent, qualitative adjustments for each portfolio loan class are required.

These adjustments are made after considering the conditions over the period from which historical loss experience was based and are split into two components:

environment or other management factors, not captured in the historical loss rates and 2) reasonable and supportable forecasts of future economic conditions and collateral values.

Given the significance of the ALL, reliance on historical loss rates and the management judgments required for quantitative and qualitative evaluation of past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts, performing audit procedures to evaluate the ALL requires a high degree of auditor judgment and increased extent of effort.

1) asset or class specific risk characteristics or current

conditions at the reporting date related to portfolio credit quality, remaining payments, volume and nature, credit culture and management, business environment or other management factors, not captured in the historical loss rates and 2) reasonable and supportable forecasts of future economic conditions and collateral values.

Given the significance of the ALL, and management judgment required for quantitative and qualitative evaluation of past events, current conditions, and reasonable and supportable forecasts, performing audit procedures to evaluate the ALL requires a high degree of auditor judgment and increased extent of effort.

We have identified the ALL estimate for certain loan portfolio classes as a critical audit matter based upon the above factors.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the ALL, included the following, among others:

• We tested the effectiveness of management’s controls over (1) key assumptions and judgments, (2) the CECL estimation model for loan portfolios, (3) the qualitative adjustments determined by management including the reasonable and supportable forecast adjustment selected by management, (4) and disclosures.

• We evaluated the appropriateness of the Company’s accounting policies, assumptions, and elections involved in the application of the CECL methodology.

• We tested the underlying data and mathematical accuracy of the cohort and WARM methodologies used to determine the loan portfolio class historical loss rates.

• We evaluated the reasonableness and conceptual soundness of the methodologies, as applied in the CECL estimation models, including key assumptions and judgments in estimating expected credit losses.

• We evaluated the accuracy and completeness of the Company’s disclosures in accordance with ASC 326.

• Specific to the qualitative adjustments made to the historical loss rates:

• We assessed the appropriateness of the framework for the qualitative adjustments.

• We performed analysis to evaluate the relevance of each of the reasonable and supportable forecast assumptions to historic losses.

• We evaluated management’s reasonable and supportable forecast of economic variables by comparing forecasts to relevant external market data.

• We assessed management’s determination whether, and to what extent, a qualitative adjustment was warranted to certain loan portfolio classes to account for specific risk characteristics or current conditions that differ from the period over which the historical loss rate was determined.

Our audit procedures related to the ALL estimate for loan portfolio classes for which we concluded the ALL was significant included the following, among others:

• We tested the effectiveness of management’s controls over model applicability, qualitative adjustments, the reasonable and supportable forecast adjustments, and management's review and approval process over the final determination of the ALL.

• We tested the underlying data and mathematical accuracy of the cohort methodology used to determine most loan portfolio class historical loss rates.

We also evaluated the reasonableness and conceptual soundness of the methodology.

• To test the qualitative adjustments, we performed analysis to evaluate management’s determination of the qualitative adjustments made to account for specific risk characteristics or current conditions that differ from the period over which the historical loss rate was determined.

Our procedures included evaluating management’s inputs and assumptions used in determining the qualitative and forecast adjustments by comparing the information to internal and external source data including, among others, the economic forecasts utilized by the Company and third-party economic forecasts for selected assumptions.

In addition, we performed procedures on the overall ALL amount, inclusive of the qualitative adjustments, by evaluating the Company’s analysis of peers’ estimated current expected credit losses for loans to the Company’s recorded ALL.

Goodwill - Refer to Note A to the financial statements

Critical Audit Matter Description

The Company’s goodwill balance as of September 30, 2023, included within Intangible Assets, is related to the Company’s single reporting unit.

Goodwill is evaluated for potential impairment on an annual basis and between tests if circumstances such as material adverse changes in legal, business, regulatory and economic factors exist.

The Company performed its annual impairment test as of August 31, 2023, using a quantitative impairment approach, and concluded the fair value of the single reporting unit exceeded its respective carrying value and did not result in an impairment for the reporting unit.

When performing the quantitative assessment of goodwill impairment, the Company estimated fair value of its reporting unit using the market capitalization approach, based on its stock price, adjusted for the effect of a control premium.

Given the significant judgments made by management to estimate the fair value of its reporting unit, including the selection of a control premium, performing audit procedures to evaluate goodwill for impairment required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the fair value of the reporting unit and selected control premium included the following procedures, among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of fair value of the reporting unit and selection of the control premium.

• With the assistance of our fair value specialists we:

◦ Evaluated the appropriateness of using the market capitalization approach to estimate the fair value of the reporting unit.

◦ Evaluated certain inputs and assumptions, within management’s impairment analysis, including assessing including peer company transaction data, to determine applicability.

◦ Performed procedures to assess the reasonableness of the control premium assumption used in the Company’s market capitalization approach.

◦ Assessed the mathematical accuracy of the valuation used in the impairment test.

/s/ Deloitte & Touche LLP

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November 17, 2023

We have served as the Company’s auditor since at least 1982;

however, an earlier year could not be reliably determined.

WASHINGTON FEDERAL, INC.

We have served as the Company’s auditor since 1982.

AND SUBSIDIARIES

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Real estate owned 4,149 6,667

FHLB & FRB stock 95,073 102,863

FHLB stock 126,820 95,073

Bank owned life insurance 242,919 237,931

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16,070,329 16,029,570

FHLB advances 2,125,000 1,720,000

Borrowings 3,650,000 2,125,000

Advance payments by borrowers for taxes and insurance 52,550 50,051

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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

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Customer accounts 237,233 43,041 42,313

FHLB advances 28,729 44,188 51,445

Borrowings 115,488 28,729 44,188

352,721 71,770 86,501

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376,035 358,575 332,459

Gain (loss) on real estate owned, net 651 427 26

Gain on real estate owned, net 176 651 427

Income before income taxes 325,076 300,037 233,138

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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

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Reclassification adjustment of net (gain) loss included in net income during the period from sale of available-for-sale securities, net of tax of $( 9 ), $( 23 ) and $( 3 )

76 11 ( 11,572 )

Net unrealized gain (loss) from investment securities, net of reclassification adjustment ( 9,334 ) ( 123,001 ) 6,773

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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

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Balance at September 30, 2020 $ — $ 135,727 $ 1,678,843 $ 1,420,906 $ 16,953 $ ( 1,238,296 ) $ 2,014,133

Adjustment pursuant to adoption of ASU 2016-13 — — — ( 21,945 ) — — ( 21,945 )

Net income — — — 183,615 — — 183,615

Other comprehensive income (loss) — — — — 52,832 — 52,832

Issuance of preferred stock, net 300,000 — ( 6,675 ) — — — 293,325

Dividends on common stock ($ 0.91 per share)

— — — ( 65,876 ) — — ( 65,876 )

Proceeds from stock-based awards — 8 136 — — — 144

Dividends on preferred stock ($ 33.45 per share)

— — — ( 10,034 ) — — ( 10,034 )

Proceeds from stock issuances

— 20 319 — — — 339

Stock-based compensation expense — 246 6,135 — — — 6,381

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Other comprehensive income (loss) — — — ( 17,304 ) — ( 17,304 )

Issuance of preferred stock, net 300,000 — ( 6,675 ) — — — 293,325

Dividends on common stock ($ 0.95 per share)

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— — — ( 14,625 ) — — ( 14,625 )

Proceeds from stock-based awards — 20 319 — — — 339

Proceeds from stock issuances

— 65 1,758 — — — 1,823

Stock-based compensation expense — 213 6,595 — — — 6,808

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— — — ( 14,625 ) — — ( 14,625 )

Proceeds from stock-based awards — 65 1,758 — — — 1,823

Proceeds from stock issuances

— 42 1,224 — — — 1,266

Stock-based compensation expense — 154 ( 565 ) — — 8,325 7,914

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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

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Proceeds from settlements of bank owned life insurance 1,809 2,266 —

Purchase of strategic investments ( 12,500 ) — —

Net cash received (paid) in business combinations ( 2,590 ) — ( 1,500 )

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Dividends paid on preferred stock ( 14,625 ) ( 14,625 ) ( 6,378 )

Proceeds from employee stock purchase

Treasury stock purchased ( 30,463 ) ( 3,260 ) ( 348,651 )

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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

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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.

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

Washington Federal, Inc.

changed its name effective September 29, 2023 to Wafd, Inc.

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

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

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Restricted cash balances - Based on the level of vault cash on hand, the Company was not required to maintain cash reserve balances with the Federal Reserve Bank as of September 30, 2023.

As of September 30, 2022 and September 30, 2021, the Company held counterparty cash collateral of $ 284,400,000 and pledged cash collateral of $ 1,500,000 , respectively, related to derivative contracts.

As of September 30, 2023 and September 30, 2022, the Company held counterparty cash collateral of $ 326,750,000 and $ 284,400,000 , respectively, related to derivative contracts.

Equity securities - The Company records equity securities within Other assets in its Consolidated Statements of Financial Condition.

These equity investments are accounted for under different methods.

• Low-income housing tax credit investments are accounted for under the proportional amortization method in accordance with ASU 2014-1.

• For other equity investments where the Company has significant influence, the Company applies the equity method of accounting, which adjusts the carrying value of the investment to recognize a proportionate share of the financial results of the investment entity, regardless of whether any distribution is made.

• Low-income housing tax credit investments are accounted for under the proportional amortization method.

• For equity investments where the Company has significant influence, the Company applies the equity method of accounting, which adjusts the carrying value of the investment to recognize a proportionate share of the financial results of the investment entity, regardless of whether any distribution is made.

Any adjustments to the fair value of these investments are recorded in Other income in the Consolidated Statements of Operations.

• For other equity investments where neither ASU 2014-1 nor the equity method of accounting is applicable, the Company applies the fair value adjustment method of ASU 2016-1.

• For investments in certain nonmarketable equity securities investments where the equity method of accounting is not applicable, the Company applies the fair value method.

Any adjustments to the fair value of these investments are recorded in Other income in the Consolidated Statements of Operations.

Fair value is determined by reference to readily determinable market values, if applicable.

Equity investments that do not have readily determinable

WASHINGTON FEDERAL, INC.

As these investments do not have readily determinable fair values, they are generally accounted for at cost minus impairment, if any, plus or minus changes resulting from observable

AND SUBSIDIARIES

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YEARS ENDED SEPTEMBER 30, 2023, 2022, AND 2021

fair values (non-marketable) are generally accounted for at cost minus impairment, if any, plus or minus changes resulting from observable transactions involving the same or similar investments from the same issuer, also referred to as the measurement alternative.

Under the NAV expedient for fair value measurement, equity investments in qualified real estate funds can use the net asset value (NAV) determined by the fund as fair value for the investment.

transactions involving the same or similar investments from the same issuer.

This practice is referred to as the measurement alternative.

• Equity investments in qualified real estate funds can use the NAV expedient for fair value measurement.

Under this method, the net asset value (NAV) is determined by the fund as fair value for the investment.

At September 30, 2023, equity investments held by the Company and recorded at NAV had a carrying amount of $ 37,587,000 and a remaining unfunded commitment of $ 6,039,000 .

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For held-to-maturity (“HTM”) debt securities, the Company is required to utilize a CECL methodology to estimate expected credit losses.

Substantially all of the Company’s HTM debt securities are issued by U.S.

All of the Company’s HTM debt securities are issued by U.S.

government agencies or U.S.

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The impairment model for available-for-sale (“AFS”) debt securities differs from the CECL methodology applied for HTM debt securities because AFS debt securities are measured at fair value rather than amortized cost.

Although ASC 326 replaced the legacy other-than-temporary impairment (“OTTI”) model with a credit loss model, it retained the fundamental nature of the legacy OTTI model.

For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis.

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Any remaining discount that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

Under the new guidance, an entity may no longer consider the length of time fair value has been less than amortized cost.

Changes in the allowance for credit losses are recorded as a provision (or release) for credit losses.

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Loans that are performing in accordance with their contractual terms are carried at the unpaid principal balance, net of premiums, discounts and net deferred loan fees.

Net deferred loan fees include nonrefundable loan origination

WASHINGTON FEDERAL, INC.

Net deferred loan fees include non-refundable loan origination fees less direct loan origination costs.

Net deferred loan fees, premiums and discounts are amortized into interest income using either the interest method or straight-line method over the terms of the loans, adjusted for actual prepayments.

In addition to fees and costs for originating loans, various other fees and charges related to existing loans may occur, including prepayment charges, late charges and assumption fees.

AND SUBSIDIARIES

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YEARS ENDED SEPTEMBER 30, 2023, 2022, AND 2021

fees less direct loan origination costs.

In addition to fees and costs for originating loans, various other fees and charges related to existing loans may occur, including prepayment charges, late charges and assumption fees.

When a borrower fails to make a required payment on a loan, the Bank attempts to cure the deficiency by contacting the borrower.

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Allowance for Credit Losses (Loans Receivable).

The Company applies FASB ASU 2016-13, Financial Instruments - Credit Losses ("ASC 326"), so the allowance calculation is based on current expected credit loss methodology ("CECL").

The Company maintains an allowance for credit losses (“ACL”) for the expected credit losses of the loan portfolio as well as unfunded loan commitments.

The amount of ACL is based on ongoing, quarterly assessments by management.

The CECL methodology requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures) and replaces the incurred loss methodology’s threshold that delayed the recognition of a credit loss until it was probable a loss event was incurred.

The current expected credit loss methodology ("CECL") requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures).

See Note E "Allowance for Losses on Loans" for details.

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1) asset or class specific risk characteristics or current conditions at the reporting date related to portfolio credit quality, remaining payments, volume and nature, credit culture and management, business environment or other management factors and 2) reasonable and supportable forecast of future economic conditions and collateral values.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2022, 2021, AND 2020

The Company performs a quarterly asset quality review which includes a review of forecasted gross charge-offs and recoveries, nonperforming assets, criticized loans, risk rating migration, delinquencies, etc.

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The overlay adjustment for the reasonable and supportable forecast assumes an immediate reversion after the one-year forecast period to historical loss rates for the remaining life of the respective loan pool.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2023, 2022, AND 2021

When management deems it to be appropriate, the Company establishes a specific reserve for individually evaluated loans that do not share similar risk characteristics with the loans included in each respective loan pool.

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We believe accrued interest receivable recorded as of September 30, 2023 is collectible.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2022, 2021, AND 2020

Off-balance-sheet credit exposures.

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However, a liability is not recognized for commitments that are unconditionally cancellable by the Company.

The reserve for unfunded commitments is determined by estimating future draws, including the effects of risk mitigation actions, and applying the expected loss rates on those draws.

The reserve for unfunded commitments is determined by estimating future draws, including the effects of risk mitigation actions, and applying the expected loss rates on

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2023, 2022, AND 2021

Loss rates are estimated by utilizing the same loss rates calculated for the allowance for credit losses related to the respective loan portfolio class.

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As the interest rate swap agreements with the customers and third parties are not designated as accounting hedges under FASB ASC 815, the instruments are marked to market in earnings.

The change in fair value of the offsetting swaps are included in other noninterest income and there is no impact on net income.

The change in fair value of the offsetting swaps are included in other noninterest income and there is minimal impact on net income.

There is fee income earned on the swaps that is included in loan fee income.

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Other intangibles, including core deposit intangibles, are acquired assets that lack physical substance but can be distinguished from goodwill.

Goodwill is evaluated for impairment on an annual basis during the fourth quarter.

Other intangible assets are amortized over their estimated lives and are subject to impairment testing when events or circumstances change.

Goodwill is not amortized but is evaluated for potential impairment on an annual basis and between tests if circumstances such as material adverse changes in legal, business, regulatory and economic factors exist.

We have determined our goodwill balance is all related to a single reporting unit and perform a quantitative impairment assessment.

An impairment loss is recorded when the carrying amount of goodwill exceeds its implied fair value.

If circumstances indicate that the carrying value of the assets may not be recoverable, an impairment charge could be recorded.

The Bank amortizes the core deposit intangibles over their estimated lives using an accelerated method.

WASHINGTON FEDERAL, INC.

Other intangible assets are amortized over their estimated lives and are subject to impairment testing when events or circumstances change.

The Company performed its annual impairment assessment as of August 31, 2023 and concluded the fair value of our single reporting unit exceeded its respective carrying value and did not result in impairment for the reporting unit.

When performing the quantitative assessment of goodwill impairment, we estimated the fair value of our reporting unit using the market capitalization approach, based on our stock price, adjusted for the effect of a control premium.

The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value.

While the Company believes the judgments and assumptions used in the goodwill impairment test is reasonable, different assumptions or changes in general industry, market and macro-economic conditions could change the estimated fair values and, therefore, future impairment charges could be required, which could be material to the consolidated financial statements.

AND SUBSIDIARIES

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Balance at September 30, 2023 $ 304,750 $ 5,869 $ 310,619

The table below presents the estimated future amortization expense of core deposit and other intangibles for the next five years.

The table below presents the estimated future amortization expense of other intangibles for the next five years.

Fiscal Year Expense

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Regulatory matters.

The Bank was previously subject to a Consent Order from the OCC for its BSA program that was issued in February 2018 (the “BSA Consent Order”).

The BSA Consent Order resulted in the Bank incurring significant expenses to

WASHINGTON FEDERAL, INC.

On October 9, 2013, the CFPB entered a Consent Order against the Bank that required the Bank to pay a civil money penalty of $ 34,000 , and to adopt an enhanced compliance program related to reporting Home Mortgage Disclosure

AND SUBSIDIARIES

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YEARS ENDED SEPTEMBER 30, 2023, 2022, AND 2021

comply with it, including payment of a $ 2,500,000 civil money penalty.

The OCC terminated the BSA Consent Order in December 2021.

Act ("HMDA") data.

The Bank has adopted an enhanced HMDA program, which continues to be subject to review by the CFPB.

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Both HMDA Consent Orders remain in place.

Subsequent events.

On November 13, 2022, the Company announced that it had entered into a definitive merger agreement pursuant to which it will acquire Luther Burbank Corporation (NASDAQ:

LBC, “Luther Burbank”) and its wholly-owned subsidiary, Luther Burbank Savings, in an all-stock transaction valued at approximately $ 654 million based upon the closing price of Washington Federal’s common stock on November 11, 2022.

Upon closing of the transaction, which was unanimously approved by the boards of directors of each of Washington Federal and Luther Burbank, and is subject to shareholder and regulatory approval and other customary closing conditions, Luther Burbank shareholders will be entitled to receive 0.3353 shares of Washington Federal common stock for each share of Luther Burbank common stock they own.

The transaction, which is anticipated to close as early as the second calendar quarter of 2023, will expand Washington Federal’s franchise into California.

The Company has evaluated subsequent events for adjustment to or disclosure in the Company’s consolidated financial statements through the date of this report and has not identified any other recordable or disclosable events.

NOTE B - NEW ACCOUNTING PRONOUNCEMENTS

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848).

The amendments in this ASU provide temporary, optional guidance to ease the potential burden in accounting for reference rate reform.

The ASU provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met.

The ASU primarily includes relief related to contract modifications and hedging relationships, as well as providing a one-time election for the sale or transfer of debt securities classified as held-to-maturity.

This guidance is effective immediately and the amendments may be applied prospectively through December 31, 2022.

The Company has evaluated the regulatory requirements to cease the use of LIBOR and has put in place systems and capabilities for this purpose.

The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815) .

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We do not expect the amendments to have a material effect on our consolidated financial statements.

WASHINGTON FEDERAL, INC.

In March 2023, the FASB issued ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323) .

The amendments in this ASU expand the population of tax credit investments for which an investor may elect to apply the proportional amortization method ("PAM") and require certain disclosures for tax credit investments.

For public companies amendments in this ASU are effective for fiscal years beginning after December 15, 2023, with early adoption permitted.

The Company has utilized PAM for low income housing tax credit investments.

We do not expect this ASU to have a material effect on our consolidated financial statements.

In August 2023, the FASB affirmed ASU 2023-ED100 , Income Tax - Improvements to Income Tax Disclosures (Topic 740) which will require reporting companies to break out their income tax expense and tax rate reconciliation in more details.

For public companies, the requirements will become effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

We do not expect this ASU to have a material effect on our consolidated financial statements.

In October 2023, the FASB issued ASU 2023-6 Disclosure Improvements:

Codification Amendments In Response to the SEC's Disclosure Update and Simplification Initiative to clarify or improve disclosure and presentation requirements on a variety of topics and align the requirements in the FASB accounting standard codification with the Securities and Exchange Commission regulations.

This guidance is effective for the Company no later than June 30, 2027.

We do not expect the amendments in this update to have a material impact on our consolidated financial statements.

AND SUBSIDIARIES

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government and agency securities due

Within 1 year $ 3,501 $ — $ ( 36 ) $ 3,465 6.06 %

1 to 5 years 18,894 — ( 563 ) 18,331 4.70

Asset-backed securities

5 to 10 years 87,922 177 — 88,099 5.76

Over 10 years 106,340 831 ( 13 ) 107,158 5.84

Asset-backed securities due

1 to 5 years 18,579 — ( 715 ) 17,864 6.06

5 to 10 years 36,875 2 ( 99 ) 36,778 6.11

Over 10 years 539,911 578 ( 7,115 ) 533,374 6.35

Corporate debt securities due

Within 1 year 75,000 4 ( 200 ) 74,804 3.74

1 to 5 years 151,893 895 ( 1,787 ) 151,001 5.14

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$ 2,542,202 $ 2,910 $ ( 194,827 ) $ 2,350,285 4.35 %

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

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1 to 5 years $ 40,403 $ — $ ( 1,049 ) $ 39,354 3.03 %

5 to 10 years $ 14,064 $ 136 $ — $ 14,200 2.05

Asset-backed securities

Asset-backed securities due

1 to 5 years 22,527 — ( 1,141 ) 21,386 3.27

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Municipal bonds due

Within 1 year 1,493 17 — 1,510 —

5 to 10 years 5,751 — ( 361 ) 5,390 3.00

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$ 2,626,036 $ 1,330 $ ( 169,469 ) $ 2,457,897 3.28 %

The Company purchased $ 587,942,000 of available-for-sale investment securities and $ 195,357,000 held-to-maturity investment securities during 2022.

The Company purchased $ 376,481,000 of available-for-sale investment securities and no held-to-maturity investment securities during 2023.

Sales of available-for-sale securities totaled $ 1,169,000 and there were no sales of held-to-maturity investment securities in 2023.

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Because the Company does not intend to sell these securities and does not consider it more likely than not that it will be required to sell these securities before the recovery of amortized cost basis, which may be upon maturity, the Company does not consider these investments to be impaired.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

26 unchanged sentences

Available-for-sale securities

Corporate debt securities $ ( 27,072 ) $ 288,753 $ — $ — $ ( 27,072 ) $ 288,753

Municipal bonds due ( 1,061 ) 14,561 — — ( 1,061 ) 14,561

government and agency securities ( 1,049 ) 39,354 — — ( 1,049 ) 39,354

Asset-backed securities ( 6,374 ) 601,248 ( 1,383 ) 50,070 ( 7,757 ) 651,318

16 unchanged sentences

government and have a long history of zero credit loss.

The issuers of the corporate debt securities and municipal bonds held are considered to be of high credit quality (rated AA or higher) and the decline in fair value is due to changes in interest rates and other market conditions.

Corporate debt securities and municipal bonds are considered to have an issuer of high credit quality and the decline in fair value is due to changes in interest rates and other market conditions.

The issuers continue to make timely principal and interest payments on the bonds.

The fair value is expected to recover as the bonds approach maturity.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

12 unchanged sentences

Commercial & industrial

2,321,717 11.8 2,350,984 12.1

Construction 3,318,994 16.9 3,784,388 19.5

14 unchanged sentences

Net loans $ 17,476,550 $ 16,113,564

(1) Includes $ 10,237,000 and $ 311,795,000 of SBA Payroll Protection Program loans as of September 30, 2022 and

September 30, 2021, respectively.

The Company elected to exclude AIR from the amortized cost basis of loans for disclosure purposes and from the calculations of estimated credit losses.

2 unchanged sentences

The FHLB does not have the right to sell or re-pledge these loans.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

38 unchanged sentences

% of total loans 0.29 % 0.21 %

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

9 unchanged sentences

Commercial & Industrial 2,315,318 2,307,020 30 2,186 6,082 8,298 0.36

Construction - Speculative 1,423,891 1,423,891 — — — —

Construction 1,838,936 1,838,936 — — — — —

Land - Acquisition & Development 156,661 156,661 — — — — —

16 unchanged sentences

Commercial & Industrial 2,343,403 2,336,791 — 919 5,693 6,612 0.28

Construction - Speculative 1,117,227 1,117,186 — — 41 41 —

Construction 1,423,891 1,423,891 — — — — —

Land - Acquisition & Development 223,616 223,616 — — — — —

9 unchanged sentences

Delinquency % 99.83 % 0.02 % 0.02 % 0.13 % 0.17 %

The Company has actively worked with its borrowers to modify consumer mortgage and commercial loans to provide payment deferrals as a result of the COVID-19 pandemic.

The terms of the payment deferrals are generally 90 days for consumer mortgage loans and up to 180 days for commercial loans, and borrowers may be eligible for multiple deferrals.

Pursuant to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) passed by Congress, these loan modifications are not accounted for as TDRs.

In total, 1,472 consumer loans and 221 commercial loans were approved for deferrals.

As of September 30, 2022, 1 mortgage loan

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2022, 2021, AND 2020

totaling $ 64,000 and no commercial loans that had been modified remain in deferral.

These loans are not considered past due until after the deferral period is over and scheduled payments have resumed.

The Company participated in the Small Business Administration’s Paycheck Protection Program.

This program came about through the CARES Act to help small businesses keep their employees employed through the COVID-19 shelter in place orders.

The Company assisted over 9,000 businesses with approximately $ 1,085,000,000 in PPP loan originations.

As of September 30, 2022, approximately 8,800 PPP loans totaling $ 1,075,000,000 have been forgiven by the SBA and we continued to hold PPP loans receivable with an amortized cost of $ 10,141,000 .

Most TDRs are accruing and performing loans where the borrower has proactively approached the Company about modifications due to temporary financial difficulties.

Most loans classified as TDRs are accruing and performing loans where the borrower has proactively approached the Company about modifications due to temporary financial difficulties.

Each request is individually evaluated for merit and likelihood of success.

4 unchanged sentences

As of September 30, 2023, 97.9 % of the restructured loans were performing.

Single-family residential loans comprised 82.5 % of TDRs as of September 30, 2022.

Single-family

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2023, 2022, AND 2021

residential loans comprised 84.7 % of TDRs as of September 30, 2023.

The Company's ACL methodology takes into account the following performance indicators for restructured loans:

21 unchanged sentences

Partial charge-off versus full charge-off may be taken if the collateral offers some identifiable protection.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

3 unchanged sentences

September 30, 2023 Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2022 2021 2020 2019 2018 Prior to 2018 Revolving Loans Revolving to Term Loans Total Loans

(In thousands) 2023 2022 2021 2020 2019 Prior to 2019

Revolving Loans Revolving to Term Loans Total Loans

Commercial loans

Pass $ 135,859 $ 658,126 $ 850,998 $ 541,655 $ 135,965 $ 400,412 $ 49,523 $ — $ 2,772,538

Special Mention — 90,428 — — — — — — 90,428

Substandard — 5,711 2,309 2,422 7,583 5,603 — — 23,628

15 unchanged sentences

Pass $ 20,593 $ 69,414 $ 39,276 $ 6,280 $ 351 $ 17,876 $ 2,600 $ — $ 156,390

Substandard — 271 — — — — — — 271

Total $ 20,593 $ 69,685 $ 39,276 $ 6,280 $ 351 $ 17,876 $ 2,600 $ — $ 156,661

4 unchanged sentences

Total $ 771,470 $ 2,845,113 $ 2,530,000 $ 1,239,813 $ 516,214 $ 1,277,596 $ 1,292,844 $ 34,560 $ 10,507,610

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

2 unchanged sentences

September 30, 2023 Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2022 2021 2020 2019 2018 Prior to 2018 Revolving Loans Revolving to Term Loans Total Loans

(In thousands) 2023 2022 2021 2020 2019 Prior to 2019

Revolving Loans Revolving to Term Loans Total Loans

Consumer loans

8 unchanged sentences

30 days past due — 760 — — — — — — 760

60 days past due — — — 2,617 — — — — 2,617

90+ days past due — 87 — — — — — — 87

Total $ 92,081 $ 219,835 $ 8,838 $ 2,860 $ 358 $ 479 $ — $ — $ 324,451

3 unchanged sentences

60 days past due — — 245 — — — — — 245

90+ days past due — — — — — 8 — — 8

Total $ 19,128 $ 41,658 $ 35,651 $ 11,517 $ 4,166 $ 12,722 $ — $ — $ 124,842

15 unchanged sentences

Total $ 625,700 $ 1,743,204 $ 1,776,345 $ 743,758 $ 300,626 $ 1,694,901 $ 259,975 $ 1,638 $ 7,146,147

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

5 unchanged sentences

Pass $ 657,144 $ 778,936 $ 500,917 $ 168,568 $ 157,144 $ 315,858 $ 34,102 $ — $ 2,612,669

Special Mention — 1,763 — 3,111 — — — — 4,874

Substandard 3,951 — 1,729 — 6,560 1,570 — — 13,810

11 unchanged sentences

Pass $ 510,764 $ 671,611 $ 142,816 $ 27,260 $ 375 $ — $ 68,808 $ — $ 1,421,634

Special Mention 931 — — — — — — — 931

Substandard — 2,257 — — — — — — 2,257

2 unchanged sentences

Pass $ 100,022 $ 64,539 $ 16,934 $ 3,391 $ 8,175 $ 27,955 $ 2,600 $ — $ 223,616

Substandard — — — — 2,340 — — — 2,340

Total $ 100,022 $ 64,539 $ 16,934 $ 3,391 $ 8,175 $ 27,955 $ 2,600 $ — $ 223,616

4 unchanged sentences

Total $ 2,351,822 $ 2,646,527 $ 1,316,898 $ 574,962 $ 422,204 $ 1,120,742 $ 1,295,091 $ 255 $ 9,728,501

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

12 unchanged sentences

Current $ 235,030 $ 150,434 $ 9,811 $ 1,155 $ 478 $ — $ — $ — $ 396,908

90+ days past due — 435 — — — — — — 435

Total $ 235,030 $ 150,869 $ 9,811 $ 1,155 $ 478 $ — $ — $ — $ 397,343

3 unchanged sentences

90+ days past due — — — — — 60 — — 60

90+ days past due — — — — 116 154 — — 270

Total $ 53,396 $ 60,454 $ 16,015 $ 5,399 $ 3,433 $ 13,248 $ — $ — $ 151,945

2 unchanged sentences

60 days past due — — — — — 29 17 — 46

90+ days past due — — — — — — 227 — 227

Total $ — $ — $ — $ — $ — $ 4,473 $ 200,571 $ 989 $ 206,033

10 unchanged sentences

Total $ 1,420,965 $ 1,873,721 $ 806,033 $ 328,430 $ 303,923 $ 1,598,038 $ 225,772 $ 989 $ 6,557,871

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

11 unchanged sentences

Commercial & industrial 57,210 ( 45,856 ) 93 47,326 58,773

Construction - speculative 25,585 — 2,179 ( 1,603 ) 26,161

Construction 26,161 — — 3,247 29,408

Land - acquisition & development 12,278 — 78 ( 5,340 ) 7,016

15 unchanged sentences

Commercial & industrial 45,957 ( 1,202 ) 73 12,382 $ 57,210

Construction - speculative 24,156 — — 1,429 $ 25,585

Construction 25,585 — 2,179 ( 1,603 ) $ 26,161

Land - acquisition & development 13,447 ( 11 ) 70 ( 1,228 ) $ 12,278

8 unchanged sentences

$ 171,300 $ ( 2,139 ) $ 5,647 $ ( 2,000 ) $ 172,808

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

2 unchanged sentences

The Company recorded a provision for credit losses of $ 41,500,000 in 2023, compared to a provision of $ 3,000,000 for 2022.

In 2022, provisioning for net growth in the loan portfolio was mostly offset by improvements in the credit quality of certain loan portfolios related to strong real estate markets and collateral conditions.

For the year ended September 30, 2022, net recoveries were $ 3,508,000 , compared to $ 6,345,000 in the prior year.

In 2023, provisioning was largely due to adjustments for one large charge-off taken, offset by reduced unfunded commitment balances.

For the year ended September 30, 2023, net charge-offs were $ 45,101,000 , compared to recoveries of $ 3,508,000 in the prior year.

A loan is charged-off when the loss is estimable and it is confirmed that the borrower is not expected to be able to meet its contractual obligations.

No allowance was recorded as of September 30, 2022 or September 30, 2021 for the PPP loans, which are included in the commercial & industrial loan category, due to the government guarantee.

Non-accrual loans increased to $ 50,422,000 as of September 30, 2023, from $ 34,534,000 as of September 30, 2022.

13 unchanged sentences

Commercial & industrial 2,164,876 6,647 143,795 — — 2,315,318

Construction - speculative 1,421,634 — 2,257 — — 1,423,891

Construction 1,818,266 — 20,670 — — 1,838,936

Land - acquisition & development 156,390 — 271 — — 156,661

9 unchanged sentences

Total grade as a % of total loans 97.7 % 0.6 % 1.7 % — % — %

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

8 unchanged sentences

Commercial & industrial 2,196,767 31,656 114,980 — — 2,343,403

Construction - speculative 1,115,791 931 505 — — 1,117,227

Construction 1,421,634 — 2,257 — — 1,423,891

Land - acquisition & development 223,616 — — — — 223,616

9 unchanged sentences

Total grade as a % of total gross loans 98.5 % 0.2 % 1.3 % — % — %

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

9 unchanged sentences

Commercial & industrial 2,309,236 99.7 6,082 0.3

Construction - speculative 1,423,891 100.0 — —

Construction 1,838,936 100.0 — —

Land - acquisition & development 156,661 100.0 — —

15 unchanged sentences

Commercial & industrial 2,337,710 99.8 5,693 0.2

Construction - speculative 1,116,722 100.0 505 —

Construction 1,423,891 100.0 — —

Land - acquisition & development 223,616 100.0 — —

8 unchanged sentences

Total gross loans $ 16,251,838 99.8 % $ 34,534 0.2 %

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

18 unchanged sentences

The Company offers interest rate swaps to its variable rate borrowers who want to manage their interest rate risk.

At the same time, the Company enters into the opposite trade with a counter party to offset its interest rate risk.

At the same time, the Company enters into the opposite trade with a counterparty to offset its interest rate risk.

The Company has also entered various forms of fair value hedges and cash flow hedges using interest rate swaps.

1 unchanged sentence

These are considered a Level 2 input method.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

33 unchanged sentences

Client swap program hedges — 67,260 — 67,260

Commercial loan fair value hedges — 2,517 — 2,517

Mortgage loan fair value hedge — 36,765 — 36,765

Borrowings cash flow hedges — 179,945 — 179,945

2 unchanged sentences

Client swap program hedges $ — $ 67,260 $ — $ 67,260

Commercial loan hedges — 2,177 — 2,177

Mortgage loan fair value hedges — 1,641 — 1,641

Total Financial Liabilities $ — $ 67,260 $ — $ 67,260

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

26 unchanged sentences

(2) The gains (losses) represent aggregate write-downs and charge-offs on real estate owned.

At September 30, 2022, there were no foreclosed residential real estate properties held as REO.

At September 30, 2023, there was $ 121,000 in foreclosed residential real estate properties held as REO.

The recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process was $ 1,756,000 .

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

27 unchanged sentences

Loans receivable 3 17,476,550 16,559,758 16,113,564 15,417,635

FHLB and FRB stock 2 95,073 95,073 102,863 102,863

FHLB stock 2 126,820 126,820 95,073 95,073

Other assets - client swap program hedges 2 78,797 78,797 67,260 67,260

4 unchanged sentences

Time deposits 2 5,305,016 5,232,689 3,338,043 3,249,169

FHLB advances and other borrowings 2 2,125,000 1,940,813 1,720,000 1,692,412

2 3,650,000 3,653,229 2,125,000 1,940,813

Other liabilities - client swap program hedges 2 79,668 79,668 67,260 67,260

Other liabilities - commercial loan fair value hedges 2 — — 2,177 2,177

Other liabilities - mortgage loan fair value hedges 2 — — 1,641 1,641

The following methods and assumptions were used to estimate the fair value of financial instruments:

2 unchanged sentences

Equity securities which are exchange traded are considered a Level 1 input method.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

11 unchanged sentences

Time deposits – The fair value of fixed-maturity time deposits is estimated by discounting the estimated future cash flows using the rates currently offered for deposits with similar remaining maturities.

FHLB advances – The fair value of FHLB advances and other borrowings is estimated by discounting the estimated future cash flows using rates currently available to the Company for debt with similar remaining maturities.

Borrowings – The fair value of FHLB advances and FRB borrowings is estimated by discounting the estimated future cash flows using rates currently available to the Company for debt with similar remaining maturities.

Interest rate swaps – The Company offers interest rate swaps to its variable rate borrowers who want to manage their interest rate risk.

20 unchanged sentences

$ 2,100,885 $ 286,487 $ 588,676 $ 67,260

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

22 unchanged sentences

At September 30, 2022, the amortized cost basis of the closed loan portfolios used in the hedging relationships was $ 1,119,975,000 , the cumulative basis adjustment associated with the hedging relationships was $( 36,458,000 ), and the amount of the designated hedged items was $ 470,000,000 .

During the year ended September 30, 2021, hedge accounting was discontinued on $ 30,000,000 ( 30 %) of a $ 100,000,000 last of layer hedge.

The $ 1,238,000 unamortized discount associated with the terminated portion of the hedge is being amortized over the remaining life of the associated pool of loans.

(2) Includes the amortized cost basis of commercial loans designated in fair value hedging relationships.

At September 30, 2022, the amortized cost basis of the hedged commercial loans was $ 39,521,000 and the cumulative basis adjustment associated with the hedging relationships was $( 2,632,000 ).

During the year ended September 30, 2021, hedge accounting was discontinued on a $ 46,240,000 commercial loan hedge.

The Company has entered into interest rate swaps to convert certain short-term borrowings to fixed rate payments.

The primary purpose of these hedges is to mitigate the risk of changes in future cash flows resulting from increasing interest rates.

For qualifying

WASHINGTON FEDERAL, INC.

For qualifying cash flow hedges under ASC 815, gains and losses on the interest rate swaps are recorded in accumulated other comprehensive income ("AOCI") and then reclassified into earnings in the same period the hedged cash flows affect earnings and within the same

AND SUBSIDIARIES

1 unchanged sentence

YEARS ENDED SEPTEMBER 30, 2023, 2022, AND 2021

cash flow hedges under ASC 815, gains and losses on the interest rate swaps are recorded in accumulated other comprehensive income ("AOCI") and then reclassified into earnings in the same period the hedged cash flows affect earnings and within the same income statement line item as the hedged cash flows.

As of September 30, 2022, the maturities for hedges of adjustable rate borrowings ranged from less than two years to eight years , with the weighted average being 6.5 years.

income statement line item as the hedged cash flows.

As of September 30, 2023, the maturities for hedges of adjustable rate borrowings ranged from less than one year to seven years , with the weighted average being 5.5 years.

The following table presents the impact of derivative instruments (cash flow hedges on borrowings) on AOCI for the periods presented.

25 unchanged sentences

The interest rate swaps are derivatives under ASC 815, with changes in fair value recorded in earnings.

There was no net impact to the statement of operations for the years ended September 30, 2022 and 2021 as the changes in fair value of the receive fixed swap and pay fixed swap offset each other.

The net impact to the statement of operations for the year ended September 30, 2023 was a decrease in other income of $ 870,000 .

There was no net income to the statement of operations for the year ended September 30, 2022 as the changes in fair value of the receive fixed swap and pay fixed swap offset each other.

As of September 30, 2023, none of the outstanding notional balance is associated with related party loans.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

7 unchanged sentences

Receive fixed/pay floating swap Other noninterest income ( 12,414 ) ( 78,244 )

$ ( 870 ) $ —

NOTE H – REVENUE FROM CONTRACTS WITH CUSTOMERS

On October 1, 2018, the Company adopted ASU No.

2014-09, Revenue from Contracts with Customers ("ASC 606") .

Since net interest income on financial assets and liabilities is excluded from this guidance, a significant majority of our revenues are not subject to the new guidance.

Revenue streams that are within the scope of the new guidance are presented within noninterest income and are, in general, recognized as revenue at the same time the Company's obligation to the customer is satisfied.

Most of the Company's customer contracts that are within the scope of the new guidance are cancelable by either party without penalty and are short-term in nature.

Net interest income on financial assets and liabilities is excluded from the scope of ASU No.

2014-09, Revenue from Contracts with Customers ("ASC 606") thus a significant majority of our revenues are not subject to the referenced guidance.

Revenue streams that are within the scope of the guidance are presented within noninterest income and are, in general, recognized as revenue at the same time the Company's obligation to the customer is satisfied.

Most of the Company's customer contracts that are within the scope of the guidance are cancelable by either party without penalty and are short-term in nature.

These sources of revenue include depositor and other consumer and business banking fees, commission income, as well as debit and credit card interchange fees.

1 unchanged sentence

As this standard is immaterial to our consolidated financial statements, the Company has omitted certain disclosures in ASC 606, including the disaggregation of revenue table.

Sources of noninterest income within the scope of the new guidance include the following:

Sources of noninterest income within the scope of the guidance include the following:

Deposit related and other service charges (recognized in Deposit Fee Income) :

9 unchanged sentences

WAFD Insurance Group, Inc.

is a wholly-owned subsidiary of Washington Federal Bank that operates as an insurance agency, selling and marketing property and casualty insurance policies for a small number of high-quality insurance carriers.

is a wholly-owned subsidiary of the Bank that operates as an insurance agency, selling and marketing property and casualty insurance policies for a small number of high-quality insurance carriers.

WAFD Insurance Group, Inc.

2 unchanged sentences

may also receive contingent incentive fees based on the volume of business generated for the insurance carrier and based on policy renewal rates.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

35 unchanged sentences

Total $ 16,070,329 100 % 2.12 % $ 16,029,570 100 % 0.51 %

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

8 unchanged sentences

3.00% to 3.99% 3,884,337 277

4.00% to 4.99% 532,153 —

5.00% and higher 435,766 —

$ 5,305,016 $ 3,338,043

7 unchanged sentences

$ 5,305,016 $ 3,338,043

Customer accounts over $250,000 (uninsured deposits) totaled $ 7,400,474,000 as of September 30, 2022, compared to $ 7,198,111,000 as of September 30, 2021.

Customer accounts with uninsured or uncollateralized deposits totaled $ 4,124,355,000 as of September 30, 2023, compared to $ 4,856,148,927 as of September 30, 2022.

Interest expense on customer accounts consisted of the following:

10 unchanged sentences

Daily weighted average interest rate during the year 1.84 % 0.34 % 0.35 %

NOTE L - FHLB ADVANCES AND OTHER BORROWINGS

NOTE L - BORROWINGS

The Company had total borrowings outstanding at September 30, 2023 with carrying values of $ 3,650,000,000 compared to $ 2,125,000,000 at September 30, 2022.

The borrowings consisted of FHLB advances and funds received from the FRB's Bank Term Funding Program.

The table below shows the contractual maturity dates of outstanding FHLB advances.

1 unchanged sentence

(In thousands)

FHLB advances

Within 1 year $ 2,900,000 $ 2,025,000

1 unchanged sentence

$ 2,900,000 $ 2,125,000

As of September 30, 2022, there are no advances that are callable by the FHLB.

Taking into account cash flow hedges, the weighted average effective maturity of FHLB advances at September 30, 2022 is 3.25 years.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

1 unchanged sentence

YEARS ENDED SEPTEMBER 30, 2023, 2022, AND 2021

As of September 30, 2023, there are no advances that are callable by the FHLB.

Taking into account cash flow hedges, the weighted average effective maturity of FHLB advances at September 30, 2023 is 2.01 years.

Financial information pertaining to the weighted-average cost and the amount of FHLB advances were as follows.

9 unchanged sentences

All borrowings are secured by stock of the FHLB, deposits with the FHLB and a blanket pledge of qualifying loans receivable as provided in the agreements with the FHLB.

WASHINGTON FEDERAL, INC.

During fiscal 2023, the Company borrowed $ 750,000,000 from the FRB's BTFP.

This program offers up to 1 year fixed-rate term borrowings that are prepayable without penalty.

These borrowings are not callable by the FRB and have contractual maturity dates within 1 year.

AND SUBSIDIARIES

24 unchanged sentences

The following table shows future minimum payments for operating leases as of September 30, 2023 for the respective periods.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

8 unchanged sentences

Financial Instruments with Off-Balance Sheet Risk - The only material off-balance-sheet credit exposures are loans in process and unused lines of credit, which had a combined balance of $ 3,625,333,000 and $ 4,947,570,000 at September 30, 2023 and September 30, 2022, respectively.

The reserve for unfunded commitments was $ 32,500,000 as of September 30, 2022, which is an increase from $ 27,500,000 at September 30, 2021.

The reserve for unfunded commitments was $ 24,500,000 as of September 30, 2023, which is a decrease from $ 32,500,000 at September 30, 2022.

See Note A "Summary of Significant Accounting Policies" for details regarding the reserve methodology.

1 unchanged sentence

Management, after consulting with legal counsel, is of the opinion that the ultimate liability, if any, resulting from these pending or threatened actions and proceedings will not have a material effect on the financial statements of the Company.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

3 unchanged sentences

Under generally accepted accounting principles, the Company uses the asset and liability method of accounting for income taxes.

Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which those temporary differences are expected to reverse.

19 unchanged sentences

Equity investments 4,244 5,323

Other 4,141 6,157

Acquired intangibles 4,798 4,116

Total deferred tax liabilities 67,666 72,097

2 unchanged sentences

Net tax asset (liability) $ 8,479 $ ( 3,305 )

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

24 unchanged sentences

The state impact of any federal changes remains subject to examination by various states for a period of up to two years after formal notification to the states.

NOTE O - 401(k) PLAN

The Company maintains a 401(k) Plan (the "Plan") for the benefit of its employees.

NOTE O - EMPLOYEE BENEFIT PLANS

401(k) Plan - The Company maintains a 401(k) Plan (the "Plan") for the benefit of its employees.

Company contributions are made annually as approved by the Board of Directors.

3 unchanged sentences

The annual addition from contributions to an individual participant's account in this Plan cannot exceed the lesser of 100 % of base salary or $ 66,000 .

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

3 unchanged sentences

Such eligible employees do not become eligible for profit sharing or matching contributions until the first day of the quarter (January 1, April 1, July 1 or October 1) following completion of 1 year of service.

A “year of service” is defined as a 12-month period in which the eligible employee works at least 1,000 hours of service and the first eligibility service period started on the first day of employment.

A “year of service” is defined as a 12-month period in which the eligible employee works at least 1,000 hours of service and the first eligibility service period starts on the first day of employment.

The Plan provides for a guaranteed safe harbor matching contribution equal to 100 % of the first 4 % of compensation that employees contribute to their account and this amount is immediately vested.

3 unchanged sentences

Company contributions to the Plan amounted to $ 8,648,000 , $ 10,559,000 and $ 9,905,000 for the years ended 2023, 2022 and 2021, respectively.

Employee Stock Purchase Plan - Upon approval by common shareholders, the Company implemented an Employee Stock Purchase Plan ("ESPP") in 2023 in which substantially all employees of the Company are eligible to participate.

The ESPP provides participants the opportunity to purchase common stock of the Company at 95 % of the closing stock price on the last day of the purchase period.

Purchase periods are three-month periods that are set as January 1 through March 31, April 1 through June 30, July 1 through September 30, and October 1 through December 31 of each year.

A total of 500,000 shares were made available for issuance.

Participants of the ESPP purchased 7,027 shares for $ 177,021 during 2023.

At September 30, 2023 there were 492,973 shares remaining for purchase under the ESPP.

Supplemental Executive Retirement Plan - Also approved by our shareholders, the Company implemented a Supplemental Executive Retirement Plan ("SERP") during 2023.

This non-qualified deferred compensation plan provides retirement benefits to certain highly compensated executives.

The SERP credits, if vested, will be distributed in the form of WaFd, Inc.

common stock, in ten ( 10 ) substantially equal annual installments, following retirement of the executive officer.

$ 11,700,000 in common stock units, and related dividend equivalents, were authorized with each unit having a value equal to one share of WaFd, Inc.

common stock.

These units will vest based on the age of each participant as follows:

Attained Age Vested Percentage

Before 62 — %

On March 9, 2023, the date of distribution, a total of 368,966 common stock units were credited to participant accounts based on the closing share price of $ 31.71 .

An additional 7,292 units were credited to accounts during 2023 as a result of dividends paid subsequent to the initial distribution.

As a result, there were a total of 376,258 share units with a weighted average grant date fair value of $ 31.59 held within SERP accounts at September 30, 2023.

SERP related expense recognized during the year was $ 625,000 .

There were no shares paid during 2023 and there were no participants vested.

NOTE P - STOCK AWARD PLANS

2 unchanged sentences

Upon approval of the 2020 Incentive Plan, the 2011 Incentive Plan terminated with respect to future awards, and the remaining shares that were not awarded under the 2011 Incentive Plan as of that date were canceled.

A total of 3,200,000 shares are available for grant under the 2020 Incentive Plan and 1,882,283 shares remain available for issuance as of September 30, 2022.

A total of 3,200,000 shares were made available for grant under the 2020 Incentive Plan and 1,129,615 shares remain available for issuance as of September 30, 2023.

When applicable, stock options are granted with an exercise price equal to the market price of the Company's stock at the date of grant;

1 unchanged sentence

The Company's policy is to issue new shares upon option exercises.

The fair value of stock options granted is estimated on the date of grant using the Black-Scholes option-pricing model.

The fair value of stock options granted is estimated on the

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2023, 2022, AND 2021

date of grant using the Black-Scholes option-pricing model.

Additionally, there may be other factors that would otherwise have a significant effect on the value of employee stock options granted but are not considered by the model.

4 unchanged sentences

Stock Option Awards:

There were 352,043 stock options granted under the incentive plans during 2022, compared to no stock options granted in 2021 and 1,043,349 stock options granted in 2020 under the previous plan.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2022, 2021, AND 2020

There were 779,740 stock options granted under the incentive plans during 2023, compared to 352,043 stock options granted in 2022 and no stock options granted in 2021 under the previous plan.

A summary of stock option activity and changes during the year are as follows.

Options Number of Options Weighted

Price Weighted

Term (Years) Aggregate

Price Weighted Average

(In thousands)

Outstanding at September 30, 2021 1,030,323 $ 29.14 8 $ 5,330

Granted 352,043 32.49

Exercised ( 64,415 ) 28.16

15 unchanged sentences

The following is a summary of activity related to unvested stock options.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2023, 2022, AND 2021

Year ended September 30, 2023 2022 2021

13 unchanged sentences

The Company had a total of 495,782 shares of restricted stock outstanding as of September 30, 2023, with a total grant date fair value of $ 12,097,081 .

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2022, 2021, AND 2020

The following table summarizes information about unvested restricted stock activity.

17 unchanged sentences

The public offering consisted of the issuance and sale of 12,000,000 depositary shares, each representing a 1/40 th interest in a share of the Series A Preferred Stock, at a public offering price of $ 25.00 per depositary share.

Holders of the depositary shares are entitled to all proportional rights and preferences of the Series A Preferred Stock (including, dividend, voting, redemption and liquidation rights).

Holders of the depositary shares

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2023, 2022, AND 2021

are entitled to all proportional rights and preferences of the Series A Preferred Stock (including, dividend, voting, redemption and liquidation rights).

The depositary shares are traded on the NASDAQ Global Select Market under the symbol "WAFDP." The Series A Preferred Stock is redeemable at the option of the Company, subject to all applicable regulatory approvals, on or after April 15, 2026.

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There are no conditions or events since that management believes have changed the Bank's categorization.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2022, 2021, AND 2020

Actual Capital Adequacy

29 unchanged sentences

Based on their examinations, these regulators can direct that the Company's or Bank's financial statements be adjusted in accordance with their findings.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2023, 2022, AND 2021

The Company and the Bank are subject to regulatory restrictions on paying dividends.

2 unchanged sentences

As of September 30, 2023, management had authorization from the Board of Directors to repurchase up to 2,559,183 additional shares.

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2022, 2021, AND 2020

The following table sets forth information regarding earnings per common share calculations.

6 unchanged sentences

Diluted EPS 3.72 3.39 2.39

NOTE R - FINANCIAL INFORMATION – WASHINGTON FEDERAL, INC.

The following Washington Federal, Inc.

NOTE R - FINANCIAL INFORMATION – WAFD, INC.

The following WaFd, Inc.

(parent company only) financial information should be read in conjunction with the other notes to the Consolidated Financial Statements.

12 unchanged sentences

Total liabilities and shareholders’ equity $ 2,430,820 $ 2,278,618

WASHINGTON FEDERAL, INC.

AND SUBSIDIARIES

15 unchanged sentences

Net income available to common shareholders $ 242,801 $ 221,705 $ 173,581

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2023, 2022, AND 2021

Condensed Statements of Cash Flows

7 unchanged sentences

Stock based compensation expense 7,914 6,808 6,381

Increase (decrease) in other liabilities 262 440 —

Net cash provided by (used in) operating activities 179,444 98,739 196,962

Decrease in other assets 1,329 — —

Increase in other liabilities 36 262 440

Net cash provided by operating activities 64,062 179,444 98,739

Cash Flows From Investing Activities

4 unchanged sentences

Proceeds from issuance of preferred stock, net — — 293,325

Proceeds from the purchase of common stock through the Employee Stock Purchase Program 177 — —

Treasury stock purchased ( 30,463 ) ( 3,260 ) ( 348,651 )

7 unchanged sentences

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 8. Financial Statements and Supplementary Data