What changed in this filing

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Item 1. Business

2024-11-20 compared with 2023-11-17 · 129 added, 55 removed, 392 unchanged (32% of the section changed)

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.

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

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

On September 27, 2023, the Company filed Articles of Amendment to its Restated Articles of Incorporation, as amended, with the Washington Secretary of State, to change its name from Washington Federal, Inc.

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

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

and its consolidated subsidiaries, and the term "Bank" or "WaFd Bank" refers to its bank operating subsidiary.

The Company is headquartered in Seattle, Washington.

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As of September 30, 2024, the stock traded at 91 times its original 1982 offering price, has paid 166 consecutive quarterly cash dividends and has returned 15,195% total shareholder return to those who invested 42 years ago.

On February 29, 2024, WaFd, Inc.

closed its merger with Luther Burbank Corporation ("Luther Burbank" or "LBC"), a California corporation, effective as of 12:00am on March 1, 2024.

Pursuant to the Merger Agreement, at the Effective Time Luther Burbank merged with and into the Company (the “Corporate Merger”), with the Company surviving the Corporate Merger.

Promptly following the Corporate Merger, Luther Burbank’s wholly-owned bank subsidiary, Luther Burbank Savings, merged with and into WaFd Bank with WaFd Bank as the surviving institution (the “Bank Merger”).

The Corporate Merger and the Bank Merger are collectively referred to in this Annual Report on Form 10-K as the “Merger.” The Merger added approximately $7.7 billion of LBC assets at fair value to the Company's balance sheet, and the Company assumed $50,175,000 in floating rate junior subordinated debentures, due June 2036 and June 2037, and $93,514,000 in 6.5% senior unsecured term notes which matured and were paid off on September 30, 2024.

The Merger expanded WaFd Bank's footprint to nine western states with the addition of ten California branches of Luther Burbank.

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

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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, 2023, Washington Federal Bank has 198 branches located in Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico and Texas.

As of September 30, 2024, Washington Federal Bank has 210 branches located in Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico, California and Texas.

Through the Bank's subsidiaries, the Company is also engaged in insurance brokerage activities.

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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 Washington State Department of Financial Institutions (the "WDFI"), its primary state regulator, the Consumer Financial Protection Bureau (the "CFPB") and the Federal Deposit Insurance Corporation ("FDIC"), which insures its deposits up to applicable limits.

The Bank is subject to extensive regulation, supervision and examination by its primary state regulator, the Washington State Department of Financial Institutions (the "WDFI"), the Federal Deposit Insurance Corporation ("FDIC"), its primary federal regulator, which insures its deposits up to applicable limits, and the Consumer Financial Protection Bureau (the "CFPB").

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").

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The following table is a summary of loans receivable by loan portfolio segment and class.

September 30, 2023 September 30, 2022 September 30, 2021 September 30, 2020 September 30, 2019

September 30, 2024 September 30, 2023 September 30, 2022

($ in thousands)

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__________________

(1) The ACL within the table does not include the the reserve for unfunded commitments which was $24,500,000, $32,500,000, $27,500,000, $25,000,000 and $6,900,000 as of September 30, 2023, 2022, 2021, 2020 and 2019 respectively.

(1) The ACL within the table does not include the reserve for unfunded commitments which was $21,500,000, $24,500,000 and $32,500,000 as of September 30, 2024, 2023 and 2022, respectively.

Lending Programs and Policies.

The Bank's lending activities include commercial and consumer loans, including the following loan categories.

Commercial real estate loans .

The Bank makes loans on a variety of commercial real estate (“CRE”) types which are generally secured by the subject property.

Management differentiates multi-family properties from the rest of our CRE portfolio as these loans have key differences in the way they are handled from underwriting through monitoring.

The following table provides detail of the amortized cost of non-multi family CRE loans by property type:

September 30, 2024 September 30, 2023 September 30, 2022

($ in thousands)

Office $ 783,363 $ 815,776 $ 813,103

Industrial 705,401 591,507 481,473

Retail 399,276 377,300 370,139

Warehouse/Self Storage 295,275 252,677 244,985

Medical/dental 265,495 198,208 167,200

Mixed Use 229,351 232,564 243,430

Hotel/motel 205,895 228,503 219,911

Other 848,099 613,566 570,871

Total commercial real estate loans $ 3,732,155 $ 3,310,101 $ 3,111,112

Within the types listed above, a CRE subject property could be either owner or non-owner occupied.

The following table provides the amortized cost of CRE loans by occupation status:

September 30, 2024 September 30, 2023 September 30, 2022

($ in thousands)

Non-owner occupied $ 3,130,637 84 % $ 2,715,693 82 % $ 2,487,568 80 %

Owner occupied 601,518 16 % 594,408 18 % 623,544 20 %

Total commercial real estate loans $ 3,732,155 100 % $ 3,310,101 100 % $ 3,111,112 100 %

In underwriting, the Bank considers a number of factors, which include the projected net cash flow to the loan's debt service requirement, the age and condition of the collateral, the financial resources and income level of the borrower and the borrower's experience in owning or managing similar properties.

CRE loans are originated in amounts up to 75% of the appraised value of the property securing the loan.

With CRE loans, credit risk is a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic and societal conditions on income-producing properties and the primary source of cash flow for repayment being spread across multiple tenants (non-owner).

Repayment of CRE loans depends upon the successful operation of the related real estate property.

If the cash flow from the property is reduced, the borrower's ability to repay the loan may be impaired.

The Bank seeks to minimize these risks through its underwriting policies, which require such loans to be qualified at origination on the basis of the property's income and debt service ratio.

Multi-family residential loans .

Multi-family residential (five or more dwelling units) loans generally are secured by multi-family rental properties, such as apartment buildings.

In underwriting multi-family residential loans, the Bank considers a number of factors, which include the projected net cash flow to the loan's debt service requirement, the age and condition of the collateral, the financial resources and income level of the borrower and the borrower's experience in owning or managing similar properties.

Multi-family residential loans are originated in amounts up to 80% of the appraised value of the property securing the loan.

In underwriting multi-family residential loans, the Bank considers the same factors considered for CRE loans.

Like CRE, multi-family residential loans are originated in amounts up to 75% of the appraised value of the property securing the loan.

Loans secured by multi-family residential real estate generally involve different credit risk than single-family residential loans and carry larger loan balances.

This different credit risk is a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic and societal conditions on income-producing properties, the primary source of cash flow for repayment being spread across multiple tenants, the effects of government orders such as eviction forbearance and the increased difficulty of evaluating and monitoring these types of loans.

Repayment of loans secured by multi-family mortgages typically depends upon the successful operation of the related real estate property.

If the cash flow from the project is reduced, the borrower's ability to repay the loan may be impaired.

The Bank seeks to minimize these risks through its underwriting policies, which require such loans to be qualified at origination on the basis of the property's income and debt service ratio.

producing properties, the primary source of cash flow for repayment being spread across multiple tenants, the effects of government orders such as eviction forbearance and the increased difficulty of evaluating and monitoring these types of loans.

It is the Bank's policy to obtain title insurance ensuring that it has a valid first lien on the mortgaged real estate serving as collateral for the loan.

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Construction lending involves a higher level of risk than single-family residential lending due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions in the home building industry.

Moreover, a construction loan can involve additional risks because of the complexities of completing the construction, the inherent difficulty in estimating both the cost (including interest) of the project and the property's value at completion of the project.

Moreover, a construction loan can involve additional risks because of the complexities of completing the construction, the inherent difficulty in estimating the cost (including interest) of the project, the future cash flows and the property's value at completion of the project.

Land development loans .

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Land development loans involve a higher degree of credit risk than long-term financing on owner-occupied real estate.

Mitigation of risk of loss on a land development loan is dependent largely upon the accuracy of the initial estimate of the property's

value at completion of development compared to the estimated cost (including interest) of development and the financial strength of the borrower.

Mitigation of risk of loss on a land development loan is dependent largely upon the accuracy of the initial estimate of the property's value at completion of development compared to the estimated cost (including interest) of development and the financial strength of the borrower.

Permanent land loans .

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All of the Bank's mortgage lending is subject to written, nondiscriminatory underwriting standards, loan origination procedures and lending policies approved by the Company's Board of Directors (the "Board").

Property valuations are required on all real estate loans.

Property valuations are required

on all real estate loans.

Appraisals are prepared by independent appraisers, reviewed by staff of the Bank, and approved by the Bank's management.

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The Bank has general authority to lend anywhere in the United States;

however, its primary lending areas are within the states of Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico and Texas.

however, its primary lending areas are within the states of Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico, California and Texas.

Loan originations come from a variety of sources.

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Loans purchased (3)

6,207,393 80,015 564,584

Loans sold (4)

(3,017,506) — —

Loan principal repayments (4,302,359) (4,435,269) (6,194,448)

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(2) Includes non-cash transactions.

(3) Loans purchased in fiscal 2024 refer to those obtained in the Merger

(4) Loans sold in fiscal 2024 refer to multi-family and single-family residential loans obtained in the Merger and were classified as held for sale.

Interest Rates, Loan Fees and Service Charges.

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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.

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.

Sources of Funds

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

In addition to deposits, the Bank derives funds from loan repayments, advances from the Federal Home Loan Bank of Des Moines ("FHLB"), borrowings from the Federal Reserve Bank ("FRB"), 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 - DM"), borrowings from the Federal Reserve Bank ("FRB"), 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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Savings and money market accounts are offered to both businesses and consumers, with interest paid after certain threshold amounts are exceeded.

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

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.

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

The Bank has a credit line with the FHLB - DM for up to 45% of total assets depending on specific collateral eligibility.

The Bank obtains advances from the FHLB - DM 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.

Each credit program has its own interest rate and range of maturities, and the FHLB prescribes acceptable uses to which the advances pursuant to each program may be put, as well as limitations on the size of such advances.

Each credit program has its own interest rate and range of maturities, and the FHLB - DM prescribes acceptable uses to which the advances pursuant to each program may be put, as well as limitations on the size of such advances.

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

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In these instances, funds are borrowed from other financial institutions or the Federal Reserve Bank, for periods generally ranging from one to seven days at the then current borrowing rate.

The Bank has elected to utilize the FRB's Bank Term Funding program (the "BTFP") to leverage its highly favorable terms to fortify the Bank's liquidity position.

These borrowings are repayable at any time without penalty and are the lowest cost funding source available.

The Bank also elected to utilize the FRB's Bank Term Funding Program (the "BTFP") to leverage its highly favorable terms to fortify the Bank's liquidity position.

These borrowings are repayable at any time without penalty and were the lowest cost funding source available.

The Federal Reserve ceased making new BTFP loans on March 11, 2024.

The Bank also participates in the FRB of San Francisco Borrower-in-Custody program which collateralizes primary credit borrowings and serves as a backstop for the FHLB - DM credit line.

Due to differing program requirements between the FHLB - DM and FRB of San Francisco, participating in both increases the amount of eligible collateral that may be pledged in support of contingent liquidity needs.

The Bank Merger provided a credit line with the Federal Home Loan Bank of San Francisco (FHLB - SF) in support of LBC borrowings from the FHLB - SF, but the Bank is unable to take down new advances against this line as a bank is not allowed to belong to more than one FHLB.

The FHLB - SF credit line is secured by a line-item pledge of single-family residential mortgages that are specifically identified.

For further information on these activities, see Note L to the Consolidated Financial Statements in “Item 8.

Financial Statements and Supplementary Data” of this report.

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

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

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

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It acts as a trustee under deeds of trust as to which the Bank is beneficiary.

As of September 30, 2023 and September 30, 2022, Washington Services, Inc.

had total assets of $13,000 and $13,000, respectively.

The Company also currently holds a 33.98% interest in Archway Software, Inc.

(“Archway”), a Delaware corporation focused on the business of developing and selling technology and software products and services for financial institutions, including the Bank.

Archway was conceived in November 2022 as a joint venture between the Company and certain subsidiaries of Madrona Venture Group.

As part of the formation of Archway, the Company contributed to Archway its ownership interests in its technology subsidiary, Pike Street Labs, LLC, including some of its related intellectual property, and made an $8 million investment in Archway in return for shares of Archway stock.

As of both September 30, 2024 and September 30, 2023, Washington Services, Inc.

had total assets of $13,000.

Human Capital

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During fiscal year 2024 we hired 421 employees.

Our voluntary turnover rate was 15.54% in fiscal year 2023, a decrease from 21.18% in 2022.

Our voluntary turnover rate was 15.80% in fiscal year 2024, a slight increase from 15.54% in 2023.

Diversity, Equity and Inclusion.

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All new employees attend our two-day new hire orientation, Welcome to WaFd.

In addition, we offer our Education Assistance Program, designed to encourage an employee's advancement and growth.

In addition, we offer our Education Tuition Assistance Program, designed to encourage an employee's advancement and growth.

We also offer the Retail Bank Peer Mentor Program and retail banking certifications for our retail employees.

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Failure to comply with applicable laws and regulations can result in a range of sanctions and enforcement actions, including the imposition of civil money penalties, formal agreements and cease and desist orders.

In order to ensure the Bank's programs and operations are in compliance with regulatory requirements, the Bank has and will continue to incur additional significant costs in order to bring programs and operations into compliance.

In order to ensure the Company's programs and operations are in compliance with regulatory requirements, the Company has and will continue to incur significant costs in order to comply in accordance with its responsibilities.

For further information on regulatory matters, see Note A to the Consolidated Financial Statements in “Item 8.

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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

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

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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, wholly-owned operating subsidiary - Restrictions on Dividends .”

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

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.

Enterprise Risk Management.

The Company faces a number of risks, including credit risk, interest rate risk, liquidity risk, operations risk, cybersecurity risk, regulatory risk, compliance and legal risk, strategic risk, and reputational risk.

The Risk Management Committee of the Board (“RMC”) establishes the Company's risk appetite and sets appropriate risk limits and policies.

The RMC is responsible for providing ongoing review, guidance and oversight of the Company's enterprise risk management function.

Management is responsible for managing the Company's risks on a day-to-day basis in accordance with the policies established by the Board.

The Company's Chief Risk Officer (“CRO”) chairs the Enterprise Risk Management Committee (“ERMC”), a management-level committee that is responsible for executing the risk management framework adopted by the Board.

The ERMC maintains enterprise-wide oversight of risk assessment, monitoring and reporting.

The ERMC meets at least quarterly to identify, evaluate, monitor, and account for new, existing and emerging risks to the Company.

Identified risks are evaluated, analyzed, prioritized and tracked by the ERMC in a manner to be compatible with effective internal controls, risk management practices and the policies adopted by the Board.

The ERMC develops risk management programs and processes to incorporate risk considerations into day-to-day business activities across the Company’s risk categories, business lines and functions.

To support the ERMC’s risk management function, certain types of risks are overseen by other management level committees.

example, the Company’s Asset Liability Committee is responsible for managing interest rate and liquidity risks and the credit administration department tracks credit risks.

On at least a quarterly basis, the Company’s CRO, Chief Financial Officer, Chief Information Officer, Chief Information Security Officer, Chief Credit Officer, and other members of management report directly to the RMC to provide reporting on risk levels, key risks, emerging risks and the Company’s compliance with the risk management framework, risk limits and risk appetites adopted by the RMC.

The Company carries out its risk management practices through its “three lines of defense” model, which is designed to establish effective checks and balances within its risk management framework.

The first line of defense is business units and process owners within the Company which are responsible for maintaining effective internal controls and executing risk and control procedures on a day to day basis.

The second line of defense is the Company’s risk management, compliance and other control functions which are responsible for ensuring that the first line of defense is properly designed, in place, and operating effectively.

The third line of defense is the Company’s internal audit function, which provides independent assessment and assurance regarding the effectiveness of governance, risk management and internal controls.

Washington Federal Bank, wholly-owned operating subsidiary

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

The WDFI is the Bank's primary state regulator and the FDIC is its primary federal regulatory.

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

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

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.

As a Washington State chartered commercial bank with branches in the States of Washington, Oregon, Idaho, Utah, Nevada, Arizona, New Mexico, California 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.

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

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

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

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.

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Generally, all affiliate transactions must be on terms at least as favorable to the bank as transactions with non-affiliates.

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.

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

shares of any affiliate that is not a subsidiary.

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

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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, 2023, FHLB advances to the Bank amounted to $2,900,000,000.

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

At September 30, 2023, the Bank held $126,820,000 in FHLB of Des Moines stock, which was in compliance with this requirement.

At September 30, 2024, total FHLB advances to the Bank amounted to $2,192,874,000.

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

The Bank also acquired the stock of the FHLB San Francisco in the Merger but is not a member of this FHLB.

At September 30, 2024, the Bank held $73,910,000 in FHLB of Des Moines stock and $21,707,000 in FHLB of San Francisco stock, which was in compliance with requirements.

Community Reinvestment Act and Fair Lending Laws.

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The Anti-Money Laundering Act of 2020 (“AML Act”) was enacted as part of the National Defense Authorization Act and requires the U.S.

Treasury Department to issue National Anti-Money Laundering and Countering the Financing of Terrorism Priorities, which occurred in June 2021.

Treasury Department to issue National Anti-Money Laundering and

Countering the Financing of Terrorism Priorities ("AML/CFT"), which occurred in June 2021.

The AML Act also includes a requirement to conduct studies and issue regulations that may alter some of the due diligence, recordkeeping and reporting requirements that the BSA and Patriot Act impose on financial institutions.

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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.

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 non-accrual, 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%.

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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.

FRB 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, 2023, see Note Q to the Consolidated Financial Statements included in Item 8 hereof.

FRB, FDIC 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, 2024, see Note R to the Consolidated Financial Statements included in Item 8 hereof.

Prompt Corrective Action.

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• Exempting from appraisal requirements certain transactions involving real property in rural areas and valued at less than $400,000;

• Directing the Consumer Financial Protection Bureau to provide guidance on the applicability of the TILA-RESPA Integrated Disclosure rule to mortgage assumption transactions and construction-to-permanent home loans, as well the extent to which lenders can rely on model disclosures that do not reflect recent regulatory changes.

• Directing the Consumer Financial Protection Bureau to provide guidance on the applicability of the Truth in Lending and Real Estate Settlement Procedures Act Integrated Disclosure rule to mortgage assumption transactions and construction-to-permanent home loans, as well the extent to which lenders can rely on model disclosures that do not reflect recent regulatory changes.

Despite the improvements for mid-size financial institutions such as the Company that has resulted from EGRRCPA, many provisions of the Dodd-Frank Act and its implementing regulations remain in place and will continue to result in additional operating and compliance costs that could have a material adverse effect on our business, financial condition, and results of operation.

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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 July 2023, the SEC adopted rules requiring registrants to disclose material cybersecurity incidents experienced and describe the material aspects of their nature, scope and timing.

The rules, which supersede their previously interpretive guidance published in February 2018, also require annual disclosures describing a company's cybersecurity risk management, strategy and governance.

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

See Item 1C - Cybersecurity , for additional disclosures regarding the Company's cybersecurity risk management, strategy and governance.

Financial Privacy.

Under the Gramm-Leach-Bliley Act of 1999, as amended, a financial institution may not disclose non-public personal information about a consumer to unaffiliated third parties unless the institution satisfies various disclosure requirements and the consumer has not elected to opt out of the information sharing.

The financial institution must provide its customers with a notice of its privacy policies and practices.

The Federal Reserve, the FDIC, and other financial regulatory agencies issued regulations implementing notice requirements and restrictions on a financial institution's ability to disclose non-public personal information about consumers to unaffiliated third parties.

In addition, privacy and data protection are areas of increasing state legislative focus, and several states have recently enacted consumer privacy laws that impose significant compliance obligations with respect to personal information.

For example, the Company is subject to the California Consumer Privacy Act (“CCPA”) and its implementing regulations.

The CCPA gives consumers the right to request disclosure of information collected about them, and whether that information has been sold or shared with others, the right to request deletion of personal information (subject to certain exceptions), the right to opt out of the sale of the consumer’s personal information, and the right not to be discriminated against for exercising these rights.

The CCPA contains several exemptions, including an exemption applicable to information that is collected, processed, sold, or disclosed pursuant to the Gramm-Leach-Bliley Act of 1999, as amended.

In November 2020, voters in the state of California approved the California Privacy Rights Act (“CPRA”), a ballot measure that amends and supplements the substantive requirements of the CCPA by, among other things, expanding certain rights relating to personal information and its use, collection, and disclosure by covered businesses and providing certain mechanisms for administration and enforcement of the statue by creating the California Privacy Protection Agency, a watchdog privacy agency.

Similar laws may in the future be adopted by other states where the Company does business.

The Company has made and will make operational adjustments in accordance with the requirements of the CCPA and other state privacy laws.

Furthermore, privacy and data protection areas are expected to receive further attention at the federal level.

Congress and federal regulatory agencies are considering similar laws or regulations that could create new individual privacy rights and impose increased obligations on companies handling personal data.

On April 1, 2022, the federal banking agencies’ new rule became effective, providing for new notification requirements for banking organizations and their service providers for significant cybersecurity incidents.

Specifically, the new rule requires banking organizations to notify their primary federal regulator as soon as possible, and no later than 36 hours after, the discovery of a computer-security incident that rises to the level of a notification incident as defined by the rule.

Notification is required for incidents that have materially affected or are reasonably likely to materially affect the viability of a banking organization’s operations, its ability to deliver banking products and services, or the stability of the financial sector.

Service providers are required under the rule to notify any affected bank to which it provides services 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.

The potential effects of state or federal privacy and data protection laws on the Company’s business cannot be determined at this time and will depend both on whether such laws are adopted by states in which the Company does business and/or at the federal level and the requirements imposed by any such laws.

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.

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We operate in a highly competitive environment.

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

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

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

9 unchanged sentences

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

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).

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

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.

3 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 1. Business