SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value per share	WAFD	NASDAQ Stock Market
Depositary Shares, Each Representing a 1/40th Interest in a Share of 4.875% Fixed Rate Series A Non-Cumulative Perpetual Preferred Stock	WAFDP	NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 ("Exchange Act") during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x☒

~~Indicate the number of~~

The registrant had outstanding 65,415,338 shares ~~outstanding of each of the issuer’s classes~~ of common stock as of ~~the latest practicable date.~~January 31, 2023.



~~Title of class:~~	~~January 24, 2018~~
~~Common stock, $1.00 par value~~	~~85,973,665~~

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

December 31, 2017 September 30, 2017
(In thousands, except share data)
ASSETS
Cash and cash equivalents $ 309,713
$ 313,070
Available-for-sale securities, at fair value 1,245,855
1,266,209
Held-to-maturity securities, at amortized cost 1,765,886
1,646,856
Loans receivable, net of allowance for loan losses of $127,155 and $123,073
11,107,042
10,882,622
Interest receivable 42,146
41,643
Premises and equipment, net 264,643
263,694
Real estate owned 17,928
20,658
FHLB and FRB stock 130,590
122,990
Bank owned life insurance 211,833
211,330
Intangible assets, including goodwill of $300,288 and $293,153
310,578
298,682
Other assets 177,799
185,826
$ 15,584,013
$ 15,253,580
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Customer accounts
Transaction deposit accounts $ 6,482,612
$ 6,361,158
Time deposit accounts 4,518,967
4,473,850
11,001,579
10,835,008
FHLB advances 2,415,000
2,225,000
Advance payments by borrowers for taxes and insurance 23,924
56,631
Accrued expenses and other liabilities 133,892
131,253
13,574,395
13,247,892
Stockholders’ equity
Common stock, $1.00 par value, 300,000,000 shares authorized; 135,274,618 and 134,957,511 shares issued; 86,363,099 and 87,193,362 shares outstanding
135,275
134,958
Additional paid-in capital 1,661,866
1,660,885
Accumulated other comprehensive income (loss), net of taxes 8,004
5,015
Treasury stock, at cost; 48,911,519 and 47,764,149 shares
(877,044 ) (838,060 )
Retained earnings 1,081,517
1,042,890
2,009,618
2,005,688
$ 15,584,013
$ 15,253,580

SEE NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended December 31,
2017 2016
(In thousands, except share data)
INTEREST INCOME
Loans receivable $ 124,511
$ 114,835
Mortgage-backed securities 16,899
12,789
Investment securities and cash equivalents 4,370
5,140
145,780
132,764
INTEREST EXPENSE
Customer accounts 14,638
13,017
FHLB advances 15,407
16,595
30,045
29,612
Net interest income 115,735
103,152
Provision (release) for loan losses —
—
Net interest income after provision (release) for loan losses 115,735
103,152

OTHER INCOME
Gain on sale of investment securities —
968
FDIC loss share valuation adjustments (8,550 ) —
Loan fee income 1,035
1,334
Deposit fee income 6,686
5,185
Other income 7,624
4,409
6,795
11,896

OTHER EXPENSE
Compensation and benefits 29,619
26,994
Occupancy 8,671
8,450
FDIC insurance premiums 2,820
2,839
Product delivery 3,956
3,361
Information technology 7,929
6,451
Other expense 8,946
6,246
61,941
54,341
Gain (loss) on real estate owned, net 46
398
Income before income taxes 60,635
61,105
Income tax expense 8,965
19,859
NET INCOME $ 51,670
$ 41,246

PER SHARE DATA
Basic earnings per share $ 0.59
$ 0.46
Diluted earnings per share 0.59
0.46
Dividends paid on common stock per share 0.15
0.14
Basic weighted average number of shares outstanding 86,938,095
89,310,958
Diluted weighted average number of shares outstanding 87,082,499
89,731,024

SEE NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

SEE NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS'~~SHAREHOLDERS' EQUITY

(in thousands) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total
Balance at October 1, 2017 $ 134,958
$ 1,660,885
$ 1,042,890
$ 5,015
$ (838,060 ) $ 2,005,688
Net income

51,670

51,670
Other comprehensive income (loss)

2,989

2,989
Dividends on common stock

(13,043 )

(13,043 )
Compensation expense related to common stock options

—
Proceeds from exercise of common stock options 14
272

286
Restricted stock expense 194
818

1,012
Exercise of stock warrants 109
(109 ) —
Treasury stock acquired

(38,984 ) (38,984 )
Balance at December 31, 2017 $ 135,275
$ 1,661,866
$ 1,081,517
$ 8,004
$ (877,044 ) $ 2,009,618

(in thousands) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total
Balance at October 1, 2016 $ 134,308
$ 1,648,388
$ 943,877
$ (11,156 ) $ (739,686 ) $ 1,975,731
Net income

41,246

41,246
Other comprehensive income (loss)

8,324

8,324
Dividends on common stock

(12,422 )

(12,422 )
Proceeds from exercise of common stock options 190
4,172

4,362
Restricted stock expense 109
2,636

2,745
Exercise of stock warrants 50
(50 )

—
Treasury stock acquired

(20,385 ) (20,385 )
Balance at December 31, 2016 $ 134,657
$ 1,655,146
$ 972,701
$ (2,832 ) $ (760,071 ) $ 1,999,601


(in thousands)	Preferred Stock		Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total
Balance at October 1, 2022	$	300,000	$	136,271	$	1,686,975	$	1,688,740	$	52,481	$	(1,590,207)	$	2,274,260

Net income	—		—		—		79,509		—		—		79,509
Other comprehensive income (loss)	—		—		—		—		(10,755)		—		(10,755)

Dividends on common stock ($0.24 per share)	—		—		—		(15,585)		—		—		(15,585)
Dividends on preferred stock ($12.1875 per share)	—		—		—		(3,656)		—		—		(3,656)
Proceeds from stock-based awards	—		25		740		—		—		—		765

Stock-based compensation expense	—		77		1,494		—		—		—		1,571

Treasury stock acquired	—		—		—		—		—		(1,728)		(1,728)
Balance at December 31, 2022	$	300,000	$	136,373	$	1,689,209	$	1,749,008	$	41,726	$	(1,591,935)	$	2,324,381

(in thousands)	Preferred Stock		Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total
Balance at October 1, 2021	$	300,000	$	135,993	$	1,678,622	$	1,528,611	$	69,785	$	(1,586,947)	$	2,126,064

Net income	—		—		—		50,281		—		—		50,281
Other comprehensive income (loss)	—		—		—		—		(7,909)		—		(7,909)
Dividends on common stock ($0.23 per share)	—		—		—		(14,899)		—		—		(14,899)
Dividends on preferred stock ($12.1875 per share)	—		—		—		(3,656)		—		—		(3,656)
Proceeds from stock-based awards	—		30		798		—		—		—		828

Stock-based compensation expense	—		173		1,217		—		—		—		1,390

Treasury stock acquired	—		—		—		—		—		(2,973)		(2,973)
Balance at December 31, 2021	$	300,000	$	136,196	$	1,680,637	$	1,560,337	$	61,876	$	(1,589,920)	$	2,149,126

SEE NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended December 31,
2017 2016
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 51,670
$ 41,246
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion expense, net 15,273
12,087
Stock based compensation expense 1,012
2,745
Loss (gain) on sale of investment securities —
(968 )
Decrease (increase) in accrued interest receivable (503 ) (449 )
Decrease (increase) in federal and state income tax receivable —
16,047
Decrease (increase) in cash surrender value of bank owned life insurance (1,571 ) (1,739 )
Gain on bank owned life insurance (2,416 ) (649 )
Net realized (gain) loss on sales of premises, equipment, and real estate owned (241 ) 657
Decrease (increase) in other assets (7,715 ) 14,153
Increase (decrease) in accrued expenses and other liabilities 2,595
(41,265 )
Net cash provided by (used in) operating activities 58,104
41,865
CASH FLOWS FROM INVESTING ACTIVITIES
Origination of loans and principal repayments, net (80,089 ) (226,080 )
Loans purchased (143,605 ) —
FHLB & FRB stock purchased (123,600 ) (9 )
FHLB & FRB stock redeemed 116,000
24
Available-for-sale securities purchased (40,884 ) —
Principal payments and maturities of available-for-sale securities 58,261
112,469
Proceeds from sales of available-for-sale securities —
350,890
Held-to-maturity securities purchased (170,836 ) (415,729 )
Principal payments and maturities of held-to-maturity securities 50,653
78,778
Proceeds from sales of real estate owned 3,440
6,457
Proceeds from settlement of bank owned life insurance 3,484
1,231
Proceeds from sales of premises and equipment 1
1,722
Premises and equipment purchased and REO improvements (6,485 ) (2,200 )
Net cash provided by (used in) investing activities (333,660 ) (92,447 )
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in customer accounts 166,647
46,799
Proceeds from borrowings 3,090,000
—
Repayments of borrowings (2,900,000 ) —
Proceeds from exercise of common stock options and related tax benefit 286
4,362
Dividends paid on common stock (13,043 ) (12,422 )
Treasury stock purchased (38,984 ) (20,385 )
Increase (decrease) in borrower advances related to taxes and insurance, net (32,707 ) (19,302 )
Net cash provided by (used in) financing activities 272,199
(948 )
Increase (decrease) in cash and cash equivalents (3,357 ) (51,530 )
Cash and cash equivalents at beginning of period 313,070
450,368
Cash and cash equivalents at end of period $ 309,713
$ 398,838


	Three Months Ended December 31,
	2022		2021
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	79,509	$	50,281
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, accretion and other, net	1,613		7,944

Stock-based compensation expense	1,571		1,390
Provision (release) for credit losses	2,500		500
Loss (gain) on sale of investment securities	—		(81)
Gain on bank owned life insurance	(821)		—
Net realized (gain) loss on sales of premises, equipment, and real estate owned	(230)		(355)



Decrease (increase) in accrued interest receivable	(11,444)		(1,115)

Decrease (increase) in federal and state income tax receivable	—		3,877
Decrease (increase) in cash surrender value of bank owned life insurance	(439)		(1,397)
Decrease (increase) in other assets	3,134		(3,422)
Increase (decrease) in federal and state income tax liabilities	16,920		5,090
Increase (decrease) in accrued expenses and other liabilities	(26,213)		(35,871)
Net cash provided by (used in) operating activities	66,100		26,841
CASH FLOWS FROM INVESTING ACTIVITIES
Origination of loans and principal repayments, net	(802,470)		(347,596)
Loans purchased	(77,484)		(413,326)
FHLB & FRB stock purchased	(176,000)		(56,000)
FHLB & FRB stock redeemed	138,000		56,000
Available-for-sale securities purchased	(115,909)		—
Principal payments and maturities of available-for-sale securities	100,340		170,847
Proceeds from sales of available-for-sale securities	—		4,510

Principal payments and maturities of held-to-maturity securities	9,793		38,679

Proceeds from sales of real estate owned	744		2,883


Equity securities purchased	(7,500)		—


Proceeds from sales of premises and equipment	664		2
Premises and equipment purchased and REO improvements	(2,217)		(2,771)
Net cash provided by (used in) investing activities	(932,039)		(546,772)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in customer accounts	(69,535)		359,934
Proceeds from borrowings	4,400,000		1,400,000
Repayments of borrowings	(3,450,000)		(1,400,000)

Proceeds from stock-based awards	765		828

Dividends paid on common stock	(15,585)		(14,899)
Dividends paid on preferred stock	(3,656)		(3,656)

Treasury stock purchased	(1,728)		(2,973)
Increase (decrease) in advances payments by borrowers for taxes and insurance	(32,425)		(29,465)
Net cash provided by (used in) financing activities	827,836		309,769
Increase (decrease) in cash and cash equivalents	(38,103)		(210,162)
Cash, cash equivalents and restricted cash at beginning of period	683,965		2,090,809
Cash, cash equivalents and restricted cash at end of period	$	645,862	$	1,880,647

SEE NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Three Months Ended December 31,
	2022		2021
	(In thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Non-cash investing activities
Real estate acquired through foreclosure	$	95	$	—
Other personal property acquired through foreclosure	—		422
Non-cash financing activities
Preferred stock dividend payable	3,656		3,656
Cash paid (received) during the period for
Interest	48,195		13,275
Income taxes	1,016		—

Three Months Ended December 31,
2017 2016
(In thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Non-cash investing activities
Real estate acquired through foreclosure $ 773
$ 1,589
Non-cash financing activities
Stock issued upon exercise of warrants 3,761
1,523
Cash paid during the period for
Interest 29,986
28,737
Income taxes 5,225
—

SEE NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE A – Summary of Significant Accounting Policies

Company and Nature of Operations - Washington Federal ~~Inc.~~Bank, a federally-insured Washington state chartered commercial bank dba WaFd Bank (the ~~"Company"~~“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, ~~headquartered in Seattle, Washington. The Company is a bank~~was formed as the Bank’s holding company ~~that conducts its operations through its national bank subsidiary, Washington Federal, National Association (the "Bank"). The Bank is principally engaged~~ in the business of attracting deposits from businesses and the general public and investing these funds, together with borrowings and other funds, in one-to-four family residential mortgage and construction loans, home equity loans, lines of credit, commercial real estate loans, commercial and industrial loans, multi-family and other forms of real estate loans.November, 1994. As used throughout this document, the terms ~~"Washington Federal"~~“Washington Federal” or the ~~"Company"~~“Company” or “we” or “us” and “our” refer to Washington Federal, Inc. and its consolidated subsidiaries, and the term ~~"Bank"~~“Bank” refers to the operating subsidiary, Washington Federal ~~National Association.~~Bank. The Company is headquartered in Seattle, Washington. The Bank conducts its activities through a network of 200 bank branches located in Washington, Oregon, Idaho, Utah, Arizona, Nevada, New Mexico and Texas.

Basis of Presentation - The Company has prepared the consolidated unaudited interim financial statements included in this report. All intercompany transactions and accounts have been eliminated in consolidation. The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America (“GAAP”), requires management to make estimates and assumptions that affect amounts reported in the financial statements. Actual results could differ from these estimates. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation are reflected in the interim financial statements. ~~Certain amounts in the financial statements from prior periods have been reclassified to conform to the current financial statement presentation.~~

The information included in this Form 10-Q should be read in conjunction with the financial statements and related notes in the Company's ~~2017~~2022 Annual Report on Form 10-K ~~(“2017~~filed with the Securities and Exchange Commission ("SEC") on November 18, 2022 ("2022 Annual Financial ~~Statements”~~Statements"). Interim results are not necessarily indicative of results for a full year.

During the three months ended December 31, 2017, an immaterial correction was recorded related to acquisitions of insurance agency businesses in prior years. The balance sheet classification correction resulted in an increase in goodwill of $7,135,000 and finite-lived intangible assets of $5,106,000 and a corresponding decrease in other assets of $12,241,000.

Summary of Significant Accounting Policies - The significant accounting policies used in preparation of the Company's consolidated financial statements are disclosed in its ~~2017~~2022 Annual Financial Statements. There have not been any ~~material~~significant changes in ~~our~~the Company's significant accounting policies compared to those contained in ~~our 2017~~its 2022 Annual Financial Statements for the year ended September 30, ~~2017.~~2022.

~~Off-Balance-Sheet Credit Exposures~~ –

Preferred Stock - On February 8, 2021, in connection with an underwritten public offering, the Company issued 300,000 shares of 4.875% Noncumulative Perpetual Series A Preferred Stock (“Series A Preferred Stock”). Net proceeds, after underwriting discounts and expenses, were $293,325,000. The ~~only material off-balance-sheet credit exposures~~public offering consisted of the issuance and sale of 12,000,000 depositary shares, each representing a 1/40th 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 ~~loans in process~~entitled to all proportional rights and ~~unused lines~~preferences of ~~credit, which had a combined balance~~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 ~~$2,088,669,000 and $1,992,905,000 at~~the Company, subject to all applicable regulatory approvals, on or after April 15, 2026.

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 December 31, ~~2017~~2022. As of December 31, 2022 and September 30, ~~2017, respectively.~~2022, the Company held counterparty cash collateral of $280,400,000 and pledged cash collateral to counterparties of $284,400,000, respectively, related to derivative contracts.

Equity Securities - The Company ~~estimates losses on off-balance-sheet~~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 ~~exposures by allocating a loss percentage derived from historical loss factors~~investments are accounted for ~~each asset class.~~

~~NOTE B – New Accounting Pronouncements~~

~~In August 2017,~~under the ~~Financial Accounting Standards Board ("FASB")~~ ~~issued~~ proportional amortization method in accordance with Accounting Standards Update ~~("ASU"~~(“ASU”) ~~2017-12,~~ ~~Derivatives~~2014-01, Equity Method and ~~Hedging~~Joint Ventures (Topic ~~815): Targeted Improvements to Accounting for Hedging Activities.~~ ~~The ASU expands and refines hedge~~323).

•For other equity investments where the Company has significant influence, the Company applies the equity method of accounting, ~~for both financial and non-financial risk components, aligns~~which adjusts the ~~recognition and presentation~~carrying value of the ~~effects~~investment to recognize a proportionate share of ~~hedging instruments and hedge items~~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 ~~financial statements,~~Consolidated Statements of Operations.

•For other equity investments where neither ASU 2014-01 nor the equity method of accounting is applicable, the Company applies the fair value adjustment method of ASU 2016-01, Recognition and ~~includes certain targeted improvements to ease the application~~Measurement of ~~current guidance related~~Financial Assets and Financial Liabilities (Subtopic 825-10). Any adjustments to the ~~assessment~~fair value of ~~hedge effectiveness. The effective date~~these investments are recorded in Other income in the Consolidated Statements of ~~the new standard for public companies~~Operations. Fair value is for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition with a cumulative effect adjustment recordeddetermined by reference to ~~opening retained earnings as of the initial adoption date. The Company does not anticipate that this guidance will have a material impact on its consolidated financial statements.~~readily

~~In March 2017, the FASB issued ASU 2017-08,~~ ~~Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities.~~ The ASU shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments should be applied on a modified retrospective basis, with a cumulative-effect adjustment directly to retained earnings as of the beginning

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

ofdeterminable market values if applicable. Equity investments that do not have readily determinable fair values (non-marketable) are generally accounted for at cost minus impairment, if any, plus or minus changes resulting from observable transactions involving the ~~period of adoption.~~ ~~The Company does not anticipate that this guidance will have a material impact on its consolidated financial statements~~.

~~In February 2017, the FASB issued ASU 2017-05,~~ ~~Other Income - Gains and Losses~~same or similar investments from the ~~Derecognition~~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. At December 31, 2022, equity investments held by the Company and recorded at NAV had a carrying amount of ~~Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope~~$38,385,000 and a remaining unfunded commitment of ~~Asset Derecognition Guidance~~$7,511,000. These NAV based investments cannot be transferred without consent and ~~Accounting for Partial Sales of Nonfinancial Assets.~~ ~~The ASU clarifies that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an~~we do not have redemption rights. Equity investments measured at NAV are not classified in substance nonfinancial asset. The amendments also define the term in substance nonfinancial asset. The amendments clarify that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. A contract that includes the transfer of ownership interests in one or more consolidated subsidiaries is within the scope of Subtopic 610-20 if substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets. The amendments clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. The ASU is effectivehierarchy.

Allowance for ~~public business entities for annual periods beginning after December 15, 2017, and interim periods therein. Entities may use either a full or modified approach to adopt the ASU.~~ Credit Losses (Loans Receivable) - The Company ~~does not anticipate that this guidance will have a material impact on its consolidated financial statements.~~

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test~~maintains an allowance for ~~Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. The ASU also eliminates the requirements~~credit losses (“ACL”) for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The ASU is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption being permitted for annual or interim goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not anticipate that this guidance will have a material impact on its consolidated financial statements.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations Clarifying the Definition of a Business (Topic 805)~~, for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted for transactions that occurred before the issuance date or effective date of the standard if the transactions were not reported in financial statements that have been issued or made available for issuance. The ASU must be applied prospectively and upon adoption the standard will impact how we assess acquisitions (or disposals) of assets or businesses. The Company does not anticipate that this guidance will have a material impact on its consolidated financial statements.

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash: a Consensus of the FASB Emerging Issues Task Force~~. This ASU requires a company’s cash flow statement to explain the changes during a reporting period of the totals for cash, cash equivalents, restricted cash, and restricted cash equivalents. Additionally, amounts for restricted cash and restricted cash equivalents are to be included with cash and cash equivalents if the cash flow statement includes a reconciliation of the total cash balances for a reporting period. This ASU is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early application permitted. The Company does not anticipate that this guidance will have a material impact on its consolidated financial statements.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments.~~ The amendments in this ASU address eight specific cash flow issues with the objective of reducing diversity in practice. The specific issues identified include: debt prepayments or extinguishment costs; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period; however, early adoption is permitted. The Company is currently evaluating the guidance to determine its adoption method and does not expect this guidance to have a material impact on its consolidated financial statements.

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments - Credit Losses. The amendments in this ASU were issued to provide financial statement users with more decision-useful information about~~ the expected credit losses of the loan portfolio as well as unfunded loan commitments. The amount of ACL is based on ~~financial instruments~~ongoing, quarterly assessments by management. 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) 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 ACL consists of the allowance for loan losses and the reserve for unfunded commitments. The estimate of expected credit losses under the CECL methodology is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. We then consider whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period that historical experience was based for each loan type. Finally, we consider forecasts about future economic conditions or changes in collateral values that are ~~not accounted~~reasonable and supportable.

Portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its ACL. The Company has designated two loan portfolio segments, commercial loans and consumer loans. These loan portfolio segments are further disaggregated into classes, which represent loans of similar type, risk characteristics, and methods for ~~at fair value through net income, including~~monitoring and assessing credit risk. The commercial loan portfolio segment is disaggregated into five classes: multi-family, commercial real estate, commercial and industrial, construction, and land acquisition and development. The risk of loss for the commercial loan portfolio segment is generally most indicated by the credit risk rating assigned to each borrower. Commercial loan risk ratings are determined by experienced senior credit officers based on specific facts and circumstances and are subject to periodic review by an independent internal team of credit specialists. The consumer loan portfolio segment is disaggregated into five classes: single-family-residential mortgage, custom construction, consumer lot loans, ~~held for investment, held-to-maturity debt securities, trade~~home equity lines of credit, and other ~~receivables,~~consumer. The risk of loss for the consumer loan portfolio segment is generally most indicated by delinquency status and general economic factors. Each commercial and consumer loan portfolio class may also be further segmented based on risk characteristics.

For most of our loan portfolio classes, the historical loss experience is determined using a cohort methodology. This method pools loans into groups (“cohorts”) sharing similar risk characteristics and tracks each cohort’s net ~~investments in leases~~charge-offs over the lives of the loans to calculate a historical loss rate. The historical loss rates for each cohort are then averaged to calculate an overall historical loss rate which is applied to the current loan balance to arrive at the quantitative baseline portion of the allowance for credit losses for the respective loan portfolio class. For certain loan portfolio classes, the Company determined there was not sufficient historical loss information to calculate a meaningful historical loss rate using the cohort methodology. For any such loan portfolio class, the weighted-average remaining maturity (“WARM”) methodology is being utilized until sufficient historical loss data is obtained. The WARM method multiplies an average annual loss rate by the expected remaining life of the loan pool to arrive at the quantitative baseline portion of the allowance for credit losses for the respective loan portfolio class.

The Company also considers qualitative adjustments to the historical loss rate for each loan portfolio class. The qualitative adjustments for each loan class consider the conditions over the period from which historical loss experience was based and are split into two components: 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 ~~commitments to extend credit held~~management factors and 2) reasonable and supportable forecast of future economic conditions and collateral values.

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. The asset quality review is performed by ~~a reporting entity at each~~

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

management and the results are used to consider a qualitative overlay to the quantitative baseline. The second qualitative adjustment noted above, economic conditions and collateral values, encompasses a one-year reasonable and supportable forecast period. 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.

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. These individually evaluated loans are removed from their respective pools and typically represent collateral dependent loans but may also include other non-performing loans or troubled debt restructurings (“TDRs”). In addition, the Company individually evaluates “reasonably expected” TDRs, which are identified by the Company as a loan expected to be classified as a TDR within the next six months. Management judgment is utilized to make this determination.

Allowance for Credit Losses (Held-to-Maturity Debt Securities) - 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. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government and have a long history of zero credit loss. See Note F "Fair Value Measurements" for more information about HTM debt securities.

Allowance for Credit Losses (Available-for-Sale Debt Securities) - The ~~amendments require that financial assets~~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. 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 ~~be presented at~~basis. If either criteria is met, the ~~net amount~~security’s amortized cost basis is written down to fair value through income. For AFS debt securities where neither of the criteria are met, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the credit rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected ~~through~~from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited to the amount that the fair value is ~~deducted from~~less than the amortized cost basis. The ASU eliminates the current framework of recognizing probable incurred losses and instead requires an entity to use its current estimate of all expected credit losses over the contractual life. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecastsAny remaining discount that ~~affect the collectability of the financial assets.~~

For purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (“PCD assets”) that are measured at amortized cost, an allowance for expected credit losses is recorded as an adjustment to the cost basis of the asset. Subsequent changes in estimated cash flows would be recorded as an adjustment to the allowance and through the statement of income.

~~Credit losses relating to available-for-sale debt securities will be~~has not been recorded through an allowance for credit losses ~~rather than~~is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded as a ~~direct write-down~~provision (or recapture of) for credit losses. Losses are charged against the allowance when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met. See Note F "Fair Value Measurements" for more information about AFS debt securities.

Accrued Interest Receivable - The Company made the following elections regarding accrued interest receivable (“AIR”):

•Presenting accrued interest receivable balances separately from their underlying instruments within the consolidated statements of financial condition.

•Excluding accrued interest receivable that is included in the amortized cost of financing receivables from related disclosure requirements.

•Continuing our policy to write off accrued interest receivable by reversing interest income in cases where the Company does not reasonably expect to receive payment.

•Not measuring an allowance for credit losses for accrued interest receivable due to the ~~security's cost basis.~~Company’s policy of writing off uncollectible accrued interest receivable balances in a timely manner, as described above.

~~The amendments in this ASU~~Non-Accrual Loans - Loans are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For most debt securities, the transition approach requires a cumulative-effect adjustment to the statement of financial position as of the beginning of the first reporting period the guidance is effective. For other-than-temporarily impaired debt securities and PCD assets, the guidance will be applied prospectively. While the Company is currentlyplaced on non-accrual status when, in the ~~process~~judgment of ~~evaluating~~management, the ~~impact~~probability of ~~the amended guidance~~collection of interest is deemed to be insufficient to warrant further accrual. When a loan is placed on ~~its consolidated financial statements, it currently expects the ALLL to increase upon adoption given~~non-accrual status, previously accrued but unpaid interest is deducted from interest income. The Bank does not accrue interest on loans 90 days or more past due. If payment is made on a loan so that the ~~allowance will be required to cover the full remaining expected life of the portfolio upon adoption, rather~~loan becomes less than ~~the incurred loss model under current U.S. GAAP. The extent of this increase is still being evaluated and will depend on economic conditions~~90 days past due, and the ~~composition~~Bank expects full collection of principal and interest, the ~~Company’s~~ loan ~~and lease portfolio at the time of adoption.~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases. The amendments require lessees~~is returned to ~~recognize a lease liability, which~~full accrual status. Any interest ultimately collected is ~~a lessee's obligation~~credited to make lease payments arising from a lease, and a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. The guidance also simplifies the accounting for sale and leaseback transactions. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presentedincome in the ~~financial statements. The modified retrospective approach would not require any transition accounting for leases~~period of recovery. A loan is charged-off when the loss is estimable and it is confirmed that ~~expired before~~ the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently in the process of accumulating the lease data necessary to apply the amended guidance. The Company is continuing to evaluate the impact of the amended guidance on its consolidated financial statements, but the effects of recognizing most operating leasesborrower is not expected to be ~~material. The Company expects~~able to ~~recognize right-of-use assets and lease liabilities for substantially all of its operating lease commitments based on the present value of unpaid lease payments as of the date of adoption.~~meet contractual obligations.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~, to require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). The amendments in this ASU also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company does not expect this guidance to have a material impact on its consolidated financial statements.

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~. The guidance in this update supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the industry topics of the codification. For public companies, this update was to be effective for interim and annual periods beginning after December 15, 2016. However, in August 2015, the FASB issued ASU 2015-14, which delayed the effective date of ASU 2014-09 by one year and permits companies to voluntarily adopt the new standard as of the original effective date. The Company does not expect this guidance to have a material impact on its consolidated financial statements.

~~NOTE C – Dividends and Share Repurchases~~

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

If a consumer loan is on non-accrual status before becoming a TDR it will stay on non-accrual status following restructuring until it has been performing for at least six months, at which point it may be moved to accrual status. If a loan is on accrual status before it becomes a TDR, and management concludes that full repayment is probable based on internal evaluation, it will remain on accrual status following restructuring. If the restructured consumer loan does not perform, it is placed on non-accrual status when it is 90 days delinquent. For commercial loans, six consecutive payments on newly restructured loan terms are required prior to returning the loan to accrual status. In some instances, after the required six consecutive payments are made, management will conclude that collection of the entire principal and interest due is still in doubt. In those instances, the loan will remain on non-accrual status.

~~On November 20, 2017,~~Collateral-Dependent Loans - A financial asset is considered collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. For all classes of loans and leases deemed collateral-dependent, the Company ~~paid~~elected the practical expedient to estimate expected credit losses based on the collateral’s fair value less cost to sell. In most cases, the Company records a ~~regular dividend~~partial charge-off to reduce the loan’s carrying value to the collateral’s fair value less cost to sell. Substantially all of the collateral consists of various types of real estate including residential properties; commercial properties such as retail centers, office buildings, and lodging; agriculture land; and vacant land.

Off-balance-sheet credit exposures - The only material off-balance-sheet credit exposures are unfunded loan commitments, which had a combined balance of $4,822,769,000 and $4,947,570,000 at December 31, 2022 and September 30, 2022, respectively. The reserve for unfunded commitments is recognized as a liability (other liabilities in the consolidated statements of financial condition), with adjustments to the reserve recognized through provision for credit losses in the consolidated statements of income. The reserve for unfunded commitments represents the expected lifetime credit losses on ~~common stock~~off-balance sheet obligations such as commitments to extend credit and standby letters of ~~$0.15 per share, which represented~~credit. However, a liability is not recognized for commitments that are unconditionally cancellable by the ~~139th consecutive quarterly cash dividend. Dividends per share were $0.15~~Company. The reserve for unfunded commitments is determined by estimating future draws, including the effects of risk mitigation actions, and ~~$0.14~~applying the expected loss rates on those draws. Loss rates are estimated by utilizing the same loss rates calculated for the ~~quarters ended~~allowance for credit losses related to the respective loan portfolio class. See Note I “Commitments and Contingencies” for more information.

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 were originally to be applied prospectively through December 31, ~~2017 and 2016, respectively. On January 24, 2018,~~2022. However, the ~~Company declared a regular dividend on common stock of $0.17 per share, which represents its 140th consecutive quarterly cash dividend. This dividend will be paid on February 23, 2018~~FASB issued ASU 2022-06, deferring the sunset date to ~~common shareholders of record on February 9, 2018.~~

~~For the three months ended~~ December 31, ~~2017,~~2024. The Company has evaluated the ~~Company repurchased 1,147,370 shares at an average price~~regulatory requirements to cease the use of ~~$33.98. Additionally, 108,704 shares~~LIBOR and has put in place systems and capabilities for this purpose. The adoption of ~~common stock were~~this ASU is not expected to have a material impact on the Company's consolidated financial statements.

In March 2022, the FASB issued ~~during~~ASU 2022-01, Derivatives and Hedging (Topic 815). The amendments in this ASU clarify the ~~three months ended~~guidance on ASC 815 on fair value hedge accounting of interest rate risk for portfolios and financial assets. Among other things, the amended guidance establishes the "last-of-layer" method for making the fair value hedge accounting for these portfolios more accessible and renames that method the "portfolio layer" method. The amendments in this ASU are effective for fiscal years beginning after December ~~31, 2017~~15, 2022, including interim periods within those fiscal years. We do not expect the amendments to ~~investors~~have a material effect on our consolidated financial statements.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326). The amendments in this ASU eliminate the guidance on troubled debt restructurings while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors made to borrowers experiencing financial difficulties. The ASU also requires that ~~exercised warrants previously issued as part~~entities disclose current-period gross charge-offs by year of origination for loans and leases. The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We do not expect the ~~2008 Troubled Asset Relief Program ("TARP"). As of December 31, 2017, 112,649 such warrants remain outstanding. Net of warrant cash repurchase activity, there are 753,585 remaining shares authorized~~amendments to ~~be repurchased under the current Board approved share repurchase program. On January 24, 2018, the Board approved an additional 5,000,000 shares available under the repurchase program.~~have a material effect on our consolidated financial statements.

~~NOTE D – Loans Receivable~~

~~The following table is a summary of loans receivable.~~

December 31, 2017 September 30, 2017
(In thousands) (In thousands)
Gross loans by category
   Single-family residential $ 5,693,318
45.7 % $ 5,711,004
46.8 %
   Construction 1,710,418
13.7
1,597,996
13.1
   Construction - custom 583,580
4.7
602,631
4.9
   Land - acquisition & development 136,938
1.1
124,308
1.0
   Land - consumer lot loans 105,086
0.8
104,405
0.9
   Multi-family 1,312,695
10.5
1,303,148
10.7
   Commercial real estate 1,436,508
11.5
1,434,610
11.8
   Commercial & industrial 1,120,707
9.0
1,093,360
9.0
   HELOC 136,995
1.1
144,850
1.2
   Consumer 219,971
1.8
85,075
0.7
Total gross loans 12,456,216
100 % 12,201,387
100 %
   Less:
      Allowance for loan losses 127,155
123,073

      Loans in process 1,175,642
1,149,934

      Net deferred fees, costs and discounts 46,377
45,758

Total loan contra accounts 1,349,174
1,318,765

Net loans $ 11,107,042
$ 10,882,622

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE C – Dividends and Share Repurchases

On December 2, 2022, the Company paid a regular dividend on common stock of $0.24 per share, which represented the 159th consecutive quarterly cash dividend. Dividends per share were $0.24 and $0.23 for the quarters ended December 31, 2022 and 2021, respectively.

For the three months ended December 31, 2022, the Company repurchased 44,845 shares at an average price of $38.53. As of December 31, 2022, there are 3,679,499 remaining shares authorized to be repurchased under the current Board approved share repurchase program.

The Company pays a cash dividend, if declared by the Board, of $12.1875 per share on its Series A Preferred Stock quarterly on January 15, April 15, July 15 and October 15. This dividend equals $0.30468750 per depositary share (each dividend, a "Series A Preferred Dividend"). The Company paid the Series A Preferred Dividend on January 15, 2023.

NOTE D – Loans Receivable

For a detailed discussion of loans and credit quality, including accounting policies and the CECL methodology used to estimate the allowance for credit losses, see Note A "Summary of Significant Accounting Policies" above.

The Company's loans held for investment are divided into two portfolio segments, commercial loans and consumer loans, with each of those segments further split into loan classes for purposes of estimating the allowance for credit losses.

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

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company elected to exclude accrued interest receivable from the amortized cost basis of loans for disclosure purposes and from the calculations of estimated credit losses. As of December 31, 2022, and September 30, 2022, AIR for loans totaled $67,169,000 and $57,070,000, respectively, and is included in the Interest receivable line item balance on the Company’s consolidated statements of financial condition.

Loans in the amount of $8,636,895,000 and $8,224,951,000 at December 31, 2022 and September 30, 2022, respectively, were pledged to secure borrowings from the Federal Home Loan Bank ("FHLB") as part of our liquidity management strategy. The FHLB does not have the right to sell or re-pledge these loans.

The following table sets forth ~~information regarding~~the amortized cost basis of non-accrual ~~loans.~~loans and loans 90 days or more past due and accruing.


	December 31, 2022							September 30, 2022
	(In thousands, except ratio data)
	Non-accrual			Non-accrual with no ACL		90 days or more past due and accruing		Non-accrual			Non-accrual with no ACL		90 days or more past due and accruing
Commercial loans
Multi-family	$	5,879		$	—	$	—	$	5,912		$	—	$	—
Commercial real estate	4,635			—		—		4,691			—		—
Commercial & industrial	906			906		—		5,693			1,308		—
Construction	—			—		—		—			—		—
Land - acquisition & development	—			—		—		—			—		—
Total commercial loans	11,420			906		—		16,296			1,308		—
Consumer loans
Single-family residential	17,084			—		—		17,450			—		—
Construction - custom	435			—		—		435			—		—
Land - consumer lot loans	71			—		—		84			—		—
HELOC	134			—		—		233			—		—
Consumer	36			—		—		36			—		—
Total consumer loans	17,760			—		—		18,238			—		—
Total non-accrual loans	$	29,180		$	906	$	—	$	34,534		$	1,308	$	—
% of total loans	0.17		%					0.21		%

December 31, 2017 September 30, 2017
(In thousands)
Non-accrual loans:
Single-family residential $ 26,219
57.7 % $ 27,930
56.3 %
Construction 364
0.8
—
—
Construction - custom —
—
91
0.2
Land - acquisition & development 1,326
2.9
296
0.6
Land - consumer lot loans 976
2.1
605
1.2
Multi-family 250
0.5
139
0.3
Commercial real estate 8,241
18.1
11,815
23.8
Commercial & industrial 7,596
16.7
8,082
16.3
HELOC 476
1.0
531
1.1
Consumer 72
0.2
91
0.2
Total non-accrual loans $ 45,520
100 % $ 49,580
100 %
% of total net loans 0.41 % 0.46 %

The Company recognized interest income on non-accrual loans of approximately ~~$2,551,000~~$534,000 in the three months ended December 31, ~~2017. Had~~2022. If these loans had been on accrual status and performed according to their original contract terms, the Company would have recognized interest income of approximately ~~$489,000~~$358,000 for the three months ended December 31, ~~2017.~~2022. Recognized interest income for the three months ended December 31, 2022 was higher than what otherwise would have been recognized in the period due to the collection of past due amounts. Interest cash flows collected on non-accrual loans ~~varies~~vary from period to period as those loans are brought current or are paid off.

December 31, 2017 Loans Receivable Days Delinquent Based on $ Amount of Loans
% based
on $
Type of Loan Net of Loans In Process Current 30 60 90 Total Delinquent
(In thousands)
Single-family residential $ 5,692,045
$ 5,655,873
$ 9,801
$ 6,073
$ 20,298
$ 36,172
0.64 %
Construction 852,164
847,793
1,500
2,507
364
4,371
0.51
Construction - custom 292,255
292,255
—
—
—
—
—
Land - acquisition & development 112,260
111,018
—
—
1,242
1,242
1.11
Land - consumer lot loans 104,996
104,246
107
153
490
750
0.71
Multi-family 1,312,673
1,312,423
—
—
250
250
0.02
Commercial real estate 1,436,508
1,436,064
129
—
315
444
0.03
Commercial & industrial 1,120,707
1,117,240
2,894
—
573
3,467
0.31
HELOC 136,995
136,004
439
147
405
991
0.72
Consumer 219,971
219,404
352
154
61
567
0.26
Total Loans $ 11,280,574
$ 11,232,320
$ 15,222
$ 9,034
$ 23,998
$ 48,254
0.43 %
Delinquency % 99.57% 0.13% 0.08% 0.21% 0.43%

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

September 30, 2017 Loans Receivable Days Delinquent Based on $ Amount of Loans
% based
on $
Type of Loan Net of Loans In Process Current 30 60 90 Total Delinquent
(In thousands)
Single-family residential $ 5,709,690
$ 5,671,933
$ 10,925
$ 4,810
$ 22,022
$ 37,757
0.66 %
Construction 793,959
793,959
—
—
—
—
—
Construction - custom 277,599
277,508
—
—
91
91
0.03
Land - acquisition & development 104,856
104,526
—
—
330
330
0.31
Land - consumer lot loans 104,335
103,389
112
680
154
946
0.91
Multi-family 1,303,119
1,302,720
5
255
139
399
0.03
Commercial real estate 1,434,610
1,432,052
507
—
2,051
2,558
0.18
Commercial & industrial 1,093,360
1,092,735
—
51
574
625
0.06
HELOC 144,850
143,974
221
342
313
876
0.60
Consumer 85,075
84,644
245
107
79
431
0.51
Total Loans $ 11,051,453
$ 11,007,440
$ 12,015
$ 6,245
$ 25,753
$ 44,013
0.40 %
Delinquency % 99.60% 0.11% 0.06% 0.23% 0.40%

The percentage of total delinquent loans increased from 0.40% as of September 30, 2017 to 0.43% as of December 31, 2017 and there are no loans greater than 90 days delinquent and still accruing interest as of either date.

The following ~~table provides information related to loans that were restructured in a troubled debt restructuring ("TDR") during the periods presented:~~tables provide details regarding loan delinquencies by loan portfolio and class.


December 31, 2022			Days Delinquent Based on $ Amount of Loans										% based on $
Type of Loan	Loans Receivable (Amortized Cost)		Current		30		60		90		Total Delinquent
	(In thousands, except ratio data)
Commercial Loans
Multi-family	$	2,695,759	$	2,695,759	$	—	$	—	$	—	$	—	—	%
Commercial real estate	3,213,308		3,212,259		533		452		64		1,049		0.03
Commercial & industrial	2,621,266		2,620,020		261		81		904		1,246		0.05
Construction	1,637,499		1,636,565		934		—				934		0.06
Land - acquisition & development	191,162		191,162		—		—		—		—		—
Total commercial loans	10,358,994		10,355,765		1,728		533		968		3,229		0.03
Consumer Loans
Single-family residential	5,967,678		5,946,382		5,661		2,038		13,597		21,296		0.36
Construction - custom	408,563		408,128		—		—		435		435		0.11
Land - consumer lot loans	147,078		146,969		49		—		60		109		0.07
HELOC	214,904		212,655		2,121		—		128		2,249		1.05
Consumer	73,168		72,777		54		174		163		391		0.53
Total consumer loans	6,811,391		6,786,911		7,885		2,212		14,383		24,480		0.36
Total Loans	$	17,170,385	$	17,142,676	$	9,613	$	2,745	$	15,351	$	27,709	0.16	%
Delinquency %			99.84%		0.06%		0.01%		0.09%		0.16%


September 30, 2022			Days Delinquent Based on $ Amount of Loans										% based on $
Type of Loan	Loans Receivable (Amortized Cost)		Current		30		60		90		Total Delinquent
	(In thousands, except ratio data)
Commercial Loans
Multi-family	$	2,626,479	$	2,626,479	$	—	$	—	$	—	$	—	—	%
Commercial real estate	3,111,112		3,110,056		538		450		68		1,056		0.03
Commercial & industrial	2,343,403		2,336,791		—		919		5,693		6,612		0.28
Construction	1,423,891		1,423,891		—		—				—		—
Land - acquisition & development	223,616		223,616		—		—		—		—		—
Total commercial loans	9,728,501		9,720,833		538		1,369		5,761		7,668		0.08
Consumer Loans
Single-family residential	5,726,979		5,708,996		2,796		1,316		13,871		17,983		0.31
Construction - custom	397,343		396,908		—		—		435		435		0.11
Land - consumer lot loans	151,945		151,746		—		139		60		199		0.13
HELOC	206,033		205,605		155		46		227		428		0.21
Consumer	75,571		75,357		162		17		35		214		0.28
Total consumer loans	6,557,871		6,538,612		3,113		1,518		14,628		19,259		0.29
Total Loans	$	16,286,372	$	16,259,445	$	3,651	$	2,887	$	20,389	$	26,927	0.17	%
Delinquency %			99.83%		0.02%		0.02%		0.13%		0.17%

Three Months Ended December 31,
2017 2016
Pre-Modification Post-Modification Pre-Modification Post-Modification
Outstanding Outstanding Outstanding Outstanding
Number of Recorded Recorded Number of Recorded Recorded
Contracts Investment Investment Contracts Investment Investment
(In thousands) (In thousands)
Troubled Debt Restructurings:
   Single-family residential 8
$ 2,012
$ 2,012
12
$ 2,134
$ 2,134
   Land - consumer lot loans —
—
—
1
204
204
   Commercial & Industrial 3
7,256
7,256
—
—
—
   HELOC —
—
—
1
228
228
11
$ 9,268
$ 9,268
14
$ 2,566
$ 2,566

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

~~The following table provides information on payment defaults occurring during the periods presented where the loan had been modified in a TDR within 12 months of the payment default.~~

Three Months Ended December 31,
2017 2016
Number of Recorded Number of Recorded
Contracts Investment Contracts Investment
(In thousands) (In thousands)
TDRs That Subsequently Defaulted:
Single-family residential 1
$ 44
6
$ 1,993
Commercial real estate —
—
2
267
1
$ 44
8
$ 2,260

Most ~~loans restructured in~~ TDRs are accruing and performing loans where the borrower has proactively approached the Company about modification due to temporary financial difficulties. ~~As of December 31, 2017, 97.6% of the Company's $199,175,000 in TDRs were classified as performing.~~ Each request for modification is individually evaluated for merit and likelihood of success. The concession granted in a loan modification is typically a payment reduction through a rate reduction of between 100 to 200 basis points for a specific term, usually six to ~~twenty four~~twenty-four months. Interest-only payments may also be approved during the modification period. Principal forgiveness is not an available option for restructured loans. As of December 31, ~~2017,~~2022, 98.0% of the Company's $55,515,000 in TDRs were classified as performing. As of December 31, 2022, single-family residential loans comprised ~~85.7%~~82.5% of TDRs.

~~The Company reserves for restructured~~We evaluate the credit quality of our loans ~~within its allowance for loan loss methodology by taking into account the following performance indicators: 1) time since modification, 2) current payment status and 3) geographic area.~~

The Company's remaining outstanding balance of assets subject to FDIC loss share agreements was $58,699,000 (including $54,865,000 of loans receivable) at December 31, 2017 compared to $67,914,000 (including $61,810,114 of loans receivable) as of September 30, 2017. As of December 31, 2017, the associated FDIC indemnification asset was $0 compared to a balance of $8,967,000 as of September 30, 2017. The FDIC clawback liability was $39,906,000 as of December 31, 2017 and $37,143,000 as of September 30, 2017. The Company has made a proposal to the FDIC to early terminate its remaining FDIC loss share agreements, which relate to the Horizon Bank and Home Valley Bank acquisitions. During the three months ended December 31, 2017, the Company recorded an $8,550,000 charge resulting from valuation adjustments related to the FDIC indemnification asset and FDIC clawback liability. The valuation adjustments were based on ~~management's estimate of the amount that would be due to the FDIC to early terminate the loss share agreements.~~

~~Table of Contents~~

~~WASHINGTON FEDERAL, INC. AND SUBSIDIARIES~~

~~NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~NOTE E – Allowance for Losses on Loans~~

~~The following tables summarize the activity in the allowance for loan losses.~~

Three Months Ended December 31, 2017
Beginning
Allowance
Charge-offs Recoveries
Provision &
Transfers

Ending
Allowance
(In thousands)
Single-family residential $ 36,892
$ (461 ) $ 121
$ (624 ) $ 35,928
Construction 24,556
—
—
658
25,214
Construction - custom 1,944
(50 ) —
158
2,052
Land - acquisition & development 6,829
—
3,372
(2,846 ) 7,355
Land - consumer lot loans 2,649
(47 ) —
304
2,906
Multi-family 7,862
—
—
42
7,904
Commercial real estate 11,818
—
—
(193 ) 11,625
Commercial & industrial 28,524
(116 ) 55
805
29,268
HELOC 855
—
—
(47 ) 808
Consumer 1,144
(78 ) 286
2,743
4,095
$ 123,073
$ (752 ) $ 3,834
$ 1,000
$ 127,155

Three Months Ended December 31, 2016
Beginning
Allowance
Charge-offs Recoveries
Provision &
Transfers

Ending
Allowance
(In thousands)
Single-family residential $ 37,796
$ (115 ) $ 151
$ 374
$ 38,206
Construction 19,838
—
—
2,096
21,934
Construction - custom 1,080
—
—
30
1,110
Land - acquisition & development 6,023
(20 ) 4,018
(3,356 ) 6,665
Land - consumer lot loans 2,535
(17 ) 70
(87 ) 2,501
Multi-family 6,925
—
—
704
7,629
Commercial real estate 8,588
(11 ) 356
1,235
10,168
Commercial & industrial 28,008
(58 ) 725
(939 ) 27,736
HELOC 813
(37 ) 1
55
832
Consumer 1,888
(146 ) 379
(446 ) 1,675
$ 113,494
$ (404 ) $ 5,700
$ (334 ) $ 118,456

~~The Company recorded no provision for loan losses during the three months ended December 31, 2017 or December 31, 2016. Reserving for new loan originations as the loan portfolio grows~~regulatory risk ratings and the mix changes has been largely offset by recoveries of previously charged-off loans. Recoveries, net of charge-offs, totaled $3,082,000 for the three months ended December 31, 2017, compared with $5,296,000 of net recoveries for the same period one year ago.

Non-performing assets were $63,448,000, or 0.41%, of total assets at December 31, 2017, compared to $70,238,000, or 0.46%, of total assets at September 30, 2017. Non-accrual loans were $45,520,000 at December 31, 2017, compared to $49,580,000 at September 30, 2017. Delinquencies, as a percent of total loans, were 0.43% at December 31, 2017, compared to 0.40% at September 30, 2017.

~~The reserve for unfunded commitments was $6,750,000 as of December 31, 2017, which is a decrease from $7,750,000 at September 30, 2017.~~

Management believes the allowance for loan losses plus the reserve for unfunded commitments, totaling $133,905,000, or 1.08% of gross loans as of December 31, 2017, is sufficient to absorb estimated inherent losses.

~~Table of Contents~~

~~WASHINGTON FEDERAL, INC. AND SUBSIDIARIES~~

~~NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~The following tables show loans collectively and individually evaluated for impairment and the related allocation of general and specific reserves.~~

December 31, 2017 Loans Collectively Evaluated for Impairment Loans Individually Evaluated for Impairment
Allowance Allocation Recorded Investment of Loans Ratio Allowance Allocation Recorded Investment of Loans Ratio
(In thousands) (In thousands)
Single-family residential $ 35,928
$ 5,676,565
0.6 % $ —
$ 24,083
— %
Construction 25,214
851,800
3.0
—
364
—
Construction - custom 2,052
292,255
0.7
—
—
—
Land - acquisition & development 7,355
110,884
6.6
—
1,376
—
Land - consumer lot loans 2,906
97,291
3.0
—
416
—
Multi-family 7,899
1,311,943
0.6
5
730
0.7
Commercial real estate 11,519
1,389,749
0.8
106
27,535
0.4
Commercial & industrial 28,744
1,108,961
2.6
524
11,694
4.5
HELOC 808
134,320
0.6
—
620
—
Consumer 4,095
219,784
1.9
—
70
—
$ 126,520
$ 11,193,552
1.1 % $ 635
$ 66,888
0.9 %

September 30, 2017 Loans Collectively Evaluated for Impairment Loans Individually Evaluated for Impairment
Allowance Allocation Recorded Investment of Loans Ratio Allowance Allocation Recorded Investment of Loans Ratio
(In thousands) (In thousands)
Single-family residential $ 36,893
$ 5,713,576
0.7 % $ —
$ 5,552
— %
Construction 24,556
793,958
3.1
—
—
—
Construction - custom 1,944
277,495
0.7
—
105
—
Land - acquisition & development 6,828
104,767
6.5
1
89
1.0
Land - consumer lot loans 2,649
96,337
2.8
—
171
—
Multi-family 7,857
1,302,625
0.6
5
493
1.0
Commercial real estate 11,697
1,391,668
0.8
120
21,765
0.6
Commercial & industrial 28,524
1,093,210
2.6
—
81
—
HELOC 855
141,689
0.6
—
215
—
Consumer 1,144
84,887
1.4
—
82
—
$ 122,947
$ 11,000,212
1.1 % $ 126
$ 28,553
0.4 %

As of December 31, 2017, $126,520,000 of the allowance was calculated under the formulas contained in our general allowance methodology and the remaining $635,000 was specific reserves on loans deemed to be individually impaired. As of September 30, 2017, $122,947,000 of the allowance was calculated under the formulas contained in our general allowance methodology and the remaining $126,000 was specific reserves on loans deemed to be individually impaired.

The Company has an asset quality review function that analyzes its loan portfolio and reports the results of the review to the Board of Directors on a quarterly basis. The single-family residential, HELOC and consumer portfolios are evaluated based on their performance as a pool of loans, since no single loan is individually significant or judged by its risk rating, size or potential risk of loss. The construction, land, multi-family, commercial real estate and commercial and industrial loans are risk rated on a loan by

~~Table of Contents~~

~~WASHINGTON FEDERAL, INC. AND SUBSIDIARIES~~

~~NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~loan basis to determine the relative risk inherent in specific borrowers or loans.~~also consider other factors. Based on ~~that risk rating,~~this evaluation, the loans are assigned a grade and classified as follows:

•Pass – the credit does not meet one of the definitions below.

•Special mention – A special mention credit is considered to be currently protected from loss but is potentially weak. No loss of principal or interest is foreseen; however, proper supervision and ~~Management~~management attention is required to deter further deterioration in the credit. Assets in this category constitute some undue and unwarranted credit risk but not to the point of justifying a risk rating of substandard. The credit risk may be relatively minor yet constitutes an unwarranted risk in light of the circumstances surrounding a specific asset.

•Substandard – A substandard credit is an unacceptable credit. Additionally, repayment in the normal course is in jeopardy due to the existence of one or more well defined weaknesses. In these situations, loss of principal is likely if the weakness is not corrected. A substandard asset is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Assets so classified will have a ~~well defined~~well-defined weakness or weaknesses that jeopardize the collection or liquidation of the debt. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets risk rated substandard.

•Doubtful – A credit classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weakness makes collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The probability of loss is high, but because of certain important and reasonably specific pending factors that may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans.

•Loss – Credits classified loss are considered uncollectible and of such little value that their continuance as a bankable asset is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even though partial recovery may be affected in the future. Losses should be taken in the period in which they are identified as uncollectible. Partial charge-off versus full charge-off may be taken if the collateral offers some identifiable protection.

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following tables ~~provide information on~~present by primary credit quality indicator, loan class, and year of origination, the amortized cost basis of loans ~~based on risk rating categories~~receivable as ~~defined above.~~of December 31, 2022 and September 30, 2022.


December 31, 2022	Term Loans Amortized Cost Basis by Origination Year
	YTD 2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Revolving to Term Loans		Total Loans
Commercial loans
Multi-family
Pass	$	94,649	$	666,795	$	763,102	$	486,468	$	167,495	$	464,692	$	36,361	$	—	$	2,679,562

Substandard	—		3,931		—		4,180		—		8,086		—		—		16,197



Total	$	94,649	$	670,726	$	763,102	$	490,648	$	167,495	$	472,778	$	36,361	$	—	$	2,695,759

Commercial real estate
Pass	$	130,440	$	806,478	$	722,298	$	467,416	$	296,176	$	705,610	$	1,375	$	—	$	3,129,793
Special Mention	—		—		—		—		1,382		—		—		—		1,382
Substandard	—		5,562		1,584		26,609		30,517		15,291		2,570		—		82,133



Total	$	130,440	$	812,040	$	723,882	$	494,025	$	328,075	$	720,901	$	3,945	$	—	$	3,213,308

Commercial & industrial
Pass	$	124,523	$	272,160	$	345,166	$	134,933	$	34,585	$	211,323	$	1,350,779	$	1,911	$	2,475,380
Special Mention	—		—		2,601		—		—		—		2,850		—		5,451
Substandard	—		7,961		12,829		5,292		4,671		25,427		84,255		—		140,435



Total	$	124,523	$	280,121	$	360,596	$	140,225	$	39,256	$	236,750	$	1,437,884	$	1,911	$	2,621,266

Construction
Pass	$	17,955	$	651,808	$	694,514	$	155,086	$	33,585	$	375	$	75,930	$	—	$	1,629,253

Substandard	—		5,987		2,259		—		—		—		—		—		8,246



Total	$	17,955	$	657,795	$	696,773	$	155,086	$	33,585	$	375	$	75,930	$	—	$	1,637,499

Land - acquisition & development
Pass	$	4,682	$	88,588	$	48,857	$	17,530	$	2,981	$	25,932	$	2,592	$	—	$	191,162





Total	$	4,682	$	88,588	$	48,857	$	17,530	$	2,981	$	25,932	$	2,592	$	—	$	191,162

Total commercial loans
Pass	$	372,249	$	2,485,829	$	2,573,937	$	1,261,433	$	534,822	$	1,407,932	$	1,467,037	$	1,911	$	10,105,150
Special Mention	—		—		2,601		—		1,382		—		2,850		—		6,833
Substandard	—		23,441		16,672		36,081		35,188		48,804		86,825		—		247,011



Total	$	372,249	$	2,509,270	$	2,593,210	$	1,297,514	$	571,392	$	1,456,736	$	1,556,712	$	1,911	$	10,358,994

December 31, 2017 Internally Assigned Grade
Pass Special mention Substandard Doubtful Loss Total Gross Loans
(In thousands)
Loan type
  Single-family residential $ 5,657,731
$ —
$ 35,587
$ —
$ —
$ 5,693,318
  Construction 1,707,044
—
3,374
—
—
1,710,418
  Construction - custom 583,580
—
—
—
—
583,580
  Land - acquisition & development 134,625
—
2,313
—
—
136,938
  Land - consumer lot loans 104,105
—
981
—
—
105,086
  Multi-family 1,304,991
3,159
4,545
—
—
1,312,695
  Commercial real estate 1,401,236
3,764
31,508
—
—
1,436,508
  Commercial & industrial 1,077,207
10,423
33,077
—
—
1,120,707
  HELOC 136,287
—
708
—
—
136,995
  Consumer 219,899
—
72
—
—
219,971
Total gross loans $ 12,326,705
$ 17,346
$ 112,165
$ —
$ —
$ 12,456,216

Total grade as a % of total gross loans 99.0 % 0.1 % 0.9 % — % — %

September 30, 2017 Internally Assigned Grade
Pass Special mention Substandard Doubtful Loss Total Gross Loans
(In thousands)
Loan type
Single-family residential $ 5,671,229
$ —
$ 39,775
$ —
$ —
$ 5,711,004
Construction 1,594,926
—
3,070
—
—
1,597,996
Construction - custom 602,540
—
91
—
—
602,631
Land - acquisition & development 123,028
207
1,073
—
—
124,308
Land - consumer lot loans 103,787
—
618
—
—
104,405
Multi-family 1,295,261
5,795
2,092
—
—
1,303,148
Commercial real estate 1,391,996
5,944
36,670
—
—
1,434,610
Commercial & industrial 1,054,972
14,814
23,574
—
—
1,093,360
HELOC 144,229
—
621
—
—
144,850
Consumer 84,984
—
91
—
—
85,075
Total gross loans $ 12,066,952
$ 26,760
$ 107,675
$ —
$ —
$ 12,201,387

Total grade as a % of total gross loans 98.9 % 0.2 % 0.9 % — % — %

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


December 31, 2022	Term Loans Amortized Cost Basis by Origination Year
	YTD 2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Revolving to Term Loans		Total Loans
Consumer loans
Single-family residential
Current	$	219,679	$	1,148,027	$	1,717,690	$	768,368	$	313,719	$	1,778,899	$	—	$	—	$	5,946,382
30 days past due	—		—		1,637		—		63		3,961		—		—		5,661
60 days past due	—		—		—		—		—		2,038		—		—		2,038
90+ days past due	—		—		—		—		1,084		12,513		—		—		13,597

Total	$	219,679	$	1,148,027	$	1,719,327	$	768,368	$	314,866	$	1,797,411	$	—	$	—	$	5,967,678

Construction - custom
Current	$	—	$	320,079	$	82,349	$	4,864	$	358	$	478	$	—	$	—	$	408,128


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

Total	$	—	$	320,079	$	82,784	$	4,864	$	358	$	478	$	—	$	—	$	408,563

Land - consumer lot loans
Current	$	4,355	$	50,736	$	55,658	$	15,336	$	5,189	$	15,695	$	—	$	—	$	146,969
30 days past due	—		—		—		—		—		49		—		—		49

90+ days past due	—		—		—		—		—		60		—		—		60

Total	$	4,355	$	50,736	$	55,658	$	15,336	$	5,189	$	15,804	$	—	$	—	$	147,078

HELOC
Current	$	—	$	—	$	—	$	—	$	—	$	4,846	$	207,284	$	525	$	212,655
30 days past due	—		—		—		—		—		260		1,861		—		2,121

90+ days past due	—		—		—		—		—		—		128		—		128

Total	$	—	$	—	$	—	$	—	$	—	$	5,106	$	209,273	$	525	$	214,904

Consumer
Current	$	108	$	2,145	$	9,986	$	8,023	$	203	$	28,303	$	24,009	$	—	$	72,777
30 days past due	—		—		—		—		—		37		17		—		54
60 days past due	—		—		—		—		1		173		—		—		174
90+ days past due	—		2		—		—		32		129		—		—		163

Total	$	108	$	2,147	$	9,986	$	8,023	$	236	$	28,642	$	24,026	$	—	$	73,168

Total consumer loans
Current	$	224,142	$	1,520,987	$	1,865,683	$	796,591	$	319,469	$	1,828,221	$	231,293	$	525	$	6,786,911
30 days past due	—		—		1,637		—		63		4,307		1,878		—		7,885
60 days past due	—		—		—		—		1		2,211		—		—		2,212
90+ days past due	—		2		435		—		1,116		12,702		128		—		14,383

Total	$	224,142	$	1,520,989	$	1,867,755	$	796,591	$	320,649	$	1,847,441	$	233,299	$	525	$	6,811,391

~~The following tables provide information on gross loans based on borrower payment activity.~~

December 31, 2017 Performing Loans Non-Performing Loans
Amount
% of Total
Gross Loans
Amount
% of Total
Gross Loans
(In thousands)
Single-family residential $ 5,667,099
99.5 % $ 26,219
0.5 %
Construction 1,710,054
100.0
364
—
Construction - custom 583,580
100.0
—
—
Land - acquisition & development 135,612
99.0
1,326
1.0
Land - consumer lot loans 104,110
99.1
976
0.9
Multi-family 1,312,445
100.0
250
—
Commercial real estate 1,428,267
99.4
8,241
0.6
Commercial & industrial 1,113,111
99.3
7,596
0.7
HELOC 136,519
99.7
476
0.3
Consumer 219,899
100.0
72
—
$ 12,410,696
99.6 % $ 45,520
0.4 %

September 30, 2017 Performing Loans Non-Performing Loans
Amount
% of Total
Gross Loans
Amount
% of Total
Gross Loans
(In thousands)
Single-family residential $ 5,683,074
99.5 % $ 27,930
0.5 %
Construction 1,597,996
100.0
—
—
Construction - custom 602,540
99.9
91
0.1
Land - acquisition & development 124,012
99.8
296
0.2
Land - consumer lot loans 103,800
99.4
605
0.6
Multi-family 1,303,009
99.9
139
0.1
Commercial real estate 1,422,795
99.2
11,815
0.8
Commercial & industrial 1,085,278
99.3
8,082
0.7
HELOC 144,319
99.6
531
0.4
Consumer 84,984
99.9
91
0.1
$ 12,151,807
99.6 % $ 49,580
0.4 %

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


September 30, 2022	Term Loans Amortized Cost Basis by Origination Year
	2022		2021		2020		2019		2018		Prior to 2018		Revolving Loans		Revolving to Term Loans		Total Loans
Commercial loans
Multi-family
Pass	$	657,144	$	778,936	$	500,917	$	168,568	$	157,144	$	315,858	$	34,102	$	—	$	2,612,669

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



Total	$	661,095	$	778,936	$	502,646	$	168,568	$	163,704	$	317,428	$	34,102	$	—	$	2,626,479

Commercial real estate
Pass	$	820,490	$	679,321	$	492,826	$	301,033	$	218,171	$	541,008	$	1,391	$	—	$	3,054,240
Special Mention	—		1,594		—		—		—		—		—		—		1,594
Substandard	259		—		6,074		30,579		4,857		10,923		2,586		—		55,278



Total	$	820,749	$	680,915	$	498,900	$	331,612	$	223,028	$	551,931	$	3,977	$	—	$	3,111,112

Commercial & industrial
Pass	$	254,668	$	435,630	$	145,799	$	39,102	$	25,709	$	197,909	$	1,097,696	$	255	$	2,196,768
Special Mention	2,503		—		—		—		—		—		29,153		—		31,656
Substandard	2,021		12,639		9,803		5,029		1,213		25,519		58,755		—		114,979



Total	$	259,192	$	448,269	$	155,602	$	44,131	$	26,922	$	223,428	$	1,185,604	$	255	$	2,343,403

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

Substandard	—		2,257		—		—		—		—		—		—		2,257



Total	$	510,764	$	673,868	$	142,816	$	27,260	$	375	$	—	$	68,808	$	—	$	1,423,891

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





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

Total commercial loans
Pass	$	2,343,088	$	2,630,037	$	1,299,292	$	539,354	$	409,574	$	1,082,730	$	1,204,597	$	255	$	9,508,927
Special Mention	2,503		1,594		—		—		—		—		29,153		—		33,250
Substandard	6,231		14,896		17,606		35,608		12,630		38,012		61,341		—		186,324



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

~~The following tables provide information on impaired loan balances and the related allowances by loan types.~~

December 31, 2017
Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance
Average Recorded Investment
(In thousands)
Impaired loans with no related allowance recorded:
Single-family residential $ 20,405
$ 21,860
$ —
$ 20,864
Construction 969
969
—
485
Construction - custom —
—
—
74
Land - acquisition & development 1,376
1,405
—
853
Land - consumer lot loans 300
375
—
254
Multi-family 250
254
—
195
Commercial real estate 16,372
21,720
—
14,631
Commercial & industrial 4,439
4,506
—
6,359
HELOC 620
747
—
555
Consumer 70
134
—
79
44,801
51,970
—
44,349
Impaired loans with an allowance recorded:
Single-family residential 170,677
174,162
3,412
176,308
Land - acquisition & development —
—
—
45
Land - consumer lot loans 7,405
7,776
—
7,677
Multi-family 480
480
5
487
Commercial real estate 11,910
12,755
106
13,495
Commercial & industrial 7,256
7,256
524
3,628
HELOC 1,356
1,435
—
1,542
Consumer 91
91
—
94
199,175
203,955
4,047
(1) 203,276
Total impaired loans:
Single-family residential 191,082
196,022
3,412
197,172
Construction 969
969
—
485
Construction - custom —
—
—
74
Land - acquisition & development 1,376
1,405
—
898
Land - consumer lot loans 7,705
8,151
—
7,931
Multi-family 730
734
5
682
Commercial real estate 28,282
34,475
106
28,126
Commercial & industrial 11,695
11,762
524
9,987
HELOC 1,976
2,182
—
2,097
Consumer 161
225
—
173
$ 243,976
$ 255,925
$ 4,047
(1) $ 247,625


~~(1)~~	~~Includes $635,000 of specific reserves and $3,412,000 included in the general reserves.~~

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


September 30, 2022	Term Loans Amortized Cost Basis by Origination Year
	2022		2021		2020		2019		2018		Prior to 2018		Revolving Loans		Revolving to Term Loans		Total Loans
Consumer loans
Single-family residential
Current	$	1,131,152	$	1,652,242	$	771,769	$	320,546	$	276,093	$	1,557,194	$	—	$	—	$	5,708,996
30 days past due	—		—		400		604		—		1,792		—		—		2,796
60 days past due	—		—		—		—		—		1,316		—		—		1,316
90+ days past due	—		—		—		477		—		13,394		—		—		13,871

Total	$	1,131,152	$	1,652,242	$	772,169	$	321,627	$	276,093	$	1,573,696	$	—	$	—	$	5,726,979

Construction - custom
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

Land - consumer lot loans
Current	$	53,396	$	60,454	$	15,876	$	5,399	$	3,433	$	13,188	$	—	$	—	$	151,746

60 days past due	—		—		139		—		—		—		—		—		139
90+ days past due	—		—		—		—		—		60		—		—		60

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

HELOC
Current	$	—	$	—	$	—	$	—	$	—	$	4,349	$	200,267	$	989	$	205,605
30 days past due	—		—		—		—		—		95		60		—		155
60 days past due	—		—		—		—		—		29		17		—		46
90+ days past due	—		—		—		—		—		—		227		—		227

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

Consumer
Current	$	1,386	$	10,156	$	8,038	$	215	$	23,919	$	6,449	$	25,194	$	—	$	75,357
30 days past due	—		—		—		2		—		153		7		—		162
60 days past due	—		—		—		—		—		17		—		—		17
90+ days past due	1		—		—		32		—		2		—		—		35

Total	$	1,387	$	10,156	$	8,038	$	249	$	23,919	$	6,621	$	25,201	$	—	$	75,571

Total consumer loans
Current	$	1,420,964	$	1,873,286	$	805,494	$	327,315	$	303,923	$	1,581,180	$	225,461	$	989	$	6,538,612
30 days past due	—		—		400		606		—		2,040		67		—		3,113
60 days past due	—		—		139		—		—		1,362		17		—		1,518
90+ days past due	1		435		—		509		—		13,456		227		—		14,628

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

September 30, 2017
Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance

Average
Recorded
Investment
(In thousands)
Impaired loans with no related allowance recorded:
Single-family residential $ 21,325
$ 23,880
$ —
$ 19,371
Construction - custom 148
165
—
231
Land - acquisition & development 330
8,208
—
176
Land - consumer lot loans 208
330
—
431
Multi-family 139
3,231
—
748
Commercial real estate 12,890
22,487
—
11,466
Commercial & industrial 8,279
14,321
—
7,425
HELOC 490
1,212
—
487
Consumer 88
1,433
—
57
43,897
75,267
—
40,392
Impaired loans with an allowance recorded:
Single-family residential 181,941
186,167
4,030
204,723
Land - acquisition & development 90
90
1
576
Land - consumer lot loans 7,949
8,526
—
8,976
Multi-family 493
493
5
1,024
Commercial real estate 15,079
16,707
120
16,991
Commercial & industrial —
—
—
297
HELOC 1,728
1,806
—
1,451
Consumer 97
284
—
100
207,377
214,073
4,156
(1) 234,138
Total impaired loans:
Single-family residential 203,266
210,047
4,030
224,094
Construction - custom 148
165
—
231
Land - acquisition & development 420
8,298
1
752
Land - consumer lot loans 8,157
8,856
—
9,407
Multi-family 632
3,724
5
1,772
Commercial real estate 27,969
39,194
120
28,457
Commercial & industrial 8,279
14,321
—
7,722
HELOC 2,218
3,018
—
1,938
Consumer 185
1,717
—
157
$ 251,274
$ 289,340
$ 4,156
(1) $ 274,530


~~(1)~~	~~Includes $126,000 of specific reserves and $4,030,000 included in the general reserves.~~

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE E – Allowance for Losses on Loans

The following tables summarize the activity in the allowance for loan losses by loan portfolio segment and class.


Three Months Ended December 31, 2022	Beginning Allowance		Charge-offs		Recoveries		Provision & Transfers(1)		Ending Allowance
	(In thousands)
Commercial loans
Multi-family	$	12,013	$	—	$	—	$	311	$	12,324
Commercial real estate	25,814		—		4		1,562		27,380
Commercial & industrial	57,210		(82)		32		6,713		63,873
Construction	26,161		—		—		(28)		26,133
Land - acquisition & development	12,278		—		16		(3,722)		8,572
Total commercial loans	133,476		(82)		52		4,836		138,282
Consumer loans
Single-family residential	25,518		—		430		(473)		25,475
Construction - custom	3,410		—		—		90		3,500
Land - consumer lot loans	5,047		—		—		(905)		4,142
HELOC	2,482		—		1		105		2,588
Consumer	2,875		(146)		234		(153)		2,810
Total consumer loans	39,332		(146)		665		(1,336)		38,515
Total ACL - loans	$	172,808	$	(228)	$	717	$	3,500	$	176,797

(1) Provision & transfer amounts within the table do not include provision recapture for unfunded commitments of $1,000,000.


Three Months Ended December 31, 2021	Beginning Allowance		Charge-offs		Recoveries		Provision & Transfers (1)		Ending Allowance
	(In thousands)
Commercial loans
Multi-family	$	16,949	$	—	$	—	$	(956)	$	15,993
Commercial real estate	23,437		(529)		44		2,770		25,722
Commercial & industrial	45,957		(43)		62		1,255		47,231
Construction	25,585		—		2,000		(2,819)		24,766
Land - acquisition & development	13,447		(2)		20		660		14,125
Total commercial loans	125,375		(574)		2,126		910		127,837
Consumer loans
Single-family residential	30,978		—		405		(1,277)		30,106
Construction - custom	4,907		—		—		(1,188)		3,719
Land - consumer lot loans	4,939		(27)		5		67		4,984
HELOC	2,390		—		1		(26)		2,365
Consumer	2,711		(76)		251		(486)		2,400
Total consumer loans	45,925		(103)		662		(2,910)		43,574
Total loans	$	171,300	$	(677)	$	2,788	$	(2,000)	$	171,411

(1) Provision & transfer amounts within the table do not include the provision for unfunded commitments of $2,500,000.

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company recorded a $2,500,000 provision for credit losses for the three months ended December 31, 2022, compared with a provision for credit losses of $500,000 for the three months ended December 31, 2021. The provision in the three months ended December 31, 2022 was primarily due to reserving for growth in loans receivable largely offset by improvements in management's assessment of the credit quality of certain loan portfolios. The provision for the three months ended December 31, 2021 was primarily due to reserving for growth in loans receivable and changes in composition of the loan portfolio. Recoveries, net of charge-offs, totaled $489,000 for the three months ended December 31, 2022, compared to $2,111,000 during the three months ended December 31, 2021.

Non-performing assets were $38,650,000, or 0.18% of total assets, at December 31, 2022, compared to $44,554,000, or 0.21% of total assets, at September 30, 2022. Non-accrual loans were $29,180,000 at December 31, 2022, compared to $34,534,000 at September 30, 2022. Delinquencies, as a percent of total loans, were 0.16% at December 31, 2022, compared to 0.17% at September 30, 2022.

The Company has an asset quality review function that analyzes its loan portfolio and reports the results of the review to its Board of Directors on a quarterly basis. The single-family residential, HELOC and consumer portfolios are evaluated based on their performance as a pool of loans, since no single loan is individually significant or judged by its risk rating, size or potential risk of loss. The construction, land, multi-family, commercial real estate and commercial and industrial loans are risk rated on a loan by loan basis to determine the relative risk inherent in specific borrowers or loans. Based on that risk rating, the loans are assigned a grade and classified as described in Note D "Loans Receivable."

The following tables provide the amortized cost of loans receivable based on risk rating categories as previously defined.


December 31, 2022	Internally Assigned Grade
	Pass			Special mention			Substandard			Doubtful			Loss			Total
	(In thousands, except ratio data)
Loan type
Commercial loans
Multi-family	$	2,679,562		$	—		$	16,197		$	—		$	—		$	2,695,759
Commercial real estate	3,129,793			1,382			82,133			—			—			3,213,308
Commercial & industrial	2,475,380			5,451			140,435			—			—			2,621,266
Construction	1,629,253			—			8,246			—			—			1,637,499
Land - acquisition & development	191,162			—			—			—			—			191,162
Total commercial loans	10,105,150			6,833			247,011			—			—			10,358,994
Consumer loans
Single-family residential	5,947,295			—			20,383			—			—			5,967,678
Construction - custom	408,127			—			436			—			—			408,563
Land - consumer lot loans	147,007			—			71			—			—			147,078
HELOC	214,771			—			133			—			—			214,904
Consumer	73,161			—			7			—			—			73,168
Total consumer loans	6,790,361			—			21,030			—			—			6,811,391
Total	$	16,895,511		$	6,833		$	268,041		$	—		$	—		$	17,170,385

Total grade as a % of total loans	98.40		%	0.04		%	1.56		%	—		%	—		%

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


September 30, 2022	Internally Assigned Grade
	Pass			Special mention			Substandard			Doubtful			Loss			Total Gross Loans
	(In thousands, except ratio data)
Loan type
Commercial loans
Multi-family	$	2,612,669		$	—		$	13,810		$	—		$	—		$	2,626,479
Commercial real estate	3,054,241			1,594			55,277			—			—			3,111,112
Commercial & industrial	2,196,767			31,656			114,980			—			—			2,343,403
Construction	1,421,634			—			2,257			—			—			1,423,891
Land - acquisition & development	223,616			—			—			—			—			223,616
Total commercial loans	9,508,927			33,250			186,324			—			—			9,728,501
Consumer loans
Single-family residential	5,706,199			—			20,780			—			—			5,726,979
Construction - custom	396,908			—			435			—			—			397,343
Land - consumer lot loans	151,723			—			222			—			—			151,945
HELOC	205,800			—			233			—			—			206,033
Consumer	75,570			—			1			—			—			75,571
Total consumer loans	6,536,200			—			21,671			—			—			6,557,871
Total loans	$	16,045,127		$	33,250		$	207,995		$	—		$	—		$	16,286,372

Total grade as a % of total gross loans	98.52		%	0.20		%	1.28		%	—		%	—		%

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following tables provide information on amortized cost of loans receivable based on borrower payment activity.


December 31, 2022	Performing Loans				Non-Performing Loans
	Amount		% of Total Loans		Amount		% of Total Loans
	(In thousands, except ratio data)
Commercial loans
Multi-family	$	2,689,880	99.8	%	$	5,879	0.2	%
Commercial real estate	3,208,673		99.9		4,635		0.1
Commercial & industrial	2,620,360		100.0		906		—
Construction	1,637,499		100.0		—		0.0
Land - acquisition & development	191,162		100.0		—		—
Total commercial loans	10,347,574		99.9		11,420		0.1
Consumer loans
Single-family residential	5,950,594		99.7		17,084		0.3
Construction - custom	408,128		99.9		435		0.1
Land - consumer lot loans	147,007		100.0		71		0.0
HELOC	214,770		99.9		134		0.1
Consumer	73,132		100.0		36		0.0
Total consumer loans	6,793,631		99.7		17,760		0.3
Total loans	$	17,141,205	99.8	%	$	29,180	0.2	%


September 30, 2022	Performing Loans				Non-Performing Loans
	Amount		% of Total Loans		Amount		% of Total Loans
	(In thousands, except ratio data)
Commercial loans
Multi-family	$	2,620,567	99.8	%	$	5,912	0.2	%
Commercial real estate	3,106,421		99.8		4,691		0.2
Commercial & industrial	2,337,710		99.8		5,693		0.2
Construction	1,423,891		100.0		—		—
Land - acquisition & development	223,616		100.0		—		—
Total commercial loans	9,712,205		99.8		16,296		0.2
Consumer loans
Single-family residential	5,709,529		99.7		17,450		0.3
Construction - custom	396,908		99.9		435		0.1
Land - consumer lot loans	151,861		99.9		84		0.1
HELOC	205,800		99.9		233		0.1
Consumer	75,535		100.0		36		0.0
Total consumer loans	6,539,633		99.7		18,238		0.4
Total loans	$	16,251,838	99.8	%	$	34,534	0.2	%

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE F – Fair Value Measurements

FASB ASC 820, Fair Value Measurement ("ASC 820") defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy ~~which~~that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active exchange markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

~~We have~~

The Company has established and documented the ~~Company's~~ process for determining the fair values of ~~the Company's~~its assets and liabilities, where applicable. Fair value is based on quoted market prices, when available, for identical or similar assets or liabilities. In the absence of quoted market prices, fair value is determined using valuation models or third-party appraisals. The following is a description of the valuation methodologies used to measure and report the fair value of financial assets and liabilities on a recurring or nonrecurring basis.

Measured on a Recurring Basis

Available-for-Sale Securities and Derivative Contracts

Securities available for sale are recorded at fair value on a recurring basis. The fair value of debt securities are priced using model pricing based on the securities' relationship to other benchmark quoted prices as provided by an independent third party, and under GAAP are considered a Level 2 input method. Securities that are traded on active exchanges ~~including the Company's equity securities,~~ are measured using the closing price in an active market and are considered a Level 1 input method.

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. The Company has also entered into commercial loan hedges, ~~as well as~~mortgage pool hedges and borrowings hedges using interest rate swaps. The fair value of these interest rate swaps are estimated by a ~~third party~~third-party pricing service using a discounted cash flow technique. These are considered a Level 2 input method.

2325

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following tables present the balance and level in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis.


	December 31, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets
Available-for-sale securities:

U.S. government and agency securities	$	—	$	99,889	$	—	$	99,889
Asset-backed securities	—		696,572		—		696,572
Municipal bonds	—		35,054		—		35,054

Corporate debt securities	—		316,487		—		316,487
Mortgage-backed securities
Agency pass-through certificates	—		911,835		—		911,835

Total available-for-sale securities	—		2,059,837		—		2,059,837
Client swap program hedges	—		63,383		—		63,383
Commercial loan fair value hedges	—		2,446		—		2,446
Mortgage loan fair value hedges	—		33,986		—		33,986
Borrowings cash flow hedges	—		173,139		—		173,139
Total financial assets	$	—	$	2,332,791	$	—	$	2,332,791

Financial Liabilities
Client swap program hedges	$	—	$	63,383	$	—	$	63,383



Total financial liabilities	$	—	$	63,383	$	—	$	63,383

December 31, 2017
Level 1 Level 2 Level 3 Total
(In thousands)
Financial Assets
Available-for-sale securities:
Equity securities $ 503
$ —
$ —
$ 503
U.S. government and agency securities —
194,869
—
194,869
Municipal bonds —
26,212
—
26,212
Corporate debt securities —
184,416
—
184,416
Mortgage-backed securities
Agency pass-through certificates —
831,489
—
831,489
Commercial MBS —
8,366
—
8,366
Total available-for-sale securities 503
1,245,352
—
1,245,855
Interest rate contracts —
7,587
—
7,587
Borrowings hedges —
4,997
—
4,997
Total financial assets $ 503
$ 1,257,936
$ —
$ 1,258,439

Financial Liabilities
Interest rate contracts $ —
$ 7,587
$ —
$ 7,587
Commercial loan hedges —
36
—
36
Total financial liabilities $ —
$ 7,623
$ —
$ 7,623

~~There were no transfers between, into and/or out of Levels 1, 2 or 3 during the three months ended~~ ~~December 31, 2017~~.


	September 30, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets
Available-for-sale securities:

U.S. government and agency securities	$	—	$	39,354	$	—	$	39,354
Asset-backed securities	—		767,001				767,001
Municipal bonds	—		34,962		—		34,962

Corporate debt securities	—		313,757		—		313,757
Mortgage-backed securities
Agency pass-through certificates	—		895,963		—		895,963

Total available-for-sale securities	—		2,051,037		—		2,051,037
Client swap program hedges	—		67,260		—		67,260
Commercial loan fair value hedges	—		2,517		—		2,517
Mortgage loan fair value hedges	—		36,765		—		36,765
Borrowings cash flow hedges	—		179,945		—		179,945
Total financial assets	$	—	$	2,337,524	$	—	$	2,337,524

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



Total financial liabilities	$	—	$	67,260	$	—	$	67,260

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

September 30, 2017
Level 1 Level 2 Level 3 Total
(In thousands)
Financial Assets
Available-for-sale securities:
Equity securities $ 522
$ —
$ —
$ 522
U.S. government and agency securities —
211,077
—
211,077
Municipal bonds —
26,624
—
26,624
Corporate debt securities —
185,298
—
185,298
Mortgage-backed securities
Agency pass-through certificates —
834,297
—
834,297
Commercial MBS —
8,391
—
8,391
Total available-for-sale securities 522
1,265,687
—
1,266,209
Interest rate contracts —
1,139
—
1,139
Total financial assets $ 522
$ 1,266,826
$ —
$ 1,267,348

Financial Liabilities
Interest rate contracts $ —
$ 1,139
$ —
$ 1,139
Commercial loan hedges —
174
—
174
Borrowings hedges —
1,693
—
1,693
Total financial liabilities $ —
$ 3,006
$ —
$ 3,006

~~There were no transfers between, into and/or out of Levels 1, 2 or 3 during the fiscal year ended September 30, 2017.~~

~~Table of Contents~~

~~WASHINGTON FEDERAL, INC. AND SUBSIDIARIES~~

~~NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

Measured on a Nonrecurring Basis

~~Impaired Loans & Real Estate Owned~~

~~Real~~Certain assets and liabilities are measured at fair value on a nonrecurring basis after initial recognition such as collateral dependent loans and real estate owned ("REO"). REO consists principally of properties acquired through foreclosure. From time to time, and on a nonrecurring basis, adjustments using fair value measurements are recorded to reflect increases or decreases based on the discounted cash flows, the current appraisal or estimated value of the collateral ~~but only up to the fair value of the real estate owned as of the initial transfer date less selling costs.~~or REO property.

When management determines that the fair value of the collateral or the ~~real estate owned~~REO requires additional adjustments, either as a result of an updated appraised value or when there is no observable market price, the Company classifies the ~~impaired~~collateral dependent loan or real estate owned as Level 3. Level 3 assets recorded at fair value on a nonrecurring basis at December 31, ~~2017~~2022 included loans for which ~~a specific reserve~~an allowance was established or a partial charge-off was recorded based on the fair value of collateral, as well as real estate owned where the fair value of the property was less than the cost basis.

The following tables present the aggregated balance of assets that were measured at fair value on a nonrecurring basis at December 31, ~~2017~~2022 and December 31, ~~2016,~~2021, and the total gains (losses) resulting from those fair value adjustments ~~for~~during the ~~three months ended December 31, 2017 and December 31, 2016.~~respective periods. The estimated fair value measurements are shown gross of estimated selling costs.

December 31, 2017 Three Months Ended December 31, 2017
Level 1 Level 2 Level 3 Total Total Gains (Losses)
(In thousands)
Impaired loans (1) $ —
$ —
$ 688
$ 688
$ (507 )
Real estate owned (2) —
—
2,055
2,055
(180 )
Balance at end of period $ —
$ —
$ 2,743
$ 2,743
$ (687 )

~~(1)~~

~~The gains (losses) represent remeasurements of collateral-dependent loans.~~December 31, 2022

Three Months Ended December 31, 2022

~~(2)~~

~~The gains (losses) represent aggregate writedowns and charge-offs on REO.~~Level 1

Level 2

Level 3

Total

Total Gains (Losses)

December 31, 2016 Three Months Ended December 31, 2016
Level 1 Level 2 Level 3 Total Total Gains (Losses)
(In thousands)
Impaired loans (1) $ —
$ —
$ 3,353
$ 3,353
$ (422 )
Real estate owned (2) —
—
2,299
2,299
(241 )
Balance at end of period $ —
$ —
$ 5,652
$ 5,652
$ (663 )

	(In thousands)								(In thousands)
Loans (1)	$	—	$	—	$	—	$	—	$	(123)
~~(1)~~Real estate owned (2)	~~The gains (losses) represent remeasurements of collateral-dependent loans.~~—

				—						—						—						—
~~(2)~~Balance at end of period			~~The gains (losses) represent aggregate writedowns~~$	—					$	—					$	—					$	—					$	(123)

(1)The gains (losses) represent re-measurements of collateral-dependent loans.

(2)The gains (losses) represent aggregate write-downs and charge-offs on ~~REO.~~

~~Impaired loans~~ - The Company adjusts the carrying amount of impaired loans when there is evidence of probable loss and the expected fair value of the loan is less than its contractual amount. The amount of the impairment may be determined based on the estimated present value of future cash flows or the fair value of the underlying collateral. Impaired loans with a specific reserve allowance based on cash flow analysis or the value of the underlying collateral are classified as Level 3 assets.

The evaluations for impairment are prepared by the Problem Loan Review Committee, which is chaired by the Chief Credit Officer and includes the Loan Review manager and Special Credits manager, as well as senior credit officers, division managers and group executives, as applicable. These evaluations are performed in conjunction with the quarterly allowance for loan loss process.

Applicable loans that were included in the previous quarter's review are reevaluated and if their values are materially different from the prior quarter evaluation, the underlying information (loan balance and collateral value) are compared. Material differences

~~Table of Contents~~

~~WASHINGTON FEDERAL, INC. AND SUBSIDIARIES~~

~~NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~are evaluated for reasonableness and discussions are held between the relationship manager and their division manager to understand the difference and determine if any adjustment is necessary.~~

The inputs are developed and substantiated on a quarterly basis, based on current borrower developments, market conditions and collateral values. The following methods are used to value impaired loans:

~~The fair value of the collateral, which may take the form of~~ real estate ~~or personal property, is based on internal estimates, field observations, assessments provided by third-party appraisers and other valuation models.~~ owned.


	December 31, 2021								Three Months Ended December 31, 2021
	Level 1		Level 2		Level 3		Total		Total Gains (Losses)
	(In thousands)								(In thousands)
Loans (1)	$	—	$	—	$	202	$	202	$	(89)
Real estate owned (2)	—		—		1,390		1,390		(504)
Balance at end of period	$	—	$	—	$	1,592	$	1,592	$	(593)

(1)The ~~Company performs or reaffirms valuations~~gains (losses) represent re-measurements of collateral-dependent ~~impaired loans at least annually. Adjustments are made if management believes that more recent information is available~~loans.

(2)The gains (losses) represent aggregate write-downs and ~~relevant with respect to the fair value of the collateral.~~

~~The present value of the expected future cash flows of the loans is used for measurement of non collateral-dependent loans to test for impairment.~~

~~Real estate owned~~ ~~- When a loan is reclassified from loan status to~~charge-offs on real estate ~~owned due to the Company taking possession~~owned.

At December 31, 2022, there was $93,000 in foreclosed residential real estate properties held as REO. The recorded investment of ~~the collateral, a special credits officer, along with the special credits manager, obtains a valuation,~~consumer mortgage loans secured by residential real estate properties for which may include appraisals or third-party price opinions, which is used to establish the fair value of the underlying collateral. The determined fair value, less selling costs, becomes the carrying value of the REO asset.

~~The fair value of REO assets is re-evaluated quarterly and the REO asset is adjusted to reflect the fair value as necessary. After~~formal foreclosure the valuations are updated periodically and current market conditions may require the assets to be written down further or up to the cost basis established on the date of transfer. The carrying balance of REO assets are also written down once a bona fide offer is contractually accepted, through execution of a purchase and sale agreement, where the accepted price is lower than the cost established on the transfer date.proceedings were in process was $2,807,000.

Fair Values of Financial Instruments

FASB ASC 825, Financial Instruments ("ASC 825") requires disclosure of fair value information about financial instruments, whether or not recognized on the statement of financial condition, for which it is practicable to estimate those values. Certain financial instruments and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value estimates presented do not reflect the underlying fair value of the Company. Although management is not aware of any factors that would materially affect the estimated fair value amounts presented below, such amounts have not been comprehensively revalued for purposes of these financial statements since the dates shown, and therefore, estimates of fair value subsequent to those dates may differ significantly from the amounts presented below.

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


		December 31, 2022				September 30, 2022
	Level in Fair Value Hierarchy	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
		($ in thousands)
Financial assets
Cash and cash equivalents	1	$	645,862	$	645,862	$	683,965	$	683,965
Available-for-sale securities

U.S. government and agency securities	2	99,889		99,889		39,354		39,354
Asset-backed securities	2	696,572		696,572		767,001		767,001
Municipal bonds	2	35,054		35,054		34,962		34,962

Corporate debt securities	2	316,487		316,487		313,757		313,757
Mortgage-backed securities
Agency pass-through certificates	2	911,835		911,835		895,963		895,963

Total available-for-sale securities		2,059,837		2,059,837		2,051,037		2,051,037
Held-to-maturity securities





Mortgage-backed securities
Agency pass-through certificates	2	453,443		402,055		463,299		406,860

Total held-to-maturity securities		453,443		402,055		463,299		406,860

Loans receivable	3	16,993,588		16,310,687		16,113,564		15,417,635

FHLB and FRB stock	2	133,073		133,073		95,073		95,073
Other assets - client swap program hedges	2	63,383		63,383		67,260		67,260
Other assets - commercial fair value loan hedges	2	2,446		2,446		2,517		2,517
Other assets - mortgage loan fair value hedges	2	33,986		33,986		36,765		36,765
Other assets - borrowings cash flow hedges	2	173,139		173,139		179,945		179,945

Financial liabilities
Time deposits	2	3,412,203		3,329,708		3,338,043		3,249,169
FHLB advances	2	3,075,000		3,067,487		2,125,000		1,940,813
Other liabilities - client swap program hedges	2	63,383		63,383		67,260		67,260

December 31, 2017 September 30, 2017
Level in Fair Value Hierarchy
Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair Value
(In thousands)
Financial assets
Cash and cash equivalents 1 $ 309,713
$ 309,713
$ 313,070
$ 313,070
Available-for-sale securities
Equity securities 1 503
503
522
522
U.S. government and agency securities 2 194,869
194,869
211,077
211,077
Municipal bonds 2 26,212
26,212
26,624
26,624
Corporate debt securities 2 184,416
184,416
185,298
185,298
Mortgage-backed securities
Agency pass-through certificates 2 831,489
831,489
834,297
834,297
Commercial MBS 2 8,366
8,366
8,391
8,391
Total available-for-sale securities 1,245,855
1,245,855
1,266,209
1,266,209
Held-to-maturity securities
Mortgage-backed securities
Agency pass-through certificates 2 1,750,886
1,738,337
1,646,856
1,635,913
                           Commercial MBS 2 15,000
15,005
—
—
Total held-to-maturity securities 1,765,886
1,753,342
1,646,856
1,635,913

Loans receivable 3 11,107,042
11,503,407
10,882,622
11,247,586
FHLB and FRB stock 2 130,590
130,590
122,990
122,990
        Other assets - interest rate contracts 2 7,587
7,587
1,139
1,139
        Other assets - borrowings hedges 2 4,997
4,997
—
—

Financial liabilities
Customer accounts 2 11,001,579
10,483,114
10,835,008
10,411,686
FHLB advances 2 2,415,000
2,431,792
2,225,000
2,266,791
        Other liabilities - interest rate contracts 2 7,587
7,587
1,139
1,139
Other liabilities - commercial loan hedges 2 36
36
174
174
        Other liabilities - borrowings hedges 2 —
—
1,693
1,693

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

Cash and cash equivalents – The carrying amount of these items is a reasonable estimate of their fair value.

Available-for-sale securities and held-to-maturity securities – Securities at fair value are primarily priced using model pricing based on the securities' relationship to other benchmark quoted prices as provided by an independent third party, and are considered a Level 2 input method. Equity securities ~~which~~that are exchange traded are considered a Level 1 input method.

Loans receivable – ~~For certain homogeneous categories~~Fair values are estimated first by stratifying the portfolios of loans with similar financial characteristics. Loans are segregated by type such as multi-family real estate, residential mortgage, construction, commercial, consumer and land loans. Each loan category is further segmented into fixed- and ~~variable-rate~~adjustable-rate interest terms. For residential mortgages and multi-family loans, the bank determined that its best exit price was by securitization. MBS benchmark prices are used as a base price, with further loan level pricing adjustments made based on individual loan characteristics such as FICO score, LTV, Property Type and occupancy. For all other loan categories an estimate of fair value is estimated for securities backed by similar loans, adjusted for differences in loan characteristics, using the same methodology described above for AFS and HTM securities. The fair value of other loan types is estimated by discounting the futurethen calculated based on discounted cash flows using a discount rate offered and estimated prepayments using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining term. Some loan types were valued at carrying value because of their floating rate or expected maturity characteristics. Net deferred loan fees are not includedobserved in the ~~fair value calculation but are included in~~market on similar products, plus an adjustment for liquidity to reflect the ~~carrying amount.~~

~~FHLB and FRB stock~~ ~~– The fair value is based upon the par value~~non-homogeneous nature of the ~~stock which equates~~loans, as well as an annual loss rate based on historical losses to ~~its carrying~~arrive at an estimated exit price fair value. Fair value for impaired loans is also based on recent appraisals or estimated cash flows discounted using rates

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

commensurate with risk associated with the estimated cash flows. Assumptions regarding credit risk, cash flows and discount rates are judgmentally determined using available market information and specific borrower information.

~~Customer accounts~~FHLB and FRB stock – The fair value is based upon the par value of the stock that equates to its carrying value.

Time deposits – The fair value of ~~demand~~time deposits ~~savings accounts, and money market accounts is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit~~ 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.

Interest rate ~~contracts~~swaps – The ~~bank~~Company offers interest rate swaps to its variable rate borrowers who want to manage their interest rate risk. At the same time, the ~~bank~~Company enters into the opposite trade with a counterparty to offset its interest rate risk. The Company also uses interest rate swaps for various fair value hedges and cash flow hedges. The fair value of these interest rate swaps ~~are~~is estimated by a ~~third party~~third-party pricing service using a discounted cash flow technique.

~~Commercial loan hedges~~ ~~– The fair value of the interest rate swaps are estimated by a third party pricing service using a discounted cash flow technique.~~

~~Borrowings hedges~~ ~~– The fair value of the interest rate swaps are estimated by a third party pricing service using a discounted cash flow technique.~~

The following tables provide ~~a reconciliation of~~details about the amortized cost toand fair value of available-for-sale and held-to-maturity securities.


	December 31, 2022
	Amortized Cost		Gross Unrealized				Fair Value		Yield
			Gains		Losses
	($ in thousands)
Available-for-sale securities
U.S. government and agency securities due

1 to 5 years	$	36,531	$	—	$	(925)	$	35,606	4.33	%

Over 10 years	64,060		223		—		64,283		3.90
Asset-backed securities

1 to 5 years	21,033		—		(1,524)		19,509		4.58
5 to 10 years	67,783		—		(1,025)		66,758		5.01
Over 10 years	627,579		365		(17,639)		610,305		5.12




Corporate debt securities due
Within 1 year	75,000		29		(212)		74,817		5.08
1 to 5 years	151,531		232		(3,435)		148,328		4.49
5 to 10 years	114,116		—		(20,774)		93,342		3.87

Municipal bonds due


5 to 10 years	5,743		—		(360)		5,383		3.00
Over 10 years	29,861		350		(540)		29,671		5.85
Mortgage-backed securities
Agency pass-through certificates	985,480		11		(73,656)		911,835		2.98

	2,178,717		1,210		(120,090)		2,059,837		3.99
Held-to-maturity securities







Mortgage-backed securities
Agency pass-through certificates	453,443		23		(51,411)		402,055		2.88

	453,443		23		(51,411)		402,055		2.88
	$	2,632,160	$	1,233	$	(171,501)	$	2,461,892	3.80	%

December 31, 2017

Amortized
Cost
Gross Unrealized
Fair
Value
Yield
Gains Losses
(In thousands)
Available-for-sale securities

U.S. government and agency securities due
Within 1 year $ 3,300
$ 70
$ —
$ 3,370
9.80 %
1 to 5 years 2,123
—
—
2,123
1.61
5 to 10 years 68,326
—
(1,174 ) 67,152
2.03
Over 10 years 122,171
215
(162 ) 122,224
2.09
Equity securities due
1 to 5 years 500
3
—
503
1.80
Corporate debt securities due
1 to 5 years 63,657
1,936
—
65,593
3.14
5 to 10 years 119,962
213
(1,352 ) 118,823
2.66
Over 10 years —
—
—
—
—
Municipal bonds due
Within 1 year 2,352
—
(4 ) 2,348
1.23
1 to 5 years 1,374
8
—
1,382
2.05
Over 10 years 20,338
2,144
—
22,482
6.45
Mortgage-backed securities
Agency pass-through certificates 825,744
8,181
(2,436 ) 831,489
3.11
Commercial MBS 8,350
16
—
8,366
3.55
1,238,197
12,786
(5,128 ) 1,245,855
2.98
Held-to-maturity securities
Mortgage-backed securities
Agency pass-through certificates 1,750,886
6,218
(18,767 ) 1,738,337
3.16
Commercial MBS 15,000
5
—
15,005
2.23
1,765,886
6,223
(18,767 ) 1,753,342
3.15
$ 3,004,083
$ 19,009
$ (23,895 ) $ 2,999,197
3.08 %

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


	September 30, 2022
	Amortized Cost		Gross Unrealized					Fair Value		Yield
			Gains		Losses
	($ in thousands)
Available-for-sale securities
U.S. government and agency securities due

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


Asset-backed securities

1 to 5 years	22,527		—			(1,141)		21,386		3.27
5 to 10 years	82,962		4			(547)		82,419		3.53
Over 10 years	668,482		783			(6,069)		663,196		3.86




Corporate debt securities due
Within 1 year	75,000		4			(200)		74,804		3.74
1 to 5 years	151,411		—			(2,748)		148,663		3.59
5 to 10 years	114,414		—			(24,124)		90,290		3.87

Municipal bonds due


5 to 10 years	5,751		—			(361)		5,390		3.00
Over 10 years	29,871		400			(699)		29,572		5.85
Mortgage-backed securities
Agency pass-through certificates	971,916		117			(76,070)		895,963		2.81

	2,162,737		1,308			(113,008)		2,051,037		3.36
Held-to-maturity securities







Mortgage-backed securities
Agency pass-through certificates	463,299		22			(56,461)		406,860		2.88

	463,299		22			(56,461)		406,860		2.88
	$	2,626,036	$	1,330		$	(169,469)	$	2,457,897	3.28	%

September 30, 2017

Amortized
Cost
Gross Unrealized
Fair
Value
Yield
Gains Losses
(In thousands)
Available-for-sale securities
U.S. government and agency securities due
Within 1 year $ 9,300
$ 146
$ —
$ 9,446
10.38 %
1 to 5 years 5,688
2
—
5,690
1.51
5 to 10 years 69,108
—
(1,238 ) 67,870
1.93
Over 10 years 127,936
353
(218 ) 128,071
1.92
Equity Securities
1 to 5 years 500
22
—
522
1.80
Corporate bonds due
Within 1 year —
—
—
—
—
1 to 5 years 63,622
2,083
—
65,705
2.96
5 to 10 years 119,960
210
(577 ) 119,593
2.62
Over 10 years —
—
—
—
—
Municipal bonds due
Within 1 year 2,344
10
—
2,354
1.23
1 to 5 years 1,367
55
—
1,422
2.05
5 to 10 years —
—
—
—
—
Over 10 years 20,343
2,505
—
22,848
6.45
Mortgage-backed securities
Agency pass-through certificates 828,069
8,402
(2,174 ) 834,297
2.96
Commercial MBS 8,350
41
—
8,391
3.31
1,256,587
13,829
(4,207 ) 1,266,209
2.86
Held-to-maturity securities
Mortgage-backed securities
Agency pass-through certificates 1,646,856
7,143
(18,086 ) 1,635,913
3.14
1,646,856
7,143
(18,086 ) 1,635,913
—
$ 2,903,443
$ 20,972
$ (22,293 ) $ 2,902,122
3.02 %

For ~~available-for-sale~~AFS investment securities, there were ~~no sales~~purchases of $115,909,000 during the three months ended December 31, 2017 and sales totaling $350,890,000 during the three months ended December 31, 2016. There were purchases of $40,884,000 of available-for-sale investment securities during the three months ended December 31, 20172022 and no purchases during the three months ended December 31, ~~2016. For held-to-maturity~~2021. There were no sales of AFS investment securities ~~there were purchases totaling $170,836,000~~ during the three months ended December 31, ~~2017~~2022 and ~~purchases~~$4,510,000 of ~~$415,729,000~~sales during the prior year same period. For HTM investment securities, there were no purchases during the three months ended December 31, ~~2016.~~2022 and no purchases during the three months ended December 31, 2021. There were no sales of ~~held-to-maturity~~HTM investment securities during ~~either period.~~the three months ended December 31, 2022 or December 31, 2021. Substantially all of the agency mortgage-backed securities have contractual due dates that exceed 10 years.

The Company elected to exclude AIR from the amortized cost basis of debt securities disclosed throughout this footnote. For AFS securities, AIR totaled $7,063,000 and $5,694,000 as of December 31, 2022 and September 30, 2022, respectively. For HTM debt securities, AIR totaled $1,084,000 and $1,108,000 as of December 31, 2022 and September 30, 2022, respectively. AIR for securities is included in the Interest receivable line item balance on the Company’s consolidated statements of financial condition.

The following tables show the gross unrealized ~~gross~~ losses and fair value of securities as of December 31, ~~2017~~2022 and September 30, ~~2017,~~2022, by length of time that individual securities in each category have been in a continuous loss position. There were 227 and 223 securities with an unrealized loss as of December 31, 2022 and September 30, 2022, respectively. The decline in fair value since purchase is attributable to changes in interest rates. 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 other than temporarily impaired.~~have any credit impairment.

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


December 31, 2022	Less than 12 months				12 months or more				Total
	Unrealized Gross Losses		Fair Value		Unrealized Gross Losses		Fair Value		Unrealized Gross Losses		Fair Value
	(In thousands)
Available-for-sale securities
Corporate debt securities	$	(24,421)	$	217,278	$	—	$	—	$	(24,421)	$	217,278
Municipal bonds	(900)		14,704		—		—		(900)		14,704
U.S. government and agency securities	$	(120)	$	28,002	$	(805)	$	7,604	$	(925)	$	35,606
Asset-backed securities	(16,304)		593,310		(3,884)		72,112		(20,188)		665,422

Mortgage-backed securities	(59,338)		833,728		(14,318)		77,584		(73,656)		911,312
	(101,083)		1,687,022		(19,007)		157,300		(120,090)		1,844,322
Held-to-maturity securities
Mortgage-backed securities	(51,411)		400,422		—		—		(51,411)		400,422
	$	(152,494)	$	2,087,444	$	(19,007)	$	157,300	$	(171,501)	$	2,244,744

Substantially all of the Company’s held-to-maturity debt securities are issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government and have a long history of zero credit loss. Therefore, the Company did not record an allowance for credit losses for these securities as of December 31, 2022 or September 30, 2022.

September 30, 2017 Less than 12 months 12 months or more Total

Unrealized
Gross Losses

Fair
Value

Unrealized
Gross Losses

Fair
Value

Unrealized
Gross Losses

Fair
Value
(In thousands)
Corporate debt securities $ —
$ —
$ (577 ) $ 49,423
$ (577 ) $ 49,423
U.S. government and agency securities (759 ) 24,400
(697 ) 96,195
(1,456 ) 120,595
Agency pass-through certificates (17,683 ) 1,163,358
(2,577 ) 249,304
(20,260 ) 1,412,662
$ (18,442 ) $ 1,187,758
$ (3,851 ) $ 394,922
$ (22,293 ) $ 1,582,680

The Company does not believe that the AFS debt securities that were in an unrealized loss position have any credit loss impairment as of December 31, 2022 or September 30, 2022. The Company does not intend to sell the investment securities that were in an unrealized loss position and it is more likely than not the Company will not be required to sell the investment securities before recovery of their amortized cost basis, which may be at maturity. AFS debt securities issued by U.S. government agencies or U.S. government-sponsored enterprises carry the explicit and/or implicit guarantee of the U.S. government and have a long history of zero credit loss. Corporate debt securities and municipal bonds are considered to have an issuer 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. The issuer continues to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE G – Derivatives and Hedging Activities

The following tables present the fair value, notional amount and balance sheet classification of derivative assets and liabilities at December 31, 2022 and September 30, 2022.

The Company enters into interest rate swaps to hedge interest rate risk. These arrangements include hedges of individual fixed rate commercial loans and also hedges of a specified portion of pools of prepayable fixed rate mortgage loans under the "last of layer" method. These relationships qualify as fair value hedges under FASB ASC 815, Derivatives and Hedging ("ASC 815"), which provides for offsetting of the recognition of gains and losses of the respective interest rate swap and the hedged items. Gains and losses on interest rate swaps designated in these hedge relationships, along with the offsetting gains and losses on the hedged items attributable to the hedged risk, are recognized in current earnings within the same income statement line item.

Upon electing to apply ASC 815 fair value hedge accounting, the carrying value of the hedged item is adjusted to reflect the cumulative impact of changes in fair value attributable to the hedged risk. The hedge basis adjustment remains with the hedged item until the hedged item is de-recognized from the balance sheet. The following tables present the impact of fair value hedge accounting on the carrying value of the hedged items at December 31, 2022 and September 30, 2022.

(1) Includes the amortized cost basis of the closed mortgage loan portfolios used to designate the hedging relationships in which the hedged items are the last layer expected to be remaining at the end of the hedging relationships. At December 31, 2022, the amortized cost basis of the closed loan portfolios used in the hedging relationships was $1,094,211,000, the cumulative basis adjustment associated with the hedging relationships was $(33,423,000), and the amount of the designated hedged items was $470,000,000.

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(2) Includes the amortized cost basis of commercial loans designated in fair value hedging relationships. At December 31, 2022, the amortized cost basis of the hedged commercial loans was $37,071,000 and the cumulative basis adjustment associated with the hedging relationships was $(2,535,000).

(1) Includes the amortized cost basis of the closed mortgage loan portfolios used to designate the hedging relationships in which the hedged items are the last layer expected to be remaining at the end of the hedging relationships. 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.

(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).

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 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 December 31, 2022, the maturities for hedges of adjustable rate borrowings ranged from two years to eight years, with the weighted average being 6.3 years.

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

The following tables present the gain (loss) on derivative instruments in fair value and cash flow accounting hedging relationships under ASC 815 for the periods presented.

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company periodically enters into certain interest rate swap agreements in order to provide commercial loan customers the ability to convert from variable to fixed interest rate payments, while the Company retains a variable rate loan. Under these agreements, the Company enters into a variable rate loan agreement and a swap agreement with the client. The swap agreement effectively converts the client’s variable rate loan into a fixed rate. The Company enters into a corresponding swap agreement with a third party in order to offset its exposure on the variable and fixed components of the client's swap agreement. The ~~Company had $956,247,000 and $1,035,573,000 notional in interest rate swaps to hedge this exposure as of December 31, 2017 and September 30, 2017, respectively. The~~ interest rate swaps are derivatives under ~~FASB~~ ASC 815,~~Derivatives and Hedging~~, with changes in fair value recorded in earnings. There was no net impact to the statement of operations for the three months ended December 31, ~~2017~~2022 and ~~2016~~2021 as the changes in ~~value for the asset and liability side of the swaps offset each other.~~

The Company has also entered into interest rate swaps to convert certain existing and future short-term borrowings to fixed rate payments. The primary purpose of these hedges is to mitigate the risk of rising interest rates, specifically LIBOR rates, which are a benchmark for the short term borrowings. The hedging program qualifies as a cash flow hedge under ASC 815, which provides for offsetting of the recognition of gains and losses of the interest rate swaps and the hedged items. The hedged item is the LIBOR portion of the series of existing or future short-term fixed rate borrowings over the term of the interest rate swap. The change in the fair value of the ~~interest rate swaps is recorded in other comprehensive income. The Company had $700,000,000 notional in interest rate swaps to hedge existing~~receive fixed swap and ~~anticipated future borrowings as of December 31, 2017 and September 30, 2017.~~pay fixed swap offset each other.

The ~~Company has also enters into interest rate swaps to hedge~~following tables present the ~~interest rate risk~~impact of ~~individual fixed rate commercial loans and these relationships qualify as a fair value~~derivative instruments (client swap program) that are not designated in accounting hedges under ASC 815 ~~which provides~~ for ~~offsetting of~~ the recognition of gains and losses of the respective interest rate swap and the hedged item. The interest rate swaps in these hedging relationships had a notional amount of $97,927,000 and $52,936,000 as of December 31, 2017 and September 30, 2017, respectively.periods presented.

Asset Derivatives Liability Derivatives
December 31, 2017 September 30, 2017 December 31, 2017 September 30, 2017
Balance Sheet Balance Sheet Balance Sheet Balance Sheet
Location Fair Value Location Fair Value Location Fair Value Location Fair Value
(In thousands)
Interest rate contracts Other assets $ 7,587
Other assets $ 1,139
Other liabilities $ 7,587
Other liabilities $ 1,139
Commercial loan hedges Other assets —
Other assets —
Other liabilities 36
Other liabilities 174
Borrowings hedges Other assets 4,997
Other assets —
Other liabilities —
Other liabilities 1,693
$ 12,584
$ 1,139
$ 7,623
$ 3,006

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE H – ~~Income Taxes~~Revenue from Contracts with Customers

On December 22, 2017, the U.S. Government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. For businesses, the Act reduces the corporate federal tax rate from a maximum of 35% to a flat 21% rate. The corporate tax rate reduction was effective January 1, 2018. Because the Company has a fiscal year end of September 30, the reduced corporate tax rate will result in the application of a blended federal statutory tax rate for its fiscal year 2018 and then a flat 21% thereafter.

Revenue streams that are within the scope of ASC 606 are presented within non-interest income and are, in general, recognized ~~for~~as revenue at the ~~future tax consequences attributable~~same time the Company's obligation 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 expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. At September 30, 2017, the Company’s deferred tax assets and liabilities were determined based on the then-current enacted federal tax rate of 35%. As a resultcustomer is satisfied. Most of the ~~reduction in~~Company's customer contracts that are within the corporate income tax rate under the Act, the Company revalued its deferred tax assets and liabilities at December 31, 2017. Deferred tax assets and liabilities expected to be realized in fiscal year 2018 were re-measured using the aforementioned blended rate. All remaining deferred tax assets and liabilities were re-measured usingscope of the new ~~statutory federal rate~~guidance are cancelable by either party without penalty and are short-term in nature. These sources of ~~21%. These re-measurements collectively resulted in a discrete tax benefit~~revenue include depositor and other consumer and business banking fees, commission income, as well as debit and credit card interchange fees. In scope revenue streams represented approximately 3.9% of ~~$3,700,000 that was recognized during~~our total revenues for the three months ended December 31, ~~2017.~~2022, compared to 5.6% for the three months ended December 31, 2021. 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 non-interest income within the scope of the guidance include the following:

Deposit related and other service charges (recognized in Deposit fee income) - The Company's deposit accounts are governed by standardized contracts customary in the industry. Revenues are earned at a point in time or over time (monthly) from account maintenance fees and charges for specific transactions such as wire transfers, stop payment orders, overdrafts, debit card replacements, check orders and cashier’s checks. The Company’s ~~revaluation~~performance obligation related to each of ~~its deferred tax assets~~these fees is generally satisfied, and ~~liabilities~~the related revenue recognized, at the time the service is ~~subject to further clarification~~provided (point in time or monthly). The Company is principal in each of these contracts.

Debit and Credit Card Interchange Fees (recognized in Deposit fee income) - The Company receives interchange fees from the debit card or credit card payment network based on transactions involving debit or credit cards issued by the Company, generally measured as a percentage of the ~~Tax Act~~underlying transaction. Interchange fees from debit and ~~refinements~~credit card transactions are recognized as the transaction processing services are provided by the network. The Company acts as an agent in the card payment network arrangement, so the interchange fees are recorded net of ~~its estimates. As~~any expenses paid to the principal (the card payment network in this case).

Insurance Agency Commissions (recognized in Other income) - WAFD Insurance Group, Inc. is a ~~result,~~wholly owned subsidiary of Washington Federal Bank, N.A. 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. earns revenue in the ~~actual impact~~form of commissions paid by the insurance carriers for policies that have been sold. In addition to the origination commission, WAFD Insurance Group, Inc. may also receive contingent incentive fees based on the ~~deferred tax assets~~volume of business generated for the insurance carrier and ~~liabilities~~based on policy renewal rates.

NOTE I – Commitments and ~~income tax expense due~~Contingencies

Lease Commitments - The Company’s lease commitments consist primarily of real estate property for branches and office space under various non-cancellable operating leases that expire between 2023 and 2070. The majority of the leases contain renewal options and provisions for increases in rental rates based on a predetermined schedule or an agreed upon index.

Financial Instruments with Off-Balance Sheet Risk - The only material off-balance-sheet credit exposures are unfunded loan commitments, which had a combined balance of $4,822,769,000 and $4,947,570,000 at December 31, 2022 and September 30, 2022, respectively. The reserve was $31,500,000 as of December 31, 2022, which is an decrease from $32,500,000 at September 30, 2022. See Note A "Summary of Significant Accounting Policies" for details regarding the reserve methodology.

Legal Proceedings- The Company and its subsidiaries are from time to time defendants in and are threatened with various legal proceedings arising from regular business activities. Management, after consulting with legal counsel, is of the ~~Tax Act may vary~~opinion that the ultimate liability, if any, resulting from these pending or threatened actions and proceedings will not have a material effect on the ~~amounts estimated.~~financial statements of the Company.

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD LOOKING STATEMENTS

You should not place undue reliance on any forward-looking statement and should consider the following uncertainties and risks, as well as the risks and uncertainties discussed elsewhere in this report, and including ~~under Item 1A. “Risk~~the Risk Factors” included in the Company’s 2022 Form 10-K for the year ended September 30, 2022, and in any of the Company's other subsequent Securities and Exchange Commission ("SEC") filings, which could cause the Company's future results to differ materially from the plans, objectives, goals, estimates, intentions and expectations expressed in forward-looking statements:

•Economic uncertainty or a deterioration in economic conditions or slowdowns in economic growth, including declines in ~~the real estate market and~~ home sale volumes and financial stress on borrowers (consumers and businesses) as a result of ~~the~~higher interest rates or an uncertain economic environment;

~~the effects of a severe economic downturn, including high unemployment~~•fluctuating interest rates and ~~declines in housing prices and property values, in~~the impact of inflation on the Company's ~~primary market areas;~~business and financial results;

•the effects of and changes in monetary and fiscal policies of the Board of Governors of the Federal Reserve System and the U.S. ~~Government;~~Government, including responses to the COVID-19 pandemic;

~~fluctuations in interest rate risk~~•global economic trends, including developments related to Ukraine and ~~changes in market interest rates;~~Russia, and related negative financial impacts on our borrowers, the financial markets and the global economy;

~~the Company's~~•our ability to make accurate assumptions and judgments about the collectability of ~~its~~our loan portfolio, including the creditworthiness of ~~its~~our borrowers and the value of the assets securing these loans;

•risks related to operational, technological, and third-party provided technology infrastructure

•risks associated with cybersecurity incidents and threat actors;

•the ~~Company's~~effects of natural or man-made disasters, calamities, or conflicts, including terrorist events and pandemics (such as the COVID-19 pandemic), and the resulting governmental and societal responses, including on our asset credit quality and business operations, as well as its impact on general economic and financial market conditions;

•risks associated with our failure to retain or attract key employees;

•risks associated with failures of our risk management framework;

•risks related to the impacts of climate change on our business or reputation;

•risks related to the Company’s pending merger with Luther Burbank Corporation.

Regulatory and Litigation Risk:

•Unanticipated effects and expenses related to the completed charter conversion of the Bank from a federal to a state charter;

•the Company’s ability to ~~successfully complete merger~~manage the risks and ~~acquisition activities~~costs involved in the remediation efforts to the Bank's Home Mortgage Disclosure Act (“HMDA”) compliance and ~~realize expected strategic~~reporting, and ~~operating efficiencies~~the impact of enforcement actions or legal proceedings with respect to the Bank’s HMDA program;

•compliance risks associated with ~~such activities;~~the USA PATRIOT Act, Bank Secrecy Act, Real Estate Settlement Procedures Act, Truth-in-Lending Act, Community Reinvestment Act, Fair Lending Laws, Flood Insurance Reform Act or other laws and regulations;

•legislative and regulatory limitations, including those arising under the Dodd-Frank Act, the Washington Commercial Bank Act and potential limitations in the manner in which the Company conducts its business and ~~undertake~~undertakes new investments and activities;

~~the ability of the Company to obtain external financing to fund its operations or obtain this financing on favorable terms;~~

•litigation risks resulting in significant expenses, losses and reputational damage;

Table of Contents

WASHINGTON FEDERAL, INC. AND SUBSIDIARIES

~~PART I – Financial Information~~

~~Item 2. Management’s Discussion~~•environmental risks resulting from our real estate lending business.

Market and ~~Analysis~~Industry Risk:

•Risks associated with our geographic concentration, including the effects of ~~Financial Condition~~a severe economic downturn, including high unemployment rates and ~~Results of Operations~~

declines in housing prices and property values, in our primary market areas;

•downturns in the real estate market;

•changes in other economic, competitive, governmental, regulatory and technological factors affecting the Company's markets, operations, pricing, products, services and fees;

•risks associated with inadequate or faulty underwriting and loan collection practices;


	Three Months Ended December 31,
	2022		2021
	(In thousands, except share data)
INTEREST INCOME
Loans receivable	$	203,946	$	138,509
Mortgage-backed securities	10,613		4,792
Investment securities and cash equivalents	18,860		7,139
	233,419		150,440
INTEREST EXPENSE
Customer accounts	31,646		8,461
FHLB advances	18,974		7,843
	50,620		16,304
Net interest income	182,799		134,136
Provision for credit losses	2,500		500
Net interest income after provision (release)	180,299		133,636
OTHER INCOME
Gain (loss) on sale of investment securities	—		81


Loan fee income	1,502		1,921
Deposit fee income	6,353		6,443
Other income	6,169		10,236
	14,024		18,681
OTHER EXPENSE
Compensation and benefits	49,070		47,425
Occupancy	10,102		10,090
FDIC insurance premiums	3,675		3,100
Product delivery	4,621		4,721
Information technology	12,329		11,421
Other expense	12,481		12,856
	92,278		89,613
Gain (loss) on real estate owned, net	(112)		562
Income before income taxes	101,933		63,266
Income tax expense	22,424		12,985
Net income	79,509		50,281
Dividends on preferred stock	3,656		3,656
Net income available to common shareholders	$	75,853	$	46,625
PER SHARE DATA
Basic earnings per common share	$	1.16	$	0.72
Diluted earnings per common share	1.16		0.71
Dividends paid on common stock per share	0.24		0.23
Basic weighted average number of shares outstanding	65,341,974		65,207,837
Diluted weighted average number of shares outstanding	65,430,690		65,350,174



	Three Months Ended December 31,
	2017			2016
	(In thousands)
Net income	$	51,670		$	41,246

Other comprehensive income (loss) net of tax:
Net unrealized gain (loss) on available-for-sale investment securities	(1,964		)	(17,079		)
Reclassification adjustment of net gain (loss) from sale of available-for-sale securities included in net income	—			968
Related tax benefit (expense)	722			5,921
	(1,242		)	(10,190		)

Net unrealized gain (loss) on cash flow hedges of borrowings	6,690			29,271
Related tax benefit (expense)	(2,459		)	(10,757		)
	4,231			18,514

Other comprehensive income (loss) net of tax	2,989			8,324
Comprehensive income	$	54,659		$	49,570


	Three Months Ended December 31,
	2022		2021
	(In thousands)
Net income	$	79,509	$	50,281
Other comprehensive income (loss) net of tax:
Net unrealized gain (loss) during the period on available-for-sale investment securities, net of tax of $1,659 and $3,864	(5,521)		(12,934)
Reclassification adjustment of net (gain) loss from sale of available-for-sale securities included in net income, net of tax of $0 and $(19)	—		62
Net unrealized gain (loss) from investment securities, net of reclassification adjustment	(5,521)		(12,872)
Net unrealized gain (loss) during the period on borrowings cash flow hedges, net of tax of $1,572 and $(1,483)	(5,234)		4,963

Net unrealized gain (loss) in cash flow hedging instruments, net of reclassification adjustment	(5,234)		4,963

Other comprehensive income (loss)	(10,755)		(7,909)
Comprehensive income	$	68,754	$	42,372


	December 31, 2022				September 30, 2022
	(In thousands)				(In thousands)
Commercial loans
Multi-family	$	2,713,331	13.4	%	$	2,645,801	13.7	%
Commercial real estate	3,237,073		16.0		3,133,660		16.2
Commercial & industrial	2,628,131		13.0		2,350,984		12.1
Construction	4,055,474		20.0		3,784,388		19.5
Land - acquisition & development	253,682		1.2		291,301		1.5
Total commercial loans	12,887,691		63.6		12,206,134		63.0
Consumer loans
Single-family residential	6,013,410		29.7		5,771,862		29.8
Construction - custom	926,126		4.6		974,652		5.0
Land - consumer lot loans	148,246		0.7		153,240		0.8
HELOC	212,123		1.0		203,528		1.0
Consumer	73,115		0.4		75,543		0.4
Total consumer loans	7,373,020		36.4		7,178,825		37.0
Total gross loans	20,260,711		100	%	19,384,959		100	%
Less:
Allowance for credit losses on loans	176,797				172,808
Loans in process	2,997,839				3,006,023
Net deferred fees, costs and discounts	92,487				92,564
Total loan contra accounts	3,267,123				3,271,395
Net loans	$	16,993,588			$	16,113,564



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Large accelerated filer	x☒	Accelerated filer	o☐
Non-accelerated filer	o☐	Smaller reporting company	o☐
Emerging growth company	o☐



	December 31, 2017			September 30, 2017
	(In thousands, except share data)
ASSETS
Cash and cash equivalents	$	309,713		$	313,070
Available-for-sale securities, at fair value	1,245,855			1,266,209
Held-to-maturity securities, at amortized cost	1,765,886			1,646,856
Loans receivable, net of allowance for loan losses of $127,155 and $123,073	11,107,042			10,882,622
Interest receivable	42,146			41,643
Premises and equipment, net	264,643			263,694
Real estate owned	17,928			20,658
FHLB and FRB stock	130,590			122,990
Bank owned life insurance	211,833			211,330
Intangible assets, including goodwill of $300,288 and $293,153	310,578			298,682
Other assets	177,799			185,826
	$	15,584,013		$	15,253,580
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Customer accounts
Transaction deposit accounts	$	6,482,612		$	6,361,158
Time deposit accounts	4,518,967			4,473,850
	11,001,579			10,835,008
FHLB advances	2,415,000			2,225,000
Advance payments by borrowers for taxes and insurance	23,924			56,631
Accrued expenses and other liabilities	133,892			131,253
	13,574,395			13,247,892
Stockholders’ equity
Common stock, $1.00 par value, 300,000,000 shares authorized; 135,274,618 and 134,957,511 shares issued; 86,363,099 and 87,193,362 shares outstanding	135,275			134,958
Additional paid-in capital	1,661,866			1,660,885
Accumulated other comprehensive income (loss), net of taxes	8,004			5,015
Treasury stock, at cost; 48,911,519 and 47,764,149 shares	(877,044		)	(838,060		)
Retained earnings	1,081,517			1,042,890
	2,009,618			2,005,688
	$	15,584,013		$	15,253,580



Three Months Ended December 31, 2017	Beginning Allowance		Charge-offs			Recoveries		Provision & Transfers			Ending Allowance
	(In thousands)
Single-family residential	$	36,892	$	(461	)	$	121	$	(624	)	$	35,928
Construction	24,556		—			—		658			25,214
Construction - custom	1,944		(50		)	—		158			2,052
Land - acquisition & development	6,829		—			3,372		(2,846		)	7,355
Land - consumer lot loans	2,649		(47		)	—		304			2,906
Multi-family	7,862		—			—		42			7,904
Commercial real estate	11,818		—			—		(193		)	11,625
Commercial & industrial	28,524		(116		)	55		805			29,268
HELOC	855		—			—		(47		)	808
Consumer	1,144		(78		)	286		2,743			4,095
	$	123,073	$	(752	)	$	3,834	$	1,000		$	127,155



Three Months Ended December 31, 2016	Beginning Allowance		Charge-offs			Recoveries		Provision & Transfers			Ending Allowance
	(In thousands)
Single-family residential	$	37,796	$	(115	)	$	151	$	374		$	38,206
Construction	19,838		—			—		2,096			21,934
Construction - custom	1,080		—			—		30			1,110
Land - acquisition & development	6,023		(20		)	4,018		(3,356		)	6,665
Land - consumer lot loans	2,535		(17		)	70		(87		)	2,501
Multi-family	6,925		—			—		704			7,629
Commercial real estate	8,588		(11		)	356		1,235			10,168
Commercial & industrial	28,008		(58		)	725		(939		)	27,736
HELOC	813		(37		)	1		55			832
Consumer	1,888		(146		)	379		(446		)	1,675
	$	113,494	$	(404	)	$	5,700	$	(334	)	$	118,456



December 31, 2017	Loans Collectively Evaluated for Impairment						Loans Individually Evaluated for Impairment
	Allowance Allocation		Recorded Investment of Loans		Ratio		Allowance Allocation		Recorded Investment of Loans		Ratio
	(In thousands)						(In thousands)
Single-family residential	$	35,928	$	5,676,565	0.6	%	$	—	$	24,083	—	%
Construction	25,214		851,800		3.0		—		364		—
Construction - custom	2,052		292,255		0.7		—		—		—
Land - acquisition & development	7,355		110,884		6.6		—		1,376		—
Land - consumer lot loans	2,906		97,291		3.0		—		416		—
Multi-family	7,899		1,311,943		0.6		5		730		0.7
Commercial real estate	11,519		1,389,749		0.8		106		27,535		0.4
Commercial & industrial	28,744		1,108,961		2.6		524		11,694		4.5
HELOC	808		134,320		0.6		—		620		—
Consumer	4,095		219,784		1.9		—		70		—
	$	126,520	$	11,193,552	1.1	%	$	635	$	66,888	0.9	%




December 31, 2017	Recorded Investment		Unpaid Principal Balance		Related Allowance			Average Recorded Investment
	(In thousands)
Impaired loans with no related allowance recorded:
Single-family residential	$	20,405	$	21,860	$	—		$	20,864
Construction	969		969		—			485
Construction - custom	—		—		—			74
Land - acquisition & development	1,376		1,405		—			853
Land - consumer lot loans	300		375		—			254
Multi-family	250		254		—			195
Commercial real estate	16,372		21,720		—			14,631
Commercial & industrial	4,439		4,506		—			6,359
HELOC	620		747		—			555
Consumer	70		134		—			79
	44,801		51,970		—			44,349
Impaired loans with an allowance recorded:
Single-family residential	170,677		174,162		3,412			176,308
Land - acquisition & development	—		—		—			45
Land - consumer lot loans	7,405		7,776		—			7,677
Multi-family	480		480		5			487
Commercial real estate	11,910		12,755		106			13,495
Commercial & industrial	7,256		7,256		524			3,628
HELOC	1,356		1,435		—			1,542
Consumer	91		91		—			94
	199,175		203,955		4,047		(1)	203,276
Total impaired loans:
Single-family residential	191,082		196,022		3,412			197,172
Construction	969		969		—			485
Construction - custom	—		—		—			74
Land - acquisition & development	1,376		1,405		—			898
Land - consumer lot loans	7,705		8,151		—			7,931
Multi-family	730		734		5			682
Commercial real estate	28,282		34,475		106			28,126
Commercial & industrial	11,695		11,762		524			9,987
HELOC	1,976		2,182		—			2,097
Consumer	161		225		—			173
	$	243,976	$	255,925	$	4,047	(1)	$	247,625



	December 31, 2016								Three Months Ended December 31, 2016
	Level 1		Level 2		Level 3		Total		Total Gains (Losses)
	(In thousands)
Impaired loans (1)	$	—	$	—	$	3,353	$	3,353	$	(422	)
Real estate owned (2)	—		—		2,299		2,299		(241		)
Balance at end of period	$	—	$	—	$	5,652	$	5,652	$	(663	)


December 31, 2022	Derivative Assets					Derivative Liabilities
Interest rate contract purpose	Balance Sheet Location	Notional		Fair Value		Balance Sheet Location	Notional		Fair Value
	(In thousands)					(In thousands)
Client swap program hedges	Other assets	$	583,782	$	63,383	Other liabilities	$	583,782	$	63,383
Commercial loan fair value hedges	Other assets	39,661		2,447		Other liabilities	—		—
Mortgage loan fair value hedges	Other assets	470,000		33,986		Other liabilities	—		—
Borrowings cash flow hedges	Other assets	1,000,000		173,139		Other liabilities	—		—
		$	2,093,443	$	272,955		$	583,782	$	63,383


(In thousands)	December 31, 2022
Balance sheet line item in which hedged item is recorded	Carrying value of hedged items		Cumulative gain (loss) fair value hedge adjustment included in carrying amount of hedged items
Loans receivable (1) (2)	$	1,131,282	$	(35,958)
	$	1,131,282	$	(35,958)


(In thousands)	Three Months Ended December 31,
Amount of gain/(loss) recognized in AOCI on derivatives in cash flow hedging relationships	2022		2021
Interest rate contracts:
Pay fixed/receive floating swaps on borrowings cash flow hedges	$	(6,806)	$	6,446

Total pre-tax gain/(loss) recognized in AOCI	$	(6,806)	$	6,446


	Three Months Ended December 31, 2022				Three Months Ended December 31, 2021
	Interest income on loans receivable		Interest expense on FHLB advances		Interest income on loans receivable		Interest expense on FHLB advances
	(In thousands)				(In thousands)
Interest income/(expense), including the effects of fair value and cash flow hedges	$	203,946	$	(18,974)	$	138,509	$	(7,843)

Gain/(loss) on fair value hedging relationships:
Interest rate contracts
Amounts related to interest settlements on derivatives	$	3,167			$	(1,371)
Recognized on derivatives	(2,849)				4,500
Recognized on hedged items	3,132				(4,475)
Net income/(expense) recognized on fair value hedges	$	3,450			$	(1,346)

Gain/(loss) on cash flow hedging relationships:
Interest rate contracts
Amounts related to interest settlements on derivatives			$	7,274			$	2,021
Amount of derivative gain/(loss) reclassified from AOCI into interest income/expense			—				—
Net income/(expense) recognized on cash flow hedges			$	7,274			$	2,021


(In thousands)		Three Months Ended December 31,
Derivative instruments	Classification of gain/(loss) recognized in income on derivative instrument	2022		2021
Interest rate contracts:
Pay fixed/receive floating swap	Other noninterest income	$	(3,878)	$	5,039
Receive fixed/pay floating swap	Other noninterest income	3,878		(5,039)
		$	—	$	—



	Asset Derivatives						Liability Derivatives
	December 31, 2017			September 30, 2017			December 31, 2017			September 30, 2017
	Balance Sheet			Balance Sheet			Balance Sheet			Balance Sheet
	Location	Fair Value		Location	Fair Value		Location	Fair Value		Location	Fair Value
	(In thousands)
Interest rate contracts	Other assets	$	7,587	Other assets	$	1,139	Other liabilities	$	7,587	Other liabilities	$	1,139
Commercial loan hedges	Other assets	—		Other assets	—		Other liabilities	36		Other liabilities	174
Borrowings hedges	Other assets	4,997		Other assets	—		Other liabilities	—		Other liabilities	1,693
		$	12,584		$	1,139		$	7,623		$	3,006


	Three Months Ended December 31, 2022						Three Months Ended December 31, 2021
	Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
	($ in thousands)						($ in thousands)
Assets
Loans receivable	$	16,580,235	$	203,946	4.88	%	$	14,297,907	$	138,509	3.84	%
Mortgage-backed securities	1,368,759		10,613		3.08		925,028		4,792		2.06
Cash & Investments	1,592,201		17,486		4.36		3,207,877		5,783		0.72
FHLB & FRB stock	117,899		1,374		4.62		102,863		1,356		5.23
Total interest-earning assets	19,659,094		233,419		4.71	%	18,533,675		150,440		3.22	%
Other assets	1,500,892						1,272,163
Total assets	$	21,159,986					$	19,805,838

Liabilities and Equity
Interest-bearing customer accounts	$	12,611,624	$	31,646	1.00	%	$	12,530,492	$	8,461	0.27	%
FHLB advances	2,695,652		18,974		2.79		1,720,000		7,843		1.81
Other borrowings	—		—		—		—		—		—
Total interest-bearing liabilities	15,307,276		50,620		1.31	%	14,250,492		16,304		0.45	%
Noninterest-bearing customer accounts	3,245,264						3,188,223
Other liabilities	304,240						223,421
Total liabilities	18,856,780						17,662,136
Shareholders' equity	2,303,206						2,143,702
Total liabilities and equity	$	21,159,986					$	19,805,838
Net interest income/interest rate spread			$	182,799	3.40	%			$	134,136	2.77	%
Net interest margin (NIM)					3.69	%					2.87	%


	Actual				Minimum Capital Adequacy Guidelines		Minimum Well-Capitalized Guidelines
($ in thousands)	Capital		Ratio		Ratio		Ratio

December 31, 2022
Common Equity Tier I risk-based capital ratio:
The Company	$	1,674,182	9.92	%	4.50	%	NA
The Bank	1,805,270		10.70	%	4.50	%	6.50	%
Tier I risk-based capital ratio:
The Company	1,974,182		11.70	%	6.00	%	NA
The Bank	1,805,270		10.70	%	6.00	%	8.00	%
Total risk-based capital ratio:
The Company	2,182,479		12.93	%	8.00	%	NA
The Bank	2,013,566		11.94	%	8.00	%	10.00	%
Tier 1 Leverage ratio:
The Company	1,974,182		9.41	%	4.00	%	NA
The Bank	1,805,270		8.61	%	4.00	%	5.00	%

September 30, 2022
Common Equity Tier 1 risk-based capital ratio:
The Company	$	1,613,075	9.86	%	4.50	%	NA
The Bank	1,781,932		10.89	%	4.50	%	6.50	%
Tier I risk-based capital ratio:
The Company	1,913,075		11.69	%	6.00	%	NA
The Bank	1,781,932		10.89	%	6.00	%	8.00	%
Total risk-based capital ratio:
The Company	2,117,574		12.94	%	8.00	%	NA
The Bank	1,986,434		12.14	%	8.00	%	10.00	%
Tier 1 Leverage ratio:
The Company	1,913,075		9.51	%	4.00	%	NA
The Bank	1,781,932		8.86	%	4.00	%	5.00	%


	December 31, 2022				September 30, 2022				Change
	($ in thousands)				($ in thousands)				$		%
Commercial loans
Multi-family	$	2,713,331	13.4	%	$	2,645,801	13.7	%	$	67,530	2.6	%
Commercial real estate	3,237,073		16.0		3,133,660		16.2		103,413		3.3
Commercial & industrial	2,628,131		13.0		2,350,984		12.1		277,147		11.8
Construction	4,055,474		20.0		3,784,388		19.5		271,086		7.2
Land - acquisition & development	253,682		1.2		291,301		1.5		(37,619)		(12.9)
Total commercial loans	12,887,691		63.6		12,206,134		63.0		681,557		5.6
Consumer loans
Single-family residential	6,013,410		29.7		5,771,862		29.8		241,548		4.2
Construction - custom	926,126		4.6		974,652		5.0		(48,526)		(5.0)
Land - consumer lot loans	148,246		0.7		153,240		0.8		(4,994)		(3.3)
HELOC	212,123		1.0		203,528		1.0		8,595		4.2
Consumer	73,115		0.4		75,543		0.4		(2,428)		(3.2)
Total consumer loans	7,373,020		36.4		7,178,825		37.0		194,195		2.7
Total gross loans	20,260,711		100	%	19,384,959		100	%	875,752		4.5
Less:
Allowance for credit losses on loans	176,797				172,808				3,989		2.3
Loans in process	2,997,839				3,006,023				(8,184)		(0.3)
Net deferred fees, costs and discounts	92,487				92,564				(77)		(0.1)
Total loan contra accounts	3,267,123				3,271,395				(4,272)		(0.1)
Net loans	$	16,993,588			$	16,113,564			$	880,024	5.5	%


	December 31, 2022					September 30, 2022
	($ in thousands)
Troubled debt restructured loans:
Multi - family	$	5,937		10.7	%	$	6,044		10.6	%
Commercial real estate	2,139			3.9		2,166			3.8
Commercial & industrial	1			—		1			—
Construction	—			—		—			—
Land - acquisition & development	—			—		—			—
Single-family residential	45,786			82.5		46,902			82.5
Construction - custom	—			—		—			—
Land - consumer lot loans	1,542			2.8		1,590			2.8
HELOC	82			0.1		83			0.1
Consumer	28			0.1		31			0.1
Total restructured loans (1)	$	55,515		100	%	$	56,817		100	%
Non-accrual loans:
Multi - family	$	5,879		20.1	%	$	5,912		17.1	%
Commercial real estate	4,635			15.9		4,691			13.6
Commercial & industrial	906			3.1		5,693			16.5
Construction	—			—		—			0.1
Land - acquisition & development	—			—		—			—
Single-family residential	17,084			58.5		17,450			50.5
Construction - custom	435			1.5		435			1.3
Land - consumer lot loans	71			0.2		84			0.2
HELOC	134			0.5		233			0.7
Consumer	36			0.1		36			0.1
Total non-accrual loans	29,180			100	%	34,534			100	%
Real estate owned	6,117					6,667
Other property owned	3,353					3,353
Total non-performing assets	$	38,650				$	44,554
Total non-performing assets and performing restructured loans as a percentage of total assets	0.43		%			0.48		%
Total Assets
(1) Restructured loans were as follows:
Performing	$	54,393		98.0	%	$	55,823		98.3	%
Non-performing (included in non-accrual loans above)	1,122			2.0		994			1.7
	$	55,515		100	%	$	56,817		100	%



	December 31, 2017					September 30, 2017
	(In thousands)
Restructured loans:
Single-family residential	$	170,601		85.7	%	$	181,941		87.8	%
Land - acquisition & development	—			—		90			—
Land - consumer lot loans	7,405			3.7		7,949			3.8
Multi - family	480			0.2		493			0.2
Commercial real estate	11,910			6.0		15,079			7.3
Commercial & industrial	7,256			3.6		—			—
HELOC	1,432			0.7		1,728			0.8
Consumer	91			—		97			—
Total restructured loans (1)	$	199,175		100	%	$	207,377		100	%

Non-accrual loans:
Single-family residential	$	26,219		57.6	%	$	27,930		56.3	%
Construction	364			0.8		—			—
Construction - custom	—			—		91			0.2
Land - acquisition & development	1,326			2.9		296			0.6
Land - consumer lot loans	976			2.1		605			1.2
Multi-family	250			0.5		139			0.3
Commercial real estate	8,241			18.1		11,815			23.8
Commercial & industrial	7,596			16.7		8,082			16.3
HELOC	476			1.0		531			1.1
Consumer	72			0.2		91			0.2
Total non-accrual loans (2)	45,520			100	%	49,580			100	%
Real estate owned	17,928					20,658
Total non-performing assets	$	63,448				$	70,238
Total non-performing assets and performing restructured loans as a percentage of total assets	1.65		%			1.79		%

(1) Restructured loans were as follows:
Performing	$	194,359		97.6	%	$	202,272		97.5	%
Non-performing (included in non-accrual loans above)	4,816			2.4		5,105			2.5
	$	199,175		100	%	$	207,377		100	%


											Comparison of Three Months Ended 12/31/2022 and 12/31/2021
	Comparison of Three Months Ended 12/31/17 and 12/31/16
	Volume			Rate			Total
	(In thousands)
($ in thousands)										($ in thousands)	Volume		Rate		Total
Interest income:										Interest income:
Loans receivable	$	10,935		$	(1,259	)	$	9,676		Loans receivable	$	24,260	$	41,177	$	65,437
Mortgaged-backed securities	(81		)	4,191			4,110
Mortgage-backed securities										Mortgage-backed securities	2,862		2,959		5,821
Investments (1)	(2,401		)	1,631			(770		)	Investments (1)	(4,802)		16,523		11,721
All interest-earning assets	8,453			4,563			13,016			All interest-earning assets	22,320		60,659		82,979
Interest expense:										Interest expense:
Customer accounts	295			1,326			1,621			Customer accounts	55		23,130		23,185
FHLB advances and other borrowings	1,681			(2,869		)	(1,188		)	FHLB advances and other borrowings	5,691		5,440		11,131
All interest-bearing liabilities	1,976			(1,543		)	433			All interest-bearing liabilities	5,746		28,570		34,316
Change in net interest income	$	6,477		$	6,106		$	12,583		Change in net interest income	$	16,574	$	32,089	$	48,663


~~(1)~~	~~Includes interest on cash equivalents and dividends on FHLB & FRB stock~~



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan (1)	Maximum Number of Shares That May Yet Be Purchased Under the Plan at the End of the Period (2)
October 1, 2017 to October 31, 2017	74,453	$	34.79	74,453	1,826,502
November 1, 2017 to November 30, 2017	744,353	33.75		744,353	1,082,149
December 1, 2017 to December 31, 2017	328,564	34.30		328,564	753,585
Total	1,147,370	$	33.98	1,147,370	753,585


~~(2)~~	Shares remaining available reflects the impact of TARP warrants that have been repurchased for cash as management also counts these against the maximum number of shares that may be repurchased under the Plan.



(a)	Exhibits

	~~31.1~~	2.1		Agreement and Plan of Reorganization by and between Washington Federal, Inc. and Luther Burbank Corporation dated as of November 13, 2022 **
	10.1		WaFd Bank Deferred Compensation Plan *
	31.1		Section 302 Certification by the Chief Executive Officer *
	~~31.2~~	31.2		Section 302 Certification by the Chief Financial Officer *
	32	32		Section 906 Certification by the Chief Executive Officer and Chief Financial Officer *
	101		Financial Statements from the Company’s Form 10-Q for the three months ended December 31, ~~2017~~2021 formatted in iXBRL *
	104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). *
* Filed herewith ** Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the SEC upon request; provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any document so furnished.


February 3, 2023		/S/ CATHY E. COOPER
		CATHY E. COOPER Executive Vice President, Chief Consumer Banker & Acting Chief Executive Officer

~~January 25, 2018~~February 3, 2023		/S/ ~~BRENT~~KELLI J. ~~BEARDALL~~ HOLZ
		~~BRENT~~KELLI J. ~~BEARDALL~~ ~~President & Chief Executive Officer~~

~~January 25, 2018~~	/S~~/ VINCENT L. BEATTY~~
	~~VINCENT L. BEATTY~~ HOLZ Executive Vice President and Chief Financial Officer

~~January 25, 2018~~	/S~~/ CORY D. STEWART~~
	~~CORY D. STEWART~~ ~~Senior Vice President and Principal Accounting Officer~~