What the changes say
- Strategic focus shifted toward commercial, small-business and SBA lending as WaFd exits single-family mortgage lending.
- Regulatory and supervisory risks increased, including the FDIC’s “Needs to Improve” CRA rating and renewed BSA/AML emphasis.
- Natural disasters and western-state concentration receive more attention, while pandemic-specific and merger-integration risks were removed.
- Dividend capacity remains dependent on the Bank’s earnings, capital and regulatory limits, with Series A Preferred Stock senior to common stock.
What changed since the prior 10-K
New
- NewOperational Risks
Changes in our business operations and divestitures of lines of business may not be successful, resulting in a negative impact on our operating results and financial condition
WaFd may not achieve expected savings or growth from strategic changes, including exiting single-family mortgages to focus on commercial, small-business and SBA loans.
- NewOperational Risks
Our business is subject to the risks of pandemics, earthquakes, tsunamis, floods, fires and other natural catastrophic events and other events beyond our control
Earthquakes, wildfires, tsunamis, floods, fires, pandemics or other catastrophes could disrupt WaFd and customers across its concentrated nine-state western footprint.
- NewRegulatory and Litigation Risks
Our “Needs to Improve” rating under the Community Reinvestment Act (“CRA”) may restrict our operations and limit our ability to pursue certain strategic opportunities
The Bank’s FDIC “Needs to Improve” CRA rating could restrict mergers, acquisitions, branch expansion or relocation, and remove expedited application processing.
- NewRegulatory and Litigation Risks
Financial institutions are required under the USA PATRIOT Act of 2001 (the “Patriot Act”) and Bank Secrecy Act ("BSA") to develop programs to prevent financial institutions from being used for money-laundering and terrorist activities
Past BSA/AML and HMDA consent orders show that compliance failures could bring major expenses, civil penalties and further enforcement.
- NewRegulatory and Litigation Risks
Changes in laws, regulations, government policy, oversight or increased enforcement activities by regulatory agencies may increase our costs and adversely affect our business and operations
Changing laws, presidential administrations, CFPB operations, Federal Reserve appointments and enforcement priorities could raise costs, restrict lending or limit growth.
- NewRegulatory and Litigation Risks
FDIC insurance premiums are risk based and, accordingly, higher premiums are charged to banks that have lower capital ratios or higher risk profiles. As a result, a decrease in the Bank’s capital ratios, or a negative evaluation by the FDIC, may increase the Bank’s net funding cost and reduce its earnings
Lower capital ratios, unfavorable FDIC evaluations, higher assessment rates or future special assessments could increase funding costs and reduce earnings.
- NewSecurity Ownership Risks
Our ability to pay dividends is subject to limitations that may affect our ability to continue to pay dividends to The Company is a separate legal entity from the bank subsidiary and does not have significant operations of its own
The holding company may be unable to pay common or preferred dividends if the Bank lacks sufficient earnings or capital; Series A Preferred Stock ranks senior to common stock.
Dropped
- DroppedOperational Risks
On March 1, 2024, the Company closed the Merger with Luther Burbank
- DroppedOperational Risks
Current uncertain economic conditions pose challenges, and could adversely affect our business, financial condition and results of operations
- DroppedOperational Risks
Our allowance for credit losses ("ACL") may not be adequate to cover future loan losses, which could adversely affect our financial condition and results of operations
- DroppedOperational Risks
Climate change could adversely affect our business, affect client activity levels and damage our reputation
Integration of WaFd and Luther Burbank and realization of merger cost savings.
- DroppedOperational Risks
The spread of COVID-19 created a global public-health crisis that resulted in significant economic uncertainty, and impacted household, business, economic, and market conditions across the world, including in the western United States where we conduct nearly all of our business
Uncertain economic conditions, inflation, supply-chain issues, labor shortages, debt concerns and recession risks.
- DroppedRegulatory and Litigation Risks
Failure to comply with the 2020 and 2013 Consent Orders from the Consumer Financial Protection Bureau regarding our Home Mortgage Disclosure Act submissions could result in additional regulatory enforcement action
- DroppedRegulatory and Litigation Risks
Recent national and state legislation and regulatory initiatives to support the financial services industry have been coupled with numerous restrictions and requirements that could detrimentally affect our business
- DroppedRegulatory and Litigation Risks
Deposit insurance premiums could increase further in the future
Whether the allowance for credit losses adequately covers loan defaults and collateral shortfalls.
- DroppedMarket and Industry Risks
Our liquidity may be adversely impacted by issues arising from certain industry deficiencies in foreclosure practices, including delays and challenges in the foreclosure process
- DroppedMarket and Industry Risks
Company's Statement of Financial Condition as goodwill
- DroppedSecurity Ownership Risks
Our ability to pay dividends is subject to limitations that may affect our ability to continue to pay dividends to shareholders
- DroppedSecurity Ownership Risks
Our 4.875% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A (“Series A Preferred Stock”) ranks senior to our Common Stock, and we are prohibited from paying dividends on our Common Stock unless we have paid dividends on our Series A Preferred
- DroppedSecurity Ownership Risks
The Company’s business or the value of its common shares could be negatively affected as a result of actions by activist shareholders
Reworded
- 79% rewrittenMarket and Industry Risks
Impairment of goodwill may adversely impact future results of operations
The discussion now emphasizes the Company’s significant goodwill balance, annual impairment testing and valuation factors including stock price, cash flows and comparable acquisitions.
- 75% rewrittenOperational Risks
If we are not able to retain or attract key employees, or if we were to suffer the loss of a significant number of employees, we could experience a disruption in our business
No substantive change; the risk still concerns disruption from losing or failing to attract key employees.
- 72% rewrittenOperational Risks
Inflationary pressures and rising prices may affect our results of operations and financial condition
The update says inflation remained above target in 2025, adds tariff uncertainty and warns that further rate cuts could worsen inflation.
- 50% rewrittenOperational Risks
We are subject to complex state and federal laws, rules, regulations and standards regarding data privacy and cybersecurity, which impact how we conduct our business
No substantive change; the risk still covers evolving privacy rules, incident notifications and responsibility for third-party providers.
- 45% rewrittenOperational Risks
Fluctuating interest rates could adversely affect our business
The risk now centers on net interest income and cash flows, asset-and-funding management, and the consequences of ineffective interest-rate risk management.
- 45% rewrittenCompetitive Risks
We rely, in part, on external financing to fund our operations and the unavailability of such funding in the future could adversely impact our growth and prospects
The update adds core deposits as a low-cost, stable funding source but omits the prior discussion of seeking additional debt and financing availability.
- 42% rewrittenOperational Risks
The development and use of Artificial Intelligence (“AI”) presents risks and challenges that may adversely impact our business
The focus shifts from AI’s evolving legal and regulatory risks to implementing AI, including agentic AI, to meet client demands and improve efficiency.
- 36% rewrittenCompetitive Risks
Our entry into California may present increased risk that may adversely impact our business, prospects and financial condition
The risk removes reliance on retaining Luther Burbank employees and broadens competition to larger banks, fintechs and other financial-service providers.
- 36% rewrittenOperational Risks
Changes to monetary policy by the Federal Reserve could adversely impact our results of operations
- 27% rewrittenSecurity Ownership Risks
The market price for our Common Stock may be volatile
- 26% rewrittenRegulatory and Litigation Risks
We operate in a highly regulated industry, which limits the manner and scope of our business activities
All 33 risk factors
Headings as the filing states them, in filing order.
Operational Risks
- 01Fluctuating interest rates could adversely affect our business45% rewritten
- 02We are exposed to risks related to fraud and cyber-attacks
- 03Changes in our business operations and divestitures of lines of business may not be successful, resulting in a negative impact on our operating results and financial conditionNew
- 04Changes to monetary policy by the Federal Reserve could adversely impact our results of operations36% rewritten
- 05Unstable global economic conditions may have serious adverse consequences on our business, financial condition, and operations
- 06Inflationary pressures and rising prices may affect our results of operations and financial condition72% rewritten
- 07The development and use of Artificial Intelligence (“AI”) presents risks and challenges that may adversely impact our business42% rewritten
- 08We are exposed to risks related to our operational, technological, and third-party provided technology infrastructure
- 09We are subject to complex state and federal laws, rules, regulations and standards regarding data privacy and cybersecurity, which impact how we conduct our business50% rewritten
- 10Our risk management framework may not be effective in mitigating risks and losses to us
- 11If we are not able to retain or attract key employees, or if we were to suffer the loss of a significant number of employees, we could experience a disruption in our business75% rewritten
- 12Our business is subject to the risks of pandemics, earthquakes, tsunamis, floods, fires and other natural catastrophic events and other events beyond our controlNew
Regulatory and Litigation Risks
- 13Our “Needs to Improve” rating under the Community Reinvestment Act (“CRA”) may restrict our operations and limit our ability to pursue certain strategic opportunitiesNew
- 14Financial institutions are required under the USA PATRIOT Act of 2001 (the “Patriot Act”) and Bank Secrecy Act ("BSA") to develop programs to prevent financial institutions from being used for money-laundering and terrorist activitiesNew
- 15We operate in a highly regulated industry, which limits the manner and scope of our business activities26% rewritten
- 16Changes in laws, regulations, government policy, oversight or increased enforcement activities by regulatory agencies may increase our costs and adversely affect our business and operationsNew
- 17FDIC insurance premiums are risk based and, accordingly, higher premiums are charged to banks that have lower capital ratios or higher risk profiles. As a result, a decrease in the Bank’s capital ratios, or a negative evaluation by the FDIC, may increase the Bank’s net funding cost and reduce its earningsNew
- 18We are subject to various claims and litigation, which could result in significant expenses, losses and damage to our reputation
- 19Our real estate lending also exposes us to the risk of environmental liabilities
Market and Industry Risks
- 20Recent negative developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system
- 21A downturn in the real estate market would hurt our business
- 22Changes in retail distribution strategies and consumer behavior may adversely impact our business, financial condition and results of operations
- 23We may suffer losses in our loan portfolio due to inadequate or faulty underwriting and loan collection practices
- 24Our operations are focused in the western United States, subjecting us to the risks of general economic conditions in these market areas
- 25Impairment of goodwill may adversely impact future results of operations79% rewritten
Competitive Risks
- 26The Bank faces strong competition from other financial institutions and new market participants, offering services similar to those offered by the Bank
- 27We rely, in part, on external financing to fund our operations and the unavailability of such funding in the future could adversely impact our growth and prospects45% rewritten
- 28We may not be able to continue to grow organically or through acquisitions
- 29Our entry into California may present increased risk that may adversely impact our business, prospects and financial condition36% rewritten
Security Ownership Risks
- 30Our ability to pay dividends is subject to limitations that may affect our ability to continue to pay dividends to The Company is a separate legal entity from the bank subsidiary and does not have significant operations of its ownNew
- 31The market price for our Common Stock may be volatile27% rewritten
- 32There may be future sales or other dilution of the Company's equity, which may adversely affect the market price of our Common Stock or depositary shares
- 33A person holding our Common Stock could have the voting power of their shares of Common Stock on all matters significantly reduced under Washington's anti-takeover statutes, if the person acquires 10% or more of the voting stock of the Company
Other WAFD 10-Ks
- FY2024 10-K risk factors40 risks
WaFd’s risk profile is heavily shaped by its recent acquisition of Luther Burbank and entry into the California market. Regional economic conditions in the western United States and real estate lending concentration dominate operational risks. Regulatory compliance, particularly with CFPB consent orders and data privacy laws, remains a key focus.
Filed Nov 20, 2024
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.