Were the recent loan sales driven by specific characteristics, and are more sales planned?

The sales were opportunistic, leveraging the purchase accounting marks from the Luther Burbank portfolio for gains. While no immediate plans for further sales exist, the company remains opportunistic, especially considering the upcoming EverBank merger. “Obviously, these came from the Luther Burbank portfolio, the portfolios that were marked previously with purchase accounting. So that gave us the opportunity for the gain. And certainly, we're just looking at the market overall and what our opportunities are. And we don't have immediate plans, but we'll continue to think about what the future is with EverBank and nothing further to announce now, but we'll continue to be opportunistic as the way I would describe it.”

Are there any other significant, lumpy credits remaining within the $76 million nonaccrual balance?

Yes, there is one larger real estate loan of $40 million that is expected to be sold, leading to a full payoff. No other remaining credits are anticipated to result in significant losses like the one incurred this quarter. “Yes. Thank you, Jeff. There are still some larger credits. We have one larger real estate loan that we do actually anticipate will be sold -- we have a property that is in the process of being sold anticipating the full payoff. So we do still have some larger credits that are adversely classified, but nothing that, from my perspective, would represent anything as a significant loss like what we incurred with the other relationship that we discussed.”

What is the expected expense run rate going forward, excluding the merger charges?

The core expense run rate for the quarter was about $115 million, which included some year-end cleanup items. While some moderation might occur, the company continues to invest in talent, so $115 million is a fair number for modeling. “Yes. I would signal what I just said. We had some cleanup there. but we're continuing to be opportunistic in terms of bringing on talent in terms of teams. So I don't want to preclude that. So I think that number is a fair number to use new models.”

WAFD

WaFd (WAFD) Q4 FY26 earnings call: guidance and Q&A

Earnings call· Sep 2026 (Q4 FY26)· Financials· Oct 16, 2026

Source: earnings call transcript

Executive summary

WaFd Q4 FY26 — Strong Loan Growth and Credit Resolution Ahead of EverBank Merger

WaFd concluded its fiscal year with robust active loan growth and improved credit quality metrics, despite significant charge-offs from a single C&I relationship and merger-related expenses. The company is actively preparing for its merger with EverBank, anticipated to close in Q1 CY27, aiming to leverage increased scale, technology investment, and a diversified business model to address evolving market dynamics.

Highlights

Adjusted EPS up 5% linked quarter and 10% year-over-year, excluding $6.2 million in merger expenses.
Active loan segments grew almost 8% for the quarter, with total production of $1.4 billion.
Net interest margin held steady at 2.81% quarter-over-quarter.
Core deposits increased to 81.8% of total deposits, up from 80.6% in the prior quarter.
Adversely classified loans decreased to 2.56% of net loans, and nonperforming assets decreased to $86 million or 0.32% of total assets.

Concerns

Incurred $6.2 million in merger-related expenses during the quarter.
Reported $39.2 million of net charge-offs, primarily due to a single large C&I problem relationship.
Noninterest-bearing deposits declined to 12.6% of total deposits.
Stock price is down 18.9% since the EverBank merger announcement, underperforming the NASDAQ Regional Bank Index by 10.6%.

Guidance & targets

Category	Target	Timeline	Confidence
Net interest margin	expand modestly high materiality	next couple of quarters	Medium
Capital ratios	in line with prior quarter ratios high materiality	Q4 · FY26	High
Loss rates	return to the norm historically medium materiality	going forward	Medium
Regulatory applications filing	file our proxy within the next 2 weeks high materiality	next 2 weeks	High
EverBank merger closing timeframe	first calendar quarter 2027 remains on track high materiality	Q1 · CY27	High
Risk-based capital ratios	significant bump high materiality	when new Basel rules get approved	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Active Loan Portfolio Includes commercial real estate, multifamily construction, land A&D, C&I, and consumer loans. Production was centered in C&I (44%), commercial real estate (20%), and construction (23%). Balance increase: $237 million QoQTotal production (Q4 FY26): $1.4 billionTotal production (FY26): $5.5 billionTotal production (FY25): $3.5 billionProduction growth (FY26 vs FY25): 56.6%	—	—	—	—
Inactive Loan Portfolio Advances were $24 million, and repayments and payoffs were $249 million for the quarter. Balance decrease: $267 million QoQ	—	—	—	—

WAFD operating KPIs by quarter

WAFD operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Jun 2026 Q3 FY26	This call Sep 2026 Q4 FY26	Change vs prior quarter
Net interest margin	2.81% As a result, the net interest margin held steady at 2.81%, no change from the March 31 quarter. Source: earnings call transcript	2.81% As a result, the net interest margin held steady at 2.81%, no change from the June 30, 2026 quarter. Source: earnings call transcript	0 pt
Efficiency ratio	53.7% The company's efficiency ratio for the June quarter was 53.7% compared to 55.7% in the prior quarter. Source: earnings call transcript	55.12% The company's efficiency ratio for the September quarter was 55.12% compared to 53.7% in the prior quarter. Source: earnings call transcript	+1.4 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

EverBank Strategic merger to create a stronger, more diversified bank.

Announced on September 7, 2026. Regulatory applications filed, proxy expected within two weeks. Aims to address hyper-competition for deposits, leverage technology and scale, and adapt to growth of non-depository financial institutions.

Risks & headwinds

Economic uncertainty ongoing

Impacts borrower top-line revenue and operating costs

Mitigation:Consistent underwriting and moderate risk profile management.

Elevated interest rate environment ongoing

Impacts borrowers' cost of debt

Mitigation:Anticipated NIM expansion as assets reprice faster than liabilities.

Hypercompetitive deposit market ongoing

Largest 25 banks grew deposits by 6.8% YTD, while others struggled to grow net deposits.

Mitigation:EverBank merger to change business model, reducing reliance on noninterest-bearing deposit growth and allowing for fair deposit rates while maintaining returns.

Decline in noninterest-bearing deposits ongoing

Noninterest-bearing deposits declined to 12.6% of total deposits.

Mitigation:EverBank merger to enable a business model less reliant on noninterest-bearing deposit growth.

Technology and scale disadvantage ongoing

Favors larger banks that can spread technology costs over a larger base.

Mitigation:EverBank merger will make the combined entity approximately 3x larger, enabling greater investment in technology.

Traditional banking done outside the banking system ongoing

Vast majority of C&I growth in loans to non-depository financial institutions (NDFIs).

Mitigation:EverBank has a strong team serving the NBFI market, turning competition into clients for the combined entity.

Stock underperformance post-merger announcement since Sep 7, 2026

Stock down 18.9% since announcement, 10.6% worse than NASDAQ Regional Bank Index (down 8.3%).

Mitigation:Focus on executing the merger plan to demonstrate accretive shareholder value, aiming to be part of the 1/3 of bank deals that are accretive.

What to watch in Q1 FY27

EverBank merger closing

Q1 CY27

Current On track for Q1 CY27

Target Merger closed

Why it matters

The merger is a transformative event expected to significantly alter the company's scale, business model, and financial profile.

Our previously announced expected closing time frame of the first calendar quarter 2027 remains on track.

Find out whether WAFD delivers this. Inve re-checks your case every morning.

Q&A highlights

When were the single-family and multifamily loan sales completed/moved to held for sale, and what were their average yields?

The single-family sale closed at the end of September with an average yield of 4.25%-4.40%. The multifamily loans were moved to held for sale on the last day of the quarter with a 4.8% yield and are expected to close in December.

“We closed on the single-family sale towards the end of September, so right at the end of the quarter, and we signed our purchase and sale agreement on the multifamily sale actually on the last day of the quarter. 2026. The single-family is reflective of a rate in the 4.25% 4.30%, 4.40% range on average in the single multifamily bucket that is held for sale is in about 4.8% today.”

asked by Jeff Rulis · answered by Kelli Holz

2 min read 5 chapters

Detailed narrative

Fiscal Year Performance Highlights

WaFd delivered its second-best year ever in terms of after-tax net income, reaching $241 million, which translated to $3.21 diluted EPS for fiscal year 2026, a significant increase from $2.63 in FY25. This strong performance was achieved amidst an eventful year, culminating in the announced strategic merger with EverBank, positioning the company for future growth and adaptation.

Strategic Loan Portfolio Management

The company strategically managed its loan portfolio by selling $543 million of single-family residential loans and reclassifying $429 million of multifamily loans as held for sale, with an expected net gain of $7 million from the latter. This move aims to reduce exposure to inactive loan types and reallocate capital towards funding higher-yielding loan origination pipelines, aligning with a shifting strategy to optimize asset yields.

Credit Quality Trends and Resolution

Despite a notable $39.2 million in net charge-offs during the quarter, primarily stemming from a $54 million C&I problem relationship, overall credit quality metrics showed improvement. Adversely classified loans decreased to 2.56% of net loans, and nonperforming assets fell to $86 million or 0.32% of total assets.

Management expressed confidence that loss rates are expected to return to historical norms following the resolution of this significant credit.

Rationale for EverBank Merger

The merger with EverBank is presented as a transformative step to address fundamental changes in the banking landscape, including intense competition for deposits, the critical role of technology and scale, and the increasing prevalence of non-depository financial institutions. The combined entity aims to achieve a 3% margin and a nearly 15% return on tangible common equity, enhancing its ability to compete and deliver shareholder value.

Historical Precedent for Strategic Transformation

Brent Beardall drew a parallel to WaFd's bold decision in 1982 to restructure its balance sheet by selling $44 million in underwater single-family loans (equivalent to $1.1 billion today), which had an 8.75% rate. This historical move, though incurring a loss, repositioned the bank for profitable growth.

The EverBank merger is viewed as a similar strategic initiative to fair value the balance sheet and convert existing weaknesses into future strengths.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.