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DATE

Friday, Oct. 16, 2026

CALL PARTICIPANTS

  • Chief Marketing Officer and Investor Relations Manager - Brad Goode
  • President and CEO - Brent Beardall
  • Chief Financial Officer - Kelli Holz
  • Chief Credit Officer - Ryan Mauer

TAKEAWAYS

  • Net Income -- $241.2 million for the full fiscal year ended September 30, 2026, representing the second-highest annual result in company history.
  • Earnings Per Share -- $0.76 for the fourth quarter, compared to $0.72 in the prior-year period.
  • Merger Expenses -- $6.2 million incurred during the fourth quarter, reflecting costs related to the pending acquisition of EverBank.
  • Loan Sales -- $543 million of single-family residential loans sold during the fourth quarter, with an additional $429 million of multifamily loans reclassified as held for sale.
  • Non-Interest Income -- $38.1 million in the fourth quarter, driven by a $16.4 million gain on the sale of single-family loans.
  • Loan Portfolio Balance -- $977 million decrease in total loans receivable during the quarter, primarily reflecting the impact of loan sale activity.
  • Net Interest Margin -- 2.81% for the quarter, remaining steady compared to the quarter ended June 30, 2026.
  • Deposit Growth -- $389 million increase in total deposits during the quarter, led by a $259 million rise in time deposits.
  • Loan Originations -- $1.4 billion in the fourth quarter, with a weighted average rate at origination of 6.87%.
  • Net Charge-offs -- $39.2 million in the fourth quarter, reflecting the resolution of a $54 million commercial and industrial loan relationship.
  • Non-Performing Assets -- $86 million, or 0.32% of total assets, representing a decrease from $136 million at the end of the previous quarter.
  • Efficiency Ratio -- 55.12% for the fourth quarter, compared to 53.7% in the third quarter.
  • CET1 Capital Ratio -- 11.4% as of September 30, 2026, maintaining a strong capital profile according to management.
  • Total Risk-Based Capital Ratio -- 14.4% at the end of the fiscal year.
  • Liquidity -- $4.2 billion of on-balance sheet liquidity, supported by a core funding base and off-balance sheet borrowing capacity.
  • Loan-to-Deposit Ratio -- 89.3% at quarter end, decreasing from the prior period due to the single-family loan sale.
  • EPS Accretion -- 29% expected earnings per share accretion from the EverBank merger once cost savings are fully realized.
  • Pro Forma Return -- 15% targeted return on tangible common equity for the merged entity assuming a 3% margin.
  • Merger Timeline -- First calendar quarter of 2027 remains the target for closing the EverBank partnership, pending regulatory and shareholder approvals.

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RISKS

  • Mauer stated, "The economic uncertainty driven by continued inflationary pressures, energy supply shocks driven by the war in the Middle East, and tariffs will continue to impact the borrower's top-line revenue results as well as operating costs," noting potential headwinds for credit quality.
  • Mauer noted that the "elevated interest rate environment has impacted the borrower's cost of debt," which may continue to pressure borrowers across the industry.
  • Beardall identified a "hyper-competitive market for deposits where the playing field is imbalanced towards the largest banks," noting that smaller institutions have struggled to grow net deposits organically.

SUMMARY

WaFd, Inc. (WAFD -1.02%) reported financial results for the fiscal year ended September 30, 2026, which leadership identified as the second-highest year for after-tax net income in company history. Management stated that the fourth quarter was characterized by significant strategic movements, including the sale of a large single-family residential loan portfolio and the reclassification of multifamily loans as held for sale. The company reported that these actions are intended to reposition the balance sheet by replacing lower-yielding assets with higher-yielding loan originations. Furthermore, the reporting period included the initial regulatory filings and integration planning for the pending merger with EverBank, which is expected to close in early 2027.

  • CEO Beardall noted that the merger with EverBank will increase the asset size of the company approximately threefold, providing the scale necessary to increase technology investments.
  • Management expects the net interest margin to expand over the next one to two quarters as assets reprice more quickly than liabilities in a rising rate environment.
  • The company is shifting its strategy to replace lower-yielding single-family loan runoff with higher-yielding loan originations, utilizing proceeds from loan sales to fund the pipeline.
  • CFO Holz stated that the company expects to recognize a net gain of approximately $7 million when the $429 million multifamily loan sale is finalized in the first quarter of fiscal 2027.
  • Chief Credit Officer Mauer reported that total criticized loans decreased by $99 million during the quarter to 4.7% of net loans, driven by the resolution of a large problem relationship.
  • Management stated that the pro forma bank will focus on the non-depository financial institution (NDFI) market, turning what was previously a competitive threat into a client base.
  • Beardall highlighted that organic deposit growth is increasingly concentrated in the 25 largest U.S. banks, stating, "The rest of us... have been unable to grow net deposits."

INDUSTRY GLOSSARY

  • CET1: Common Equity Tier 1 capital, a key regulatory measure of a bank's core equity capital compared to its total risk-weighted assets.
  • NIM: Net Interest Margin, the difference between the interest income earned by a bank and the amount of interest paid out to its lenders.
  • NDFI: Non-depository financial institutions, entities such as insurance companies or investment funds that provide financial services but do not accept deposits.
  • C&I: Commercial and Industrial loans, which are loans made to businesses rather than for individual or real estate purposes.
  • Accretion: An increase in earnings per share resulting from a merger or acquisition.
  • Criticized Loans: Loans that are showing signs of potential weakness and are under closer supervision by bank management and regulators.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the WaFd, Inc. fourth quarter and fiscal year 2026 earnings call. At this time, all participants are in a listen only mode. After the speaker's presentation, we'll open up for questions. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's call is being recorded. I would now like to hand it over to our first speaker, Brad Goode, Chief Marketing Officer and Investor Relations Manager. Please go ahead.

Brad Goode: Victor, thank you. Good morning, everybody. Happy Friday. Let's dive into our 2026 fourth quarter and full year earnings report. You can find that earnings press release, along with our detailed fact sheet and investor scorecard on our website at wafdbank.com. During today's call, we'll make forward-looking statements which are subject to risks and uncertainties and are intended to be covered by the safe harbor provisions of Federal securities law. Information on risk factors that could cause actual results to differ are available from the earnings press release that was released yesterday and the Form 10-K for the fiscal year ended September 30, 2025.

Forward-looking statements are effective only as of the date they are made, and WaFd assumes no obligation to update information concerning its expectations. We will also reference non-GAAP financial measures, and I encourage you to review the non-GAAP reconciliations provided in our earnings materials. Joining us this morning are President and CEO, Brent Beardall, Chief Financial Officer, Kelli Holz, and Chief Credit Officer, Ryan Mauer. I'd now like to hand the call over to Mr. Beardall.

Brent Beardall: Good morning and thank you for joining us. It has certainly been an eventful quarter and year for WaFd. During this call, we will focus primarily on the WaFd standalone results, and at the end of the call, I will provide my comments on the merger with EverBank that we announced on September 7 of this year. We closed out our fiscal year 2026 on a high note with earnings per share up 22% over the prior year. Adjusting for non-operating items, specifically the $6.2 million of merger expenses in the quarter, EPS would have been up by 5% on a linked quarter basis and up by 10% on the same quarter one year ago.

In what is likely to be our final fiscal year before we merge with EverBank, we are proud to deliver our second-best year ever in terms of after-tax net income of $241 million. This morning, we will cover four areas. First, Kelli Holz, our CFO, will provide you with a detailed review of the balance sheet and income statement for the quarter and year-end. Next, Ryan Mauer, our Chief Credit Officer, will provide comments on the current status of our loan portfolio and credit quality trends, including a detailed discussion of the large charge-off incurred this quarter. Then I will provide my thoughts on the quarter, the short-term outlook on earnings, and our long-term prospects partnering with EverBank.

Finally, we will answer any questions you have. Kelly, please walk us through the quarter and fiscal year-end results we published yesterday.

Kelli Holz: Thank you, Brent. As announced, WaFd, Inc. reported net income available to common shareholders of $56.3 million or $0.76 per diluted share for the quarter ended September 30, 2026. This compares to net income to common shareholders of $0.72 per share for the fourth quarter of fiscal 2025 and $0.84 per share for the June 2026 quarter. The decrease in EPS for the quarter was a result of a modest increase in net interest income, increased non-interest income from the loan sale activity, offset by an increased provision for loan losses and merger-related expenses. For the full year ended September 30, 2026, WaFd reported net income available to common shareholders of $241.2 million or $3.21 per diluted share.

This compares to net income to common shareholders of $2.63 per diluted share for fiscal year 2025. For the balance sheet, loans receivable decreased $977 million during the quarter as a result of the loan sale-related activity. The company sold $543 million of single-family residential loans during the quarter and has entered into an agreement to sell $429 million of multifamily loans in the first quarter of fiscal 2027. These multifamily loans have been reclassified as held for sale at September 30, 2026. We expect to realize a net gain of approximately $7 million when this sale is finalized.

Outside of the loan sale, active loan types, commercial real estate, multifamily, construction, land A&D, C&I, and consumer combined increased by $237 million for the quarter, while our inactive loan types decreased by $267 million. Loan originations and advances for the quarter outpaced repayments and payoffs for our active loan types, with originations of $1.4 billion and repayments and payoffs of $1 billion. For the inactive loan types, advances were $24 million, and repayments and payoffs were $249 million. The weighted average rate at origination was 6.87% for the quarter, and the weighted average rate on repayments and payoffs was 6.35%. Please see the tables in our fact sheet that provide a breakdown between our active and inactive loan types.

Total investments and mortgage-backed securities decreased $113 million during the quarter, a result of our shifting strategy, replacing the single family runoff in the loan portfolio from mortgage-backed securities to funding our higher yielding loan origination pipeline. Total deposits increased by $389 million during the quarter, with non-interest bearing deposits increasing $39 million or 1.5%, interest-bearing deposits increasing $91 million or 0.9%, and time deposits increasing $259 million or 3.2%. Core deposits ended the quarter at 81.8%, compared to the June quarter at 80.6% of total deposits, and up from September 2025 at 77.9%. Non-interest bearing deposits ended the quarter at 12.6% of total deposits.

The loan to deposit ratio decreased for the quarter ended September 2026 to 89.3%, primarily as a result of the loan sale activity. WaFd's capital profile remains strong. We expect our capital ratios to be in line with the prior quarter ratios, which was 11.4% for CET1, and 14.4% for the total risk-based capital ratio. Liquidity is strong with $4.2 billion of on-balance sheet liquidity, a robust core funding base, and significant off-balance sheet borrowing capacity. For the income statement, net interest income increased $1 million from the prior quarter. The effect of a 4 basis point improvement on the interest earned on assets, offset by a 7-point increase in the cost of interest paid on liabilities.

As a result, the net interest margin held steady at 2.81%, no change from the June 30, 2026 quarter. On a linked quarter comparison, the margin was benefited from a 2 basis point improvement with loan rates, a 3 basis point improvement with investment yields, a 1 basis point decrease with borrowing rates, and then impacted by a 6 basis point increase in the cost of deposits and 3 basis points for day count. The 92-day quarter compared to 91 days in June. 50% of our loans and 75% of our securities are on a 30/360 basis.

For the spot rate as of the September quarter end, the yield on interest earning assets was 5.21%, while the cost of interest-bearing liabilities was 2.87%, and the margin ended at 2.81%, the same as the margin for the September quarter. Absent any changes in interest rates, we expect our margin to expand modestly over the next quarter or two with the reduction in earning assets due to the loan sales, in addition to our earning assets repricing more quickly than our liabilities in the short term in a rising rate environment. As of September 30, the balance of deferred income on the interest rate mark for the Luther Burbank portfolio was $137 million.

During the September quarter, we recognized approximately $17 million of the discount through non-interest income with the sale of the single-family loan portfolio pool. Total non-interest income was $38.1 million for the September 2026 quarter, compared to $24.2 million for the prior quarter. This increase was primarily driven by a $16.4 million gain on the sale of single family loans during the quarter. This gain was partially offset by the quarter-over-quarter reduction in non-interest income attributable to the $3 million gain on the sale of bank real estate we recognized in the third quarter. Total non-interest expense was $121.5 million compared to $110.3 million for the June quarter.

This was the result of continued investments in our people and technologies, combined with $6.2 million in merger related costs incurred in the fourth quarter. The company's efficiency ratio for the September quarter was 55.12%, compared to 53.7% in the prior quarter. Income tax expense totaled $17.1 million for the September 2026 quarter, compared to $18.2 million for the June quarter. The effective tax rate for the September quarter was 22.17%, compared to 21.6% for the quarter ended June 30, 2026. The increase in the effective tax rate from the prior quarter was the result of merger related expenses incurred, which are not deductible for tax and create a discrete tax expense.

The effective tax rate for the fiscal year 2026 was 21.88%. I will now turn the call over to Ryan to share his comments on WaFd's credit quality.

Ryan Mauer: Thank you, Kelli, and good morning, everyone. As reflected in our earnings release, we had a solid quarter of new loan production along multiple product lines. As Kelli indicated, total production in our active portfolio was $1.4 billion for the September quarter. This loan production was centered in commercial and industrial of 44%, commercial real estate of 20%, and construction of 23%. We were able to achieve this level of loan production utilizing a consistent approach to underwriting and managing to a moderate risk profile. Total loan production in our active portfolio for fiscal year 2026 was $5.5 billion compared to $3.5 billion for the fiscal year 2025, a 56.6% increase year-over-year.

I would like to acknowledge the significant efforts of our WaFd colleagues in generating that level of growth in a challenging and highly competitive environment. Adversely classified loans during the quarter decreased to 2.56% of net loans, compared to 2.59% as of the June quarter 2026, and 3.16% as of September 2025. Total criticized loans decreased by $99 million to 4.7% of net loans, compared to 4.9% as of the June quarter, and 4.4% as of September 2025. The decrease in criticized loans is the result of an improvement of a large C&I relationship, as well as the resolution of a significant $54 million C&I problem relationship during the quarter.

This problem relationship was noted in our previous call with anticipation that the business would be sold prior to fiscal year-end. Ultimately, this relationship resulted in a large impairment well outside of our historical loss results. The loans in question were provided to a large private equity-owned manufacturer, and at the time of the issuance in 2021, the underwriting credit metrics for the borrower in terms of revenue, earnings, and cash flow all represented strong and stable growth. Further, pro forma leverage, a measure of funded debt to EBITDA, was very modest, well over one to one. However, operating results saw a material decline in 2023 and 2024 due to unfavorable operating conditions and the challenging economic environment.

This decline, coupled with the inability of ownership to contribute or raise additional capital, caused a negative spiral in working capital in 2025 and 2026, which in turn further impacted operating results. In the end, the company was unable to recover from this spiral and had to be sold to new ownership, resulting in a large impairment to the bank. It should be noted that this loss was significant for the bank and is well outside of our normalized loss history. Inclusive of this loss, the loss rate for fiscal year ending 9/30/2026 was 22 basis points. Adjusting for or excluding this loss at 9/30/2026 would have resulted in a loss rate of four basis points.

This compares with loss rates from prior two years ending 9/30/2025 and 9/30/2024 of six basis points and one basis point respectively. Going forward, we anticipate the loss rates to return to the norm historically. Non-performing assets decreased to $86 million, or 0.32% of total assets from $136 million or 0.49% at June 30, 2026. This change is centered in the resolution of the $54 million problem loan relationship noted previously. Delinquent loans decreased to 0.5% of total loans at September 30, 2026, compared to 0.75% at June 30, 2026 and 0.6% at September 30, 2025. The net provision for credit losses in the quarter was $20 million, compared to a provision of $11 million in the prior quarter.

The provision for loan losses in the fourth fiscal quarter of 2026 was the result of growth in the active loan portfolio and increased charge-offs during the quarter. $39.2 million of net charge-offs were taken during the quarter, inclusive of the problem loan mentioned previously. The allowance for credit losses, including the reserve for unfunded commitments, provides coverage of 1.04% of gross loans at September 30, 2026 and 2025. For the commercial loan portion of the portfolio, the allowance represents 1.37% of net loans, compared to 1.3% as of September 2025. Overall, we saw quarter-over-quarter improvements in adversely classified loans, criticized loans, non-performing assets, and delinquencies in the quarter.

While these metrics remain elevated when compared to historic norms, they remain at moderate levels overall and continue to be impacted by two primary drivers. First, the economic uncertainty driven by continued inflationary pressures, energy supply shocks driven by the war in the Middle East, and tariffs will continue to impact the borrower's top-line revenue results as well as operating costs. Second, the elevated interest rate environment has impacted the borrower's cost of debt. Looking forward, these factors will remain headwinds for credit quality in the industry. With that, I will turn the call over to Brent for his comments.

Brent Beardall: As you have just heard, the fundamentals of our business are doing very well. We produced almost 8% growth in our active loan segments, which is impressive to me considering the overall economy is growing at just 2.5%. Having resolved the large C&I credit quality measures are strong. Our loan and deposit pipelines are robust with $3 billion of loans, a 5% increase from the June quarter, and $240 million of deposits in our pipeline, a 6% decline from the June quarter. Our net promoter score remains in the top quartile of all banks at a 55.

Given the recent increase in short-term rates, we would expect our margin to expand over the next couple of quarters as assets will reprice more quickly than liabilities. We are likely to receive a significant bump in our risk-based capital ratios when the new Basel rules get approved. With all of that for context, the question I receive most often now is why did WaFd decide to partner with EverBank? I answer that question with a philosophical retort. How much is enough?

WaFd has had a remarkable run in the last 44 years as a public company, with total shareholder return of approximately 36,000% when the stock was at $36 a share, which is where we were trading immediately prior to the announcement. But just as we can look back with a great deal of pride, we need to guard ourselves and not let that turn into hubris going forward. There are plenty of examples of companies that failed to adapt or made the wrong changes, both inside of banking, think WaMu or First Republic, and outside of banking, for example, Sears, Blockbuster, or Palm. Those did not adjust to the market.

The reality from my perspective is the banking world has fundamentally changed over the last decade. Let me give three examples. First, today we operate in a hyper-competitive market for deposits where the playing field is imbalanced towards the largest banks. Evidence for this is in the Federal Reserve's H.8 data, which I've mentioned earlier, which shows that year-to-date, the largest 25 banks in the U.S. have grown deposits organically by 6.8%. The rest of us, and that's roughly 4,300 banks for those of you that are counting, have been unable to grow net deposits. That is a problem, and I don't see it changing, unfortunately.

Additionally, non-interest-bearing deposits, which have historically been the lifeblood of banks from a profitability standpoint, have declined in totality, and I believe will continue to decline as it is easier and easier to move funds to higher-yielding alternatives. Second, technology and scale matters. Primarily because scale allows you to invest more money in technology. This is great for our customers, but certainly favors larger banks that can spread the cost over a larger base. Third, more and more traditional banking is done outside of the banking system. If you look, the vast majority of bank C&I growth over the last decade has been in loans to these so-called non-depository financial institutions, NDFIs. I am convinced that this trend will continue.

Based on that perspective, how can WaFd not just compete, but compete and win going forward? I think the partnership with EverBank makes us stronger in addressing each of these three areas noted above. First, we are changing our business model so that we are not solely reliant on non-interest-bearing deposit growth to hit our return goals. Our pro forma bank, as shown in the investor presentation published on September 7th, shows that with a 3% margin, which would be in the lowest quartile of the peer group, we can achieve just shy of a 15% return on tangible common equity. To me, this is a game changer.

We can pay a fair rate for deposits and still deliver the needed returns to our shareholders, and we can do this through improved margins on our assets and operating in the top quartile of all banks from an efficiency standpoint. That is a long-term differentiator that I want to be a part of. Second, coming together with EverBank will make us approximately three times the size from an asset perspective that we are today and will enable us to use that scale to invest more in technology for both our clients and our teams. We already have a very strong digital offering, but I am convinced we will make further improvements.

Third, EverBank has built a very strong team to serve the NDFI market and do it in a way that we believe is well controlled from both an underwriting perspective and from an ongoing controls and monitoring. What today is our competition will become clients for us going forward. With this partnership, we will be able to address these fundamental risks and turn what was a weakness into a strength. Let me share one further why and how it relates to what WaFd has done historically.

If you go way back to 1982, before we went public, WaFd made the bold decision to restructure its balance sheet and sell a large portion of its single-family loans that were underwater from a rate perspective. Crazy to think that 8.75% mortgages at that time were underwater, but that was the case in 1982. They did this to position the bank for profitable growth going forward. At the time, we realized a loss that amounted to $44 million on those loan sales. To put that in perspective for WaFd today, $44 million was the equivalent of four years' earnings back then. Looking at the last four years today for WaFd, that would equate to $1.1 billion.

It was a bold move, but it paid off. WaFd in 1982 turned below-market-yielding assets into market-yielding assets, and the results were phenomenal. For the next decade, as WaFd significantly outperformed its peers, including ROAs up to 3%. While I am not forecasting that kind of ROA in our future, through this merger, we will be able to fair value the WaFd balance sheet, including the $6.6 billion of single-family residential loans that are today earning only 4.25%, and mark those loans to market rates. What was a weakness will become a strength. Importantly, we were able to do it with the following metrics.

9.8% pro forma CET1 at close, only 8% dilution to WaFd existing shareholders, and 29% EPS accretion to WaFd shareholders once the cost saves are fully realized. I believe this is a unique opportunity to make WaFd stronger and EverBank stronger. Most importantly, from my perspective, is we will do this without losing what makes WaFd great, our bankers and the ethos we have created over the last 109 years, believing we can make a difference one customer at a time. So where do we stand on the merger? Earlier this month, we filed our regulatory applications, and we expect to file our proxy within the next two weeks.

Our previously announced expected closing timeframe of the first calendar quarter 2027 remains on track. All of this is, of course, pending receipt of the requisite approvals from both shareholders and regulators. You have likely heard me say before that our research shows that roughly two-thirds of bank M&A is destructive to capital of the acquiring firm. Since we announced our deal, our stock is down 18.9%, while the Nasdaq Regional Bank Index is down 8.3%, roughly a 10% delta. You cannot argue with the market. We look forward to the opportunity to execute on our plan and demonstrate that we are part of the one-third of bank deals that are accretive to shareholder value.

Finally, I want to acknowledge all of the incredible bankers that call WaFd Bank home that make these results for the fiscal year 2026 possible. Our most valuable asset is our team. We have bankers that care and want to serve our clients. Thank you to our bankers. With that, we will move to Q&A.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1 on your telephone and wait for a name to be announced. To withdraw your question, please press star 1 again. Please stand by while we compile the Q&A roster. Our first question will come from the line of Jeff Rulis from D.A. Davidson. Your line is open.

Jeff Rulis: Thanks. Good morning.

Brent Beardall: Good morning, Jeff.

Jeff Rulis: Appreciate the strategic kind of overview there, Brent. Helpful. Maybe if I could hop into the loan sales. What timing of that in the quarter when those were completed or the multifamily moved to held for sale, and then the average yield on those buckets of the sale?

Brent Beardall: Sure. Kelly, do you want to handle that?

Kelli Holz: Certainly. 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, 9/30/2026. The single family is reflective of a rate in the 4.25%, 4.30%, 4.40% range on average, and the single multifamily bucket that is held for sale is in about 4.8% today.

Brent Beardall: And we expect the multifamily sale to close in December. Is that correct?

Kelli Holz: Correct.

Jeff Rulis: Perfect. Thanks. I guess, those buckets of loans, was there anything particular about could get premium pricing or good execution on those? Was there a selection process of maybe why those? The follow-up question is, any more coming that you see within those portfolios?

Brent Beardall: Yeah. I will take that. 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. Certainly, if we are just looking at the market overall and what our opportunities are. We do not have immediate plans, but we will continue to think about what the future is with EverBank and nothing further to announce now, but we will continue to be opportunistic is the way I would describe it.

Jeff Rulis: Okay. Then maybe just a question on the kind of a preliminary thought on earning asset levels at year-end relative to the 9/30 balance. Is the expectation, I guess any color of that, just given the moving pieces, do you expect it to be largely flat, up, down? Any look into the earning asset level at year-end?

Brent Beardall: Yeah. So the only thing we know is that sale of the single family that are held for sale. But besides that, I would expect relatively flat to modest growth with loan growth.

Jeff Rulis: Okay. Maybe just squeeze in one more for Ryan. The remaining, call it $76 million on nonaccrual. Any more sort of sizable credits or relationships there as that number comes down? Just trying to peg if there's anything kind of lumpy in there, if there's a significant one or two credits or relationships remaining.

Ryan Mauer: Yeah. 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 a 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.

Jeff Rulis: Sure. Ryan, what's the balance of that, maybe that large real estate loan?

Ryan Mauer: The other, that one's a $40 million balance.

Jeff Rulis: 40 million. Okay.

Ryan Mauer: Yeah.

Jeff Rulis: Little over half of the remaining balance. Okay. I will step back. Thank you.

Ryan Mauer: Yep.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Matthew Clark from Piper Sandler. Your line is open.

Matthew Clark: Hey, good morning. Thanks for the questions. Just want to touch on the earning assets a little further there. Loans are going to be down roughly $1 billion with the multifamily loan sale later this year. I guess, do you anticipate any offset to the weaker NII that is going to unfold from that? Is there something you plan to do on the expense side, or just want to make sure we are thinking about it correctly?

Brent Beardall: Yeah. We haven't made definitive plans. Nothing to announce. Clearly, we've got levers to pull from an investment side. One of the nice things about higher rates is the investments now yield higher than these loans that we got rid of, so we could replace those loans with investments. As I think we called out, we're expecting our margin to go up, and we'll work to defend the NII.

Matthew Clark: Okay. Just on the expense run rate this quarter, $117 million, ex the merger charges. Thoughts on that run rate going forward?

Brent Beardall: Yeah, I would say typically this quarter is a little bit hotter with kind of year-end cleanup items. So you take out those merger-related expenses, and I think we'll probably be there to a little bit flat on the next quarter.

Matthew Clark: Okay. Just on CD repricing, can you remind us, I think it's in your actually, I think it's in your fact sheet, so I apologize. Maybe the roll-on rate of new CDs, kind of the blended average, where you anticipate those CDs to migrate to.

Brent Beardall: Yeah, I will let Kelli talk about where our new pricing is at right now. What I would say is we kind of saw the market front run the latest Fed increase, where you saw rates start to go up. So we have kind of been getting squeezed the last couple of quarters. Now with the actual rates going up, that helps us on the asset side. So my expectation is that it will kind of fade out in terms of the increasing on the deposit costs just because it kind of front-loaded a little bit. Kelli, do you want to share where our current special rates are?

Kelli Holz: Yeah. We are currently in our CD special rates. We are running 4.1% for a 13-month CD. So, and we are seeing most of our CD renewals and CD dollars coming through just the specials at this point.

Matthew Clark: Okay. What is the beta you are assuming on interest-bearing deposits, assuming we get one or two more rate hikes?

Kelli Holz: I think about 50%.

Matthew Clark: Okay. Got it. Last one from me. Just on the buyback, is there any appetite to buy back shares here given where you're trading on a pro forma tangible book basis?

Brent Beardall: There's certainly appetite, but given where we're at with the proxy and so forth, we're not in a position to be buying back shares today.

Matthew Clark: Understood. Thank you.

Operator: Thank you. Our next question will come from the line of Andrew Terrell from Stephens. Your line is open.

Andrew Terrell: Hey, good morning.

Brent Beardall: Andrew, welcome back. We missed you.

Andrew Terrell: Thank you. Good to be back. Hey, I wanted to just clarify on the expenses. When you back out the merger charges, it looks like the core number was about $115 million. This quarter was a pretty big step-up from the prior quarter, and I know the release called out some strategic investments. Maybe there was some year-end cleanup. But should we expect expenses moderate from here, or is $115 million kind of the true run rate organically going forward?

Brent Beardall: Yeah, no, I would stick with what I just said there. We had some cleanup there. But we're continuing to be opportunistic in terms of bringing on talent, in terms of teams. So don't want to preclude that. So I think that number is a fair number to use in your models.

Andrew Terrell: Okay, great. Just to clarify on the margin. The single-family and multifamily yields, I think you said like 430, 440 for the single family and 480 for the multifamily. Does that include the since they are marked assets from Luther, does that include the accretable, or is that just the book yield?

Kelli Holz: That is the book yield.

Andrew Terrell: Okay.

Brent Beardall: Yeah. The accretable comes over the life of the loan. By taking the sale, we accelerated that accretable with the sale.

Kelli Holz: With the single-family sale, we recognized about $18 million of the discount that was the fair value mark that was out there for that group of loans.

Brent Beardall: But even after both sales are complete, we will have $119 million left in the accretable yield on the balance sheet.

Andrew Terrell: Okay. Got it. Is it fair to think that the quarterly rate of purchase accounting accretion comes down, though?

Kelli Holz: It will come down a little bit, yes, with both loan sales, taking about in total $35 million or so out of the balance that was there at June 30. About a half a million a quarter.

Andrew Terrell: Okay. Got it.

Kelli Holz: Correct.

Andrew Terrell: That's helpful. I appreciate it. Just last, just to kind of put a bow on the model for the margin, can you just remind us the floating rate loan portfolio mix? What's floating versus what's fixed? I know you guys have put some swaps on over time. Just want to make sure as we're thinking about this curve moves around a lot, but as we're thinking about maybe more rate hikes, just want to make sure we've got floating mixes set appropriately.

Brent Beardall: Yeah, I think we do a really nice job on the fact sheet, if you will. If you looked on page 2 of the fact sheet where we do contractual term of maturity or repricing. So we have $7.1 billion that reprice within a quarter.

Andrew Terrell: That includes swaps?

Brent Beardall: Correct.

Andrew Terrell: Okay, great. Thank you.

Operator: Thank you. As a reminder, that is star 11 for questions, star 11. Our next question will come from the line of Kelly Motta from KBW. Your line is open.

Kelly Motta: Hey, good morning. Thanks for the question. I would like to kick it off on a high level. It has been about a month since your EverBank deal call, and in that time, I am sure you have been out and meeting with people on the front lines. Just wondering how those conversations are going. Any insight that you can share that has come out of meeting with the people who drive your business and EverBank's business? Thank you.

Brent Beardall: Yeah, Kelly, great question. Thank you so much. I would say the meetings are characterized with optimism. There was certainly some shock. A lot of people did not expect this coming, and understandably so. But as people really got in and understood how the two banks are stronger together and what the levers that they provide us that we did not have on our own, and then how they offset our concentration in CRE loans and how we offset their concentration in NDFI loans, I think the light bulb kind of goes off and people are like, "Wow, we will be formidable going forward." The optimism level is high.

Sincerely, I am more excited about the deal today than when we announced it a month ago. So, thank you for that question.

Kelly Motta: Great. That's great color. I hate to beat a dead horse, but I would love to circle back to NII and the margin. Obviously, you have about $1 billion of loan sales last quarter and this upcoming quarter. As we think about the balance sheet size, how much is going to be used to pay down borrowings versus reinvestment into the investment portfolio? I'm just asking because borrowings did come down this quarter with some de-levering there. Thanks.

Brent Beardall: Yeah. Good question, Kelly, and we haven't made those final determinations yet, so can't give you any. But as I said, we will work to defend the NII number. If that means that we're going to make some investment purchases, certainly can do that. But we're not looking to shrink our income.

Kelly Motta: Got it. That's helpful. The spot loans, Kelly, at it looks like 5.44% for the quarter. I was surprised to see that up a bit given the gain you had taken on those loans, which were marked. I know you usually do that assuming a similar amount of accretion. Did you make that adjustment for just a lower amount of accretion on a go-forward basis? Or we should kind of take that five four and make our own appropriate assumptions around the accretion contribution going forward as a build-off? Thanks.

Kelli Holz: Yeah, we did factor in the drag that I mentioned with Andrew of about half a million dollars a quarter on the accretion change given the loan sales.

Kelly Motta: Got it. That is helpful. Then I really appreciate all the color on the credit that was cleaned up during the quarter. I know at deal announcement, you projected about 1.45 times the reserve as the credit mark for the WaFd portfolio. I would imagine that would include some cleanup such as this. So it is not too unexpected based on the run rate, but I was hoping you could offer any additional color on any changes since the deal was announced there. Thank you.

Brent Beardall: Yeah, I would say no significant changes from the deal announcement. Obviously, the biggest changes have happened in the interest rates, so those would be the biggest changes. But we also took some proactive measures both on the WaFd side and the EverBank side to try to hedge some of that risk from interest rates and feel really good about those activities. But from a credit mark standpoint, we will stay with the same assumptions that we put out in early September.

Kelly Motta: Thanks so much.

Brent Beardall: Thank you, Kelly. Appreciate it.

Operator: Thank you. I am not showing any further questions in the queue. I would like to turn it back over to Brad for any closing remarks. Brad.

Brent Beardall: Not hearing Brad, I will go ahead and say thank you very much, everyone, for joining us this morning. Have a wonderful rest of your day, and we look forward to speaking to you next quarter.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.