WaFd Inc. stock plunged 6.4% in afternoon trading following the public unveiling of a $3.9 billion reverse merger with EverBank Financial Corp, a Jacksonville, Florida-based digital bank. The transaction, announced over the Labor Day weekend and formally presented to investors today, triggered an immediate market reassessment of WaFd's equity value.
Under the terms disclosed, EverBank will be merged into WaFd in legal form, but will be treated as the accounting acquirer. Upon closing, EverBank investors are expected to control roughly 59.2% of the combined company, leaving current WaFd shareholders with an approximate 40.8% minority stake. To facilitate the transaction, WaFd plans to issue about 103 million new common shares, a level of dilution that the market moved quickly to incorporate into the stock price.
Company management said the combined institution would hold approximately $75 billion in assets, about $58 billion in total loans and roughly $59 billion in deposits, placing the merged bank among the top 50 U.S. banks by size. Executives projected that the transaction would provide about 29% earnings-per-share accretion for WaFd shareholders in 2027 and, after realizing expected synergies, a return on tangible common equity of about 15%. Management also said that tangible book value dilution is expected to be recovered in under two years.
Despite those forward-looking targets, investors weighed the immediate equity dilution and the operational challenges of combining a Western U.S. commercial-branch network with a nationwide digital retail platform. The deal remains subject to regulatory approvals from the Federal Reserve and the Office of the Comptroller of the Currency, along with a vote from WaFd shareholders, and is not expected to close before early 2027. Those milestones introduce extended execution risk and a prolonged period in which shareholder stakes will change only if and when the transaction is consummated.
WaFd Chief Executive Officer Brent Beardall, who is slated to become president of the combined bank, said: "This opportunity to partner with EverBank is an elegant fit, and it allows us to carry forward the ethos of WaFd and deliver improved returns for our shareholders." The comment was included in materials released with the investor presentation.
The wider U.S. equity market offered limited support during the session. The S&P 500 fell about 0.4%, the Dow Jones Industrial Average was down 1.1% and the Nasdaq lost roughly 0.2%. Regional banking peers were operating in a cautious macro environment, but WaFd's share drop far exceeded the index-level moves, highlighting that the merger terms and the dilution mechanics dominated trading in the stock.
Market participants framed the reaction as an acquiree discount scenario: while the strategic combination of WaFd's branch footprint in the Western U.S. with EverBank's digital capabilities is clear on paper, the immediate consequence of existing shareholders seeing their ownership stake reduced to less than half - subject to regulatory and shareholder approval processes that could take months - imposed a near-term overhang that the market responded to with significant repricing.
Contextual note: The figures and timelines above reflect the company disclosures presented to investors as part of the merger announcement. The transaction remains contingent on standard approvals and closing conditions.