Business Combination

3 Months Ended

Dec. 31, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

On March 1, 2024 ("the Merger Date"), WaFd, Inc. acquired Luther Burbank Corporation, headquartered in Santa Rosa, California. The Merger was effectively an all-stock transaction and has been accounted for as a business combination. See Note A "Summary of Significant Accounting Policies" for more information regarding the Merger and our policies pertaining to business combinations.

While the Company believes that the information available on the Merger Date provided a reasonable basis for estimating fair value, additional information may be obtained during the measurement period that would result in changes to the estimated fair value amounts. The measurement period ends on the earlier of one year after the Merger Date or the date the Company concludes that all necessary information about the facts and circumstances that existed as of the Merger Date have been obtained. Management anticipates that facts obtained during the measurement period could result in adjustments to the Merger Date valuation amounts presented herein.

The table below displays the amounts recognized as of the Merger Date for each major class of assets acquired and liabilities assumed:


	March 1, 2024
	(in thousands)
Total merger consideration			$	465,504
Fair value of assets acquired
Cash and cash equivalents	$	627,403
Investment securities	518,878
Loans receivable	3,186,891
Loans held for sale	3,017,506
Interest receivable	25,697
Premises and equipment	6,436
FHLB stock	35,831
Bank owned life insurance	17,781
Intangible assets	37,022
Deferred tax asset, net	125,151
Other assets	75,398
Total assets acquired	$	7,673,994
Fair value of liabilities assumed
Customer accounts	$	5,640,440
Borrowings	1,432,138
Junior subordinated debentures	50,175
Senior Debt	93,514
Accrued expenses and other liabilities	100,113
Total liabilities assumed	$	7,316,380
Net Assets Acquired			$	357,614
Goodwill			$	107,890

In connection with the Merger, the Company recorded approximately $107,890,000 of goodwill and $37,022,000 of other intangibles. Goodwill represents the excess of the purchase price over the fair value of the assets acquired net of fair value of liabilities assumed. Information regarding goodwill and the carrying amount and amortization of intangible assets are provided in Note A.

During the three months ended December 31, 2024, there were $239,000 in merger-related expenses compared to $517,000 during the three months ended December 31, 2023. Merger related expenses are recognized in the periods in which they were incurred.

The following table presents unaudited pro forma information as if the Merger had occurred on October 1, 2022. The pro forma adjustments give effect to any change in interest income due to the accretion of the discount (premium) associated with the fair value adjustments to acquired loans, any change in interest expense due to estimated premium amortization/discount accretion associated with the fair value adjustment to acquired interest-bearing deposits, borrowings and long-term debt and the amortization of the core deposit intangible that would have resulted had the deposits been acquired as of October 1, 2022. The pro forma information is not indicative of what would have occurred had the Merger occurred as of the beginning of the year prior to the Merger Date. The pro forma amounts below do not reflect the Company's expectations as of the date of the pro forma information of further operating cost savings and other business synergies expected to be achieved, including revenue growth as a result of the Merger. As a result, actual amounts differed from the unaudited pro forma information presented.


	Unaudited Pro Forma for the Three Months Ended
	December 31, 2024
	(in thousands)
Net-interest income	$	161,356
Non-interest income	15,702
Net income	50,611