KBRA Affirms Ratings for EverBank Financial Corp
1 Aug 2025 | New York
KBRA affirms the senior unsecured debt rating of BBB+, the subordinated debt rating of BBB, and the short-term debt rating of K2 for Jacksonville, Florida-based EverBank Financial Corp (“the company” or "EFC"). Additionally, KBRA affirms the deposit and senior unsecured debt ratings of A-, the subordinated debt rating of BBB+, and the short-term deposit and debt ratings of K2 for lead subsidiary, EverBank, National Association. The Outlook for all long-term ratings is Stable.
EFC’s profitability is somewhat lower than similarly-rated peers but is trending positively. Historically, higher cost of funds, limited noninterest income sources, and a lower yielding loan book have been headwinds to earnings, partially offset by lower operating expenses reflective of the branch-light model and modest provisioning for credit losses. Management is targeting higher core ROAA – compared to 0.50%-0.70% historically – through loan rotation, balance sheet and funding optimization, and cost efficiencies. KBRA notes that profitability targets appear achievable, though timing is difficult to predict.
Credit risk has been managed well, aided by a relatively lower risk loan portfolio of residential mortgages, CRE lending, and lower risk commercial lending. While growth in commercial loan verticals may increase risk density, we expect losses to remain manageable. ACL coverage (0.88% of loans) is adequate in our view, given a relatively lower risk loan book.
While growth of more direct customer relationships will likely improve the deposit base over time, EFC’s funding remains more reliant on near-market rate interesting-bearing deposits than peers, and NIB remains low at ~6% of total deposits. Contingent liquidity sources consisting of FHLB capacity and high-quality unencumbered securities appear ample. The acquisition of Sterling Bank and Trust, F.S.B., which closed on April 1, 2025, adds 25 bank branches in CA and one in NY, and $2 billion in deposits, and provides a modest uplift to the funding profile.
Core capitalization has declined in recent periods, particularly at the holding company. At 2Q25, the company's CET1 ratio was 9.8%, down from 13.8% at 4Q23. Preferred shares issued to TIAA as part of the company's change of control in 2023 are a partial offset to the lower proportion of common equity in the capital structure, which benefits the Tier 1 Capital ratio, which was 11.8% at 2Q25.
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