Oct 20, 2026 earnings call — Loan growth and margin outlook
Average loans were $28.9 billion, increasing approximately 9.6% annualized during the quarter.
Revenue $0.4B (est $0.4B) · EPS $0.96 (est $0.96)
Key quotes
"Average loans were $28.9 billion increasing approximately 9.6% annualized during the quarter."
"Reported FTE net interest margin declined 6 basis points to 3.88% as funding cost increased but FTE net interest income rose $3.4 million as loan growth and accretion income more than offset those pressures."
"Quarter over quarter, nonperforming assets declined to 37 basis points of loans held for investment from 39 basis points Classified assets decreased to 4.0% from 4.0% and net charge offs remained at 3 basis points annualized."
Analyst Q&A 7
Interest margin outlook and loan growth
Q (Brian Wilczynski · Morgan Stanley): They asked about the updated net interest margin outlook for 2026, including the impact of borrowings and higher rates. They also asked if higher rates are causing any slowdown in construction or other parts of the loan portfolio and how that could affect loan growth.
A: They said Q3 margin fell 6 basis points driven by funding mix and borrowings, and they are keeping full-year NIM guidance at 3.90% to 3.95% with an expected improvement in Q4 as variable loans and some investments reprice. For loans, fundings on existing construction projects will continue, but they expect fewer new construction starts with a delayed impact of about 6 months to a year; C&I demand is strong so overall loan growth may moderate but should stay positive.
"And as we move into the fourth quarter, and you heard from our prepared remarks, we are sticking with the range of 3.90% to 3.95% for our net interest margin." — Alexander D. Dodd (CFO)
Deposit betas and broker deposits
Q (Janet Lee · TD Cowen): They asked whether a Fed rate hike would still be a net benefit to core NIM and what the bank's cumulative beta expectations are. They also asked how much broker deposits might fall in the fourth quarter.
A: They said a Fed rate increase is a net benefit and that the bank is modestly asset sensitive on the short end. They reported an overall beta of 40% and 50% on the interest-bearing portion, and said they took about $500 million of borrowings this quarter, mostly short term, which they expect to replace with customer deposits as they mature.
"And we did take on borrowings from the quarter, about $500 million." — Alexander D. Dodd (CFO)
Deposit costs and loan pipelines
Q (David Chiaverini · Jefferies): They asked about the size and drivers of higher interest-bearing deposit mix and recent deposit pricing behavior. They also asked which loan sectors are driving pipeline growth and whether data center activity is supporting that pipeline.
A: They said the 6 basis point margin decline was driven solely by funding, from deposit mix, higher deposit pricing, and borrowings; deposit cost rises are from mix and higher average pricing on interest checking and savings, and they expect full beta to come through. On loans, C&I makes up roughly 59% of production and pipelines are growing across regions; data center work is a tangential benefit through contractors, industrial and power infrastructure, supporting portions of their pipeline.
"To your question about the deposit portfolio, the 2 drivers of the cost of deposits increasing by 7 points are really coming from mix." — Alexander D. Dodd (CFO)
Rates that could slow loan growth
Q (Russell Elliott Gunther · Stephen.): They asked whether there is an absolute level of rates that would cause pipeline fallout beyond construction, and whether that could move growth from high to mid single digits. They also asked how much each 25 basis point hike would move NIM and what spot deposit rates were at quarter end.
A: They said higher rates will most affect new construction commitments, slowing but not stopping projects, while C&I and many real estate sectors should be less impacted; the effect may lower growth from high to mid single digits but construction is the main area at risk. They added each 25 basis point increase should add about 3 basis points of margin in a quarter, and spot deposit rate in September was 2.03% (2.00% for the full quarter, up 3 basis points in September).
"Each 25 basis point increase, Russell, should be about 3 basis points of margin in a quarter." — Alexander D. Dodd (CFO)
Loan yields and buyback plans
Q (Will Jones · KBW): They asked about loan yield trends in the quarter and expectations for loan yields going forward. They also asked about the pace of buybacks and whether AOCI and tangible equity changes affect buyback plans.
A: They said variable loan yields ended the quarter around 6.2% with spreads near 220 basis points and fixed yields around 6.45% with tighter spreads; they expect yields to rise with recent rate moves. On capital, they said priority is supporting organic growth then returning capital via dividends and buybacks; they repurchased $62.5 million this quarter and intend to continue the buyback through May 2027 while monitoring AOCI and tangible common equity and remaining flexible if rates move sharply.
"We do intend on continuing the buyback through May 2027." — Alexander D. Dodd (CFO)
Credit stress and defense sector health
Q (David Bishop · Hovde Group): They asked if higher rates are causing credit stress in commercial or consumer segments. They also asked what the bank is seeing in the defense/GovCon segment in the Greater DC region.
A: The credit officer said they see some impact on floating-rate construction projects but most institutional developers can absorb it and they do not see signs of stress in C&I borrowers because interest expense is a small share of operating costs. Management said the defense sector is very active, credits are holding up, M&A is occurring, and the trend is durable with spillover benefits to local markets.
"On the C and I side, even though rates have gone up, the interest rate cost expense to a C and I borrower is a small percent of their overall operating cost." — Douglas F. Woolley
North Carolina growth and accretion
Q (Steve Moss · Raymond James): They asked what growth the bank is seeing in its North Carolina markets and how much that contributed to loan growth. They also asked for updated thoughts on purchase accounting accretion for 2027.
A: They said they view themselves as about a $3 billion asset bank in North Carolina with an established Charlotte presence and the American National franchise in the Piedmont Triad, and that they have added coverage with 29 producers in the Carolinas, supporting continued growth. On accretion, they are not giving 2027 guidance yet; for Q3 baseline accretion was about $9 million per month ($27 million for the quarter) and accelerated accretion was about $13 million to $14 million for the quarter, with baseline expected in Q4 but accelerated accretion may slow if prepayments fall in a higher rate environment.
"And the baseline accretion was about $9 million per month or $27 million for the quarter." — Alexander D. Dodd (CFO)