Oct 28, 2026 earnings call — Balance sheet repositioning improves earnings
Company reported net earnings of $73.1 million and EPS of $0.46, with pre-tax, pre-provision income of $118.4 million.
Revenue $0.3B (est $0.3B) · EPS $0.46 (est $0.45)
Key quotes
"We completed our securities reinvestment during the quarter, deploying the proceeds into higher-yielding assets."
"Our bankers delivered another strong quarter of production, with $2.6 billion in loan production and disbursements contributing to 6% annualized growth in loans held for investment."
"Our CET1 ratio increased to an estimated 9.70% at September 30 compared with 9.25% at June 30."
Analyst Q&A 12
Net interest margin drivers
Q (David Chiaverini · Jefferies): Analyst asked what will drive net interest margin over multiple quarters and whether fixed asset repricing is a multi-quarter tailwind. He also asked why new loan production yields fell year-over-year and whether that was mix or competition.
A: Management said multifamily repricing and higher production yields versus portfolio yields should expand margin. They noted disciplined deposit pricing and running off higher cost broker deposits helped. They also cited floating-rate C&I and past 2025 rate cuts as factors.
"Our production yield is meaningfully higher than our portfolio yield, and our lowest portfolio yield really sits in the multifamily portfolio." — Jared Wolff (CEO·CHAIR)
HOA deposit business
Q (Chris McGratty · KBW): Analyst asked how to think about ECR (HOA) deposit costs and their role as the firm grows other deposits and manages expense. He asked about expense growth with or without ECRs.
A: Management said the HOA deposit business is stable, reasonably priced compared with alternatives, and they want to grow it prudently. They noted $4 billion of such deposits sit in NIB, are distributed across many accounts, and the team executes well.
"We got $4 billion of deposits that are at cost that are really reasonable." — Jared Wolff (CEO·CHAIR)
Core commercial loan pipelines
Q (David Feaster · Raymond James): Analyst asked about core commercial loan pipelines excluding strategic multifamily declines and single-family purchases, and how management can accelerate that growth.
A: Management said recent production and disbursements were strong with manageable payoffs and they see net portfolio growth over the last two quarters. They expect continued growth from many levers across C&I, lender finance and warehouse, and said remixing the portfolio also raises earnings.
"I would say that this was one of the most boring quarters we've had in a while, and I expect that to continue." — Jared Wolff (CEO·CHAIR)
Securities yield impact
Q (Jared Shaw · Barclays): Analyst asked what securities yields should be in the fourth quarter after the restructuring and what roll-off yield to expect going forward.
A: Management said reinvestment in Q3 didn't give a full quarter benefit and expects AFS securities yield to expand roughly 12 to 15 basis points in Q4. They also said replacing non-performing loans with performing assets will help NIM.
"I think you could expect probably somewhere between 15 basis points or so expansion of yield, somewhere in that range, maybe like 12 to 15 basis point expansion of yield on the AFS securities book." — Joe Kauder (CFO)
Held-for-sale loan resolution
Q (Matthew Clark · Piper Sandler): Analyst asked about the remaining held-for-sale loans that appeared converted to permanent financing and wanted final resolution details.
A: Management said the converted loan was not held for sale and came onto the books as a performing permanent loan. They committed to finance the permanent piece and noted the targeted loan sales announced earlier are complete and off the books.
"Yeah. That's not in held for sale. That came on as a performing loan on our books." — Jared Wolff (CEO·CHAIR)
Capital and buybacks
Q (Anthony Elian · JPMorgan): Analyst asked if achieving 10% CET1 in 1Q is the trigger to resume share buybacks and whether TCE ratio is a concern.
A: Management said TCE should float up and they are not worried about it moving down; they will be disciplined on capital. They said buybacks are possible before hitting 10% CET1 but they will be opportunistic and wait for regulatory clarity and the best path.
"In terms of buybacks, Anthony, we of course hope that our stock is going to re-rate here with our higher ROTCE and our higher earnings glide path." — Jared Wolff (CEO·CHAIR)
Discount accretion level
Q (Gary Tenner · D.A. Davidson): Analyst asked why discount accretion dropped this quarter and whether the lower level is a new run rate.
A: Management said the third-quarter accretion was a bit low with basically no accelerated discount accretion in the quarter, and they prudently do not include much upside in forecasts. They noted $33 million of net discounts remain and will benefit capital over time.
"We got basically no accelerated discount accretion in the quarter." — Joe Kauder (CFO)
Preferred redemption funding plan
Q (Ben Gerlinger · Citi): Analyst asked if resets on hybrid multifamily loans stick and about the preferred redemption and how the balance sheet would be funded if they redeem.
A: Management said many repricings stick but behavior is mixed; some borrowers keep floating rates, some fix, and they expect to exit many loans and redeploy capital into better-yielding assets. For preferreds, they said redeeming and funding with FHLB would be cheaper and estimated about half the cost savings relative to the preferred.
"I think the easiest way to think about it is if today we chose to redeem it all and fund it with FHLB, it would be cheaper." — Jared Wolff (CEO·CHAIR)
Private banking costs
Q (Terry McEvoy · Wells Fargo): Analyst asked whether the private bank is low cost from operating expense or deposit cost perspective.
A: Management said the private bank initiative has negligible incremental operating cost initially because they redeployed existing team capacity and added modest marketing and APIs. They also said it's not a rate-focused deposit strategy but a high-touch service for wealthy clients.
"Fundamentally, the operating cost was negligible for what we want to do." — Jared Wolff (CEO·CHAIR)
Use of deposits and asset growth
Q (Timur Braziler · UBS): Analyst asked how average earning assets may change in Q4 and whether core deposit growth will fund loans or continue to pay down brokered funding.
A: Management said average earning assets could increase by several hundred million if things go well and they will deploy excess deposits to loans or securities where returns are best. They also said broker deposits could come down over time and they can both grow earning assets and reduce brokered funding.
"I think on average earning assets, I think you could see it continue to increase, maybe in the tune of, I don't know, anywhere from, let's just say several hundred million, if things go well." — Joe Kauder (CFO)
Economic resilience and positioning
Q (Tim Coffey · Brean Capital): Analyst asked whether two more rate hikes would stall economic growth in their footprint and if that alters views on deposit or loan resilience.
A: Management said additional rate hikes would probably stall economic growth. They said they have de-risked the balance sheet recently and are positioned with alternatives like securities and selective lending to be resilient in different rate environments.
"I think one of the things that we did last quarter, and we did it several times last year, was we de-risked our balance sheet." — Jared Wolff (CEO·CHAIR)
Payments initiative impact
Q (Eric Bedell · Bloomberg Intelligence): Analyst asked for an update on payments and how it will impact 2027.
A: Management said they are excited about payments and expect it to contribute to fee income in 2027 from merchant acquiring and issuing. They currently generate about $10 million-$12 million of fee income monthly and hope payments meaningfully grows fee income next year without additional investment by partnering with another company.
"We hope that it contributes to fee income growth in 2027." — Jared Wolff (CEO·CHAIR)