Oct 21, 2026 earnings call — Margin expansion and fourth-quarter outlook
Net interest margin reached 316 NIM in Q3 and management guided NIM around 3.2% for Q4.
Revenue $0.3B (est $0.3B) · EPS $1.03 (est $1.03)
Key quotes
"And the reason it is good is because we have been very laser-focused on pricing and profitability and refuse to do business just for volume sake."
"We finished with total NIDDA at 32.2% of total deposits compared with 30.1% a year ago, so we were pleased with that."
"The middle one, the commercial banking is what we've been really focused on the last two years and has been growing at double digits."
Analyst Q&A 7
Why NIM will expand in Q4
Q (David Chiaverini · Jefferies): He asked how much of the fourth-quarter NIM expansion comes from asset sensitivity versus balance-sheet mix, and how rate-sensitivity should be thought of for possible future hikes.
A: Management said the Q4 expansion is largely from asset sensitivity as deposit costs reset slower than loan yields reprice. They noted seasonal NIDDA declines and non-core loan runoff help margins. They try to keep the static balance sheet near neutral and accept slight asset sensitivity from new business.
"In the fourth quarter, I think it's largely the asset sensitivity." — Jim Mackey (CFO)
Loan growth split; DDA and securities moves
Q (Jared Shaw · Barclays): He asked how core-loan growth should be split between C&I and CRE and how sustainable those balances are. He also asked about DDA movement through the quarter and details of the securities repositioning.
A: Management expects about two-thirds of near-term loan growth to be in C&I and about one-third in CRE, noting CRE is being impacted by repricing and retrades. They said average DDA will decline in Q4 due to normal seasonality and the ending balance will be down. On securities, they characterized the actions as normal ALCO-driven sales of highly seasoned, short-maturity assets reinvested into a 3- to 5-year profile rather than a special restructuring.
"I would say, again, we were selling assets that were highly seasoned, so we've been holding them for a while." — Tom Cornish (COO)
Title deposits, competition, and HOA growth
Q (David Rochester · Cantor): He asked why deposit balances are flat despite customer growth and whether that is from higher mortgage rates or competition. He also asked about hires, where competition is coming from, and progress in growing the HOA deposit business plus DDA mix in title and HOA.
A: Management attributed the September balance decline largely to mortgage-market moves and higher rates, and said competition has increased and mainly shows up through pricing. They said they are still acquiring roughly the same number of clients each quarter. On HOA, they target smaller associations for profitability, have grown it slowly over four to five years, and said title DDA is a majority while they did not provide a precise HOA DDA percent.
"I am attributing it largely to what happened to the mortgage market and what happened to rates." — Tom Cornish (COO)
Credit, deposit mix change, capital target
Q (Woody Lay · KBW): He asked about the movement from special mention to substandard and what drove that. He also asked about the quarter's deposit mix change between muni and brokered deposits and whether the mid-11% CET1 target still applies.
A: They said the credit moves are episodic and lumpy, noting one loan that moved to NPL was in the weather disaster recovery business and is soft. On deposits, they said they backed off muni (especially in Florida) and used more brokered deposits this quarter, which picked up about 5–8 basis points on similar-duration liabilities. On capital, management still views a mid-11% CET1 target as appropriate but said Q4 could push the ratio down somewhat because of remaining buybacks and some balance-sheet growth; any buyback action will be discussed with the board.
"This quarter it was a drop in muni, an increase in brokered, and we picked up 5, 8 basis points on similar duration assets." — Raj Singh (CEO·CHAIR)
Loan origination spreads and pipeline regions
Q (David Bishop · Hovde Group): He asked what yields new commercial loans are originating at versus the yields on loans rolling off, and which geographic markets are driving the commercial pipeline.
A: They said average C&I spreads versus SOFR are roughly in the 225 to 240 basis-point range, while CRE spreads are lower, around 160 to 180 basis points. The pipeline is fairly evenly spread across markets, with Florida strong in many areas and New York showing particular strength in mid-sized business and commercial banking; payoffs are concentrated in more mature markets.
"But if you kind of average it all together, I would say the C&I compared from a SOFR perspective, I would probably give you an average of about 225 basis points to 240 basis points in range." — Jim Mackey (CFO)
Residential runoff and NIM sustainability
Q (Jon Arfstrom · RBC): He asked whether higher rates will slow residential runoff and what to expect in coming quarters, and whether the 320 basis-point NIM in Q4 is sustainable or could rise with more hikes.
A: They said higher market rates shouldn't materially slow CPR-driven residential runoff because the drivers are amortization, ARM resets, moves, and life events rather than refis. They said they've reduced the residential portfolio and may move from reducing to flatlining and later growth in time, with more guidance in a few months. On NIM, they said current balance-sheet dynamics can continue to push margin higher year-over-year, but seasonality matters quarter-to-quarter.
"The reason is if you have a 3.5% mortgage, whether primary mortgage rates are at 7% or 7.5%, I don't think it really impacts CPR that much." — Raj Singh (CEO·CHAIR)
NDFI exposure and securities repositioning timing
Q (Michael Rose · Raymond James): He asked where NDFI exposure should sit for a bank this size and whether more structural runoff is coming. He also asked when the securities repositioning happened and the yield pickup and what was sold.
A: They said they do not plan further NDFI reductions unless risks in that sector change, and noted diversity within the NDFI category, with capital-call business and tax-certificate financing seen as acceptable while lending to private credit funds was reduced. On securities, they said most repositioning was front-loaded in the quarter, securities had about a 4 basis-point NIM impact for the quarter, they moved from sub-one-year holdings to three- to five-year duration, and the book-value amount was north of $1 billion but less than $2 billion.
"I don't think there's anything more that we feel compelled to do." — Raj Singh (CEO·CHAIR)