Oct 21, 2026 earnings call — Deposit-driven loan growth and margin expansion
Record pre-provision net revenue, up 36% year-over-year, drove margin expansion and efficiency ratio below 50%.
Revenue $0.0B (est $0.0B) · EPS $0.49 (est $0.47)
Key quotes
"Turning to slide 9, I think the biggest highlight of the quarter for us was the $165 million or 20% annualized core deposit growth we generated."
"This allowed us to accelerate loan growth during the past quarter to over 7% annualized, with loan and core deposit growth now in line on a year-to-date basis."
"Turning to slide 15, our nonperforming assets declined modestly from last quarter, ending the period at 37 basis points and remaining well below peer levels."
Analyst Q&A 4
Higher rates effect on lending and margins
Q (Jeff Rulis · D.A. Davidson): Analyst asked how higher interest rates (one or two more hikes) would affect loan demand and asked Katie to walk through loan repricing schedules. He also asked Joe about the longer-term margin level and how they might return to mid-threes.
A: Nick said the recent rate rise will slightly reduce near-term loan originations but many deals well underway should close in the fourth quarter, and refinance/payoff activity has offset new origination headwinds while affordable housing drives growth. Katie said they have run repricing analysis, feel they have a good handle on affected loans, and have action plans in place. Joe said the margin looks durable after shifting loans to more variable rate and shortening loan duration; that gives stability now and potential upside as the back book reprices through 2027.
"Feeling good about that, especially as we go through covenant testing and looking ahead 12 months out, if there's a repricing event, how does that look for property performance?" — Katie Morrell
Capital plan: ATM vs internal growth
Q (Brendan Nosal · Hovde): Analyst asked if the quarter's dip in tangible capital makes an ATM raise more likely versus internal capital generation, and whether mid-single-digit growth is the new steady-state for loans and core funding.
A: Joe said their priority is optionality and they believe they can self-generate capital to support growth while keeping both buyback and ATM available. Nick said mid-single-digit growth feels like the right run rate in the current interest rate environment, and faster growth would likely require more accommodating fiscal policy; they will be disciplined and focus on profitable growth.
"I think as we've said, optionality is always our goal." — Joe Chybowski (CFO)
Core deposit pipeline and payoffs
Q (Nathan Race · Piper Sandler): Analyst asked how much visibility they have into the core deposit pipeline and whether core deposit gains can replace higher-cost funding that matures. He also asked what inning payoffs of lower-yield CRE loans are in and confirmed whether incremental deposit costs are about 3.5%.
A: Nick said they feel very good about core deposit gathering after a strong third quarter, helped by new treasury and commercial hires and growth in the affordable housing vertical; core deposits will remain the governor on loan growth while brokered funding stays part of the funding mix. On payoffs, he said the environment has shifted in the last 90 days, clients are reevaluating sales or refinancing plans, and borrowers are generally much better prepared now than in 2023 so the bank can work through repricing or provide extensions. Joe agreed that incremental deposit costs are roughly 3.5% and said short-term CD competition (credit unions) can be a leading indicator, but they focus on whole commercial relationships rather than just chasing rate.
"I think when we couple kind of commercial relationships with a non-interest-bearing deposit with a more actively managed money market, I think that's kind of how we think about the incremental cost of funds." — Joe Chybowski (CFO)
Expenses, provisions, and securities yield
Q (Brandon Rud · Stephens): Analyst asked what drove third-quarter expense outperformance and what will drive the step-up in fourth-quarter expenses. He also asked whether a higher fourth-quarter provision means more charge-offs or reserve buildup, and how much opportunity remains from securities repricing to help NIM.
A: Joe said expense priorities remain investing in people and technology, hiring top talent and improving efficiency, and they aim for continued positive operating leverage with revenue growing faster than expenses into 2027. Katie said they expect fourth-quarter provision to be a bit higher as they work through nonperforming assets, and some reserves could migrate to charge-offs, with loan growth also raising the provision. Joe added that the rise in securities yield came mainly from incremental purchases, especially tax-exempt municipals, and they will stay opportunistic in the investment portfolio while balancing loan and deposit growth.
"Yeah, Brandon. That was the comment in the prepared remarks that we expect fourth quarter to be a bit higher than we saw in the third." — Katie Morrell