Oct 21, 2026 earnings call — Record net interest income and raised growth outlook
Company raised full-year loan growth outlook to 5%-6% and deposit growth outlook to 4%-5%.
Revenue $0.2B (est $0.2B) · EPS $1.43 (est $1.45)
Key quotes
"Net interest income reached a record $211.9 million, increasing $11 million or 5.5% from the prior quarter."
"Loans increased $575 million or 2.8% during the quarter, while deposits increased $773 million or 3.7%, led by growth in non-interest-bearing demand and money market balances."
"Credit results this quarter included elevated charge-offs in three previously identified borrower-specific credits. We have substantial reserves in place against these credits and took appropriate action during the quarter."
Analyst Q&A 6
Net interest margin and deposit growth
Q (David Chiaverini · Jefferies): How should we think about NIM into the fourth quarter and rate sensitivity? Also, what is driving the big rise in non-interest-bearing deposits and can that momentum continue?
A: Management said they are not ready to call a peak on NIM and see room to expand, noting the guide includes a 25 basis point increase in December and many loans and cash will reprice. They warned of deposit cost pressure from CDs rolling off and competition, and said the non-interest-bearing deposit gain this quarter was strong but likely not fully sustainable while branches and law firm relationships are focusing on lower-cost deposits.
"We do have in the guide a 25 basis point increase in December, which will help us from the asset side." — Al Wang (CFO)
Loan growth outlook and LIHTC amortization
Q (Gary Tenner · D.A. Davidson): Why did you set the loan growth guide where you did and what should we expect for Q4 growth? Also, what is the expected LIHTC amortization for the fourth quarter?
A: Management said biggest loan growth was in Q2 and Q3, Q1 was flat, and Q4 has historically been flat though pipelines look OK and C&I is the growth driver across industries; they are comfortable with the revised 5%-6% guide. On LIHTC amortization, they expect more of the $9 million-$10 million per quarter range, but it can vary by project financials and tax credit recognition.
"I am expecting kind of more of the $9 million-$10 million per quarter." — Al Wang (CFO)
Contract termination and margin recoveries
Q (Andrew Terrell · Stephens): How does the contract termination affect operating expenses and where will you find efficiencies? Also, how much did recoveries and prepayments affect loan yields this quarter?
A: They called the contract termination fee a one-time charge tied to upgrading a vendor and not an expense-savings play, expecting the new vendor to help future revenue growth. On loan yields, most of the effect was recoveries, about $3.7 million-$3.8 million, which was roughly 6 basis points for the quarter and would make core NIM about 3.46%.
"Most of it was recoveries and not prepayment penalties, but it was about $3.7 million-$3.8 million of recoveries." — Al Wang (CFO)
Specific charge-offs, deposit costs, and buybacks
Q (Matthew Clark · Piper Sandler): How much of net charge-offs related to the three previously reserved credits? Also, what was the spot deposit rate at end of September and will you keep buying back stock?
A: They said two theater loans from the Far East National Bank acquisition totaled about 18, and a construction loan with water and mold damage was about almost a $9 million exposure. The September interest-bearing deposit cost was like 2.92% and all-in was 2.43%; on buybacks they remain comfortable with recent activity, view the stock as attractively priced, and find the earn-back period acceptable given their outlook.
"The September kind of interest rate deposit cost for interest-bearing was like 2.92%." — Al Wang (CFO)
Commercial loan drivers, deposits, and expense priorities
Q (Kelly Motta · KBW): What is driving strong commercial (C&I) loan growth, are higher rates affecting borrower behavior, were Q3 non-interest deposit inflows chunkier, and what are expense priorities going forward?
A: They said C&I strength is broad across manufacturing, distribution and wholesalers (including food), and C&I lending is need-based so borrowers still use lines despite higher rates; higher rates may affect CRE purchases more than refis. On deposits, growth was generally broad based but there were some larger inflows at the end of September. For expenses, priorities are investing in front-line people and client-facing technology, including operational AI efficiencies, with most future spending in salaries and tech.
"Additionally, sort of the technology front and any tech that's kind of client facing, including anything that's operationally with AI and efficiencies we can gain out of AI." — Chang Liu (CEO)
Wealth management fee revenue decline
Q (Andrew Liesch · StoneX): What caused the decline in wealth management revenue this quarter?
A: They said the decline was driven by transaction-based volume and there was nothing significant or unusual behind it. Management noted revenue trends have been strong since the new leader arrived and they expect a small increase next quarter, though not necessarily back to Q2 levels.
"I'd say you can see over the trend over the last several quarters, particularly since our new leader came in for that business." — Al Wang (CFO)