Oct 27, 2026 earnings call — Pension termination and rising interest margin
Management expects a nonrecurring pretax gain of approximately $27 million in the fourth quarter.
Revenue $0.3B (est $0.3B) · EPS $0.48 (est $0.49)
Key quotes
"But then our debit card portfolio is really what is driving the payments volume."
"But even in, rising rate environments, we have seen kind of a mid- to low-20s type of a beta, and that is kind of our expectation."
"Lastly, our capital levels remain well above target with $2 billion of excess capital or $8.28 per share."
Analyst Q&A 6
payments growth and checking deposits
Q (Ryan Kenny · Morgan Stanley): The analyst asked what the company is doing to drive payments growth. He also asked whether payments bring low-cost deposits and what is driving the growth in noninterest-bearing balances.
A: Management said payment volumes are up and they are committed to the business. They said the debit card portfolio is driving payments as the retail customer base grows and they exited some small, high-expense areas. For deposits, they said the 6% noninterest-bearing growth matches their long-term trend because they focus on acquiring checking customers and expect mid-single-digit growth going forward.
"But then our debit card portfolio is really what is driving the payments volume." — Daniel H. Westhues
margin and balance sheet outlook
Q (Christopher McGratty · KBW): The analyst asked for an outlook on margins and balance sheet growth, and how net interest income may evolve. He also asked about using pension termination proceeds and any change in M&A conversations.
A: Management detailed loan repricing: they have "$700 million" rolling off in fourth quarter and "$2.2 million" rolling off next year, and said reinvesting should improve yields by about "100 basis points". They noted a consumer mix shift toward residential first mortgages and HELOCs, see securities repricing opportunity, and expect net interest margin and net interest income to grind higher. On pension proceeds, they just locked it in and have made no decisions about using it; on M&A they have no updates.
"there is additional opportunity for that net interest margin and net interest income to grind higher." — James K. Ciroli (CFO)
commercial loan demand with higher rates
Q (Matt Olney · Stephens): The analyst asked what commercial borrowers are saying about higher rates and whether higher rates will reduce loan demand. He wanted to know if demand is weakening.
A: Management said loans grew at a 3% linked-quarter annualized rate, and if you exclude declines in other consumer loans the linked-quarter annualized growth is about "4%". They said mid-single-digit loan growth is the long-term expectation and their commercial loan pipeline remains encouraged and as strong as a quarter ago.
"So 4% seems right to us when environments are a little bit more competitive and a little bit more irrational at times." — James K. Ciroli (CFO)
ways to lower rate sensitivity
Q (Eric A. Hallgren): The analyst asked what strategies the bank might use to moderate asset sensitivity if they want to reduce exposure to rate volatility.
A: Management said they remain slightly asset sensitive and view the current higher-for-longer rate environment as beneficial, but they are taking steps to reduce sensitivity. They put on a cash flow hedge at the end of the quarter and will consider prudent measures, including adjustments in the securities portfolio, to reduce exposure to rate volatility.
"I would tell you that when you look at when you look at our queue where we make the interest rate risk disclosures, and you will see that we are we are still slightly asset sensitive." — James K. Ciroli (CFO)
buybacks and floating-rate loan mix
Q (Nathan Race · Piper Sandler): The analyst asked whether the bank might step up buybacks until an acquisition happens. He also asked the mix between Prime and SOFR within the roughly "$2.5 billion" of floating rate loans.
A: Management said they are cautious on buybacks even though they see excess capital ("$8.28" per share) and some unrecognized value, so "we are not as aggressive with our buyback." They noted a "$100 million" authorization and will balance buybacks against M&A opportunities. On the floating-rate mix, management said they will get back to the analyst and confirmed the "$2.5 billion" number.
"So we are not as aggressive with our buyback." — James K. Ciroli (CFO)
public deposit seasonality and nonperformers
Q (Brandon Berman · BofA): The analyst asked about seasonality in the public deposit portfolio and how that could affect deposit costs in the fourth quarter. He also asked whether the rise in commercial nonperformers was tied to the isolated borrowers mentioned earlier.
A: Management explained the seasonality is driven by the state of Missouri where tax and property tax payments are due in December, so spot balances rise into fourth quarter though quarterly averages can be flat. They said the public fund portfolio's cost can drive period-to-period deposit cost changes. On nonperformers, management said the increase was situational and specific to certain commercial situations, not a thematic credit shift, and they remain comfortable with portfolio positioning and allowance coverage.
"In the state of Missouri, tax payments are due, property tax payments are due in December." — James K. Ciroli (CFO)