Oct 22, 2026 earnings call — Dividend increase and large buyback authorization
Board approved a 25% increase on our quarterly common dividend and a $350 million stock buyback authorization.
Revenue $0.3B (est $0.3B) · EPS $0.63 (est $0.59)
Key quotes
"As we disclosed yesterday in a separate press release, we are very pleased that our board approved a 25% increase on our quarterly common dividend and a $350 million stock buyback authorization."
"The primary drivers were the absence of approximately $3.4 million of purchase discounts and deferred fee accelerations recognized last quarter, along with higher funding costs."
"Loan growth was broad-based across our market, but particularly within the commercial segment, with total loans increasing at a 3.3% annualized linked quarter rate."
Analyst Q&A 6
NIM outlook and funding costs
Q (Arren Cyganovich · Truist): Will NIM stay stable into the fourth quarter and were the headwinds from higher funding costs? Also, how is the balance sheet positioned to absorb higher rates over the next year?
A: Management said margin should be stable next quarter because of volatility in funding costs and the overall interest rate environment. They expect about $250 million in cash flows from lower-yielding securities and commercial loan repricing to help expand net interest income and stabilize NIM. They also said the bank is asset-sensitive and should benefit if interest rates rise.
"Due to changes in the interest rate environment and the impact it has had on cost of funding, we think that until we get more clarity on that front, margin will remain stable." — Said Ortiz (CFO)
Other income, auto delinquencies, competition
Q (Brett Rabatin · StoneX Group): Will other income rebound and what is the outlook for fee income? Also, why did auto delinquencies rise and what happened with the construction shared national credit? Are credit unions increasing competition and how will that affect margin and deposit costs?
A: They said the quarter-to-quarter decrease in other income was because gains realized in Q2 did not repeat, so other income should remain around Q3 levels. The construction loan was repaid early in the quarter, removing that delinquency risk, and auto sales are down with some seasonality so the auto portfolio is decreasing but they expect it to stabilize. On competition, they said some credit unions are more aggressive on large balances, and the bank will try to be competitive without overreacting.
"The decrease in the quarter was some gains that we were able to realize on the second quarter that we did not have this quarter." — Said Ortiz (CFO)
Capital return policy and deposit repricing
Q (Kelly Motta · KBW): Would you consider returning more than 100% capital if capital stays strong? What would give you comfort to do so? Also, how much of government deposits repriced and did that bake in recent Fed moves? And how will inflation affect consumers?
A: They said the goal is to stay around 100% capital return and they are unlikely to exceed that unless opportunistic; they may act in 2027 if opportunities arise. Management said government market linked accounts saw an increase of about 12 basis points in cost, and Prime and SOFR repricing timing affected loan and deposit movements. They also said they are monitoring consumer credit closely and feel the portfolio is behaving well, but inflation is affecting consumers on items like electricity and gasoline.
"We're probably not going to get there unless it's opportunistic." — Aurelio Alemán (CEO)
No substantive question
Q (Chase · Raymond James): The caller identified himself but did not ask a substantive question.
A: The analyst only introduced himself. Management only acknowledged with a brief response and gave no substantive answer or new information.
Securities reinvestment and loan pricing
Q (Speaker 7): Why did yielding securities and other earning assets move lower despite reinvestment, and what is the repricing opportunity into 2027? Are you seeing any slowdown in commercial demand? Where are new commercial loans pricing today?
A: They said Q2 included an acceleration of deferred fees that lowered reported yields; excluding those one-timers, securities yield rose about 8 basis points and total earning assets were similar to the prior quarter. They bought about $400 million at 5.44% this quarter and noted they have $252 coming in on the fourth quarter yielding 2.23% that they expect to reinvest in the high 5s to lower 6s. They also said the commercial pipeline has not shown material slowdown yet and that new commercial loans are pricing roughly similar to current yields.
"We have $252 coming in on the fourth quarter yielding 2.23%, and we should be able to invest that on high 5s and lower 6s." — Said Ortiz (CFO)
NIM outlook, deposit costs, loan growth, reserves
Q (Manuel Navas · Piper Sandler): How should we think of NIM after the fourth quarter—flat or up into next year? What are marginal loan yields and marginal deposit costs (especially CDs)? Is CD appetite steady? What is driving commercial loan growth and will loan loss reserves keep falling?
A: They said the fourth quarter has both positives and negatives, and if rates increase (which is uncertain) that should be positive for NIM into 2027, but loan growth targets and asset mix will matter. On new loans, they said loan rates are similar to the yields shown in results, and on deposits they are renewing CDs at higher rates than the 3.30% cost today, so time deposit costs are rising. They described the commercial pipeline as diversified — new construction, M&A, business expansion, warehouses, and CRE investors — and said recent reserve decline was partly from updated mortgage historical experience; if credit remains stable they expect reserve levels to be similar going forward.
"Obviously, if rate increases happen, which are uncertain, it should be positive for our NIM into 2027." — Aurelio Alemán (CEO)