Oct 23, 2026 earnings call — Timing shift to 2028 for transformation
Management pushed the turnaround timeline to 2028 and cut 2026 EPS to $0.10 to $0.15.
Revenue $0.5B (est $0.5B) · EPS $0.01 (est $0.07)
Key quotes
"During the third quarter, we generated $4.6 billion in new and increased C&I loan commitments, resulting in $2.9 billion in loan originations, up 4% compared to the prior quarter, and we ended the quarter with a strong pipeline going into the fourth quarter at $2.7 billion."
"During the quarter, our CRE payoffs totaled $1.2 billion, of which 35% were rated substandard."
"These events have caused an increase in our provision expense to $76 million in the third quarter."
Analyst Q&A 14
multifamily loan resets and maturities
Q (Christopher McGratty · KBW): Analyst asked for visibility on loan resets and maturities after the recent rate moves, and whether they face the same reset pressure again. He also asked about buybacks given capital levels and credit noise.
A: Management said the big reset year was 2027 with about $10 billion and that recent actions push visibility through Q1 of 2028; they emphasized a cautious, formulaic 18-month credit review and said most migration this quarter was on market-rate units. On buybacks, management said they will not do additional repurchases in Q4 and expect to resume in 2027, pending core earnings, credit trends, and C&I growth.
"So -- if you think about -- we're through that and if you think about this last quarter, it pushes us through to Q1 of 2028." — Lee Smith (CFO)
C&I loan growth and deposit capture
Q (David Rochester · Cantor): How much deposit growth came from new C&I lending and how confident are they in funding growth with new deposits at a low cost?
A: They reported $2 billion of net C&I loan growth in the quarter and said they brought in just under $600 million of deposits tied to that lending, which is roughly a 30% capture rate. Management said bankers are focused on deepening full relationships (deposits, fees) to fund future loan growth.
"In the third quarter, as we reported, net C&I loan growth was $2 billion, and we brought in just under $600 million of deposits around that commercial activity." — Richard Raffetto (COO)
drivers and risks to NII and deposits
Q (David Chiaverini · Jefferies): Which items in the net interest income walk are most at risk versus mechanical? Also asked if the C&I pipeline pull-through slowed through the quarter.
A: They said deposit growth is the main variable and the biggest risk; loan origination and fixed-asset repricing are more mechanical. On the pipeline, management described the external environment as resilient, said pull-through is solid and diversified, and they did not see a material slowdown late in the quarter.
"I think the question is, can we deliver on the deposit growth." — Lee Smith (CFO)
provision assumption and deposit beta
Q (Casey Haire · Autonomous): What does the forward guide assume for net charge-offs and how low can the ACL ratio go? Also asked September deposit cost and beta going forward.
A: They said use the provision forecast as the proxy for net charge-offs. For deposit cost, they reported a spot interest-bearing deposit rate as of September 30 of 2.56% and are targeting a 60% beta; interest-bearing deposit repricing beta recently was 32%.
"The way we think about the beta is we are targeting a 60% beta." — Lee Smith (CFO)
slower loan growth and NYC rent-reg portfolio
Q (Jared David Shaw · Barclays Capital): Why slow assumed loan growth for 2027/28 and what is sentiment among NYC rent-regulated landlords about supporting properties?
A: They said the growth plan is driven by deposit availability, expecting about 90% of growth from C&I with some residential. For rent-regulated owners, management said many still want to hold properties, may seek restructures to lower contractual coupons, and they have not seen a broad desire to exit ownership.
"Our documentation, just as a reminder, resets at their SOFR index plus 300 or reference rate plus 275." — Joseph Otting (CEO·CHAIR)
ending asset level outlook
Q (David Smith · Truist): Can you confirm expected ending assets over the next few years and whether $1 billion a quarter net growth is the plan? Also asked what supports CRE runoff continuing.
A: They confirmed end of '26 total assets $82.1 billion, end of '27 $92.1 billion, and end of '28 about $97 billion. They said runoff is driven by a large number of contractual resets and maturities (about $19 billion across Q4 '26, '27 and '28) and that only $3 billion of the 2027 $10 billion is more than 50% rent regulated.
"Yes, you're right, David. So end of '26, we're at $82.1 -- this is total assets, $82.1 billion, end of '27, $92.1 billion." — Lee Smith (CFO)
noninterest-bearing deposit growth drivers
Q (Ryan Kenny · Morgan Stanley): What drove the quarter's growth in noninterest-bearing deposits and can it continue? Also asked about net charge-off assumptions for rent-regulated loans.
A: They said they converted about $900 million to $1 billion of very low-cost interest-bearing deposits into noninterest-bearing deposits during a product review, which lifted that line. On charge-offs, they said $34 million of the quarter's $74 million net charge-offs was already fully reserved for; excluding that, net charge-offs were about $40 million and the higher-rate environment increased provisioning needs.
"We did move around $900 million to $1 billion of interest-bearing deposit." — Lee Smith (CFO)
why pause buybacks and strategic options
Q (Ebrahim Poonawala · BofA): Why suspend buybacks now instead of buying at current book value, and would strategic options like mergers be considered to unlock value?
A: Management said pausing buybacks is a prudent choice until core earnings strengthen, credit forecasts are clear, and C&I growth solidifies; they expect to resume buybacks in 2027. They also said executing the existing business plan is the best path to unlock shareholder value, though they monitor markets for opportunistic moves.
"Ebrahim, I just think it's prudent until we build our core earnings and ensure that our credit quality forecast is accurate." — Joseph Otting (CEO·CHAIR)
which yield curve used for forecast
Q (Benjamin Gerlinger · Citibank): Which yield curve did the forecast use — 9/30 or a later date? And how much does curve movement change credit resolution dynamics?
A: They said the forecast used a September curve that included four hikes (September, December, March and June). Management agreed that lower rates would ease credit pressures and noted many borrowers may choose floating rates now to wait for refinancing opportunities if yields fall.
"This was based on a September curve that had 4 hikes in it." — Lee Smith (CFO)
NIM headwinds and funding mix
Q (Bernard Von Gizycki · Deutsche Bank): What are the headwinds to NIM growth, and will wholesale borrowings decline as shown on the funding mix chart?
A: They said deposit costs and loan mix were headwinds; Q3 spread was a bit lighter due to loan mix, and nonaccruals being flat limited NIM upside. They confirmed FHLB borrowings are expected to come down about $1 billion and a $300 million subordinated note payoff in Q4 '28 also helps the funding mix.
"In Q3, and Rich can touch on this a little bit, given the mix of C&I lending that we did, the -- I would say that the spread came in a little lighter than Q2 when we were at 2.25%." — Lee Smith (CFO)
provision sensitivity and nonaccrual path
Q (Sun Young Lee · TD Cowen): If the December hike is avoided, would the provision forecast be lower? Also asked visibility on nonaccruals and if the prior $2.3 billion target is still reachable.
A: They said provisions are linked to interest rates so avoiding a hike could lower provisions, but provisions also depend on C&I growth and Moody's economic forecast. They now assume year-end nonaccruals around $2.6 billion and expect to reduce to about $2 billion in 2027, though progress is not linear and depends on workout outcomes.
"Right now, we're assuming that we end the year at about $2.6 billion of nonaccruals, Janet." — Lee Smith (CFO)
ACL on rent-reg and selling rent-reg loans
Q (Anthony Elian · JPMorgan): What is embedded for ACL on criticized/classified rent-reg loans, and are they considering selling parts of the NYC rent-reg portfolio like some peers?
A: They said the ACL shown reflects what is embedded and to use the provision for charge-off expectations, with most provisions weighted to multifamily. Management said they prefer loan-by-loan resolutions over selling now, believing that working through loans preserves capital, though they will monitor the market and could opportunistically sell if attractive offers appear.
"we have the team in place. We've been working these out that a year or 2 from now, we think our shareholders are better served by us loan by loan, having resolutions to that." — Joseph Otting (CEO·CHAIR)
fee income decline drivers and floating CRE
Q (Matthew Breese · Stephens): Why is fee income guided lower and how much of the $10.7 billion floating CRE is temporary versus structural?
A: They said the fee decline is mainly lower gain on loan sales from mortgage origination due to higher rates and reduced deposit and loan volumes; other fee lines should grow over time. On floating CRE, some is health care CRE and some borrowers are choosing short-term floating (or SOFR) as a landing spot while they wait to refinance; they expect about 65% to ultimately pay off at maturity.
"So the biggest drivers of the reduction in the fee income forecast are lower gain on loan sale from the mortgage origination business, the higher rate environment, I mean that's been sort of costing us a couple of million a month." — Lee Smith (CFO)
higher expense guide reasons and outlook drivers
Q (Jon Arfstrom · RBC): What drove the slightly higher expense guide for 2027 and any deeper reset items that could make things worse?
A: They said the higher guide reflects continued investment in people and technology, which moved expenses beyond the prior top-end guide. On the broader outlook, they stressed detailed work on the mechanical repricing and said the key variable is whether they can bring in $800 million to $1 billion of deposits per quarter to fund growth and meet the plan.
"And so that just put us sort of beyond the top end of the previous guide and into the sort of the current guide, which is consistent with where our expenses are this year." — Lee Smith (CFO)