Oct 22, 2026 earnings call — Earnings, balance-sheet growth, and CEO succession
Third quarter net income was 67.8 million, or $1.09 per diluted share, and net interest margin rose to 3.44%.
Revenue $0.2B (est $0.2B) · EPS $1.10 (est $1.04)
Key quotes
"Although these relationships were newly reported as nonaccrual in the third quarter, the expected loss content had already been recognized through specific reserves established in prior periods."
"So loan growth should continue through the fourth quarter in the mid single digits."
"Our net interest margin of 3.44% increased 6 basis points from prior quarter and 20 basis points over the past year."
Analyst Q&A 6
credit costs and reserves
Q (Daniel · Raymond James): Analyst asked whether the new $22 million of nonaccruals will be charged off in Q4, whether reserves should stay stable as a percent of loans, and if there are any other near-term specific reserves to watch.
A: Management said they will not charge off the full amount of those loans and guided the full-year reserve level closer to 38 to 40 basis points. They said reserving going forward will largely track portfolio growth and they are not expecting new specific reserves beyond what was already reserved. They also said criticized and classified balances rose modestly as normal quarter-to-quarter migration and are not a broad concern now.
"We are not going to charge off the full amount of those loans." — Michele Kawiecki (CFO)
loan growth, margins, and expenses
Q (Russell Gunther · Stephens): Analyst asked what will drive loan growth and mix in 4Q and whether higher rates could destroy demand for the 6%–8% growth target. He also asked about margin outlook, loan yield sensitivity, and near-term expense outlook and normalized expense growth.
A: Management said muted loan growth this quarter reflected selective management of sponsor and shared national credit exposure while other commercial channels had good production and healthy pipelines. They said the consumer mortgage pipeline is being hit by higher mortgage rates, but commercial pipelines remain solid; margin should be stable in 4Q with some lift from asset repricing partly offset by sub-debt expense. On expenses, they said Q3 was elevated due to increased marketing and branding, Q3 run rate is a reasonable guide for Q4, and they expect 3% to 5% expense growth into 2027.
"So the pipeline on the consumer mortgage side is definitely being impacted now." — Michael J. Stewart (PRESIDENT)
fee income, growth, and buybacks
Q (Damon Del Monte · KBW): Analyst asked if gain-on-sale income will be weaker in 4Q and how that affects total noninterest income; asked whether card payments and wealth can grow high single digits in 2027; and asked if the company will use sub debt to support buybacks.
A: Management said Q4 had about $700 thousand of one-time items that will not recur and that gains on sale could be a little softer, but they expect fee income in Q4 to be roughly consistent with Q3. They said client-related fee categories should grow in the higher single digits into 2027 and that they will use some of the sub debt to buy back shares, expecting elevated buybacks in Q4 and possibly Q1.
"But we will use some of that sub debt to buy back shares and I think you will see an elevated level of share buyback in Q4 maybe potentially in Q1 as well." — Michele Kawiecki (CFO)
provisioning, hiring, and tax rate
Q (Nathan Race · Piper Sandler): Analyst asked whether provisions will cover expected Q4 charge-offs and whether the 3%–5% expense growth outlook includes production-related hires; also asked what initiatives the incoming CEO will accelerate and the tax rate to model.
A: Management said the new nonaccruals were already specifically reserved for in prior quarters and are in the allowance, so provisioning is not expected to need to cover those again. They said they will be opportunistic on adding commercial bankers—especially in the Michigan market—and that strategic planning is underway to optimize resources and grow EPS and tangible book value. For modeling, they said use a 14% effective tax rate.
"14%, I think, would be a good effective tax rate to use for the modeling." — Michele Kawiecki (CFO)
commercial opportunities and rate impact
Q (Janney Montgomery Scott): Analyst asked where the most commercial opportunity is for 4Q and next year and whether pipelines are up. He also asked how margin responds to rate hikes and how much fixed-rate loans will reprice in 12 months.
A: Management said the best momentum and pipelines are in the community and corporate bank C&I business and in asset-based lending, with investment real estate and low-income housing tax projects also providing opportunities; the commercial pipeline was modestly up quarter over quarter and stable year over year. They said each 25-basis point rate hike typically lifts margin 1 to 2 basis points, though sub-debt cost will offset some of that, and about $350 million at a 4.90 rate will reprice over the next 12 months.
"So with each 25-basis point rate hike, we typically see margin increase 1 to 2 basis points." — Michele Kawiecki (CFO)
shared national credit (SNC) changes
Q (Brendan · Hovde Group): Analyst asked whether the SNC book decline from $1,000,000,000 to $936,000,000 was normal turnover or an intentional portfolio change after last quarter's wireless carrier credit, and whether more realignment work is coming.
A: Management said the decline was a bit of both: normal renewals and some selective decisions not to participate after reviewing cross-sell and returns. They said they evaluate these relationships transaction by transaction and did not institute a core portfolio model change, so they will continue to review renewals individually and do not see a broad shift today.
"it is not like we instituted a core portfolio model change or something of that nature." — John J. Martin