Oct 16, 2026 earnings call — Loan growth, margins, buybacks, and conversion delay
Q3 net income was $89.7 million and diluted EPS was $1.90, a 12% increase over prior quarter EPS.
Revenue $0.3B (est $0.3B) · EPS $1.90 (est $1.85)
Key quotes
"On September 30th, our approved commercial loan pipeline totaled $574 million, up from $510 million on June 30th."
"This one loan has a newly established $6.5 million specific reserve."
"During the third quarter, we repurchased $57.4 million in capital, executing on our long-term goal of prudently returning excess capital to shareholders."
Analyst Q&A 7
office loan went non-accrual
Q (Feddie Strickland · Hovde Group): Analyst asked details on the office loan that went non-accrual: location, type, and the workout plan. He also asked about $17 million of classified office loans due in Q4 and timing for loan growth.
A: Management said the loan is a local single-tenant office that will likely become a mostly empty building. They are working with the sponsor on an early-stage plan to convert it to multifamily and reserved down to an average value, creating a $6.5 million reserve. They also said the sponsor has a history of supporting projects and put the loan on non-performing status proactively.
"The other thing I would add is the sponsor has a history of supporting their projects." — Jeff Tengel (CEO)
net interest margin and deposits
Q (Justin Crowley · Piper Sandler): Analyst asked how margin moved through the quarter, the September spot NIM and spot deposit cost, and the outlook into next year. He also asked about share buybacks and capital return plans.
A: Management said margin rose gradually into September and the September spot NIM was 381. They noted securities yields are appearing higher in the margin due to OCI unrealized loss, and the spot cost of deposits for September was 144 or 1.44%, so they expect deposit cost pressure in Q4 but see asset yields improving. On capital return, they reaffirmed the plan to return 100% of profits via dividend and buyback and said they may not be more aggressive than that while funding buybacks from bank profits.
"For now, you will see a little bit of elevated yields in the securities book just because of that loss piece embedded in it." — Mark Ruggiero (CFO)
size and timing of non-performers
Q (Laurie Hunsicker · Seaport Research Partners): Analyst asked whether the new office non-performer was the $22.4 million loan and for clarification of the $62 million in office non-performers. She also asked about the life sciences non-performer and timing for resolution.
A: Management confirmed the new non-performer is a $22.4 million loan and the prior SNC loan is around $21.9–$22 million. They said the SNC is likely to return to accrual in January 2027 (Q1), the life sciences non-performer is one loan in a about $100 million portfolio with a $6 million reserve, and they hope to resolve that life sciences loan by year-end or spill into Q1.
"Just a reminder on that one, Laurie Hunsicker, we also have a $6 million reserve on that." — Mark Ruggiero (CFO)
office reserves, securities and yields
Q (Steve Moss · Raymond James): Analyst asked total reserves for the office portfolio, what securities the bank is buying now and their yields, current loan origination yields, and expected loan cash flows next 12 months. He also asked about expense outlook for 2027.
A: Management said there are a little over $14 million of specific reserves, not counting an $8 million charge-off on the SNC, so roughly $22 million of charge-off/reserve combined. For securities they paid a weighted average yield around 5% for the quarter and are seeing purchases near 6% in September, mainly mortgage-backed and agency securities. On loans, they said new commercial origination yields averaged about 6.5% in Q3, expect $1.5 billion to $2 billion of annual repricing or cash flow, and they aim to "hold the line on expenses" in 2027 while still investing in technology and the core conversion.
"For the quarter, we were basically weighted average yield of around 5%." — Mark Ruggiero (CFO)
one-time consolidation charges
Q (Laurie Hunsicker · Seaport Research Partners): Analyst asked whether there are any one-time charges from consolidating headquarters or if those costs are already included.
A: Management said they have not yet taken the charges but there will be some and they will include details in the 2027 guidance. They said the amounts will not be large but they will accelerate remaining rent expense on a couple of facilities with leases into 2028, and those charges will likely show in 2027.
"So, it won't be real significant dollars, but there'll be a couple of facilities that have leases out into 2028 that we would look to be accelerating the remaining rent expense on that." — Mark Ruggiero (CFO)
core conversion delay and cost
Q (Jared Shaw · Barclays): Analyst asked why the core conversion was moved to February, whether the delay raises incremental costs in Q4, and if efficiency benefits are pushed out. He also asked how margin would react to one or two rate hikes next year and CD strategy.
A: Management said they delayed because they did not feel ready and wanted to avoid risk and employee stress; they preferred to wait until February to minimize customer disruption. They said the incremental cost is mainly third-party consulting for one-time help and they are not running parallel core systems, so no large ongoing duplicate run costs. On rates, they said about 25%–30% beta on the non-CD deposit book would move costs a few basis points and roughly 25% of the loan book is tied to the short end, so some loan yield and deposit cost effects offset; CDs may add a bit more funding cost and they are shifting CD pricing to attract longer-duration CDs.
"As I also mentioned in my prepared remarks, you get one chance to get this right, and if you don't, then you'll have customer implications for a while." — Jeff Tengel (CEO)
commercial pipeline vs. actual funding
Q (Matthew Breese · Stephens): Analyst asked why the $574 million commercial pipeline has not turned into faster loan growth, how much of recent payoffs were unusual, and what normalized growth looks like. He also asked about hiring in Connecticut/New Hampshire and whether higher cap rates should drive higher reserves.
A: Management said the pipeline numbers are commitments, not funded loans, and that some outsized second-quarter payoffs were one-offs. They said construction loans can take 12–15 months to fund and they expect low single-digit growth in commercial real estate assuming normal payoffs. They noted no hires yet in Connecticut or New Hampshire but active outreach, and said reserve changes would follow observed CRE valuation data and qualitative judgment (Q factors), with transparency if reserves increase.
"So a $550 million pipeline probably leads to a little over $400 million in actual fundings out of the gate." — Mark Ruggiero (CFO)