Oct 29, 2026 earnings call — Fintech deposits, margin expansion, and credit provision
Reported earnings were $0.03 per diluted share, weighed down by a provision for credit losses of approximately $9.9 million.
Revenue $0.0B (est $0.0B) · EPS $0.04 (est $0.41)
Key quotes
"Fintech payment deposits increased 28% sequentially to $766 million, now representing nearly 1/4 of our total deposits and up nearly 55% from a year ago."
"Nearly 75% of the increase in nonperforming loans during the quarter was attributed to 1 acquisition and development land loan involving circumstances specific to the borrower and the property."
"Excluding nonrecurring interest income in the prior quarter, core net interest margin expanded 15 basis points sequentially from 3.87% to 4.02%, reflecting continued loan growth, lower funding costs and ongoing balance sheet optimization."
Analyst Q&A 3
loan loss provision outlook
Q (Joseph Yanchunis · Raymond James): How should we think about a normalized provision expense if credit stays stable? Also, how much more can you cut risk and compliance staff, when were the cuts made, will Q4 see cost benefit, and can noninterest expense stay below $30 million given wage inflation?
A: They said much of the quarter's provision was specific reserves: $4.6 million for the land loan and $3.2 million from legacy SBA migration, so you can strip those out to see a normalized level. On risk and compliance they described heavy AI use: 14 certified Claude engineers and 100 Digis, and expect only about 5 to 7 more headcount reductions there. They plan to keep risk/compliance expense around the $9.5 million, $10 million level into the rest of this year and see only a small change into 2027, and they believe NIM has room to move higher via margin optimization and more low-cost fintech deposits.
"So if you strip that out, you can sort of get to what a normalized provision level is absent, specific reserves and go from there." — Michael Sumbs (CFO)
nonperforming loan and fintech deposits
Q (William Jones · KBW): Was the nonperforming loan a criticized loan last quarter and how was it identified and will it be resolved? Also, how do you see the right long-term mix between fintech and core deposits, and how sensitive are fintech deposits to Fed rate moves?
A: They said the loan was identified as criticized and, at maturity, an updated appraisal came in significantly lower due to entitlements; they hired a forensic appraisal firm and recorded a $4.6 million specific reserve, writing the loan down to current appraised value less selling costs. On deposits, they said the CoRe bank is limited to their local markets but fintech is national with clients in 40 different states, a pipeline of 50 fintechs, nearly $1 billion in fintech deposits (almost $800 million now) and they expect to exceed $1 billion soon. On rate sensitivity, they said interest-bearing fintech deposits can be indexed to Fed funds and may show a 100% beta to Fed funds if fully indexed, though overall the fintech pool including noninterest-bearing deposits tends to be lower beta.
"We did record a $4.6 million specific reserve on it, which wrote the loan down to current appraised value less selling costs." — Michael Sumbs (CFO)
plan if rates rise; fees and losses
Q (Sun Young Lee · TD Cowen): If rates rise further, will you switch to defense like last cycle, and how should we think about 2027 loan and deposit growth? Also, on the $13 million AD&C portfolio and the close to $5 million specific reserve, what is realistic loss content and net charge-off timing? Finally, when will fee income inflect given fintech growth and lower equity-method income?
A: They said this cycle is different and they still see loan growth opportunities, especially in specialty lending, and are remixing the portfolio into higher-yielding loans; core loan yield rose about 20 basis points versus Q2. For the AD&C credit they said there could be a similar level of charge-offs in Q4 as in Q3 while they work through migrated nonperformers, they feel good about the reserve based on current appraised value but timing of resolution is hard to predict. On fees, they said payment card and service charge income are growing and are the focus, while equity-method income depends on mortgage market activity and may stay slow while rates are elevated.
"So I would say from a charge-off standpoint, there could be a similar level in Q4 as to what you saw in Q3 as we continue to work through some of the loans that have migrated into the nonperformer." — Michael Sumbs (CFO)