Oct 21, 2026 earnings call — Strong loan growth and margin expansion
Net income was $22.8 million and net interest margin improved to 4.12%, with total loans up $95.3 million this quarter.
Revenue $0.1B (est $0.1B) · EPS $1.17 (est $1.10)
Key quotes
"Total loans increased by $95.3 million, or 9% annualized, with growth across the commercial, consumer, and residential mortgage portfolios."
"Since the Codorus Valley merger in 2024, we have been focused on replacing the loan accretion as it winds down."
"The efficiency ratio came down to 56% in the third quarter, and on an annualized basis, I am projecting the expense run rate to be between $153 million and $157 million."
Analyst Q&A 5
Loan growth and prepayments
Q (Emily Graves · Hovde Group): She asked what would need to improve for loan growth to rise and how prepayment volumes looked in the quarter. She also asked about new loan origination yields versus roll-off yields and signs of credit stress.
A: Management said the loan pipeline remains robust and they are confident in the team's ability to generate loan growth. Prepayment activity is lower than earlier in the year but still occurring. New floating-rate loan spreads are around 225-250 and fixed rates are coming in the low sevens; they have not seen borrower stress in the portfolio.
"The new spreads on the floating rate loans are probably in the 225-250 range on average." — Neelesh Kalani
Sources of C&I growth and expenses
Q (Ken Kohut · Raymond James): He asked how much C&I growth came from the middle-market team and where growth is coming from. He also asked whether the $15.5 million home equity purchase was strategic or opportunistic and about the timing of the expense run-rate.
A: Management said a significant portion of C&I growth came from their lower-end middle-market efforts across the bank footprint as new expertise enabled the teams. The $15.5 million home equity purchase was opportunistic and not part of the core strategy; core loan growth for the quarter was 7% even without purchases. On expenses, 4Q should be similar to 3Q, then costs will slowly build with new hires and mid-year salary increases and ongoing tech investments.
"Our core loan growth for the quarter was 7%, even without the purchases." — Neelesh Kalani
NIM, rate assumptions, risks, funding mix
Q (Jake Civiello · D.A. Davidson): He asked if core NIM is expected to be flat while accretion falls and what rate assumptions were used. He also asked the biggest risks to the 2027 outlook and how they plan to fund loan growth if deposits lag.
A: Management expects some increase in core NIM and noted core NIM excluding purchase accounting is 372 versus the prior 340-350 range. Their modeling assumes another 2 increases of 25 basis points over the next year. The biggest risk is the economic environment; opportunities to improve profitability include higher loan production, OFA, deeper client relationships, and tech investments. In the short term they will use time deposits, money markets and wholesale but are focused on driving core deposit growth over time and have increased non-interest bearing deposits by $40 million year-over-year.
"Our modeling assumes another 2 increases over the course of the next year." — Neelesh Kalani
Home equity purchase details and M&A interest
Q (Daniel Cardenas · Brean Capital): He asked whether the lending market is rational or showing irrational behavior. He also asked for yield, vintage, average life and whether the purchased HELOCs were in-market, and he asked about M&A plans given capital levels.
A: Management said the market is mostly rational with occasional one-off deals that they avoid and that their relationship-driven approach differentiates them. The HELOC portfolio yields are in the 8% range, has strong FICO scores, average remaining term 357 months with only 3 months seasoning, projected average life about 6 years, and the loans are spread throughout the country rather than in-market. On M&A, their focus remains internal but they would consider deals that make financial, cultural and geographic sense.
"We feel like we have an incredible internal growth story and we certainly are open to discussions if it makes right financial sense and culturally it makes sense, geographically it makes sense." — Adam Metz
Deposit beta and capital plans
Q (Tim Switzer · KBW): He asked what deposit beta they expect through a Fed hike cycle and how deposit competition is trending. He also asked how they plan to deploy excess capital — dividends, buybacks, M&A, or other uses.
A: Management said they are still assessing beta in this early cycle and pointed to the prior cycle where beta was on the lower side, 25 basis points, but they expect it may be higher now and that outcomes will be market- and competition-driven. They are seeing more promos and cash incentives from large banks. On capital, they like having optionality: they would consider M&A if the fit is right, and also look at dividends, share repurchases, branch optimization and targeted hires.
"I can point to the previous rate hike cycle where our beta was on the lower side, 25 basis points." — Neelesh Kalani