Oct 21, 2026 earnings call — LIHTC growth and core system conversion
Adjusted net income of $36 million and reaffirmed gross loan growth guidance of 10%-15% annualized for Q4.
Revenue $0.1B (est $0.1B) · EPS $2.21 (est $2.09)
Key quotes
"Our LIHTC lending business continues to perform exceptionally well as the demand for affordable housing remains robust, driven by a lack of supply and ongoing affordability challenges nationwide."
"Our digital transformation remains a key strategic priority, and the completion of our third core conversion in October was another important milestone in that journey."
"Total loans grew $190 million in the quarter, or 11% annualized when excluding the M2 portfolio runoff."
Analyst Q&A 6
LIHTC demand and fees
Q (Jeff Rulis · D.A. Davidson): Analyst asked how rising rates affect the LIHTC portfolio: demand, credit, and fee generation historically and in the upcoming cycle.
A: Management said higher long-term rates are a headwind because developers must rework capital stacks. They said the LIHTC business is durable across rate cycles, credit is largely unimpacted because rates are fixed at closing, and fees can be modestly affected if long rates move between term sheet and close.
"One of the things we love about this business is it's very durable through all rate cycles." — Todd Gipple (CEO)
Loan growth mix and future size
Q (Damon DelMonte · KBW): Analyst asked how much loan pipeline growth is LIHTC versus traditional community banking, and how big the LIHTC business could grow over time.
A: Management said current pipeline mix is about 70% LIHTC and 30% traditional, with recent strong growth in traditional banking helping reach their 10%-15% growth guide. They said they have invested in faster origination processes and expect the LIHTC business to grow, but they will prove that growth before giving firm targets and noted equity availability is a current industry headwind.
"What I can tell you is that we have spent the last couple of years really working on and investing in the factory so we can go faster." — Todd Gipple (CEO)
Deposit betas and loan pricing
Q (Nathan Race · Piper Sandler): Analyst asked how deposit and asset betas will behave if rates rise, whether funding mix can offset repricing, and what new loan production yields look like.
A: Management said they are close to neutral liability sensitivity and expect betas to be balanced, but liability sensitivity could show up if hikes continue. They are focused on raising non-interest-bearing deposits and said pricing has firmed: targeted spreads around 225-250 bps over FHLB implying upper-6% yields, fixed loans in the 650-675 range, and floating in the 7%-7.25% area.
"When we look at what's coming on for fixed loans, we're targeting more in that 650-675 range." — Nick Anderson (CFO)
New offtake process and capital benefit
Q (Brandon Rud · Stephens): Analyst asked whether new partnerships will let them do more LIHTC offtakes per year and how much capital benefit selling B pieces would free up.
A: Management said the new perm offtake process should be much more nimble and could smooth origination by allowing inventory build and more frequent offtakes. They said they currently hold a little over $100 million in B pieces and that selling them would free up 100 basis points of regulatory capital (CET1 and total risk base).
"When we sell those B pieces, that will free up 100 basis points of regulatory capital, CET1, and total risk base." — Todd Gipple (CEO)
Capital allocation once structures start
Q (Nicholas Holowko · Raymond James): Analyst asked how capital freed by new LIHTC structures would affect choices between organic growth, buybacks, dividends, or M&A and whether higher rates hurt offtakes.
A: Management said supporting organic growth will increase in 2027, they remain opportunistic on buybacks and dividends, and M&A has a very high bar though they are more open to conversations. They also said LIHTC loans on their balance sheet are floating rate, so higher rates do not hinder the new-style offtake completion.
"Those assets on our balance sheet are floating rate." — Todd Gipple (CEO)
Efficiency, M&A priorities, and credit outlook
Q (Brian Martin · Brean Capital): Analyst asked about efficiency targets after conversions and $10 billion, M&A priorities (size, deposits), tax rate, and expectations for reserves/provisions.
A: Management said efficiency is mid-50s now and they expect improvement toward low-50s as conversion benefits arrive and revenue grows. They said M&A must fit a tight "strike zone", favoring bolt-ons in central Iowa or a similar fifth market, and emphasized acquiring strong people and core deposits. They reported an effective tax range around 8%-10% and said asset quality is strong while they plan to maintain CECL around 123-124 basis points to provide for growth.
"We like operating in this 123, 124 basis points of CECL." — Todd Gipple (CEO)