Oct 23, 2026 earnings call — Deposit beta and Walton Trust growth
Reported core EPS of $1.75 for the third quarter.
Revenue $0.3B (est $0.3B) · EPS $1.75 (est $1.62)
Key quotes
"So I would expect that our normalized beta would be about 45% to 50% through this increase cycle, which would be consistent with the prior increase cycle, maybe a little bit better, but not a bit higher than."
"The growth in our fee revenue was led by Walton Trust, which increased 30% year-over-year and now represents approximately 60% of our total fee revenue."
"Gross loans grew 1% linked quarter or 5% annualized. Excluding the continued runoff of the Spring EQ portfolio, loans grew 2% linked quarter and 7% year-over-year."
Analyst Q&A 6
loan growth, deposit beta, Cash Connect
Q (Russell Elliott Gunther · Stephens): Analyst asked how to think about fourth-quarter loan growth by size and mix, whether higher rates could break their mid-single-digit loan goal, and whether the 35% noninterest-bearing deposit beta is sustainable.
A: Management said commercial C&I is growing and consumer growth is coming from mortgage and home equity but likely at a slower rate given mortgages above 7%. They expect a normalized deposit beta of about 45% to 50% through this increase cycle, similar to the prior increase cycle. For Cash Connect, a 25 basis point rate hike raises fees by about $2.7 million to $2.8 million and increases expenses by a similar amount, causing a modest margin pressure of several hundred thousand dollars per 25 basis points annually.
"I would expect that our normalized beta would be about 45% to 50% through this increase cycle, which would be consistent with the prior increase cycle, maybe a little bit better, but not a bit higher than." — David Burg (CFO)
deposits pace, securities use, capital target
Q (Christopher Marinac · Brean Capital,): Analyst asked whether deposits will track loans or grow faster, whether they will use the securities portfolio more instead of loans, and if high rates change the 12% capital target.
A: Management said through the cycle deposits generally track loans and they expect mid-single digit growth across both, noting recent core deposit growth about 10% versus loan growth about 5%. They are reinvesting into securities but plan to keep the securities portfolio in the low 20s percent of assets; the securities portfolio yield is about 2.80% and reinvestment has helped NIM. The 12% medium-term capital target still stands, but they reduced buybacks to about 80% of net income this quarter while watching interest rate volatility.
"Our expectation is probably mid-single digits across both generally." — David Burg (CFO)
Institutional Services activity, noninterest deposits, NIM
Q (Manuel Navas · Piper Sandler): Analyst asked if higher rates could slow Institutional Services and trust activity, whether that would affect noninterest-bearing deposits, and how NIM might react to further rate increases.
A: Management said deal activity in Institutional Services remains healthy and transactional balances move daily, so averages are a better activity measure; fee growth in the business grew about 5% quarter-over-quarter and deal activity rose about 4%. They said the securitization market is broad and resilient though growth may slow from about 20% a year. On NIM they noted the September exit NIM was for the month and they expect roughly 2 to 3 basis points of NIM improvement per 25 basis points, dependent on deposit beta.
"When you look at fee growth quarter-over-quarter, the fee growth in that business grew about 5%." — David Burg (CFO)
new loan yields, credit, Walton Trust growth
Q (Kelly Motta · KBW): Analyst asked what yields on new loans looked like and whether higher rates are creating new credit risks, and asked what sustainable growth rate looks like for Walton Trust.
A: Management said yield on new loans is largely neutral overall, though some originations like mortgage, NewLane and small business are accretive. Credit: they run a 24-month stress review at a 7.5% coupon for maturing CRE loans and have not seen material impact; one NPA this quarter was a one-off in a small portfolio. For Walton Trust, the goal is to grow the business double digits, though not at the 30% quarterly pace seen this year.
"Our goal, Kelly, is to grow that business double digits." — David Burg (CFO)
expense decline and guidance update
Q (Manuel Navas · Piper Sandler): Analyst asked what drove the quarter-to-quarter salary and other OpEx declines, how sustainable the improved efficiency ratio is, and whether management will update targets midquarter.
A: Management said the quarter-over-quarter decline in salaries and benefits was related to medical expenses and the quarter benefited from about $2 million to $3 million of favorable nonrecurring items, so the run rate may be a bit higher. They continue to aim to gradually reduce the efficiency ratio while investing in the business. On targets, they typically don't update midquarter but said credit trends look better and they expect to come in a bit better than net charge-off guidance.
"So when you look at salaries and benefits, that was really the quarter-over-quarter decline was related to medical expenses." — David Burg (CFO)
transactional deposit volatility and lending sentiment
Q (Sun Young Lee · TD Cowen): Analyst asked for more context on the concentrated transactional noninterest-bearing outflows, whether clients are more hesitant in C&I or CRE given rising rates, and whether double-digit wealth growth is sustainable.
A: Management said Institutional Services is transaction-based with meaningful daily inflows and outflows, so point-to-point measures can be volatile and averages are a better activity measure. On lending, CRE projects are sometimes harder to pencil and maturing loans may face refinancing challenges, while C&I appetite hasn't meaningfully changed though competition is rising. For wealth, about 70% of revenue is non-AUM and 30% is AUM, so diversified drivers give confidence in continued medium-term growth and they continue to gain share.