Dave Rochester

Dave Rochester inquired about the expected timing for Flagstar Bank N.A. to consistently hit the $1.7 billion-$2.2 billion C&I production run rate and when total loans are expected to grow again. He also asked if the planned hiring of 100 people for next year would involve new verticals and what additional regulatory relief, beyond cost savings, the bank gains from eliminating the holding company.

Answer

Lee Smith, Chief Financial Officer, stated that the balance sheet's low point is expected in Q4 2025 ($90B-$91B), with total loans stabilizing then and starting to grow slightly in Q1 2026, trending upwards from Q2 2026. Joseph Otting, Chairman, President, and CEO, confirmed C&I originations are expected to exceed $2 billion consistently. Joseph Otting also explained that eliminating the holding company provides regulatory relief by removing duplicate examinations from the OCC and the Fed, freeing up resources and time, and is a logical step given the bank's focus on admitted activities.

Dave Rochester from Cantor asked about the timing for Flagstar Bank N.A. to reach its projected C&I production run rate of $1.7-$2.2 billion, when total loans are expected to start growing again, and if the planned hiring of 100 new bankers in 2026 includes new vertical expansions. He also inquired about any additional regulatory relief gained from the elimination of the holding company beyond cost savings and stress test exemptions.

Answer

CFO Lee Smith stated that the balance sheet's low point is expected in Q4 2025, with slight growth in Q1 2026 and more significant growth from Q2 2026 onwards. CEO Joseph Otting confirmed that C&I originations are expected to consistently exceed $2 billion, driven by new hires and existing bankers deepening relationships, with no new verticals planned for the 2026 hires. He also noted that eliminating the holding company reduces redundant examinations and frees up resources and time, aligning with the bank's strategy of not engaging in non-admitted activities.

Dave Rochester asked for Valley National Bancorp's perspective on a more normalized Net Interest Margin (NIM) level, considering the forward curve, CRE remix, and funding initiatives. He also inquired about the progress and expected impact of hiring for upmarket C&I and business banking, including underwriters, on future growth.

Answer

Travis Lan, CFO, projected a normalized NIM of 3.20%-3.40% for Valley, up from historical 2.90%-3.10%, with an anticipated 20 basis point expansion from Q4 2025 to Q4 2026, and potential upside from non-interest deposits. Gino Martocci, President of Commercial Banking, stated they are in the 'second or third inning' of hiring senior bankers and underwriters, aiming for strong momentum in 2026. Ira Robbins, CEO, highlighted a robust $3.3 billion pipeline, and Travis Lan, CFO, projected mid-single-digit loan growth (4-6%) for 2026, driven by these holistic bankers who also bring deposits.

Dave Rochester from Cantor inquired about Valley National Bancorp's expectations for a more normalized Net Interest Margin (NIM) level in 2026, considering the forward curve, CRE remix, and funding initiatives. He also asked about the progress and timeline for hiring in the upmarket C&I effort, including underwriters, and when a boost in growth from this initiative is expected.

Answer

CFO Travis Lan projected a new normalized NIM range of 3.20%-3.40% for Valley National Bancorp, up from historical levels, with an anticipated 20 basis point expansion from Q4 2025 to Q4 2026, and further upside from non-interest deposit growth. President of Commercial Banking Gino Martocci described the upmarket C&I hiring as being in the "second or third inning," with strong traction in bringing on senior bankers and underwriters to drive momentum in 2026. CEO Ira Robbins and CFO Travis Lan outlined expectations for mid-single-digit loan growth (4%-6%) for 2026, driven by these holistic bankers who also bring deposits.

Dave Rochester inquired about the fixed-rate asset repricing factored into the NII guide, seeking details on expected loan and securities balances rolling over, the anticipated yield pickup, and longer-term interest rate expectations. He also asked for an update on the bank's comfort with share buybacks given higher capital ratios and clearer portfolio growth.

Answer

CFO Ryan Richards indicated a potential two to three basis point pickup on earning asset yields from fixed asset repricing, embedded in the NII guidance, and mentioned that fixed-rate assets include a mix of behavioral fixed-rate loans across CRE, CNI, and mortgages. Regarding capital, Ryan Richards stated that including AOCI, the bank aims to be in line with peers, expecting to approach those levels in about twelve months, which would make them more comfortable with buybacks.

Dave Rochester from Cantor inquired about the fixed-rate asset repricing factored into the NII guide, seeking details on expected loan and securities balances rolling over, the anticipated yield pickup, and longer-term interest rate expectations. He also followed up on the bank's comfort with share buybacks, given improved capital ratios and clearer outlook on portfolio and growth.

Answer

CFO Ryan Richards indicated a slightly to moderately increasing loan growth guide and continued securities remix into loans, projecting a 2-3 basis point earning asset yield pickup from fixed asset repricing, including various fixed-rate-like loans. Regarding capital, Ryan Richards stated that including AOCI, the bank aims for a central tendency around 10% relative to peers, expecting to approach those levels in about 12 months before considering buybacks.

Dave Rochester asked about potential upside to M&T Bank's net interest margin (NIM) beyond the Q4 guide, considering Federal Reserve rate cuts and fixed-rate asset repricing. He also inquired about the bank's concerns regarding a potential government shutdown and its exposure to the Tricolor situation.

Answer

Daryl Bible, SEVP and CFO, stated M&T's modeling embeds five rate cuts (two this year, three next), resulting in a neutral NII sensitivity. He noted continued benefits from fixed-rate asset repricing and stable deposit betas. Regarding a government shutdown, Mr. Bible mentioned monitoring sectors like government contractors, SBA, HUD/FHA, CNI healthcare, and nonprofits, but hadn't seen significant stress yet. For Tricolor, he confirmed M&T (Wilmington Trust) had no lender exposure, only roles as warehouse/account bank, custodian, and various securitization trustee roles, and is monitoring the legal process.

Dave Rochester inquired about the private bank's outlook, specifically deposit and AUM targets, and Citizens Financial Group's confidence in hitting year-end goals. He also asked about the sensitivity of the $325-$350 medium-term margin target to changes in the Fed funds rate.

Answer

CEO Bruce Van Saun indicated that private bank deposit growth would not be linear but expects net growth, while AUM targets depend on the timing of wealth liftout conversions. President Brendan Coughlin expressed confidence in sustained private bank momentum due to team growth, new capabilities, and cross-selling. Bruce Van Saun also explained that Citizens has layered in hedges to protect against aggressive Fed rate cuts, solidifying the view that the $325-$350 NIM target can be sustained at lower Fed funds rates.