Dave Rochester

Dave Rochester inquired about Flagstar Bank's comfort level in funding its planned loan growth for the year primarily through core deposit growth. He also asked about the prospects for stock buybacks, given the bank's significant excess capital and improving fundamentals.

Answer

Lee Smith, Senior Executive Vice President and CFO, expressed confidence in core deposit growth, citing avenues such as bank branches, new C&I relationships, and the private client bank. Joseph Otting, Chairman, President, and CEO, discussed capital deployment, emphasizing the focus on balance sheet growth in targeted areas and reducing non-performing loans. He confirmed that stock buybacks are a discussion point among the board and would be looked upon favorably if capital is not deployed elsewhere as the year progresses.

Dave Rochester inquired about Flagstar Bank's comfort level in funding its planned loan growth for the year with core deposit growth. He also asked about the prospects of stock buybacks, given the bank's significant excess capital and improving fundamentals.

Answer

Lee Smith, Senior Executive Vice President and Chief Financial Officer, expressed confidence in core deposit growth, citing avenues such as bank branches, leveraging new C&I relationships for deposits and fee income, and the private client bank. Regarding capital, Lee Smith stated that the board would consider deploying excess capital for buybacks if it's not utilized for balance sheet growth and non-performing loan reduction, especially as the year progresses.

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 about Prosperity's capital discussion, specifically if the current stock price below past buyback averages presents an immediate buyback opportunity, and inquired about blackout periods. He also sought clarity on the trajectory for Net Interest Income (NII) and Net Interest Margin (NIM) through 2026, considering the three upcoming deals and assuming Stellar closes by June 30.

Answer

David Zalman (Senior Chairman and CEO, Prosperity Bancshares) reiterated that buybacks would be opportunistic, confirming no 10b5-1 plan. Charlotte Rasche (EVP and General Counsel, Prosperity Bancshares) clarified blackout periods related to earnings and merger transactions. Asylbek Osmonov (CFO, Prosperity Bancshares) projected a standalone NIM of around 3.50% for Prosperity in 2026, with Stellar's higher margin (around 4.2%) being very accretive, leading to a combined minimum NIM of 3.5%. He attributed this improvement to repricing the bond portfolio and fixed loans, and reduced borrowing levels. Zalman highlighted strong tailwinds for NII and NIM in 2026 and 2027.

Dave Rochester asked about East West Bancorp's fee income growth aspirations for 2026, questioning if the double-digit growth seen in 2025 would continue given ongoing investments. He also explored opportunities for increased Commercial Real Estate (CRE) loan growth and the bank's strategy regarding its growing Tangible Common Equity (TCE) ratio.

Answer

CFO Christopher Del Moral-Niles affirmed the aspiration for continued double-digit fee income growth, referencing a 10% four-year CAGR. Regarding CRE, Mr. Del Moral-Niles noted that declining rates could stimulate activity, with Chairman and CEO Dominic Ng adding that the bank maintains strong discipline in concentration allocation and prioritizes long-term client relationships. Mr. Del Moral-Niles stated that the bank is proud of its strong capital levels, viewing them as a competitive advantage and a support for timely client service, without specifying a new target range for the TCE ratio.

Dave Rochester inquired about the expected trajectory of East West Bancorp's fee income growth for 2026, potential for increased Commercial Real Estate (CRE) loan growth, and the bank's strategy regarding its growing Tangible Common Equity (TCE) ratio.

Answer

Christopher Del Moral-Niles, CFO, stated the aspiration to continue double-digit fee income growth. Regarding CRE, Mr. Del Moral-Niles and Dominic Ng, Chairman and CEO, noted approaching favorable rate levels but emphasized selective partnerships and disciplined asset allocation. Mr. Del Moral-Niles reiterated commitment to top-quartile returns and best-in-class efficiency, viewing strong capital as a strategic advantage.

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.