Janet Lee

Janet Lee asked for clarification on how Renasant plans to drive increased profitability from the revenue side, beyond expense management, and whether the mid-single-digit loan and deposit growth target remains appropriate given recent trends.

Answer

Kevin Chapman (President and CEO) explained that revenue growth comes from improving scale and performance at individual and market levels, noting that the company is achieving above-average growth with over 300 fewer employees since the acquisition announcement. He emphasized increased accountability for individual and market returns. Regarding growth targets, he stated that mid-single digits remain the target, baking in potential Q4 payoff elevation due to a lower rate environment, but the focus is on finding every good opportunity.

Janet Lee asked for clarification on what 'expectations being raised further internally' for profitability means on the revenue side, seeking examples beyond expense management, such as low-cost deposits or fee-income products. She also inquired if the mid-single-digit loan and deposit growth target remains appropriate, given the recently muted payoffs.

Answer

President and CEO Kevin Chapman explained that improved profitability on the revenue side involves gaining scale by enhancing performance at individual and market levels, such as average loan per lender and deposit per branch. He noted that the company is achieving above-average growth with over 300 fewer employees since the acquisition announcement, reflecting increased accountability. Mr. Chapman reiterated the mid-single-digit growth target, which accounts for an anticipated uptick in Q4 payoffs due to a lower rate environment, and stated that new expectations would be set after evaluating Q4's prepayment speeds.

Janet Lee asked about the key drivers behind the strong growth in UMB Financial's institutional banking division, particularly trust and securities processing fees and assets under administration, and sought an outlook for this division. She also asked for clarification on the fee income run rate, excluding a one-time $6 million benefit.

Answer

Mariner Kemper, Chairman and CEO, attributed growth to asset servicing (alternatives, hedge funds, private equity) where UMB is a top national player, benefiting from market disruption and the democratization of private investing. He also cited corporate trust, where UMB is a consolidator, expanding into new markets like LA and New York, and new verticals. Jim Rine, President and CEO of UMB Bank, confirmed this is legacy UMB business that will benefit from Heartland referrals. Ram Shankar, CFO, provided a detailed breakdown, indicating a fee income run rate around $190 million, adjusting for security losses, BOLI death benefits, legal settlements, and derivative fees, while noting potential volatility from private investment monetizations and equity investments.

Janet Lee from TD Cowen questioned the primary growth drivers for UMB Financial's institutional banking division, including trust and securities processing and assets under administration, and sought an outlook for the division, including the impact of the 'Big Beautiful Bill' on HSA deposits. She also asked for clarity on the sustainable fee income run rate for Q4 after adjusting for Q3's one-time benefits.

Answer

Chairman and CEO Mariner Kemper attributed institutional banking growth to strong performance in asset servicing (alternatives) and corporate trust, driven by market disruption, strategic partnerships, and expanded geographic reach, while downplaying the 'Big Beautiful Bill' impact on HSA. CFO Ram Shankar detailed Q3 fee income adjustments, suggesting a Q4 run rate around $190M, subject to BOLI/COLI volatility, private investment monetizations, and equity investment changes, noting strong derivative team contributions.

Janet Lee from TD Securities revisited the M&A topic, asking First Hawaiian to clarify its current stance on potential mainland M&A opportunities and what specific criteria or characteristics would make sense for such an acquisition in the mainland. She then inquired about the potential positive impact on the bank's residential mortgage business if interest rates were to drop to the 5% range, questioning whether this would be helpful given Hawaii's supply constraints. Lastly, Lee asked for clarification on the $130 million paydown on corporate lines, specifically if it was a seasonal occurrence or a one-off event.

Answer

Chairman, President, and CEO Bob Harrison reiterated that the bank is open to talking to people about M&A in the Western U.S. and would consider the right opportunity, with no further specifics to share. Vice Chairman and CFO Jamie Moses stated that lower rates would increase activity in the residential mortgage business, which would be constructive for balances, acknowledging that supply constraints exist but increased activity would still be helpful. Bob Harrison clarified that the $130 million paydown on corporate lines was not seasonal but rather the repayment of earlier draws for specific projects that happened to land in the same quarter, noting that the draws themselves were not in the same quarter.

Janet Lee followed up on First Hawaiian Inc.'s M&A stance, asking for clarification on what type of mainland opportunities would be considered. She also inquired about the potential positive impact on residential mortgage activity if interest rates decline to the five handle, considering Hawaii's supply issues. Finally, she asked if the $130 million paydown on corporate lines was seasonal or a one-off event.

Answer

Bob Harrison, Chairman, President, and CEO, reiterated that M&A consideration would be limited to the Western States, with no further details to share. Jamie Moses, Vice Chairman and CFO, stated that lower rates would increase residential mortgage activity, which would be constructive for balances despite supply constraints. Harrison clarified that the $130 million paydown on corporate lines was not seasonal but rather the repayment of earlier draws for specific projects that coincidentally landed in the same quarter.

Janet Lee inquired about the Cash Connect business, specifically how revenue and Net Interest Income (NII) benefit would be impacted if interest rates were to decline, and whether this would lead to compression or increased financial benefit. She also asked about the pace and total impact of payoffs from consumer partnerships, such as Spring EQ, and their effect on commercial loan growth guidance.

Answer

CFO David Burg explained that a reduction in Cash Connect fee revenue due to lower rates would be more than offset by reduced expenses, resulting in a pre-tax profitability benefit of approximately $300,000 per 25 basis point rate cut. COO Arthur Bacci clarified this benefit flows through fee income and non-interest expense. Mr. Burg also noted increasing profit margins in Cash Connect due to pricing leverage and efficiency. Regarding loans, Mr. Burg detailed the $85 million Upstart portfolio sale and the expected $15-17 million monthly runoff from Spring EQ, which is being offset by strong growth in home lending and WSFS-originated consumer loans. He acknowledged commercial loan impacts from problem loan payoffs and lower line utilization but emphasized a strong $300 million commercial pipeline and recent talent acquisition.

Janet Lee from TD Bank inquired about the impact of declining interest rates on WSFS Financial Corporation's Cash Connect business revenue and profitability, specifically how NII benefits or compresses. She also asked about the company's low single-digit commercial loan growth guidance, including problem loan payoffs, and the expected pace and total impact of consumer partnership loan payoffs (Upstart, Spring EQ).

Answer

David Burg, CFO, and Arthur Bacci, COO, clarified that while Cash Connect fee revenue would reduce with lower rates, this would be more than offset by reduced expenses, leading to increased profitability (approximately $300,000 pre-tax benefit per 25 basis point cut). They noted the profit margin trajectory from 6% to 10% year-over-year. Regarding loans, David Burg detailed the $85 million Upstart portfolio sale and the expected $50 million quarterly runoff from Spring EQ, anticipating $15-$17 million per month. He highlighted strong double-digit growth in home lending and WSFS-originated consumer loans offsetting this runoff. Commercial loan growth was impacted by problem loan payoffs and lower line utilization, but the pipeline remains strong at $300 million, supported by talent acquisition.

Janet Lee from TD Cowen questioned Valley National Bancorp on the drivers of specialized deposit growth, its role in replacing indirect deposits, and whether the growth pace in other commercial and small business deposits could sustain a $2 billion annual rate. She also asked if the Q3 headwinds from commodity C&I payoffs were temporary and if any other parts of the portfolio are targeted for runoff.

Answer

CFO Travis Lan detailed that specialized deposit growth was broad-based, including contributions from healthcare, HOA, Cannabis, and National Deposits Group, alongside significant commercial growth across New Jersey, New York, and Florida markets. He expects specialty deposits to grow at an above-average rate but noted it's not the sole source. CFO Travis Lan confirmed that the commodity C&I payoffs were a temporary, unique dynamic for the quarter, and no other parts of the portfolio are targeted for runoff, suggesting a broader view of loan growth over a longer period.

Janet Lee asked about the specialized deposit growth, its role in replacing indirect deposits, and whether commercial and small business deposits could sustain a $2 billion annual growth pace. She also inquired if the Q3 headwinds from commodity C&I payoffs were temporary and if any other parts of Valley's portfolio are targeted for runoff.

Answer

Travis Lan, CFO, confirmed that specialized deposits (healthcare, HOA, Cannabis, National Deposits Group) are a focus and should grow at an above-average rate, but emphasized that deposit growth is broad-based across all markets, including commercial deposits in New Jersey, New York, and Florida. Travis Lan, CFO, clarified that the commodity C&I payoffs were a temporary dynamic unique to Q3, and no other parts of the portfolio are targeted for runoff, noting that total loans were up 2.5% annualized over the last six months despite these headwinds.

Janet Lee with TD Cowen inquired if the C&I loan decline was solely due to lower utilization and if the projected mid-single-digit loan growth for Q4 relies on utilization picking up. She also asked about the core NIM trajectory for 2026, considering asset sensitivity and potential yield curve steepening. Additionally, she questioned management's primary concerns if a government shutdown were prolonged.

Answer

President and CEO John Asbury and EVP and Wholesale Banking Group Executive David Ring clarified that while reduced line utilization was a material factor in the C&I loan decline, Q4 loan growth targets are supported by current pipelines and not solely predicated on a reversal in line utilization. EVP and CFO Rob Gorman and John Asbury projected low single-digit core NIM expansion per quarter, dependent on term rates and fixed-rate loan repricing, noting less asset sensitivity post-Sandy Spring acquisition. John Asbury expressed no particular concern about a prolonged government shutdown, citing past resilience of government contractors and minimal consumer impact, though it could further slow economic activity.

Janet Lee asked for an update on the company's sensitivity to rate cuts, specifically if the prior guidance of a one to two basis point NIM improvement per 25 basis point cut still holds, and whether this guidance included accretion. She also inquired about the implications of IBTX bankers adopting SouthState's business model, particularly concerning expenses, incentives for deposit costs or loans, and the potential impact on the growth profile.

Answer

Chief Strategy Officer Steve Young clarified that the prior guidance on NIM improvement per rate cut is impacted by the revised loan accretion forecast (down to $125M for 2026 from $150M) and the deposit beta. He noted that while the deposit beta for the first 100 basis points of cuts was 38%, the company is modeling 27% for future cuts, similar to the 2019-2020 easing cycle, with a potential lag. He expects NIM to start in the mid-$3.80s and move higher by late 2026/early 2027 as the deposit beta potentially improves. CEO John Corbett explained that IBTX's incentive system will align with SouthState's approach in 2026, basing incentives on PP&R growth and loan growth, with adjustments to encourage recruiting by not penalizing regional presidents for new hires' first-year compensation.

Janet Lee asked if the previous guidance of a 1-2 basis point NIM improvement per 25 basis point rate cut still holds, clarifying if it applied to core NIM or included accretion. She also inquired about the implications of IBTX bankers adopting SouthState's business model in 2026 on expenses, incentives, and growth profile.

Answer

Steve Young, Chief Strategy Officer, clarified that the core NIM guidance has changed due to a revised loan accretion forecast (down by 4 basis points for 2026) and a lower deposit beta assumption of 27% for the easing cycle, compared to 38% previously. He expects NIM to start in the mid-380s and move higher by late 2026/early 2027 as deposit beta potentially increases. CEO John Corbett explained that in 2026, IBTX incentives will align with SouthState's P&L-based approach for Regional Presidents, focusing on PP&R growth, with adjustments to encourage recruiting by not penalizing for new hire compensation in the first year.

Janet Lee asked about the mortgage finance self-funding ratio, specifically if there's a structural opportunity to reduce it further beyond the expected 85% for Q4, given the firm's increasing client deposits. She also sought clarification on the 'maturation of the platform' commentary regarding expenses, asking if it implies less need for significant talent hiring compared to previous years.

Answer

CFO Matt Scurlock confirmed that reducing reliance on mortgage finance deposits by growing commercial client deposits is an ongoing goal, as it improves margin, beta profile, and liquidity quality. CEO Rob Holmes added that the mortgage business is now viewed as a profitable industry vertical with diverse revenue streams beyond just warehouse yield. Regarding expenses, Rob Holmes clarified that while the firm will continue to add front-office talent, the extensive infrastructure build-out (operating risk, controls, accounting, compliance) is largely complete. This means incremental headcount additions are now much smaller on the margin, as the underlying support structure is already in place.

Janet Lee asked about Western Alliance Bancorporation's comfort level with limited loss potential on First Brands and Canter Group 5 exposures, and the adequacy of current reserves for NDFI exposure. She also inquired about beta expectations for ECR deposits and the outlook for mortgage revenue.

Answer

President and CEO Ken Vecchione expressed comfort with asset quality, anticipating no losses from Canter Group 5 due to collateral, guarantees, and a $25 million mortgage insurance policy, and no large reserve increases. CFO Dale Gibbons clarified ECR beta is closer to 70%, with credit-related deposits at 100% beta. Ken Vecchione highlighted strong mortgage-related income, up 21% quarter-over-quarter, driven by lower 30-year mortgage rates, and expressed optimism for 2026 despite seasonal Q4 declines.

Janet Lee inquired about Western Alliance Bancorporation's credit picture, specifically their comfort level with current reserves given NDFI exposure and potential for future increases.

Answer

President and CEO Ken Vecchione expressed comfort with asset quality, anticipating stability and no losses from Canter Group 5 or Point Bonita Fund 1, citing collateral, guarantees, and a $25 million mortgage insurance policy. He noted that CECL reviews are ongoing, based on macroeconomic factors, interest rates, and portfolio composition, and does not foresee another significant reserve increase. Regarding a follow-up on PP&R growth, interest expense, ECR deposit beta, and mortgage revenue, CFO Dale Gibbons clarified ECR beta is closer to 70%, with credit-related ECR deposits having a 100% beta. Ken Vecchione highlighted strong mortgage-related income due to lower 30-year mortgage rates, expecting continued momentum despite seasonal Q4 declines, and optimism for 2026.

Janet Lee asked for the size of the Bremer loan runoff observed in Q3 and sought clarification on whether the loan growth guidance 'excluding Bremer' also accounts for these runoffs or only the initial added loan amount. She also inquired about the nature of the strong fee income performance, particularly the jump in capital markets, other fee, and bank fees, asking if these represent organic trends or unusual occurrences, and if they indicate a sustainable run rate for growth.

Answer

CFO John Moran stated that the third-quarter Bremer runoff was about $200 million. He clarified that the fourth-quarter loan growth guidance is inclusive of everything (Old National plus Bremer), while the full-year guidance excludes Bremer because it wasn't present for the first four months. He confirmed that future runoffs from Bremer-related lines of business are expected to be reduced compared to the $200 million. Regarding fee income, John Moran indicated that the right run rate for total fee income is probably around $120 million, with Q3 being exceptionally good, especially in capital markets due to rate volatility, which he expects to normalize. Mortgage income was also seasonally strong in Q3 and will decline in Q4.

Janet Lee asked for the size of the Bremer loan runoff in Q3 and clarified if the Q4 loan growth guidance, stated as 'excluding Bremer' for the full year, also excludes the impact of Bremer runoffs or just the initial added loan amount. She also inquired about the drivers of the strong fee income, particularly capital markets, and if the Q3 performance represents a sustainable run rate.

Answer

CFO John Moran stated that the Q3 Bremer runoff was about $200 million. He clarified that the full-year loan growth guidance (4-5% excluding Bremer) accounts for Bremer not being present for the first four months, but the Q4 guidance (3-5%) is inclusive of all Old National and Bremer operations. He confirmed that Bremer runoffs are expected to reduce in coming quarters. Regarding fee income, Moran indicated that the right run rate for total fee income is around $120 million, with Q3 being exceptionally strong, especially in capital markets, and expects it to normalize in Q4, along with seasonal mortgage income.

Janet Lee asked about the strategic growth trajectory of premium finance loans, considering seasonality and its share of the loan portfolio. She questioned how Wintrust's appetite for premium finance versus C&I loans would change if C&I growth picked up, given premium finance's comparable yields and lower credit risk but lack of deposit generation. She also sought color on whether the four basis point decline in loan yields was solely due to variable rate loan impact or if there was incremental spread compression.

Answer

Dave Dykstra, Vice Chairman and Chief Operating Officer, stated that premium finance typically constitutes about a third of the balance sheet, and Wintrust aims to grow all good businesses. He indicated that they wouldn't reduce focus on premium finance even with increased C&I growth, and if concentration became an issue (e.g., around 40%), they might sell off excess production. Timothy Crane, President and Chief Executive Officer, confirmed that the loan yield decline was mostly due to the timing around variable rate loans. He acknowledged increased market competitiveness for fully funded loans but reiterated Wintrust's selective approach to client acquisition and its ability to maintain the margin.

Janet Lee sought clarification on the NII guide, specifically confirming the expected 2-3 basis point lift to earning asset yields per quarter and the assumption of reinvesting half of the securities runoff, requesting details on underlying assumptions. She also asked for confirmation that CNI would be a bigger driver for commercial loan growth than CRE, and about commercial borrowers' optimism regarding rate cuts and the potential positive impact of bonus depreciation returning in 2026 on CNI loan growth.

Answer

CFO Ryan Richards confirmed the expected range for earning asset yield pickup and stated that the bank has consistently reinvested about half of gross cash flows from the securities portfolio, though this may taper. He noted that future reinvestment depends on liquidity stress tests, loan growth opportunities, and wholesale funding paydowns. President and COO Scott McLean confirmed that CNI loans are expected to be the greater portion of growth in 2026. He suggested that borrower enthusiasm is more tied to macroeconomy concerns than just rates, and while lower rates are welcome, they weren't the primary retardant to growth. Ryan Richards added that bonus depreciation would likely support capital investments, but no specific modeling was available yet.

Janet Lee from TD Cowen sought confirmation on the NII guide assumptions, specifically a 2-3 basis point lift to earning asset yields per quarter based on the forward curve and whether half of the securities runoff would be reinvested. She also inquired if Commercial & Industrial (CNI) loans are expected to be a larger driver of commercial loan growth than Commercial Real Estate (CRE) over the next 12 months, and if commercial borrowers are showing increased optimism due to anticipated rate cuts and potential bonus depreciation.

Answer

CFO Ryan Richards confirmed the 2-3 basis point range for earning asset yield pickup, noting consistent reinvestment of about half of gross securities cash flows, though future reinvestment depends on liquidity tests and loan growth opportunities. President and COO Scott McLean confirmed CNI will be the greater portion of growth in 2026, adding that borrower enthusiasm is more tied to macroeconomy concerns than solely rate changes. Ryan Richards noted that bonus depreciation would likely support capital investments, but no specific modeling was available.

Janet Lee asked about the drivers of CNI loan growth and whether 2026 loan growth is expected to exceed the previously anticipated 4-5% for 2025, given commercial real estate (CRE) runoffs. She also questioned if recent NBFI headlines would change Webster Financial's appetite for growing its NBFI exposure.

Answer

John Ciulla (CEO) stated that Webster is not yet ready to guide for 2026 but would consider mid-single-digit loan growth as solid, emphasizing diverse, full-relationship growth and onboarding good risk-return assets. Regarding NBFI, Mr. Ciulla acknowledged optical sensitivity but fundamentally views their existing NBFI categories (fund banking, lender finance) as low-risk and suitable for continued origination within the overall portfolio context, unless broader market cracks emerge.

Janet Lee asked for more clarity on the Boston office loan that moved to substandard accrual, specifically regarding the baseline expectation for securing a potential tenant and the likely path of the loan given the current reserve. She also inquired about the low loan origination volume in Q3, asking if it was an outlier and if higher volumes are expected in Q4 and beyond, considering declining RESG commitments are driven by payoffs.

Answer

George Gleason, Chairman and CEO, stated that the bank would not preempt the sponsor's negotiations on the Boston office loan, noting the sponsor is actively pursuing leasing and recapitalization options. He reiterated that the reserve adequately covers a wide range of potential scenarios. Regarding loan originations, George Gleason confirmed that declining RESG commitments are indeed due to payoffs. He indicated that Q3's low origination volume was likely an anomaly, with significant closings already occurring in Q4 that were anticipated in Q3. Despite market competition, he expects a return to more typical origination volumes in Q4 and future quarters.

Janet Lee from TD Cowen sought more color on FHN Financial's trading revenue, specifically what drove the 40% increase in ADR in Q3, its sustainability, and if it was related to rate cuts or securities repositioning. She also asked about the change in C&I loan growth pace and the company's M&A strategy regarding contiguous vs. core footprint and crossing the $100 billion asset threshold.

Answer

CFO Hope Dmuchowski explained that FHN Financial's momentum picked up before the rate cut signal and continued into early October, with no significant balance sheet repositioning noted. She linked sustainability to future rate cuts and yield curve shape. Chief Credit Officer Thomas Hung clarified that the C&I loan growth pace was consistent, with minor lumpiness. Chairman, President, and CEO Bryan Jordan reiterated a focus on the core franchise for M&A in 2026 and beyond, expressing increased confidence in crossing the $100 billion asset threshold.

Janet Lee sought more color on FHN Financial's trading revenue strength, particularly in September, asking if it was linked to rate cuts, the yield curve shape, and its sustainability, or if it involved securities repositioning. She also asked about the change in C&I loan growth pace and the comfort level with mid-single-digit loan growth for 2026. Finally, she inquired if potential M&A would focus on contiguous footprint and comfort crossing the $100 billion asset threshold.

Answer

CFO Hope Dmuchowski explained FHN Financial's momentum picked up before the rate cut signal and continued into early October, with less balance sheet repositioning than year-end. Chief Credit Officer Thomas Hung and Chairman, President, and CEO Bryan Jordan confirmed good C&I momentum, with lumpiness, and maintained comfort with mid-single-digit loan growth for 2026. Bryan Jordan clarified M&A focus on the core franchise (2026+ timing) and increased confidence in crossing $100 billion due to an improved regulatory environment.