Ryan Payne

Ryan Payne, on behalf of Jeff Rulis from D.A. Davidson, inquired about the competitive landscape within the LIHTC business and the broader loan market, seeking insights into why LIHTC competition feels isolated and general loan competition.

Answer

President and CEO Todd A. Gipple explained that QCR Holdings holds only about 2% of the LIHTC market, indicating significant growth potential. He noted that the primary reason for losing LIHTC deals is when an equity provider mandates using their in-house or partner perm loan provider, which the company is actively addressing by partnering with perm loan agnostic equity providers. For traditional banking, Gipple stated that QCR Holdings is typically at the table for most substantial transactions in their markets, with competition primarily revolving around pricing.

Ryan Payne asked about the competitive landscape within the LIHTC business and the broader loan market.

Answer

Todd A. Gipple, President and CEO of QCR Holdings, stated that the company's LIHTC team is highly valued by developers, and competition is primarily from equity providers who tie permanent loans to their equity offerings. He noted that QCR Holdings has only about 2% of the total LIHTC market, indicating significant growth potential. In traditional banking, he mentioned that QCR Holdings is typically involved in most substantial transactions in their markets, with competition often revolving around pricing.

Ryan Payne asked for confirmation on the 2026 margin guide, specifically if it includes expected accretion from the Frontier merger, and sought a consolidated core margin expectation. He also inquired about competitive pressures on pricing and underwriting standards in the market.

Answer

Rick Sems, Bank CEO, confirmed the 2026 margin guide includes Frontier accretion. Rick Sems and Brad Elliott, Chairman and CEO, explained that Equity Bancshares is strategically holding pricing higher despite competitive stretching on rates, choosing to let some rate-based deals go, especially given the high loan-to-deposit ratio of recent mergers like Frontier.

Ryan Payne inquired about the 2026 margin guide, seeking confirmation that it includes expected accretion from the Frontier merger and clarification on the consolidated core margin expectation. He also asked about competitive pressures on loan pricing and underwriting standards.

Answer

Rick Sems, Bank CEO, confirmed the 2026 margin guide includes Frontier accretion. He explained that Equity Bancshares is strategically maintaining higher loan pricing despite competitive pressures, letting some rate-based opportunities go. Brad Elliott, Chairman and CEO, added that with high loan-to-deposit ratios from recent mergers, it's prudent to avoid stretching on rates when higher-rate assets are soon to be on the balance sheet.

Ryan Payne, on behalf of Jeff Rulis, inquired about the bank's preference for future interest rate cuts regarding net interest margin and asked for the total loan exposure to quick-service restaurants (QSR).

Answer

CFO Chris Navratil stated that the bank's rate sensitivity position remains neutral, prepared for either an up or down rate environment. Chief Credit Officer Krzysztof Slupkowski noted that QSR loans constitute less than 3% of the portfolio and are granular. Chairman and CEO Brad Elliott added that the largest classified QSR credit has a clear plan for resolution.

Ryan Payne inquired about Civista Bancshares' net interest margin sensitivity to potential rate cuts in late 2025 and 2026, including the expected impact from the Farmers Savings Bank acquisition. He also asked about capital priorities post-Farmers close, focusing on organic growth, repurchases, and M&A interest, and sought clarification on the higher effective tax rate for the quarter.

Answer

Ian Whinnem, SVP and CFO, projected a 5 basis point margin expansion in Q4 due to Farmers, assuming rate cuts in October and December. Dennis Shaffer, President and CEO, emphasized a primary focus on organic growth, increasing tangible book value, and EPS, with capital allocated to technology, people, and infrastructure investments like AI and RPA. He noted M&A remains opportunistic and disciplined, with no increased inbound interest from the Farmers deal. Regarding the tax rate, Dennis Shaffer explained it was adjusted due to increased expected earnings for the year, anticipating a 16-16.5% range year-to-date and for Q4.

Ryan Payne from D.A. Davidson inquired about the higher-than-historical effective tax rate for the quarter and whether this range is expected to continue.

Answer

Dennis Shaffer (President and CEO, Civista Bancshares Inc) explained the increase was due to higher expected earnings for the remainder of the year, anticipating a year-to-date range of 16%-16.5% for the fourth quarter.

Ryan Payne of D.A. Davidson & Co. inquired about the competitive environment for loans, specific areas of focus for 2025, the drivers behind the increase in non-performing assets (NPAs), and sought confirmation on the projected 2025 expenses for the 2UniFi platform.

Answer

President Aldis Birkans and CEO Tim Laney described the competitive loan environment as rational. Regarding NPAs, Mr. Laney identified weakness in the transportation sector, which constitutes less than 2% of total loans, and some small-dollar exposures from a previous acquisition. CFO Nicole Van Denabeele confirmed the projected 2025 expense for 2UniFi is in the range of $27 million to $29 million.