Terry McEvoy

Terry McEvoy inquired about new commercial loan yields, loan spreads, and the competitive landscape in Ohio and Indiana. He also asked about the volume and expected rate pickup from commercial loans repricing in 2026. Additionally, he questioned Civista Bancshares' strategy to capitalize on market disruption from larger Ohio banks, and how this 'playing offense' might impact future expenses, particularly related to hiring.

Answer

President Chuck A. Parcher noted that new CRE loans are coming on at 6.25%-6.5%, with spreads of approximately 275 basis points over the five-year treasury. He added that about $225 million in commercial credits are set to reprice in 2026, expecting a 1.5 percentage point increase from their previous 4.75% rates. SVP Michael D. Mulford and President and CEO Dennis Shaffer confirmed that Civista is actively hiring new lenders, often from banks undergoing acquisitions or disruption, and that these investments in personnel are already factored into the expense guidance provided earlier.

Terry McEvoy inquired about the current yields on new commercial loans, the competitive landscape for loan spreads in Ohio and Indiana, and Civista Bancshares' strategy to capitalize on market disruptions in 2026, including potential impacts on expenses from increased hiring.

Answer

Chuck Parcher, President of Civista Bancshares, stated that new CRE loans were coming on at around 6.73% in December, with larger deals slightly lower, and spreads remaining consistent at about 275 basis points over the five-year treasury. He also noted that approximately $225 million of adjustable-rate credits are set to reprice in 2026, expecting a 1.5 percentage point pickup. Dennis Shaffer, President and CEO, highlighted that the company is actively hiring new lenders, often from banks undergoing acquisitions or disruptions, and that the previously mentioned expense guidance includes these investments in personnel.

Terry McEvoy inquired about the quarterly trajectory of First Financial Bancorp's expenses, specifically how the $156-$158 million guidance would trend through Q4 2026 as cost savings from acquisitions materialize. He also asked about the strategy for growth in the Chicago market following the BankFinancial acquisition.

Answer

CFO Jamie Anderson explained that major conversion events for Westfield (March) and BankFinancial (June) would lead to significant cost savings realization after those dates, typically within 90 days post-conversion. However, a pickup in foreign exchange revenue in the back half of the year would increase variable compensation, partially offsetting some savings. He projected expenses in the low $150 million range in the back half of the year. President and CEO Archie Brown outlined the Chicago strategy, focusing on organic growth by leveraging an existing commercial banking team, adding wealth, private banking, and mortgage bankers, and retooling retail centers for lending. He also mentioned potential for add-on M&A but noted it's not the current primary focus.

Terry McEvoy asked for the expected quarterly trajectory of expenses, specifically how the $156-$158 million guidance would trend through the fourth quarter once cost savings from acquisitions are realized. He also inquired about the strategy for growth in the Chicago market, including organic efforts, hiring, and potential M&A.

Answer

Jamie Anderson, CFO, explained that major cost savings from Westfield would materialize after the March conversion, and BankFinancial savings after its June conversion. He noted that increased variable compensation from fee businesses in the back half of the year would partially offset these savings, projecting expenses in the low $150 million range. Archie Brown, President and CEO, outlined the Chicago strategy, focusing on organic growth by expanding the commercial banking team, adding wealth and mortgage bankers, and retooling retail centers for lending, while also considering add-on M&A if the right opportunity arises.

Terry McEvoy sought an update on Central Bancompany's wealth and treasury management initiatives, inquiring about expected growth in 2026 and when these initiatives might translate into organic growth, and also asked about branch expansion plans for 2026.

Answer

CFO Jim Iroli reported that wealth assets under advice grew to $16 billion, driven by strong investment performance and net new money throughout the year, especially in Q4. He acknowledged some Q3 to Q4 seasonality in payments volume and service charges but highlighted ongoing investments to sustain historical growth rates. Chief Customer Officer Dan Westhues outlined 2026 branch expansion plans, including two new locations in St. Louis (with the first opening soon and two more planned) and one in Denver, Colorado, expected online by Q2.

Terry McEvoy asked about Central Bancompany's branch expansion plans for 2026.

Answer

Chief Customer Officer Dan Westhues outlined plans for two major branch locations coming online in 2026: St. Louis (first branch in the next couple of months, with at least two more planned) and Denver, Colorado (online by Q2). He also mentioned ongoing negotiations for additional spaces.

Terry McEvoy sought more details on Byline Bancorp's commercial payments team, asking if clients are primarily fintech companies or traditional commercial customers, the due diligence process involved, and the medium-term goals for this business. He also inquired whether the recent government shutdown impacted the SBA business in Q4 or caused any activity to be pushed into Q1.

Answer

Alberto Paracchini (President) explained that commercial payments clients include payroll processing companies and potentially fintechs requiring payment functionalities like embedded finance or card issuing/acquiring. He emphasized a deliberate, non-aggressive onboarding approach of 3-4 customers annually, with a 6-9 month due diligence process to ensure compliance. He stated that the government shutdown had an immaterial impact on the SBA business in Q4.

Terry McEvoy sought details on Byline Bancorp's commercial payments team, including the types of clients they serve (fintech vs. traditional commercial), their due diligence process, and any medium-term goals or objectives for tracking progress.

Answer

President Alberto Paracchini explained that the commercial payments team serves clients such as payroll processing companies, providing banking infrastructure for payment origination and processing. He also noted interest in fintech companies requiring embedded payment solutions or card issuing/acquiring capabilities. Mr. Paracchini emphasized a deliberate, non-shotgun approach, aiming to onboard 3-4 customers annually, with each onboarding taking 6-9 months due to rigorous compliance, process, and infrastructure requirements. He also confirmed that the government shutdown had an immaterial impact on the SBA business in Q4.

Terry McEvoy inquired about specific data points or areas where Associated Banc-Corp is observing a deepening of its customer base, indicating customers are utilizing more products and services.

Answer

President and CEO Andy Harmening highlighted several areas of deepening: increased value and quality of new consumer and commercial customers, acceleration in loan and deposit production, improved fee income and capital markets numbers, and growth in mass affluent/private wealth. He also noted successful cross-referral and collaboration, particularly with the HSA group driving consumer banking relationships.

Terry McEvoy asked Derek Meyer about the implications of the 5%-6% loan-to-deposit growth and 5.5%-6.5% NII growth on core margin expansion, and what assumptions for interest-bearing deposit betas were embedded in the NII guidance.

Answer

Derek Meyer, CFO, stated that while NIM guidance is not provided, the figures imply some expansion, with NIM typically trickling up due to portfolio remix. He noted the forecast assumes two Fed rate cuts and that upside depends on rational competitor behavior on deposit costs. Terry McEvoy then asked Andy Harmening about data points demonstrating the deepening of the customer base, where customers are using more products. Andy Harmening highlighted increased value and quality of new customers, acceleration in commercial loan and deposit production, and improved fee income. He also mentioned early positive signs from a new private wealth product and effective cross-referral and collaboration across segments.

Terry McEvoy from Stephens asked for a reminder of the typical Powersports borrower profile, including FICO scores and alignment with the K-shaped economy, as well as any seasonality in charge-offs. He also inquired if the "inevitable" share repurchase comment was driven by current capital levels or the M&A market outlook for 2026.

Answer

Darin Campbell, Head of National Specialty Lending, detailed the Powersports portfolio's average FICO score at 730, with the largest segment in the 776 FICO tier. He explained that origination peaks in Q2/Q3, while delinquencies and losses are higher in other quarters, particularly year-end, a consistent trend over 30 years. Brad Adams, COO and CFO, clarified that the share repurchase is driven by the bank's strong capital generation and having saved more capital than needed for recent acquisitions, rather than M&A market conditions, though the M&A market remains active.

Terry McEvoy requested a reminder of the typical power sports borrower profile, their economic positioning, and any seasonality in charge-offs within that portfolio. He also asked if the 'inevitable' share repurchase was driven by current capital levels or by the M&A market outlook for 2026.

Answer

Darin Campbell, Head of National Specialty Lending, described the average FICO score for the power sports portfolio as 730, with the largest segment in the tier one bucket averaging 776. He explained that the busy season for originations is Q2 and Q3, while higher risk (delinquency or losses) typically occurs in the other two quarters, especially year-end, a consistent trend over 30 years. Brad Adams, COO and CFO, clarified that the share repurchase decision is primarily a function of the bank's strong capital generation and current capital levels exceeding immediate needs, rather than a specific M&A market outlook.

Terry McEvoy asked about the expected weighting of commercial loan growth between commercial real estate (CRE) and commercial and industrial (C&I) for 2026, the priority of leasing, and plans for opening new offices to support deposit generation.

Answer

EVP and Chief Commercial Banking Officer Lynn M. Kerber stated that the commercial portfolio mix is expected to remain consistent, with equipment finance being a complementary core product rather than an outsized priority. CEO and President Thomas Prame mentioned an upcoming office opening in Indianapolis and potential opportunistic distribution expansions in key Michigan markets like Grand Rapids, Lansing, and Holland, but not a wholesale branch strategy.

Terry McAvoy from Stephens asked about the expected mix of commercial loan growth in 2026 (CRE vs. C&I), the priority of leasing, and plans for opening new offices to support deposit generation.

Answer

Lynn M. Kerber, EVP and Chief Commercial Banking Officer, stated that the commercial portfolio mix has been consistent, with quarterly originations mirroring the overall book, and equipment finance serving as a complementary core product. Thomas Prame, CEO and President, confirmed an Indianapolis office opening this summer and opportunistic consideration of additional distribution points in key Michigan markets (Grand Rapids, Lansing, Holland) where teams are performing well, rather than a wholesale branch strategy.

Terry McEvoy asked about Horizon Bancorp Inc.'s balance sheet rate neutrality, questioning if the current mix (commercial-heavy, fewer high-beta deposits, less fixed-rate assets) suggests more asset sensitivity, and how the company plans to play offense in Michigan while balancing expense outlook.

Answer

EVP and CFO John Stewart clarified that the balance sheet is very modestly asset-sensitive, with approximately 25% floating loans and minimal floating securities, supported by strategic deposit positioning to mitigate significant impact from rate changes. CEO and President Thomas Prame addressed the Michigan market, noting optimistic growth opportunities due to market transactions and prior human capital investments in commercial and treasury teams. He emphasized leveraging existing expenses rather than adding significantly to the expense base for growth.

Terry McEvoy questioned the CFO on how Horizon Bancorp Inc. maintains a rate-neutral balance sheet despite a shift towards more commercial loans, fewer high-beta deposits, and less fixed-rate assets. He also asked the CEO about strategies to enhance offensive growth in the Michigan market while managing expenses.

Answer

EVP and CFO John Stewart explained that while the balance sheet is modestly asset-sensitive, shock analyses show minimal impact from curve changes, citing 25% floating loans and stable deposit positioning. CEO and President Thomas Prame noted optimistic growth opportunities in Michigan, leveraging existing human capital investments in commercial and treasury management teams in key growth markets, without needing significant additional expense.

Terry McEvoy asked if Old National Bancorp's 2026 fee income outlook contains conservatism, given that the annualized fourth-quarter performance was at the high end of the guidance, and requested details on incremental repricing benefits for new loan production and securities.

Answer

John Moran, CFO, acknowledged some Q1 seasonality in mortgage but expressed cautious optimism for 2026 mortgage and capital markets, seeing potential upside. He detailed a 70 basis point spread on the loan side for new production over the portfolio ($5 billion over 12 months) and $2.9 billion in investment portfolio cash flow with new money yields 94 basis points above the backbook.