Timur Braziler • Wells Fargo

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CEO Mariner Kemper asserted that they are at the 'very beginning' of realizing Heartland's growth potential, stating there is 'huge potential' yet to be unlocked. CFO Ram Shankar explained that deposit costs remained stable because the benefit from Heartland's base was offset by strong growth in new, higher-yielding institutional and middle-market deposits, reflecting a mix shift rather than competitive rate pressure.

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CEO J. Kemper explained that DDA balances are inherently volatile due to large institutional clients and that 'aligning the portfolio' refers to applying UMB's underwriting processes and policies, not a major credit cleanup. He affirmed that all challenged credits were identified during diligence and that he expects the combined portfolio to perform in line with UMB's historically strong credit metrics without hindering growth.

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CFO Ram Shankar noted that while cost savings will be realized throughout the year, the bulk of technology-related savings will occur after the systems conversion in Q4. Chairman and CEO J. Kemper reiterated that UMB's overall EPS accretion targets for the deal remain intact, supported by UMB's own outperformance and a conservative credit mark that will be applied to the HTLF portfolio. He stressed that the recent credit actions at HTLF were on loans identified during due diligence.

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Chairman and CEO J. Kemper described the competitive environment as 'always very competitive' and stated that UMBF's success is due to its ability to win in a high-quality space, suggesting no significant change in conditions. Regarding deposits, CFO Ram Shankar explained that the period-end balance sheet is predictably inflated by institutional client activity and is not 'noncore.' Kemper characterized the activity as 'episodic' rather than 'transitory' and reiterated that Q3 is a seasonal low. Shankar advised focusing on average balances as a more representative measure of the operating business.

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President & CEO James Reuter emphasized that organic growth is the primary focus for capital, but all options, including buybacks, are being considered to enhance shareholder value. EVP & CFO David Della Camera confirmed the 2026 NII guidance does not assume any capital actions. Regarding loan resets, Reuter acknowledged some multifamily loans may exit to the secondary market but expressed confidence in replacing them with new production. He reiterated confidence in credit quality, stating the criticized loan increase is due to primary repayment source issues, not weakness in collateral or guarantors.

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CEO James Reuter declined to name specific geographies for multifamily stress but noted it was occurring in a few different spots across their diversified footprint. Deputy CFO David Della Camera confirmed that none of the three remaining loans over $50 million were downgraded this quarter and all are currently performing. Regarding 2026 growth, Della Camera clarified 'meaningful' would likely be in the 'low to mid' single-digit range, with a focus on C&I and owner-occupied commercial real estate for small to mid-sized businesses.

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CEO Jim Reuter clarified his confidence is in the bank's *assessment* process for grading credit, noting the review of large loans is complete with the rest of the portfolio underway. CFO Marcy Mutch confirmed no specific reserves were needed for the four downgraded loans due to adequate collateral. Mr. Reuter stated the dividend is not currently under review for a change but is part of ongoing capital planning. He also indicated that the earning asset base would likely bottom out before inflecting higher later in the year or in 2026.

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CFO Marcy Mutch declined to provide specific locations to protect negotiating positions but confirmed they were in defined metro areas. CEO Kevin Riley confirmed the disclosure includes construction loans. Both executives reiterated a focus on full-relationship lending outside of metro areas for new construction. Mutch stated she expects deposit rates to be 'stable to down' through the end of the quarter.

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President & Group Chief Risk Officer Michael Schrum stated that while the CET1 ratio is high, it provides flexibility for potential M&A without needing to raise capital, and it will take a few years to bring it down. Chairman & CEO Michael Collins added that holding higher capital is prudent in the current environment and the goal is a payout ratio over 100% to gradually lower the capital level. Group CFO Craig Bridgewater explained that deposit costs benefited from a reduction in duration, and while further decreases are possible, the pace will slow. Michael Schrum noted the bank is approaching a flattening NIM as deposit costs near their floor.

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Michael Collins, Chairman and CEO, stated that trade tensions have little direct impact on M&A, but noted that FX volatility is a more significant factor in negotiations. Craig Bridgewater, Group CFO, explained that Q1 fee income benefited from market volatility driving FX and asset management activity. Regarding the Elbow Beach resolution, Mr. Bridgewater confirmed it will reduce the 90-days past due loan balance and create a headwind for NII, as it was an accruing loan at a penalty rate. Mr. Collins added that no credit loss is expected from the resolution.

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Michael Schrum, President and Group Chief Risk Officer, stated that the smaller buyback authorization does not correlate to M&A likelihood and that the Board is supportive of re-upping the authorization if needed. CEO Michael Collins affirmed this, saying they would only pare back repurchases if a deal became likely. Group CFO Craig Bridgewater explained that while NIM may expand, NII could face downward pressure if deposit volumes normalize lower. He also confirmed the impact of the last 25 basis point rate cut on the Bermuda loan book would fully flow through in Q1 2025 due to a 90-day lag.

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CRO Lea Nakamura expressed confidence that most criticized assets will cure, noting the low starting base makes increases appear large. CEO Robert Harrison stated that while several construction loans paid off, pricing on new deals remains solid. CFO James Moses and CEO Robert Harrison collectively projected modest balance sheet growth by year-end, supported by loan growth and a stable securities portfolio, with the now-stabilized indirect auto book no longer being a headwind.

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CEO Bob Harrison identified potential increases in construction material costs as the primary tariff-related risk to watch, while noting no immediate impact on tourism. Chief Risk Officer Lea Nakamura explained the consumer reserve build was driven by the economic model's forecast, not current deterioration. She stated that while the consumer has held up well, it remains an area to watch closely given Hawaii's economic vulnerabilities.

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CFO Jamie Moses clarified that the $400 million quarterly repricing forecast is independent of unexpected payoffs, but acknowledged further payoffs would pose a risk. He stated the new FHLB advance rate was 4.14%. The securities yield decline was attributed to a small portfolio of floating-rate securities. CRO Lea Nakamura explained the rise in classified assets was due to a few well-collateralized but underperforming multi-family loans, which she does not consider indicative of a broader trend.

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Executive VP & CFO Jorge García explained that the company's updated guidance already embeds the expectation of reaching the maximum profit-sharing accrual of approximately $40 million. Regarding deposits, he noted that while some yield-seeking behavior persists among retail clients, the teams are highly focused on deposit retention. He confirmed the expectation for historical Q3 seasonality but highlighted that stronger client inflows in H1 2025 support the overall NII guide.

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CFO Jorge Garcia identified deposit mix, cost, and overall levels as the key variables that will determine where NII lands within the guided range. He clarified a Q4 DDA reclassification was a one-time event and that deposit cannibalization is not a major concern in Puerto Rico. CEO Ignacio Alvarez affirmed that while the board is vigilant, he does not currently see any reason to pause the share repurchase program despite macro uncertainty.

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CFO Jorge Garcia confirmed the NII guidance is GAAP-based and expects both GAAP and tax-equivalent NIM to expand in Q4. He does not anticipate large public deposit outflows in Q4. CRO Lidio Soriano expressed a positive consumer credit outlook, citing the strong labor market, excess liquidity, and the potential benefit of falling rates on consumer debt.

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EVP & CFO Christopher Del Moral-Niles asserted that demand for homeownership among their clients remains strong and is not flagging. Regarding fees, he noted that the recent performance represents a steady run-rate, with core fee categories showing consistent strength, suggesting it is not a temporary pull-forward.

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CEO Dominic Ng clarified that only a small part of commercial and FX fees are cross-border related. Chief Risk Officer Irene Oh explained the overall allowance increase was driven by a higher weighting for the downside economic scenario due to tariff uncertainty, which primarily resulted in a $37 million increase in the C&I reserve.

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CRO Irene Oh confirmed that all impacted properties have adequate hazard insurance and that based on past experience, credit impact is minimal due to low LTVs. CEO Dominic Ng noted that substantial government aid is also available for affected businesses. CFO Christopher Del Moral-Niles added that while some year-end deposit growth is transitory, the DDA mix has stabilized into the new quarter.

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CFO Christopher Del Moral-Niles stated that about $8 billion in CDs will roll in Q4 and the bank is actively managing pricing down. He attributed record fee income to strong sales execution. Chief Risk Officer Irene Oh explained the CRE reserve build was driven by broad-based qualitative factors, not a specific problem loan.

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CEO Stacy Kymes stated that expenses for the mortgage warehouse business, including 11 FTEs, are already in the Q2 run rate, creating future operating leverage. EVP & CFO Martin Grunst noted the base case for funding loan growth is to grow deposits, supported by a strong loan-to-deposit ratio below 65%. He also quantified quarterly cash flows at approximately $650 million from the securities portfolio and $200-250 million from the fixed-rate loan book.

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CFO Martin Grunst explained that the CD portfolio is short-duration, which will allow for repricing benefits in Q1. He clarified that the current MBS yield is around 5.80%, but the portfolio is a blend of vintages. He attributed the Q4 CRE payoffs to a significant drop in 10-year rates late in 2024, which created a temporary refinancing window for clients, and noted that the subsequent rise in rates will slow this activity.

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CEO José Fernández explained that while government deposit costs can fluctuate, the bank's overall deposit strategy is yielding strong net new account growth in retail, driven by an enhanced value proposition and digital tools. He characterized deposit competition as rational. Regarding loan growth, Fernández attributed the strength to a robust pipeline from Q1, increased commercial line utilization, and a solid Puerto Rico economy, leading him to raise the full-year loan growth guidance to 5-6% from 3-4%. CFO Maritza Arizmendi Díaz also contributed to the discussion.

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CFO Maritza Arizmendi specified that a ~$100 million decline in demand deposits was from public funds. CEO José Fernández described the deposit market as rational and stable, with steady inflows despite competition. On credit, Fernández confirmed the U.S. commercial loans requiring reserves were geographically and industry-diversified C&I loans. Arizmendi added that the allowance coverage is at a good level, projecting a future provision run rate of $18-$20 million per quarter, assuming stable economic conditions.

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Executive Maritza Arizmendi stated the securities portfolio has a duration of 5-6 years and that reinvestment decisions balance market opportunities against cash yields. She reiterated the full-year NIM guidance of 5.3% to 5.4%, noting it would remain at the upper end if government deposits are retained. Executive José Fernández clarified that the specific reserves were for three loans: one in Puerto Rico and two in the U.S. totaling about $10 million, which were placed in substandard.

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Chairman & CEO John Ciulla clarified the Marathon JV enables Webster to compete for larger deals with existing clients, boosting on-balance sheet growth. Senior EVP & CFO Neal Holland reiterated full-year NIM guidance of ~3.40%, expecting an exit rate between 3.35% and 3.40% due to pressures from cash levels, debt costs, and modest spread compression.

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CEO John Ciulla explained that decisions on deposit pricing are informed by competitive dynamics and funding needs, but affirmed the bank has significant flexibility to aggressively lower rates on certain products if desired. Regarding CECL, Ciulla clarified that two quarters of higher charge-offs do not materially impact the model's long look-back period and therefore won't structurally increase provisioning requirements in the near term.

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CFO William Holland expressed confidence in the 3.35% to 3.40% NIM range, noting factors like DDA growth and debt issuance could cause variability. CEO John Ciulla reiterated a mid-2025 credit inflection point, expecting normalized charge-offs around 25-30 basis points, similar to the first three quarters of 2024, and noted improving underlying credit metrics in the office portfolio.

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CFO Harold Carpenter expressed confidence in their ability to lower deposit costs effectively when the Fed cuts rates. CEO Terry Turner reiterated that a BHG monetization event is contingent on favorable market conditions with no set timeline. Turner strongly refuted any negative impact on hiring, pointing to the record pace of 71 new revenue producers hired year-to-date and 59 outstanding offers as evidence of continued recruiting momentum.

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M. Turner (Executive) asserted that the firm's strategy of hiring experienced bankers to move their established, high-quality books of business is less risky and more reliable than traditional growth models, making it viable in nearly any environment. Harold Carpenter (Executive) added that demand for BHG paper from both bank partners and institutional buyers remains strong. He also clarified the bond restructure occurred in the last two weeks of the quarter.

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Executive Andrew Harmening acknowledged tailwinds for Q2 NII from the recent loan sale and deposit repricing but noted that seasonal deposit outflows could be a partial offset. He expressed confidence in the bank's various deposit growth levers, such as its HSA business and new commercial teams, to fund the balance sheet. Harmening also explained that commercial loan growth is driven by market share gains from new hires, whose non-solicitation agreements are progressively expiring, making growth less dependent on the broader economy.

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An executive could not provide a spot funding cost but stated that new CD specials were dynamic, moving from 5% down to 4%, keeping the overall CD book rate flat quarter-over-quarter. The confidence in NII growth stems from strategic initiatives driving loan and deposit growth in more profitable products, particularly C&I loans and core deposits. The executive reiterated prior guidance that the full deposit beta through the end of next year is expected to be 46%, assuming 175 basis points of total cuts.

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President and CEO Jared Wolff stated that requiring substantial deposit relationships is a balancing act but has been working. He noted that the 30% NIB goal is meaningful but challenging in an environment of deposit outflows. He attributed payoffs to construction loan completions and warehouse cycling, clarifying that this was separate from the classified migration, which was a proactive review of older, repricing loans.

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CEO Jared Wolff and CFO Joseph Kauder explained that the expense guidance reflects investments to support growth, with Q1 being seasonally high. They noted that the mid-to-upper single-digit loan growth target is a net figure, accounting for payoffs, and is driven by increased economic activity. On deposits, Wolff stated that competition is easing, allowing for further cost reductions on maturing high-rate deposits.

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CFO Joe Kauder stated that while Q4 will see a meaningful benefit from Q3's restructuring, the bank remains conservative on its rate cut assumptions. The long-term strategy is to grow margin by lowering funding costs and originating higher-yield loans. CEO Jared Wolff clarified that lender finance was a legacy PacWest business, and the bank repurchased a familiar portfolio at par. He sees it as a key growth area with historically low losses, especially given the current lack of competition.

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CFO Hope Dmuchowski explained that deposit costs could be lowered by growing noninterest-bearing deposits through new-to-bank checking campaigns, like the current $450 cash offer. She believes they can maintain current cost levels but noted significant further reduction is unlikely without Fed cuts. Chairman, President and CEO Bryan Jordan reiterated that growing customer relationships is a core objective. Regarding expenses, they confirmed major project costs (GL, Treasury) are largely complete, and future spending is built into their flexible guidance, with marketing being a key variable driver of the line.

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CFO Hope Dmuchowski stated that noninterest-bearing balances have stabilized and she believes the significant mix shift is largely complete. Chief Credit Officer Thomas Hung explained that higher rates have primarily delayed new CRE projects rather than accelerating paydowns. He suggested that if anticipated rate cuts materialize, it would likely lead to more refinances out of the portfolio as projects move to the permanent market.

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CFO Hope Dmuchowski suggested a sub-6% mortgage rate is needed for a rebound, driven by both new purchases and refinancings. She clarified the revenue guidance range reflects uncertainty around Fed rate cuts, with more upside in fees and more downside risk in NII if cuts are aggressive. CCO Thomas Hung added that CRE paydowns are hard to predict as they depend on the takeout financing market.

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CEO Kevin Blair acknowledged that lending competition is increasing, primarily on price, causing some spread compression. However, he noted this is being offset by lower deposit costs, leading to a positive net spread on new production. CFO Jamie Gregory stated that with core deposit growth expected to match loan growth, the wholesale funding ratio should see some reduction, though not as significant as in the recent past.

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CFO Jamie Gregory established a $10 million per quarter baseline for capital markets revenue and attributed the Q3 beat to broad outperformance in NII, wealth fees, and lower expenses, including a drop in FDIC costs. An executive, Bob Derrick, suggested that criticized loan levels are nearing a peak around 4%, with the velocity of downgrades slowing.

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CFO Ron Farnsworth clarified that securities accretion should remain relatively stable, with recent pops being one-offs, and expects slightly lower but consistent trends ahead. Regarding deposit betas, he reiterated the expectation that they will mirror the trend seen on the way up, with the timing and pace of repricing dependent on the Federal Reserve's actions on interest rates.

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