Prepared remarks
Good day. Thank you for standing by. Welcome to Atlantic Union Bancshares Second Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising that your hand is raised. Please be advised that today's conference is being recorded. I will now hand the conference over to your speaker host, Bill Cimino, Senior Vice President of Investor Relations. Please go ahead.
Thank you, Olivia, and good morning, everyone. I have Atlantic Union Bankshares' president and CEO, John C. Asbury, and executive vice president and CFO, Alexander D. Dodd with me today. We also have other members of our executive management team with us for the question-and-answer period. Please note that today's earnings release and the accompanying slide presentation we are going through on this webcast are available to download on our investor website investors.atlanticunionbank.com. During today's call, we will comment on our financial performance using both GAAP metrics and non-GAAP financial measures. Important information about these non-GAAP financial measures, including reconciliations to comparable GAAP measures, is included in the appendix to our slide presentation and in our earnings release for the second quarter of 2026. We will also make forward-looking statements, which are not statements of historical fact and are subject to risks and uncertainties. There can be no assurance that actual performance will not differ materially from any future expectation or result expressed or implied by these forward-looking statements. We undertake no obligation to publicly revise or update any forward-looking statement except as required by law. Please refer to our earnings release and slide presentation issued today and our other SEC filings for further discussion of the company's risk factors. Other important information regarding our forward-looking statements includes factors that could cause actual results to differ from those expressed or implied in the forward-looking statements. All comments made during today's call are subject to that Safe Harbor statement. At the end of the call, we will take questions from the research analyst community. And now I will turn the call over to John.
Thank you, Bill. Good morning, everyone. Thank you so much for joining us today. Atlantic Union Bancshares reported strong second quarter financial results reflecting disciplined execution and providing an encouraging indication of the earnings power of the franchise we have been building. For the first time in two years, we did not incur any merger-related costs. We were also pleased to realize a $32.3 million pretax gain from the sale of our equity interest in Bancshares, Inc. Adjusted operating performance, excluding the gain from the equity interest sale, was notable for solid loan growth, margin improvement on both a core and reported basis, disciplined expense management, and solid credit performance, along with continued capital generation. Over the past two years, we have deployed capital to intentionally strengthen and expand our franchise. We believe our second quarter results are an encouraging early indication that those investments are beginning to translate into stronger earnings capacity, capital generation and long-term shareholder value. We remain focused on building on this progress through disciplined execution, organic growth and continued attention to soundness, profitability and growth, in that order. Our commitment to creating shareholder value remains unwavering. We believe Atlantic Union is well positioned to deliver sustainable growth, top-tier financial performance and long-term value for our shareholders. We believe that our continued organic growth opportunities due to our robust presence in attractive markets reinforce our status as the premier regional bank headquartered in the Lower Mid-Atlantic. I will briefly cover our Q2 2026 highlights and share insights before Alexander presents the financial review. Before reviewing this quarter's results, I would note that the second quarter was marked by continued uncertainty, particularly around geopolitical developments and conflict involving Iran. Despite that backdrop, customer confidence remained resilient and economic activity across our footprint held up well. We delivered record loan production during the quarter, exceeding our 2025 fourth quarter production level, which is traditionally our strongest quarter, by roughly 8 percent. While the second quarter is typically one of our seasonally stronger periods, and we expect some moderation in the third quarter due to the normal summer slowdown, our pipelines remain healthy. Overall, we believe that our underlying credit activity and pipeline depth support our full-year outlook, and we currently expect loan growth to finish toward the higher end of our mid-single-digit range. Importantly, this growth reflects strong client activity across our markets, the value of the customer relationships we have built and disciplined execution by our team. With that context, here are the key highlights from the second quarter. Average loans were $28.2 billion and grew approximately 6% annualized during the second quarter while period-end loans increased approximately 10.4% annualized from Q1 to Q2, ending the quarter at approximately $28.7 billion. Growth was well distributed across the franchise, led by strong client activity in commercial lending, construction lending, multifamily, and select consumer categories. Line-of-credit utilization decreased slightly from the first quarter, but was up slightly year over year. Year-to-date annualized loan growth was 6.4%. As I mentioned, loan pipelines are healthy and support our expectation that full-year loan growth is tracking toward the higher end of our mid-single-digit outlook. Average deposits increased 2.4% annualized during the quarter, and total deposits increased approximately 1% annualized from the end of Q1 to the end of Q2, all consistent with our low-single-digit 2026 outlook. Growth was concentrated in interest-bearing deposits. We also reduced broker deposits by approximately $53 million during the quarter and roughly $571 million year-to-date. Broker deposits represented only 2% of total deposits at quarter-end, giving us flexibility to use them selectively going forward if needed. Our core customer deposit base remains a defining strength of the franchise. Our focus remains on relationship-based deposit growth, expanding share of wallet, and maintaining funding discipline. Core net interest margin, which excludes the purchase accounting adjustments, improved by 1 basis point quarter-over-quarter. Reported fully-tax-equivalent net interest margin increased 9 basis points to 3.94%, driven primarily by higher accretion income compared with the first quarter. Alexander will provide more detail on the factors influencing NIM performance in his review section. Before turning to credit, I do want to highlight the progress we are making in bringing our capital markets capabilities to our expanded footprint. In the second quarter, former Sandy Spring Bank teams generated approximately 27% of our interest-rate swap transactions and 32% of our foreign exchange revenue. We believe these fee products should continue to provide opportunities for additional revenue synergies over time. Credit quality remained strong in the quarter with annualized net charge-offs of just 3 basis points for both the second quarter and year-to-date. Based on our first-half performance, current loss expectations and favorable asset quality trends, we are lowering our full-year net charge-off guidance which Alexander will discuss later in the call. Key asset-quality indicators remained encouraging. Nonperforming assets increased modestly from the prior quarter, but remained low at 39 basis points of loans held for investment, while past dues declined considerably and criticized and classified assets improved to 4.4% of total loans, down from 4.5% in the prior quarter. The Bureau of Labor Statistics is scheduled to release July unemployment data shortly; this chart will soon be updated. For now, I will simply note that Virginia and North Carolina's May unemployment rates remain below the national average, while Maryland's was just slightly above it. We continue to expect unemployment levels in Virginia, Maryland, and North Carolina to remain manageable and generally comparable to or below the national average consistent with Moody's current state-level forecast. We remain confident in the resilience and long-term attractiveness of our markets. As I approach my 10th anniversary with Atlantic Union at the end of this quarter, what is clear to me is how far we have come as an organization. We have stayed focused, adapted as conditions changed, and consistently executed the strategy we set out and clearly communicated, while remaining grounded in the community bank values and local relationships that have always defined Atlantic Union. This quarter's results reflect that continued momentum and most importantly, the dedication of our teammates whose hard work makes it all possible. With that foundation in place and no additional acquisitions currently planned during this phase of our strategic plan, our focus is squarely on continuing to demonstrate the sustained performance and capital generation capability of the company we have built—performance that enables us to better serve our customers and communities, invest in our teammates and create long-term value for our shareholders. With that, I will turn the call over to our CFO, Alexander D. Dodd, for a detailed review of quarterly financial results. Before I do, I would like to note that Alexander has now been with the company for nearly four months, following a deliberate and smooth transition with former CFO Robert Michael Gorman, who will retire at the end of September. Since this is our last earnings call before Robert's retirement, I want to again thank him for all he has contributed over his 14 years with Atlantic Union. Robert leaves behind a strong legacy and will be missed, but he is ably succeeded by Alexander. With that, I will turn the call over to Alexander for his inaugural quarterly earnings comments. Alexander?
Thank you, John, and good morning, everyone. Before I begin, I want to thank Robert as well for making this a smooth transition for me. I will now take a few minutes to provide you with some details on the results. My commentary today will primarily address Atlantic Union's second quarter financial results presented on a non-GAAP adjusted operating basis, which for the second quarter principally excludes the $32.3 million pretax gain associated with the sale of our equity interest in Bancshares, Inc. In the second quarter, reported net income available to common shareholders was $158 million and earnings per common share of $1.11. The adjusted operating earnings available to common shareholders were $134 million or $0.94 per common share for the second quarter, resulting in an adjusted operating return on tangible common equity of 20.11%, an adjusted operating return on assets of 1.47%, and an adjusted operating efficiency ratio of 47.47%. Here's a look at the GAAP year-to-date metrics and trends over the last few years. Looking at the year-to-date adjusted operating numbers at the end of the second quarter, we have already reached the target for ROA and ROTCE medium-term financial targets. We remain confident that we will achieve all three of these targets over the medium term which we define as this year and next. Turning to the credit loss reserves: At the end of the second quarter, the total allowance for credit losses was $331 million, an increase of $9.1 million primarily driven by loan growth during the quarter. The total allowance for credit losses as a percentage of total loans held for investment remains flat at 115 basis points at the end of the second quarter. As John mentioned, net charge-offs were $2 million or 3 basis points annualized in the quarter. Now turning to the pretax pre-provision components of the income statement for the second quarter. Tax-equivalent net interest income was $329.7 million, an increase of $12.8 million from the first quarter primarily driven by an increase in loan volumes, higher loan yields, and increased loan accretion income. The increase in loan-related interest income was partially offset by an increase in deposit interest expense primarily from growth in interest-bearing deposit balances and modestly higher deposit costs. As John noted, the second quarter's tax-equivalent net interest margin increased 9 basis points from the prior quarter to 3.94%, primarily due to higher earning asset yields partially offset by modestly higher cost of deposits. Earning asset yields increased 9 basis points from the prior quarter to 5.88% primarily due to higher loan accretion income of $5 million and higher loan yields. Cost of funds was flat from the prior quarter as a 3 basis point increase in the cost of deposits was offset by lower borrowing amortization costs related to past acquisitions. Of note, excluding the impact of accretion income, our core net interest margin increased by 1 basis point to 3.46%. Noninterest income increased $35.5 million to $90.2 million for the second quarter primarily driven by the gain on sale of our equity interest in Bancshares, Inc. Excluding the one-time gain, adjusted operating noninterest income increased $33.1 million to $57.9 million driven by higher loan-related interest rate swap fees associated with higher loan originations and increased fiduciary and asset management fees which were partially offset by lower other income. Noninterest expense decreased $10.7 million to $199.1 million for the second quarter driven by a $9 million decline in merger-related costs. Adjusted operating noninterest expense, which excludes merger-related costs in the first quarter and amortization of intangible assets in both quarters, decreased $1.3 million to $184 million for the second quarter primarily due to lower marketing costs along with a decrease in salaries and benefits primarily related to seasonally higher payroll taxes and 401(k) contribution expenses in the prior quarter. At June 30, loans held for investment net of unearned income were $28.7 billion, an increase of $727 million or 10.4% annualized from the prior quarter. Our average loan growth for the quarter was approximately 6%. At June 30, total deposits were $30.5 billion, an increase of $77 million or approximately 1% annualized from the prior quarter while average deposits decreased 2.4% for the quarter. Our loan-to-deposit ratio ended the quarter at 94.1% within our preferred range of 90% to 95%. At the end of the second quarter, Atlantic Union Bankshares' and Atlantic Union Bank's regulatory capital ratios were comfortably above well-capitalized levels. In addition, we remain well capitalized on an adjusted basis if you include the negative impact of AOCI and unrealized losses for held-to-maturity securities in the calculation of the regulatory capital ratios. On a linked-quarter basis, tangible book value per common share increased $0.84 or 4.2% to $20.77 per share at the end of the second quarter. Since Q2 of 2025, tangible book value per share has grown $2.39 or 13% year over year. The CET1 ratio was 10.41% for the second quarter and within our preferred range of 10% to 10.5%. During the second quarter, the company repurchased approximately $10 million of its common shares at an average price of $37.76 leaving approximately $240 million remaining under our share repurchase authorization. Before turning to the financial outlook, I would emphasize that our second quarter results represented strong operating performance and an encouraging indication of the earnings capacity and capital generation capability of the franchise. At the same time, we believe our updated outlook reflects a disciplined and prudent view of second-half funding competition and deposit mix. We expect loan balances to end the year between $29 and $30 billion, while year-end deposit balances continue to be projected between $31 and $32 billion. On the credit front, the allowance for credit losses is projected to remain in the 115 to 120 basis point range, and we are reducing the range for our projected net charge-off ratio to be between 5 and 10 basis points in 2026. Fully tax-equivalent net interest income for the full year is now projected to come in between $1.32 billion and $1.33 billion inclusive of accretion income. The updated range reflects our expectation of higher interest-bearing deposit mix as well as greater loan and deposit competition in the second half of the year. We are tightening the range for our 2026 fully tax-equivalent net interest margin to between 3.90% and 3.95%. This outlook is supported by our baseline assumption that the Federal Reserve increases rates by 25 basis points in September and that term rates remain stable at current levels. On a full-year basis, noninterest income is expected to be between $22 million and $30 million while adjusted operating noninterest expense is estimated to fall in the range of $742 million to $752 million including the expense impact of our North Carolina investment and our other 2026 strategic initiatives. Based on these projections, including our expected stock repurchase activity, we expect to generate annual growth in tangible book value per share of approximately 12% in 2026, and produce financial returns that will place us within the top quartile of our proxy peer group. In summary, Atlantic Union delivered strong operating financial results in the second quarter and had a solid first half. We remain focused on generating sustainable, profitable growth and building long-term value for our shareholders in 2026 and beyond. I will now turn the call over to Bill.
Thank you, Alexander. And, Olivia, we are ready for our first caller, please. Sally.
Ladies and gentlemen, to ask a question at this time, you will need to press *11 on your telephone and wait for your name to be announced. To withdraw your question, simply press *11 again. Please stand by while the system compiles the roster. Now first question coming from the line of Russell Elliott Gunther with Stephens. Your line is now open.
Good morning, Russell.
Questions and answers
Hey. Good morning. Morning, John. Good morning, Alexander. First question for me: I wanted to start on the margin and really try to get a sense directionally for loan yields—where they are headed. So if you could level set us for where new production came on in February, and perhaps where that pipeline yield sits today, and then just remind us of what the fixed-rate opportunity repricing is for you guys relative to what you are putting on new commercial loans today.
Sure. And good morning, Russell. For the second quarter, our fixed-rate loans are coming on at new loan spreads of around 200 basis points. Our variable-rate loans are also around 200 basis points. We saw a little bit of lower spreads in the quarter due to larger loans that we completed, and that was more just a function of the size of the loan, but around 200 basis points for both variable and fixed. In terms of the fixed-rate opportunity, we have about $800 to $900 million per quarter of variable-rate loans that are maturing with rates around 5%, and we expect to put those back on at around 6% to 6.1%, so it is about a 100 to 110 basis point benefit for the loan maturities each quarter.
Okay. Great. Thanks, Alexander. And then, maybe just to follow up with the revised NII guidance including a Fed hike in September: can you quantify for us what, if any, benefit is factored into your revised NIM and NII outlook? And perhaps where you would expect the core NIM overall to trend within that guide.
Yeah. We do have a 25 basis point increase factored into our guidance for September. We expect to see a small benefit in the fourth quarter from the deposit pricing lag—it's under 1 basis point for the full year and about 3 basis points in the fourth quarter. In terms of core margin, we expect it to grind higher over time from the benefit of the fixed-rate loan repricing. But because of higher funding costs and deposit mix, it is not going to be as high as it otherwise might be. Over the next few quarters, we expect core margin to increase modestly because of those dynamics.
Got it. Okay. Great. Super helpful. I will step back. Thanks for taking my question.
Thank you, Russell.
And, Olivia, we are ready for our next caller, please.
Thank you. Our next question coming from the line of Janet Lee with TD Securities. Your line is now open.
Hi, Janet.
Good morning. Could you give us a little more color around deposit competition and the mix shift that you are expecting in your NII guide, and maybe what pace of deposit cost increase is assumed in your 3.90% to 3.95% NIM guide?
Sure. Good morning, Janet. We updated our guidance for net interest income solely because of the funding side of the balance sheet. What we saw in the quarter was customer migration to our higher-yielding interest-bearing deposit accounts, and that informed our guidance. We are encouraged by the loan growth that we saw in the quarter, but the cost of funding is going up higher than we expected. To give you perspective, in the month of June we saw a 2 basis point increase in our cost of deposits—3 basis points for the full quarter and 2 basis points in June—and that really informed the outlook for the rest of the year.
Got it. So the 2 basis point increase in the month of June: is that the pace you would expect for the rest of the year, ballpark?
Not necessarily. We expect to be a little bit under that if you project it out because of the mix we expect in certificate growth, money market growth, and some DDA growth in our outlook. So it is underneath that pace, but that June pace informed our outlook.
Alexander, is it fair to say what we are seeing is relatively stable deposit rates from a competitive standpoint and this is more of a mix issue in terms of where the growth is coming?
That is a good point, John. It really is our deposit mix informing the guide here. Deposit competition is elevated but stable, so what we are seeing is that inflows into our deposit portfolio are coming from higher-yielding products.
Got it. Thanks for the color. And just a quick follow-up: PAA for the second quarter came in maybe just slightly above what you guided before. Is 145 PAA for 2026 still a good assumption?
We had said on the last call the range is 140 to 150, and we are still tracking to that. So 145 being at the midpoint is fine.
Thank you.
Thanks, Janet.
And, Olivia, we are ready for the next caller, please.
Thank you. Our next question coming from the line of David Bishop with Hovde Group. Your line is now open.
Hey. Good morning, gentlemen.
Hey, David. Curious, John, Alexander: it sounds like the loan pipeline continues to be pretty robust. Just curious what you are seeing on the commercial pipeline out of the legacy Sandy Spring, Maryland market—how much that is contributing to the pipeline and maybe the growth you saw there?
Sure. I mean, we are seeing double-digit growth in the pipeline within the Greater Washington market, Greater Washington Maryland. Production is up double digits as well. All the teams in those markets are growing, so we are seeing very balanced, stable growth.
We are not seeing any hangover from the acquisition. The way I think about this is the former Sandy Spring is, in round numbers, maybe a third of the overall portfolio, and so you would expect, all things being equal, for them to be about a third of the pipeline—and they have come a long way closer to that. We have been very pleased with it and the teams.
Appreciate that color. And then, John, maybe an update in progress in terms of the Carolina build-out—what you are seeing on those funds. Thanks.
Yes. I think of this as a holistic strategy comprised of both the retail banking effort as well as the investment that we are making in expanding our commercial banking teams along with some additional investments for mortgage and wealth management. While we refer to it as the North Carolina strategy, you could more specifically refer to it as our densification strategy in Raleigh and Wilmington because that is where the thrust of the investment and the physical branch network build-out is going on. I'll ask Sean O'Brien, head of consumer and business banking, to update on the branch effort, and then I will ask David V. Ring to chime in with perspective on the commercial side.
Yeah. Thanks, John. So we announced that we were going to open 10 branches in North Carolina—three in Raleigh and three in Wilmington as primary markets. The first of those branches opens this month in Raleigh. We have two more opening in Raleigh in October and November of this year, so we will have three new Raleigh branches this year. Then we will start to open branches in Wilmington as well. We hope to get all 10 done in 2027; a couple may get into 2028, but we are very happy with our site selection. We have hired the first three teams; they are completely staffed for Raleigh, so we have all of those teams hired. We are very happy with the talent we found and are excited about our plans to grow new customers in those two primary markets.
We are working really closely with consumer, and we are seeing double-digit growth again in loan balances in North Carolina. We are also waiting on announcements of some new hires that have started or recently started that we are very excited about. Overall, we are meeting our talent acquisition plan and meeting our loan growth expectations.
So Dave, more to come on that.
Great. Thank you for the color.
Thanks, David.
And, Olivia, we are ready for our next caller, please.
Our next question coming from the line of Catherine Miller with KBW. Your line is open.
Hi. Good morning. Just one more on the NII. Circling back on the size of the bond book: how should we think about securities portfolio growth in the back half of the year?
If you were to keep that fairly stable: in the second quarter we reduced it by just over $200 million to fund lending growth, and we are now at about 13% of total assets. We plan on keeping it stable for the rest of the year.
So we would expect that deposit growth will fund loan growth in the back half of the year, and the securities book should be flat?
Yeah. You are correct. We want to fund loan growth from our core deposit growth going forward.
Perfect. And then on buybacks: it was great to see that started. How should we think about how much of that $240 million you expect to repurchase over the period that you have that authorization?
We plan to complete the whole program. Our forecasting assumption right now is to spread it out by quarter, but it will be dictated by the share price and when we are in the market.
Okay. Thank you.
Yep.
And, Catherine, one quick note: the securities book was elevated after the CRE loan sales. Bringing it down was part of our plan to reinvest in core earning assets. So you will see how it rose temporarily and then was drawn down; roughly 13% is a good proportion of assets to have in the securities portfolio from our perspective.
Got it. Thank you for the clarification.
And, Olivia, we are ready for the next caller, please.
Our next question coming from the line of Steve Moss with Raymond James. Your line is now open.
Hey, John. Good morning, everyone. Maybe just following up on deposit competition here: curious whether you would consider increasing borrowings over higher-cost CDs in the market? Is borrowing cheaper in the market right now? I know you put on some toward the end of the quarter.
What you saw at the end of the quarter was essentially a bridge. We had 6% annualized loan growth during the quarter, so we were productive all quarter long, which was great. It was not all back-end loaded; having said that, it certainly picked up at the end of the quarter, hence that bridge. Alexander, want to share any perspective?
Sure. We ended the quarter with a loan-to-deposit ratio over 94% and had to increase borrowings as you noted. We would prefer to fund our lending growth through core deposit growth including CDs, and then, after that, support with broker deposits as needed. Borrowings are more of a short-term measure to balance the overall balance sheet.
You know from past history with us, not unlike many others, we do see some seasonality in deposit balances in Q2 due to tax payments. We also have certain larger commercial depositors that commonly have some downdraft in balances at quarter end through the natural cycle and flow of their businesses. You can see that in the difference between spot growth rate for deposits and the quarterly average. Just wanted to check on that. Appreciate the question.
And then second, on credit: could you give color around the C&I loans that were placed on nonaccrual this quarter? And regarding the allowance for credit losses, you state in your guidance that you assume an uptick in unemployment—how much of an impact does that uptick have on the total ACL for the current year by year-end?
Douglas Woolley, our Chief Credit Officer, is here—do you want to speak to that, Douglas?
The C&I nonperformers are two smaller credits that have gone a little bit sideways, so we are working through that. They are nonaccrual, so we think there is a little bit of loss there, but this does not indicate anything broader or tied to other parts of the portfolio.
We have been impressed with the resilience of our local economies and client base. Nonperformers are low at 39 basis points of loans held for investment; you could see it move plus or minus a bit in any given quarter. We are actually below where we finished at the end of last year. There is no common systemic thread. We feel pretty good about losses.
Is the assumed uptick in unemployment a minor impact—maybe one to two basis points on ACL?
That's right. It is a minor impact. We are still within our 115 to 120 basis points range looking out to 2027.
Okay. Thanks. We'll step back in the queue.
Thank you, Steve.
And, Olivia, we are ready for the next caller, please.
Our next question coming from the line of Brian Wilczynski with Morgan Stanley. Your line is now open.
Hi. Good morning. Thanks for taking my questions. You mentioned earlier on the call that most of the pressure you are seeing on deposit cost is coming from mix. Can you give any color on what the cost of new interest-bearing deposits coming into the bank today are?
Yeah. New deposits on a combined basis are between 3% and 3.5% depending on mix, with most coming in CDs, money markets, and interest-bearing checking.
That is very helpful. Thank you. And when we look at noninterest-bearing deposits as a percentage of total, it sounds like you expect some migration in the second half. Do you think you will see a similar amount of migration in the second half as you saw in the second quarter?
We are actually forecasting some noninterest-bearing growth in the second half and maintaining that percentage of total deposits around 22%. We did see migration in the second quarter, so that is our current assumption based on working with the business leaders, but it could change.
The data suggests it is not smaller deposit accounts but some larger commercial businesses making more active use of sweep accounts. We offer sophisticated treasury services and help them optimize working capital. We saw some movement as they deploy surplus funds, and we expect some improvement there over time, but it is difficult to forecast.
Got it. And if I could squeeze one more, Alexander: do you have the spot deposit cost at quarter end?
It was 1.95% for the month of June.
Got it. I appreciate all the detail—thank you.
Thanks, Brian.
And, Olivia, we are ready for the next caller, please.
Our next question coming from the line of David Chiaverini with Jefferies. Your line is now open.
Hi, everyone. This is Frank on for David. Just one for me. On balance sheet sensitivity: I know you mentioned the NII guide down was coming mostly from the deposit side, but how has your modeled NII sensitivity changed relative to last quarter with the positive beta you are now embedding in your guidance?
The sensitivity changed because of our mix: we have a higher rate-sensitive deposit product mix versus the prior quarter. Regarding beta, for a 25 basis point increase we are modeling roughly 50% beta for interest-bearing products and about 40% overall. There will be a lag—some contractual deposits reprice immediately, and savings have a 90-day lag which will give a short-lived benefit in the fourth quarter.
Awesome. Thank you.
Thanks, Frank.
And, Olivia, we are ready for the next caller, please.
Our next question in queue is coming from the line of Casey Haire with Piper Sandler. Your line is now open.
Yes. Thanks. Good morning, guys. Curious if we could go back to the repurchase conversation briefly. You said you plan to utilize the entirety of the authorization. Can you talk at a high level about how you think about the math—whether it is an earn-back perspective, alternate uses of capital—and how sensitive the pace would be if the stock continues to move higher?
Sure. In terms of buybacks, we want to manage CET1 between 10% and 10.5% and our capital management priority is supporting loan growth. So if loan growth outperforms guidance, we will slow the buyback. We have an intrinsic value model for share price—we want a certain return to be in the market. If shares trade above where we want to be in the market, we will pause repurchases for a while. Overall, the earn-back is about four years on the share buyback. We want to make a good economic decision about when to repurchase. We have modeled repurchases evenly over the next 12 months, but it will depend on market pricing.
Got it. Very helpful. Appreciate the clarity. And one last: on balance sheet momentum and loan growth: it sounds like overall balance sheet growth should more closely match loan growth moving forward, with less drawdown in securities and more matched deposit growth—is that the right viewpoint?
Over time, our guidance for 2026 is mid-single-digit loan growth and low-single-digit deposit growth. Ideally, over time we expect to fund loans with customer deposits.
Got it. Appreciate it and thanks for the time.
Thanks, Steve, and thanks, everyone, for joining us today. We appreciate your time and look forward to talking with you next quarter. Thank you, everyone.
Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.