BankUnited 3T 2026 Resumen de la conferencia de resultados

Conclusiones principales

• BankUnited registró un beneficio neto en el 3T de 2026 de 72 millones de dólares, o 1,01 dólares por acción. Excluyendo una pérdida por venta de valores de 2,3 millones de dólares, el beneficio neto ajustado fue de 74 millones de dólares, o 1,03 dólares por acción, frente al BPA ajustado de 0,96 dólares del trimestre anterior y los 0,94 dólares del mismo periodo del año anterior.
• El margen de interés neto alcanzó el 3,16%, lo que representa un aumento de 10 puntos básicos respecto al trimestre anterior y de 16 puntos básicos en tasa interanual. El mayor rendimiento de los valores y de los préstamos core, el menor recurso a la financiación mayorista y la caída de 6 puntos básicos en los costes de los depósitos impulsaron este avance.
• Los depósitos a la vista promedio que no devengan intereses (NIDDA) se mantuvieron prácticamente estables en términos intertrimestrales y aumentaron un 10% en tasa interanual. Los NIDDA representaron el 32,2% de los depósitos totales, frente al 30,1% del año anterior.
• Los préstamos core promedio aumentaron en 706 millones de dólares, o un 4%, interanual. La producción de préstamos del 3T superó los 1.100 millones de dólares, aunque los saldos promedio de préstamos comerciales e industriales (C&I) cayeron en 300 millones de dólares respecto al trimestre anterior debido a amortizaciones anticipadas, cierres diferidos y disciplina de precios.
• Las tendencias crediticias se mantuvieron favorables. Los préstamos criticados y clasificados cayeron un 14% interanual, los préstamos morosos descendieron un 30% y la ratio de activos morosos mejoró hasta los 77 puntos básicos desde los 110 puntos básicos.
• La dirección prevé para el 4T de 2026 un NIM de aproximadamente el 3,2%, unos ingresos netos por intereses de 265 millones de dólares y un saldo final de préstamos core de entre 17.600 millones y 17.700 millones de dólares. Las previsiones asumen una subida adicional de tipos de 25 puntos básicos en diciembre.

Datos financieros principales

Rendimiento comercial y operativo

La estructura de financiación continuó siendo un motor fundamental de los resultados. El promedio de depósitos totales, excluyendo los depósitos intermediados, aumentó en aproximadamente 1.000 millones de dólares interanual. Las comisiones por servicios de depósito crecieron un 19,4%, lo que refleja la penetración de los servicios de tesorería, el incremento de las cuentas operativas y la disciplina de precios.

Los saldos de depósitos vinculados a sociedades de títulos de propiedad sufrieron la presión de una menor actividad hipotecaria tras el alza de los tipos a largo plazo. La dirección señaló que la captación de clientes se mantuvo constante, mientras que la menor actividad en las cuentas redujo los saldos promedio. La presión competitiva en la banca de títulos de propiedad también ha aumentado, principalmente a través de precios más que por pérdida de clientes.

La producción de préstamos se situó ligeramente por encima de los 1.100 millones de dólares. Los préstamos inmobiliarios comerciales (CRE) promedio aumentaron en aproximadamente 75 millones de dólares respecto al 2T y un 10% interanual. La cartera de CRE registró una ratio de cobertura del servicio de la deuda promedio de 1,8 veces y una ratio préstamo-valor (LTV) promedio del 54%.

Los saldos promedio de financiación hipotecaria de almacén aumentaron en aproximadamente 133 millones de dólares, o un 18%, en términos intertrimestrales y un 35% interanual. Este crecimiento compensó en parte las amortizaciones de préstamos C&I y los cierres diferidos.

BankUnited destacó su negocio de banca comercial para el mercado mediano (middle-market), que según la dirección se encamina hacia un tercer año consecutivo de crecimiento de doble dígito. Este negocio suele generar relaciones bancarias integrales, ratios de préstamos sobre depósitos cercanas al 100% y depósitos con un coste comparativamente bajo. Se prevé su expansión en nuevos mercados, incluidos Texas y, con el tiempo, Atlanta.

La dirección afirmó que las oportunidades de préstamos estuvieron ampliamente distribuidas entre Florida, Nueva York, Atlanta, Charlotte y Dallas. Nueva York se mostró especialmente fuerte en la banca comercial para el mercado mediano. Los diferenciales de los nuevos préstamos C&I se situaron generalmente entre 225 y 240 puntos básicos sobre el SOFR, mientras que los diferenciales de CRE oscilaron entre 160 y 180 puntos básicos.

La entidad continuó reduciendo la exposición seleccionada a instituciones financieras no bancarias (NDFI), en particular la concesión de crédito a fondos de crédito privado y sociedades de desarrollo empresarial. La exposición total a NDFI disminuyó desde aproximadamente 1.500 millones de dólares a finales del año pasado a menos de 1.200 millones de dólares. La dirección no indicó que actualmente se requiera una reducción más amplia.

Previsiones de la dirección

Las previsiones de BankUnited para el 4T de 2026 asumen una subida adicional de tipos de 25 puntos básicos por parte de la Reserva Federal en diciembre.

La dirección prevé que el crecimiento de los préstamos en el 4T sea estacionalmente fuerte, procediendo aproximadamente dos tercios de categorías relacionadas con C&I y un tercio de CRE. Sin embargo, los plazos de amortización anticipada y las tasas de utilización siguen siendo inciertos.

Se espera que los NIDDA promedio disminuyan moderadamente debido a la estacionalidad habitual y a la presión sobre los saldos vinculados a títulos de propiedad. La dirección prevé que los ingresos no provenientes de intereses se acerquen a niveles normalizados a medida que mejore la actividad de los mercados de capitales y no se repitan las notables pérdidas del 3T.

La compañía prevé que el NIM continúe mejorando en tasa interanual, respaldado por los continuos cambios en la estructura del balance. Publicará las previsiones para 2027 en enero.

Riesgos y puntos a seguir

• Los cambios rápidos en la curva de tipos podrían afectar a la demanda de préstamos, la actividad hipotecaria, los depósitos vinculados a títulos de propiedad y el posicionamiento del activo y pasivo.
• La competencia por los depósitos sigue siendo intensa, especialmente en productos promocionales del mercado monetario y certificados de depósito.
• Los resultados crediticios del 4T dependen en parte de amortizaciones imprevistas, tasas de utilización y calendarios de cierre.
• Los tipos de interés más altos están comenzando a provocar un reajuste de precios de las operaciones en CRE, lo que podría afectar a las transacciones más allá del 4T y principios del 1T.
• La dirección mantiene la cautela respecto a la concesión de crédito a fondos de crédito privado debido al apalancamiento y al posible impacto de la subida de los tipos de interés.
• La incertidumbre geopolítica, la coyuntura energética y las preocupaciones por la inflación llevaron a la compañía a añadir ajustes cualitativos a las reservas crediticias, a pesar de los bajos niveles de saneamientos por insolvencias.

Puntos destacados del turno de preguntas de analistas

Sensibilidad del margen: La dirección afirmó que la expansión del margen prevista para el 4T está vinculada principalmente a la sensibilidad de los activos. Los rendimientos de los préstamos deberían reajustarse más rápido que los costes de los depósitos, aunque BankUnited busca mantener su balance estático cerca de la neutralidad frente a los tipos de interés en lugar de realizar una apuesta direccional sobre los tipos.

Posicionamiento de la cartera de valores: La compañía vendió valores madurados de menor duración y los reinvirtió en títulos con una duración de tres a cinco años. El valor contable afectado superó los 1.000 millones de dólares pero fue inferior a los 2.000 millones de dólares. Las operaciones generaron una pérdida de 2,3 millones de dólares, pero reforzaron el NIM y equilibraron la cartera de préstamos, cada vez más orientada a tipo variable.

Retribución al accionista: BankUnited recompró 2,1 millones de acciones por aproximadamente 97 millones de dólares durante el 3T. Los dividendos y las recompras sumaron 278 millones de dólares en los primeros nueve meses de 2026. La dirección prevé completar la autorización restante y señaló que se sorprendería si el consejo no renovara el programa, aunque cualquier nueva autorización sigue sujeta a la aprobación del consejo de administración.

Objetivo de capital: La dirección sigue considerando que una ratio CET1 cercana al 11,5% es un punto de referencia adecuado a medio plazo. La ratio podría disminuir en el 4T debido a recompras adicionales y al crecimiento del balance.

Cartera residencial: No se espera que los tipos hipotecarios más altos ralenticen de forma significativa la reducción de la cartera, ya que los reembolsos se ven impulsados más por los reajustes de tipo variable, la amortización y eventos normales de los prestatarios que por refinanciaciones. La dirección prevé abordar cuándo podría BankUnited reanudar la actividad seleccionada de hipotecas a tipo variable a cinco y siete años en su próxima actualización de previsiones.

Transcripción completa de la conferencia de resultados

Transcripción completa de la conferencia de resultados

Comentarios de la dirección

Operator

Good day, and welcome to the BankUnited, Inc. Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Jackie Bravo, Corporate Secretary. Please go ahead.

Jacqueline Bravo

Thank you. Good morning, and thank you, everyone, for joining us today for BankUnited Inc. Third Quarter 2026 Results Conference Call. On the call this morning are Raj Singh, Chairman, President and CEO; Jim Mackey, Chief Financial Officer; and Tom Cornish, Chief Operating Officer.

Before we begin, please note that our remarks today may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect current expectations and are subject to various risks and uncertainties that could cause actual results to differ materially. The company does not undertake any obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise. Additional information regarding these risks can be found in the company's annual report on Form 10-K for the year ended December 31, 2025, and any subsequent quarterly report on Form 10-Q or current report on Form 8-K, which are available at the SEC's website.

With that, I'd like to turn the call over to Mr. Raj Singh.

Raj Singh

Thank you, Jackie. Good morning, everyone. Thanks for joining us. Usually, we always have this issue that we come out with earnings, and there are 8 other banks doing their calls at the same time. My team tells me that we somehow got lucky and we picked a day when not many banks are coming out. So we'll have your undivided attention, that's awesome.

Let me start by just -- before we talk about our numbers, just talk about the question that I often get from investors, what do you see in the economy and how are things out there in mainstream? And my answer is going to be similar to last quarter, which is while there are geopolitical risks and energy is a lot of control, there are concerns around inflation. The economy itself is doing quite well. GDP [ is ] strong, unemployment is historically low. And in our particular markets, even more so, both those things. So we are benefiting from that. And but keeping an eye on making sure it continues that way.

What has changed from the last time that we spoke is the interest rate environment is quite different. Fed is no longer in a hold or a loosening mantra policy stance. It's gone the other way. We've had our first rate hike, but more important than the rate hike also has been what's happened with the rest of the yield curve. So that is a big change from last time, and we're paying extra attention to it and make sure that we have all our bases covered. That's really been the big change.

Overall, our numbers, I'll walk through them really quick. And of course, Tom and Jim will then get into some details. Net income came in at $72 million or $1.01 per share. I know you guys love to exclude anything on the securities front. So if you take out some securities losses we had, net income was $74 million, and EPS was $1.03 per share. If you compare that to last quarter, I think we were at $0.96 last quarter. And a year ago, we were at $0.94. So making progress. ROA on an adjusted basis was 84 basis points and ROE is now pretty damn close to 10%, but still not at 10%. It's at 9.8%. So basically, ROA, ROE, margin, EPS, everything improved and it all happened on the back of basically gaining market share and deepening client relationships.

So quickly, the highlight of the quarter was margin. We had given you guidance that by fourth quarter, we will be at 3.15% NIM. We're happy to be actually at 3.16% already in the third quarter. A bit of a deja vu moment for me, I think this time last year, we had the same dynamic play out. We had promised you a margin for the fourth quarter, but we achieved that in the third quarter and then expanded from there. So it's going to be a very similar story, and we'll talk about guidance a little bit, but margin is looking very good.

And the reason it's good is because we are not -- we've been very, very laser focused on pricing and profitability and refuse to do business just for volume sake. So that's the trade-off we've made and it's showing. If you dissect this a little bit deeper, where is the margin growth coming from. It's coming from both sides of the balance sheet. Commercial loan yields are up but average deposit costs are down. I tend to read not every bank that comes out for the earnings before, but I do selectively pick up earnings releases from other banks. And I have yet to see a bank that has -- [indiscernible], but I haven't seen a bank that has actually reduced deposit costs last quarter or quarter-over-quarter. So we're very proud of that.

And -- and by the way, that happened not because our NIDDA grew this quarter, actually, our average NIDDA was flat this quarter. So this is really all coming off the back of interest-bearing deposits. So we're very proud of that. So printing a number below 2%, I think that's -- that makes me very happy.

Talking about deposits, our franchise continued to perform well. And deposits, the seasonality in our deposit -- second quarter is always the strongest quarter. And then things tend to moderate in the third and fourth quarter and first quarter is our weakest quarter. So average NIDDA was essentially flat this quarter. To be honest, I was expecting a little bit of growth. But in September or late August into September with the mortgage origination business getting impacted pretty severely by rising 10-year rates, that took a hit -- our title business took a hit for that. Now we grew our title business in terms of customers who brought in more clients this quarter and continue to do that every quarter, but the average activity in those accounts was lower and directly attributable to what's happening in the long end of the curve.

NIDDA now stands at 32% of deposits, again, compared to a year ago, it was 30%. So there's growth. We still have 10% growth in NIDDA year-over-year, talking about averages. Remember, we've told you time and time again. Don't look at [indiscernible], always look at averages, that's what drives the P&L, and that's a better representation of how our business is doing.

Quickly talking about lending. Again, we had a pretty decent quarter in terms of production, but we also have been high again. Low production -- year-over-year, our core loans, which we define as a commercial CRE and small business and mortgage warehouse lending as well, grew at about 4%, about $700 million. But the average C&I balances from last quarter did decline by $300 million. Some of it is attributable to some loans that slipped over into the fourth quarter. But generally, that has been fairly -- it's all coming back to the discipline that we're trying to maintain on 2 fronts. One is trying to get the full relationship and not just to drive the actual business and second is spreads. So that's directly attributable to that.

Having said that, fourth quarter is always our biggest quarter. If you go back and look at last year or the year before you'll see fourth quarter tends to be the [indiscernible] quarter for us, and we expect the same this year.

I will say one more thing about C&I. I've been trying to look at a lot of what our competition is doing. A lot of C&I growth, especially over the last couple of years for the industry has come for, but at least to greatly benefited from NDFI expansion. We have actually taken a more selective path. And instead of increasing our NDFI exposure, we've been decreasing it. It's a call on risk for no other reason. And we think it's the right thing to do long term. We're okay with doing investment-grade capital called business, a little bit of that but other categories of NDFI have been taken down.

Also, we have steered clear of some of the flasher asset classes like data centers and AI. We don't think a bank our size really is geared towards participating in that. And I know some of our peers are actively participating in that growth as well. There's not -- there's no way we're getting deposits out of that business if we ever do this, let's put it that way.

Quickly, a comment or two on credit. Credit -- it's fairly benign and the charge-offs were pretty low just like last quarter. Provision would have actually been 0 if we had just gone with the model. But given all the geopolitical and other risks that are out there, we used qualitative overlays and build reserve to about 93 basis points.

Capital, we did -- because the stock was weak this quarter, we took this opportunity to step up our buyback speed and we bought back a lot more shares this quarter than previous quarters. I think we bought back 2.1 million shares for about $97 million. So year-to-date, if I combine dividends and share repurchase, I think we've returned $278 million in the first 9 months of capital. And having done that, CET1 still remains robust at 12.1%.

And I know your question is going to be, so what happens in the fourth quarter? Well, most likely, we will finish our -- whatever is remaining in this authorization, and we'll go back to our board in the fourth quarter. We have meetings coming up in November, December, and we'll discuss this with them. They'll probably want to see a detailed business plan for next year and revised forecast for actually not just the next year but the next 3 years, and they'll make a decision based on that. So -- but I'd be shocked if we don't re-up the buyback.

With that, quickly on margin, I've already said this, I expect margin to expand again modestly in the fourth quarter quite like it did last year. And I'm sure you'll all be tempted to ask us about what will happen past fourth quarter, and we're not ready for that yet. We will give you that guidance in January, like we always do.

With that, let me turn it over to Tom, and then Tom will turn it over to Jim.

Thomas Cornish

Great. Thank you, Raj. So as Raj mentioned, average NIDDA remained essentially stable from the prior quarter despite the normal seasonal activity that we have. So some parts of the businesses we operate different businesses that have different cycles. Some parts were down, some parts were up across the quarter from an average perspective, but overall, up 10% from a year ago. We finished with total NIDDA at 32.2%, total deposits compared with 30.1% a year ago. So we were pleased with that. And average total deposits, excluding broker deposits, increased by approximately $1 billion from a year ago.

Commercial operating balances continued to remain strong. Pipeline continues to remain strong. As Raj mentioned, we're having good success in adding new relationships. So one thing I always talk about is the progress we're making on service charges on deposits. If we look at Q3 2026 compared to Q3 2025, we were up 19.4%. So we're really happy about that. I think it shows good product penetration across the treasury services business, strong operating account business and strong discipline on the pricing of products and services that we offer through the platform.

The quality of the funding base continues to improve as we add more operating accounts and expand relationship banking. Production, as Raj mentioned, we were happy with for the quarter, just slightly over $1.1 billion. We've had a quarterly increase of production for each major line of business for each quarter this year kind of building up to what is our normal very large fourth quarter, which we anticipate, and we've already seen a good level of closing activity early in the quarter so far for this year.

Loan balances for the quarter were impacted by some payoffs, some delayed closings and just ongoing portfolio positioning. Average core loans increased by $706 million or 4% from a year ago, areas where we saw some growth in the quarter. Average CRE loans increased by approximately $75 million from the prior quarter and 10% a year ago. Again, as you can see from the detailed additional information in the deck that's very balanced across all major asset categories within CRE. There's no particular imbalance and the overall CRE portfolio still remains with 1.8 average debt service coverage ratio and a 54% loan-to-value profile. So we feel very good about that.

Average mortgage warehouse balances increased approximately $133 million or 18% from the prior quarter and 35% from a year ago. The growth in CRE mortgage warehouse partly offset the C&I payoffs and the timing of closings. We continue to remain focused on growing core loans, while remaining disciplined around pricing and full relationship economics. Jim and Raj and I were looking at some numbers this morning kind of tracing spreads from a year ago to today, on a quarter-by-quarter basis and despite substantial competition in the market, I think we're holding spreads very, very well and staying really disciplined on that.

We continue to see a healthy flow of opportunities. As Rob said, we're in great markets. The markets continue to do well, virtually every market we're in. We're seeing good opportunities in Florida. Florida remains strong. The New York market has been very good to us, particularly over the last year in terms of growth, particularly in C&I area and our newer markets like Atlanta and Charlotte and Dallas are really, really doing well. So we're confident heading into the fourth quarter and looking forward to a very strong quarter.

So with that, I'll turn it over to Jim.

James Mackey

Great. Thanks, Tom. As Raj mentioned, we had adjusted net income of $74 million or $1.03 per share. I won't repeat some of the statistics that Raj mentioned, but I do want to dive just a little bit deeper in some of the numbers. The only adjustment we made was related to security sales. We normally have flat to slight gains on this line item. But this quarter, we had a $2.3 million loss and what drove that is with the market volatility this quarter, it gave us an opportunity to sell some shorter-dated seasoned securities where spreads had come in and tightened, and we were able to reinvest those in longer-dated securities at more attractive yields. It certainly helps NIM, but more importantly, it complements our slight asset-sensitive balance sheet profile. And that's why we wanted to take those actions now.

Now while we only adjusted earnings for the security sales, there were a couple of other notable items I want to just want to call out at the beginning of my comments, both are down in noninterest income. First is leasing. We had the opportunity to sell some, I'll call it, challenging lease assets at attractive prices. We're continuing to sort of deemphasize that leasing portfolio. So when we have that opportunity, we want to take advantage of it. We recognized a $1.1 million loss on these transactions. But with residual gains and losses on equipment sales, it's a normal part of the business, and we have it regularly. This was just a little bit larger than usual. So I wanted to call it out.

On BOLI, we had a $1.9 million decline this quarter. These plans are designed so that the asset liabilities largely offset over time. But there are quarterly mismatches from -- in periods where rates are volatile. And if you look back over the last couple of years, you'll see it bouncing around. And usually when there's a big movement up or down in rates. We would expect this to normalize pretty quickly over time and start to see the quarterly BOLI performance level out, consistent with where you've seen it over time.

On net interest income and margin, as Raj mentioned, both have improved this quarter, reflecting our improved funding mix, lower deposit costs and higher asset yields. NII up $5 million from the last quarter, $11 million from a year ago. NIM up 10 bps from last quarter, 16 bps from a year ago. Related to the 10 bp improvement from last quarter, it's really driven primarily by improved asset yields. Our security yield went up 10 basis points, and that added 4 bps to NIM. And this reflects the portfolio actions that I mentioned earlier as well as various purchases that we made earlier in the year.

Core loan yield increased 4 basis points, also adding 4 bps to NIM. That was largely due to the favorable repricing and the improved mix within the loan book. The remaining 2 bps of improvement is due to funding optimization, where we relied on less wholesale funding during the quarter. And as Raj mentioned, deposit costs were $1.99 -- or sorry, 1.99%, down 6 bps from last quarter.

NIM improved year-over-year by 16 bps, and that was mostly due to improved funding mix. Both sides of the balance sheet saw the impact of lower rates. However, the funding cost just declined more than enough to offset the decline in earning asset yields.

On the noninterest income and expense, noninterest income was $20 million for the quarter, which is down $9 million from last quarter and $6 million from a year ago. As we -- as I talked about at the beginning of my comments, the biggest drivers were the, I'll call it, the notable items that happened during the quarter.

I will acknowledge capital markets revenue was down $1.8 million from last quarter and it was flat to the same quarter last year. Really, there were 2 things that drove that decline. One was there were several lending transactions that slipped from third quarter to fourth quarter. So that creates some noise between the quarters. And while our pipeline of transactions was strong, just the interest rate volatility this quarter, frankly, just resulted in a lower average revenue per transaction. So that weighed on it a little bit. Not much to say on noninterest expense, it was stable at $175 million. You can see it's up from a year ago. That's just inflationary higher compensation cost investments we're making in our business and elevated deposit costs as our NIDDA continues to grow.

On credit, just a couple of things to say. Our net charge-offs, as Raj mentioned, remained low this quarter. Just want to give a public service announcement that not -- don't just look at one quarter, look at this over time, it can bounce around given the nature of our portfolio. Criticized and classified down 14% year-over-year. Nonperforming loans are down 30%. Our NPA ratio improved to 77 basis points from 110 basis points and provision expense at only $9 million, really reflecting the low level of charge-offs, but importantly, we increased the covered 2 basis points. And we did that through the addition of qualitative factors given the low level of charge-offs.

So let me finish by turning to our guidance update. Obviously, as we're almost at the end of the year, we focused our guidance just on the fourth quarter. Again, we'll come back to you in January to talk about 2027. I'll note our fourth quarter guidance assumes one more rate increase in December, 25 basis points. So let me tick down the metrics that we provided. Core loans we're forecasting a range of $17.6 billion to $17.7 billion ending balance. That reflects our seasonally strong fourth quarter. We've got a healthy production pipeline so lots of good opportunities for the growth.

The one thing that's always a wild card you can't predict is timing of payoffs or what utilization rates may be. So that's why we're giving you a range. NIDDA, $8.65 billion, again, consistent with the seasonal patterns and also keeping in mind what's going on in the mortgage market related to the title business. NIM, as Raj mentioned, we expect to continue to improve in the fourth quarter. We're pegging that at around 3.2%. The impact from the September Fed increase and the fact that we're slightly asset-sensitive certainly is -- will help.

Net interest income of $265 million, just to remind everybody, that's sort of as reported, so a non-FTE basis. I know some model looking at it on an FTE basis. But -- and that just reflects the higher NIM and the increase in earning assets during the quarter. Noninterest income, we do expect to return more back to normalized levels. We would certainly expect to see some improved capital markets revenue in the quarter and a non-repeat from some of the notable items that we discussed.

Expenses around $178 million, just normal quarterly variability, nothing really to call out there. All that sort of drives the PPNR of $115 million. And lastly, credit provision, it's a little hard to peg, but we put it at $15 million, which is sort of our normal kind of run rate, if you will. And a lot of it will depend on where charge-offs and other things land during the quarter.

So with that, I'll turn it back to Raj.

Raj Singh

All right. I think I was just looking through my notes here. One comment that I wanted to make, which I forgot, is, it's a detailed point, but it's an important one. In our C&I business, it's -- you see a C&I number. There are actually a few businesses that add up to that. And there is a large corporate business, which is larger tickets business. There's a middle market or what we call commercial banking, and there is tough very small ticket business, which we do out of our branches.

The middle one, the commercial banking is what we have been really focused on the last 2 years and has been growing at double digits. This will be its third year of growing double digits. That is a business that we tend to capture the full relationship, we tend to have 100% loan-to-deposit ratios, the deposits come in and generally, the deposits are the lowest cost of all of our business lines. So we are very focused on growing that. It doesn't show up in the numbers and still not going to be big enough to move the needle and the whole book is back a couple of billion dollars split between New York and Florida.

But that's what is growing and where the margin pressure is the biggest, and we don't get enough deposits is the large corporate business. And that's the one that actually is a little bit behind in terms of its overall balances. We still want to grow that business, too. So don't get me wrong. But I'm really excited about Commercial Banking, which is that small ticket, the $5 million, $10 million ticket size business doing as well as it has. And in the next 2, 3 years to come, that I expect that business to really become a big enough business to stand on its own as a separate line of business.

But we've had a lot of success there. It's taken a long time. We've changed leadership over here. It -- not change, but we added to the management bench over there. And we're expanding that into our new markets as well, which we have not done to date, so in Texas and eventually Atlanta as well. So we're very excited about that. So you'll hear me talk about this more and more over the course of next year or two. So just one point that I wanted to make that I forgot.

Let's open it up for Q&A.

Operator

[Operator Instructions] Our first question comes from David Chiaverini with Jefferies.

Preguntas y respuestas

David Chiaverini

I guess, starting out on the net interest margin. You guided for it to expand further in the fourth quarter. You mentioned about how you're slightly asset sensitive and you're assuming one hike. I guess can you split out how much of the expansion is from the asset sensitivity versus mix shift on the balance sheet?

James Mackey

In the fourth quarter, I think it's largely the -- I mean it's largely the asset sensitivity. The NIDDA, obviously, it's a seasonal, so it declines. I mean we continue to have noncore loans running off, so on the margins, that is helping. And as Raj and Tom mentioned, we're holding the line on loans. So it's really just -- our loan yields. So it's really just the deposit cost resetting slower than the benefit of the loans repricing up.

David Chiaverini

That's helpful. And as we think about the forward curve with potential hikes coming in, what sort of magnitude of rate sensitivity should we think about as it relates to the NIM and rate hikes?

Raj Singh

I think there are 2 things here. One is just the lag effect from rate hikes, which I think is really a shopper point to talk about the fourth quarter, eventually lag infects only help you for a period of time after the lags catch up with your deposits to price back up. But our stated strategy always has been to not be asset sensitive or liability sensitive to try and manage as close to 0 as possible. That's on a static basis. On a dynamic basis on new business coming on, naturally, we become asset-sensitive. So it is -- and even now, I mean [ ALCO's ] going to meet next week as well, we will try and again, [ rejigger ] to make sure that we're not -- because we really don't know where rates are headed. It feels like they're headed up, but they could be headed down within 3 months. So we're not trying to make a call on rates. We're trying to be as the static balance sheet to be as neutral as physically possible and just slight asset sensitivity from the new business that's coming on.

Unknown Executive

Raj -- I mean our deposit betas, I think, during the last rate hiking cycle was like 80 and we would expect that to be the same. But it's not linear, right? It's early -- the earlier cuts, you have -- it's much lower.

Operator

The next question comes from Jared Shaw with Barclays.

Jared David Shaw

Looking at the growth expected in core loans, can you just help a little bit with breaking that out between C&I and CRE? And thanks, Raj, for the color on the middle market commercial but how should we think about that fourth quarter growth and how sustainable, I guess, those balances are on the balance sheet?

Thomas Cornish

Yes. I would -- I would say if you look at what we've done maybe over the last 12 months, we've had more CRE growth as a percentage of that number. I would expect it to be a little bit less. I think that we will probably have about 2/3 of the growth across the sort of segments that make up C&I, including corporate banking, commercial banking, retail small business and about 1/3 of that would likely be in the CRE business. We are seeing a bit more -- probably won't impact us as much in the fourth quarter, but we are starting to see the consistent movement up in perspective that rates will move up being a little bit more impactful in deals that are coming together now.

Not what's in the pipeline, not what's closing in Q4, maybe not what's closing in Q1 but you are starting to see a lot of retrading of deals going on in the market. So I think when we look at the next quarter and even quarters after that, I'm expecting that our growth will probably be more like 2/3 to 70% in the C&I world and 1/3 to 30% in the CRE world, just because of kind of the rebalancing of that.

Jared David Shaw

Okay. And then on DDA average balance for fourth quarter, I mean, how should we -- I know we -- that you're not focused on end of period, but how should we think about the movement through the quarter and sort of an exit rate for DDAs coming out of the year -- coming out of the quarter?

Unknown Executive

Well, I mean average DDA will decline in the fourth quarter. That's just the normal seasonal trend. Then obviously, the ending balance will be down as well, and that will be your exit rate in the next year. I'm not sure what else to say on that other than -- a lot of it will depend on...

Raj Singh

It's a slight decline in the fourth quarter, not as much as it happens in the first quarter. But if you go back and look at fourth quarter decline last year or maybe the last couple of years and average that, it's probably our best guess. .

Jared David Shaw

And then just finally, if -- any detail on that securities restructuring in terms of balances sold and yield and balances and what was purchased?

Unknown Executive

No. I mean, I wouldn't characterize it as a restructuring necessarily. It was sort of just our normal asset liability. It just is maybe a little bit more concentrated in one quarter. So I would say, again, we were selling assets that were highly seasoned. So we've been holding them for a while. They're less than one year maturity and reinvested in our normal profile, which is more in the 3% to 5% range, and that's...

Raj Singh

It's more driven by ALCO than anything else. .

Jared David Shaw

3- to 5-year being duration, right, not [indiscernible]?

Unknown Executive

Yes, I'm sorry, I misspoke. Yes, 3- to 5-year duration.

Raj Singh

Jared, if you look at our origination now for the last 3 or 4 years, C&I is almost all floating rate. CRE also is largely floating rate. So we really have stayed away from the fixed business for now 3, 4 years. So as new production comes on, old loans pay off, if you just think about the fixed versus floating, that the left side of the balance sheet that keeps going more and more in the floating rate side. So we have to, every now and then, step up and rebalance and we don't use loans to rebalance. We use securities.

Operator

And the next question comes from David Rochester with Cantor.

David Rochester

Just wanted to touch on the title business for a minute. Looking at deposit balances, you're kind of flattish year-over-year on those, but you've been growing customers quite a bit over the last year. So I'm just wondering, can you talk about that flat trend? Is that coming solely from higher mortgage rates that you're seeing now that's slowing the purchase market? Or is there a measure of competitive pressures in there that's come online that's driving some of that headwind as well? And can you talk about how you think these deposit trends could look going forward in this higher rate environment where elevated mortgage rates become the norm? That would be great.

Raj Singh

I think balance is -- because we saw a sharp decline in the month of September, I'm attributing it largely to what happened to the mortgage market and what happened to rates. The competitive pressure is definitely higher this year than last year, and last year was higher than the year before. But that is manifesting itself through pricing more than balances. So the pricing has gotten less favorable. That's -- our competitor is basically coming in, somebody new coming in that generally lead with price and we're the incumbent and we are reacting to that price.

But in terms of volume, I think it's going to -- it's more to do with what's happening in the mortgage market. And we -- in terms of picking up clients, we are picking up the same number of clients every quarter, roughly that we have been for quite some time now.

Unknown Executive

The other thing to add and again, we'll be able to talk more about it in January. But if -- just looking at the Mortgage Bankers Association projections of purchase mortgage market, most industry participants are saying purchase mortgage market will be flat next year to this year. It's sort of at a -- it can't go much lower, just mathematically. And the purchase mortgage market drives more of our balances than the refi market. Clearly, the refi market has completely dried up right now.

Purchase mortgage market, as Raj said, certainly, the quick movement in the 10-year and a quick movement in rates sort of stifle things. But generally, the market thinks that it will kind of normalize and be flat year-over-year. So really, if that plays out, then the big driver for us on trends will be continuing to grow share and generate our fair share of those, call it, flat year-over-year volume. Does that make sense?

David Rochester

Yes. Yes, absolutely. And in terms of plans to grow that business, just organically, are you doing any more hires, making more hires? And then from a competitive standpoint, I know historically, you competed with, I would say, smaller sophisticated banks versus your technology platform, which you had been working on for years and was really a step ahead of the rest. Where are you seeing the competition coming from? Is it coming from larger banks? Or are you starting to see some of the midsized banks coming into it as well?

Raj Singh

I think it's a full spectrum. I know for small sort of sub-$5 billion bank that is trying to make a mark in this. I know of a bank in the mid-cap space. But then I also know the money center banks trying -- money center and the very large banks when they try, they have all the technology in the world, they can do it, but it can't get out of their own way to focus on this business. It's not just about technology, David, it also is about processes in the back office that are tailor-made for this business. Fraud, OFAC, BSA [indiscernible], they all have to be fine-tuned to serve this client base and large companies find that specialization very hard to achieve. It's not about technology. They could get those ducks in a row than they could do. So I'm not worried about them at all because they try and then they go away.

Smaller players are more nimble and hungry. And they are -- I think they just come out with price as the weapon to try and this large customers. They haven't been very successful, but they certainly are making the market more competitive.

David Rochester

Maybe just one last one on the HOA business. You've definitely grown those deposits. It's a nice sleeve of low cost. You have some low cost within that. Can you just give an update on progress on growing that business and what you're facing competitively?

Raj Singh

Yes. No, that is -- there are a handful of banks, I would say, about 10 or 12 in -- that are doing that as a separate business line, and some of them are much bigger than us and others, our size. There -- the trick is to focus on the low end of the market and not the really big property management companies. That's our differentiator. That's why I think the profitability of our HOA business is much more different than somebody who's playing in a different scale.

If you really want to be at a scale 3, 4, 5, 6x bigger than us, you have to go to the very large property management companies. And there, the profitability is just very different. It's a different ball game. So we've avoided that really upper end of the market and stayed focused on the smaller associations. And it's a much harder way to build business. It takes much longer -- it has taken us 4, 5 years to get here, but that's okay, a trade speed for profitability.

Thomas Cornish

Also another thing I might add is a lot of the M&A activity is sort of at the upper end of the market. And so if you're fishing consistently at the upper end of the market versus kind of the client segment that Raj is talking about you're susceptible to a lot more M&A activity, creating volatility in the business for you.

David Rochester

And can you just remind us roughly what the percent of GDA is within both of those sleeves and title and HOA and if that's changed recently?

Raj Singh

I don't have that in front of me. But I would say, time line now, it's more than 50%. So it's a majority. And HOA, I don't have it in front of me, but it's a fairly large number in HOA as well.

Operator

And the next question comes from Woody Lay with KBW.

Wood Lay

Maybe just to start on credit. It looks like special mentions were down, but some increase in substandard. I was just wondering if you could give any color on some of those moving pieces.

Raj Singh

It's the usual stuff that happens 1 or 2 loans go back and forth between this. There's nothing that we're losing sleep on. But this does happen. We've always said our portfolio is lumpy and even just 2 loans moving -- migrating from one bucket to other can cause this. And Tom, do you have...

Thomas Cornish

Kind of the -- it's basically what Raj said. I mean there's nothing systemic or correlated in that, that we look at. If we look at the one number that moved to NPL this quarter from being a criticized loan, it was a company that's in the -- I would broadly call it in the weather disaster recovery business. And I'll say this tongue in cheek, unfortunately, there's not enough weather disasters going on right now, and their business is soft. We haven't had significant hurricane activity. We haven't had significant hail storm activity. And unfortunately, that's the business they're in. And -- so that business is a little bit softer. That was kind of the highlight loan of the quarter that moved from one category to another. But beyond that, it's kind of just sort of episodic.

Unknown Executive

That's why I gave the public service announcement. Just look at the trends over a few quarters. And the general trends year-over-year have been quite positive and probably a more indicative measure of the status of credit.

Wood Lay

Got it. That's helpful. And then maybe a question on deposits. It looks like there was some mix change between the IV demand into time. Could you just walk through some of that -- the mix change in the quarter and kind of what drove that change?

Raj Singh

We look at some of the businesses -- I mean, let's say, we have an immunity business. We, of course, have some broker deposits. We have some other price-sensitive deposits. And we're always looking at them and quarter-over-quarter, month-over-month, you can find one segment get overheated another one a little less. Like last quarter, we were telling you that brokered market had gotten ahead of itself. And we had backed off brokered in a big way. This quarter, we felt the other way, actually, [ munis ] was a little ahead of itself, especially in Florida. So we backed off on [ munis ] and broker actually came in line with what our expectations would happen from brokerage. So we found more opportunities there than in munis.

So we're fine-tuning this almost on a weekly basis. But this quarter, it was a drop in munis and increase in brokerage, and we picked up 5, 8 basis points on similar duration assets -- or sorry, liabilities. So beyond that, it wasn't really anything of substance, we're not the highest rate out there. We're trying to -- we're still getting pretty good roll up of -- roll forward of our CDs. We're still capturing 80%, 85% of the rates we have. So we monitor it very carefully. But promotional money market rates and promotional CD rates in our market, I think, naturally have taken off. Deposit competition is pretty intense. But we're monitoring that very, very closely. And that was the only notable thing munis versus broker to kind of flipped on itself this quarter from last quarter.

Thomas Cornish

We try to be flexible when there's opportunities for imbalances.

Wood Lay

No, that's helpful color. And then maybe just last for me on capital. It sounds like we might get some additional detail next quarter. But where we are today, the CET1 is above 12%. I think the start to the year, you all kind of laid out a mid-11% CET1 target. Does that still feel like a good target in kind of the medium term?

Unknown Executive

Yes. I think so. We feel good about that. I mean our -- at the beginning of the year, I would have said we would progress towards that target a little faster. But as you know, the loan growth, we've been pretty diligent on that. So loan growth hasn't been as high as we originally modeled. So that -- we've been buying back the same volume of shares that we projected is just the investment in the balance sheet has been a little bit slower. So as we think about the next round of share repurchases, we'll want to be mindful of where the balance sheet is going and all of that as we [indiscernible].

Raj Singh

In the fourth quarter, that number might come down not just from the remaining buyback but also from some balance sheet curve. So we'll see where we end the year and then most likely, I can't say anything about the buyback until the board authorizes us, but we'll be discussing that with them very soon. .

James Mackey

Yes. Just to remind, the 11.5%, we came up just sort of middle of the pack. We're looking at peer sets and capital ranges, and we don't want to be on the low end or the high end.

Operator

And the next question comes from David Bishop with Hovde Group.

David Bishop

Jim, following up on the loan origination yields and roll off. Just curious where you guys were onboarding new maybe commercial loans this quarter in terms of yields versus some of the roll off. It sounds like maybe some of the nonrelationship loans were rolling off at lower yields. Just curious sort of the spread dynamic there.

Thomas Cornish

Yes. Yes, I would say it's different in different segments. But if you kind of average it all together, I would say the C&I compared from a SOFR perspective, I would probably give you an average of about 225 -- 225 to 240 in range spread, depending upon what segment you're in.

Raj Singh

And CRE is lower.

Thomas Cornish

CRE is lower.

Raj Singh

CRE is without [indiscernible] between 160 to 180 in that range.

David Bishop

Got it. And then just in terms -- as you look at the loan pipeline across your geographic regions there. Just curious what markets may be standing out and driving the bulk of that commercial pipeline?

Thomas Cornish

It's pretty evenly spread across all markets. I mean Florida has been good and basically every major area of the state. We've seen good strength in New York, particularly in the midsized business category that Raj has mentioned, the Commercial Banking segment in New York has been really, really strong and the new markets all continue to perform well. It's pretty broad.

Raj Singh

Production is evenly spread. Payoffs are not. Obviously, payoffs are in the more mature markets where we've been -- that's Florida and New York, so not much payoffs in the new market for obvious reasons.

Operator

And the last question comes from Jon Arfstrom with RBC Capital Markets.

Jon Arfstrom

Just a couple of questions here. Higher rates, does that slow the progress on reducing residential at all? Or what are you expecting in the next several quarters on the residential runoff, should that stay about the same?

Raj Singh

Yes, that's a good question. I don't think so, is my quick answer. And the reason is if you have a 3.5% mortgage, whether primary mortgage rates are at 7% or 7.5%, I don't think it really impacts CPR that much. I think a lot of this is just now either arms that are resetting, which are causing runoff or regular amortization or just -- people move, people have divorces, people die, stuff happens. And it is not active refi that is creating the CPR.

So yes, the refi market is very sensitive to [indiscernible] rates are, but that's not what's causing a 3.5% mortgage to go away. It's more regular stuff that happens. And we produced our resi portfolio very nicely now over the last 3 years. We are coming up to a time where the first half will be do not reduce it to actually flatline it. And then there will be a time, maybe a year or 2 after that, we'll grow it as well. It's not that we want to drive this to 0, like we did the multifamily business in New York many years ago. That's not the goal. The goal is to that we were too heavy in this asset class, and we need to bring it down.

So we've been at it for 3 years. We're doing a lot of work. The spreads in the business will do change from time to time, but that will dictate how aggressively and when we want to step back in. But if you take a finer point to it in our portfolio, you have some 30-year fixed, you have some 5-year arms, 7-year arms. There's a big difference between how much I like the 30-year, how much I like the 5-year? I hate the 30-year and I like the 5-year. So I would like to run that 30-year down for a very long time. We don't want to grow that. But there will be a time, and we'll give you guidance on that maybe in 3 months on when we will start to actively engage again on the 5.1 to 7.1 part of the business.

Jon Arfstrom

Okay. Slide 19 is helpful. I'm understanding that for what it's worth. The other part of this is the [ 3.20% ] NIM that you're talking about for the fourth quarter. I think that's notable. You promised us that and it looks like you're going to hit it. Do you feel like that's a sustainable level for you? And if we get some more hikes, can that 3.20% grow over time?

Raj Singh

I think the dynamics that have been playing are still very much the same. Our balance sheet is still changing, left and right side. So as long as we keep doing that, there's no reason why our margin cannot keep expanding. The -- the only caveat I will give you is that there is a seasonal trend from quarter-over-quarter. So just be careful of that. But if you ask me year-over-year, do I expect NIM to keep improving? The answer is yes.

Operator

One final question from Michael Rose with Raymond James.

Michael Rose

Raj, just one question on the NDFI exposure. I know you have been intentional about bringing it down a little over 5% of loans, I think about 7% of commercial loans that says in the deck. For a banker size, where do you think that should be? And where do you think it will kind of end up over time, basically asking is more structural runoff coming?

Raj Singh

I don't think there's anything more that we feel compelled to do. This was a call we made actually earlier in the year last quarter, not third quarter, second quarter. So under something changes out there in the NDFI space, that we start to see more risk, I don't really expect this to change that much.

Thomas Cornish

Yes, I would add that if you look at the NDFI exposure, there is diversity within that overall number. right? So a part of it is the capital call business. We don't -- that's largely an investment grade short-term business that we're not concerned about, and we'd be willing to expand that. We have a lot of things that run through the NDFI category like tax certificate financing, and there's a lot of different industry segments that fall into that category that we feel good about and would grow.

The part where we are very light and have been careful on has been essentially the lending to private credit funds. That's anything in the kind of B2B business development corporation type world. That's where we've been careful and that -- most of that is what's been sort of the reduction. I think late last year, we were at about $1.5 billion. Today, we're a little under $1.2 billion. Most of that couple of hundred million dollar reduction has been in that area. That's where we'll continue to be very careful because I think the impact in that industry segment from rising rates and heavy use of leverage as we head into next year is not going to be great. But the overall [indiscernible] they're not as significant as that component of the number.

Michael Rose

Perfect. I appreciate the color. And maybe just one final housekeeping question. Jim, when did the securities repositioning happen in the quarter? And kind of what was the yield pickup, maybe what was sold, kind of et cetera?

James Mackey

It was probably front loaded. Most of it was at the front end of the quarter, and I don't have the exact -- well, I mean I know securities as a whole had a 4 basis point NIM impact for the quarter. But again, most of that was from the actions we took earlier in the year a little bit on this quarter. But I don't have the exact yield pickup that I can give you on this call.

I mean, again, the yield pickup is going to be going from less than a 1-year duration security out to a 3- to 5-year set of securities, and it was north of $1 billion -- north of $1 billion, less than $2 billion that we're really talking about here in book value.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Raj Singh for any closing remarks.

Raj Singh

Thank you so much. Guys, thanks for joining us. And I'm sure there are more questions that will pop up. And Jim is here. I will probably be on a plane in a short while, but [indiscernible] as well. Thanks. We'll talk to you again in 90 days, or probably at a conference before that. Bye.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.