S&T 뱅코프(STBA) 2026년 3분기 실적 발표회: 사상 최고 EPS 및 NIM 4.06% 기록

핵심 요약

• S&T 반코프는 2026년 3분기 사상 최대 수준인 1.09달러의 주당순이익을 발표하며 전년 동기 대비 약 20%, 전분기 대비 거의 7% 증가세를 보였습니다. 분기 매출은 사상 최대인 약 1억 800만 달러를 기록했습니다.
• 순이자마진(NIM)은 높은 대출 수익률과 자금 조달 구조 개선에 힘입어 전분기 대비 7bp 확대된 4.06%를 기록했습니다. 경영진은 금리 상승세가 지속될 경우 NIM이 2027년까지 4% 이상을 유지할 것으로 예상하고 있습니다.
• 평균 대출 잔액은 6,100만 달러 증가했지만, 기말 대출 잔액은 소폭 감소했습니다. 경영진은 대출 금리 적용 규율, C&I 대출 취급 감소, CRE 심사 강화를 반영해 4분기 대출 성장이 보합에서 한 자릿수 초반에 그칠 것으로 예상하고 있습니다.
• 자산 건전성은 양호하게 유지되었습니다. 부실자산은 370만 달러 감소해 3,600만 달러를 소폭 상회하는 수준(대출 및 OREO의 0.45%)을 나타냈으며, 순상각액은 210만 달러(총대출의 0.10%)를 기록했습니다.
• 자금 조달 구조가 개선되어 중개예금이 연초 대비 1억 8,000만 달러 이상 감소하며 대차대조표상에 남지 않게 되었습니다. 요구불예금은 총예금의 28%를 차지했습니다.
• 경영진은 주가 및 시장 상황에 따라 기존 1억 달러의 매입 승인한도 내에서 4분기 중 자사주 매입을 재개하는 방안을 검토하고 있습니다.

주요 재무 데이터

사업 및 영업 실적

S&T 반코프가 외형 규모보다 수익성과 순이자마진을 우선시함에 따라 대출 잔액은 전반적으로 보합세를 나타냈습니다. 평균 대출 잔액은 6,100만 달러 증가했으나, 기말 잔액은 소폭 감소했습니다.

상업용 부동산 잔액은 자금 집행이 완료된 건설 프로젝트가 CRE 항목으로 전환되면서 6,500만 달러 증가했습니다. 경영진은 건설 자금 집행과 CRE 성장이 4분기와 1분기까지 비교적 꾸준히 유지될 것으로 예상하고 있습니다.

C&I 대출 잔액은 약 5,000만 달러 감소했습니다. 이러한 감소는 회전한도 대출 이용률 저하, 부실화된 여신의 정리, 예상보다 약했던 신규 대출 취급을 반영합니다. 신규 영입된 C&I 뱅커들은 여전히 영업 파이프라인 구축 단계에 있으며, 다수가 고객 유치 금지 제한을 적용받고 있습니다.

평균 예금은 5,600만 달러 이상 증가했으며, 여기에는 2,400만 달러의 평균 요구불예금 증가가 포함되었습니다. 기말 예금은 주로 계절적 요인으로 인해 소폭 감소했습니다. S&T 반코프는 예금 기반 투자의 일환으로 3분기에 온라인 뱅킹 업그레이드를 완료했으며 4분기에는 모바일 뱅킹 업그레이드를 계획하고 있습니다.

비이자이익은 주로 전분기 일회성 항목의 영향으로 약 20만 달러 감소하며 거의 변동이 없었습니다. 비이자비용은 마케팅 비용 감소와 세금 관련 기부금 축소에 힘입어 전분기 대비 110만 달러 감소했습니다.

경영진 가이던스

• 경영진은 철저한 금리 적용 및 심사 규율이 단기 대출 규모를 제한함에 따라 4분기 대출 성장이 보합에서 한 자릿수 초반에 그칠 것으로 예상하고 있습니다.
• 금리 상승세가 이어질 경우 경영진은 순이자마진이 2027년까지 4% 이상을 유지할 것으로 예상하고 있습니다. 9월 연방준비제도의 금리 인상이 4분기 마진을 몇 bp 올릴 것으로 기대되지만, 예금 및 대출 가격 경쟁이 결과에 영향을 줄 수 있습니다.
• 분기별 수수료 이익은 연말까지 및 2027년까지 약 1,400만~1,500만 달러 수준을 기록할 것으로 예상됩니다.
• S&T 반코프는 연말 전에는 자산 100억 달러 기준선을 넘어서지 않을 것으로 예상합니다. 경영진은 이로 인해 더빈 조항의 영향이 빠르면 2028년 중반까지 지연될 것이라고 말했습니다.
• 경영진은 2027년 비이자비용 증가율을 전년 대비 약 3%로 제한할 계획이며, 이는 연중 분기별 비용 지출이 5,900만~6,000만 달러 방향으로 이동함을 의미합니다.
• 회사는 현재 자본 수준을 유지하면서 4분기 자사주 매입 재개를 검토 중입니다.

리스크 및 주요 관전 포인트

대출과 예금 모두에서 경쟁이 한층 심화되었습니다. 경영진은 신규 추가 예금 금리가 대체로 4%대 초반 수준에 형성되어 있으며 일부는 이보다 높아 조달 비용이 증가할 가능성이 있다고 전했습니다.

고금리와 환원율(Cap Rate) 상승이 상업용 부동산(CRE) 감정평가액 및 현금흐름 심사에 영향을 미치고 있습니다. S&T 반코프는 거래를 성사시키기 위해 대출 금리를 낮추기보다는 차주의 자본 참여 확대를 요구하고 있으며, 이는 마진과 신용 규율을 지탱하지만 성장을 제한합니다.

요주의 및 고정이하 자산은 3분기 중 약 7% 증가했습니다. 이번 증가는 주로 요주의 대출에서 발생했으며, 고정이하 대출은 안정적인 수준을 유지했습니다. 경영진은 정리 및 정상화 노력을 통해 4분기 중 이 잔액들이 2분기 수준에 가까워질 것으로 예상합니다.

금리 상승은 유가증권 포트폴리오와 관련된 기타포괄손실 누계액도 증가시켰습니다. 이로 인한 AOCI 변동으로 분기 중 주당 유형장부가치가 주당 0.66달러 감소했습니다.

애널리스트 Q&A 주요 내용

경영진은 대출 파이프라인이 2분기 진입 시점과 비슷한 수준이라고 말했습니다. CRE 건설 대출의 전환이 잔액을 계속 받쳐주겠지만, 최근 채용된 뱅커들이 고객 관계를 구축함에 따라 유의미한 C&I 파이프라인 성장에는 시간이 걸릴 것입니다.

마진 동향과 관련해 경영진은 대출의 36%가 1개월 이내에 금리가 재산정된다고 언급했습니다. 이러한 변동금리 노출은 신규 취급된 고정금리 또는 변동금리 대출의 적은 물량보다 순이자이익을 더욱 크게 뒷받침할 것으로 기대됩니다. 3분기 CRE 대출 스프레드는 5년 만기 벤치마크 대비 약 230bp로, 6%대 중후반 수익률을 기록했습니다.

유가증권 포트폴리오는 연간 약 1억 5,000만 달러의 현금 흐름을 창출할 것으로 예상됩니다. 2027년에는 3년 및 5년 만기 상업용 대출 약 1억 달러의 금리 재산정이 예정되어 있으며, 경영진은 이러한 금리 재산정 시 200bp 이상의 잠재적 수익률 상승을 추정하고 있습니다.

경영진은 가격, 시기, 조직 문화 적합도, 구조가 적절할 경우 은행 인수를 전략적 우선순위로 계속 간주하고 있습니다. M&A 결정은 자산 100억 달러 기준선 관리와는 별개로 추진된다고 강조했습니다.

실적 발표 전화회의 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Welcome to the S&T Bancorp Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Now I would like to turn the call over to Chief Financial Officer, Mark Kochvar.

Mark Kochvar

Thank you. Good afternoon, everyone. Thank you for participating in today's earnings call. Before beginning the presentation, I want to take time to refer you to our statement about forward-looking statements and risk factors. This statement provides the cautionary language required by the Securities and Exchange Commission for forward-looking statements that may be included in this presentation.

[Operator Instructions] You can also obtain a copy of these materials by visiting our Investor Relations website at stbancorp.com.

With me today are Chris McComish, S&T's CEO; and Dave Antolik, S&T's President. I'd now like to turn the call over to Chris.

Christopher McComish

Great. Mark, thank you, and good afternoon, everyone, and thank you for joining us today. We certainly appreciate the analysts and investors being with us. And as always, we look forward to your questions. Before we get into the numbers, I would like to take a moment and talk a little bit about our company and reflect on who we are as an organization. While we're obviously here to deliver results for shareholders, and we're very proud of those results, banks like ours also exist to make broader impact. We focus our company on the value -- our values. The values drive our culture and our culture drives our financial performance.

And not only is our financial performance strong, but once again, we were honored with an award most recently by the American Bankers Association for supporting military families. This marks the second year in a row we received this recognition. Our People Forward purpose is about making positive impact in the lives of those we serve, and this award is a powerful example of that purpose and action. We're proud to support military families and grateful to our employees for helping create stronger communities through the -- through their commitment and service. So to everyone who has contributed to our efforts to support military families, thank you. Your work continues to make a meaningful difference and is helping us build on our shared future together.

Now talking about the third quarter. Our results reflect another strong quarter of disciplined financial performance. We delivered record earnings per share of $1.09, up nearly 20% from a year ago and almost 7% from last quarter and record revenue of nearly $108 million for the quarter. Return metrics were also strong with ROA of 1.55%, ROE of just under 11% and a return on average tangible shareholders' equity of 14.81%. Further, PPNR increased 12 basis points to 2.01% for the quarter. Our results demonstrated the strength and consistency of our core earnings engine, producing higher profitability and stronger returns.

Our operating performance was also strong. Net interest margin expanded 7 basis points from the linked quarter to 4.06%, supported by higher loan yields and an improved funding mix. Importantly, we are seeing positive year-to-date operating leverage as well. Through the first 9 months of the year, revenue growth has outpaced expense growth, and our efficiency ratio has improved to 54.65% compared to 56.35% for the first 9 months of 2025. Asset quality trends remained favorable for the quarter with net charge-offs of $2.1 million or 10 basis points of total loans and nonperforming assets declined again this quarter by $3.7 million to just over $36 million or 0.45% of total loans plus OREO.

Turning now to Slide 4 and our balance sheet. Loan balances were essentially flat during the quarter. Growth was impacted by our decisions to balance overall profitability and net interest margin against loan volume. We also experienced lower line utilization during the quarter. While period ended loan balances were down slightly, average loan balances for the quarter were actually up $61 million. Deposits declined modestly during the quarter, largely reflecting seasonal trends. Similar to loans, period ending deposit balances were down, but average deposit balances were up over $56 million, including $24 million of average DDA growth compared to June 30, 2026.

Importantly, our funding profile remains a source of strength and has improved significantly this year. Demand deposits continue to represent a significant component of our deposit base at 28% of total deposits. As a reminder, we reduced brokered deposits by over $180 million year-to-date and currently have no brokered deposits on the balance sheet. Tangible book value increased $0.10 per share to $29.28 despite a significant increase in AOCI related to the impact of higher interest rates on our bond portfolio, which reduced tangible book value by $0.66 a share.

In summary, our third quarter performance demonstrates record results. We produced record earnings per share and revenue, expanded margins, achieved higher returns, delivered positive operating leverage and maintained favorable credit quality. These results reflect the disciplined execution of our strategy and most importantly, the dedication of our employees across the organization. As we move forward into the final quarter of the year, we remain focused on driving profitable growth, maintaining strong credit discipline, enhancing our operating efficiency and continue to create long-term value for our shareholders. I'm going to turn it over to Dave to provide more details on the balance sheet and customer activity as well as asset quality, and I look forward to your questions. Dave?

Dave Antolik

Great. Thank you, Chris. And continuing on Page 4 with the overview of the balance sheet. I'll start by emphasizing something that Chris just reflected on, which was our deliberate decisions to balance volume and margin. This is being done in support of our continued strong earnings performance. At the same time, we recognize that the competitive environment for both loans and deposits continues to evolve in response to changes in both the economic landscape and the interest rate environment. We remain committed to investing in our deposit franchise as the primary driver of both profitability and growth here at S&T. As an example of that commitment, we completed a significant upgrade to our online banking platform for all customers in Q3, and we'll roll out a similar significant upgrade for our mobile banking platform in Q4.

As depicted on the slide, loans were relatively flat during the quarter, reflecting reduced origination activity, particularly in the C&I banking space. Within commercial real estate, we saw balance growth of $65 million, driven primarily by construction projects that were fully funded and moved from commercial construction into the commercial real estate category. Construction loan funding remains an important contributor to the total loan growth, and we forecast funding levels and overall CRE growth to remain relatively consistent in Q4 and into Q1.

Balances in our C&I book declined by approximately $50 million in Q3. Impacting this result were a number of factors, including a slight reduction in revolving commercial utilization rates, the decision to exit several credits due to credit deterioration and lower-than-anticipated originations. Based on current pipeline activity, we anticipate flat to low single-digit loan growth in Q4.

Turning to Page 5. Asset quality metrics remained solid during the quarter. Our allowance for credit losses was stable at 1.16% of gross loans, reflecting the overall quality of the loan portfolio and our focus on maintaining improvements that we've made over the past several years. Nonperforming loans declined by $3.7 million, representing a very manageable 45 basis points of total loans plus OREO. Net charge-offs were modest at $2.1 million. Criticized and classified assets did increase during the quarter by approximately 7%.

However, it's important to note that the increase was primarily driven by growth in criticized loans, while classified loans remained stable. We view this distinction as important because it reflects proactive risk identification and monitoring rather than deterioration in our most severely rated credits. Overall, asset quality remains sound as we actively monitor the portfolio and adjust underwriting practices to reflect changes in the economic and interest rate environments.

I'll turn the program over to Mark.

Mark Kochvar

Thanks, Dave. Third quarter net interest income increased by $2.7 million or about 3% due to an additional day in the quarter and growth in average loan balances. That, combined with improvement in the yield on earning assets, up 9 basis points with both better loan and securities yields. Also a stable cost of funds, up just 1 basis point in the quarter. The net interest income and net interest margin improvement came with very little impact from the September Fed increase, which we expect will add a couple of basis points to margin in the fourth quarter. As our floating loan rate book will reprice within the month and deposit pricing -- repricing will lag some.

We expect net interest margin strength if rates continue to move higher and based on expectations for 2 to 3 additional rate increases over the year, the net interest margin rate should stay north of 4% into 2027. How much depends on the level of price competition on both loans and deposits, which we have seen increase over the past month or so. Noninterest income was essentially unchanged this quarter, down about $200,000.

Declines were mostly due to onetime items last quarter. Our expectations for fees as we close out the year and move into 2027 is approximately $14 million to $15 million per quarter. Given the slower loan growth this quarter, we don't expect to cross the $10 billion threshold before year-end, which would delay the Durbin impact to mid-2028 at the earliest.

Expenses were well controlled this quarter, decreasing by $1.1 million compared to second quarter. Marketing decreased due to higher promotional efforts in the second quarter and the favorable variance in other includes tax-related contributions, which were partially offset by an unfavorable variance in the Other Taxes line. We expect to manage our 2027 noninterest expense year-over-year increase to approximately 3%, which implies a quarterly run rate moving towards $59 million up to $60 million over the course of next year. The TCE ratio increased by 10 basis points this quarter as strong earnings and a slightly smaller balance sheet more than offset higher AOCI.

We paused share repurchases in the third quarter after the strong stock performance in late June and July and into July. But we do have a $100 million authorization in place and are evaluating a resumption of activity here in the fourth quarter with an eye towards at least maintaining current capital levels. Our regulatory ratios continue to be very strong with significant excess capital. We're comfortable that given -- even considering additional repurchases and further AOCI impact, we have more than sufficient current capital and generation capabilities to position us well for the environment and to enable us to take advantage of organic or inorganic growth opportunities that may arise.

Thanks very much. At this time, I'd like to turn the call back over to the operator to provide instructions for asking questions.

Operator

[Operator Instructions] Your first question comes from the line of Justin Crowley with Piper Sandler.

질의응답

Justin Crowley

Just want to start out on loan growth. I know line utilization can certainly swing around. But as far as the lower origination activity that you called out, what would you point to as the driver of that? Are you seeing more caution on the part of borrowers just given the level of rates? And how does that kind of get you thinking about growth? I know you gave some Q4 guide, but more medium term, especially if we get another couple of hikes out of the Fed?

Dave Antolik

Yes. Justin, it's Dave. I think there are a couple of factors, particularly from our side as we manage to this balance between volume and rate. So if I look at spreads on commercial loans -- newly originated commercial loans in Q3, they're very similar to Q4. We plan on maintaining that focus on maintaining spread in order to defend the net interest margin. So that will have an impact on growth.

At the same time, we continue to hire bankers in the C&I space. They're building their pipeline. So you saw C&I declines in Q3. We would expect a more active Q4 into Q1 and Q2 as we move into the new year with those new bankers on board. The other dynamic of being a CRE concentrated bank is as interest rates rise, cap rates do as well. So appraisal outcomes are being impacted by rising cap rates.

So that leaves us with a decision to reduce a spread in order to make a deal work from both a cash flow and loan-to-value perspective or to require additional capital from our borrowers. We've chosen to require the additional capital from our borrowers to make them fit. And we've adjusted our underwriting as well to include increased rates or elevated rates in our stress testing scenarios.

So staying disciplined around our underwriting and our desire to maintain the progress that we made relative to asset quality, along with this volume rate trade-off is going to impact us. And that's why we're guiding to slightly lower loan growth in Q4 and into the new year.

Justin Crowley

Okay. Got it. That's all super helpful. And I guess kind of along those lines, do you have any detail that you can sort of share on the pipeline, just kind of what that activity looks like through the quarter, where it ended the period? And then you made the comments about hiring C&I bankers and you've done plenty of that already. So just kind of curious what that mix looks like.

Dave Antolik

Yes. So the pipeline in total is very similar to where it was entering Q2. So end of Q2, beginning of Q2 and into Q3, very similar levels and here in early Q4. Again, we would expect the same momentum relative to CRE construction funding converting to permanent CRE balances. and then more emphasis on C&I. We just haven't seen significant pipeline growth in the C&I space. It just takes time for these new bankers to get up and running and start producing results.

Justin Crowley

Okay. Got it. And then maybe just one last one. You called out likely not crossing 10 by the end of this year. And I know you guys have been pretty clear in the past that you would be comfortable crossing organically. But I guess just maybe an update on the state of M&A, how you guys are thinking about that? And maybe just frame up for us just the opportunities out there and the sort of things that you're looking at.

Christopher McComish

Yes, Justin, it's Chris. We still -- our posture hasn't changed at all. We -- inorganic growth opportunities are things that represent a priority for us with the right structure with the right partner at the right time. And so our job is to continue to build relationships, which I think we've done an excellent job of and then be prepared, which we are for the opportunity as they present themselves.

So I think I've been pretty consistent every quarter is we kind of bifurcate this $10 billion asset threshold and M&A and we're going to grow the bank organically for the right reasons in the right way, which I think we've proven that we're doing. At the same time, we're going to continue to build relationships with partners that represent opportunities for inorganic growth, which I think we're doing very, very well. But those two things we don't think about in the same way. And so the market has not changed dramatically when you think about kind of the parts of the Midwest and the Mid-Atlantic that we're focused on. There have been a couple of transactions that have been announced. And our job is to continue to build relationships with the right opportunities.

Justin Crowley

Okay. And not that you guys are rushing to do a deal, I think you've made that very clear. But what would you say are some of the things that are maybe a hang-up in getting something? And again, I realize that's not the top priority, but just curious for color there.

Christopher McComish

What are some of the things that are a hang-up in what?

Justin Crowley

In terms of like in your conversations with sellers getting to the same place and being able to actually announce the transaction?

Christopher McComish

Yes. I mean it's the typical things that would be a hang-up in any situation. There's price, there's timing, there's qualitative factors, there's cultural fit. All of those things play into the discussion. So I can't say that there's anything -- any one thing. Obviously, the bank stock prices have run up and bank stock values have run up and people feel good about what they're doing and the way that they're running the company. So there's lots of external factors that could play into it as well.

You've got the election coming up in a couple of weeks. That could change things in Washington or if the perceptions that things are going to change in Washington, that could cause somebody to think differently tomorrow than they do about things. The interest rate impacts, right? You've got AOCI impacts today that you didn't have 6 months ago, and they may get more pronounced in the coming quarters. That could be an impact for a seller.

So there's lots of factors that go into it, succession planning issues for a leadership team. All of those things factor into the timing. The most important thing that we can do is run our company really well, prove to others that we know how to run a good bank and would be a great partner. And by delivering results that gives the people on the other side of the table confidence.

Operator

Your next question comes from the line of David Bishop with Hovde Group.

David Bishop

Just curious if you have a line of sight into maybe expected cash flows off the fixed rate loan portfolio maybe over the next year in securities and maybe what sort of spreads you might be looking at sort of roll-off yields versus roll-on yields?

Mark Kochvar

Over the past quarter or so, we've seen them be fairly even. A little bit of a pickup on the commercial side still, probably in the 10 to 15 basis points. The best turnover we're getting, although the volume is not heavy on the mortgage book where that's a good percent higher. Cash flow in the securities book over the next year, I mean, we have a fairly laddered portfolio, so it runs maybe $150 million or so a year on the securities book.

On the commercial loan side, I don't think we don't have any large concentrations that are coming off. We have some amount, I think it's in the $100 million range of kind of 3- and 5-year resets that will happen in '27. Pickup there is actually more significant, probably in the 200 or more basis point range. But on the fixed side, I don't think we have any walls coming at least we look at that from the credit perspective, there's nothing significant there.

David Bishop

Okay. Got it. And then I think you mentioned the recent C&I banker adds. Just curious if you were active this quarter in adding to the bench strength. And just curious if some of the recent hires are still sort of operating under non-compete or non-solicits they have to work through.

Dave Antolik

Yes. Yes, the majority of the hires have some kind of a non-solicit. It just takes time to work through those. We've also built within our business banking space. We've made several hires there to upgrade talent and to focus on the relationship strategy that we've taken in order to help emphasize the growth and strength of our deposit franchise.

Christopher McComish

Yes. So Dave, I mean, the activity has been both in commercial banking as well as on the business banking side.

David Bishop

Got it. And then maybe as you look at...

Christopher McComish

Your other question about the non-competes and non-solicit, typically, a banker would have something that comes with them for a period of time.

David Bishop

Got it. And then maybe looking at the -- I don't know if you guys track this, but the deposit pipeline, just curious how that maybe looks in terms of maybe near-term treasury management account wins, operating account wins.

Dave Antolik

Yes. We monitor that. Activity continues to be steady in that space. We're spending a lot of time focused in on capabilities in order to attract and retain deposit balances. So everything relative to payments -- we've got some leaders within the organization that are looking at additional capabilities. As I mentioned, the online banking update, the mobile rollout next quarter, doing things that build a competitive advantage on top of just table stakes, but doing things that we can get in front of our customers that can help them protect their cash, move money more quickly, more safely. And those are things that we're focused on from a fundamental perspective in order to help strengthen the deposit franchise.

Operator

Your next question comes from the line of Kelly Motta with KBW.

Kelly Motta

Maybe sticking along the lines of deposits, costs were really well controlled this quarter, granted growth is minimal, but interest-bearing deposit costs were only up 3 basis points with CD rates down. I'm just wondering what the incremental cost of new funding is at? And given the rate move later in the quarter, if there's -- how you're thinking through the incremental beta here on this next rate hiking cycle?

Mark Kochvar

Yes. So kind of, I mean, we do -- we have seen an increase in the competitive environment here, both on the CD side and on the money market side. There's a lot of kind of specials and back pocket specials out there. So we are defending our turf as much as we can there. So we're seeing at the increment kind of in the low 4s as a place where we can put a stake in the ground, but we are seeing some leaking higher than that. So we'll continue to evaluate that. But it's kind of in that low 4s where we have to spend to save the relationships in a lot of cases.

Kelly Motta

Got it. And I apologize if I missed it, but you weren't active on the buyback this quarter, which was telegraphed at the last quarter's call. I'm wondering given that capital is building with the balance sheet flat and your profitability, it's a high-class problem to have, but any incremental thoughts here on returning to market?

Mark Kochvar

Yes. I mean we are looking at it again. And again, the AOCI this quarter helped to keep the capital levels down, but we're certainly sensitive to keeping those in line and not letting those get too far ahead of us. So we're looking much more seriously at resuming the buybacks here in the fourth quarter. So we'll see how the price and if the market environment plays out, but it's under more consideration than it was in Q3.

Operator

Your next question comes from the line of Matthew Breese with Stephens Inc.

Matthew Breese

A couple for me. The first, just I'm really interested in the whole NIM dynamics versus volume conversation. Could you talk a little bit about what on the spread front you're seeing, how much compression? I would have to imagine it's more than 50 bps for things to really kind of turn off. And then you had also mentioned kind of higher cap rates. I'm curious if you're seeing that already or if you're anticipating that? And what kind of moving cap rates do you expect?

Dave Antolik

Yes. I'll take the cap rate question. Yes, we're already seeing it impacting appraisal values. But more importantly, when we do our cash flow underwriting for commercial real estate deals, we stress test to the current rate environment. So you have seen this increase in term rates. So we apply a stress rate at 200 to 300 basis points above that, and that has had an impact on cash flow.

So again, we have decisions to make. We can say, well, we can live with a 120% cash flow coverage ratio where we might have a policy that says it needs to be 125%. So that we have an exception process if we need to do that. But we -- at this point, we've stayed disciplined because one -- the easiest way to make it work is to lower the rate on the loan. And that just hurts NIM, that hurts profitability.

And given the pressures that we have from a NIM perspective and pressures that we have to make sure that we're able to maintain the strong profitability that we've experienced, that has kind of outweighed the desire for growth for the sake of growth. So in the long run, we know we need to grow loans and deposits. That's key for us. But it starts with that deposit franchise and making sure that we're able to fund things efficiently and effectively. But yes, in the long term, we know we need to grow those bases, we need to grow loans and deposits.

Christopher McComish

Matt, I think if you look over -- it's Chris, over the past 12 to 15 months, you've seen more spread compression over that time in the commercial lending space, particularly within commercial real estate. The C&I business is more kind of event-driven customer-by-customer basis. But that's been fairly consistent contraction of margins from an origination standpoint. And then in this rising rate environment on the deposit side, you are seeing some more -- really more competitive intensity on the deposit side.

So I would say where a year ago, it was contraction on the loan side. Here, you're seeing it on both sides of the balance sheet more so than what we may have experienced in the past. So as Dave said, our job is to balance those two things. First of all, we're going to do everything we can to satisfy our customer relationship, retain a customer relationship and grow a customer relationship. But we also don't want to do things to stretch too far, certainly from a profitability standpoint as well as from a credit quality perspective. So it's a balance that we have to achieve.

We clearly feel really good about the income statement and the returns and everything. We're going to -- we need to continue to do work to balance the growth on the balance sheet.

Matthew Breese

Okay. And then maybe tying a couple of thoughts together. I think you answered Mr. Bishop's question with incremental cost of deposits is leaking into the 4% range. Is that to say that we're trying to push loan yields kind of into the 8% range, but competition spread compression is keeping it in kind of the 6%, 7% range, and that just doesn't work. Is that the right way to think about it? Incremental margins are tighter? What is the incremental margin today?

Mark Kochvar

Well, I said, I mean, incremental margin like on a commercial real estate deal, I mean, it's not -- we're not really match maturity that. I mean we're taking some interest rate risk on a nominal perspective, it's certainly way less than that. You're probably doing a commercial real estate loan at...

Christopher McComish

In and around 200 basis points.

Mark Kochvar

Yes. I mean it's -- for the quarter, it was 230. Yes. So 230 over, like, a 5-year, so you're looking at mid- to high 6s. If you think about it as funding off the front end of the curve, then you're looking at maybe a 250 incremental spread. But there's a lot more that goes into that.

For example, on the probably the biggest thing to impact us here as we move into the fourth quarter is just the Fed move at 25 basis points because there, we have 36% of our loans that are going to reprice within a month. And so there's a lot of activity there. There, we might only pass on 30% to 40% of that from a beta perspective to only a portion of our customers. So the pickup there on the margin side from a dollar perspective is much more significant than the amount of volume, which is just a fraction of that, that's happened out the curve where we have this tighter incremental spread.

So from a margin management perspective, we'll make a lot more margin and net interest income dollars by that repricing on the front of the curve because we've got $2 billion, $3 billion that reprice versus maybe $100 million or $150 million during the quarter on that fixed or ARM side that has that tighter incremental spread.

Matthew Breese

Okay. No, that's really great answer. If this continues...

Mark Kochvar

If you follow all of that, you're getting the question of the day award.

Matthew Breese

Yes. If this dynamic continues for, let's call it, the next 6 months into '27, I never really considered it, but is there the possibility that you stay under 10 for '27 as well?

Christopher McComish

We don't -- we're not thinking that way. We know we've got to be able to run this company in the low to mid-single-digit asset growth that's the markets that we're in, that's the opportunity. That's $0.5 billion of loan growth over a year, and that gets us meaningfully over $10 billion. So certainly, in the short term between now and the end of the year, we're so close, we would be -- it wouldn't make sense for us to go over right now. So regardless of it, we'll continue to manage the company appropriately where it stands today.

But our job is to appropriately grow the company. It's an interesting time, rising rate environment. The economy is what it is. There's certainly a lot of positives there, but we're just trying to -- we're working really hard to stay balanced. And we feel -- again, we feel really good about our performance. And we want to continue that and not meaningfully sacrifice it in the sake of volume.

Operator

Your next question comes from the line of Nicholas Holowko with Raymond James.

Nicholas Holowko

Most of them have been answered so far, given all the color. But maybe just a couple of follow-ups. It doesn't sound like there's any kind of credit concerns on the horizon, but just as you observe the trends within criticized and classified, is there anything that you would call out as something worth paying attention to as you're thinking about the impact of higher rates at this point? And I guess, as a side, how you're thinking about the direction of charge-offs from here, obviously, at a very low level year-to-date, but any color there would be great.

Dave Antolik

Yes. Sure, Nick. This is Dave. We don't see anything in the credit rating stack that would lead us to believe that credit results would deteriorate. We are closely monitoring the impact of inflation and interest rate movements on the portfolio. So we actively stress test at underwriting through the annual review process and through our diligent credit review process. So nothing that would lead us to believe that there would be some kind of a surprise relative to credit moving forward.

I did mention that there was a slight uptick in C&C assets in Q3, but we believe we have resolution or rehabilitation plans that will drive those levels back down to a more moderate level or more close to what they were in Q2 through the results of our activities in Q4. So nothing that stands out, Nick.

Nicholas Holowko

Perfect. And maybe as a follow-up, I think we've run through most of the key line items, but any thoughts on where fee income kind of trends from here and into next year, especially now that we shouldn't be anticipating the Durbin impact until 2028?

Mark Kochvar

Yes. So I mean, just from a run rate basis, we would expect to stay pretty similar to where we're at. We're kind of in that mid-$14 million to pushing on $15 million. So over the course of the year, we'd expect to see us kind of move forward through to that level. Again, to the extent we were thinking that the cross would happen in '26 and the Durbin would roll off kind of halfway through '27, we don't think that's going to happen. So that supports a better, more consistent run rate, at least in '27 for the full year. But other than that, we don't have any significant plus or minus on the fee side.

Operator

There are no further questions at this time. I would now like to turn the call over to Chief Executive Officer, Chris McComish for closing remarks.

Christopher McComish

Great. Well, listen, thanks, everybody, for being on the call with us and your interest in our company and the really good and thoughtful questions. Again, as I said, we're really proud of the performance we delivered in Q3. And we're going to continue to run this company in a way that, as I started out with and aligned with the values that we have that builds our culture that delivers the results. And we look forward to closing out the year strong and connecting with you over the coming weeks. So have a great rest of the day.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.