비즈니스 퍼스트 뱅크셰어스(BFST) 2026년 3분기 실적 발표 전화회의: 마진 및 예금 성장

핵심 요약

• 비즈니스 퍼스트 뱅크셰어스(Business First Bancshares)는 2026년 3분기 GAAP 기준 보통주 순이익이 2,320만 달러(주당 0.71달러)를 기록했다고 발표했습니다. 핵심 순이익은 2,600만 달러(주당 0.79달러)였습니다.
• 핵심 평균자산순이익률(ROAA)은 1.17%에 달했으며, 핵심 효율성 비율은 61.1%를 기록했습니다. 핵심 세전·충당금적립전이익(PPOP)은 총 3,630만 달러였습니다.
• 핵심 순이자마진(NIM)은 대출 수익률 상승, 조달 비용 감소 및 수익률이 낮은 프로그레시브 대출 매각에 따른 분기 전체 효과에 힘입어 전 분기 대비 12bp 확대된 3.80%를 기록했습니다.
• 투자목적대출은 전 분기 대비 연환산 7.2%인 2,140만 달러 증가했습니다. 예수금은 연환산 7.7%인 1억 4,120만 달러 늘어나 브로커 예수금을 줄이고 연방홈론은행(FHLB) 차입금 1억 800만 달러를 상환할 수 있었습니다.
• 경영진은 4분기 대출 성장이 한 자릿수 중후반대를 기록하고 마진이 추가 확대될 것으로 예상하지만, 경쟁적인 예금 금리 책정으로 인해 금리 상승 수혜가 제한될 수 있습니다.
• 신용 건전성 개선은 완만하게 유지되었습니다. 경영진은 4분기에 부실자산(NPA)이 최대 1,500만 달러 감소할 것으로 예상하며, 향후 부실채권(NPL) 비율 50bp 이하 목표를 유지하고 있습니다.

핵심 재무 데이터

사업 및 영업 실적

휴스턴과 루이지애나 서남부 지역이 대출 성장을 견인했습니다. 경영진은 최근 영입한 일부 뱅커들이 고객 유인 금지 제약을 받고 있음에도 휴스턴의 대출 파이프라인이 실제 집행 잔액으로 전환되기 시작했다고 밝혔습니다.

은행은 또한 루이지애나 전역에서 영업 활동이 개선되었다고 보고했습니다. 바턴루지, 레이크찰스, 라피엣에 본사를 둔 기업들이 메타(Meta)의 루이지애나 북부 데이터 센터 개발 관련 사업에 참여하면서 전체 지점망에 걸쳐 대출 기회가 창출되고 있습니다.

비즈니스 퍼스트는 텍사스주 타일러에 6명 규모의 기업금융 팀을 신설했습니다. 경영진은 타일러를 텍사스 동부 및 댈러스와 슈리브포트를 잇는 I-20 회랑 지역으로 추가 확장하기 위한 거점으로 보고 있습니다. 댈러스는 은행의 가장 큰 단일 시장으로 유지되고 있으나, 특정 신용 관계를 정리하고 새로운 시장 책임자를 정착시키는 과정에서 최근 성장세는 다소 정체되었습니다.

프로그레시브 뱅크(Progressive Bank)의 인수·통합 작업은 8월에 완료되었습니다. 은행은 3분기 중 관련 비용 절감 효과를 사실상 대부분 반영하여 핵심 비이자비용을 5,690만 달러로 줄였습니다.

예수금 성장에는 기업 MMF 잔액의 1억 8,010만 달러 증가가 포함되었습니다. 이를 통해 고금리 브로커 예수금을 약 6,600만 달러 줄이고 FHLB 차입금 1억 800만 달러를 상환하는 데 자금을 충당하여 FHLB 잔액은 3억 3,420만 달러가 되었습니다.

경영진에 따르면 금융서비스 그룹은 현재 200개 이상의 은행에 서비스를 제공하고 있으며, 매출은 연환산 20% 이상의 속도로 성장하고 있습니다. 금융기관그룹(FIG) 사업부는 타 은행의 예수금 약 3억 달러 이상을 관리하고 있으며, 조달 비용은 현재 1년 만기 FHLB 및 브로커 조달 대안보다 75~90bp 낮습니다.

경영진 가이던스

• 대출 성장: 경영진은 4분기 성장이 3분기 속도와 전반적으로 유사한 한 자릿수 중후반대를 기록할 것으로 예상합니다.
• 순이자마진: 4분기에 추가 확대가 예상됩니다. 경영진은 금리 인상이 점진적으로 이루어지고 예금 금리 재조정이 자산 금리 재조정보다 계속 지연될 경우, 분기별 한 자릿수 초중반대의 마진 확대를 달성할 수 있다고 밝혔습니다.
• 금리: 기본 전제는 9월 인상을 제외하고 2026년 남은 기간 동안 금리가 동결될 것이라는 점입니다. 추가 인상이 이뤄질 경우 순이자마진과 순이자이익에 단기적으로 완만한 수혜를 제공할 것으로 예상됩니다.
• 예금 베타: 경영진은 향후 금리 변동에 대해 전체 예금 베타 45%~55% 달성이 가능할 것으로 지속적으로 전망하고 있습니다.
• 비용: 핵심 비이자비용은 4분기에 약 5,700만 달러를 기록한 후, 텍사스와 루이지애나에서 인력을 채용함에 따라 내년에는 한 자릿수 초반대의 자체 비용 증가가 뒤따를 것으로 예상됩니다.
• 신용 건전성: 경영진은 4분기에 부실자산이 최대 1,500만 달러 감소하고 2027년 상반기까지 추가 개선이 이뤄질 것으로 기대합니다. 장기 목표는 NPL 비율 50bp 이하입니다.
• 수익성: 회사는 마진, 대출 성장, 조달 비용, 부실채권 해소 등 전반의 지속적 실행을 전제로 4분기 1.25% ROA 달성 가능성을 보고 있습니다.

리스크 및 주요 관전 포인트

은행의 주요 시장 전반에서 예금 금리 경쟁이 치열해지고 있습니다. 경영진은 프로모션 금리가 1년 만기 브로커 차입 비용에 근접하고 있어 조달 비용의 추가 개선을 제한할 수 있다고 언급했습니다.

신용 정상화는 당초 예상보다 더 오랜 시간이 걸리고 있습니다. 이미 충당금이 전액 적립되어 있던 이전에 식별된 1건의 기업 거래처로 인해 3분기 대손상각비(charge-off)가 증가했습니다. 경영진은 추가적인 부실 해소를 기대하고 있으나, 타이밍은 워크아웃 절차에 달려 있습니다.

비이자이익은 분기별로 변동성이 클 수 있습니다. 3분기 실적은 소상공인투자회사(SBIC) 투자 수익 및 스왑 수수료 부진의 영향을 받았으며, 금리 상승과 기타포괄손익누계액(AOCI) 변동은 SSW 사업의 운용자산(AUM)에 영향을 미칠 수 있습니다.

신규 기업 거래처와 관련된 미집행 약정은 위험기준자본에 단기적인 부담을 주었습니다. 경영진은 실행 대출 성장을 통한 자본 생성이 시간이 지남에 따라 이러한 압력을 상쇄할 것으로 기대합니다.

애널리스트 Q&A 주요 내용

애널리스트들은 휴스턴의 성장 모멘텀이 지속될 수 있을지에 주목했습니다. 경영진은 파이프라인이 여전히 견조하다고 밝히며, 최근 영입된 뱅커들의 고객 유인 금지 기간이 만료되면 이들의 영업 활동이 확대될 것으로 기대한다고 답했습니다.

순이자마진과 관련해 경영진은 대출 포트폴리오의 53%가 변동금리부 대출이라고 강조했습니다. 9월의 25bp 금리 인상은 해당 대출에 이미 반영되었으나, 4분기의 최종 수혜 규모는 예금 경쟁과 계절적인 지자체 자금 유입 상황에 따라 달라질 것입니다.

수수료 이익과 관련해 경영진은 이번 감소가 치명적인 악재로 인한 것은 아니라고 밝혔습니다. 부진의 주원인은 SBIC 및 스왑 수익이었으며, 회사는 금융기관과의 관계 확장을 지속하는 한편 4분기에는 어느 정도 정상화될 것으로 기대하고 있습니다.

경영진은 메타(Meta)의 데이터 센터와 스페이스X(SpaceX)가 발표한 1,000억 달러 투자 공약을 포함해 루이지애나 대형 투자 프로젝트의 잠재적 장기 영향도 강조했습니다. 은행은 주거용 혜택보다 기업금융 기회가 먼저 나타날 것으로 예상했으나, 재무적 영향을 수치로 제시하지는 않았습니다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Ladies and gentlemen, thank you for standing by. My name is Demi, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Business First Bancshares Third Quarter 2026 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Matt Sealy, Senior Vice President, Director of Corporate Strategy and FP&A. You may begin.

Matthew Sealy

Thank you. Good morning, and thank you all for joining. Earlier today, we issued our third quarter 2026 earnings press release, a copy of which is available on our website, along with the slide presentation that we will reference during today's call. Please refer to Slide 3 of our presentation, which includes our safe harbor statements regarding forward-looking statements and the use of non-GAAP financial measures. For those of you joining by phone, please note the slide presentation is available on our website at www.b1bank.com. Please also note our safe harbor statements are available on Page 6 of our earnings press release that was filed with the SEC today.

All comments made during today's call are subject to the safe harbor statements on our slide presentation and earnings release. I'm joined this morning by Business First Bancshares Chairman and CEO, Jude Melville; Chief Financial Officer, Greg Robertson; and President of B1 Bank, Jerry Vascocu. After the presentation, we'll be happy to address any questions you may have. And with that, I'll turn the call over to you, Jude.

David Melville

Okay. Thanks, Matt. Good morning, everyone, and thank you for joining us. Monday morning has come with plenty of competing priority. We know that, and we appreciate you spending part of yours with us. When we spoke in July, we told you we expected a stronger second half, loan growth picking up, deposits rebounding and continued progress on margin. I'm pleased to say the third quarter delivered on each of those. I describe it as simply a quarter in which good execution turned into good results. Loans grew a little over 7% annualized, led by the Houston pipeline we talked about last quarter and deposits grew at a similar pace, which gave us the opportunity to pay down higher cost brokered funding and borrowings.

Margin expanded another 12 basis points on a core basis and expenses stayed in check. Added up, these incremental improvements produced our strongest core profitability in several years. And with our shares trading below what we believe the Business First franchise is worth, we continue buying back stock while still growing tangible book value. The one area where progress came slightly slower than we hoped is credit. Non-performing loans moved down only modestly this quarter, primarily due to timing of already in motion. We expect to show further progress on nonperforming loans in the fourth quarter. One thing worth noting is that while we had an uptick in NCOs, these are primarily loans previously discussed in this forum, the bulk of which were already fully specifically reserved for as we work on resolution over the course of the year.

Just as important, though less visible in the numbers, we completed the Progressive Bank conversion in August. Conversions are rarely as easy as they look from the outside. And I want to thank our North Louisiana clients and teammates, both in North Louisiana and throughout the company for making this one as smooth as any I can remember. It positions us to hit the ground running in a region where investment activity continues to build. Looking ahead, the set of opportunities across our footprint is as broad as I've ever seen it. North Louisiana is now home to not only Meta's largest data center, but also in the Northwest corner of the state, Amazon's roughly $20 billion commitment. The opportunities in Houston and Dallas speak for themselves.

Southwest Louisiana keeps delivering steady growth, something we expect to continue with SpaceX's $100 billion investment gets underway. We were pleased to add a 6-person lift out of a commercial team in Tyler, Northeast Texas largest city, giving us the opportunity to begin filling in the I-20 portion of our footprint between Dallas and Shreveport. Finally, our financial services group now serving more than 200 banks with the addition of [ American Planning Corp ], is growing revenue at better than 20% annualized. Our job is to pursue these opportunities with the same discipline at this point. And if we can do that, we expect to see continued improvement in core profitability, not over the rest of the year, but into 2027. Again, thank you for your time and attention. And with that, I'll now turn it over to Greg.

Gregory Robertson

Thank you, Jude, and good morning, everyone. As always, I'll spend a few minutes reviewing our results and we'll discuss our updated outlook before we open up to Q&A. Third quarter GAAP net income and EPS available to common shareholders was $23.2 million and $0.71 per share and included $3.5 million in merger-related expense and $21,000 loss on sale of securities. Excluding these non-core items, non-GAAP core net income and EPS available to common holders was $26 million and $0.79 per share. From our perspective, third quarter results marked another quarter of strong financial performance, generating a 1.17% core ROAA and a core efficiency ratio of 61.1% quarter. Core pretax pre-provision earnings for the third quarter was $36.3 million and exceeded our expectations.

Our third quarter earnings results were highlighted by better-than-expected margin expansion, balanced loan and deposit growth and disciplined expense control. The third quarter benefited from recognizing substantially all cost saves from a Progressive acquisition and a full quarter impact of the loan sale of lower-yielding loans. The strong financial results allowed us to remain active repurchasing our common shares during the quarter. On our balance sheet, total loans held for investment increased $21.4 million or 7.2% annualized on a linked-quarter basis, led by our Houston, Texas and Southwest Louisiana markets. Based on unpaid principal balance, Texas loans were unchanged from the prior quarter at 35% of our portfolio.

Total deposits increased $141.2 million or 7.7% annualized, driven by $119.1 million increase in interest-bearing deposits and $22.1 million increase in noninterest-bearing deposits. The increase in interest-bearing deposits was largely attributable to $180.1 million in commercial money market accounts, partially offset by the decision to pay down roughly $66 million in higher cost broker deposits during the quarter. During the quarter, we also managed to repay $108 million in FHLB borrowings, bringing our total FHLB balances to $334.2 million. Looking ahead to Q4, we do see some opportunity to further reduce borrowings and broker deposits. Lastly, I think it's worth mentioning the slight increase in tangible book value per share, which increased approximately 1.7% annualized during the linked quarter.

While this is not a significant increase on an absolute percentage basis, we feel positive movement in tangible book value per share while being active in our buyback plan and while interest rate pressure, AOCI is certainly a noteworthy highlight of the quarter. Moving on to the margin. Our GAAP reported third quarter net interest margin increased 13 basis points linked quarter to 3.86%, while the non-GAAP core net interest margin, excluding purchase accounting accretion, increased 12 basis points from 3.68% to 3.80% for the quarter ended September 30. The margin performance during the third quarter was driven by improvement in loan yields and slight decrease in funding costs due to the previously mentioned reduction in broker deposits and reduction in FHLB balances. The margin also benefited from a full quarter impact of the Progressive loan sale, which occurred in late Q2 of this year.

Loan discount accretion during the third quarter was roughly $1.2 million was driven by higher-than-expected early paydowns. However, going forward, we expect loan accretion to average about $500,000 for the next few quarters. On a linked quarter basis, cost of total deposits decreased 2 basis points, while total loan yields increased 10 basis points. Core loan yields, excluding loan discount accretion for the third quarter was 6.66%, up 9 basis points from the prior quarter. Total cost of deposits for the month ended September 2026 was 2.25%, which was relatively consistent for the Q3 '26 full quarter weighted average. We are pleased with our continued ability to hold line on new loan yields during the quarter with a weighted average of new and renewed loan yields of 6.99% for the third quarter and 7.13% for the month of September.

I'd like to make a note of a few takeaways to Slide 19 in our investor presentation. We continue to see 45% to 55% overall deposit betas achievable regarding any future rate changes. I'd also like to point out overall core CD balance retention rate was 77% during Q3. This impressive statistic reflects our team's continued focus on maintaining and retaining core deposit relationships. Our baseline assumption is that interest rates remain flat for the remainder of 2026 other than the recent September increase in Fed funds. We would expect additional rate hikes to slightly benefit our net interest margin and net interest income in the near term. On the income statement, GAAP noninterest expense was $60.5 million and excluded $3.5 million in nonrecurring acquisition conversion-related expense, which included $1.23 million in lease termination expense.

Core non-interest expense for the third quarter was $56.9 million, down $1.4 million from the prior quarter. This was below our expectations for the quarter and was driven by an acceleration in recognizing cost saves from the Progressive acquisition. Recall, we completed Progressive's core conversion in mid-August of this year. Third quarter GAAP and core noninterest income was $12.5 million. GAAP results did include $21,000 loss on sale of securities. Non-interest income results for the third quarter were slightly below our expectations, primarily due to the lower-than-expected SBIC revenue and swap fee revenue. As we have mentioned in the past, some of our noninterest revenue business can be lumpy from quarter-to-quarter, but over the immediate and longer term, we do expect a steady build in overall contribution.

Lastly, in credit quality, I'd like to mention the modest improvement in credit quality during the quarter, highlighted by our 30-day or more past due ratio of 0.48%, holding stable over the last 3 quarters. The ratio of nonperforming loans compared to loans held for investment decreased 2 basis points to 1.24% at September 30, while the ratio of nonperforming assets compared to total assets decreased 1 basis point to 1.22% compared to the linked quarter. I'd like to mention the increase in charge-offs during the third quarter was attributable to a single previously identified and fully reserved commercial relationship. This credit cleanup is consistent with our previous conversations, and we expect continued resolution as we move forward over the next few quarters. That concludes my prepared remarks. I'll hand the call back over to you, Jude, for anything additionally before opening up to Q&A.

David Melville

Thanks, Greg. I would just summarize by saying we've been, I think, fairly transparent and consistent in the things that we've been speaking about to you over the past few quarters and match up with the things that we've been working on as a bank and not that complicated, healthy growth, discipline on the expense side, making sure that we execute on acquisitions and then making sure that we're thinking through our capital allocation decisions. I think what we saw in the third quarter was those elements of incremental improvement coming together to produce good results. And we look forward to continuing to focus on those kind of broad principles as we navigate the opportunities and inevitable challenges that we'll have over the next few quarters. We look forward to it. And with that, I will turn it over for any questions anybody might have.

Operator

[Operator Instructions] Our first question comes from the line of Matt Olney with Stephens Inc.

질의응답

Matt Olney

I want to start on the loan growth front, good to see some strong trends this quarter. It sounds like Houston was a big driver. Any more color on the pipelines from here? And then I guess the second part, you mentioned the lift out of a team in Tyler. I would love to hear about expectations that you have for this team.

David Melville

Sure. I'll start us off, Greg. We do see the Houston pipeline that we've been building beginning to turn into actual on the books production, which is exciting. And we I believe that will continue. And one thing we're especially pleased with is that whenever you recruit bankers over, often they have a period of non-solicitation and a number of the members of our expanded team are operating under that and have been able to produce even with those constrictions. So we'll look forward to when we pass the year mark and be able to broaden the universe of their calling efforts. We're very pleased with the progress there and anticipate that will continue. Also saw good moderate loan growth in parts of Louisiana. Southwest Louisiana and the capital region are doing well and North Louisiana as well. We saw some positive movement.

One interesting thing that we're seeing, I talked a fair amount last quarter about the Meta development in Northeast Louisiana, where we now have a significant presence. We've been there for a number of years, but of course, we've added on to with our Progressive acquisition. And one interesting thing about that is we're actually seeing an uptick in loan production in other parts of our footprint related to the Meta investment. So when you think about who is actually moving materials and being involved in the construction, quite a bit of it we're seeing is coming from South Louisiana. Some of the uptick in fundings in Baton Rouge and Lake Charles and Lafayette have come from companies already prepared and active serving in the Meta area. So it's been nice to see the kind of network effect of our footprint being the only community bank in Louisiana that is truly Louisiana wide in terms of our footprint. We're seeing benefit in multiple areas, which we would expect to continue. So I know Greg can talk a little more about that in terms of details, if you want to, Greg.

Gregory Robertson

Yes, Matt, we think going forward in Q4, we feel like the mid- to upper single-digit growth with the pipeline that we're seeing, as Jude mentioned, continued build out of Houston, is what we're expecting to see more in line with kind of a replication of the performance in Q3. I would -- I think one of the things that we're seeing, and this is kind of moving away from loan growth, but I think it's a result of loan growth is that you probably noticed risk-based capital had a slight decline. I think that the impact of some of the unfunded commitments for these types of business Jude was referring to with some of our better clients that unfunded commitment portion does drag on capital a little bit. So that is short term, and we feel like we'll be accreting capital with the loan growth relative to those relationships going forward. We feel good about the pipeline, for sure.

David Melville

Matt, I know your second question was on Tyler, which we're excited about at the beginning of the year in our Board planning process. We've discussed areas of our footprint that we would be most excited about filling in. I guess is the right word. It's a new venture, but also squarely within our current footprint. And Tyler was top of that list. We feel like there's really a good growth story in East Texas and Tyler is kind of the jewel of East Texas in that regard. And so when you think about it being not only what we could do in Tyler, but as a window to the rest of East Texas, partial Longview, those other growth areas along I-20, we're excited about the long-term opportunities that we have there.

We -- the team that we partnered with came out of a community bank there at Tyler and feel like they'll be able to hit the ground running and make a material difference for us, not only in the long term, but over the next year as they work to transition their book to ours. We have a good history not only being able to move business, but because of the size of our balance sheet relative to most community banks in the area, we can actually allow them to do more with their current clients. So we're excited about the opportunity to enable those bankers to better serve their clients and look forward to seeing what they can do.

Matt Olney

Okay. All right. Well, I appreciate the color, Jude and Greg, on that front. And if I switch over to core margin, I'm curious also on expectations there. I mean the 3.80% margin we're at now is the highest we've seen in a while. So congrats on that. Would just love to appreciate expectations on the core margin from here. And it sounds like you're not expecting any rate changes in the near term at least, but would love to kind of appreciate your outlook if you sensitize that based off higher rates from here.

Gregory Robertson

Yes. We expect the margin to expand in Q4. I'll put a little bit of context to that. The 25 basis point rate hike that we saw in September with our balance sheet being slightly asset sensitive, 53% of our loan book is variable price. So we did get some benefit. All of those have repriced by now. As a result of that, it would lead you to believe that we should see some margin expansion. I will say that with a caveat, as we move through Q4, what we're seeing is some competitive rate pressure on the deposit side. For example, there are some specials we're seeing out there in our -- pretty much across the markets that are very nearing 1-year broker borrowings rates. So we're going to keep an eye on that.

Our bankers have been doing an excellent job of recruiting new relationships and managing funding costs, but it is something to stay aware of. That with our build that we seasonally get in Q4 from municipalities. That should -- that does have an impact on the liability side from a cost standpoint. So we're going to keep an eye on that. I think we feel like margin expansion in the fourth quarter is very achievable, but we'll have to continue to manage the liability side of it.

David Melville

We started really talking publicly about a year ago about margin being our priority over growth. And we think we can do both, but we will continue to focus and prioritize on incrementally improving that margin as we can. And this level of growth on the loan side and particularly when it's match funded, feels like a pretty healthy natural rate. And so we can continue to have this moderate healthy growth and maintain a little bit of incremental improvement on the margin each quarter. I think we'll all be very pleased with the results.

Operator

Next question comes from the line of Feddie Strickland with Hovde Group.

Feddie Strickland

Just wanted to ask a couple of questions here on fees. There's a $500,000, I think, step down in the other fees line versus both last quarter and last year. Was there any one item driving that?

Gregory Robertson

I would say -- not necessarily. I think it's just seasonally as we continue to work through different types of client bases, I think that's just the movement that you would expect to see. No major setback from a total standpoint. I think on the noninterest income side, I think the thing that we felt like that really underperformed expectations, as we mentioned, was the SBIC and the timing of the income from those investments sometimes is a little bit tricky and then also the swap revenue that we've seen quarter-over-quarter. I think the yield curve has a little bit to do with that and also some timing of some deals that are coming through the pipeline, we expect to see that start to trend back up though.

David Melville

I think we've been able to talk a few times about one of the -- the good side of this part of the business is that it's generally non-spread based, right? So it's a diversifier, but the challenge sometimes is that the earnings can be a little bit lumpy quarter-to-quarter and really have to take a step back and look at the overall longer-term trends. And we still remain on pace to improve revenues 20% and bottom line earnings, 20% year-over-year, which would be, I think, the third year that we've done that. And we assume -- we anticipate that, that trend will continue. This might be a little up and down as we get there, but that's the nature of that type of business and it's a good thing. So we -- I think we'll revert to the mean a little bit in the fourth quarter and should see a little -- again, not a major uptick, but maybe a little bit back to the norm in the fourth quarter in that line item.

Gregory Robertson

One driver, Feddie, in that group is it's not always predictable to control the revenue coming off of it. As Jude mentioned, it's kind of lumpy. But one thing we're proud of is while growing the business, I think our -- the banks that we serve now that make up part of that revenue stream are over 200 banks. So as we continue to grow add relationships with banks, we would hope that, that would continue to offset some of the lumpiness...

David Melville

Yes. Same thing that as we grew our core bank in the early days, particularly in the business bank, the individual client exposure could be fairly lumpy. And rather than try to run off some of those bigger clients, we actually grew into them so that the lumpiness became more diversified and a large enough group that changes in individual client relationships mitigated through the number of client relationships. And to Greg's point, we're building a large number of banks in which we have a relationship and the larger we can get that group then the less lumpy individual transactions will appear. So good opportunity for us to keep working on as we continue to grow that part of the bank.

Feddie Strickland

That's great. And just on that same topic, I mean, is there any potential impact I should think about if we do see rate increases and higher long-end yields, I mean how does that impact SSW and the FIG group? I mean I get lower gain on sale and swaps most likely. But just curious how SSW and the FIG group in particular, might see changes with where the yield curve is.

Gregory Robertson

I think we have to keep an eye and pay attention to SSW, their RIA. So assets under management matters. So AOCI negatively impacts that. But they -- historically, if you look back at their earnings since our partnership with them, they've not only added banks to offset some of this like we were talking about previously, but also if you compare their performance versus the industry, the impact to AOCI was significantly less than the industry. So we feel good about the way they manage that portfolio. And it will be impacted to your point, but I think they are doing the things not only on a day-to-day basis, but also by adding additional banks to offset the income impact as well.

David Melville

I think it's a really good point and not to get too weedy, but SSW, who, as you know, worked with us for I think 17 years before we officially partnered with them. SSW guides their clients in the construction of their investment portfolios to focus more on cash flow than on yield. And one of the things that, that has done has meant that the duration risk as rates increase has been lower than it has been for non-SSW peer banks. So I think from proving out their worth to potential clients, we actually have a good story to tell there. And as rates move, I think that story will be only more apparent and visible and be a great proof point to potential clients that we offer value in a way that's different from just a normal brokerage type arrangement.

The other thing about managing for cash flow versus just yield is that it means that as rates rise, and they'll have the opportunity to reinvest that cash flow faster than some other banks that aren't following that same philosophy. And so again, that should be an opportunity to serve our client banks at an even higher level, which should ultimately benefit them in terms of being able to grow the client base. So in banking, whether it's the SSW part of the world or the core bank, it's not really rate movements that get you. It's how quickly the rates move that get you. And so right now, it feels as if it's going to be a fairly measured rate of increase, which I think is something that we can all manage through much less painfully than the March Madness days and times in which they had to move rates a lot quicker in order to get them what they thought need to be done. So we don't view it as a negative. We view it as an opportunity.

Gregory Robertson

Yes. And FIG, I think another point -- data point outside of SSW relationship with a lot of these banks, our FIG group manages slightly over $300 million in deposits from other banks as well. So that's part of our balance sheet and the funding cost on that is between 75 and 90 basis points below what a 1-year FHLB and broker would be today. So it's on the higher price, but it's also relative to other funding types cheaper and help solidify those relationships with multiple products.

Operator

Next question comes from the line of Michael Rose with Raymond James.

Michael Rose

Greg, I just wanted to start on expenses. I think you said that essentially all of the Progressive cost saves have been realized through the third quarter. Obviously, this quarter's results were better than expected. Just how should we think about the growth rate from here, starting point for the fourth quarter? And then as you continue to invest in bankers infrastructure and technology as we move into next year, how should we at least initially think about a base rate of expense growth for you guys?

Gregory Robertson

It's a great question. I think what we expect in the fourth quarter would be about $57 million is the base case, starting there and then low single-digit organic growth rate going forward over the next year. I think what we expect is to grow maybe not as aggressively as we did with our Houston team lift out in numbers, but we want to continue to fill in organically bankers in our markets to deepen those relationships that we have in our existing markets, and that would be Texas and Louisiana.

Michael Rose

Okay. That's helpful. And then I wanted to go back to Matt's question on the margin. I think I heard that the new and renewed loan production was at 7.13% in the month of September. I think you guys said that you don't have any more rate hikes built in, but the forward curve certainly does. I know you guys are rate sensitive. I guess the real question is, is there opportunity for you to kind of continue to lag deposit cost increases? And should we kind of contemplate at least some additional margin expansion in the -- at least in the earlier part of next year?

Gregory Robertson

Yes. The lag is the key. That's a great point. I think what we think is all things being equal, as long as rates are measured, we think low to mid-single-digit margin expansion quarterly, depending on that lag is probably achievable and reasonable first in the fourth quarter and then depending on what -- how many moves happen going forward.

Operator

Next question comes from the line of Gary Tenner with D.A. Davidson.

Gary Tenner

Just wanted to follow up on Greg, your comment about the September loan yields. Just curious if you're seeing any kind of pressure on demand or transactions as it relates to the higher rate environment.

Gregory Robertson

We're pleased with the demand we're seeing in the pipeline we're seeing. And I think the rate environment is a component of it, but what we're experiencing is with new bankers and new teammates, their pipeline and moving that business hasn't really shown any decay due to the 25 basis point rate move. So we're excited about it. And more recently, saw loan committees with multiple new deals presented with all rates around the 7% mark, which we were very happy with that. So we feel good about the pipeline, the rate so far, the rate environment doesn't look like it's decayed any of the work our bankers have been doing to move those relationships over.

Gary Tenner

And then in terms of the deposit beta that you had noted that's in your deck, I assume that's sort of based on the existing deposit base. But if you're able to further reduce the broker deposit amount, the overall cost of deposits should increase at a pace below the beta that you're targeting. Is that the right way to think about it? Or is that inclusive of changes in the mix?

Gregory Robertson

No, that's the right way to think about it.

Operator

Next question comes from the line of Christopher Marinac with Brean Capital.

Christopher Marinac

I wanted to ask about Dallas. And is Dallas deemphasized? Or what would be the outlook for there? Again, I appreciate all the success in Houston that you've called out this quarter and last quarter, too.

David Melville

Yes. No, not deemphasized, but we hired a new market leader there about 2 months ago, and he's jumping in and beginning to make his mark. And we did have -- if you look at our asset quality upticks that we had earlier in the year, they were -- I would say the bulk of them came from the Dallas area. And again, not a huge number when you think about the amount of growth that we've been able to put on the books over the past 7, 8 years. But we certainly have an opportunity to kind of hit the reset button a little bit on some of those relationships, and that's why it's been a little flatter as of late.

But in terms of the potential and opportunity going forward, we're as excited about Dallas as we've ever been. Maybe we don't talk about it quite as much because it's kind of a given just be in Dallas and we've been talking more about some of the newer opportunities within our footprint, but Dallas remains -- actually our largest individual market. And as we continue to add bankers there, we anticipate really good things from Dallas as well. So as we talk about our overall growth goals, those include performing well in Dallas over the next few quarters as well.

Christopher Marinac

Great. I appreciate it. And then just a follow-up on sort of the announcement by SpaceX to do big development in South Louisiana. What does that mean from your standpoint, both for commercial and also residential activity?

David Melville

Yes. Well, much like the Meta investment, maybe even on a bigger scale, it's a tremendous opportunity for Louisiana and therefore, a tremendous opportunity for us given our footprint. And we were already excited about the opportunities in Lafayette area, the Acadiana area, even without SpaceX, I think they've done a nice job of diversifying their industry exposure over time. And so if you were to ask me 6 months ago, what area of Louisiana was most excited about. Of course, we would talk about North Louisiana with the data centers, but I would have also put Lafayette there as an area that we want to continue to invest in and take advantage of the growth opportunities there. So that's only been magnified now that SpaceX has made their announcement.

It's really hard to quantify a $100 billion investment in an area that hasn't seen a lot of that type of investment over the years. And so it's difficult to say with any specificity what that means other than it's going to be really good for the economy, and that should impact both commercial opportunities and residential opportunities over time. And when you think about our prioritization of new branches within Louisiana, that's most likely to be our #1 priority to make sure that we capture our fair share of the benefits. I think there's still some things to figure out in terms of specifically where the activity will take place. I don't mean the actual spaceport for itself, but when you think about roads being constructed, for example, to access the facilities and where the executives that are working there will be living.

There's still a little bit of work to be done in terms of planning. So I think it's something that we'll probably see a little -- on the commercial side, we'll probably see the benefit sooner. There are already companies at work. And the infrastructure from a commercial standpoint is already in place. And I don't mean the physical space for it, but I mean the companies that can support the work to build out the infrastructure are already active and in place. So I would expect that we see more commercial uplift in the near term. But then over the long term, there should be a lot of residential impact as well as some of the pieces of the puzzle are fit in. But $100 billion is a lot of money, a lot of investment. And when they're successful, I doubt that, that will be the last investment.

You're already seeing some of the other areas of the state where we have data centers and things of that nature are expanding their investment and it wouldn't surprise me if SpaceX ends up in the same way. So a little hard to quantify exactly what the benefits will be, but they're going to be significant. They'll be large and they'll be meaningful. And then it's going to be an operating plan. One of the concerns about the data center investments that has been raised has been what happens after construction in terms of the actual jobs created. And not that worried about with the data centers because the investments are so large that the construction periods are -- I think I saw the Meta construction just on the current investment is not scheduled to be complete until 2031.

So we still have a number of years to go there. But when you think about the spaceport for SpaceX. That's an ongoing operation that will employ individuals for a long time to come. And we'll have other ancillary industry developments as vendors and other experts choose to co-locate in the area. So I think that's one that will be meaningful for a long period of time, and we feel like we're well placed to be an active participant in that development. Really, I don't remember in my lifetime, and I'm lifelong Louisiana resident, 52. And I don't remember a time in which there was as much excitement about the economic opportunity here in Louisiana.

Operator

There are no further questions at this time. That concludes the question-and-answer session. I will now turn the call back over to Jude Melville for closing comments.

David Melville

I just want to mention that I appreciate the North Louisiana integration process that we just went through, and it speaks -- the smoothness of it speaks to the teammates that we inherited and to our own team in terms of their proactive and positive jumping into the opportunity. And while the Progressive teammates have been teammates since the beginning of the year when we formally closed the acquisition, it's exciting to share a name and share processes and truly operate as a team. So again, I want to thank them for the positivity, which they jumped in. I also want to reiterate my appreciation for the Tyler team that took the risk to come and join us and look forward to supporting them. I'll get to see some of them tomorrow in fact, and look forward to that.

And I would say the things that just in closing, the things that we've been working on, again, are working. And it's nice to have some optionality. When you think about our focused on growing tangible book. I know on a percentage basis, as Greg said, we didn't grow significantly, but it was positive. And we would have actually grown significantly more, I think, over 14% tangible book if we -- if it hadn't had the AOCI impact and if we hadn't done share buybacks. So it's nice to have that optionality when you think about the difference in our balance sheet and our P&L today versus a year ago, you can kind of summarize it in saying that we've built in more optionality, whether that be from a healthier funding base, diversification of earning assets or profitability leading to a situation that we are growing capital faster than we're deploying it, even though we're deploying it at a healthy rate.

So I love that optionality and plan on continuing to maximize that opportunity in the coming quarters and years. It really was a little bit of a boring quarter in some ways, if you think about it, and it's exciting to be boring in a way a bank. And so we like that. And I want to continue that. And I appreciate everybody's time and everybody's efforts over time that have led us to the spot and excited about continuing. We look forward to visiting with you again. Matt, you had something you wanted to?

Matthew Sealy

I might have one more, it looks like someone's got a follow-up question here. I want to see if we could get them in, if possible. Feddie, I don't know if that was you is what it looked like it might be. I want to make sure we get all questions addressed.

Feddie Strickland

Operator, could you potentially open up Strickland's line of the group... Feddie Strickland with Hovde Group. Late follow-up here. I'm not sure if you can hear me. But just wanted to ask about credit. It seems like there's still credit improvement on the horizon here, maybe some it just took a little longer to get to the finish line than you expected. How should we think about the workouts and overall level of NPAs in the next couple of quarters?

Gregory Robertson

Yes. Thanks, Feddie. We still expect to reduce NPAs in the fourth quarter. I think they'll continue to work as resolutions happen in that type of business, sometimes they're delayed as you work through the process. We feel pretty confident that some of those delays in the third quarter will pull through into the fourth quarter, and you'll start seeing reductions upwards of $15 million in the fourth quarter in those. And then that will continue to move throughout the first half of next year. Maybe not at that cliff, but they'll continue to move down with our target range of having that NPL percentage of loans being 50 basis points or less.

Yes. I think one thing that we talk about that impacts performance, and we feel like the fourth quarter, Jude's always about since the beginning of the year, our ROA performance, third quarter was evidence of the kind of plan pulling forward. NPAs are a part of that as you start putting those assets back online. We do expect we have a glide path to get in the fourth quarter to that 1.25% goal that we've talked about all year. I think it's -- each component, whether it be margin, loan growth, deposit funding, the cost of that funding has to fall in line kind of like they did in the third quarter. But I think if those components continue to play out, I think we'll be pleased with fourth quarter results and have a way to get to that 1.25% as well. Nonperforming assets as a part of that.

David Melville

Yes. I think everything is we've. Go ahead.

Feddie Strickland

Sorry, just 1.25% ROA. Is that?

David Melville

Yes. That's it.

Feddie Strickland

Got it.

David Melville

Yes. And again, as we've said earlier in the year, that means we have to be able to perform on all cylinders and things have to work out. But right now, we believe we can do that and certainly plan on continuing the upward trajectory from our 1.17% in the third quarter, where exactly we end up, we'll have to see. But we do know that it will be significantly better from a long-term structural profitability standpoint, wherever it ends up than we began the year, which was -- really should be our goal every year, right? All right. Well, with that, I won't subject you all to a repeat of my closing statement. And -- but I do want to thank everybody for being with us and for following and happy to answer any follow-up questions offline should you have any. Thank you all again. Have a good week.

Operator

This concludes today's conference call. Thank you all for joining, and you may now disconnect.