Cuộc họp công bố kết quả kinh doanh Q3 2026 của Valley National Bancorp (VLY): Tăng trưởng tiền gửi và mở rộng biên lãi ròng (NIM)

Thông tin trọng tâm

• Valley National Bancorp (NASDAQ: VLY) báo cáo khả năng sinh lời tiếp tục cải thiện trong quý 3/2026, với tỷ lệ hiệu quả hoạt động đã điều chỉnh giảm xuống dưới 50% sớm hơn một quý so với kế hoạch và đạt mức thấp nhất kể từ quý 3/2021.
• Tiền gửi khách hàng cốt lõi trực tiếp tăng 1,1 tỷ USD trong quý. Tỷ lệ dư nợ trên tiền gửi (LDR) cải thiện lên 96%, trong khi 400 triệu USD nợ ngắn hạn đến hạn đã được thanh toán.
• Tỷ lệ tập trung tín dụng bất động sản thương mại (CRE) giảm xuống 312% từ mức 317% trong quý 2/2026 và đã giảm hơn 160 điểm phần trăm so với đỉnh vào quý 4/2023. Tỷ lệ vốn cổ phần phổ thông cấp 1 (CET1) đạt 10,7% tài sản có rủi ro.
• Xu hướng tín dụng diễn biến trái chiều. Nợ bị chú ý và nợ phân loại giảm 2% so với quý trước và giảm 12% so với cùng kỳ năm ngoái, nhưng nợ không dồn tích lãi tăng lên 0,96% và tỷ lệ xóa nợ ròng tăng lên 28 điểm cơ bản, chủ yếu do dư nợ riêng lẻ ở mảng xây dựng và thương mại & công nghiệp (C&I).
• Ban lãnh đạo kỳ vọng biên lãi ròng (NIM) sẽ mở rộng thêm 5–7 điểm cơ bản trong quý 4/2026. Ban lãnh đạo cũng dự báo tăng trưởng thu nhập lãi ròng cả năm sẽ tiến gần mức cao của khoảng 11%–13% đã thảo luận trước đó.
• Các thương vụ thâu tóm Providence Financial Corporation và Bluevine đang chờ hoàn tất dự kiến sẽ đóng góp thêm hơn 3,5 tỷ USD tiền gửi cốt lõi. Ban lãnh đạo cho biết các giao dịch này có thể nâng biên lãi ròng quý 4/2027 lên trên 3,50%, có khả năng tiến gần mức 3,60%, với giả định bối cảnh đường cong lợi suất hiện tại tiếp tục duy trì.

Dữ liệu tài chính cốt lõi

Kết quả kinh doanh và hoạt động

Tăng trưởng tín dụng tiếp tục tập trung vào mảng C&I và CRE do chủ sở hữu tự sử dụng, dẫn đầu là lĩnh vực y tế và các hoạt động rộng hơn trên địa bàn hoạt động của Valley. Quy mô danh mục cho vay tiềm năng đã phục hồi lên khoảng 5 tỷ USD vào cuối quý và tiếp tục ưu tiên các nhóm dựa trên mối quan hệ khách hàng này.

Tối ưu hóa nguồn vốn tiếp tục là ưu tiên chiến lược hàng đầu của ban lãnh đạo. Tăng trưởng tiền gửi cốt lõi đã tài trợ cho việc hoàn trả khoảng 400 triệu USD nợ ngắn hạn, trong khi tiền gửi qua môi giới giữ nguyên. Valley đã thay thế khoảng 350 triệu USD dư nợ tiền gửi môi giới không kỳ hạn có chịu lãi bằng chứng chỉ tiền gửi (CD) môi giới có kỳ hạn.

Quản lý nguồn vốn tiếp tục hỗ trợ nguồn thu nhập từ phí thường xuyên. Phí dịch vụ tiền gửi tăng quý thứ 12 liên tiếp, và khoảng 60% khách hàng C&I hiện sử dụng nền tảng quản lý nguồn vốn của Valley. Ban lãnh đạo kỳ vọng mảng này sẽ tiếp tục tăng trưởng, dù với tốc độ chậm hơn do lợi ích từ điều chỉnh giá gần đây khó có thể lặp lại.

Giao dịch Bluevine đang chờ hoàn tất đóng vai trò trung tâm trong chiến lược tiền gửi doanh nghiệp nhỏ của Valley. Bluevine sở hữu 2,3 tỷ USD tiền gửi và khoảng 185.000 khách hàng doanh nghiệp nhỏ đang hoạt động tính đến ngày 30 tháng 9 năm 2026. Tiền gửi tăng 200 triệu USD trong quý, trong khi số lượng khách hàng hoạt động tăng 10.000. Ban lãnh đạo dự kiến dư nợ có thể đạt khoảng 2,7 tỷ đến 2,8 tỷ USD trước thời điểm chuyển giao tiền gửi dự kiến vào khoảng ngày 1 tháng 4 năm 2027.

Valley cũng đang triển khai AI trong chăm sóc khách hàng, rà soát gian lận và chống rửa tiền (AML), thu hồi nợ vay mua ô tô, thẩm định tín dụng và quản lý khoản vay. Ban lãnh đạo đánh giá lợi ích tiềm năng bao gồm khoảng 65% liên quan đến chi phí và 35% liên quan đến doanh thu, bao gồm cả các cơ hội bán chéo.

Dự báo của Ban lãnh đạo

• Ban lãnh đạo kỳ vọng Valley sẽ kết thúc năm 2026 ở mức cao của các khoảng dự báo được thiết lập vào đầu năm.
• Thuế suất thực tế cả năm dự kiến vào khoảng 20%, phản ánh các khoản mua tín dụng thuế bổ sung. Trong quý 4/2026, ban lãnh đạo chỉ ra mức thuế suất khoảng 20%–21% và phân bổ tín dụng thuế khoảng 20 triệu USD.
• Biên lãi ròng (NIM) quý 4/2026 dự kiến mở rộng khoảng 5–7 điểm cơ bản, nhờ lợi suất tài sản cao hơn và những nỗ lực hạn chế sự gia tăng chi phí vốn.
• Đối với mô hình sơ bộ cho năm 2027, ban lãnh đạo cho biết tăng trưởng tín dụng từ 4%–6% là điểm khởi đầu hợp lý, nhưng dự báo chính thức sẽ được cung cấp sau. Tăng trưởng tiền gửi cốt lõi dự kiến sẽ vượt tăng trưởng tín dụng.
• Ban lãnh đạo dự kiến tỷ lệ dư nợ trên tiền gửi (LDR) sẽ chuyển sang vùng thấp của khoảng 90% vào cuối năm 2027 sau khi tính đến các thương vụ thâu tóm đang chờ hoàn tất.
• Valley tiếp tục duy trì mục tiêu đưa tỷ lệ tập trung tín dụng CRE xuống dưới mức 300%, tỷ lệ hiệu quả hoạt động ở vùng giữa 40% và tỷ suất sinh lời trên vốn cổ phần phổ thông hữu hình ở mức khoảng 17%–19% trong vài năm tới.
• Trên cơ sở độc lập, ban lãnh đạo tin rằng tỷ suất sinh lời trên vốn cổ phần phổ thông hữu hình có thể đạt 15% vào khoảng giữa năm 2027 và vượt mức đó vào cuối năm. Các giao dịch đang chờ hoàn tất có thể đóng góp thêm khoảng 100 điểm cơ bản vào cuối năm 2027 và khoảng 200 điểm cơ bản khi đi vào giai đoạn ổn định.

Rủi ro và các điểm cần theo dõi

Mặt bằng lãi suất cao hơn có thể làm giảm các khoản phát sinh cho vay mới, mặc dù ban lãnh đạo lưu ý rằng điều này cũng có thể làm chậm tốc độ trả nợ đối với các khoản vay hiện hữu. Cạnh tranh vẫn tiếp diễn ở cả hai bên của bảng cân đối kế toán, và chi phí tiền gửi đã tăng lên sau đợt tăng lãi suất gần đây của Cục Dự trữ Liên bang (Fed).

Chất lượng tín dụng cần được theo dõi. Nợ không dồn tích lãi tăng do một khoản vay thế chấp đất đai đã đến hạn, trong khi một khoản xóa nợ C&I duy nhất đã thúc đẩy mức tăng xóa nợ ròng hàng quý. Mặc dù vậy, ban lãnh đạo kỳ vọng dư nợ bị chú ý và phân loại sẽ tiếp tục cải thiện, đồng thời đánh giá khoản vay đất đai được đảm bảo tốt với giá trị tài sản thế chấp lớn và có các bên mua quan tâm.

Các giao dịch Providence và Bluevine vẫn đang chờ hoàn tất. Ban lãnh đạo dự kiến sẽ hoàn tất vào đầu năm 2027, nhưng tiền gửi của Bluevine có thể phải đến khoảng ngày 1 tháng 4 mới được chuyển giao. Công ty cũng dự kiến tỷ lệ tập trung tín dụng CRE sẽ tăng tạm thời khi nguồn vốn liên quan đến thương vụ thâu tóm được giải ngân.

Điểm nhấn phần Hỏi & Đáp với chuyên gia phân tích

Ban lãnh đạo cho biết khoảng 1,5 tỷ USD tiền gửi môi giới và 400 triệu USD nguồn vốn từ Ngân hàng Cho vay Hỗ trợ Nhà ở Liên bang (FHLB) sẽ đến hạn trong quý 1/2027. Tiền gửi từ Bluevine ban đầu sẽ được sử dụng để thay thế các nguồn vốn có chi phí cao hơn này, với thanh khoản thặng dư có thể được đầu tư vào chứng khoán.

Các khoản phát sinh cho vay lãi suất cố định hiện có lợi suất cao hơn 150–200 điểm cơ bản so với lợi suất của dư nợ sụt giảm. Trong danh mục chứng khoán, các tài sản đến hạn có lợi suất ở khoảng giữa 4%, so với các khoản mua mới ở khoảng giữa 5%.

Ban lãnh đạo kỳ vọng tỷ lệ bao phủ dự phòng sẽ duy trì về cơ bản là ổn định. Sự cải thiện tiếp tục ở các khoản vay bị chú ý và phân loại sẽ được cân bằng bởi tốc độ tăng trưởng C&I nhanh hơn, vốn có yêu cầu trích lập dự phòng cao hơn.

Việc mua lại cổ phiếu vẫn mang tính tùy chọn. Ban lãnh đạo nhấn mạnh ưu tiên sử dụng vốn hàng đầu là tài trợ cho tăng trưởng tín dụng tự thân chất lượng cao và cho biết các mục tiêu lợi nhuận trên cơ sở độc lập không phụ thuộc vào các đợt mua lại cổ phiếu bổ sung.

Toàn văn biên bản cuộc họp báo cáo kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Good day, and thank you for standing by. Welcome to the Valley National Bancorp Third Quarter 2026 Earnings Conference Call. [Operator Instructions]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Andrew Jianette. Please go ahead.

Andrew Jianette

Good morning, and welcome to Valley's Third Quarter 2026 Earnings Conference Call. I am joined today by CEO, Ira Robbins; and CFO, Travis Lan. Reconciliations of any non-GAAP measures mentioned on the call can be found in today's earnings release and presentation at valley.com. Please note Slide 2 of our earnings presentation and remember that comments made today may include forward-looking statements about Valley National Bancorp, the banking industry and our pending acquisitions of Providence Financial Corporation and Bluevine, Inc. Actual results may differ from those statements. For more information on these forward-looking statements and associated risk factors, please refer to our SEC filings, including Forms 8-K, 10-Q and 10-K.

With that, I'll turn the call over to Ira Robbins.

Ira Robbins

Thank you, Andrew. In a few minutes, Travis will review our exceptional third quarter financial results. Before that, I want to use Slide 6 to add context to those results and explain why our strategy, including the pending acquisitions of Providence and Bluevine will position Valley to create meaningful shareholder value.

The foundation of our journey began in 2017 when Valley was a $24 billion Northeast focused Inc. Through technology modernization, consistent organic growth, and targeted strategic acquisitions, we transformed Valley into a geographically diverse $57 billion regional bank by the end of '22. While investing over $300 million in CapEx during this period, we meaningfully improved efficiency and generated above-average returns relative to similar sized peers.

While we were proud of these profitability results, our CRE concentration loan-to-deposit ratio and capital and reserve levels made Valley an industry outlier. These metrics were appropriate for our risk profile but created an external perception that Valley could be more exposed to challenges when the industry landscape shifted rapidly in 2023.

Against this backdrop, the second chapter of our journey required us to recalibrate our balance sheet to close the valuation gap created by these outlier metrics. To address these perceived concerns, we acted swiftly and decisively to strengthen capital, reduce CRE concentration and improved funding. Our allowance coverage ratio improved during this time as well. These balance sheet derisking efforts set the stage for the current performance driven third chapter of our journey.

As of September 30, 2026, our CRE concentration ratio has declined by more than 160 percentage points from its peak in the fourth quarter of '23. CET1 has grown to 10.7% of risk-weighted assets. Our loan-to-deposit ratio has improved to 96% and most profitability metrics have returned to 2022 levels.

Since 2017, we have built a larger, stronger and more profitable bank and opportunities remain to continue this momentum. Over the next few years, we are targeting a 90% loan-to-deposit ratio. CRE concentration, well below 300%, an efficiency ratio in the mid-40% range and returns on tangible common equity in the high teens.

We believe this quarter's strong results supplemented by our pending acquisitions will position us well to achieve these aspirations as we continue to focus on returning to our position as a top performing regional bank. As we progress towards these goals, funding optimization remains our top priority and will likely be the most significant driver of further profitability improvement and valuation expansion.

As detailed on Slide 14, we have grown deposits from $18 billion in 2017 to $55 billion today. Despite strong loan growth and significant market disruption, we have reduced our reliance on wholesale funding over this time. The combined acquisitions of Providence and Bluevine are expected to add over $3.5 billion of low-cost CRE deposits to Valley. This should further improve our funding profile, expand our margin, enhance the value of our franchise. Our strategic focus on small business and business banking will likely be central to our funding strategy. More than 36 million small businesses operate in the United States and account for nearly half of private sector employment. These entities generate the granular operating deposits that we value most. Those that tend to value relationships and user experiences above absolute rate.

Capturing these valuable operating deposits requires a combination which few providers can offer. Large banks often lack the personal attention that small businesses value. Community banks may lack the product breadth and technology, and fintechs typically cannot match the balance sheet strength and stability of a regulated bank. With its pending acquisitions, Valley will bring these advantages together, delivering sophisticated deposit, treasury, lending and well dilutions through deep client relationships and experienced advisory services. Our pending acquisitions also tackle this a small business opportunity from complementary angles.

Providence provides an established physical network in Chicago land, a mark with over 1 million active small businesses. Bluevine is expected to add national digital reach with approximately 185,000 active small business customers and over $2 billion of low-cost core deposit relationships. Bluevine should expand our small business client base by nearly 20 times while creating meaningful cross-sell potential for the roughly 40% of its clients that already operate within Valley's footprint.

AI is another structural area lever that should drive further profitability improvement for Valley. Banks which deploy AI effectively can create capacity for growth while structurally lowering efficiency ratios. We were early to identify the AI opportunity and quickly dedicated significant resources to build the foundation that is critical to recognize the meaningful benefits we expect.

Our approach is disciplined. We focus on measurable value, centralized governance and human oversight. Building on our investments in data and core infrastructure, we are already deploying AI in several areas, including customer care, fraud and AML reviews, auto loan collections and most recently, agent credit underwriting and loan servicing.

Bluevine is expected to accelerate these efforts, enhancing our AI engineering and develop our talent base. There are [indiscernible] cases for AI efficiency in the banking space and expanding our capacity to solve these use cases will continue to repay our performance in the next chapter of our journey.

Over the past 8 years, we have accomplished a lot. We have modernized our foundation, build a tech-forward culture, strengthen our balance sheet and improved our funding base. We have rebuilt our profitability and are looking forward from a position of strength. Our next chapter will focus on further optimizing our funding base, capturing profitable small business and middle market growth, and using technology to drive sustained operating leverage. I'm proud of our team and the foundation we have built to deliver substantial value for our shareholders, clients and associates.

With that, I will turn the call over to Travis.

Travis Lan

Thank you, Ira. This quarter's strong results position us to finish 2026 at the high end of the guidance ranges provided at the start of the year. Compared with last quarter's guidance update, the primary change for modeling purposes is the effective tax rate, which is now expected to be approximately 20% for the full year, reflecting our opportunistic purchase of additional tax credits during the quarter.

Turning to capital deployment on Slide 11. Our improving profitability supports strong loan growth, meaningful capital returns and the value-enhancing acquisitions we recently announced. During the quarter, we returned approximately $96 million to shareholders through common dividends and the repurchase of 2.5 million shares. Our regulatory capital ratios remain comfortably within our target range, providing flexibility to pursue opportunistic share repurchases while funding the strong loan growth we expect over the next several quarters.

Slide 12 details the $1.1 billion increase in direct core customer deposits during the quarter, led by commercial nonmaturity accounts, particularly in our technology vertical and Metro New York footprint. Broker deposits were unchanged as excess core deposit growth funded the repayment of approximately $400 million of maturing short-term debt during the quarter.

Within broker deposits, we replaced roughly $350 million of interest-bearing non-maturity balances with term brokered CDs. Noninterest deposits declined by about $100 million due to late runoff in the quarter. However, average noninterest deposits increased nearly $300 million from the second quarter and spot balances have rebuilt in October.

Total deposit costs increased 5 basis points to 2.33% but remain well below 2.69% from a year ago. We are working to limit deposit cost increases following the recent Fed hike and continue to believe that replacing wholesale funding with core deposits offers relative net interest margin upside versus peers. This position will be augmented by the acquisitions of Providence and Bluevine targeted for early 2027.

Slide 15 highlights solid loan growth during the quarter, concentrated in our strategic focused portfolios of C&I and owner-occupied CRE. Growth was again led by our health care vertical and broader strength across our geographic footprint. As a result of organic regulatory capital accretion and stable regulatory CRE balances, our CRE concentration ratio declined to 312% from 317% at June 30, 2026. On a stand-alone basis, we expect to drive this ratio lower but acknowledge that a temporary uptick will likely result from expected capital deployment for our pending acquisitions in early 2027.

As Ira mentioned, we remain focused on bringing this ratio below 300% over the next few years. Slide 18 illustrates the consistent growth in our net interest income and net interest margin. The quarter-over-quarter expansion in both metrics was largely the result of higher average loan balances and expanding yields. Average new loan origination yields increased 8 basis points during the quarter, while the average cost of newly originated deposit relationships decreased by 9 basis points, primarily as a result of lower CD originations relative to the second quarter.

Our balance sheet and business model remain well positioned benefit from the existing yield curve backdrop despite consistent competition on both sides of the balance sheet. We're pleased with quarter's net interest margin progress and expect further expansion in fourth quarter of 2026 and beyond.

As shown on Slide 19, adjusted noninterest income increased nearly $2 million during the quarter despite a $3 million sequential decline in capital markets revenue. Growth in our tax credit advisory business and an approximately $2 million benefit from fintech equity valuations were the primary offsets.

Deposit service charges increased for the 12th consecutive quarter, reflecting continued expansion of treasury management services across our commercial customer base. We expect tax credit advisory revenue and fintech valuation benefits to normalize in the fourth quarter while capital markets activity should rebound. We are proud of the substantial growth in core recurring fee income over the past several years although we acknowledge that strong net interest income growth at the same time has reduced the overall impact on our revenue mix.

Adjusted noninterest expenses declined $5 million from the second quarter, primarily due to lower professional fees, FDIC assessment costs and technology expenses. Our efficiency ratio declined below 50%, 1 quarter ahead of schedule and reached its lowest level since the third quarter of 2021. This multiyear improvement reflects disciplined expense management and operational efficiencies, including from technology and AI adoption.

As Ira noted, we endeavor to further utilize AI deployment to help offset traditional expense growth while improving productivity and supporting revenue generation over time. We expect the efficiency ratio to continue declining towards our mid-40% target for the next few years. Criticized and classified loans declined 2% during the quarter and 12% year-over-year to represent 7.1% of loans compared with 7.3% last quarter and 8.8% a year ago. We also saw a reduction in accruing past due loans, driven primarily by lower early-stage CRE delinquencies.

Nonaccrual loans increased to 0.96% of total loans, primarily due to migration of a single well-secured construction loan. Net charge-offs increased 28 basis points of average loans from 17 basis points in the second quarter of 2026, primarily due to a single C&I loan charge-off. Year-to-date net charge-offs of 20 basis points sit at the high end of our guidance range, which is a reasonable expectation for the full year. Our $31 million provision resulted in a modest decline in the allowance coverage ratio to 1.13% from 1.6% at June 30, 2026. The decline reflects in part the continued improvement in criticized and classified loans as a percent of total loans and sustained borrower financial performance.

Despite the OCI headwind associated with our available-for-sale securities portfolio and share repurchase activity, tangible book value increased modestly during the quarter despite the OCI headwind associated with our available-for-sale securities portfolio and incremental share repurchase activity. Regulatory capital ratios were generally unchanged as strong profitability supported the quarter's loan growth and share repurchase activity.

We remain comfortable with our capital positioning in the context of our loan growth expectations and the impact of our pending acquisitions.

To summarize, the third quarter displayed continued progress on the strategic priorities that we have continuously discussed. We've improved the funding base through strong core customer deposit growth and diversified our loan portfolio with continued growth in relationship-based C&I and owner-occupied CRE. We've increased our fee income and controlled our expenses, which has led to a sub-50% efficiency ratio, we have also actively and effectively managed our capital deployment. We continue to focus on improving our profitability and anticipate a strong end to 2026.

With that, I will turn the call back to the operator to begin Q&A. Thank you.

Operator

[Operator Instructions]. Our first question comes from the line of Freddie Strickland with Hovde Group.

Phần hỏi đáp

Feddie Strickland

Just I wanted to start off on credit, if we could. Just can you provide any more details just on the construction line? I know it's not a big piece and you're not really expecting anything in terms of losses. But just curious, what gives you comfort that what the workout time line might look like?

Mark Saeger

Absolutely. Hey, Freddie, this is Mark Saager. That loan is actually a land loan. They haven't begun construction on that. It falls within our construction bucket that will obviously -- what brings us comfort is, over the last year, we've had substantive paydowns of of that facility in order to grant extensions. It is current on interest but it has matured, and we hadn't reached agreements on the way forward. We have current valuation, which shows substantial value in the land, a number of interested parties -- interested in the land. So we're confident that we exit of this loan without issue.

Feddie Strickland

Got it. Appreciate that. And just more broadly, I mean, can we see criticized and classified continue to drop even with higher rates? Or is that going to get a little bit more challenging just as that service coverage gets a little tighter?

Mark Saeger

We still feel that, that trend that we've experienced over the last 5 quarters, we're going to continue to see improvement in criticized classified. Beginning at the end of 2023, we started a process to forward look on any rate resets or maturities, 12 months ahead.

Historically, we've had great success for the limited population that would be stressed due to rate increase of either resizing those loans, having those refinanced by more aggressive lenders or through sales of property. And over the past 2 years, the number of modified loans that we've had to do as an organization has been very small.

Feddie Strickland

And just 1 last question for me. Just wanted to ask whether there's any added thoughts on maybe when the deposits and fees start to flow over after Bluevine closes and they wind down their current relationships. .

Travis Lan

Yes, Feddie, this is Travis. There's no change. I mean we've guided to kind of April 1 is a good assumption for when we'll be able to onboard the deposits after an expected January 1st close. So that's kind of the time line we're thinking. Between close and the deposit transition, we still benefit from the chargeback that Bluevine gets from their current partner bank. So it's not that the economics will be 0, but it will be effectively breakeven until we get the deposits and to put them back to work.

So I think the April 1 is still a good date to pencil in, we're certainly working to accelerate that as fast as we can.

Operator

Our next question comes from the line of Ben Gerlinger with Citi. .

Benjamin Gerlinger

I know it's a little bit harder with interest rates kind of moving around all over the place. But when you think about just the growth between either now or potentially going into next year? And I know you don't want to give next year's guide, but do you think there's some fits and starts in terms of like sometimes pipelines like they build and they follow through, even though rates move up. So like how do you think about the like rounding the corner, rounding the calendar year in terms of growth, specifically CRE and/or C&I.

Travis Lan

Yes, Ben, this is Travis. So maybe I'll kind of give you what our expectations are or maybe I'll start with the pipeline and then kind of talk about how we're contemplating as it relates to our growth outlook.

So the pipeline right now has increased back towards the $5 billion mark that we were at as of March 31. So Obviously, March 31, led to a significant loan growth quarter in the second quarter, which aided into the pipeline. We saw solid growth here in the third quarter, but the pipeline rebuilt at the same time.

So the pipeline remains very strong. I would say as we think about modeling growth, we're more likely to contemplate a 2027 guide that's similar to where we were coming into the year for loan growth. So we've started with a 4% to 6% loan growth guide, likely to be what we contemplate for next year. I do think rates will eat into new origination activity to some degree. At the same time, it will likely slow the pay down on the back book.

So I think those 2 things may not balance out perfectly, but I think there's offsets there. So I am being fairly conservative with our loan growth expectations as it feeds into our net interest income guide, but still very strong activity in our business lines and across our geographies. And the other thing on the pipeline is it continues to tilt heavily towards C&I and owner-occupied CRE.

Benjamin Gerlinger

Got it. And then when we think about expenses and again, not looking for '27 guide, but like when you think of just broadly speaking, you guys have run a pretty tight expenses to average earning assets. And it seems like as your assets gets bigger, that ratio continues to improve because via efficiency, but with the deal pending and then you're going to have a little bit of noise on the integration. Do you think some of that reinvested? Or should we see kind of a relatively short-term high watermark that actually comes down kind of going into next year, to expose against core hirings for lenders?

Ira Robbins

I think our approach has always been we're willing to invest in opportunities to enhance the franchise, drive future revenue growth and franchise value. But every time we put a dollar out the door, we're looking for as much offset as we can in the background. I think we've been able to execute that consistently over the last couple of years, and that's again driven our efficiency ratio below 50%. And I'll say Providence also has an efficiency ratio on a stand-alone basis, below 50%, obviously, very small relative to the total, but we're already starting there with something that's consistent with the efficiency we have before any potential cost saves.

On Bluevine, we've talked about the synergies that we expect to occur over a couple of years. But again, none of this changes the fact that we will invest in our organic opportunities and then work to find offsets through process improvement, the utilization of AI and technology. And I think we've proven our ability to do that.

Operator

Our next question comes from the line of Anthony Elian with JPMorgan.

Michael Pietrini

This is Mike on for Tony. On NII, you guys expect the -- it still looks like the high end of the 11% to 13% range, which would imply a little bit of a ramp in 4Q. Is that the right way to think about it? And I guess, what are some of the drivers to get there?

Travis Lan

Yes, that's correct. I mean so we've talked about being fairly neutral to the front end of the curve and more exposed to the belly and longer ends. Obviously, there's been significant move higher in those points, which has supported our -- I think, partially supported our results this quarter, but also our outlook for the fourth quarter and beyond.

So our exit margin for the month of September was 3.33%. We guided to 5 to 7 basis points of expansion for the third quarter. We obviously exceeded that we'll guide to another kind of 5 basis points, call it, 5 to 7 basis points of expansion here in the fourth quarter. And it's a result of the interest rate backdrop and our ability to continue to reprice our asset yields higher, while preserving as best we can in the funding cost.

Michael Pietrini

Great. And on [ROATC], you remain on track to achieve that goal and are likely to exceed the 15% target by the end -- any thoughts on reaching that target earlier in the year given it came in at 14.2% this quarter?

Travis Lan

Yes. I mean we're always working towards it. I think this quarter was great because it showed -- you gave a little bit more credibility to the 15% guidance that we put out there. I think we can pull that towards the middle of the year, and I think we can exceed it by the end of next year. I think that's kind of implicit in the comment that we made.

And by the way, that's for Valley on a stand-alone basis and does not contemplate the impact of the potential transactions that we've talked about longer term, the transactions could add, call it, 200 basis points to our terminal and return on tangible common equity. By the end of next year, it's probably half of that just because of the timing of how these things feed in. But I do think there should be clear credibility to the guidance that we've laid out and our opportunity to outperform.

Operator

Our next question comes from the line of David Smith with Truist Securities.

David Smith

How should we be thinking about the reserve ratio dynamics going forward? As on the 1 hand, you continue to have generally improving credit metrics, but you're also still growing C&I a lot faster than CRE. So is there kind of a leveling out in that decline in the ACL ratio? Or how would you be thinking about that going forward?

Ira Robbins

I think we've said the largest driver of the ACL outlook will be the trajectory of criticized and classified loans. And obviously, over the last year, we've seen a significant reduction in criticized and classified as a percent of total, and that's what supported the reduction you've seen in the ACL. The reality is the gross reduction in the ACL reflecting criticized and classified would be more if it weren't offset by the C&I growth that you call out. So going forward, we continue to guide to something that looks fairly stable on the ACL as we anticipate continued criticized and classified improvement and then balancing that with continued focus on C&I growth, which to your point, carries a higher allowance.

David Smith

And then the full year guide seems to imply a tax rate of around 21% in the fourth quarter, which is still a little bit lower than we've been used to. Should we also be expecting a corresponding higher tax credit amortization expense than the $15 million or $16 million quarterly you're running at prior to 3Q?

Ira Robbins

Yes. Just for the fourth quarter, I would anticipate our tax credit amortization remains in line with the third quarter, which call it $20 million. And then the tax rate, to your point, should be, call it, 20% to 21%. The 1 thing I just want to call out is the 15% tax rate this quarter can't be viewed in a vacuum. It's related to the $4 million quarter-over-quarter increase in tax credit amortization. So if you want to use last quarter's tax rate, you would need to similarly reduce the GAAP expense for the tax credit amortization.

And I think that the combination of those 2 factors or the interplay there is kind of being missed. So it's not just like you would take our pretax income this quarter. and apply a different tax rate like those 2 things, the increased tax credit amortization, the lower tax rate, they occur in conjunction with 1 another.

David Smith

Yes, for sure. It seems like a net benefit was obviously positive this quarter between those 2.

Operator

Our next question comes from the line of David Chiaverini with Jefferies.

Unknown Analyst

[indiscernible] on for David Chiaverini here. I just want to talk about the 90% loan-to-deposit ratio. And if loan growth stays at 4% to 6% next year, which you guys thank you for providing that. I just want to talk about where you guys expect deposits to go on an organic basis.

And if you guys could touch on the $5.3 billion of brokered deposits and where do you guys expect that to trend?

Travis Lan

Yes. So when we have the guidance page in the deck, I mean, obviously, that shows where our 2026 guidance was coming into the year, I think loan and deposit growth, again, our starting point for 2027 as we work to refine our forecast for '27 that we'll announce official guidance 3 months from now. But that would be a good starting point. So we're targeting core deposit growth in excess of loans for sure.

But again, that does not contemplate the impact of the acquisitions, which should add $3.5 billion of core deposits against about $1 billion of loans. So just the organic progress that we make and then the impact of the acquisitions in '27, you should bring loans to deposits by the end of next year into the low 90s already.

Operator

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

Matthew Breese

Travis, maybe or Ira, maybe you could update us on where Bluevine deposits, total deposits and the cost of those deposits sit today? And just curious, by the time the deal is closed, how much do you anticipate those balances where do you expect those to be?

Travis Lan

Yes. So the update as of 9/30 is they're $2.3 billion, so up $200 million during the quarter. No change to the rate there, in the number of active clients has gone up by 10,000. So that's the 3Q update on Bluevine. And I think that continued kind of $200 million a quarter pace is what we would anticipate.

So by the time you bring the deposits over, call it, April 1, you're closer to the $2.7 billion, $2.8 billion of deposits.

Matthew Breese

Okay. And then once you bring it all over, what is the offset you pay down brokered or add securities? I'm curious which way you're leaning there? And then with that and Providence, what is the NIM outlook once you put this all together. I don't know if there's a bogey by year-end '27 that you kind of roughly point us to?

Travis Lan

Yes. So as it relates to the immediate opportunity on the inflow of the deposits, I mean, we have about $1.5 billion of brokered deposits that are set to mature in the first quarter of 2027. There may be a slight timing mismatch there between getting the actual deposits from BlueVine in, but we will hold that kind of short to make sure that we can benefit as quickly as possible. The other -- we also have about $400 million of FHLB maturities in the first quarter of '27So our primary focus would be optimizing the funding side of the equation. And then anything excess, we'll look to potentially invest in the securities portfolio.

But again, I think there's plenty of opportunity on the brokerage side where we can optimize that in pretty short order post deposit transition. In terms of the margin, for we've been kind of looking at it fourth quarter to fourth quarter. So the fourth quarter of '25 was 3.17. -- when you shake everything out, it will be up, call it, more than 15 basis points through the fourth quarter I expect a similar stand-alone Valley margin improvement by the end of 2027.

And then I think the acquisition, as we kind of think about the timing, should add another, call it, 15 basis points to that math. So I think you're certainly above 3.50 by the fourth quarter of '27, all else equal, and approaching probably 360 or something like that, again, with what we're seeing today with the yield curve.

Matthew Breese

Got it. Okay. Very helpful. And then just last 1 for me. One thing I'm struggling with a little bit model-wise is the outlook for buybacks. You both kind of commented you want that CRE concentration to go meaningfully below 300%, but it feels a little bit difficult if we sustain 2.5 million shares a quarter.

Could you give us some idea of what that buyback might look like over the next handful of quarters?

Ira Robbins

Yes. I mean we certainly retain the flexibility to buy back stock. We've been consistent, though, Matt, in saying that our #1 priority is supporting well-funded, high-quality organic loan growth opportunities that may occur in the quarter that we're sitting in or what our outlook is and again, with the pipeline strong, I think that's where our #1 priority is we have put incremental cattle to work in the 2 deals that we've announced. But the underlying earnings power of the franchise is driving significant improvement in returns, which is giving us more flexibility around capital allocation. So we remain flexible there. It's fully discretionary. The 1 thing I would just call out is that I think because of the better earnings power as we model it, our ROATC outlook that we talked about on a stand-alone basis is not dependent on share repurchases in any way. So it's a flexible tool that we have, and we'll monitor it and manage it -- we manage it on a daily basis.

Travis Lan

And I think, Matt, just adding 1 sort of element to that is there is no pressure to get under 300 by a certain time. it's an important number for us as to where we think about sort of where the valuation of the organization sits. There's no pressure to get there by tomorrow or next quarter or anything else like that. But we do believe over a longer time, it's going to continue to trend down and well below that 30%.

Operator

Our next question comes from the line of Jared Shaw with Barclays.

Unknown Analyst

This is [indiscernible] on for Jared. Going back to Bluevine, it seems like really good accretion to the margin from that. Do you see any risk to the I guess, rate activity or deposit those customers as they transition to Valley or just over time?

Ira Robbins

I think it's 1 of the driving factors as to why we wanted to really do something with Bluevine is that those clients are really less rate sensitive than what we've seen of any other client segment. When you look at why clients choose BlueVine, largely has nothing to do with the rate. It's the ease of use of the platform, the ability to look at it from a deposit perspective on their mobile app. Those are the choices from a relationship perspective. As we think about what that opportunity is in blending it in with Valley.

We have strong relationship advisers from a human element in our organization, a very strong branch network across a lot of geographies. So we think that we'll be able to maintain very low betas in that book and we continue to accelerate what that deposit growth is to some point, even greater than what Bluevine been able to do organically on their own. SP1

Unknown Analyst

Okay. Great. That's very helpful. And then I guess thinking about AI being more embedded in the processes of the company, is that due to like the long-term expense growth rate? And could that also benefit things like lending growth and fee income?

Ira Robbins

I think AI has an opportunity, I talked about last quarter, really to impact much more than just on the expense side. I think we sort of internally think the AI opportunity probably 65% on the expenses and 35% on the revenue as we think about the additional opportunities from a cross-sell perspective and how we think about valuations on some of those relationships. So we feel really positive about the opportunity for AI.

As we've mentioned, it's something that we've been focused on for a very long period of time. making sure the foundation, the data that we have here, what that looks like, the quality of the data. and how we can really begin to. So AI at value isn't just something that we're conceptually talking about. It's something we've already embedded into the financial results of the company. And we think it's going to be an enabler for us to continue to grow the organization with a much stronger positive operating leverage.

Unknown Analyst

Okay. Great. And then if I could just sneak one more in. Is there any seasonality in deposits we should keep in mind for the [indiscernible]

Travis Lan

Not on a point-to-point basis as the quarter goes on. We see -- typically see fourth quarter inflows in the municipal deposit side that ease a little bit into -- into year-end. But point to point, there's no significant seasonality you should think about.

Operator

[Operator Instructions] Our next question comes from the line of Ryan Kenny with Morgan Stanley.

Ryan Kenny

Wondering if you could elaborate on some of the progress that you guys have been making on the treasury management side. And any color or numbers around what percent of commercial borrowers today have a treasury management relationship with the bank and how that's evolved over time?

Travis Lan

Yes. This is Travis. So Ryan, we converted the core some of the bank actually 3 years ago almost to the day, we got a more modern and mature treasury management platform. The first call it, year after that conversion, we were focused on penetration of the product, which was fairly nascent from our customer base.

As we sit today, that penetration is built up towards 60% of our C&I customers use the treasury management platform. So that's supported growth that you've seen over the last couple of years. The other element, though, that supported that growth has been we've repriced the product higher a couple of times towards market rates where we kind of sit today for the pricing of the treasury management platform. I'd say there's not likely to be another reprice higher going forward, but still a certain opportunity to penetrate the continued customer base and any new customers that come to us on the C&I side. So still certainly expect growth in the deposit service line. but not to that same pace given the repricing benefits that we had over the last couple of years.

Ryan Kenny

All right. That's helpful. 60% seems pretty high. So -- just wondering, as you grow C&I loans, any way to think about for every dollar of C&I loan growth, how much do you expect to capture on the core deposit side. And has that capture rate also evolved over time? Or is it more challenging because of higher rates?

Travis Lan

We're not seeing any immediate change in terms of the C&I loan-to-deposit ratio for our customers. There's a cut of differences in the rate environment there, the deposit backdrop, they relative to the last rate hiking cycle. And I think that we're positioned to kind of continue to preserve C&I deposits that we have. So we're focused on it. There does tend to be for a new C&I loan, call it, a 3- to 6-month lag in terms of getting up to the deposit levels that we model. But I think we've seen that constant pull-through, which has helped the exceptional core deposit growth we've seen over the last couple of years. .

Operator

Our next question comes from the line of Chris O'Connell with ABW.

Unknown Analyst

This is Chris on for Chris on for Chris McGratty. Just wanted to focus in on the fixed asset repricing coming up over the next year or so. And after the recent rate moves, see what the replacement yields are now coming on at on both the CRE side and then on the securities book?

Travis Lan

Yes. Thanks, Chris. It's Travis. Long time no talk. So we put that NII page in the deck that shows where runoff rates are. Reorigination rates are coming in 150 to 200 basis points higher than where the runoff is on the fixed rate loan portfolio.

On the securities portfolio, this quarter, as an example, we saw rates running off in the mid-4s and new purchases that are occurring in the mid-5s.

So it's about 100 basis points pickup on the security side and again, call it, 150 to 200 basis points on the loan side.

Unknown Analyst

6 Great. And then given the Providence deal and some of your targeted expansion into new markets over the past few years, can you guys talk about your biggest opportunities in the expansion markets going forward? Maybe both in the context of loan deposit growth.

Ira Robbins

I think as we talked about Chicago, we had a very strong franchise there as we thought about the middle market C&I. And the Providence franchise is really more about the SMB and consumer opportunity within that book. They had a very strong deposit ratio and we really anticipate continued deposit growth in that market that obviously is what we're doing on the loan side. So that will help with the loan-to-deposit ratio in that area. .

As we go into each individual, some of these growth markets, there's always a very strong deposit element of how we think about it. So they're relationship focused. Everyone comes with a treasury a banker associated with each of those individual markets as well. So definitely not just an asset play for us, but a full relationship that has very strong deposit goals as well.

Operator

And I'm currently showing no further questions at this time. I'd now like to hand the call back over to Ira Robbins for closing remarks.

Ira Robbins

Just want to thank everyone for your attention and time today and really look forward to meeting with you next quarter. Thank you.

Operator

This concludes today's conference. Thank you for your participation. You may now disconnect.