西北邦克股份 (NWBI) 2026年第三季度业绩电话会议：营收创新高，工商业贷款强劲增长

Northwest Bancshares (NASDAQ: NWBI) 报告称，在强劲的工商贷款和更高的手续费收入支撑下，2026年第三季度营业收入和净利息收入创历史新高。管理层还预计第四季度净息差将有所改善。

核心要点

• 营业收入达到创公司纪录的1.85亿美元，环比增长2%，同比增长9.9%。净利息收入也创下新高，达1.49亿美元，同比增长超过9%。
• 摊薄每股收益按GAAP准则为0.34美元，按调整后准则为0.35美元，两项指标均较上一季度下降0.02美元。
• 平均工商贷款增加2.01亿美元，即环比增长7.2%；增加7.02亿美元，即同比增长30.8%。
• 净息差下降5个基点至3.70%，主要是由于借款增加以及收购会计增计减少。管理层预计第四季度净息差为3.73%。
• 资产质量保持在内部预期范围内。年化净核销率为15个基点，而逾期90天以上贷款率降至36个基点。
• Northwest通过每股0.20美元的股息回馈了季度收益的半数以上，标志着其连续第128个季度派发现金股息。

核心财务数据

业务与运营表现

商业贷款仍是主要的增长引擎。Northwest在全国范围内的垂直业务领域目前约占其商业贷款组合的30%，特色业务实现全面增长。管理层表示，当竞争加剧时，将优先考虑贷款结构而非定价。

商业地产贷款发放势头稳健，但继续被组合到期流失所抵消。管理层认为，商业地产组合正在接近拐点，净降幅可能在一至两个季度内收窄或转为小幅正增长。

非利息收入环比增加170万美元，同比增加370万美元（增幅11.6%）。增长来自服务费、手续费和财富管理。信托及其他金融服务收入同比增长25.7%。管理层还指出，SBA（小企业管理局贷款）业务和资金管理业务也是手续费收入的贡献来源。

Northwest继续推进其在哥伦布市的扩张。另外两家金融中心计划于2026年第四季度开业，随后第五家网点将于2027年2月开业。管理层表示，所有五家网点预计将在2027年第一季度末投入运营。

管理层业绩指引

管理层预计2026年第四季度净息差为3.73%，全年净息差为3.71%。第四季度的改善预计将反映9月份加息的影响，以及赎回次级债务带来的估计2个基点收益。

对于2026全年度，管理层预计：

• 营业收入处于其既定指引区间的高段位置。
• 非利息收入将超出其指引区间的上限。
• 非利息支出处于其指引区间的高段位置。
• 根据当前经济状况，净核销率处于指引区间的低段位置。
• 由于盈利增长强劲，有效税率趋向于24%。
• 贷款和存款增长指引保持不变。

该公司继续以实现约200个基点的正向年运营杠杆率为目标，不过管理层提醒称，这一目标可能无法在每个季度都实现。

风险与关注焦点

存款竞争依然激烈。管理层表示，在必要时，Northwest可能会接受存款成本增加1到2个基点，以获得支持贷款增长所需的资金，尤其是在公司扩展到哥伦布等利率较高的市场时。

贷款竞争也对定价构成压力。Northwest表示，公司在信贷结构上保持审慎纪律，可能会拒绝要求放宽条款的交易。

收购会计增计仍是净息差的不确定性来源，因为其贡献取决于 Penns Woods 投资组合中贷款还清的时机。对新金融中心、技术和财富管理领域的投资也可能推动费用逐步走高。

分析师问答亮点

• 息差展望：管理层将净息差预计从3.70%上升至3.73%主要归因于9月份的加息和次级债务赎回。由于存款重定价存在滞后性，第四季度末潜在的加息可能几乎不会产生即时影响。
• 贷款增长组合：Northwest预计商业贷款再次实现30%的增长不会直接转化为整体资产加速增长。公司可能会放缓间接贷款，以使资产负债表增长与存款增长保持一致。
• 手续费收入持续性：服务费被描述为相对稳定，但取决于客户行为。只要市场估值保持支撑，财富管理收入大部分具有经常性，而其他非利息收入波动较大。
• 运营优化：公司正在新任首席信息官的领导下审查传统系统、技术采购和工作流程。管理层预计这些工作将兼顾成本节省和提升客户体验。
• 资本配置：管理层表示，在资本规则和内部资本生成情况进一步明确的前提下，股票回购可能在2027年成为资本配置组合的一部分。Northwest拥有一项5000万美元的授权额度。
• 收购策略：管理层对地理位置和战略上契合且增益显著的收购持开放态度，但表示当前市场较为沉寂。近期优先事项是有机增长和内部优化。

业绩电话会议完整实录

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完整财报电话会议逐字稿

管理层陈述

Operator

Good morning. Thank you for joining us, and welcome to Northwest Bancshares' Third Quarter 2026 Earnings Call. This session is being recorded, and a playback will be available on Northwest's Investor Relations website. [Operator Instructions]

Now I would like to introduce Michael Perry, Northwest's Managing Director of Corporate Development and Strategy and Investor Relations.

Michael Perry

Good morning, everyone, and thank you, operator. Welcome to Northwest Bancshares' Third Quarter 2026 Earnings Call. Joining me today are Lou Torchio, President and CEO of Northwest Bancshares; Doug Schosser, our Chief Financial Officer; and T.K. Creal, our Chief Credit Officer.

During this call, we will refer to information included in the supplemental third quarter 2026 earnings presentation, which is available on our Investor Relations website. If you'd like to read our forward-looking and other related disclosures, you can find them on Slide 2. Thank you.

And now I'll hand it over to Lou.

Louis Torchio

Good morning, everyone. Thank you for joining us today to discuss our third quarter 2026 results. I'll let Doug take you through the details of our third quarter performance in a moment. But first, I'd like to reflect on several important milestones, including record revenue and record net interest income and how they have contributed to our achievements and momentum in the third quarter, positioning us well for continued growth for the remainder of 2026 and into next year.

We recently held the official grand opening of our second financial center in Columbus, and we expect our third and fourth financial centers to open by the end of the year. We also plan to add a fifth in this market by the first quarter of 2027. Our new financial centers bring to life the hospitality and personal advice-led approach that Urich and his team have embedded across the consumer bank. The most recent opening is next to the Ohio State University's Columbus campus and the design incorporated feedback from students on what is most important to them in a bank relationship.

In addition, we recently announced a multiyear sponsorship agreement with the Columbus Crew MLS team. We appreciate our relationship with the Crew that we have developed through our sports vertical and our Ohio-based middle market teams. We continue to be excited about the growth opportunities that this relationship will bring to our headquarters market.

Now turning to Slide 4, you can see some of the financial highlights of the third quarter 2026. We delivered $185 million in revenue and $149 million in net interest income for the third quarter, both records in the company's history, each resulting in more than 9% year-over-year growth. Also, we delivered another strong quarter with diluted earnings per share of $0.34 on a GAAP basis and $0.35 on an adjusted basis. We continue to drive strong momentum in our C&I business with $201 million of average C&I loan growth in the third quarter, representing 31% year-over-year growth.

As we've highlighted previously, we continue to grow our nationwide business verticals in a very disciplined manner and are pleased with the performance of these verticals, which are led by experienced and highly networked industry leaders. Collectively, they now represent approximately 30% of our commercial lending portfolio.

In addition, we continue to focus on investing in and growing our in-market regional and middle market commercial banking businesses. We achieved these results while continuing to invest in talent, technology and new financial centers to support our future growth. None of these results would be possible without the hard work and dedication of our 2,200 associates. I'm very pleased with our results, and I'm proud of the team for their continued commitment to driving strong core performance across the bank.

And in the third quarter of 2026, we delivered on our commitment to our shareholders, returning more than half of our profits through a quarterly dividend of $0.20 per share. This is the 128th consecutive quarter in which the company has paid a cash dividend. As we look ahead for the rest of 2026, we continue to focus on organic growth initiatives, further optimizing our operations and driving improved financial performance, expanding our financial center network and serving our core customers and communities.

With that, I'll turn it over to Doug to review our third quarter results in more detail. Doug?

Douglas Schosser

Thank you, Lou, and good morning, everyone. As Lou indicated, we are very pleased with our strong financial performance in the third quarter.

Now let's continue on Slide 5 of the earnings presentation, where I'll walk you through the highlights of Northwest's financial results for the third quarter. Our GAAP EPS for the quarter was $0.34 per share. And on an adjusted basis, our EPS was $0.35 per share, a slight decline from the prior quarter of $0.02 per share on both a GAAP basis and an adjusted basis. Total revenues were $185 million for the third quarter, which represented a 2% increase quarter-over-quarter and a 9.9% increase year-over-year. While our GAAP efficiency ratio was 58.9%, our adjusted efficiency ratio was 57.8% for the third quarter, and although higher than last quarter, did represent a 184 basis point improvement year-over-year.

Our record revenue in the third quarter of 2026 drove solid returns with a return on average assets of 1.18% and an ROTCE of 13.9% on both a GAAP and adjusted basis. Our pretax pre-provision net revenue in the third quarter of '26 was $76 million, down 1.5% quarter-over-quarter, but represented a 15.5% increase year-over-year on an adjusted basis.

Turning to Slide 6. We achieved our fourth consecutive quarter of period-end loan growth with period-end loans increasing by $164 million to $13.3 billion, representing a 5% annualized growth rate, while our average loans grew $208 million quarter-over-quarter. Our C&I loan growth continued with strong performance in many of our national verticals and in our other commercial loan portfolios. Average C&I loans increased $201 million or 7.2% quarter-over-quarter and $702 million or 30.8% year-over-year. Our recent CRE loan production levels have been strong, but continue to be offset by elevated levels of runoff in the CRE portfolio.

Our loan yield was relatively stable, decreasing by 2 basis points to 5.59% in the third quarter. Our overall interest rate sensitivity position continues to remain slightly asset-sensitive with continued growth in floating rate commercial loans. We expect to see a fourth quarter benefit from the latest rate hike, and our outlook is for at least one more rate hike later in this year or early in 2027.

Moving to Slide 7 and our deposit balances. Our period-end deposit balances grew by $113 million in the third quarter, representing an annualized growth rate of 3.2% and our average total deposits grew by $6 million quarter-over-quarter, partially benefiting from growth in money market and demand accounts. We grew primary deposit relationships on a net basis in the third quarter, resulting from improved digital marketing and account opening, employee enablement programs and our Columbus expansion. For the third quarter, our cost of deposits remained relatively stable, up 1 basis point to 1.44%, a product of our proactive management of the overall portfolio.

37% of the CD portfolio matured in the third quarter of 2026, a weighted average rate of 310 basis points with new volume coming on at a weighted average rate of 297 basis points. Our granular diversified deposit book has an average balance of $19,900 with customer deposits consisting of over 715,000 accounts with an average tenure of more than 12.5 years.

On Slide 8, we show our net interest margin performance with NIM decreasing 5 basis points to 370 basis points in the third quarter of '26, resulting from an increase in borrowings, with a 4 basis point negative impact and a 2 basis point negative impact from a decline in purchase accounting accretion. Although we redeemed our sub-debt in the third quarter, which has a positive net impact on borrowing costs, this action occurred late in the third quarter. So, our results do not reflect a full quarter impact of that benefit, which we estimate to be 2 basis points.

Turning to our securities portfolio on Slide 9. Our portfolio yield continues to increase as new security purchases came on at higher yields than the runoff portfolio, resulting in a yield increase of 7 basis points to 3.34% in the quarter.

Turning to Slide 10. Our noninterest income increased $1.7 million quarter-over-quarter and $3.7 million or 11.6% year-over-year, driven by growth in service charges and fees and growth in our wealth management business, resulting in an increase in trust and other financial services income. Our investment in building out the wealth management business has resulted in a 25.7% growth in trust and other financial services income over the last year.

Regarding noninterest expense, as detailed on Slide 11, we continue to focus on expense management with adjusted efficiency ratio at 57.8% in the third quarter of '26, representing a 184 basis point improvement year-over-year. Overall expenses, excluding merger and restructuring expenses, increased quarter-over-quarter, impacted by an increase in nonpersonnel expenses of $4 million due to an increase of $3 million in FDIC insurance premiums as the second quarter of '26 included a benefit related to the prior period assessment rate changes. We have maintained our focus on managing personnel expenses with compensation and benefits increasing 72 basis points quarter-over-quarter and only 1.5% over the last year.

On Slide 12, you'll see our overall ACL was stable at $149.6 million and our coverage ratio declined 1 basis point to 1.12% in the third quarter of 2026. Our quarterly annualized net charge-offs of 15 basis points were below the low end of our full year guidance again this quarter.

Turning to credit quality on Slide 13. Our credit risk metrics remain within internal expectations. Our total delinquency remained relatively stable, increasing 1 basis point from 86 to 87 basis points quarter-over-quarter. Our 90-day plus delinquency declined from 49 basis points to 36 basis points quarter-over-quarter, while NPAs increased to 76 basis points of average loans in the third quarter.

Taking a deeper dive into the breakdown of our credit quality on Slide 14. In third quarter 2026, we experienced a decrease in classified loans as a percentage of total loans and on an absolute basis, which was attributable partially to payoffs and upgrades in the portfolio. As we've discussed on previous calls, our strategy with respect to classified loans is to continue to work them down over time.

And finally, on Slide 15, we'd like to provide an update to our outlook for 2026. Specifically, for loan and deposit growth, our outlook remains unchanged. For revenue, we would expect to be at the high end of our stated range. For net interest margin, we expect to be at 373 basis points for the fourth quarter of 2026 and would expect to be at 371 basis points for the full year of 2026.

For noninterest income, we expect to exceed the high end of our range. For noninterest expense, we expect to be at the high end of our range. For net charge-offs, based on current economic conditions, we expect to be at the low end of our range. Finally, we expect the tax rate to drift up to 24% based on stronger earnings.

We remain very confident about Northwest business, and we're excited about our prospects for the remainder of the year.

Now I'll turn the call over to the operator, who will open the lines for a live Q&A session.

Operator

[Operator Instructions] Your first question comes from the line of Jeff Rulis with D.A. Davidson.

分析师问答

Jeff Rulis

Maybe I could just -- I'll hop off the slide that you just went over, Doug. I appreciate it. Really good detail. But on the margin, just understanding the puts and takes, it sounds as if the timing of the sub-debt, that benefit that you are asset-sensitive, maybe a little benefit there. So just the lift in the margin, I guess, as we kind of ease into the next year, would you expect the borrowing side to lighten up in Q4 with core deposit growth? And then just kind of, if you wouldn't mind, kind of walking through kind of the margin puts and takes as you kind of enter into the next year?

Douglas Schosser

Yes. Thanks for the question, Jeff. So yes, I think we talked a little bit about it in the prepared comments. So, on the positive side for the margin, we have the next -- the rate hike that just happened in late September will translate through. And because we're slightly asset-sensitive, that should be a net benefit. Additionally, we will get the benefit of the sub-debt payoff, which again, we're thinking is about 2 basis points. So that gets you from the 3.70% to around the 3.73%. Obviously, purchase accounting is one of those things with the way the loan portfolio transitions over the quarter, that could be a little bit of benefit, could be no more than it was this quarter. So that's a little bit of the wildcard.

And then I think you could assume that as we indicated, if there is another rate hike, maybe you get another benefit from that. Don't know as to timing. But I think right now, the market is thinking there might be one late in the fourth quarter. So that would probably be the setup for next year.

Jeff Rulis

Okay. And then it sounds…

Douglas Schosser

I'm sorry your other question. Yes, deposits. So, I do think that we would have some potentially incremental deposit growth as we head into the fourth quarter to lighten up on some of the other borrowings as you had asked in your question.

Jeff Rulis

Okay. Great. And maybe I'll just do one other one. From a strategic standpoint and maybe for Lou, just a year removed from the Penns Woods closing and obviously, the Columbus focus on opening those locations, you've got a few more coming. I just -- kind of taking a step back and thinking about acquisition versus de novo and kind of where you see as again, peering into '27, the focus? Or is it sort of balanced on acquisition versus de novo?

Louis Torchio

Yes. So, thanks, Jeff. I think that as we move forward, as we sort of stated in the past, to the extent that we have opportunities around acquisitions that fit our geography, fit our strategic direction and are highly accretive, we certainly are in position to act on those. Notwithstanding, and I would just comment that I think the market is pretty soft right now, and it's pretty quiet out there. We'll have just a few boulders going into next year to drive financial performance. And we'll be inwardly focused on evaluating our launch here in the retail space in Columbus, which is so far is exceeding our expectations and going well, but we will measure that as those branches roll out. And then we'll be ultra-focused on optimizing our core and organic performance through '27.

Douglas Schosser

And then just for clarity, we expect to have 2 branches opened -- sorry, 2 additional branches opened in the fourth quarter with one that will be opening in February of '27. So, we'll have all 5 branches fully opened by the end of the first quarter next year.

Operator

Your next question comes from the line of Daniel Tamayo with Raymond James.

Daniel Tamayo

Yes, maybe just starting on the fee income guidance. So obviously, nice progression this year. You guys are well above your initial guidance, but I guess, so far above that I'm asking for a little clarity, if you will, on where that could land. Maybe if we just zero in on the fourth quarter, is last quarter's run rate relatively stable? I mean, if you can walk us through if there's anything that you think is kind of unusual that would drive a decline in the fourth quarter number? And maybe as we think about going forward, how we should think about what would be a decent run rate in terms of annual growth rate for the fee income as a whole?

Douglas Schosser

Yes. Thanks for the question. So, I think we tried to point it out. So, if you look on Slide 10, we kind of broke those bars down into the components of fee income. So, I would say the service charges and fees rate, that is all dependent on customer behavior. So, I think that's a fairly stable source of revenue. As we add customers, obviously, we would say that's a potential there to grow it. But again, it all kind of depends on customer behavior. And I think going into the fourth quarter generally tends to be where you get a decent amount of fee opportunities from your customers. So, assume that's pretty stable.

We broke out the trust and other financial services. As you can see, that was $8 million up to $10 million. A lot of that is annuitized business. So again, assuming markets hold up, asset values hold up, you could expect that to be pretty recurring. The other noninterest income, you can see has a bit more volatility, and that has everything in it from gains on BOLI and other things. So that's a little bit harder to predict. But again, if you look at our trend, you would definitely be in the $7 million to $8 million range is sort of the quarterly expectation. Hopefully, that gives you the color. So again, we feel really good about the fee performance, and we feel like it is a positive, and that was why we were indicating if you start looking at the performance and kind of thinking about that being stable, that would be an -- exceed the range that we provided last year.

Louis Torchio

And I would just say, Daniel, strategically, right, and we may have signaled this in the past that we've invested in that wealth business, and we think there's opportunity there. I would also point out in those fee numbers, mortgage banking is somewhat nonexistent at this point, right? So, we really like the momentum, the trajectory that we've established, and it's certainly part of the strategy going forward.

Douglas Schosser

I think also -- we would also highlight SBA business. That's a national business. That's one of our national verticals and continues to contribute nicely to that line item. So again, that's another driver of fee income.

Louis Torchio

And then finally, Dan, just one more point I'd like to make around that is we're -- that product, that wealth offering, we are layering in and have had success post Penns Woods' acquisition to the new marketplace. So again, we're really happy with the way we executed what we've achieved on cost saves, the accretion of that deal. In addition to that, we're now starting to layer in various products and services to the marketplace that otherwise weren't offered through the smaller franchise. And so, we think that's a positive trend as well.

Daniel Tamayo

Great. And then I guess maybe on the expense side. So, assuming that the fourth quarter kind of takes us into the middle of your range and you're kind of settled in the $425 million range. Just thoughts on that number being a decent run rate going forward and a little bit higher than maybe we were looking for coming into the quarter, around a $109 million number.

Douglas Schosser

Yes. So again, I think as we continue to invest in the franchise, right, you're going to see that slowly drift upwards. That's just pretty natural. We obviously will spend quite a bit of time trying to manage that down. We wanted to highlight the fact that the personnel costs within that, we have managed pretty effectively and keep that from showing a lot of growth. There are going to be some incremental expenses when you have incremental business, particularly on the wealth side. You tend to have commissions and incentives that get paid to those folks as well. So, there's some volatility in it. But again, the core personnel has been pretty good. And I think, yes, given the way we laid out our guidance and things, you can start to think about that as a decent sort of quarterly expectation.

Louis Torchio

And one thing to point out there as well is that we're launching these de novo branches in Columbus, and there's a certain cost and investment associated with that. As you -- I think everyone knows about 5 months ago, we hired a new CIO -- and we're looking at the entire spectrum of how we run the company from investments and efficiencies and saves. So again, I think, Dan, this goes -- kind of goes back to my earlier comments about we are focused on optimizing internal. We have plenty of things to do, and we're hyper focused on it to the extent there are no near-term opportunities on the acquisition side.

Daniel Tamayo

Okay. Great. And this obviously depends on the rate environment next year, but just curious if you think you're going to be able to produce positive operating leverage next year?

Douglas Schosser

We would always target to produce positive operating leverage again. I think we've been pretty clear on that. And we know that our efficiency ratio is a little bit high still relatively speaking. So yes, we would look to do that again next year. And we'll obviously provide much more clarity on that when we get fourth quarter results released sometime in late January.

And just to clarify, we target 200 basis points of positive operating leverage on an annual basis. So again, you're not going to necessarily see it every quarter, of course, but you will -- if you look back, look at the full year performance, and you should expect to see that.

Operator

Your next question comes from the line of David Bishop with Hovde Group. [Operator Instructions] We will move on to the next question from Brian Foran with Truist.

Brian Foran

I guess 2 separate questions. One on credit and just going back to the game we all have to do with backing out the fourth quarter from the full year. I mean I appreciate losses are so low, you're probably getting down to forecasting individual loans. But is there anything line of sight that -- I guess what I'm asking is you're 15 bps year-to-date, to get to 20 bps for the full year, you have to be like over 30 in the fourth quarter. So, is there anything line of sight that you're seeing that would push you into that low end of that range? Or is it just kind of look, we're being a little conservative if we end up beating, we're beating?

Douglas Schosser

Yes. I would say that's a good characteristic. So, we wanted to suggest that we're going to be at the low end of the range. Obviously, things happened in the fourth quarter, and we look to see where we need to position various items. But yes, I think right now, you can safely say that, yes, low end of the range, and that is a conservative estimate [indiscernible].

Brian Foran

Got it. And then just thematically on deposit competition, I feel like there's so much fear that you and other banks are going to have margins roll over in 2027 because everyone is going to be in a knife fight for funding. I wonder if you could just kind of speak for what you're seeing in the markets. Is that a valid concern? Or is that maybe a little bit overblown in terms of the risk of deposit costs kind of breaking the nice margin story you've had?

Douglas Schosser

I mean, again, deposits are always hypercompetitive. And I think we are fortunate in the way we have a very loyal, very granular deposit base. We're in a lot of markets that don't have a significant amount of competition. So that plays to our advantage. And we tend to service our clients well, and we feel that they're happy with the offering that we have at the company. But as we continue to look for opportunities to grow deposits as we move into new markets, we're obviously going to have some upward push on that. We'll break out the branch performance in the Columbus markets probably the middle of next year after at least one of them has been open for a full year.

And again, we have to be reactive to the market and where it goes. But I think in general, we would say deposits continue to be pretty competitive out there, and we look to find opportunities in order to maintain our deposit costs and grow our deposits at the same time, which I think we've done pretty good. But if you're going to see a basis point or 2 of increase in that deposit rate on our behalf, I think we have it to give in order to get the right deposit growth so that we can support the lending franchise.

Operator

We'll now take a question from David Bishop with Hovde Group.

David Bishop

Question was regarding the average origination yields on loans this quarter. Just curious what you're seeing on that side of the ledger relative to last quarter?

Douglas Schosser

Yes. I think the deposit or the loan originations are pretty similar quarter-over-quarter. Again, it does tend to be a bit of a mix issue for us at times. I mean you'll have some very highly rated credits that will come in at relatively lower cost and then you'll have some other credits that will be more normalized. And in any given quarter, you might have a little bit of a dynamic where you get a little bit more of those more competitive loans that come on the book. We are seeing a lot of loan competition for growth out there as well. So again, we tend to -- we keep structures in place and other things and price is the thing that we're -- is more apt to go rather than structural components of these loans. So, we are going to see a little bit of pressure there. But again, with our margin guidance, we're kind of suggesting another quarter of sort of similar performance.

Louis Torchio

And I would just add that one of our strengths there is really our diversity across the national lines of business, the regional small business that's in-market and a pretty distributed consumer book. So, it gives us a lot of flexibility and our discipline around the risk environment, especially currently, is that we'll be very disciplined on structure. And so, we'll continue to be very conscious of the macroeconomic environment that we're going to be going through perhaps.

David Bishop

Got it. We're trying to put up a hard number on it, do you think new origination yields coming in the low to mid-6s, is that sort of a good range to assume?

Douglas Schosser

I mean, again, depending on mix, yes, we're obviously targeting a bit of a higher level overall. But I think if you go with low to mid-6s, that is reasonable.

David Bishop

Got it. And then you mentioned the payoffs still remaining pretty high on commercial real estate portfolio. Are you seeing any signs on the loan pipeline, any fallouts being impacted by the rise in interest rates and just inflation impacting some of the enthusiasm from some of your borrowers to launch new projects?

Douglas Schosser

Not yet. I think our pipelines have held up really well. We've had conversations with our commercial business heads, and they've kind of concurred that right now, it's a pretty good market out there. Also on the commercial real estate portfolio, I do feel like we're getting very close to an inflection point. So, we have had a lot of runoff in that portfolio historically. The originations have been pretty good, and I'm hopeful to see that overall net decline shrink and maybe turn slightly positive within the next quarter or certainly within the next 2 quarters. So, I think we're feeling good that, that business has reached a point of stabilization.

Louis Torchio

I would also just point out there, just again, from a risk perspective, we're not outsized in our construction loan pipeline. So, we're finding different opportunities inside the market.

Operator

Your next question comes from the line of Emily Lee with KBW.

Emily Noelle Lee

This is Emily stepping in for Tim Switzer. So just on the loan growth side, can you maybe dig into which loan categories or geographies are seeing the most strength or greatest demand? And specifically on the national specialty vertical side, which areas are you most excited about?

Douglas Schosser

Yes. I think we've seen really nice broad-based growth across the national verticals. So those, I wouldn't necessarily highlight any one in particular. If you were looking at growth, you would see a lot of growth in, say, franchise, but that's just because it has such a small base. But I think all of the verticals are doing well. There's opportunities in all of them. And we're starting to see some of the regional commercial businesses and CRE, as I had said earlier, those are starting to stabilize as well. So, I think we feel pretty good about where we're at on lending, and we feel pretty good about the markets that are out there. So, it's just, again -- it's competitive on price, and it is competitive on structure. And in some of those cases, we lose because we're not willing to take the structural components that are required to win the deals.

Emily Noelle Lee

That's helpful. And then just to touch on the NIM. Given the asset-sensitive balance sheet, can you quantify the impact of one additional 25 basis point hike, what that means on NII or NIM?

Douglas Schosser

I would tell you that, generally speaking, I think the asset sensitivity is going to add a couple of basis points to NIM, but it's delayed, and it also tends to be driven a lot by deposit pricing as well. So we get pretty much -- the first 30 days, we get the benefit of the loan side, and then it takes a little bit of time for the deposit cost to kind of translate through. So there's a little bit of a lag in there. So, if we get one late in the fourth quarter, it's not really going to add to margin at all. So pretty much we're looking at the rate raise that we had in September to carry over and influence the fourth quarter. But the one that we sort of see is likely in late December is not going to have a meaningful influence on it.

Operator

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

Matthew Breese

C&I growth has been impressive. It looks like it's on track to be up another 25-ish percent year-on-year. I'm just curious, thinking about the pipelines, how sustainable is that into 2027? And Doug, just kind of tying this together with your commercial real estate commentary, if we do start to see stability in that portfolio, perhaps maybe even a little bit of growth, how does that change kind of the loan growth dynamics here? I mean, low- to mid-single-digits for 2026, does that dynamic push you into like mid- to high-single-digits for next year?

Douglas Schosser

No. So the way -- I'll kind of go through your question, right? So, I think are we going to get another 30% growth in commercial? That is -- that's a lot of growth. And I think what we like to do is have a very balanced firm overall and see the growth become a bit more balanced, although we are continuing to focus on reformulating the balance sheet. The big lever that we have is our indirect businesses, and we would reduce the growth in the indirect markets to offset the opportunity that we have to grow in the commercial space. So, we talk a lot about our overall mix. It's about 45% commercial, 55% consumer. We would be happy if that were to drift up. I mean it can stay where it's at or it can move a little bit. But we'd obviously keep the overall asset growth sort of more in line with the deposit growth over time. So in the near term, if we had nice opportunities, and we think we will because our pipelines continue to be strong on the commercial side, we would slow down the indirect verticals a little bit.

And even when I say that, we don't just look at indirect auto, it's some of the other indirect commercial businesses as well, where we're not -- we don't have the opportunity to gain more of a full relationship. So in that case, perhaps think of an equipment finance deal or perhaps a participation in the larger syndication, where the only opportunity is on the lending side.

Matthew Breese

Got it. Okay. Very helpful. And then do you have the spot deposit costs at period end or into October? And then I'd be curious how you're thinking about deposit betas through cycle?

Douglas Schosser

Yes. We haven't provided that level of transparency on deposit pricing. I don't think we've seen it go up materially. But again, I don't think we get into that level of detail. And then on the deposit betas, I don't think we've also gotten to a lot of detail there as well. And again, a lot of it -- it gets a little bit harder for us to see sometimes as we're growing some of the higher rate markets like Columbus.

Operator

Your next question comes from the line of Manuel Navas with Piper Sandler.

Manuel Navas

Just to kind of circle back up on the NIM. The sub-debt helps with 2 basis points. You have a little bit of benefit from the September hike. Were you kind of going into this fourth quarter a little bit below the average for the full quarter of 3.70%? Is that kind of why it's not kind of a bigger lift here in the fourth quarter?

Douglas Schosser

Well, I mean, again, I think we're also trying to accommodate for what's purchase accounting impact going to be on the margin. So that was almost 2 basis points quarter-over-quarter. And again, as you know, it is all influenced by sort of which loans pay off early on the Penns Woods book, which is pretty difficult for us to know in advance. So I think we feel really good about the 3.73% based on the points that we made and you just rearticulated on the sub-debt benefit as well as the impact of the rate rise.

The piece that we don't know and don't tend to estimate is what the purchase accounting benefit could do. So could that be another little bit of upside? Yes. Could it be exactly where it was last quarter and provide no upside? Yes. So I think we're always trying to get with guidance that's pretty appropriate and pretty conservative, and then we'll explain sort of the puts and takes after the quarter goes. But I think that 3.73% is a pretty good expectation for the fourth quarter given everything we know.

Manuel Navas

Okay. You talked a little bit about being inwardly focused on the -- a little bit on your new Chief Information Officer. Can you just speak a little bit more of what you're doing to kind of optimize operations? Just add a little bit more on that piece.

Louis Torchio

Yes. So bringing in new leadership with a broad acumen and deep experience while working at the large super regionals, et cetera, gives us a perspective to come in and evaluate some of the legacy stuff systems and products that we've had. So we're going through a pretty thorough evaluation of how we want to execute that strategy. And so over time, we'll roll that out. We hope that both -- we're going to realize both cost saves and through different sourcing of technology and workflows. And in addition to that, we're going to continue to increase the customer experience, reduce friction in the process which will also drive future revenues and gains.

So we're sort of hunkered down on a week-to-week meeting, if you will, evaluating all those opportunities and then figuring out which ones we can invest in, in '27 and what that's going to bring to our overall operating efficiency.

Manuel Navas

I appreciate that. On the service charge side, that growth has been nice. Does that also include treasury management fees? And is there -- what's the latest on your commercial deposit gathering efforts? Average noninterest-bearing balances were up linked quarter. I think that speaks a little better than maybe the movements on an end-of-period basis. But just kind of an update on the commercial deposit gathering pipeline?

Douglas Schosser

So yes, the treasury management fee income would be part of that overall service charges, and we have seen some nice growth in there, again, off a relatively small base, but I think we continue to find opportunities to grow commercial deposits with commercial relationships as the new verticals come in. And there does tend to be a little bit of a lag at times, right? You bring the loan in and then it takes time to move operating accounts and other things over. So we do expect that transition to occur from once we end up with some of these relationships and then the time it takes to build it in. But it does look like there's some opportunities in that space going into next year.

And then we also have some -- we are excited about the fact that we added a new member to the commercial team who's got a kind of a debt capital market specialty, and we think there's some opportunities there going into next year as well for better overall fees on the commercial side.

Operator

Your next question comes from the line of Daniel Tamayo with Raymond James.

Daniel Tamayo

Yes. Just a quick follow-up here. So I guess you've got the sub-debt behind you now, the redemption. The buybacks haven't been a part of the story for you guys, but a lot of capital -- recognize you're obviously still making investments on the growth side. But are you closer now to where you would consider using buybacks as a capital deployment tool?

Douglas Schosser

Yes. I think we are closer. That doesn't mean we're going to do it in the fourth quarter. But I think now that we have our capital pretty well established, again, I'd really like to understand where capital rules are going to go before we start making big commitments there. We're still returning well over 50% of our earnings to our shareholders in the form of that dividend. That's a pretty high dividend payout ratio or high overall capital return. But I think we are getting to the point now where as capital rules become a little bit firmer and we can kind of look out at what we're going to need and how much internal capital generation we have, we might want to think about sort of that buyback entering into the mix in 2027.

Daniel Tamayo

Is there a total return number that you're -- I mean, there's a lot of moving parts, I recognize. But given what you said about the dividend, and obviously, that's always been pretty strong for you guys. Is there a total return percentage that kind of makes sense for you guys? Or do you want to see that still come down a bit kind of longer term?

Douglas Schosser

I'd definitely like to see -- I'd like to earn our way to the dividend overall payout going down. That would be ideal. That's the way we'll do it is we'll do it through growing the firm. And then we are always working with the Board and others on sort of setting those targets. So as we have more capital planning done and we have more insights into next year, we have better visibility to the capital rules and other things, I think that is the time that we'll start talking more seriously about it. And I think we have a $50 million authorization. So it's not a huge amount, but I would like to see us start making some progress against that lever.

Operator

That concludes the question-and-answer portion of the call. I'll hand it over to Mr. Torchio for closing comments.

Louis Torchio

Thank you. On behalf of the entire leadership team and the Board of Directors, thank you for joining our call this morning. I'm excited about our momentum for the rest of 2026 as we are well positioned to continue to optimize our financial performance and to capitalize on opportunities to drive profitable core growth. I look forward to speaking to you on our fourth quarter earnings call in January.

Operator

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