Central Bancompany (OTCMKTS:CBCY) reported third-quarter net income of $116.2 million, or $0.48 per share, as higher net interest income and controlled expenses supported profitability. The company said its return on assets was 2.27% during the quarter.
Net interest income rose $20 million from the prior-year quarter to $218.9 million, while the fully taxable equivalent net interest margin increased 12 basis points year over year to 4.51%. President and Chief Executive Officer John Ross said deposit costs declined 8 basis points from a year earlier, reflecting rate cuts late last year.
Ross said the company has remained disciplined in deposit pricing, though he noted that current interest-rate volatility creates uncertainty around future deposit-cost beta. He added that the bank remains positioned to benefit from higher interest rates.
Fees, Expenses and Capital
Core fee income increased 4% from a year earlier, or 8% when excluding mortgage-related revenue. While mortgage revenue declined in the quarter, Ross said originations continued to be profitable on a direct-cost basis.
The company reported a fully taxable equivalent efficiency ratio of 45.4%, with Ross describing overall expenses as well controlled. Central Bancompany is also proceeding with the termination of its pension plan, which was frozen in 2018. The company has contracted the related termination payments and expects to recognize a non-recurring pretax gain of about $27 million in the fourth quarter.
Credit conditions remained favorable, according to management, with net charge-offs of 12 basis points for the quarter. Ross said the company held approximately $2 billion of excess capital, equal to $8.28 per share. Central Bancompany repurchased a minimal amount of stock during the quarter and had $96 million remaining under its repurchase authorization.
Management said it sees value in its shares at current levels but will remain opportunistic with repurchases because of its limited authorization and the need to preserve stock liquidity.
Deposit and Payments Growth
During the question-and-answer session, Chief Financial Officer Jim Ciroli said noninterest-bearing deposits increased 6% from a year earlier, a pace he characterized as consistent with the company’s longer-term performance. He said Central Bancompany emphasizes attracting checking-account customers rather than seeking higher-yield savings balances.
“We are not trying to buy money,” Ciroli said. “We are trying to bring new customers in on the checking account side.” He said mid-single-digit annual growth in noninterest-bearing deposits is a reasonable long-term expectation.
Chief Customer Officer Dan Westhues said more than half of the consumer deposit base consists of consumer deposits, with noninterest-bearing balances representing an important portion of that business. He said the company’s debit-card portfolio, supported by retail customer growth, is the principal driver of payment volumes. The company also exited certain smaller payment categories, including gift cards, because associated expenses were too high.
Westhues said Central Bancompany continues to pursue commercial payments growth within its existing customer base, while Ross said the company continues to invest in the payments business.
Margin Outlook and Loan Activity
Ciroli said Central Bancompany sees additional opportunities for net interest margin and net interest income to rise. The company expects about $700 million of fixed-rate loans to reprice in the fourth quarter and another $2.2 billion to reprice in 2027. Those loans are rolling off at rates of roughly 6%, and Ciroli said reinvestment yields are about 100 basis points higher at current levels.
The company also cited repricing potential in its securities portfolio. Ciroli said the company’s internal modeling, based on a static balance sheet and static rate curve, indicates potential for net interest income to increase in 2027 and 2028 compared with its 2026 projections.
Loan growth was 3% on a linked-quarter annualized basis. Excluding the decline in the company’s “other consumer” portfolio, which has been contracting for several quarters, Ciroli said annualized linked-quarter loan growth was about 4%. The company is replacing some higher-yielding direct consumer lending with residential first mortgages and home equity lines of credit.
Commercial lending pipelines remained as strong as they were a quarter earlier, according to management. Chief Credit Officer Eric Hallgren said borrower activity and appetite have moderated in some markets amid the rate environment, but stronger activity in other markets has helped sustain the overall pipeline.
Rate Risk, Deposits and Credit
Ciroli said the bank remains slightly asset-sensitive but has begun taking steps to moderate its exposure to rate volatility. The company entered into a cash-flow hedge at the end of the quarter and may use both hedging and its securities portfolio to reduce some asset sensitivity.
On public deposits, Ciroli said the company typically sees balances trough in September, largely due to property-tax collection timing in Missouri. Public balances tend to rise on a spot basis later in the year, while first-quarter average balances are generally the highest. He said the changing level of public deposits can affect overall deposit costs because those balances carry higher costs than consumer and commercial deposits.
Commercial nonperforming assets increased modestly during the quarter, but Hallgren said the change was tied to specific situations rather than a broad shift in portfolio conditions or asset-class weakness. He said management has not observed a thematic credit deterioration and remains confident in the portfolio’s positioning.
Ross also announced two management promotions: Matt Adams, previously the senior lender in Oklahoma, was named CEO of that region, while Brandy Bryant was named to the newly created role of Head of Consumer and Small Business Lending.
About Central Bancompany (OTCMKTS:CBCY)
Central Bancompany is a bank holding company headquartered in Missouri. Through its banking subsidiaries, the company provides community banking services to individuals, families, businesses and institutions across the state.
The company’s principal offerings include deposit accounts, consumer and commercial lending, residential mortgages, online and mobile banking, treasury management and other financial services. Its subsidiaries also provide wealth management, trust and investment-related services in selected markets.
Central Bancompany has a history of serving Missouri communities through locally managed banking operations.
