Wintrust Financial Corporation's 3rd Quarter 2026 Earnings Conference Call and Webcast - WINTRUST FINANCIAL CORP

Welcome to Wintrust Financial Corporation's third quarter and year-to-date 2026 Earnings Conference Call. A review of the results will be made by Tim Crane, President and Chief Executive Officer, David Dykstra, Vice Chairman and Chief Operating Officer, and Richard Murphy, Vice chairman and Chief Lending Officer. As part of their reviews, the presenters may make reference to both the earnings press release and the earnings release presentation. Following their presentations, there will be a formal question and answer session. During the course of today's call, Wintrust management may make statements that constitute projections, expectations, beliefs, or similar forward-looking statements. Actual results could differ materially from the results anticipated or projected in any such forward-looking statements. The company's forward- looking assumptions that could cause the actual results to differ materiallly from the information discussed during this call are detailed in our earnings press release and in the company's most recent form 10-K and in subsequent filings with the SEC. Also, our remarks may reference certain non-GAAP financial measures. Our earnings press release and earnings release presentation include a reconciliation of each non-GAP financial measure to the nearest comparable GAAP financial measure. As a reminder, this conference call is being recorded. I will now turn the conference over to Mr. Tim Crane. Good morning, and welcome to Wintrust's third quarter 2026 earnings call. In addition to those Lateef introduced, I'm joined by Chief Financial Officer Dave Starr and Chief Legal Officer Kate Bogey. I will begin with a brief overview of the quarter. Dave Dykstra and Rich will provide a deeper look at the key results, and I'll be back to share some final thoughts before we open to your questions. In the third quarter, we recorded our seventh consecutive quarter of record net income. Net income was $239 million, up from $234 million in the prior quarter. Net income and net interest income growth continue to be a function of a stable margin and solid core business growth. Both loans and deposits were up nicely during the quarter, in line with our historical results and our expectations for the quarter. Our efficiency ratio improved, and we continue to generate operating leverage as expenses remain appropriate relative to revenue growth. To generate these results, we continue to deliver on our three key strategic priorities to deliver an exceptional and differentiated customer experience, to pursue strategic and disciplined growth, and further build out our foundation by investing for our future. On September 1st, we closed the previously announced acquisition to grow our guardianship services business. This transaction will help boost wealth management revenues and income going forward. We also opened four new branches during the quarter, with two others opening this month. They're all off to a good start in terms of deposit gathering and growing new Wintrust households. These new branches help fill in our Midwestern footprint as we continue to deliver our high-touch, high-tech approach to meeting customer banking needs. In fact, the latest FDIC deposit market share data shows that Wintrust outperformed both Illinois and the U.S. banking industry on deposit growth. To be more specific, in our core Illinois market, Wintrust continued to gain market share, growing deposits 9.2% year over year, more than double the state's 4.4% growth rate, and well above the U。S. industry average of 5.2%. We remain well positioned in Wisconsin and West Michigan as well, with plenty of growth opportunities in all of our markets. Growing core deposits remains the single most important thing we do to enhance the value of a franchise and to ensure our continued success. Overall, I'm pleased with our results this quarter, another consistent quarter of solid performance driving continued value for our shareholders. Let me turn it over to Dave for more on what drove our results. Great, thanks Tim. Let me start with the balance sheet. Both loans and deposits grew at an annualized rate of 8% for the third quarter relative to the prior quarter. Total deposits were up approximately $1.3 billion during the quarter, which funded solid third quarter loan growth of roughly $1,1 billion. Yields and rates on major balance sheet categories were essentially flat with the prior quarter. We were particularly pleased that given the strong deposit growth during the quarter, that interest-bearing deposit costs were actually down one basis point, matching the one basis point decline in loan yields. I would note that period end loans were approximately $822 million higher than average loans for the third quarter, giving us a great start to achieving a higher level of average earning assets in the final quarter of 2026. Turning to the income statement results, this was a very solid operating quarter producing another record level of quarterly net income. Net interest income improved by $24.2 million compared to the second quarter of 2026 to $621.6 million. Improvement in net interest income was primarily the result of an increase of $2.1 billion in average earning assets, which was offset slightly by a one-basis point decline in the net interest margin, which Was 3.51% for the third quarter. The one- Basis point Decline in the net interest margin was caused by the impact of having one additional day in the quarter. interest rate changes and business mix changes essentially netted to no impact on the margin. The net interest margin has remained in the range of 350 to 359 during the last 11 quarters, showing the sustainability of this metric. And given our balance sheet structure and our established interest rate hedging positions, we believe that our interest rate sensitivity should continue to remain relatively neutral, even with a few rate cuts in either direction. The provision for credit losses continued to remain relatively consistent with prior quarters, staying in the $20 million to $30 million range for the seventh consecutive quarter as the overall credit environment and our asset quality has remained stable. Turning to other non-interest income and non-interest expenses, total non- interest income was $136.3 million in the third quarter, which was a decrease from the $141.3 billion recorded in the prior quarter. This roughly $5 million decline was primarily a result of a $1.9 million of lower mortgage banking revenue as higher rates weighed on mortgage loan originations, and approximately $3.5 million less security gains and losses as the unrealized gains in the second quarter swung around to unrealized losses in the third quarter. As to non-interest expense categories, non-interest expenses were consistent with our expectations noted during a second quarter conference call and totaled $405.7 million in the third quarter, up $8.1 million from the prior quarter. The second quarter included a $5.2 million reversal of an accrued FDIC insurance expense related to the final true-up of the previously imposed special assessments by the FDic. So if we adjust for that reversal, expenses were up only $2.9 million from the prior quarter and reflect smaller levels of increases in a variety of other expense categories to support the continued growth of the company. Additionally, the net overhead and efficiency ratios have remained relatively stable through the first nine months of the year, helping the company produce solid operating leverage thus far in 2026. In summary, I'll reiterate what Tim said. This was another very solid and consistent operating quarter. The company achieved strong loan and deposit growth, a relatively stable net interest margin, another record level of net income, and a continued low level of non-performing assets. In addition to the operating performance, I'll add one additional comment regarding the planned use of cash in the fourth quarter. The company has already, or intends to, redeem seven issuances of our trust-referred securities, which are shown on our balance sheet as junior subordinated debentures. The redemptions will total approximately $108 million and will retire higher price floating rate debenture that on average have a spread to three months so far of approximately 309 basis points so some of our highest rate debt will be retired during the fourth quarter so with that i'll conclude my comments and turn it over to rich to discuss credit thanks dave as detailed on slide 7 of the investor presentation third quarter loan growth was strong and broad-based the three primary drivers were 690 million in core commercial real estate loan growth reflecting both new lending opportunities and funding of previously committed loans $226 million in growth in Wintrust Life Loans, and $153 million in residential mortgage loan growth. Every lending segment recorded positive growth during the quarter. On a year-over-year basis, total loans increased by $4.7 billion, or 9%. Turning to credit quality, slide 15 details continued strong performance across our portfolio. Non-performing loans decreased slightly from $179.3 million, or 0.32% of total loans, to $176.9 million, and remained at very manageable levels. Charge-offs were 15 basis points for the quarter, up slightly from the prior quarter, and continue to reflect a stable and benign credit environment. That assessment is further supported by the historical non-performings asset trends on slide 16 and the consistent levels of special mention and substandard loans on slide 15. This quarter again demonstrates our commitment to identifying problems early and charging down loans where appropriate. Our goal, as always, is to stay ahead of potential credit challenges. As we've noted on recent calls, we remain highly focused on a commercial real estate exposure, particularly in light of potential higher interest rates in the environment. As detailed on slide 19, this portfolio continued to perform well during the third quarter. CRE non-performing loans declined from 12 basis points to 9 basis points. Charge-offs of 2 basis points in the second quarter shifted to 5 basis points of recoveries in the third quarter. Overall, customers have remained resilient despite continued uncertainty around the geopolitical environment, interest rates, inflation, and the broader economy. We continue to see healthy activity across our markets, and client conversations reflect cautious optimism about the business environment. These close relationships provide valuable real-time insights into changing conditions, while our disciplined risk management approach positions us well as the economic environment continues to evolve. That concludes my comments on lending and credit, and Tim, I'll turn it back to you. Great. Thank you, Rich. Just some final thoughts. As we close out the year, our targets remain unchanged for the fourth quarter. Based on continued positive feedback from clients, solid pipelines, and the unique market position we occupy, we expect loan and deposit growth in the mid to high single digits. We've consistently funded our loan growth with appropriately priced deposits, and we expect that to continue in the fourth corner. The net interest margin should remain stable, plus or minus 3.5%. We believe that any further rate increases will result in loan yields and deposit costs moving roughly in concert and accordingly should not materially impact the margin. That said, as our loan book is largely variable priced, increases in SOFR or other loan index rates in advance of a rate increase or market factors that moderate increases in deposit costs could be supportive of a slightly higher margin. Our capital position remains strong and increased during the quarter. The capital priorities we have discussed on prior calls remain unchanged. As always, our team focuses on delivering the exceptional customer service that is our key differentiator. Going into 2027, we feel good about our competitive position in the market, our ability to continue to grow our business, and to deliver value for our shareholders. With that, Lateef, could you please open the line for questions? As a reminder, to ask a question, you will need to press star 11 on your telephones. To remove yourself from the queue, you may press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of John Armstrong of RBC Capital Markets. Your line is open, John. Hey, good morning. Nice job. Thanks, John. Yep. Maybe Tim or Rich, let's just start with the lending pipelines. You know, Rich, anything else you can share in terms of what you're seeing in terms of the pipelines, whether they're strengthening or not, and then maybe help us understand the CRE growth a little bit more this quarter? I know you touched on it in your prepared comments, but what drove that? Sure. Yeah, the pipelines are good, John, I mean, we've said this really for the last few calls. You know, it's, I think it's indicative of the economy's holding together pretty well. But, you know, we continue to have a really nice position in our market, you know. Both in, you know the Chicago, but you know Michigan, Wisconsin, all you know seem to be taking market share you know pretty nicely. And so you know as long as we can continue to execute on that, you know some pretty good numbers. So you know if I look down the you know the major categories. I mean, CRE, you know, shows, you know, pretty good momentum there. You know, CNI, we've had some really nice wins here over the last couple quarters, and that continues to show up in the pipeline. So, you know, again, feel pretty good about that. Now, you know, we don't know where the economy is going to go and, you know, where things will happen. But generally speaking, as I look at the pipelines, you know, we feel good. As it relates to the CRE. I mean, CRE for the quarter is a little bit of a timing issue. If you look back at last quarter, we were just over $100 million in total funding. So if you add those two quarters together, they kind of come in right where the last four quarters are, which is right around $300 million or around 9%. And as I look at what funded during the third quarter, you know, we had a number of larger owner-occupied and kind of strong investor-type deals that we feel good about. The thing about real estate, too, for us is that these are not transactional deals. These are very much relationship-oriented deals that, if I look at the names that we funded in the third quarter, are people that we've been doing business with for a long time. So in general, it's a timing issue more than anything else. Okay. Thanks on that. And then maybe Dave or Tim, I appreciate the comments on the variable rate loans. It's just what I thought. But the other side of it, can you just comment a little on the deposit pricing environment? You obviously had a very nice quarter on deposit costs and just maybe help us understand the drivers of the deposit growth and how you're able to hold those costs steady. Yeah, John, thanks. We do feel good about the deposit growth, probably a little more commercial than retail. But the Chicago and both West Michigan and Milwaukee markets are largely rational. You know, we see promotional pricing, you know, four or low fours. We continue to win business at those levels. We've started to get a little bit of a lift from the new branches we've opened. We'll get more of that in the fourth quarter and continued build-out of our commercial franchise as well. So a nice mix of deposits, many of them interest-bearing, but we controlled the interest-bearings deposit costs well during the quarter and overall feel like we did a very nice job during the quarterly. Okay. Thank you. Thank you? Our next question comes from the line of Daniel Tamayo of Raymond James. Your line is open, Daniel. Thank you. Good morning, everyone. Maybe the other side of the deposit question, so certainly a really nice quarter on overall deposit growth, but the non-interest bearing came down a bit on the period end basis. has been trending up, but I guess as a percentage of overall kind of down below that 19%, I don't know if I'd call it a bogey or not, but it seems like it's just kind of trending down. Just curious your thoughts on the ability to hold that number at or close to that level, or if you're not as concerned with it given kind of the overall level of deposit costs and deposit growth that you've been in? Well, I think it's both. We're growing the denominator rapidly and doing that at a reasonable cost. So we're comfortable that we continue to build the franchise and happy with those results. That said, we very much would like the non-interest bearing to stay around 19% and we'll work to do that. But the mix comes to us as our customers dictate at times and just kind of look at it on an overall basis. Yeah, and Danny, this is Dave. I do think you pointed to the average balance. I do think you need to look at the average balance a little bit more than point in time because money's flowing in and out sometimes a quarter and make that move around a little bit. But the average balance is trending up, which shows we're gaining general, most of that is commercial, obviously, and so we're gaining middle market and small business accounts, and we think we'll keep doing that. But, you know, we're fortunate that we have to fund good loan growth, and if you fund that higher loan growth you generally have to do some of that with interest-bearing deposits more so than DDA. And so we'll try to hold that number there, but it's a good problem to have. Agreed, and thanks for your thoughts on that. And maybe just a higher-level question, you know, have you been seeing any impact? It sounds like pipelines are really strong, but with the rate increase in September and then, you know, we've got another one probably coming to us soon and maybe some more next year, any early indications that that's impacting borrowers at all, and do you guys think that would potentially impact your ability to grow loans as fast as you've been growing them? You know, we can speculate on that, and my guess is it will have some impact. Certainly, borrowing costs in the CRE space are a big driver, but at this point, we don't see that. And if you think back about, you know, the last four quarters and really beyond that, you know the Midwest economy that we pretty much lend into has been amazingly resilient. I mean, so whether it's been tariffs or increased rates or transportation costs or whatever, you know, those shocks have been, you know, they've continued to work their way through it. And our customers kind of reflect that same attitude, you know, that they will, you know, those might be impactful, but they think that they can manage through it, so at this point, I wouldn't anticipate it would have a meaningful effect. Yeah, I might just throw on there, you 80% of our loans repriced are mature within a year, and the short end of the curve was 50 basis points higher in June of last year. So prime was 50 base points higher than where we are now, and our production was very good at that point in time. So as Rich said, you'll have to see what happens with the economy, and in the shape of the curve is a little bit different, but we still think these rates are good for new business development. Great. Well, thank you for that, Culler. Appreciate it. Thank you. Our next question comes from the line of Ben Gerlinger of Citi. Your line is open, Ben. Hey, good morning. Morning, Ben, Ben Ben. Just want to jump off. You just said Dextra, but whoever wants to take it, go for it. like if you have like roughly a year ago rates being lower as we drift into early 27 the repricing aspect seems like it's pretty big tailwind so i get that the floating rate with runs with so far you guys have been really really really good on deposit pricing why why are we not talking like a bias higher on the margin or maybe we are you just maybe giving yourself a little rope here on deposit prices because like you said mix is not always in your control? Yeah, I would say, you know, we do have the swaps in place that hedge part of that floating rate SOFR portfolio. But I would Say that in a rising rate scenario, as Tim said in his comments, if deposit rates lag a little bit, as they historically do when rates go up, which our competition is doing, and then if SOFR gets out ahead of Fed increases, that would put us to a bias to the upside of the 350 plus or minus a few basis points. And then over time, all else being equal, you will have your premium finance books reprice over time. But you also have some CDs repricing over time so I think you're right, an up rate environment, we have a slight bias to an increased margin, but a lot of moving parts there. Got it. That's helpful. And then as you kind of think about the branch expansion, it's good to hear the early progress. Is there something we should look for? Is it more NIB deposits? Is this a very similar mix? I'm just trying to think, like, branches should equal what kind of correlation towards overall deposits? I mean, given our overall size with you know, more than 210 branches. I don't think the five or six that we've talked about are going to be trajectory changing, but we continue to add households, we continue to add retail deposits, and we, as you know focus on deposits as the core of our franchise. And so we're filling in in communities that we would like to have been in. We're building, you know in adjacent communities and I would just view it as kind of normal progress. I I don't think you're going to see major changes, but it will contribute to the deposit growth over time. Gotcha. That's really helpful. I appreciate it. Thank you. Thank you, Dave. Our next question comes from the line of Nathan Race of Piper Sandler. Your line is open, Nathan. Hey, guys. Good morning. Thanks for taking the questions. Hey, Dave, on slide – I'm sorry, page 21 of the release, just looking at the sensitivity to rates going up, it looks like it became a little bit more of a headwind to NAI. Could you just unpack maybe some of the assumption changes that went into that? Or – and just curious within that context, it looked like you guys added more downside protection to rates growing up. So just curious if you kind of unpack why the sensitivity to higher rates increased or was more detrimental relative to at the end of June. Yeah, one of the things I'll note in that table is that assumes instantaneous, you know, change of deposit rates and to the extent we can lag deposit rates, that would actually probably you know bring that 2.9 percent to more of a neutral position and so we we assume our competition is going to move quickly in our models but to the extent that the the market moderates a little bit and and deposit betas take time to get up up to the full amount then then that will that will benna benefit us so this is a conservative view of the world and and really that the impact of that is deposit lagging okay so it's just kind of conservative beta assumptions which isn't necessarily what you guys are seeing relative to Tim's comments around some of the rational deposit pricing competition you're seeing these days is that a correct interpretation I think that's a good way to summarize it okay great and then maybe Richard Tim just curious if you can comment on what you're seen from a loan pricing perspective you know to the earlier question a good amount of growth on the CRE side in the quarter but you I'm just curious what you're seeing in terms of coupons on loan production in the third quarter relative to kind of the portfolio yield these days around 6.06%. Yeah, we've talked about this in the past, Nate, where we saw just a lot of competition out there, particularly on fully funded CRE loans, and I think it's still very competitive. But some of that downward pricing pressure I think has stabilized a little bit when it's a really good credit and you get lots of deposits, still people are fighting very hard over it. But at this point, I think people are genuinely focused on getting reasonably paid, given where we're at in the market and the potential risks out there. But we like to kind of be in that 6 and 1 half range when we're looking at opportunities. And if we can't get appropriately priced in a decent relationship with it, we'll pass on it. gotcha um that's really helpful i appreciate the color guys thank you thank you our next question comes from the line of terry mcavoy of wells fargo your line is open terry hi thanks um good morning maybe just start dave a question for you could you provide any insight into fourth quarter expenses um with a normal fdic expense and then the deal that closed And also, if you're willing to discuss kind of early thoughts on 2027 expense growth. Yeah, well, the FDIC recovery was the second quarter. So the third quarter here was a pretty clean quarter for us. I'd expect it to be roughly the same in the fourth quarter, you know, plus or minus just a hair. So I think we'll be able to hold the expenses fairly consistent in the forth quarter. And then, you know, we have said this for years now in a row that probably without the impact of any acquisitions into the equation or a big jump up in the mortgage business that we would expect expenses generally to grow, you know, in the mid-single digits each year if we're getting that mid to high single digit loan growth. So I think we've been consistent quarter after quarter, year after year here with those forecasts. And given what we see right now, I think that's probably still a consistent way to look at us going forward. Great. Thank you. And Tim, maybe just a question for you on scale. When I look at the Chicago MSA, you're now surrounded by these trillion dollar plus banks, which you, as we see today, continue to outperform from a growth perspective as a $75 billion bank today. Do you need more scale for that trend to continue over the medium term? No, I don't think so. Our relationship model and our presence in the market and our ability to differentiate with service will continue regardless of size. I think on the technology front, we're well positioned from treasury management services and wealth services to compete effectively. I don't see scale being a limitation given where we are right now. And I'd probably add to that, I think it's a benefit to be surrounded by those banks because we can provide better service and take market share. If you look at the deposit market share, that slide that we put in on slide 22 of the deck, you know, we grew our market share more than those banks did. And a number of the big banks actually lost market share so I think our relationship style of banking against the big guys is what we've always done for 30 years very effectively. So I think it's actually good for us. Perfect. Thank you very much. Thank you. Our next question comes from the line of Casey Hare of Autonomous. Please go ahead, Casey. Yeah, great. Thanks. Good morning, everyone. One more on the deposit side of things. It all sounds kind of right in line, but just longer term, when we look back at the last cycle that the interest-bearing deposit beta was 66% on a cumulative basis and 53% on the total. Is there anything that would, this cycle, that would change those kind of numbers, or is that still the expectation? No, I think if you've gone through a number of different cycles, 60% to 65% has sort of been the beta on the ways up and the way down, and we would expect that to behave similarly on the way up here. Gotcha. Okay. Great. Thank you. And then the M&A commentary, sorry, not the commentary, the M & A outlook, just some updated thoughts on what you guys are seeing in your markets from an opportunity point of view. Yeah, still some conversations, mostly smaller banks, I would suggest exploring their options in an environment that still feels like a pretty good time to exit if that's your plan. I would say, you know, larger size conversations have been few and far between. Thank you. You bet. Thank you. Our next question comes from the line of David Chiaverini of Jefferies. Please go ahead, David. Hi, thanks for taking the questions. So circling back to loans, so solid trends overall, I was curious on your thoughts with premium finance P&C and it being a softer market. Could the headwinds here potentially lead to the lower end of the mid to high single digit as we look out over the next 12 months? Or could the pipelines on the CNI side, you know, make up for it? I think, yeah, I mean, it is softer, but we would still think that we would see positive growth in deal sizes next year, albeit not at the same level that we used to see because of that softening in the market. But we're still taking share. We continue to, I think be a premium provider in that space. Our technology, you know, that we, the investments that we make allow us to continue to take market share. So I'm optimistic there that we'll continue to see that class continue to grow in line with, you know, that mid to high single digits. But, you Know, it depends on where those markets go. But I'm pretty optimistic about that business right now. Great. Thanks for that. And then on the capital front, does the increase in AOCI this quarter impact how you manage the business at all, such as tapping the brakes on loan growth, or does it not impact, you know, the loan front or anything else at all? Yeah, I don't think it affects our ability to continue to deduct business. I mean, our long-term approach is to add franchise value by adding clients. You know, you can tell from the way we've positioned the balance sheet for interest rates that, you know, we are very neutral and want to continue to grow. You know there's been a little bit of a recovery since the end of the quarter, and so, you know, some of the ALCI change we've probably recovered, but it's, you know, one quarter, it's not a major element. Very helpful. Thank you. Thank you, Our next question comes from the line of Janet Lee of TD Cohen. Please go ahead, Janet. Good morning. Good morning, Janet Sorry for asking on the same topic, but if you were to assume 60%-ish beta on your interest sparing deposits, I mean, that would imply a significant uptick in deposit costs over the near term, but that doesn't really square away with what you saw in the third quarter, at least, and then your commentary around deposit competition. Maybe you're referring to the cycle or cumulative beta over time. Could you talk on, like, are you able to share the spot deposit cost as it stands today? Yeah, so I was talking through the cycle, that that that 60 to 65 is the beta that we see through the the cycle you know initially i think we generally see close to you know 40 so 10 basis points of the 25 and then it works its way up over time so spot rates were just slightly higher four or five basis points higher than the average for the third quarter so but that you know that 40 percent initial beta or 10 basis points would then eventually work its way up to 60%, 65% through the cycle. Right. And you're referring to the interest-bearing deposits? Yes. Thank you. On the resi mortgage piece, you've been consistent, even in the third quarter, you've consistently growing that category pretty nicely in the current backdrop, which is pretty impressive. Do you continue, do you expect this line category to continue increasing from here, just given where the rates are? I think it's a little bit seasonal, Janet. We clearly think we will benefit from some of the, what I would characterize as refinance shops or independents that, you know, haven't survived the cycle. And so our share of the mortgage business, whatever that is, should be higher. And we believe that mortgages are a core component of our offering. So I think the market will drive that. But as we've said for several quarters, it's a pretty tough market right now. And the financial changes that you'll see over the next few quarters probably won't be very material. As we've said in the past, too, about half of the mortgage-related revenue is related to servicing. So it's just not a big impact anymore at this level. Yeah, and on the balance sheet, which you might be referring to, we add $100 million, $200 million a quarter, and they're generally our customers in our footprint and ones that we like to do, and it works well within our asset liability positioning also. So probably that will grow gradually, but not dramatically. Got it. If I can squeeze one quick one, the backlog repricing for the premium finance, that negative impact to them, is it still about a basis point in the fourth quarter? That's it? No. What we talked about last quarter is that the one basis point impact was impacting the third quarter. And so we should be done in the third corner. and now rates are going up, so we should start to see that actually start to benefit and price up. Great, thank you. Thank you. Our next question comes from the line of Chris McGrady of KBW. Your line is open, Chris. Oh, great. Good morning. Tim or Dave, no one's asked the buyback question. You're generating a lot of capital more than you've ever done. You have the helper from Basel III. Does that become more of the narrative, even with the growth that you expect in the 27? Yeah, I think it could, Chris. I mean, we said when we get north of 10.5, we would start to more materially look at other options. As you know, even at 10.0, we feel like we're very well capitalized from a risk-adjusted basis. So I think fourth quarter and into 2027, we will be looking at other ways to deploy capital in the same order and sort of with the same priorities we've talked about on prior calls. Okay. Helpful. Thank you. And Dave, I know the mortgage market isn't all that great right now, but what's any near-term expectations for mortgage contribution relative to recent levels? No, a fourth quarter tends to be a soft quarter generally. And with the bump up in rates, I would expect that to continue. So originations in our markets in the winter months tend to be lower generally. And I would just expect it to continue to be soft. But as Tim said, half of that revenue, $10 million, $11 million of it is servicing income so we'll see where originations are but you know probably low 20s maybe just 20 million plus or minus for the fourth quarter just because of the rates and the and the seasonality can't go much lower i mean there's a certain amount of of purchases that just occur because people move or or have other life events going on and i think we're sort of close to that bottom. But it doesn't materially, if you think about it, it doesnít materially impact the bottom line after you take that revenue and back off commissions and other expenses and taxes. So weíre going to stay in the business. Weíre committed to it to serve our customers. And weíre just going to be as efficient as we can and wait for the rates to rebound and get more of the market share as Tim referred to earlier. Okay, great. Thank you. Thank you. Our next question comes from the line of Jeff Rollis of D.A. Davidson. Your line is open, Jeff. Appreciate it. Thanks. You guys have covered the margin pretty well. I just wanted to check in, Dave. The impact from that higher rate sub-debt retiring, sounds like that is immaterial or a slight positive. Dave, just want to check in on the general margin outlook with that piece. Yeah, I mean, think about it. It's $100 million on, you know, a $76 billion balance sheet. So it's not a big impact, but, you know, maybe it adds one basis point to the margin. But most of that, you know, it pays off during the quarter. A lot of it pays off on the last day of the quarter, so it's not going to have much of an impact in the fourth quarter. Okay, got it. And then another kind of granular question, just looking at the premium finance life insurance had a little uptick in the non-performing loan balance, loss rates historically very, very low. So just checking in on that, if that's any indication on anything on credit within that segment. no i i think if you look at it it's it's in the over 90 and still accruing from time to time we have administrative past dues and um we don't see any loss in that but if you go back we have one of those every now and then it's just administratively we work on on deals to accommodate customers or for whatever other reason and so we don'T think there's anything there yeah fully that. Okay. Appreciate it. And maybe if we could squeeze one last one in. Just the market share tables, appreciate those. The minor tick down in Michigan in terms of deposit market share, is that, would you relate that to kind of the deal that you did in finding your footing and then expect to grow from there? Any comment on the Michigan market? Yeah. I mean, as you know, these are a little bit dated. They reflect the data as of, you know. June when the prior year, so you would have some conversion-related activities. I think I'd look at it over the two-year period, and we continue to have very good momentum in Michigan and feel great about the opportunities there, so I don't think there's anything to read into that. Okay. Thank you. Thank you? Our next question comes from the line of Jared Shaw, Barclays. Your line is open, Jared. Thanks. Good morning. I guess maybe just on the deposit side, any color around the growth that we saw in the quarter in the wealth management remix and what we can expect from that line with the acquisition closing now? yeah i mean we we feel good about our wealth management business and have you know kind of seen it moving the right direction in 26 and expect that that will continue in 27 the the guardianship deal brings a very very small number of deposits that's not going to affect the number very materially there but we continue to view the wealth business as an opportunity and have good traction in all of our markets okay thanks and then just um you know going back to the margin and and you know the the bias of like plus or minus a basis point i guess what what would have to happen for you to be more comfortable with with a higher margin here in the next few quarters you know it feels like you know deposit costs or deposit costs are lagging you still have the tailwind from premium finance um you have you know a little bit of benefit from the the sub-debt, what would keep you back from being more optimistic on margin? Just the competitive environment is really the biggest, Jared. I mean, we just don't know what we're going to see. Again, we feel pretty good about pipelines and our MO has been a relatively stable margin and then grow the business to produce more net interest income and franchise value. So we're hopeful that we get a little bit of help here, but we're not counting on it. Okay, thank you. Thank you. Our next question comes from the line of Bernard von Gaziski of Deutsche Bank. Your line is open, Bernard. Hey, good morning. Just on the guardianship services business, it added the $1.2 billion AUM. What was the revenue and expense impact in the quarter. And it's just a bigger question, you know, what kind of investments are needed to integrate into your franchise and any color on expectations on AUM fees and efficiency ratio for the business? Yeah. We haven't disclosed all of it yet, Bernie, but you're right. We brought over a billion two of assets under management related to that business. We were in that business already, So we didn't bring over their technology. We put the business on our systems. So it just gave us better leverage and gave us a better market position in especially the Chicago market area for those services. So we think it's just a nice addition to our wealth management business. And from a revenue perspective, generally, again, we haven't disclosed the details, but our guardianship business, to get you sort of in the ballpark, generally it's about a 1% fee range, plus or minus. So if you take $1.2 billion at 1%, it should get you in the range of the additive revenue. and then maybe just on the deposit market share obviously a great presence in the illinois market um but just the strategic importance in wisconsin indiana michigan is there like from those three where do you see the biggest market share opportunity outside the chicago area um i don't know that we would handicap any of the three against each other they have their own elements and in some ways different competitors. We've talked about in the past, Michigan and Wisconsin have more credit unions, sort of makes the numbers a little bit harder to look at. But we feel good and would intend to grow in each of the markets. The branches we've opened, a couple were in Indiana. One that opens this quarter is in Wisconsin. So So, again, we're not going to do anything crazy. We're disciplined with respect to pricing, but we do add households. And small business activity is good. Wealth activity is great. And these branches are nice fill-ins for us. Okay, great. Thanks for taking my questions. Thank you. Our next question comes from the line of Brandon Rudd of Stevens, Inc. Please go ahead, Brandon. morning thanks for taking my questions um so most of my most might have been asked i guess just one follow-up on your comments earlier rich on the cre portfolio i think your your comment was that there was some funding i'm not pushing the third quarter that uh resulted in a stronger growth rate here but when i look at the industrial portfolio specifically going back really over the last year it's kind of been growing in quarter in and quarter out can you kind of help characterize that as is that new new customer growth or is that existing customers in investing more heavily i'd say it's a combination of both um getting new opportunities uh from as we as we talked about before bringing in customers from some of the other larger banks um but it's also from long time uh customers that you know have um have a lot of experience in that space um it's it's an area that we've had a lot of success in over over the years we think we are pretty good at underwriting those opportunities and definitely an asset class we feel pretty good about particularly with that type of sponsorship okay thank you very much for taking my question you bet thank you our next question comes from the line of tumor brazzler of UBS your line is open Hi, thanks. Good morning. One more follow-up for me on commercial real estate. First, if you can just provide any color on payoff activity and if that headwind has now largely abated, and then maybe triangulate your comments on focusing on CRE exposure in light of the rate hikes with some of the growth and what that might mean for future growth rates. Yeah, payoff activity was pretty consistent over the first three quarters. There's still borrowers who are going out to secondary markets, and there's a lot of liquidity still out there. But I think you're right. I think that what we would maybe anticipate here over Q4 and into next year is that you might want to hold on to a property for an existing loan for a little bit longer and then wait for the end markets to right themselves. So maybe that slows down payoff activity over the next few quarters, but to be seen. So we haven't quite seen that yet, but I would agree with you that that might be in effect. As it relates to CRE growth, we've always been very, very disciplined. I mean, our portfolio mix is we always talk about a third, a third of third, which is a third CNI, third CRE, third niche businesses. Right now, our CRE grow is actually less than that, not to say that we want to fill that out to that level, but we'd like to have a nice balanced portfolio. CRE has always been a piece of that. But again, if you look at our performance over time, you look at the quality of the sponsors that we deal with, you look at the mix of different types of properties within that subset of CRE, we try to be very, very disciplined in that space. We underwrite, I'd say, very conservatively. So while I would agree that as rates move up, you have to be Very Mindful of that, but we like our positioning right now. We like our customers. We like that portfolio. Great. And then just, I guess, from a competitive landscape, are you seeing anything that's either stretching from a pricing standpoint or, more importantly, from the structural standpoint from any of your competitors? Last quarter, I got the question, where are we at on a spectrum of competitiveness? And I would have said at that time, we would have definitely been at the higher end of the curve. Seems to have moderated a little bit, you know, maybe for some of the reasons that you touched on. But, you Know, right now, it's competitive, as I said earlier in the call, you know, if you have a well-structured, you know, good credit that we are looking at, there's going to be a lot of other people looking at it as well. So you have to be, you know, thoughtful, but it's got a hurdle and it's got to bring relationship for us to have it make sense. Great. Thank you. thank you i would now like to turn the conference back to tim crane for closing remarks sir thank you latif and for those of you on the phone always thank you for your questions i know we'll see some of you between now and the end of the year for those that we don't on behalf of dave rich and our team we want to wish you the best for safe and happy holiday season our team will be focused on finishing the year strong. We anticipate carrying our momentum into 2027 and hopefully we'll do some celebrating too. Thank you for joining us on the call today. Have a great rest of the day. This concludes today's conference call. Thank you for participating. You may now disconnect.