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 materially 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-GAAP 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 Boege. 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 built 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 US 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. 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. The 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 continue to remain relatively consistent with prior quarters, staying in the $20 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 million 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 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 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-priced floating-rate debentures that, on average, have a spread to three months so far of approximately 309 basis points, so some of our highest debentures. 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 seven 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, or 0.31%, 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-performing 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 two basis points in the second quarter shifted to five 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 quarter. 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 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line. 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 pipeline's 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. Pipelines are good, John. We've said this really for the last few calls. I think it's indicative of the economy holding together pretty well, but we continue to have a really nice position in our market, both in Chicago, Michigan, Wisconsin all seem to be taking market share pretty nicely. As long as we can continue to execute on that, the pipelines are going to reflect some pretty good numbers. If I look down the major categories, CRE shows pretty good momentum there. CNI, we've had some really nice wins here over the last A couple quarters and that continues to show up in the pipeline. So, again, feel pretty good about that. Now, we don't know where the economy is going to go and where things will happen, but generally speaking, as I look at the pipelines, 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 fundings. 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, 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 you know these are not you know transactional deals these are very much relationship oriented deals that you know 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 generally it's more just it's a timing issue more than anything else.

Okay thanks on that and then maybe Dave or Tim 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. 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, you know, many of them interest bearing, but we controlled the interest bearing deposit costs well during the quarter and overall feel like we did a very nice job during the quarter.

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 The non-interest bearing came down a bit on the period end basis. Average 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 and many more.

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, 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 is flowing in and out sometimes a quarter and make that. and many more.

Agreed, and thanks for your thoughts on that. Maybe just a higher-level question. Have you been seeing any impact? It sounds like pipelines are really strong, but with the rate increase in September and then 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?

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. If you think back about the last four quarters and really beyond that, the Midwest economy that we pretty much lend into has been amazingly resilient. 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 know, 80% of our loans reprice or mature within a year and the short end of the curve is 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 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, Keller. Appreciate it.

Thank you. Our next question comes from the line of Ben Gerlinger of Citi. Your line is open, Ben.

Hey, good morning.

Good morning, Ben.

Just wanted to jump in after you just said Dykstra, 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 2017, The repricing aspect seems like it's a pretty big tailwind. So I get that the floating rate runs with SOFR. You guys have been really, really, really good on deposit pricing. Why are we not talking like a bias higher on the margin? Or maybe we are and you're just maybe giving yourself a little rope here on deposit pricing because like you said, mix is not always in your control.

Yeah, I would say 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 expansions, good to hear the early progress. Is there something we should look for? Is it more NIB deposits?

Is it 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 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.

Appreciate it. Thank you.

Thank you. 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. Did you just unpack maybe some of the assumption changes that went into that? And just curious within that context, it looks like you guys added more downside protection to rates going 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 Thank you. Thank you. then that will benefit us. So this is a conservative view of the world and really 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 seeing from a loan pricing perspective. To the earlier question, a good amount of growth on the CRE side in the quarter, but just curious what you're seeing in terms of coupons on loan production in the third quarter relative to the portfolio yield these days around 6.06%.

Yeah, you know, 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, you know, some of that downward pricing pressure, I think, has stabilized a little bit, you know, when it's a really good credit and you get lots of deposits, still people are fighting very hard over it. 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 six and a 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.

That's really helpful. I appreciate all the color guys. Thank you.

Thank you. Our next question comes from the line of Terry McEvoy of Wells Fargo. Your line is open, Terry.

Hi, thanks. Good morning. Maybe just start, Dave, a question for you. Could you provide any insight into Fourth quarter expenses 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 fourth 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 Longrow. 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 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, the interest-bearing deposit beta was 66% on a cumulative basis and 53% on a total. is there anything that would this cycle that would change those kind of numbers or is that is that still the expectation?

No, I think if you've gone through a number of different cycles 60 to 65 percent has sort of been the bait on the ways up and the way down and we would expect that to behave similarly on the way up here.

Gotcha, okay and then 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 make up for it?

I think, yeah, I mean, it is softer, but we would still think that we would see positive growth in and Deel 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, the investments that we make allow us to continue to take market share. So I'm optimistic there that we'll continue to see and many more.

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 duck 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 Some of the ALCI change we've probably recovered, but it's 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.

Morning, Janet.

Sorry for asking on the same topic, but if you were to assume 60%-ish beta on your interest-bearing 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, are you able to share the spot deposit cost as it stands today?

Yeah, so I was talking through the cycle, that 60 to 65 is the beta that we see through the cycle. Initially, I think we generally see close to 40%, so 10 basis points of the 25, and then it works its way up over time. 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% 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. The Rezzy mortgage piece, you've been consistent, even in the third quarter, you've been consistently growing that category pretty nicely in the current backdrop, which is pretty impressive. 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 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 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, you know, add 100, 200 million a quarter, and they're generally our customers in our footprint, and ones that we like to do, and it, you know, works well within our asset liability positioning also. So probably that will grow gradually, but not dramatically.

Got it. And if I can squeeze out one quick one, the Backbug repricing for the premium finance that negative impact to them. Is it still about a basis point in the fourth quarter at that set?

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 quarter. 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 27th?

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 10.5, 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 You know, 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, you know, half of that revenue, 10 plus million, 10, 11 million dollars 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 seasonality. Can't go much lower. I mean, there's a certain amount of purchases that just occur because people move 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 doesn't materially impact the bottom line after you take that revenue and back off commissions and other expenses and taxes. So we're going to stay in the business. committed to it to serve our customers. We're 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 DA 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. 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, $76 billion balance sheet. So it's not a big impact, but you know maybe maybe it adds one basis point to the margin but it most of that the 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 think if you look at it, it's in the over 90 and still accruing from time to time. We have administrative past dues and 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 deals to accommodate customers or for whatever other reason. And so we don't think there's anything there fully secured. 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 any comment on the 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. and many more. Thank you.

and many more.

It feels like deposit costs are lagging. You still have the tailwind from premium finance. You have the little bit of benefit from 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 $1.2 billion 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 a billion two 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, but just the strategic importance in Wisconsin, Indiana, Michigan. From those three, where do you see the biggest market share opportunity outside the Chicago area?

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 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 good. 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. 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 comment was that there was some funding that pushed in the third quarter that 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? Is that new customer growth or is that existing customers investing more heavily?

I'd say it's a combination of both. Getting new opportunities from, as we talked about before, bringing in customers from some of the other larger banks. But it's also from long-time customers that have a lot of experience in that space. It's an area that we've had a lot of success in over the years. We think we are pretty good at underwriting those opportunities. Definitely an asset class we feel pretty good about, particularly with that type of sponsorship.

Got it. Okay. Thank you very much for taking my question.

You bet. Thank you. Our next question comes from the line of Timmer Bresler of UBS. Your line is open, Timmer.

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. It was pretty consistent over the first three quarters. So, you know, there's still borrowers who are going out to secondary markets and, you know, there's a lot of liquidity still out there. So, but I think you're right. I think that, you know, what we would maybe anticipate here over Q4 and into next year is that if you're, you know, 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, a third, which is a third CNI, third CRE, third niche businesses. Right now, our CRE growth 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, 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.

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 a structural standpoint from any of your Cree 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, maybe for some of the reasons that you touched on, but right now it's competitive, as I said earlier in the call. If you have a well-structured, 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 thoughtful, but it's got a hurdle and it's got to bring relationship for us to have it make sense.

Thank you.

Thank you. I would now like to turn the conference back to Tim Crane for closing remarks, sir.

Thank you, Lateef. 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.