Good morning, and welcome to Regions Financial Corporation's quarterly earnings call. My name is Chris, and I will be your operator for today's call. I would like to remind everyone that all participant phone lines have been placed on listen only. At the end of the call, there will be a question and answer session. If you wish to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. I will now turn the call over to Chris Best to begin. Thank you, Chris. Welcome to Region's Third Quarter 2026 Earnings Call. John and Anil will provide high-level commentary regarding our results. We ask that you review the cautionary statements included in our earnings documents, which are available in the Investor Relations section of our website. These materials contain information regarding the use of non-GAAP measures and reconciliations to the GAAP results, as well as forward-looking statements about Region's performance. These statements speak only as of today and we undertake no obligation to update them. I will now turn the call over to John. Thank you Chris and good morning everyone. We appreciate you joining our call today. Earlier this morning we reported earnings of 611 million dollars resulting in earnings per share of 71 cents. On an adjusted basis earnings were 622 million dollars or 73 cents per share we delivered adjusted pre-tax pre-provision income of 870 million dollars and an adjusted return on tangible common equity of 22 percent as we move through the second half of the year what stands out most to me is the consistency of our performance while continuing to generate strong financial results we've remained focused on strengthening the franchise through investments and talent technology products and key markets those investments continue to enhance our ability to serve customers and compete effectively across our businesses we continue to see healthy customer engagement on the consumer side we continue grow households and checking accounts while deepening primary relationships commercial clients continue to invest in their businesses technology and long term growth initiatives while the operating environment continues to evolve activity levels across the franchise remain constructive credit quality continued to be a source of strength during the quarter annualized net charge offs were 29 basis points of average loans while business services criticized and total non-performing loans continued to decline despite these positive trends we remain focused on actively managing risk across the portfolio while soundness remains the foundation of our strategy we're also generating strong momentum across our fee-based businesses capital markets and treasury management each delivered record revenue during the quarter reflecting strong client engagement and continued execution across both businesses wealth management revenue moderated from record second quarter levels but remained strong relative to the prior year collectively capital markets treasury management and wealth management continue to perform at historically strong levels demonstrating the strength of our diversified fee-based business model and the value we provide to our clients We continue to make meaningful progress on our cloud-based deposit platform implementation and broader modernization efforts. As we've discussed previously, we're taking a deliberate, phased approach that we believe appropriately balances execution discipline with the scale and complexity of the initiative. This is one of the most significant technology investments in our company's history, and remain confident in both our approach and the long-term benefits this investment will deliver. Our commitment to long- term investment extends beyond talent and technology to the communities we serve. This year marks 30 years as the official bank of the Southeastern Conference, a milestone we're proud to celebrate. We believe the longevity of that relationship reflects the strength of our brand the depth of our community relationships and our long-standing commitment to customers and businesses we serve as we look ahead we remain confident in our position we have a strong franchise healthy customer relationships and a leadership team focused on execution we believe the investments we've made and the momentum we're seeing across the business position regions well for a strong finish to 2026 and sustained success in the years ahead now anil will provide some highlights regarding the quarter thank you john let's start with the balance sheet both average and ending loans increased modestly versus the second quarter as expected and consistent with market trends growth moderated from the stronger pace experience during the first half of the year growth was again driven by broad-based commercial lending activity, including continued strength across several C&I categories, including government and public sector and wholesale and financial services. While net loan growth remained concentrated among investment-grade commercial clients, production trends continued to be healthy across our emerging commercial and middle market businesses, supported by recent talent investments. Consumer loan balances declined modestly during the quarter. Growth in credit card and home equity was offset by continued softness in residential mortgage and region's home improvement finance, reflecting the higher rate environment and muted housing market activity. As we look ahead, current levels of client engagement, production activity, and pipeline strength continue to support our confidence in the growth outlook. We continue to expect full-year average loan growth to be of low single digits versus 2025. Turning to deposits, both average and ending balances decreased modestly, primarily reflecting activity from a few of our largest commercial customers utilizing our institutional investment services for specific investment strategies, combined with expected seasonal outflows in public funds deposits. As a reminder, the company continues to manage substantial excess client balances for our commercial clients, totaling approximately $16 billion through highly liquid off-balance sheet investment solutions. Underlying commercial trends remain healthy with continued growth in new accounts and increases in both average and ending commercial non-interest-bearing balances during the quarter. Retail deposits performed as expected with growth in new accounts partially offset by late summer seasonal spending. Consumer money market balances continued to grow while year-to-date small business account openings reached their highest level in the past decade, excluding the pandemic period, and are approximately 100 basis points higher than the prior year period. We remain disciplined in managing deposit costs in an elevated rate environment while leveraging the strength of our deposit franchise to drive customer acquisition and retention. Our non-interest-bearing deposit mix remained in the low 30% range consistent with our target and reflective of the operational nature of our DepositBase. We continue to expect 2026 average deposits to be at low single digits versus the prior year. Let's shift to net interest income. Net interest income increased 2% link quarter, building on recent momentum and supported by structural repricing dynamics and balance sheet expansion. Net Interest Margin increased two basis points to 3.68%, reflecting our strong profitability and deposit funding advantage. During the third quarter, interest-bearing deposit costs were largely stable, increasing just one basis point to 1.70 percent. Disciplined deposit cost management in our operating account mix continues to provide a strong foundation for earnings in the current elevated interest rate environment. We expect the interest-bearing deposit beta will remain in the mid to high 30 percent range through the rising rate cycle, supporting a mostly neutral interest rate risk position. In the fourth quarter, however, lags in the repricing of certain retail deposit products following the September rate hike will provide a modest lift to net interest income. We are positioned well to benefit from higher middle and long-term interest rates through fixed rate asset turnover. In the third quarter, yields on newly originated fixed rate assets were approximately 100 basis points higher than the yields on maturities. We expect this repricing advantage to expand to between 100 and 125 basis points in the fourth quarter, providing a tailwind that persists for multiple years, assuming current rate levels, while moderating through time. As previously mentioned, loan growth moderated during the quarter. However, we did see momentum pick up late, further supporting average balance and net interest income growth into the fourth quarter. The mix of loan growth continues to migrate towards high-quality credits, and while this creates a headwind for asset spreads, net interest income, and margin, the economic trade-off is evident in improving credit results and deepening customer relationships. Similarly, while the funding mix in the third quarter was negatively impacted by the migration of certain deposits to off-balance sheet products, the resulting shift supports fee revenue. Looking forward, we expect a more balanced loan and deposit growth profile to sustain profitability. Assuming the next Fed rate hike occurs in December, we expect fourth quarter net interest income to increase between one and two supported by persistent tailwinds from higher rates, structural repricing, disciplined deposit cost management, balance sheet growth, and the seasonal HR asset dividend. The fourth quarter net interest margin is expected to be approximately 3.70%. Now let's turn to fee revenue performance for the quarter. Adjusted non-interest income increased 3% on a linked quarter basis, driven primarily by record capital markets and Treasury management revenue revenue, as well as growth in commercial credit fees, bank-owned life insurance income, and other non-interest income, partially offset by a $28 million decline in the market value on employee benefit assets. Capital markets income increased 23 percent compared to the prior quarter, driven by stronger M&A advisory activity, securities underwriting and placement fees, commercial swap income, and syndications revenue. Moving ahead, activity levels remain constructive, and we continue to expect fourth quarter revenue to be within our previously communicated range of $90 to $105 million. The timing of client activity and market conditions will influence where we land within that range. For full year 2026, we continue expect adjusted non-interest income to grow between 3 and 5 percent versus 2025, with results continuing to track toward the lower end of that range Let's move on to non-interest expense. Adjusted non-interest expense was relatively stable compared to the prior quarter. Lower salaries and benefits expense, attributable primarily to lower market value adjustments for supplemental employee benefit liabilities, along with a decline in other expense, helped offset higher equipment and software expense and increased professional, legal, and regulatory costs during the quarter. As expected, continued investments in technology and infrastructure were offset by disciplined management across the broader expense base. Overall expense trends remain consistent with our expectations for the year. For full year 2026, we continue to expect adjusted non-interest expense to be up between 1.5% and 3.5%, and we expect to deliver full-year adjusted positive operating leverage. Regarding asset quality, we were encouraged by strong credit performance during the quarter, the strength and resiliency of our customer base and our continued disciplined approach to risk management. As John highlighted, annualized net charge-offs as a percentage of average loans declined 13 basis points to 29 basis points. Business services criticized and non-performing loans both improved during the quarter. The business services criticized ratio declined 30 basis points, to 4.71%, while the non- performing loan ratio declined 8 basis points to 59 basis points. The allowance for credit losses ratio declined two basis points to 1.61%. Continued progress within previously identified portfolios of interest were largely offset by reserves maintained for macroeconomic uncertainty and other qualitative factors, resulting in a relatively stable reserve balance during the quarter. We continue to expect full-year 2026 net charge-offs to be between 40 and 50 basis points, and based on performance to date, now expect a trend toward the lower end of that range. Let's turn to capital and liquidity. We ended the quarter with an estimated common equity Tier 1 ratio of 10.8%, while executing $95 million in share repurchases and paying $255 million in common dividends during the quarter. Liquidity remains robust, with total sources well above required levels. Modest declines during the quarter reflect the impact of higher interest rates on collateral valuations as well as the changes in loans and deposits discussed previously. Regions remains well positioned to support future loan growth while maintaining its disciplined approach to balance sheet management. Including the impact at ASEI and reflecting the proposed Basel III endgame risk-weighted asset changes, our estimated CET1 ratio was approximately 10%. This level remains well above our target range of 9.25 to 9.75% and provides continued flexibility to support strategic growth and return capital to shareholders. Regions maintains a strong earnings profile that consistently generates capital and we will continue to execute strategies to further reduce our sensitivity to interest rates. Overall, we're pleased with our third quarter performance, which reflects the strength of our franchise, the resiliency of our customer base, and the disciplined execution of our long-term strategy. We remain well positioned to support our customers, invest in growth opportunities, and deliver sustainable value for shareholders. With that, we'll open the line for your questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would Like to remove your question from the queue. Please hold while we compile the Q&A roster. Thank you. Our first question comes from the line of Ryan Nash with Goldman Sachs. Please proceed with your question. Hey, good morning, guys. So you guys have been able to buck the trend this quarter. Deposit costs are up just one basis point. Maybe just talk about expectations embedded in the 4Q NII guide in the head. Anil, I know you mentioned they could lag a bit, but looking forward, just how do you think about balancing growing deposit to support the balance sheet and also continuing to maintain a peer-leading margin? Maybe just a little bit of color on how you think about incremental funding from here. Thank you, and I have a follow-up. Yeah, thank you. So the most important thing to protect the margin is to make sure we continue to grow non-interfering deposits. And so that has been a key focus of ours. That's why we're making the investments we are across our retail network, across the small business platform. We've seen great results so far this year. Small business operating accounts are up over 100 basis points this year, and so continuing to do that, it is day-to-day fighting, but that is the key to success. The overall composition of our balance sheet is also what helps us. Having a relatively lower loan-to deposit ratio is helpful. Having a lower debt footprint is helpful, And it allows us to continue to invest in profitable loan growth while being able to maintain deposit cost flexibility and having the funding needed to fund that growth through time. So continuing to do that, being mindful of putting on good profitable loan gross, and continuing to execute growing non-interest-bearing deposits is the key to maintaining that flexibility and that deposit advantage and the NIM advantage going forward. Ron, I'd just add we're obviously not using rate as part of our deposit, the strategy to grow deposits, but we can if we need to. We have about $16 billion in off-ballot sheet investment-related deposits that customers are holding either in a suite product basically or with our institutional trust department. We know that money is, we can easily attract that back to the bank with higher rates. Separately on the consumer side, back in 2022, 2023, when rates were rising and we saw the, because of a very active program that we initiated to grow deposits, we grew CDs by about $7 billion, money market deposits by four, and we're able to do that at a deposit beta of about 44%. So when rates went up almost 500 basis points over that period of time. So we know we can grow deposits if we need to by using rate, and we're actively following our customer activity, but it's not part of our strategy, obviously, currently. Got it. Thanks, John. And, Anil, maybe for a follow-up, just given the move in rates, you know, your capital levels fell below the 9.25 and 9.75 without factoring in Basel III. and I think TCE may have dipped a little below 7%. So maybe just talk about how you're planning on managing capital over the next few quarters given decent loan growth. Are you factoring Basel III now into expectations? And, you know, what time frame would you expect to be back in that sort of targeted range that you guys have been focused on for a period of time here? Thank you. Yeah, so importantly, under the current capital framework, our capital level is 10.8%. It's a very robust capital level. To your point, if we wanted to pro forma for Basel III endgame, which we expect to see this year, that would take us to 10%, which is well above our 9.25 to 9.75 range. Also, we generate 50 basis points of capital every quarter. This quarter is a great example. It just really shows the organic capital generation that we have quarter to quarter. We'll pay 20 basis points out in a dividend, grow the balance sheet, and so we organically create capital as well. And also, when you think about the impact from AOCI given last quarter's rate moves, through time, we'll see that AOCI burndown, assuming flat rates. And so that's capital that accretes back to our balance sheet through time as well. And so we think we're well positioned, given the organic capital we generate, given our overall capital position, to continue to make all the investments we want to make and win appropriate buyback shares through time. Thank you. Thank you for your time as we wrap up. Thank you very much. Our next question comes from the line of Scott Severs with Katie Cowan. Please proceed with your question. Thank you for taking the question. Hey, Neil, I think you noted in your prepared remarks that loan demand picked up toward the end of the quarter, I believe. Hopefully, I'm not putting words in your mouth. We've heard that from a couple of regionals. So I guess question and follow-up is, you know, what do you think is driving that? And then on the flip side, is there a point where you think higher rates might start to impact uh demand a little more materially i guess on the on the negative side yeah this is john uh we have seen nice activity toward the end of the quarter as you pointed out um production was up year over year about four billion dollars we saw a 60 increase in production and um in addition to that obviously line utilization is up year over here they're down a little for the quarter but customers are actively managing their balance sheets, investing in their business, and still have a positive point of view or positive view of the economy. And so we'd expect that activity to continue. One place where we are seeing the impact of interest rates is in the investor real estate portfolio. While we're seeing growth in multifamily as a result of previous commitments that are funding the level of new activity is slowing because of rising cost and difficulty to make make the economics of those transactions work so that's uh something we'll look for in future quarters have an impact on loan growth but in general a business sentiment is still good all right perfect thank you very much i appreciate the color thank you Our next question comes from the line of Erica Najarian with UBS. Please proceed with your question. Morning, Eric. Morning. I noticed that slide that you usually have in terms of where your NIM is against the Fed Fund's background isn't in the third quarter slide. So as we think about the rate curve and as you think about your confidence in NIB growth optimization, and beta. I'm wondering how we should think about the path of the net interest margin from 370 exit as we contemplate two to three rate hikes over the next 12 months. Yeah, and we removed that slide given that slide was really focused for the full year. And given we gave you the fourth quarter guide, we just didn't feel that slide as necessary. But I'll address your question. Won't go too far to give 27 guidance, but we indicated we expect to exit the fourth quarter around the 370 margin. So when we look forward into 2027, some of the structural tailwinds that we have will continue into 2077. So fixed asset repricing will continue. We quoted that to be 100 to 125 basis points in the fourth quarter. That will continue in the future at a lower rate as we go through time. It's still a benefit. And then we expect the balance sheet to continue to grow into 2070. And so as long as we continue to generate good non-interest-bearing deposits, maintain our deposit data in the mid to high 30s as rate increases. That will continue to support expansion in both net interest income and the margin in the 20s. Very clear. And just to follow up on Ryan's question on capital, and congratulations, by the way, on Alan being your new treasurer. He's great. As we think about rates being higher for longer on the belly of the curve. Obviously, you bought back $95 million this quarter. How should we think about your priorities in terms of buybacks versus protecting capital? And you mentioned TCE. I'm wondering, Moody's has come out with tougher language for your larger bank peers. Bank of America, there's a release in Bank of Amerika yesterday. How much are they starting to assert themselves more, you know, in terms of the conversation about capital? Yes, our conversations about capital with the rating agencies have been positive. We've been very clear with how we think about regulatory capital, TCE. So our capital priorities are unchanged. We have strong capital generation. We're mindful of the interest rate environment. You know, it's just good to remind ourselves over the past 10 years, we've seen 11 quarters when the 10-year Treasury has increased or decreased more than 50 basis points. And so we saw a big move this quarter, but we need to remind ourselves that large moves can happen. And so that's one of the reasons why we're so active in making sure that our hedging program factors that in. And so you see on the slide in our appendix the fair value hedges that we put on this quarter to protect capital in a potential rising rate environment. So we'll continue to execute strategies like that to protect capitol. But because of that and the capital generation that we have, we still think our capital priorities are unchanged. With respect to the TCE ratio, I've commented on this before, but, you know, the inclusion of cash flow hedges in that calculation, I think, is meaningful. You know, for us, that's the core of our franchise values, our deposit base. And so being able to maintain that duration and capitalize on that through time, through revenue, is important for us. And so we will make sure that we make good risk management decisions around that. But the TCE ratio really only reflecting, you know, one side of that trade, if you will, we think is a big disadvantage of that ratio. And so, we thank the changes to regulatory capital. Those make sense and we'll monitor TCE. But the inclusion of cash flow hedges is one that I think I wouldn't want to impact how we risk manage our balance sheet. Does that complete your question? Yes. Thank you. Thank you, I'll stop. Thank you okay. Our next question comes from the line of Ibrahim Poonawallo with Bank of America. Please proceed with your question. Good morning, Ibrahim. Good morning. Good morning John and Ibrahim, how are you? Just talk to us about from a deposit growth standpoint, I think John you shared some stats in your remarks, I believe earlier, but as we think about deposit growth and bringing in new customers, what seems to be doing more to sort of deepen the relationship and similarly on the consumer side, because all we hear is competitive dynamics, a lot of promotions from sort of non-market banks in the Southeast. So if you don't mind sharing some color around, how should we think about lower cost core deposit growth from here? Yeah, I mean, it is our focus, and we're dedicated, our consumer banking teams, to focus on acquiring the new customer checking households and new small business checking households. Our commercial bankers are focused on winning new logos, new middle market business, and that really is our objective. We're using Feed on the Street to do that by and large, and we think we're in really great markets. We continue to recruit a lot of wonderful bankers. We are enabling them with a lot OF really good technology, provides insights about customers and prospects, and we're focused on execution. And as a result of that, we're growing consumer checking accounts, we'RE growing small business checking accounts, and that's really the core of the business, right? So as we deepen those relationships through providing customers with debit cards, with credit cards, with equity lines of credit and or mortgages, investment products. On the other side, small businesses with treasury management, payment capabilities, and sometimes credit. Those are relationship deepening activities. We've talked about growth in treasury management and penetration rates up over 7%. Again, it's a focus on helping customers manage the cash flow in their business, manage the cash in their businesses, and also take advantage of emerging and new payments products that really help their businesses and help speed up cash flow as assets convert. So I think our teams are doing a really nice job, and we're seeing that in household growth and feel good about what that will mean over time as those customers activate their accounts, use their cards, and do other things that result in more deposit balances coming to the bank. And, Evie, I'll just add to that. We really understand the nature of our deposit base and our deposit customers. We're very proud of the 30-ish percent of our composite base that's not interest-bearing. But even that interest-being portion, we understand the rate-seeking behavior of that population. We're able to test into that population and grow deposits in a very targeted fashion. this is where being in some of the best growth markets in the country works to our advantage because we can do very targeted opportunities and offers to grow deposits in that bucket that we have very well defined and add to our deposit base while still protecting the non-interest bearing deposit basis john just alluded to the other thing i just make a point we've grown our mass affluent customer base by about eight percent year over year and 85 of those customers come from our own customer base. So we're acquiring younger customers, we believe, based upon information provided by industry sources at about three times the rate that many of our peers are, and we're converting those customers over time to be more mass affluent in nature, and as a result, their balances and their relationships grow. So a really important part of our strategy, and I think producing really good results. That's an interesting stat on the younger customers, so thanks for sharing all that color. One quick question on, you didn't mention AI, mostly in terms of, we've heard some of your peers talk about redirecting tech investment towards cyber risk because of AI. Just talk to us how big of a lift is that and just how all of that is informing your concern around cyber threats, not just to regions, but obviously the entire system. Yeah, absolutely. So investing in cyber defense has always been something very critical for us and is even more heightened in today's environment. We are actively participating across many different industry consortiums to ensure that our cyber defense protocols are advancing as this technology evolves. To your point, it does involve meaningful expense, both new expense and redirection of existing associates, and that's embedded in our call space. We do expect that to continue through time. the new reality that we live in today. So we're definitely front and center with that. Our CISO is actively involved with her counterparts across the industry, and we have a great team working to make sure that our customers can continue to have the trust in us that we know is incredibly valuable to them. So that is an important investment that we will constantly make to make sure that trust is maintained. We're able to monitor in terms of how AI is being used across different platform so we can track activity and how it may impact our deposit base we're seeing very low traffic through that through that channel we'll continue to monitor that we've talked before about while we don't believe that's a meaningful threat to our deposit based but we can monitor that as well but to your point it's an important investment broadly speaking that we need to make as a company and one that we'll absolutely continue to do because thank you our next This question comes from the line of Ken Usdin with Autonomous Research. Please proceed with your question. Good morning, Ken. Good morning. Hey, good morning. One question on betas. You mentioned that you still expect that the cumulative betas in this up cycle to be in the mid to upper 30s, and last cycle they were higher than that, and I'm just wondering just what the difference is and if it's, you know, what do you tell us about either the mix of deposits or the granularity of the deposit base that gives you that continued confidence that you can kind of keep it in that much better than pure range? Thanks. Yeah. One point of differentiation is the magnitude of the change before, I think, drove a higher beta. But in terms of what gives us confidence is really it's that granularity of understanding the nature of our deposit base. So not just thinking about it, quote-unquote, in aggregate, but understanding that we have a portion of our customer base that's 100 percent beta, and we understand and can back test to see how that changes through time and so by actively monitoring betas across different cohorts if you will of our deposit base and tracking that and seeing the consistency of performance that's what really gives us confidence in our guide looking forward i think too ken just embedded in the numbers where some of the maybe some of the the data i shared about our growing deposits intentionally growing deposits interest-bearing deposits in 2022 and 2023. You might remember that was a period of time when banks were actively seeking deposit growth. There was a lot of pressure on deposits. And so at that time, as I mentioned, we grew CDs by $7 billion and money market deposits by $4 billion. As a result, the deposit beta was higher at 44%, as I recall. Yeah. And to your remixing point, we have, as you'd expect, as rates have moved higher, you know our kind of starting point today does have some of that remixing already baked into it okay got it um and and uh just on the loan book um you know i think we're just from here is is the loanbook kind of just all moving the same direction like and you've kind of gotten past uh all those uh runoff books i believe uh for the most part and so is it kind of like business as usual from here and just really depending on the environment and what you're facing in terms of the the consumer and commercial sides of the business yes uh and i think if you look at loan growth over the quarter consumer loan growth has been a little bit of a headwind and since a good bit of our consumer loan grow consumer loan balances are in the mortgage portfolio shouldn't expect to see a lot of growth in in consumer loans if any growth over the next quarter two three depending upon where rates are on the other side our wholesale business grew significantly look at h8 data we grew a little faster than the h8 in in the corporate banking business so we feel good about the path of loan growth from here and to your point it should be business as usual absent the impact on the consumer business from rates and i'll just point in the quarter we saw really nice growth and ira as well up about 2.4 percent as you look towards where rates may go in the future that will be a kind of a governor as to how much growth we see there in terms of what may go to the capital markets if rates level out a little bit but john's point we're really proud of the growth that we're seeing and when you break it down portfolio by portfolio we think the comparison to ha data is kind of reaffirming our belief that we are growing as our markets grow understood thank you Our next question comes from the line of John Pancari with Evercore ISI. Please proceed with your question. Morning, John. Morning. Morning. On the security side, I know you had mentioned that you'll continue to review actions to manage your interest rate sensitivity. I know that you further repositioned the securities book this quarter, $845 million or so. So can you just talk to us about, you know, potential further actions there to adjust your rate sensitivity via the securities book and other actions that you're taking as part of that expectation to manage rates? Yeah, so we're going to maintain the discipline that you've seen from us in terms of looking at the return profile of those transactions. And so that $850 million that we executed this quarter, that $15 million loss, had about a two-year payback on that. And so we've been consistent with thinking about that from a payback of less than three years, and we'll do that through time. As rates move around, we're constantly evaluating any opportunities. And as securities pull closer to maturity, the lack of liquidity benefit also provides opportunity there. I wouldn't expect to see too much given what we're seeing right now, but given our history, you should expect us to continue to manage that. Regarding the overall securities portfolio, we feel good about the size and composition of where it sits right now. We'll continue to mange the risk from interest rates, as I mentioned before, through continuing to use fair value swaps on securities to make sure that we're monitoring capital risk. And then we feel great about our mix of HTM right now at about 16%. same percent. We'll monitor that through time. But all in all, I feel like we're well positioned in this rate environment. Okay, great. Thanks. And then secondly, on the credit side, credit trends were particularly solid and improved a bit this quarter. Just given the moving rates and inflationary concerns and macro volatility out there, any signs of erosion that you're seeing early signs um you know worth flagging and is it you know i know your acl ratio bumped down a little bit this quarter is it fair to assume that likely stable from here just given the the backdrop or do you think you're probably going to see that compress incrementally thank you yeah no we think stable from heredon based on what we know uh we think the net charge off range based on the composition of our portfolio is somewhere between 40 and 50 basis points. We're still working on a few large credits that we had identified as problems in those portfolios of interest. How and when they get resolved will impact results and could increase charge-offs modestly in a given quarter. But for the year, we would expect charge-off within the 40 to 50 basis point range and likely at the low end of that range. And we think we see stability from here forward. A little weakness in the multifamily business, primarily in Texas, just as a geography, some softness in absorption rates. But otherwise, and we continue to watch office and transportation, given the things that are still impacting those portfolios, but they have improved. And obviously, as you see that in our results, and We would expect, as I said, stability from here. And I'll just point you maybe to three things as you think about the allowance from here, and John mentioned there's a couple credits that we're still monitoring. They're fully reserved for, so if they charge off over time, you should expect us to reduce the allowance by like amount. Continue to look at the economic environment. You know, clearly that's something that could be variable, and so we'll keep an eye on that, and then also just as importantly is the origination profile. We've talked a lot about investment-grade credits, and so just mathematically, if that should continue into the future, we don't need to hold as much reserves against those given the better credit risk. So that could play out just in terms of the mass as the ratio moves from here. Great. Thank you so much. Our next question comes from the line of David Chevrini with Jefferies. Please proceed with your question. Good morning. Hi, good morning. Thanks for taking the question. I wanted to ask about capital markets and the outlook. You're guiding 90 to 105 million. I was curious as to your expectation in terms of with the higher rate backdrop, the extent to which this could impact your CRE customers? Are you seeing any impact at all thus far? Well, it has had an impact on the business over the last, call it 12 to 18 months. So we did have a good quarter in the third quarter across all components of our capital markets business, including the real estate business. We have a couple of transactions that actually could go to the secondary market and on the verge depending on what happens with with rates over the next few weeks and so we're guiding to 90 to 105 and we think that's a solid range if those transactions work maybe it's on the upper end of that range but today we we would say somewhere between 90 105 is where we ought to end the quarter. Got it. Thanks for that. And then on the expense side and the cloud-based deposit platform, remind us, is there any changing timing in terms of when you expect that to be completed? And then can you refresh us on your latest thoughts on the M&A front? Sure. So on the deposit system platform, We'll begin a pilot of associates, friends, and family, so to speak, in the next week or two. And assuming that goes well, we'll start a larger pilot in the first quarter of 2027. And our intention is to convert customers over time in 2027, completing sometime towards the end of the second quarter into the third quarter of 1027. And all that is on track at the moment. In terms of M&A, our position is unchanged. We said we're not interested in depository M&As. We have a really good plan. We can see an executor plan. We can deliver top quartile, top decile results based on return on tangible common equity as a primary metric, and we think that that's still very achievable. We have this project going on. it is consuming everyone's attention internally likely the largest technology project we've done we're effectively converting ourselves so we need to get through that project before we think about m a and and i would say that when we get through it we'll have a lot of the conversation about about our interests but today because i think we'll have some capabilities that will position us well if we wanted to participate but today we are not The candidate just paid a depository M&A. Very helpful. Thank you. Thank you Our next question comes from the line of Matt O'Connor with Deutsche Bank. Please proceed with your question. Good morning, Matt. Good morning. Good morning was just hoping you could talk about the wealth fees, sorry if I missed it earlier, but they were down a little bit, QQ, up to 5% year-over-year. I would feel like equities have been strong, but remind us kind of how impacted they are by equity levels versus fixed income and maybe just versus, you know, other things that might be in there, like annuity sales or just some of the moving pieces. Thanks. Yeah, so I'd break the drivers into two buckets. First, to your point, is just portfolio composition. And so, looking at both equities and bonds, I'd say drives around 40 to 50% of the overall performance of the business, but most importantly, production within our financial advisors is what strives the growth as well and so this is a place where we've really been committed to investing this business has done very well for us you've seen us post record quarters and prior quarters this quarter we take down just a little bit still seeing good production and expect that to return but as you think about the drivers of revenue i'd break it into those buckets okay that's helpful thank you and see i make the point just uh we will end likely in the year with a record year of wealth management so while we had a little softness in the quarter relatively speaking it's going to be a really good year for wealth management we would expect that trend to continue okay that's helpful thanks that's it for me okay thank you our next question comes from the line of ryan kenney with morgan stanley please proceed with your question Good morning. Hey, good morning. Thanks for taking my questions. So just following up on the conversation around the core deposit system conversion that's been in the works for a few years now, and just wondering if you could give an update on the timing and do the capabilities that you're launching need to evolve, given that we now are facing the rise of AI tools and real-time payments, and which specific capabilities do you think will most be able to help you enhance your customer product set? Yeah, so we are on schedule to deliver the platform in 2027. As I mentioned earlier, we'll start a pilot in the next week or two, and that pilot will gravitate to a much larger set of customers after the first of the year, and we will convert customers in waves over the course of the year, likely completing that toward the end of the second quarter or sometime early in the third quarter based on what we know today. The platform will be a contemporary platform. We think this gives us a lot of capabilities that we don't have today. It's a real-time system, and we think that will be an advantage that we have and something we can bring to our customers will also allow us to bring products, pricing mechanisms to customers that we don't have today. We think we'll be able to do that much more quickly. And so we're excited about the capabilities. With respect to artificial intelligence, again, we think the system is one component of a transformation of our business as we think about how do we make it easier for our bankers and our customers to do business? How do we transform our client onboarding experience, sales enablement, problem resolution? The new system, in combination with artificial intelligence and process improvement driven by bankers that know and understand our processes, are things that we think will give us a real competitive advantage once the system's in place and we can begin to combine technology with process improvement and quality bankers. And then separately on consumer deposits, so it seems like you're not seeing much of an impact from AI agents on consumer checking balances, but are you seeing any impact from inflation driving loan balances? Yeah, no, it's something we monitor very clearly. I just remind you of a couple of metrics. So our average customer deposit account balance is right at $5,200. That's a similar number to what I've shared with you before. And the median is still right around $900. And so we have not seen a meaningful shift in that. We talked earlier this year about the benefit of taxes and how that's a buffer for higher cost across the board, but really aren't seeing much movement. We track energy costs. And And so year over year, the impact of our gasoline prices on our customers is about $24 a month. And so our customers are very resilient, and we see that in their deposit balance. Thank you. Thank you, sir. Thank you for your question. Our next question comes from the line of Christopher Spahr with Wells Fargo. Please proceed with your question, sir, and please proceed with the question. Good morning. Good morning, sirs. Yeah, hi. Hi. Good morning and thanks for taking my questions. First is just a little clarification. So the comments on the higher tech spend in the quarter, is that tied at all to the transformation or the systems upgrade? That's just investment in cybersecurity. So think about frontier AI and investments that we're making to ensure we have a trustful platform for our customers. And some of that is just a redirectment of existing spend and then some marginal spend as well. But all that's in the numbers for the quarter. And then once you get towards the second half of next year, will there be any kind of relief on the expense side or a headcount when you're finally done with the deposit conversion? I think a couple of things. One, we will move on to a new general ledger platform as well, and so there will be continued investments in tech spend. I won't give you too much guidance into 2027, but we think technology investment is something that we will continue to do. There are ample projects that we think can enable our business investment as we compete in markets that we're in today. And so we're very focused on a couple key projects today. But when we bring those online, there are plenty of other projects that we think technology can bring to bear to help our bankers support our customers day in and day out. And we have some great business cases that we'll be executing upon in years to come. So won't go too far in terms of headcount going forward. But I think what you should see is us continuing to invest in capabilities that will enable our bankers to serve our customers. Okay. I guess what I'm getting at, too, is I believe in the past you've talked about total tech spend being a little elevated above your, what, 10% to 11% range of revenues, if I recall right? Yeah. And will that continue beyond the second half and into 28? I think it'll continue for a couple years. It'll start to come down as revenue starts to grow. Thank you. Thank you Our next question comes from the line of Chris McGrady with KBW. Please proceed with your question. Chris. Good morning. Good morning, maybe asking the expense, putting the deposit conversation and the tech spend together. It feels like there's a path to continued operating leverage beyond 2026. Any pushback to that observation? Generating positive operating leverage through time is a commitment of ours. When you have significant investments like we have right now, the timing of them, as you can imagine, when you start depreciating capital spend and bringing on SAS-related expenses is important just in terms of the math. And so, you know, the time of all that will impact positive operating leverage. We're still committed to delivering it. But as we get closer to giving guidance for 2027, we'll clarify that. But the underlying core of our business, the revenue we generate, the expense discipline is unchanged. When we have significant projects like this, there becomes a bit of a math exercise that we can go through. But the core of business, our core strategy is unchanged and as we get closer to 27, we'll update you on our guidance. Chris, we're committed to delivering positive operating leverage. Great. Yep. That's right here. Okay. John, the follow-up would be, here I am not ready for depositories, but I guess when that day potentially comes, can you just, I know it's been a while, but what would kind of the ideal wave your wand situation be? Any parameters or guideposts would be great, thanks. I'm sorry, I missed the first part of the question. For a transaction. Oh, for a transaction, M&A. Yeah. Yeah. Okay, got it, I'm Sorry. So, you know, I think as we think about depository M&A, if we were interested, we probably would be most focused on creating more density in markets that we're in. We're in a lot of really great markets, and I think if we had an opportunity to, again, create more density, build a stronger business in some of the markets we're not as present, that would certainly be a consideration. I mean, in the end, we have a very good, obviously, low-cost deposit base, very loyal customer base. And I think any acquisition that we might consider, if we were interested in depository M&A, would have to be one that was complementary. Certainly not going to be the same as, but would be complementary to the customer base that we currently have and the deposit base we have. That would be my primary focus. Thank you very much. Yep. Thank you. This concludes our question and answer session. I would now like to turn the call back over to John Turner for closing comments. Okay. Well, thank you very. Again, we're awfully proud of our quarter and the consistent performance we continue to deliver. Appreciate your interest in our company and participating today, and hope you have a great weekend. Thank you This concludes today's teleconference. You may disconnect your lines at this time.