Cuộc họp báo cáo kết quả kinh doanh Quý 3/2026 của First Horizon (FHN): Thương vụ bán khoản vay thế chấp 4,5 tỷ USD nhắm tới tăng trưởng EPS năm 2027

Điểm tin chính

• First Horizon đã báo cáo EPS điều chỉnh quý 3/2026 đạt 0,53 USD, tăng 4% so với cùng kỳ năm ngoái nhưng giảm so với quý trước. ROTCE điều chỉnh giảm xuống 14,4%, một phần do vốn cổ phần phổ thông hữu hình bình quân tăng lên trong ngắn hạn.
• Công ty đã đồng ý bán khoảng 4,5 tỷ USD khoản vay thế chấp nhà ở có lợi suất thấp hơn với mức chiết khấu gộp khoảng 10%. Danh mục này có lãi suất danh nghĩa bình quân gia quyền là 3,85% và chỉ đi kèm khoảng 200 triệu USD tiền gửi liên quan.
• Ban lãnh đạo dự kiến giao dịch thế chấp này sẽ đóng góp thêm khoảng 4% vào EPS năm 2027 và cải thiện ROTCE khoảng 150 điểm cơ bản, chưa tính đến dư địa tăng trưởng bổ sung từ việc tái đầu tư nguồn thu vào các khoản vay có lợi suất cao hơn.
• Biên lãi thuần (NIM) giảm 1 điểm cơ bản xuống 3,48%, trong khi thu nhập lãi thuần tăng 7 triệu USD. Ban lãnh đạo dự kiến NIM sẽ tiến vào vùng 3,50% sau khi hoàn tất việc bán khoản vay thế chấp.
• Tiền gửi của khách hàng mới tăng khoảng 1,5 tỷ USD, giúp thay thế nguồn vốn huy động qua môi giới. Việc bán khoản vay thế chấp dự kiến sẽ hạ tỷ lệ dư nợ trên tiền gửi (LDR) xuống còn khoảng 88%.
• Nhìn chung, các chỉ số tín dụng duy trì ổn định. Tỷ lệ nợ xấu đạt 81 điểm cơ bản, tỷ lệ xóa nợ ròng là 22 điểm cơ bản và dự phòng tổn thất tín dụng chiếm 1,25% tổng dư nợ.

Dữ liệu tài chính cốt lõi

Kết quả hoạt động kinh doanh và vận hành

Tái cấu trúc bảng cân đối kế toán là chủ đề trung tâm trong cuộc họp công bố kết quả kinh doanh quý 3/2026 của First Horizon. Danh mục thế chấp mục tiêu chủ yếu bao gồm các tài sản không thuộc nhóm khách hàng chiến lược có lợi suất thấp và ít tiền gửi đính kèm. Giao dịch bán dự kiến sẽ hoàn tất thanh toán vào đầu quý 4.

Nguồn thu ban đầu sẽ được sử dụng để giảm huy động vốn bán buôn và mua các chứng khoán lãi suất thả nổi ngắn hạn. Sau đó, ban lãnh đạo dự kiến sẽ tái phân bổ vốn vào các khoản vay khách hàng chiến lược có lợi suất cao hơn. Bryan Jordan cho biết công ty có thể giải ngân khoảng một nửa trong số 4,5 tỷ USD, tương đương hơn 2 tỷ USD một chút, vào hoạt động cho vay bổ sung trong 2 đến 3 năm tới, tùy thuộc vào điều kiện kinh tế.

Giao dịch này dự kiến sẽ rút ngắn kỳ hạn bình quân của tài sản và tăng độ nhạy tài sản trong ngắn hạn thêm khoảng 100 điểm cơ bản. Ban lãnh đạo cho biết thanh khoản thu được cũng sẽ mang lại sự linh hoạt cao hơn trong việc định giá tiền gửi và phát triển bảng cân đối kế toán.

Nhu cầu cho vay thương mại duy trì ổn định, mặc dù số dư cho vay C&I không bao gồm các công ty thế chấp giảm nhẹ. Dư nợ bất động sản thương mại tăng, trong khi tổng tỷ lệ sử dụng hạn mức không đổi ở mức 44%. Biên độ lãi suất cho vay mới nhìn chung nằm trong khoảng từ giữa 100 đến giữa 200 điểm cơ bản.

Thu nhập từ phí tăng 3 triệu USD so với quý trước nếu không tính khoản thù lao hoãn lại, nhưng giảm 8 triệu USD so với cùng kỳ năm ngoái. Doanh thu từ công cụ thu nhập cố định tăng 6% so với quý trước, với doanh thu trung bình hàng ngày đạt 629.000 USD chủ yếu nhờ hoạt động tái cấu trúc của khách hàng.

Chi phí điều chỉnh không bao gồm thù lao hoãn lại tăng 8 triệu USD. Chi phí ngoài lãi khác tăng 6 triệu USD do các chương trình khuyến mại mở tài khoản mới, trong khi chi phí mặt bằng và thiết bị tăng do các dự án công nghệ và đầu tư vào AI.

Dự báo từ ban lãnh đạo

Ban lãnh đạo kỳ vọng biên lãi thuần sẽ cải thiện lên vùng 3,50% sau giao dịch bán khoản vay thế chấp. Dự báo này dựa trên giả định rằng nguồn thu ban đầu sẽ được phân bổ giữa việc giảm vốn huy động bán buôn và đầu tư vào chứng khoán lãi suất thả nổi ngắn hạn.

Công ty ước tính việc bán khoản vay thế chấp sẽ làm tăng EPS năm 2027 khoảng 4% và cải thiện ROTCE khoảng 150 điểm cơ bản. Các ước tính này chưa bao gồm lợi ích tiềm năng bổ sung từ việc tái đầu tư nguồn thu vào các khoản vay có biên độ lãi suất cao hơn lợi suất chứng khoán ban đầu thường trên 100 điểm cơ bản.

First Horizon đặt mục tiêu beta tiền gửi đạt khoảng 60% trong suốt chu kỳ tăng lãi suất. Ban lãnh đạo nhấn mạnh rằng kết quả theo quý có thể biến động tùy thuộc vào thời điểm, số lần tăng lãi suất và điều kiện cạnh tranh tiền gửi.

Công ty tiếp tục theo đuổi cơ hội tăng lợi nhuận trước thuế và trước dự phòng hơn 100 triệu USD và cho biết đã đạt khoảng 40% tỷ lệ thực hiện mục tiêu. Ban lãnh đạo đánh giá lợi ích sau thuế khoảng 45 triệu USD từ việc tái cơ cấu khoản vay thế chấp là phần bổ sung cho chương trình đó.

Ban lãnh đạo dự kiến chi phí cả năm 2026 nhìn chung sẽ đi ngang và kỳ vọng đòn bẩy hoạt động đạt mức dương vào năm 2027. Công ty cũng dự kiến sẽ khởi động lại việc mua lại cổ phiếu trong quý 4 trong khi vẫn duy trì tỷ lệ CET1 trong khoảng mục tiêu từ 10,25% đến 10,5%.

Rủi ro và các yếu tố cần theo dõi

• Cạnh tranh tiền gửi vẫn ở mức cao và chi phí bình quân của tiền gửi trả lãi đã tăng 12 điểm cơ bản trong quý.
• Lãi suất cao hơn có thể làm chậm hoạt động kinh tế và nhu cầu vay vốn, mặc dù ban lãnh đạo hiện thấy nhu cầu thương mại tương đối ổn định.
• Số dư khoản vay tài trợ kho thế chấp giảm khoảng 891 triệu USD và có thể tiếp tục chịu áp lực do khối lượng giao dịch thế chấp thấp hơn.
• Lạm phát đang làm giảm số dư tài khoản thanh toán của một số khách hàng và có thể làm tăng chi phí nhân sự, chăm sóc sức khỏe cùng các chi phí vận hành khác.
• Doanh thu quý 4 phải đối mặt với mức nền so sánh cao của cùng kỳ năm trước, do quý 4/2025 ghi nhận số dư khoản vay tài trợ kho thế chấp và doanh thu trung bình hàng ngày từ công cụ thu nhập cố định cao bất thường.
• Thời điểm và mức độ sinh lời của việc tái đầu tư nguồn thu từ việc bán khoản vay thế chấp phụ thuộc vào nhu cầu cho vay, lãi suất, lạm phát và các điều kiện tín dụng.

Nội dung nổi bật phần Hỏi & Đáp với chuyên viên phân tích

Ban lãnh đạo cho biết quy mô bán khoản vay thế chấp 4,5 tỷ USD được tính toán nhằm loại bỏ các tài sản có lợi suất thấp và ít quan hệ khách hàng diện rộng. Hiện tại, công ty không có kế hoạch tái cấu trúc bảng cân đối kế toán lớn nào khác.

Về việc phân bổ vốn, công ty cho biết giao dịch thế chấp không hạn chế khả năng mua lại cổ phiếu. Hạn mức mua lại cổ phiếu còn lại hơn 660 triệu USD, và ban lãnh đạo có kế hoạch ưu tiên phân bổ vốn cho sự tăng trưởng của khách hàng và dư nợ cho vay, sau đó mới nắm bắt cơ hội để mang lại lợi nhuận cho cổ đông.

Liên quan đến bất động sản thương mại, ban lãnh đạo cho biết thị trường tái tài trợ vẫn hoạt động tích cực, bao gồm nguồn vốn từ các ngân hàng thương mại và tín dụng tư nhân. Việc định giá cập nhật tại các thị trường dư cung nhiều hơn nhìn chung vẫn nằm trong tầm kiểm soát, nhờ hoạt động thẩm định tín dụng thường yêu cầu tỷ lệ vốn chủ sở hữu khoảng 40% và tỷ lệ cho vay trên chi phí (LTC) là 60%.

Ban lãnh đạo kỳ vọng chất lượng tín dụng mảng tài trợ kho thế chấp sẽ tiếp tục duy trì tích cực. Mảng này thường nắm giữ các kỳ phiếu gốc khi hoàn tất giao dịch, các khoản vay nằm trên bảng cân đối kế toán trung bình khoảng 19 ngày và tỷ lệ xóa nợ hàng năm trong lịch sử chỉ khoảng 1 điểm cơ bản.

First Horizon cho biết ngân hàng không đuổi theo tiền gửi lãi suất cao nhưng phải định giá cạnh tranh cho số dư tiền gửi hiện có của khách hàng. Theo ban lãnh đạo, công ty tiếp tục duy trì tỷ lệ giữ chân hơn 90% khách hàng tiền gửi mỗi quý.

Toàn văn biên bản cuộc họp công bố kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Hello, everyone. Thank you for joining us, and welcome to the First Horizon Third Quarter 2026 Earnings Conference Call. [Operator Instructions]

I will now hand the conference over to Tyler Craft, Head of Investor Relations. Tyler, please go ahead.

Tyler Craft

Thank you, Erica. Good morning. Welcome to our third quarter 2026 results conference call. Thank you for joining us. Today, our Chairman, President and CEO, Bryan Jordan; and Chief Financial Officer, Hope Dmuchowski, will provide prepared remarks, after which we'll be happy to take your questions. We're also pleased to have our Chief Credit Officer, Thomas Hung, here to assist with questions as well.

Our remarks today will reference our earnings presentation, which is available on our website at ir.firsthorizon.com. As always, I need to remind you that we will make forward-looking statements that are subject to risks and uncertainties. Therefore, we ask you to review the factors that may cause our results to differ from our expectations at the end of our presentation and in our SEC filings. Additionally, please be aware that our comments will refer to adjusted results, which exclude the impact of notable items and to other non-GAAP measures.

Therefore, it's important for you to review the GAAP information in our earnings release, Pages 2 and 31 of our presentation and the non-GAAP reconciliations at the end of our presentation. And last but not least, our comments reflect our current views, and you should understand that we are not obligated to update them.

And with that, I'll hand it over to Bryan.

Bryan Jordan

Thank you, Tyler. Good morning, everyone. Thank you for joining us. Our adjusted results this quarter are highlighted by EPS of $0.53, which is a 4% increase year-over-year. Over the last year, we've grown our commercial loan portfolio nearly $2 billion, in line with our strategy of growing the balance sheet to generate sustainable returns and drive the most value for our clients. This quarter, we initiated the sale of approximately $4.5 billion of targeted residential mortgage loans as part of our broader realignment of the mortgage business. We entered into an agreement in October and expect to settle the transaction early in the fourth quarter. This transaction, along with the business line restructuring is aligned with the strategy we have discussed consistently throughout the past year of prioritizing full client relationships, enhancing the profitability of our balance sheet and driving improved earnings and returns through the cycle.

This repositioning offers several important strategic advantages. It will serve our goal to utilize balance sheet capacity to profitably serve our clients, and it will immediately enhance our goal of delivering top-tier financial returns. We continue to see steady C&I commercial and commercial real estate loan demand across our geographic footprint from both current and new customers. As outlined in our slides, the transaction will reduce our loan-to-deposit ratio to roughly 88% while maintaining strong capital ratios in line with our stated targets and allowing us to maintain our current share repurchase program. The financial impact will produce an approximately 4% EPS accretion in 2027 without considering the upside impact of deploying proceeds into incremental lending. As noted, we have conviction that this liquidity will support further growth in new core client relationships lending, which will meaningfully enhance our returns going forward.

I'll turn the call over to Hope to walk through the results in more detail before I provide some closing thoughts. Hope?

Hope Dmuchowski

Thank you, Bryan. Good morning, everyone, and thank you for joining us today. Starting on Slide 5. We provide key highlights of our performance this quarter. In the quarter, adjusted EPS declined to $0.53 on lower fee income and slightly higher provision expense in the quarter. Our adjusted ROTCE decreased to 14.4% in the quarter. This is primarily due to the temporary impacts of the timing of capital use in the quarter, which resulted in an elevated average TCE ahead of deployment as part of the mortgage loan reclassification at quarter end. We continue seeing momentum with our strategic focus on relationship banking with client deposits up more than $1 billion this quarter and NIM remaining in line with our expectations at 3.48%.

On Slide 6, we cover notable items in the quarter, which includes the impact of reclassifying the loans associated with our mortgage portfolio sale, which I will discuss more in just a moment. Additionally, we recognized costs associated with reorganizing parts of our business, which includes reductions in our mortgage line of business to align mortgage production more closely with core clients.

On Slide 7, we cover the expected mortgage portfolio sale in more detail. This transaction further ensures our balance sheet is aligned with our strategic focus on delivering relationship-oriented banking and focusing on safety and soundness, profitability and growth. The loans in this transaction have minimal deposits of approximately $200 million and are concentrated in the lowest yielding portion of our mortgage portfolio with an overall weighted average coupon rate of 3.85%.

This transaction is expected to settle early in the fourth quarter and will result in selling approximately $4.5 billion in lower-yielding mortgage loans with limited deposits and relationship balances at an approximate 10% discount all in. Excluding further upside of yields from incremental lending, we expect the transaction to be accretive going forward with 2027 earnings per share benefit of around 4% and improved ROTCE of approximately 150 basis points. Share buybacks will resume in Q4, in line with our CET1 target ratios for the year. This transaction puts our liquidity into an improved position as our loan-to-deposit ratio moves to approximately 88%. It provides immediate improvement to NIM and a future upside as we redeploy to higher yielding loans while continuing to focus on client relationship growth with deposits and fees, deployment into incremental lending in the coming quarters and years will further improve these results.

On Slide 8, we walk through our net interest income and margin performance in the third quarter. Our margin compressed by 1 basis point remaining settled in the high 340s. This reflects the rate of environment evolving into a flat to up expectation. We grew NII by $7 million this quarter, reflecting higher loan yields and includes customer deposit growth replacing broker deposits over the course of the quarter. We believe that the flexibility created by our mortgage portfolio transaction this quarter supports continued margin strength into next year and through the cycle and we expect NIM to improve into the 350s.

On Slide 9, we cover details around our deposit performance in the quarter. Period-end balances decreased by $0.4 billion compared to prior quarter, driven primarily by a decrease in broker CDs as we grew new client deposits approximately $1.5 billion. The average rate paid on interest-bearing deposits increased to 2.45%, which is a 12 basis point increase from the prior quarter. This reflects higher average broker deposits and higher customer deposit costs in the third quarter, which includes impacts from the resetting index client deposits.

Our exit rate for the quarter on a spot and a September average basis is low single-digit basis points above the average for the quarter, and we do expect that the environment for deposits will remain competitive. As we enter into a rate increase cycle, we will focus on betas through the cycle targeting approximately 60%. As always, we remain focused on growing our core deposit base and prioritizing relationship growth as a way to sustainably and profitably grow our balance sheet.

On Slide 10, we cover our quarterly loan growth. Period-end loans decreased $5.5 billion from the prior quarter driven primarily by the reclassification of mortgage loans for the $4.5 billion mortgage portfolio sale. Loans to mortgage companies decreased $891 million in the quarter which steadily decreased in the quarters as rates rose. C&I, excluding loans to mortgage companies decreased $96 million and commercial real estate grew $97 million.

Total line utilization ended the third quarter essentially unchanged from Q2 at 44%. This dipped in July and August before rising again in September to near prior quarter levels. Commercial lending remained competitive through the quarter. Spreads on new lending are typically in the mid-100s to mid-200 basis points in the current environment.

Turning to Slide 11. We detail our fee income performance for the quarter, which increased $3 million from the prior quarter, excluding deferred compensation and is down $8 million year-over-year. We saw a 6% quarter-over-quarter increase in fixed income revenues due to an increase in average daily revenue to $629,000. Higher ADRs were driven primarily by favorable restructuring activity during the quarter.

On Slide 12, we cover adjusted expenses that excluding deferred compensation, increased $8 million from prior quarter. Other noninterest expense increased by $6 million, driven by the timing of new account promotions and occupancy and equipment increased due to internal technology projects and AI investments.

Turning to credit on Slide 13. NPLs remained flat at 81 basis points on a $49 million reduction in nonaccrual balances driven by strong resolutions during the quarter. Net charge-offs increased by $3 million to $36 million, bringing our net charge-off ratio to 22 basis points. Excluding the mortgage restructuring impact, our provision for credit losses was $20 million in the quarter.

Our ACL to loans ratio increased by 1 basis point to 1.25, this primarily reflects mix shift associated with the reclassification of mortgage loans associated with our mortgage portfolio transaction. On Slide 14, we ended the quarter with CET1 of 10.3%, which is down slightly from the prior quarter and reflects the impact of notable items, including the mortgage transaction we discussed.

Our tangible book value per share ended the quarter at $13.84 and is down 5% quarter-over-quarter, also reflecting the impact of the mortgage portfolio transaction. Our tangible common equity to total assets ratio remains strong at 7.93%.

Now I'll wrap up with Slide 15 and 16. We shared some refinements to our 2026 outlook that include the impacts of the expected mortgage transaction as well as the revenue impact from the current rate environment. We continue making progress towards the $100 million plus PPNR opportunity discussed over the last 18 months and believe our balance sheet restructuring will provide further catalysts for return growth in 2027.

And with that, I'll give it back to Bryan.

Bryan Jordan

Thank you, Hope. The results in the third quarter position First Horizon for continued success, meaningful upside opportunities and deepening strategic alignment. Over the past year, we have shared with you how our strategic framework provides clarity for our associates on the results we expect, understanding of the ways we earn our right to win precision on the types of clients that value our approach, discipline on how we go to market and urgency on the opportunities we have to further enable our strategy.

Our third quarter results which include an important business restructuring, a strategic portfolio transaction and consistent banker engagement with our clients to deliver deeper relationships and drive profitability enable us to deliver enhanced profitability going forward. Thank you to our associates who continue to work hard at delivering these objectives. I reiterate my gratitude to our clients and shareholders who continue to be central to the First Horizon story.

Erica, with that, we can open it up for questions.

Operator

[Operator Instructions] Your first question comes from the line of Jon Arfstrom with RBC Capital Markets.

Phần hỏi đáp

Jon Arfstrom

Just a question on the realignment, Bryan, not being critical, but why now? And how did you determine the size of the sale, the $4.5 billion? And anything more left to do or is this it?

Bryan Jordan

Yes. So the one now is it -- one became clear that we're in a cycle of rising interest rates. We sized the portfolio based on trying to extract out or sell what was essentially nonrelationship portfolio assets. And the intent there was mainly to create capacity on our balance sheet to fund continued growth and investing in longer deeper relationship opportunities that we see in the marketplace. And we believe that we have the asset generation capability to put that to use.

So we looked at the portfolio, we tried to exclude anything that was related to private client or wealth, we tried to -- it basically extract a portfolio that was very minimal relationship outside of a loan transaction. And as Hope pointed out, when you do that, you come up with about $4.5 billion of loans, about $200 million of deposit base and a low yielding portfolio.

So the timing was it was a low-yielding set of assets, nonrelationship, we thought we could use the capacity for other and deeper relationships. And then the tangential benefit is it gives us much greater flexibility in terms of how we think about competing in the deposit markets and the use of wholesale deposits on a go-forward basis. So we think it has very positive profitability characteristics. In terms of the work left to be done at this point.

Basically, we should settle the transaction in the next few days to a week. We have to deliver some loan files, and we have a signed agreement. So the transaction is essentially done at this point.

Jon Arfstrom

Yes. Okay. Good. And then maybe for you, Hope, can you frame the assumptions around the 4% 2027 EPS accretion? I think you both mentioned some upside as you redeploy the proceeds. But what are you assuming right now in terms of the drivers of that 4% lift?

Hope Dmuchowski

The 4% is really the immediate lift, which is a portion of it going to pay down wholesale funding and the rest going into our securities rate at floating rate securities as we continue to, as Bryan mentioned, deployed us into loan. So that 4% is really as we get the cash in, in the next week or so, immediately putting that to work between paying down our wholesale funding and putting it in our securities portfolio in short-term floating rate.

D. Jordan

And John, I'll add why you're dropping off, I'll add that you should start to see the benefit, 2/3 of it or so beginning in the fourth quarter of this year as Hope said we get this closed, we'll start reimmediately reinvesting the CAD.

Operator

Your next question comes from the line of Ryan Nash with Goldman Sachs.

Ryan Nash

Maybe to start, you noted that you expect 60% beta from the rate hike, I think that implies about a 15 basis point or so deposit costs increase. When we look in this quarter, obviously, deposit costs were up 12 without a rate hike. So can you maybe just help us better understand the 12 basis point increase? How much was related to the hike? How much were client deposit costs actually up in -- do you expect there to be residual pressure outside of the rate-driven increases that we've seen?

Do you expect those to persist and I have a follow-up.

Hope Dmuchowski

Thanks, Ryan. Starting with the 60% beta comment, that is through the cycle. And so quarter-to-quarter, depending on when you have a rate increase earlier late in the quarter, that is not meant to be a quarter in, quarter out. We also only had 2 weeks of this rate hike baked into this quarter. When we look at the rate competition, I've said this previously, the summer month is the most competitive time for us is when we mentioned now 3 years running that we bring -- we bring new customer deposits, specifically in private client, retail some of our commercial clients in at a promo rate. You'll see the $6 million of expenses that we paid out this quarter, which is the cash offers associated with those private client and consumer offers and then you start to walk those back.

So I do think a portion of what increase in Q3 is similar to the last 2 years when we start to lead with rates before we deepen that client and walk it back. As far as exactly what I expect in Q4, Ryan, it really depends on the rate scenario. Do we see 1 hike? Do we see 2? Is it earlier in the quarter or later -- that's why I really focus on the beta part of it because I do think there'll be noise quarter-to-quarter as there has been in past rising and decreasing rates on how that leads and lags in a quarter. But as I said in my prepared remarks, we expect margin to be in the 350s next quarter and continuing to focus on expanding that with the redeployment of this mortgage sale into higher-yielding assets.

Bryan Jordan

Brian, 1 follow-on thought is, in the third quarter, we did have higher average balance of wholesale deposits and they did pull the aggregate rate on deposits up some over the quarter. And with this transaction and our ability to repay that, particularly as mortgage warehouse has come down some, that should take some pressure off deposit costs.

More macro I've often said and long said that over time, technology started with the Internet and cell phones and mobile technology provides a lot more clarity and upward there's going to be some upward movement of deposit costs over time. I know here recently, there's been a lot of focus on genic AI and tools like use and other things like that impacting deposit costs. And while that may be a long-term adoption trend -- it's not something that we expect to have a lot of impact in the very near term that, that will take a lot of time. And fundamentally, I do believe that customer relationships, customer stickiness is still an important part of the business, and we believe that, one, our focus on relationships and all that will help us ameliorate some of the upward drift in deposit costs over time.

It will not eliminate it, but will help ameliorate some of that. But at the end of the day, we think that we have the ability in this rising rate environment to be very, very competitive, we think with the adjusted balance sheet with a loan deposit ratio percent or so, it gives us more flexibility. So we think we're extraordinarily well positioned to navigate this period of rising rates.

Ryan Nash

Got you. I appreciate all that color. And Bryan, you've been relatively upbeat on loan growth. maybe outside of warehouse, C&I balances and CRE had a little bit of growth, a little bit of shrinkage. Maybe just talk a little bit about the performance? And given the freed up balance sheet capacity, how are you feeling about the ability to lean in a little bit further on loan growth?

Bryan Jordan

Yes. I still am update. And if you get sort of a political environment where the consumer is feeling under some degree of stress. And that there are parts of the economy that are somewhat weaker than others. But generally speaking, demand in the economy is still pretty good. GDP growth, GDP now at Atlanta Fed, I think, is still around 4% for the fourth quarter.

So underlying activity is still pretty good. And we think that loan demand will continue to be reasonably steady. If you look at the mix of our balance sheet you pointed out mortgage warehouse lending came down during the quarter. C&I was relatively flat. We're still seeing some funding up in commercial real estate deals. We don't we follow the market in terms of prognosticating about what the future of rates will do. But it will have some marginal impact on the ability of the economy to create additional lending simply because more deals were not cancel out. But at the end of the day, we feel good about our asset generation capability. We have a unique set of businesses that are in many ways are national and in our specialty lines of business, whether it be mortgage warehouse lending, where we can continue to -- we think we're in additional market share, our franchise finance business, our equipment leasing business, our trucking and transportation businesses. So we think our asset generation capability is still very strong on a relative basis. But I will put all of that against a backdrop. We're going to be smart about what the customer base and the economy gives us, we're going to pick our spots and participate. And we think that this economy was solid is still at a place where rising rates and inflation are likely to slow it down some as we transition into 2027.

Operator

The next question comes from the line of Ebrahim Poonawala with Bank of America.

Ebrahim Poonawala

I guess maybe just on this restructuring -- maybe I missed it. When we think about the loan-to-deposit ratio shifting to 88%, I know you've been very reluctant Bryan to deploy deposits to low-yielding government securities. But as we think about where it's resetting now, how should like -- is that the new normal? And does that also sort of set the stage for you to be able to become 100 billion-plus asset bank where a mid- to high 80s loan-to-deposit ratio feels the right place to be, if you yes.

Hope Dmuchowski

Thanks for the question. We do -- as I mentioned in my prepared remarks, we will put a good portion into securities immediately, but we do expect to redeploy that into loan growth. The intention is not to grow our securities portfolio. As we think about where loan growth will come from one of the comments, Bryan and I have made consistently on this call and conferences, is our ability to grow loans previously was dependent on our ability to grow deposits balance both sides of the balance sheet. So this does allow us to have some additional growth on the loan side with the deposit side slightly lagging, whether it's either quarter-to-quarter or year-over-year, loan-to-deposit ratio gives us a little bit more ability to loosen up those rains for the right side of the balance sheet to grow. As we think about where we redeploy this -- we are -- as I mentioned in my prepared comments, we are going to put it in floating rate securities. We are expecting rate increases in the coming quarters. So that will also increase the immediate payback as we see that forward curve play out.

Bryan Jordan

It positions us with a slightly more asset-sensitive balance sheet, which is a positive, we think, in this rising rate environment. And we're not with any in any measure reducing our desire to continue to grow the right side of our balance sheet to grow our deposit relationships and broaden and deepen. And we've talked a lot over the course of the last year, 1.5 years, 2 years about our desire to continue to sell our treasury management products to penetrate operating account relationships and to continue to broaden and deepen with our credit customers.

And we think that freeing up the opportunity to take this pool of largely non-relationship assets and move it off the balance sheet and create capacity to put more relationship generating assets on the balance sheet is going to be a net positive for that loan-to-deposit ratio over the long term.

Hope Dmuchowski

One additional comment on that is that the mortgage sale does shorten our duration and make our immediate asset sensitivity about 100 basis points higher in the near term in a rising rate environment.

Ebrahim Poonawala

Got it. So the action, obviously, from a client relationship ROTCE asset sensitivity understood. And maybe given just the change in the rate outlook or what's happened from the -- for the market. Talk to us about the mortgage warehouse business. Obviously, it's been an attractive business for you. But maybe how are you thinking about it today given where rates are headed. And talk just the health of the underlying clients. Like are you seeing consolidation in that space? Just how should we think about where that may trend over the coming quarters or over the next couple of years?

Bryan Jordan

Yes. I'll come right back to the mortgage warehouse question. I want to add one other benefit. And this repositioning of the balance sheet does not impact our ability to continue to repurchase or return capital, repurchase stock or return capital to our shareholders. We have strong capital ratios and we're comfortable in this 10.25%, 10.5% range, and we intend to resume our repurchase program.

With respect to mortgage lending or mortgage warehouse lending, the third quarter was unique in some ways. We talk about our countercyclical businesses and how through the cycle, we tend to be less asset sensitive than stated in terms of our asset sensitivity disclosures because we have these countercyclical businesses that perform in opposite direction.

The third quarter was unusual in the sense that we started to see the impact on the countercyclical businesses well in advance of the Fed raising rates. And so we think there's likely to be a little less seasonality impact in the fourth quarter in mortgage warehouse lending. We'll see how that plays out with mortgage rates where they are. At the end of the day, the mortgage warehouse lending business came down about $900 million in the quarter. We think it peaked sometime in the second quarter of this year. So that is a very unusual dynamic. We think that we have built share in that business. We have broader lines, and we think we've deepened share with our customers. We expect that there will be some consolidation in the mortgage space we think we're well positioned to continue to serve that customer set, and we will continue to be there. We are positioned with strong participants and while the economics of the mortgage business broadly for us and for everybody else, we'll be a little bit tougher in a lower volume environment, we think we're well positioned.

Tom, I don't know what you would add to that.

Thomas Hung

Yes. I would add that we've seen some, but not what I would call any outsized consolidation so far. A lot of these operators have obviously been through rapid rate increase cycle only a handful of years ago. And so they're well aware of kind of what would happen in that environment again if we were to see multiple rate increases. So in terms of sizing their companies appropriately from an infrastructure and fixed cost fixed expenses standpoint, we're working with very experienced operators. And so I would continue to expect a very strong credit performance even in the face of multiple rate increases.

Hope Dmuchowski

What I'll add to what Tom and Bryan already said is -- this is not an NDFI line. We do table fund. So we have the underlying notes at close. So should something happen to one of our clients, we have those notes, we can sell them. And so we don't have the same risk that some of the different mortgage warehouse structures have. We continually talk about -- we've had 1 basis points of charge-off annually in this business as long as we can go back and calculate because we hold the collateral at closing. The other one is that we always point to is this typically stays on our balance sheet 19 days per note. It's just from the time the deal closes at the time it is delivered to the other side. So if we were to see something happen in this business, we had concern, we can bring those lines down pretty quickly.

Operator

The next question comes from the line of Michael Rose with Raymond James.

Michael Rose

Just wanted to talk about the 100 million plus PPNR opportunity. I think the slides say your about 40% of the way through. How should we think about the repositioning of the $45 million after tax benefits in relation to that. Should we think about this as in addition? Or should we think about it as maybe just accelerating the progress and the path that you're already on?

Bryan Jordan

Think about the $45 million to use your word in addition or incremental to the $100 million pretax pre-provision efforts that we have in place.

Michael Rose

Okay. Perfect. And then maybe if you can just outline from here, the extra 60% to get to the original amount. What is still left to happen? And how does the rate picture kind of potentially impact the timing.

Bryan Jordan

Some of it is just timing when you annualize it as you deepen with customers. We've talked a lot about our treasury management success with deepening with existing commercial clients. On average, when you deepen our treasury management relation with the client, it can take 3 to 9 months to actually get that treasury management relationship moved over because of their payroll, their IP, their [ ARR ]. It is a long process for them to move that all over. So some of that is just the annualization. So when we say it's 40%. That's kind of an exit rate and then you pick that up on a full year. The other is we continue to see great success with wealth. We keep talking about how we've rolled out a new partnership with LPL. We've hired new wealth advisers. We're continuing to see that work as we deepen with some of our commercial business owners and others that already are first rising client and then we introduced them to the [ wealth ] side of it. I would say those are the 2 biggest that we still have the tail on. We've continually talked about loan-only relationships, low economic profit, low only and not renewing those at renewals we can't get the profitability up or deep in the relationship. This mortgage sale goes hand to hand with that. These are mortgages that were seasoned on our balance sheet where we did not deepen the relationship.

So Bryan's first question, this is additive to the number, but is completely in line with how we've been rethinking of our portfolio to increase profitability for every single dollar we lend out.

Michael Rose

That's very helpful. And I don't want to get ahead of myself and asking about 2027, but just given the benefits from the repositioning. How much opportunity is there as we think about incremental investment in the franchise and things like you mentioned, I hope just on treasury management wealth also leaning into commercial loan growth to basically, how should we think about positive operating leverage for next year? I know it's early, but just trying to better understand the outlook there.

Hope Dmuchowski

We do not expect to have a significant reinvestment like we did 3 years ago coming out of the termination. We believe we have the right run rate of expenses. We continually say will be inflationary from here on out for expense growth year-over-year, and we expect positive operating leverage next year.

Bryan Jordan

We see, Michael, we see a number of opportunities to continue to invest. So our plans today would include refreshing banking centers, building new banking centers, continuing to hire to invest in technologies, et cetera. And we feel good about our ability to control our expense base. We think we have enough levers in that. We will feel some of the impacts of inflation in certain things like health care and costs and general inflationary type costs. But we think we can maintain a reasonable growth rate in our expense base that we can deliver positive operating leverage into 2027. And I would say, as we sit here and think about 2028, that's our plan going into 2028 as well.

Operator

The next question comes from the line of Bernard Von Gizycki with Deutsche Bank.

Bernard Von Gizycki

Just on commercial real estate, it seems expectations have improved throughout the year. I just wonder if you could just share some thoughts on forward expectations and how that look for higher rates impact that at all?

Bryan Jordan

Yes, sure, I'm happy to answer that one. The commercial real estate group has had a lot of momentum. But most importantly, we've remained very disciplined in how we manage that book. And so my expectations are -- if rates go up, I can -- I would expect it to continue to perform very well. And I think the 2 main reasons I'll point to.

One is if you look at our strong loss history, if you go back to the start of 2023 when we were seeing our peak interest rates. Since then, our pre net charge-offs at our average 17 basis points. And so I think that speaks to even in a high rate environment, our discipline really holds up. And those numbers, I mentioned around projects underwritten in a very low post-COVID rate environment. Obviously, the more recent vintages are underwritten to higher interest rates. The other thing I'd point to is, especially on the multifamily side, I think the real root cause has been supply and absorption rate.

On the supply side, CoStar show since the peak in 2022 starts are down 70% units under construction are down 50%. So there's a lot more supply coming on. And then on the absorption side, with what consumers are dealing with right now on top of elevated home prices and higher interest rates, renting is relatively more attractive than buying. And so I think the absorption will be there as well.

Bernard Von Gizycki

Okay. And then just as a follow-up, maybe just on the fixed income side, it seemed maybe it came in a little bit better than expected, I mean, just given the rate [indiscernible] during the quarter and you did highlight some higher client restructuring activity. I'm just wondering, is that maybe just specific to the quarter? Do you think that kind of continues? Just kind of some thoughts on the go-forward expectations on some of those trends?

Bryan Jordan

Yes. We have continued to see in this business over time as you enter a rising rate environment, a quick rising rate or quick decreasing rates. Some of our clients try to get ahead of that and restructure their balance sheet. We saw this when rates were decreasing about this time last year. And I do think, depending on how quickly rates increase, if we do, I don't know where the forward curve is this morning, but yesterday it had 1.5 increases in the back half of the year. I do believe that we could see additional restructuring, but it really is very related to how quickly rates move up and down and our clients' appetite to try to hedge that in advance.

Operator

The next question comes from the line of Ryan Kenny with Morgan Stanley.

Ryan Kenny

Can you unpack what you're seeing in terms of noninterest-bearing deposit balances and mix shift. On one hand, you could argue, customers are already broadly optimized. You're growing operating accounts, you're deepening relationships. But on the other hand, we have some rate hikes in the forward curve. So how do you think about NIB mix? And is there a scenario where NIB balances and IP balances can grow?

Hope Dmuchowski

Yes. On the first part, we're not seeing mix shift, and we haven't seen it for well over a year now. Customers that were rate-sensitive had already taken advantage of that in a rising rate scenario, and we had stabilized. What we are seeing is the cost of inflation has then have less money in their operating and checking accounts, right? They're spending it more quickly.

So their average balance their average days at a higher balance, a little bit lower. We absolutely believe that we have a franchise -- we have a product set and bankers that can continue to grow deposits, both the noninterest-bearing and interest-bearing as you saw this quarter. There's always seasonality in deposits with commercial clients when they pay their annual taxes or there's seasonality around consumer private client around tax season or bonus season. But we absolutely believe we will continue to grow both of those in the coming quarters and years as we refocus on long -- strong relationship business with our clients.

Bryan Jordan

If I had to take a side on the trade, I'd say customers are much more optimized today than they were a year ago or 6 months ago. There's been a lot of -- there's a lot of data out there about rates. There's very good transparency in the marketplace. And as Hope said, most of the mix shift we see today is just in sort of spending patterns.

Ryan Kenny

And as a follow-up, in terms of your capital priorities. So you used some capital for the mortgage sales? It seems like looking forward, you'll use some capital for resuming buybacks for loan growth. Is it a fair interpretation that this means less of a priority to maybe use capital for a depository acquisition?

Bryan Jordan

I think that's one of the tangential benefits. As I've talked about over the last year, the optionality about doing something small that would create incremental liquidity. I think that makes that significantly less of a priority in our view. And in many ways, deals with that need. So the capital priorities are: one, investing in customer growth, customer and balance sheet activity to being smart with our capital and repatriating it to shareholders opportunistically through repurchasing shares in the marketplace. And we have about a little over $660 million of capacity remaining. So we're in a good place to be -- have a lot of optionality around investing with customers and returning capital to shareholders.

Operator

The next question comes from the line of Janet Lee with TD Cowen.

Sun Young Lee

Could you unpack a little bit about the decline in core C&I ex LMC, you talked about how the line utilization dipped in July and August before rebounding again in September. Is there any more things that could explain the decline in C&I outside of those July and August in summer months?

Bryan Jordan

No, not particularly. The loans to mortgage companies is really seasonally driven as well as just the [indiscernible] environment in terms of other core C&I, as you would expect, there were increases in some sectors and decreases in other, there wasn't any major driver in one direction or the other.

It's speculation/projection. But I think customers are like all of us, I see headline fuel cost inflation going up significantly during the course of the summer, diesel fuel supplies. You see a lot of competitive dynamics. And I think people are just being thoughtful about where are we in the economy, what's next? And I don't read anything into it of a negative been at this point, I think it's just ordinary course of business.

We increased the level of lines that are outstanding in the quarter, and I fully expect that over time, customers will take those lines, use them and put them to work and growing in their businesses.

Sun Young Lee

Right. So it seems like you're expecting for commercial lending growth momentum to increase versus the third quarter. On the mortgage can also, it looks like the 4% EPS accretion seems like floor since that's not assuming any benefit from partial deployment into higher-yielding loans. Can you help us quantify what partial means here of the $4.5 billion coming off the balance sheet, how much should we expect to redeploy into C&I and CRE as mid-single-digit kind of growth still a right place to be?

Bryan Jordan

Well, yes, I think I think the pro forma is invested in securities. And my working assumption is that over the next 2 to 3 years, we can deploy half of the $4.5 billion is the call it, a little over $2 billion in incremental loan growth activity over the next 2 to 3 years. Again, it's dependent upon what the economy gives us. And how interest rates and inflation impact things. But we think with our asset generation capability, we can pick up incremental growth in that range.

Operator

Your next question comes from the line of Jared Shaw with Barclays.

Jared David Shaw

So just going back, I guess, to the bigger strategic view with this sale, should we expect any additional bigger moves to execute on that Five Flag strategy? Or is it more of like executing on the blocking and tackling like Coke mentioned around treasury management, wealth management and things like that?

Bryan Jordan

Yes. I think -- in terms of a big balance sheet profile changing things, I wouldn't expect anything else at this point. I think the -- you used a great phrase blocking and tackling. The $100 million is a blocking and tackling exercise Hope did a great job describing some of the actions. But it really is customers work on cycles, our relationship with them on cycles, and it really is hundreds if not thousands of bankers every single day interacting on sort of the premise that I laid out in my prepared comments that we want to broaden and deepen customer relationships and thinking about how we proactively look for opportunities to deliver more valuable advice, counsel and support for our customers and at the same time, deepen our relationship, but it is a blocking and tackling exercise.

Jared David Shaw

Okay. And then just a follow-up for me more bookkeeping. When we look at the securities portfolio, apart from what you're going to be putting in from this sale, what's the cash flow been looking like there? And what's your new reinvestment rate versus the roll off on that?

Hope Dmuchowski

Yes. Jared, we have that in our deck. I'm just trying to turn the page. I think it's approximately $1 billion of securities with a roll-off yield of currently 2.9%. And as of today, floating rates in the mid-450s -- mid-4s, sorry, SOFR plus -- if we do see rate increases, obviously, that gets higher as the reinvestment, the mid-4s moves up 25, 50 basis points, et cetera, so far and Fed funds move up in the future quarters.

Operator

Your next question comes from the line of Anthony Elian with JPMorgan.

Anthony Elian

Can you help unpack what drove the reduction to the revenue outlook? You have tailwinds to NII from the bottom of Slide 8, you noted a few times hope that NIM is expected to increase to the 350s in 4Q. But is that not enough to offset the lower countercyclical revenue in 4Q?

Hope Dmuchowski

Yes. Thank you for the question. I think we're sitting right at about 4% for the first 9 months of the year. If you look at Q4 of last year, it's not as much about momentum quarter-over-quarter, but we had a really strong Q4 last year in our counter cyclical, it was a high point for mortgage warehouse balances, which is typically a low point of the year that they had a significant increase in Q4. We also saw really strong ADR in FHN Financial that we do not expect to repeat in Q4 of this year.

Anthony Elian

And then on expense, you saw a step-up in expense ex deferred comp in 3Q, but you're still pointing to flat for the full year expense range. I think that would imply a step down in 4Q. What's driving that and the unchanged expense outlook? I asked because if I look at the past few years, 4Q expense has been up sequentially.

Hope Dmuchowski

Yes. A few things in that is the timing of our cash incentives that were paid out for deposits was a high point. So if you look at noninterest expense in Q2, Q3 and Q4, there is absolutely seasonality in that line. The other is really as we think about completing multiple technology and AI investment, we're starting to see the expense realization come in. And the third part of that, as we talked about, we had a restructuring of our mortgage business as well as some other smaller restructurings in the quarter that reduced our go-forward run rate for personnel and associated costs with that.

Operator

Your next question comes from the line of Timur Braziler with UBS.

Timur Braziler

A couple more on the restructuring. Just the near-term opportunity in terms of wholesale reduction versus securities purchase, I guess, what portion of the proceeds are going towards reducing wholesale?

Hope Dmuchowski

Yes. We don't have that exact number yet. I think it's really -- we're looking through all the scenarios. As we mentioned in our prepared remarks, we just closed on this transaction last week, and we expect to close this month. So we're still in the early phases of putting that all back to work. I do think it's more a mix into securities and wholesale funding. As Bryan mentioned earlier, we did end the quarter with higher wholesale funding than we needed due to the way you ladder that out. You make a 30-day, 60-day commitment. We brought in more client deposits. So that wholesale funding will come down beyond just the impact of the sale.

Timur Braziler

Got it. And then maybe bigger picture, I guess what is this restructuring transaction, say, if anything, about First Horizon's willingness to remain independent? And does this broadly change anything from a strategic optionality standpoint going forward?

Bryan Jordan

I think in broad terms, it increases our optionality. It creates a more profitable customer-centric balance sheet. We remain as flexible in terms of our capital repatriation. And while I've said many, many times over the last couple of years, we're going to continue to operate the business with a long-term vision of creating value for our customers, our communities, our shareholders and our associates. We're not changing or reducing in our view, any optionality we have for the future.

Hope Dmuchowski

I just need to clean up my words per my legal advisement here. We finalized last week and we settled this month. Apparently, I got my legal terms backwards on the transaction. So note from our legal team. I just want to clean up my language there.

Bryan Jordan

We signed a sale agreement we'll close it.

Hope Dmuchowski

Correct. I want to make sure it's appropriately recognized in the transcript.

Operator

Your next question comes from the line of David Chiaverini with Jefferies.

Unknown Analyst

This is Brooks on for David Severini. You mentioned that the sale adds about 100 basis points of near-term asset sensitivity and the proceeds going into floating rate securities. You guys still have some received fixed swaps maturing in 2027. And then in the hiking cycle, would you restructure or unwind any of those hedges or let them run off and keep the extra asset sensitivity?

Hope Dmuchowski

Great question, Brook. And I'll say we're always evaluating what our options are, but bringing down the duration of the portfolio was a positive to this transaction. But we are not -- as Bryan mentioned earlier, we're not in the near term looking at any other transactions at this time. But we're always reevaluating our balance sheet based on changing rates environments, whether it's increasing, decreasing flat. So that is part of our regular cadence to look at our asset sensitivity and make sure that we're hedged correctly on both sides of the balance sheet.

Bryan Jordan

And I know this is somewhat repetitive, but as I mentioned earlier, we do think about the countercyclical businesses in terms of our aggregate sensitivity business. So we're never quite as asset sensitive in rising or a falling rate environment. So when we look at balance sheet derivatives, we look at it in total and how the balance sheet will perform through in our view, through an earnings cycle. So we'll make those decisions as we get closer.

Operator

Your next question comes from the line of Casey Haire with Autonomous Research.

Casey Haire

Great. Just 1 more to me -- the 60% beta, I guess my question is, why is that not lower through the cycle? I mean, that very much lines up with what you guys did in the last hike cycle. And it sounds like you guys are -- with the stronger liquidity profile, you're more willing to let loan growth pick up and deposit growth kind of lag. So that would give you the opportunity in theory to do better than that 60% deposit beta. Just wondering why that's still the target and if whether or not that's conservative.

Hope Dmuchowski

I would say that target is a little bit lower than what we saw through the last rising rate cycle because we had the banking crisis in there. We actually topped out closer to the 70%. So it is slightly down from that. I think it's an early guess, Casey. The question is how much -- as we've talked about every call, it is a competitive environment for deposits, how much loan growth is there in the environment impacts what the competitive nature of deposit is the balance sheet going to shrink at any point in that cycle. And so I'd say use it as a proxy, but absolutely, we would love to beat it.

Operator

Your next question comes from the line of Edward Najarian with Hovde Group.

Edward Najarian

Most of my questions were answered. Just a quick question on capital deployment and stock buybacks. Bryan, you mentioned that you're going to continue to -- you're going to resume the stock buyback you were buying back very rapidly really through the first quarter, a little bit less in the second quarter and then stopped in the third quarter. Now you're down to 10.3% on CET1. I guess 2 questions. First is the moment this transaction closes next week or whenever that is, to what extent does that enhance the 10.3% CET1, do you step up when these things go off and then to what extent is that? And then, Bryan, could you give us any sense of how rapidly or what kind of focus you have on buying back stock in the near term? And is there sort of a low threshold, whether it's 10.25% or whatever it is that you don't want to drop below on CET1?

Bryan Jordan

So it's been a long time and a good talk to you.

Edward Najarian

The yes, Bryan, it's been a long time, I could talk to you back then.

Bryan Jordan

Buyback is one of the things that we're opportunistic about. And as we look at capital we look at it relative to a number of risks in the balance sheet, everything from our stress testing to our bottoms-up analysis of capitalization. And we think we're very comfortable in that 10.25% to 10.5% range post this transaction. We expect to continue to generate a fair amount of capital, which will support growth. We expect that we have the ability to continue to repatriate capital to shareholders.

So there's not a hard floor, there's not a hard ceiling. We continue to, as a Board, to sit down every quarter as we go through our financial performance and the outlook on the economy to evaluate where we are. But given this transaction, where we are post the sale of the loans and our outlook on the economy, credit, so on and so forth. We do think we have capacity to use a portion of this capital -- excuse me, this buyback and our capital base to repatriate some capital in the fourth quarter and going into the first. We have been opportunistic over the course of the last couple of years, and we have repurchased a significant amount of stock.

And clearly, when it's in our view, on sale at prices like we see in the market over the last week or 2 as the industry has come down, we will continue to use that as an opportunity to buy.

Edward Najarian

Hope, is there any kind of a projection or levels we should think about where CET1 would be the moment the day that these loans actually leave the balance sheet.

Hope Dmuchowski

No, it's not a material impact we've already marked on. That's how we use capital this quarter. I talked about in my opening remarks that average TCE was much higher than period end TCE we marked these all at quarter end when we entered into an agreement to sell and so that has already happened. What we did have to do is stop all share buybacks. When you're in a discussion of something like this, regardless of what your capital target is, you cannot be in share buybacks. We do not do an ASR. We stay active in the market throughout the quarter. so that we have leveraged to say -- you mentioned in the prior quarter, we had really significant loan growth in prior quarter, which we put that capital used in and then use the delta to figure out how we get within our CET1 target.

We don't set a dollar amount at the end of -- at the beginning of each quarter with our board for a quarter. We really look at how do we deploy capital to loans first and then shareholder second, targeting that CET1 kind of our denominator on that calculation.

Operator

Your next question comes from the line of Christopher Marinac with Green Capital.

Christopher Marinac

I wanted to ask a question to Tom about C&I losses, and I know we've got the broader guide for losses for the year. But just curious at the C&I level that we've seen this quarter and last quarter. Is that still a good number in the near term? Or would you expect that to change either side?

Thomas Hung

Yes. C&I net charge-offs have been fairly consistent. Obviously, quarter-to-quarter, there's some ups and downs, but it's remained relatively consistent. I don't have any reason to believe it would materially deviate one way or the other in the upcoming quarters. Probably not surprising where it's coming from is generally things that are more closely tied to discretionary consumer spending in the current environment. So discussion in consumer, retail trade, some manufacturing, that's essentially kind of where we've been seeing it.

Bryan Jordan

It's largely -- this is Bryan. Chris, it's largely idiosyncratic. There's no huge patterns developing.

Christopher Marinac

Okay. Great. And then just a related question. The balances we've seen on the unfunded C&I, we could still interpret that as a kind of net growth of customers, both new and existing on the platform.

Bryan Jordan

Yes. Yes. In terms of putting unfunded commitments onto the balance sheet is net growth in customers, broadening and deepening customer relationships and new customers.

Unknown Executive

Yes, that's right.

Operator

Your next question comes from the line of Ben Gerlinger with Citi.

Benjamin Gerlinger

Just want to follow up a little bit on Casey's question about deposit betas. [indiscernible] to here give you liquidity or reducing your loan-to-deposit ratio. Like isn't the kind of the positive years that your overall beta shouldn't be a pressure to kind of in theory hot money type clients looking for more yield? Or is it potentially like you might have continued loan or deposit balance growth? I'm just kind of curious on why the beta wouldn't be a step lower over this next hike cycle.

Bryan Jordan

Well, Hope, can give you a mechanical answer to that. I'll give you my 40,000-foot view. And it is -- we're forecasting out a cycle and the competitive landscape and what happens is a little bit unknown to us like it is to everybody else. And so we're placing a forecast out there that's in line with what we have seen in past cycles. We are going to optimize our deposit pricing capability as best we can.

But it is important, as I've said in the past, we're not playing solitaire in the marketplace and that we're going out there competing to broaden and deepen customer relationships. We're looking to acquire new customers and so we think in a context, plus or minus 60% that we can operate in that area, and that is our outlook. I would not try to read too much into or fly spec whether that's 58 or 62 at this point because there are too many unknowns in the operating environment. But we are at every single day looking for how we strike that balance with providing real value to customers and prospective customers and do it in a way that drives profitability.

Hope Dmuchowski

What I would add to that, Ben, is you asked the question about hot money. We don't chase hot money. We do not have a large CD portfolio. We don't have a national deposit franchise where we market higher rates across our footprint. But we do have clients that want to be treated fairly and get a fair value. And so as they see the rates moving up, they're going to call their banker here and says, "Hey, I've seen this or I think called from other bankers. So a lot of it is protecting your back book and protecting your client relationship. We do run an asset-sensitive balance sheet. And so a lot of our clients was asked a lot of critic questions, their cost of funding is going to go up with each rate hike. To the extent that they have interest-bearing deposits with us, they're going to try to offset that as an earning asset. And so don't think about it as chasing hot money, and we continue to put in our earnings deck that we retained 90-plus percent clients each quarter in the depository space, but that requires us to pay them fairly once they're in, not just reward a new customer with top of market. That's how we retain those relationships.

Operator

Your next question comes from the line of Chris McGratty with KBW.

Christopher McGratty

Bryan, you obviously got a capital the capital to do this trade. I'm interested in the discussion about earn-backs with this. Obviously, there's a earnings initially and earnings over time. But relative to buying back the stock, and the answer might be you could do both, but the earn back on paper looks long, but just any color behind that decision would be great.

Hope Dmuchowski

Yes. I would say the arm back on paper is the minimum. That is your immediate return and we just put this all in securities and you don't see significant rising rate environment. So -- when we think about the payback, we are assuming that, as Bryan said earlier, approximately half of this is redeployed into loans in the coming years, and that payback comes significantly in line. I'm not sure what assumptions you were using, Chris, in your question there. But I do want to reiterate what we put in the deck is the immediate impact in the current rate scenario.

Bryan Jordan

Yes. The earn back, if you just assume we invested in floating rates, short-term securities, that is a longer earn-back. If you assume like we believe we can, that we can invest in incremental customer relationships over the next couple of years, call it, half of the proceeds, the earn back comes in very favorable vis-a-vis a stock buyback.

Hope Dmuchowski

To put that in line with my earlier comments, we talked about securities being SOFR plus 50 currently, and we talk about our loan deployment being in the SOFR plus mid-100s to mid-200s. And so for every dollar that you redeploy, you pick up much more 100-plus basis points more on average than what will be in the securities day 1.

So what we tried to do is tell you what the immediate impact is and then it's upside from there as to how quickly redeploy it at 150 or 200 basis points higher than what it will be in securities day one.

Operator

The last question comes from the line of Russ Anderson with Evercore.

Unknown Analyst

This is Ross Anderson on for John Pancari. Just on -- Tom, you touched on the credit performance and user in the multifamily supply picture. Could you just talk a little bit more about what you're seeing in updated property valuations and refinancing, borrowers have to bring more equity to the table or cash flows generally supporting renewals on existing terms.

Bryan Jordan

Yes, we actually continue to see a very robust market for refinancing our predevelopment deals. Some of this is commercial banks or some of it is private credit. There's a lot of deals on the market. That's what contributed to a very [indiscernible] and slow down the value alerts such as only in Texas than to supply those cases in kind of the most even in dress mark travel, we've seen no real evaluate and not updated [indiscernible] of about 20% and with we already consist through all site always to [indiscernible] so we insist certainly in the set cost loan. And so we have a significant distension years ago current for a confidence is still why we've been [indiscernible].

Sorry, could you guys hear us on that last answer, I got some feedback that we maybe have some audio issues in that last answer. Yes, I'm happy to repeat that. What I was saying is, overall, the refinance market has actually remained pretty solid. We've seen a number of our deals taken out by commercial banks. But but also by private credit and much more often than not without any additional equity coming in. That's because overall property values have held up, I think, relatively well -- relative to expectations even in markets with the greatest oversupply like the markets in Texas, where we've seen updated appraisals, generally speaking, kind of where we've seen where we have seen decreases even kind of the higher cases of those, it's been about a negative 20% and considering we've been very consistent and always underwriting to about 40% equity coming in the deals. And so 60% LTC, that has -- we've been able to absorb any of those decreases and still maintain a healthy amount of equity in our deals.

So I was pointing to, I think that's a big contributor this discipline we've kept and not chasing the market. That's why even in peak interest rates, we have continued to perform very well in our CRE portfolio.

Operator

There are no further questions at this time. I will now turn the call back to Bryan Jordan, Chairman, President and CEO, for closing remarks.

Bryan Jordan

Thank you, Eric. Thank you all for joining us this morning. I appreciate your interest and patience as we try to work through some of the complexity of this quarter. We think we're very, very well positioned for the fourth quarter and '27. Please reach out if there's anything at all we can do to give you additional information. I hope everyone has a wonderful day.