关联银行 (ASB) 2026年第三季度业绩电话会：息差与存款增长

核心要点

• Associated Bancorp公布2026年第三季度GAAP每股收益为0.76美元，扣除一次性收购成本后为0.81美元。调整后有形普通股回报率（ROTCE）超过15%。
• 净利息收入环比增加700万美元至3.77亿美元；尽管收购会计增值收益下降，净息差仍扩大3个基点至3.20%。
• 核心客户存款较上一季度增长近7亿美元（增幅2%）。这一增长使该银行得以减少批发融资。
• 总贷款额达到365亿美元，环比增加5300万美元。商业贷款偿付额偏高限制了期末贷款增长，但商业贷款项目储备同比增加36%至40%。
• 在资本市场业务、资产收益、存款服务费及刷卡费的支撑下，非利息收入环比增长8%至8700万美元。非利息支出减少1200万美元至2.60亿美元。
• 公司在第三季度回购了1亿美元的股票，并预计在第四季度完成现有回购授权的剩余额度，同时继续优先推动内生性增长。

关键财务数据

业务与经营业绩

Associated继续调整资产负债表结构，向基于客户关系的商业贷款倾斜，同时减少收益率较低且缺乏深层客户关系的住宅抵押贷款余额。工商业贷款（C&I）放款保持稳健，但偿付额与还款额偏高制约了第三季度的贷款余额增长。商业地产贷款（CRE）放款额超过偿付额，管理层指出，今年迄今约一半的CRE放款为建筑贷款，这将为未来的资金投放增长提供支撑。

吸收存款仍是核心盈利驱动力。关键市场的存款增长广泛，其中计息活期存款增长近4亿美元。管理层还强调，客户户数已连续七个季度实现净增长，今年迄今资金管理业务销售额同比增长37%。

资本市场业务、资产收益、服务费、存款账户费及刷卡费等多项手续费收入均有所改善。管理层预计American National将在2027年带来额外的财富管理和资本市场业务机遇，同时提醒称资本市场业务收入各季度间可能仍保持不均衡状态。

American National的系统和网点转换工作在季度结束后完成。在转换后的前七天，支票账户开户量较6月至8月的对比时期高出121%。管理层计划在奥马哈市场进一步加大对市场营销、人员和社区项目的投资。

在较新的商业贷款市场方面，管理层表示达拉斯已开始入账贷款。堪萨斯城业绩超出内部预期，被描述为该行表现最强劲的团队之一。

管理层业绩指引

管理层重申或更新了以下2026全年预期指标，其增长率是以Associated截至2025年12月31日止年度的独立业绩为基准计算的：

支出展望包含了与收购American National相关的成本。管理层目前预计收购相关总支出约为4850万美元，低于此前预期的5250万美元，预计所有剩余成本将在2026年年底前全部确认。

尽管收购会计增值收益减少，管理层预计每季度内生净息差仍将扩大约1个基点。此外，管理层预计将把核心一级资本充足率（CET1）目标区间维持在10%至10.5%，并将证券及现金占总资产比率保持在22%至24%。

公司未提供正式的2027年业绩指引。管理层计划在1月份举行的第四季度业绩电话会上讨论下一阶段战略规划及2027年展望，同时将保持正向经营杠杆列为核心目标。

风险与关注领域

• 即使储备项目和新放款增长更为强劲，工商业贷款（C&I）和商业地产贷款（CRE）的高偿付额仍可能继续影响所报告的贷款增长时点。
• 截至第三季度末，非应计贷款额为1.83亿美元，环比增加3300万美元。这一增加大部分反映了在共享国家银团贷款（SNC）审查后，一笔3000万美元的工商业贷款被重新分类。
• 逾期贷款有所增加，原因是在系统转换后部分车贷客户需要重新注册自动清算所（ACH）付款。管理层预计该问题将在短期内恢复正常。
• 管理层指出，能源市场动荡、持续通货膨胀、紧缩性货币政策、劳动力市场变化以及关税等因素需要持续监测信贷风险。
• 利率波动仍是不确定性的来源。据该行估算，利率上调100个基点将对净息差（NIM）产生1.8%的影响，而利率下调100个基点则将产生1.1%的影响。

分析师问答精选

经营杠杆：管理层表示，未来的投资部分将通过精简其他方面的开支来提供资金。管理层提到调整后效率比率为51%，并重申保持正向经营杠杆是核心规划原则。

商业贷款项目储备：管理层确认，商业贷款承诺同比增加36%至40%，按已提款项目衡量增幅甚至更大。管理层预计第四季度放款及工商业贷款（C&I）增长势头良好，尽管交易完成日期仍存在不确定性。

存款与息差展望：管理层预计第四季度来自商业和财富客户的无固定期限存款将出现季节性流入，这可能有助于进一步减少批发融资。管理层表示，资产重定价和存款增长应会支持息差持续扩大。

资本回报：该行管理资本主要参考核心一级资本充足率（CET1比例），而非有形普通股股权比率（TCE比例）。2027年进一步回购股票仍是一项选项，但管理层尚未设定未来的季度回购节奏。

战略重点：管理层的长期目标是实现客户户数增长2%至3%，进一步在主要大都市市场拓展业务，并加大对资金管理和商业银行基础设施的投资。

业绩电话会完整文字实录

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完整财报电话会议逐字稿

管理层陈述

Operator

Good afternoon, everyone, and welcome to Associated Bancorp's Third Quarter 2026 earnings conference call. My name is Sherry, and I will be your operator today. [Operator Instructions] Copy of the slides that will be referenced during today's call are available on the company's website at investor.associatedbanc.com. As a reminder, this conference call is being recorded.

As outlined on Slide 2, during the course of this discussion today, management may make statements that constitute projections, expectations, beliefs or similar forward-looking statements. Associated actual results could differ materially from the results anticipated or projected in any such forward-looking statements.

Additional detailed information concerning the important factors that could cause Associated's actual results to differ materially from the information discussed today is readily available on the SEC website and the Risk Factors section of Associated's most recent Form 10-K and subsequent SEC filings.

These factors are incorporated herein by reference. For reconciliation of the non-GAAP financial measures to the GAAP financial measures mentioned in our conference call. Please refer to Pages 26 and 27 of the slide presentation and 2P 10 and 11 of the press release financial tables.

Following today's presentation, instructions will be given for a question-and-answer session. At this time, I would like to turn the conference over to Andy Harmening, President and CEO, for opening remarks. Please go ahead, sir.

Andrew Harmening

Well, good afternoon, and welcome to our third quarter earnings call. I'm Andy Harmening, and I'm joined by our Chief Financial Officer, Derek Meyer; and our Chief Credit Officer, Pat Ahern. I'll start with some highlights for the quarter. From there, Derek will cover income statement and capital trends, and Pat will provide an update on credit quality.

Across the bank, we remain squarely focused on attracting and deepening relationships as a means to drive sustainable organic growth, remix our balance sheet, enhance profitability and improve our return profile. Through the third quarter, we've maintained our momentum.

We're improving our profitability by growing and remixing our loan portfolio. We overcame elevated payoffs in Q3 and grew relationship commercial loan balances while continuing to work down low-yielding non-relationship [ resi ] mortgage loans and recent pipeline trends give us confidence in sustainable growth trajectory.

We're growing our customer base and funding loan growth primarily with core deposits. We've grown our customer household base for 7 consecutive quarters. And in Q3, we posted nearly $700 million in core customer deposit growth, a 2% increase versus the prior quarter. This growth helped us reduce wholesale funding during the quarter.

Our ability to fund our growth with customer deposits is driving expansion of both net interest income and margin. In Q3, our net interest income increased by $7 million, while our net interest margin expanded by 3 basis points to 3.2%, our second best quarter in over a decade. And our focus on relationship deepening is also contributing to emerging noninterest income growth.

In Q3, we posted total noninterest income of $87 million an 8% increase versus the prior quarter, with broad-based improvement across several fee categories. Combined with disciplined expense management and stable credit trends, our third quarter results or further illustration of a model that's repeatable and sustainable.

As a result of our improved profitability profile, we can now support growth and contemplate other uses of capital simultaneously. With that in mind, we're pleased to return capital to our shareholders with $100 million in share repurchases during the quarter. The first major share buyback we've executed since I joined the bank in 2021.

We expect to execute on the remainder of our existing repurchase authorization here in the fourth quarter. With that said, organic growth remains our primary focus. Earlier this month, we reached an important milestone by completing the systems and branch conversion of American National Corporation.

With nearly 150,000 loan and deposit accounts branches, 80 and 70 ATMs converted over the course of a 3-day weekend, reaching this milestone took months of planning, collaboration and care from colleagues across our bank. From preparing systems and processes to helping customers and teams navigate change their focus and dedication made this milestone possible.

I'd like to congratulate the project team and thank our colleagues transitioning from American National Bank who have taken the change in stride. This partnership gives us a powerful lever to attract and deepen relationships in markets like Omaha for the Twin Cities and beyond. And I'm excited for what we will continue to accomplish together as one associated bank team.

As we've discussed previously, our leadership team is currently finalizing plans for the next wave of strategic initiatives to sustain our growth momentum into 2027 and beyond. With areas of focus, including growing our customer base, competing in major metro markets, outperforming and deposit gathering, driving relationship commercial growth, remixing the balance sheet expanding margins and improving our return profile.

We look forward to sharing additional details in the coming months. In summary, Associated Bank is on an upward trajectory with a proven plan to drive sustainable growth over time. And as always, our growth will be balanced with a conservative approach to expenses, credit and risk management that serves as the foundation of our company.

With that, let's walk through our third quarter financial highlights, beginning on Slide 4. We reported GAAP EPS of $0.76 in Q3 or $0.81 after adjusting for nonrecurring acquisition costs recognized during the quarter. Total loans of $36.5 billion grew by $53 million versus the prior quarter. We were faced with elevated payoffs in our commercial business during the quarter, but pipelines remain strong, and we remain confident in both our full year loan growth outlook and the sustainability of our growth strategy more broadly.

Core customer deposits grew by 2% during the quarter, driven by a combination of organic growth initiatives and seasonal inflows. This growth in customer deposits helped us reduce our wholesale funding levels in Q3. Shifting to the income statement. Q3 net interest income increased $7 million or 2% versus the prior quarter. while our net interest margin expanded by 3 basis points to 3.2%.

Noninterest income also increased by $7 million versus the prior quarter, led by growth in capital markets, asset gains, service charges and deposit account fees and other fee-based income. Total noninterest expense of $260 million decreased by $12 million versus the prior quarter. Our Q3 expenses included $13 million in onetime expenses tied to the American National acquisition which was down from $24 million recognized in Q2.

Capital trends remain solid. Credit trends remained solid with $14 million of provision, a 2 basis point decrease in our ACL ratio, a decrease in criticized loans and 19 basis points of annualized net charge-offs recognized during the quarter. Finally, we executed on $100 million in share repurchases during the quarter and finished with an adjusted ROTCE ratio north of 15%.

On Slide 5, we reiterate the core elements of our organic growth strategy and why we expect to sustain our momentum into 2027 and beyond. First, we put in more than 5 years of work to build an organic growth engine that focuses on attracting and deepening relationships as a means to grow and remix both sides of our balance sheet.

We bolstered leadership across all areas of the organization set ourselves up for growth. We've modernized our digital banking experience, enhance our product set, improved our marketing acquisition capabilities and developed a successful mass affluent program.

All of which are key to growth, particularly in major metro markets. As a result, we've turned a shrinking customer base into a net growth story with 7 consecutive quarters of net growth in customer households. As we grow these primary relationships, it's also translated into deposit growth, fee growth and other business.

And in commercial, we've increased RMs by nearly 50% in key metros sharpened our relationship focus across the team expanded our offering with new verticals and deposit gathering capabilities and launched new and C&I offices in Kansas City and Dallas with very promising initial results.

In addition to loan growth, we're collaborating to drive deposit growth, TM, capital markets, HSA and other business in a steady increasing manner. And as we've discussed previously, the renewed focus on relationships and collaboration across the bank presents natural connections into private wealth.

To facilitate this connectivity at the local level and across the footprint, we've added several talented executives to our private wealth leadership team, upgraded our product suite and are currently working through additional enhancements to the digital experience for wealth clients.

Shifting to the middle of the page, the American National Partnership has been as advertised, serving as a natural complement to our organic growth story. Going forward, we see a significant opportunity to pair American National's strong legacy in Omaha a Twin Cities with associated proven model to track and deepen relationships in metro markets.

This gives us another level to drive organic growth into 2027. And finally, in order to sustain our growth momentum in the future, our leadership team is currently mapping out what we want the next 3 years to look like for associated.

While we're still finalizing our plans, you can expect the continuation of the sustainable organic growth that has become a defining characteristic of our company, a focus on growing our customer base, competing in major metro markets.

Outperforming in deposit gathering and commercial loan growth, remixing the balance sheet, expanding margins and improving our return profile. We look forward to sharing more details in the near future. On Slide 6, we highlight our quarterly loan trends through Q3.

Average quarterly loans grew by 1% as we continue to remix the balance sheet by driving growth in commercial categories and working down our lower-yielding noncustomer resi mortgage balances. We have previously mentioned that the torrid pace of C&I growth in the first half of the year was expected to slow somewhat in the back half.

In Q3, our underlying C&I production was solid, but balance flows were impacted by an elevated level of payoffs and paydowns. We remain confident in the overall trajectory of our C&I business due to the strong trends we continue to see in our commercial pipelines, which are up nearly 40% versus the same period a year ago.

CRE was a similar story where the team drove high-quality relationship loan production that outpaced elevated payoffs during the quarter. We continue to expect elevated payoffs in CRE in the near term, but our team is among the best in the country at growing high-quality relationship business with proven players across our markets. For the combined company, we continue to expect period-end loan growth of 18% to 20% in 2026 and C&I loan growth of 20% to 22% as compared to associate stand-alone results for the year ended December 31, 2025.

On Slide 7, core customer deposits grew by 2% versus the prior quarter driven by a combination of seasonal inflows and our efforts to drive sustainable relationship deposit growth across the bank. During the quarter, we saw growth across most key markets. led by nearly $400 million of growth in the interest-bearing demand category.

This growth in customer deposits helped drive a reduction in our wholesale funding levels during the quarter. We continue to expect 2026 period and total deposit growth of 17% to 19% and period-end core customer deposit growth of 19% to 21% as compared to associated stand-alone results for the year ended December 31, 2025.

And with that, I'll pass it to Derek to discuss our income statement and capital trends.

Derek Meyer

Thanks, Andy. I'll start with yield trends on Slide 8. During Q3, overall asset yields improved by 2 basis points with slight increases in commercial and business loans, investments and resi mortgage loans, partially offset by slight decreases in CRE and auto.

On the other side of the balance sheet, total interest-bearing deposit costs have remained largely flat throughout 2026 and we finished the third quarter at 2.46%. More broadly, total interest-bearing liability costs increased by 1 basis point to 2.67%. On Slide 9, third quarter net interest income increased by $7 million from prior quarter to $377 million.

After posting a 14 basis point increase in our net interest margin in Q2 an increase largely driven by the addition of American National to our balance sheet and the resulting purchase accounting accretion, our margin expanded by an additional 3 basis points in Q3 to finish at 3.20%. This Q3 increase came despite a reduced accretion benefit during the quarter, a reflection of our efforts to grow and remix our balance sheet simultaneously.

We continue to expect total 2026 net interest income to grow by 19% to 21% as compared to associated stand-alone results for the year ended December 31, 2025. Given recent volatility in the rate environment, Slide 10 provides a reminder of the steps we've taken to put ourselves in a more neutral interest rate position.

We're keeping our funding obligations short to remain -- to maintain repricing flexibility -- we're protecting our variable rate loan portfolio by maintaining a received fixed swap balances of approximately $2.45 billion, and we're maintaining a $4 billion fixed rate auto book with low prepayment risk.

An up 100 ramp scenario now represents a 1.8% impact to our NIM as of Q3, while a down 100 scenario now represents a 1.1% impact. We expect to maintain this relatively neutral position going forward. Moving to Slide 11. Total investment security balances finished at $10 billion in Q3, down slightly from the prior quarter.

Our securities plus cash to total assets ratio finished at 22.6% as of Q3, down slightly relative to the prior quarter, but squarely in line with our target range of between 22% and 24% for the year. We expect to stick within that target range going forward. Next, I'll walk through noninterest income trends on Slide 12. Total noninterest income of $87 million was up 8% from prior quarter and up 7% from the same period a year ago. The increase was broad-based but was led by capital markets and asset gains.

We also saw growth in service charges and deposit account fees and card-based fees, while wealth management fees remained stable versus the prior quarter. Year-to-date through September, we've seen encouraging trends to start emerging wealth management, capital markets and several other fee income categories that are influenced by our efforts to attract and deepen relationships across the bank.

Additionally, as we've discussed previously, American National is not historically focused on wealth management and capital markets, so we see additional opportunities in those areas as we get into 2027. In 2026, we now expect total noninterest income growth of 12% to 14% as compared to associated stand-alone results for the year ended December 31, 2025.

Moving to Slide 13. Total noninterest expense of $260 million decreased by $12 million versus the prior quarter as we saw increases in technology, occupancy and FDIC assessment costs more than offset by decreases in personnel, legal and professional and other expense categories.

During the quarter, we recognized $13 million of nonrecurring costs in connection with the American National acquisition, a decrease from the $24 million recognized in Q2. Year-to-date, we've recognized $39 million in acquisition-related expenses, and we now expect the total amount of acquisition-related expenses to land at approximately $48.5 million a reduction from the $52.5 million forecast we shared in July.

We expect all remaining acquisition-related expenses to be recognized by the year-end of 2026. As we move forward, we will continue to invest in the growth of our franchise, but we're anchored on delivering positive operating leverage.

Based on our latest forecast, we now expect noninterest expense to grow by 19% to 20% in 2026 as compared to associated stand-alone results for the year ended December 31, 2025. This figure includes nonrecurring costs incurred as part of the American National acquisition.

Shifting to Slide 14. We are pleased to execute $100 million of share repurchases at a weighted average share price of $3.88 in the third quarter. Our CET1 ratio finished at 10.38%.

This figure was down 9 basis points from the prior quarter, but up 5 basis points relative to Q3 of 2025. Our TCE ratio was down 24 basis points from the prior quarter and down 15 basis points from the same period a year ago, landing at 8.03%.

Our tangible book value per share finished at $21.67 and $0.48 lower than the prior quarter but up $0.31 relative to Q3 of 2025. Going forward, we expect to maintain our CET1 target range of between 10% and 10.5%.

We I'll now hand it over to our Chief Credit Officer, Pat Ahern, to provide an update on credit.

Patrick Ahern

Thanks, Derek. I'll start with an allowance update on Slide 15. Our CECL forward-looking assumptions utilized the Moody's August 2026 baseline forecast. Forecast remains consistent with a resilient economy continuing a more optimistic GDP outlook despite increasing concerns of energy market disruptions, elevated levels of inflation for longer and a restrictive monetary policy.

In Q3, our ACLL decreased by $4 million to $491 million, with the decrease driven by an equal mix of loan growth and normal credit movements. Our ACL ratio as a percent of total loans decreased to 1.34%, down 2 basis points from the prior quarter and flat versus Q3 of 2025.

On Slide 16, key credit quality metrics have remained solid through the third quarter. Total delinquencies increased relative to the prior quarter and the increase was not was driven that by credit quality issues, but by the temporary impact of a systems conversion of our auto portfolio, requiring a segment of customers to reenroll in ACH payments.

The vast majority of these customers had never been laid on their payments, and we are actively working with them to complete the reconnection process. This process is moving quickly with the expectation of normalized delinquency levels in the near term.

Nonaccrual balances increased by $183 million in Q3, up $33 million versus Q2. And the vast majority of the increase was driven by the reclass of a $30 million C&I credit following the recent SNC exam. We remain comfortable with the underlying asset quality and full resolution of that specific credit and our nonaccrual trends were essentially flat otherwise.

And despite the increase in nonaccruals, total criticized loans still decreased by 7% and or $121 million versus the prior quarter. Q3 net charge-offs of $18 million were down 24% or $6 million versus the prior quarter, and we posted a net charge-off ratio of just 19 basis points for the quarter.

And finally, we booked $14 million of provision in Q3, down $5 million from the prior quarter and down $2 million from Q3 of 2025. In summary, we continue to feel comfortable with the credit performance of both our core portfolio and the credits inherited from American National.

With that said, our teams remain vigilant in reviewing our portfolios and staying in regular contact with customers to stay ahead of any emerging risks. We also remain diligent in monitoring credit stressors in the macro economy to ensure current underwriting reflects the impact of ongoing inflation pressures, shifting labor markets, tariffs and other economic concerns.

In addition, we continue to maintain specific attention to the effects of elevated interest rates on the portfolio, including ongoing interest rate sensitivity analysis bank-wide. We expect any future provision adjustments will reflect changes to risk rates, economic conditions, loan volumes and other indications of credit quality.

With that, I will now pass it back to Andy for closing remarks.

Andrew Harmening

Thanks, Pat. On Slide 17, we provided an update to our outlook following a Q3 marked by continued organic momentum, deposit growth, margin expansion, enhanced profitability and an improving return profile.

We are well positioned to finish this year strong and look forward to providing additional color on our expectations for 2027 and beyond on our fourth quarter earnings call in January. With that, let's open it up for questions.

Operator

[Operator Instructions] Our first question is from Casey Haire with Autonomous Research.

分析师问答

Casey Haire

Wanted to start on Slide 5, the strategic plan. So just some of the initiatives obviously look like they're going to put some pressure on the expenses next year. I know we're not -- it's too early for 2027, but just broad strokes is positive operating leverage still the goal for next year even with all these investments on the come? .

Andrew Harmening

Yes, Casey. I mean, always a good question. I would say a couple of things to that. This -- we're going to come up with a really creative name for this third plan. It's going to be called Phase I and in Phase I and Phase II, we got the same question on expenses.

And I think probably the best indicator of future results is what you've done. And so I look at Phase 2, that's wrapping up in 2026. And we had a ROTCE target of mid-teens. We've achieved that. We had a margin expectation of 3% plus. We achieved that. We had an efficiency ratio target of 55% to 60%.

We're operating at an adjusted efficiency ratio of 51%. Net charge-offs target of less than 35 basis points were well under that and having positive operating leverage. You can probably expect some of the similar categories. And the way that we approach any new initiative, even the fancy name Phase II is we'll go into our expense base, and we will find.

We'll make difficult decisions on where to cut in order to reinvest to drive our profitability profile. So the answer is that we will have -- we will expand on what we know which increases the certainty of execution. One of those key points will be looking at expenses, driving those down to reinvest in areas that we've proven in the past, we can get results.

Casey Haire

Okay. Great. And then just switching to capital. So it sounds like you're going to exhaust the remaining $100 million in the fourth quarter here. But just looking ahead, I know you guys are within your CET1 range. But does -- do you guys manage to the TCE ratio.

Just wondering, with that at 8% and more rate hikes coming, is that -- is there a level there that you want to hold to as you contemplate buybacks in the 27?

Andrew Harmening

Yes. The short answer to that is no. We're managing to our CET1 at $10 to $10.75 and the reason that we're comfortable with that range is because we have a conservative risk profile.

And we have an ACLL that's at the peer median with the risk profile that's lower than that. So we put ourselves in a pretty good position there. And so that's how we've operated.

That's how we expect to operate I don't know if you have any further comments, Derek, on TCE or not.

Derek Meyer

No, I think you said it well, we're trying to get our rate to where it should be and the binding constraint for us as we do that is look -- and we've been reinvesting our securities portfolio pretty short so that any AOCI risk is relatively low anyways, even though that's not included in our CET1.

Operator

Our next question is from Daniel Tamayo with Raymond James.

Daniel Tamayo

Daniel, maybe just starting on the credit side. So criticized loans were down, which is nice to see NPLs were up a bit. Curious if you see any of that increase on the NPLs flowing through on near-term charge-offs? And maybe just kind of a reminder if everything still seems the same? Or any update on the credit outlook. .

Derek Meyer

No, we don't see any near-term things flowing through the charge-offs. We remain -- the increase this quarter, something we were already kind of in discussions with, with clients. So we feel good about that resolution. And then as far as the outlook overall, we feel pretty confident in how we're looking at right now and the continued trajectory of the metrics.

Daniel Tamayo

Okay. Great. And then maybe, Andy, for you on the new markets, any color on kind of early trends from a balance sheet growth perspective in terms of what the they're putting up. And just curious how the kind of the pricing out there from a loan deposit perspective compares to your -- the rest of your portfolio, your footprint?

Andrew Harmening

Yes. Well, you're asking probably 1 of the most impatient CEOs in America, what trends he sees, which is pretty funny because I've been asking that question 8 days in to the systems conversion.

And in the way too early trend category, what I would say is I'm really, really pleased with what we've done on the consumer side of the bank.

And just a quick answer is we're almost fully activated on our debit card portfolio to what their activation level was pre conversion, and that happened in a week. And so as that -- what that means is then you have the people that want to get in digital banking logging in already.

And the most interesting stat that I've seen is more of a precursor into 2027. My question is on account opening, what happened immediately. So you're going through a conversion. You're getting a lot of questions.

We're issuing debit cards. You have people coming in, in the first 7 days and lo and behold, the number of checking accounts we opened in the first 7 days versus a period from June to August was up 121%. And so I can't take that number and forecast 2027, but in the category of welcome surprise.

We have a consumer bank that just has products and services that are significant, layering it on top of a team that was ready for it with a conversion that quickly got people up and running and activated on digital and on their debit cards. So the very, very early answer to that is we were excited about Omaha. There is reason to be excited. We will invest in Omaha.

We will invest from a charitable standpoint. We will invest from a marketing standpoint. We will invest from a people standpoint. And so we'll let the dust settle here over the next 30 days as you should, for any conversion but the very early indication to me is it's what we had hoped it is would be for us.

Daniel Tamayo

And also -- sorry, the Dallas and Kansas City markets. I know it's really early in Dallas, but Curious if there's anything you could tell us there?

Andrew Harmening

Yes, we're booking loans in Dallas, and that's a good sign. That means that the people that we brought over are consistent with what our strategy has been, which is we bring seasoned bankers.

We're not training them how to be bankers. They're very good they're opting for us, and they have followings on the customer and community side. So if you don't have to introduce somebody to the community, you can immediately get down to business, and that's what they've done there.

Kansas City they've exceeded every projection we've put out for them. And we hired there, and we say it's early. It's not even early in Kansas City anymore. We're almost 2 years into that is, frankly, 1 of the strongest teams that we have.

And I would say, 1 of the strongest teams in that market. And I couldn't be more pleased with what they do and how they do it. So those 2 early indicators to us tell us that we can move into major metropolitan markets. We have a blueprint for it, and it's really key on hiring people.

Those people are going to want to know that we have capabilities that allow them to go to market. So when we come out with our strategic plan in the first quarter, you can count on seeing increase in infrastructure on treasury management so that we can compete with regional and national players.

We also just are completing this coming weekend, our transition to a new commercial platform as well, which allows us to plug additional capabilities into it. So feeling pretty good on the 2 markets and really feeling good about our leadership team in commercial across the company, including in the Omaha market with our new market President, Jason Hansen.

Operator

Our next question is from Terry McEvoy with Wells Fargo.

Terence McEvoy

Maybe first question, is the 18% to 20% loan growth range, largely a function of uncertainty around the timing and magnitude of loan payoffs? And then maybe while you're thinking about loans. Could you just expand on kind of commercial loan pipelines and overall business sentiment among your customers? .

Andrew Harmening

Yes. I'm not sure that I caught uncertainty on payoffs. What I would say is on the -- just starting with the big picture on loans, we're in a very good place, regardless of some Q3 company sales that it payoffs we'd be at the top of the original ASP guide.

We're very likely to meet the full bank guide. And we're growing in areas that are allowing the remix and an increased profitability profile. The commercial pipeline we pressure test this and we look at this from a dollar amount and overall commitment amount.

We look at it from a funded debt standpoint, and so when I say it's around this, I try to be conservative and it's a little hard to believe. But the pipeline is up 36% to 40%, it could even be higher if we look at funded cape opportunity.

So what we're finding is a customer base and a community base that is seeing good business results and they're starting to convert on that. When we look at CRE, that's a really interesting one.

We were up 50% in production this year year-to-date roughly. We're up roughly 50% in payoffs, which so is the industry and think good as we are. That means deals are flowing through. But when you increase that production, half of that is construction lending.

So our unfunded construction commitments are up as well. When you net all that out, it means we have a pretty good view into the next 12 months that we're going to grow. And we believe that we'll grow responsibly in the low to mid-single digits in CRE. So good pipeline in commercial, good unfunded construction balances with an increase in production to quality borrowers and so when I look at that, Terry, that's -- does it happen in November, early December, January 2, I don't know.

But I will say that we feel pretty strongly we can achieve in the range that we have. And we have a durable, sustainable period coming after that.

Terence McEvoy

And then just as a follow-up, just curious, average noninterest-bearing deposits look to be about $500 million kind of above the period end. And I'm just curious, is that timing related? Am I reading too much into it because it did catch my eye.

Derek Meyer

Yes. This is Derek. So I would say all of our non maturity deposits are growing nicely. And both this quarter and looking into the next quarter, that's where you see most of the growth, including in noninterest-bearing. .

So that's been a strong story for us the back half of the year, both from a production standpoint and a tailwind standpoint, and it supports our outlook on NIM also.

Operator

Our next question is from Brandon Rud with Stephens, Inc.

Brandon Berman

If I could start on the expense guide. I'm just kind of backing into kind of what that implies for the fourth quarter here. And it seems like that suggests fairly large step-up in expenses from 3Q to 4Q. I guess, one, am I reading that correctly, 5%, 6% or so. And I guess, what's driving that?

Derek Meyer

So the -- we had an OREO recovery in third quarter that was -- that may have affected what you're looking at. But overall, we're within our guide and we'd expect to be.

Brandon Rud

Got it. Okay. And then maybe just on the NIM, the good core expansion here in the third quarter. Just maybe your expectations for that going forward. given the strong trends on the deposit side and the loan side as well?

Derek Meyer

Yes. I think our story is staying the same, that we started before the acquisition, then we took a nice step up with the acquisition, and we expect to continue after the acquisition, which is a basis point 1/4 of organic expansion.

We expect to do that in spite of runoff of the accretion. And so we believe that's a reflection of our business model working and the sustainability of it overall. So that's -- that's how we're thinking about it.

And we think planning that way and relying on organic growth to drive our outlook so that we can invest in a responsible way and drive operating leverage is the winning formula for us.

Andrew Harmening

And Brandon, just some color behind that. It is the same idea that we've had for a few years now, but we continue to get sustained performance behind it.

So if you look behind that, what I would say gives me some comfort that we can continue on is 7 consecutive quarters of growing our customer base.

I looked at TM sales this week Year-to-date, our treasury management sales are up 37% from the same period the prior year. We don't get rich on TM sales however, that's a good indication. We're talking about liquidity management. And that's where I'm starting to see a real movement in our commercial team and what they're doing.

We have one of the largest HSA businesses in the country. We have fed that business and we've had either high single digits or double-digit growth in deposits in that pretty regularly for the last 5 years.

So as we look to continue to invest in what we're doing in those categories, we have very good stable momentum going into the year-end.

And likely additional initiatives that will kind of feed to that. I know that's a long way around town when you talk about NIM. But for us, funding and deposit funding is something that is significant. They are not new strategies, and they're proving to be repeatable.

Operator

Our next question is from Jared Shaw with Barclays.

Jared David Shaw

I guess sticking with the deposit conversation, maybe looking at time deposits, you had some good pricing declines there, given the rate environment. How are you thinking about pricing time deposits? And can you give us an update on what's coming due and sort of the roll-on roll-off impact of that?

Unknown Executive

Yes. So the way we're thinking about it, is we're -- this quarter and next quarter, we don't see that as a key driver of our deposit growth. So while the pricing is a little bit below, our back book is a little bit below the marginal rates you see now.

So I think we're under 4 in the promotional rates that are out there are all over for. That rollover is not going to drive a lot of our NIM going forward. Most of it is -- most of our growth in fourth quarter, again, is non maturity deposits and interest-bearing demand deposits are is the biggest chunk of that.

So that's going to outpace any role pricing impact on the CD book for the rest of this year, and then we'll give a fresh view next year.

Derek Meyer

As we look at that dynamic of growth with good growth coming from non maturity deposits, how are you thinking about the cumulative beta through the cycle then if the structure of funding has improved, should we expect that betas could be better this time around? .

Right now, we're about 55%. I still think we're -- it's still going to roll around between 52% and 57% but as you know, even watching the competitive environment or the interest rate environment like we saw today versus a couple of weeks ago, I don't want to get too anchored on an outlook with the macro environment changing so much. What I do have a lot of confidence in is that we can offset that pricing with our asset pricing and still get improving deposit -- overall margin.

Jared David Shaw

Okay. And if I could just sneak one more on capital markets. Should we expect that growth in that line is a little more stable and steady now given some of the success you're saying you're having with treasury management and other areas. How should we think about capital markets going forward?

Andrew Harmening

Derek, do you know that's a yes and their question, right? I mean, you can have a lumpy quarter. But when we look year-to-year, I would expect to continue to see progress on that.

You can get a nice deal in there that gives it a pop but as we've added commercial bankers as we continue to believe we can, as we've expanded into the Omaha market where they don't have it, it's certainly my expectation that year-over-year-over-year will continue to get better. improving capital markets.

But I would be very careful to predict quarter-by-quarter in that category.

Derek Meyer

Jared, if we think about it as we should have higher highs and higher lows out of that category. .

Andrew Harmening

I could have saved time by just saying that,

Operator

Our next question is from Nathan Race with Paper Sandler.

Nathan Race

Just going back to the deposit discussion. To get to the guide for the full year, that implies a decent ramp in the fourth quarter. So just curious kind of apart from the momentum you guys described in terms of new client acquisition, household growth and so forth.

Is there any other seasonality we should be thinking about into the fourth quarter to help on the deposit growth front. And to that end, I mean, how much more do you expect kind of wholesale funding to come down after some good success on that front over the last couple of quarters?

Derek Meyer

I think the end of the fourth quarter is really where you see a lot of our seasonality kick in, which also gives us relief on the wholesale funding. And that comes through, again, in the non maturity deposits, both on the wealth side and the commercial side.

Andrew Harmening

And Nathan, in the early quarters, we often show a year-over-year growth in deposits, so we don't get confused. We don't just benefit from seasonality from same period prior year, we've been squarely in the 5% to 6% growth range on deposits.

So from this near term to your question and understanding the impact on NIM from funding sources, yes, we do expect to grow. And yes, that could lead to decreases in wholesale funding.

But seasonality to me is not the full story. The full story is if you look at one period the prior year, have you gone up? And are you ahead of the market on your funding? And the answer pretty consistently for us has been yes.

Nathan Race

Okay. That's helpful. One more for me. Just curious what you see in terms of kind of the way to have a rate on new loan pricing today? And if you have kind of like the spot rate on loan yields at the end of September? .

Andrew Harmening

Yes. Getting the spot rate on the end of September, I think is the road to nowhere. I think about the idea of what can happen with your deposits, what can happen with the particular loan.

So we don't really guide to that. What I will tell you is that our -- the asset yields that we're putting on commercial C&I is a little higher than CRE, and we grow it a little bit faster.

I'll tell you the things that we're doing is leading to that lift -- but I'd be very careful modeling something on a 1-day point margin into the fourth quarter as a directional thing. So we try to stay away from that.

Nathan Race

Understandable. Yes, just trying to get a sense of how much momentum loan yields have just given all the hires and with rates going up over the course of the kind of early part of 3Q just in advance of the rate hike.

Andrew Harmening

Yes, that's a one thing I'd say though, Nathan, that I'm not sure what happened there, but we have a pretty big variable rate book on the commercial side.

So going into the quarter based on the date effective data change, and we're slightly asset sensitive. We'll see a little bit of benefit going into October from that.

Operator

Our next question is from Chris McGratty with KBW. Going.

Andrew Steven Leischner

This is Andrew Leischner on for Chris McGratty. Just going back to fee income is in the quarter and the guidance update. Is this a good run rate to use as we go into the I think it was like an $85 million core number. Is that a good run rate to use as we go into 2027?

And then from there, factor in the additional opportunities you spoke about, given the Wealth and American National synergies or were there certain items that were outsized or seasonally higher in the quarter?

Derek Meyer

No. I mean we're not going to give guidance yet for next year until we go through it do, I guess, our Phase II strategic plan. But you do start to see -- we had a really good second half of the year last year.

Now we put up a really good third quarter this year. So you are starting to see a higher level run rate. It is still lumpy. You have nice performance in debit card and customer service charges and wealth, but it really is what's the rolling 4-quarter view that we can start to expect out of capital markets, and we have not settled in on that yet.

Other than we're very interested in it, like everyone else says because it's really been a highlight for us. And there's opportunity as a result of the A&B acquisition and all the RM hires.

Andrew Harmening

I'm more comfortable Andrew, now with the direction we have than I've been in 5 years. And the reason I am is that when you start to grow your customer base, we went from a negative 1% to 2% to 0% celebrated that and got absolutely no tailwind. Then we went up to 1% but was for part of the year and got very little tailwind.

And now we've been playing around in the 1.5% range for a while and that is giving us a tailwind on fees, whether that is debit card fees, whether that's new customers that are bringing more money, whether that's people that are getting a card and so on the consumer side of it, it's the first time I felt a tailwind in our company, and we'll have that heading into 2027.

As Derek said, we don't have the forecast for '27 yet, but we have nice momentum in areas that would lead you to believe that your fee income has an opportunity to go up.

As you increase that number on the customer side, and that goes through mass affluent, that mass affluent will start to go into your private wealth business.

And so when you expand your commercial base, that starts to go into your private wealth business. So we're seeing some increases. We highlight there some of those numbers. We'll certainly come up with a forecast for 2027.

The plan is to do that in January. But the fundamentals of our business right now are as strong as they've been in a decade.

Brandon Berman

Okay. Great. And then going back to [indiscernible] just given you're in the midpoint of your CET1 range, is the $100 million quarter a good pace for 2027? Or should we expect a little moderation

Andrew Harmening

I'd put that into category, we haven't forecasted that one just yet. We saw an opportunity right now and pretty comfortable in that $10 to $10.75 area because I'd just remind you, and you can see some pages on this, the quality of our super prime business, which should matter and the allowance that we have today. .

What I would say is it's an option open to us that we haven't had before. It's one that will be in our decision matrix for capital spend in 2027.

Operator

Our next question is from Jon Arfstrom with RBC Capital Markets.

Jon Arfstrom

Andy, can you talk about that commercial pipeline comment. Again, I think I heard something like 35% to 40% up. and you hedged a little bit on that. But is that right? And is that up materially? And if so, when or how does that pull through?

Andrew Harmening

My only hedge on that is I didn't want to give you a bigger number. The number is 36% to 40% in commitments, and it's higher than that when we look at funded portion of that.

So when you start to get into those numbers, you say, hey, what's the real pull through. I think the takeaway for me in that is when I see a pipeline going up like that, from a year-over-year standpoint, it does lead me to believe that the production is going to be there.

It has been my whole career. And I would say Phil Trier and the commercial team are very diligent in tracking their pipeline through the different levels so the answer is, it's not a hedge. It is a 36% to 40% increase. And with that, we expect pretty solid production in the fourth quarter, and we expect C&I growth in the fourth quarter.

Jon Arfstrom

Okay. Good on that. And then most of the questions have been handled, but I'm not asking for Phase III yet. But what are you pushing your people on right now, what's bothering you? And then is there anything left undone from Phase I that will carry over .

Andrew Harmening

Yes. I we've worked pretty darn hard to get to a 15% ROTCE. We've worked really hard to get to a 1.5-plus percent customer growth. And the message now is after you go through a conversion, after you go through a couple of platform changes, hey, that's your breath, but catch it fast.

And what I want to make sure of, and I really don't have to do much convincing on this is we want to be 2%, 2.5%, 3% in household growth. That doesn't happen by wishing for it. So we have plans, and we're just determining what the right timing of that is going to be.

And I think the continued growth in major metropolitan markets, where do you go and how do you get launched there? And do you use the plan that you've had in the past. But right now, I think it's the things that aren't fancy, it's discipline, and our team has it, and I like it.

And it's making sure that you aren't in place because there is a clear next step for us. We've worked hard to get to where we are, but there's another step for us from a business standpoint and a performance standpoint. And then let's make sure we give enough attention to Omaha.

It's a really good market, and these people are going through a conversion, and that's hard. However, we will put our money where our mouth is in that market. We believe in that team. And so I think those are some of the things on my mind right now heading into the end of the year and into 2027.

Operator

Are no further questions at this time. I would like to turn the conference back over to management for closing remarks.

Andrew Harmening

Yes. So I want to thank everyone for the interest. I will just highlight that. I'm pleased that we continue to expand NIM. I'm pleased that we've controlled expenses, grown revenue, maintain credit quality, improve our ROE. .

And I'm quite optimistic on the -- not just the fourth quarter, but going into the next year based on the pipeline growth that I've seen. So thank you for the continued interest and I will say, go brewers. This is the eve of the World Series and the first time in Milwaukee in 44 years. Thank you all.

Operator

This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.