Columbia Banking System, Inc. (COLB) Earnings Call Transcript
November 6, 2026
Earnings Call Speaker Segments
[Audio Gap] appreciate it. Columbia Banking is a regional bank operating across large, attractive Western markets with a strategy focused on deepening -- it's Northwest presence, strengthening its competitive position in California and expanding across other Western markets. Its commercial banking model supports a granular low-cost deposit franchise with total deposit costs of just 1.29% last quarter. The company has also continued to expand through M&A including last year's acquisition of Pacific Premier. Joining us today is Clint Stein, Chairman, President and CEO of Columbia Banking System. Clint has been with Columbia since 2005, serving in several key leadership roles before becoming CEO in 2020 and helping guide the company through multiple transformational mergers. To his left is Tory Nixon, President of Columbia Bank since March of 2023. And then earlier this week, those that saw an 8-K may have noticed that he is transitioning to a senior adviser role later next year. And then far right there is Ivan Seda, who is the Chief Financial Officer, role he's held since late 2025.
So typical as the other presentations, I'll kick off the Q&A and then open it up to the floor. First one, if we go back 5 years, Colombia was embarking on a significant transformation today after 2 major acquisitions and several years of integration and optimization work, how would you describe that the franchise Colombia has today?
Well, thanks for having us, and thank you for sticking it out here. I think we're the last 1 of the day. And so we'll try to make it entertaining if we can. I think that our franchise is the crown jewel of the West. And not that there aren't other good banks and good franchises in our markets. But when I look at our market position, I look at between specialty banks between $50 billion and $100 billion, we stand out. And it's the density that we have up and down the coast from the Canadian border to the Mexican border. So what we're building and have built over the years in the Intermountain states. And we just -- we're just in a sweet spot. As Tory likes to call it, it's kind of the Goldilocks syndrome.
And just sticking with that theme, Colombia is now one of the largest banks in the West. And just beyond higher hold limits, what opportunities does that scale create that would have been more difficult, call it, 5 years ago?
I mean higher hold limits are one thing. It gives us the ability to continue to grow with our customers as they grow. More importantly, it gives our customers the confidence that they can continue to bank with us. They can continue to expand their business, and we're going to be there for them. Obviously, there's the benefits of technology spread that over a larger customer base. Our market position it comes to recruiting talent. So it's -- there's a lot of benefit to what we've created.
Let me add to that. I would just say the success breeds success and talent likes to follow talent. So I think a big part of it can be in fact that as we've gotten bigger and we have developed more capabilities, we're attracting a kind of a different class of talent in the company, some highly sophisticated, very talented bankers that are coming to us today, which is different than 5, 6, 7 years ago, which is great.
The only other thing I would add is just diversification of the business model. That's very different than it was 5 years ago, kind of prior to the MOE and prior to the PPPI deal, we track a sheet of what we call wins and losses. So anything about $10 million of TCE we look at every single quarter. And the thing that I like to see on it is the diversification, both in terms of the industries that we're supporting and the types of products that we're leveraging. And then the geographic diversity is up and down the 8 Western states that we now serve.
Maybe sticking with products, what role do treasury management payments, wealth management and other fee-based capabilities going to play in strengthening that consumer relationship and kind of driving long-term value and growth?
Yes, maybe I'll take that one. If you think about the business alone sometimes an entree into the customer and the customer into the bank, but a loan can be more and more commoditized. It can be very transactional. It's the fee-based products, the treasury management, the commercial card, merchant services, international banking. All of those things are the true, I think, foundation of a really good core relationship with a customer. That's kind of where you make a transition from being a lender to an actual a participant and an adviser for a company. And -- and that's incredibly important for us as a company as we deepen the existing relationships. And then as we bring new relationships into the bank, it is a full service how do we lend you money if you need it, but then how do we do all these other things that are part of your working capital that give us this true core relationship with our customers. And it's pretty powerful.
And maybe Ivan could just add from a financial perspective, how do you finance that growth? And what are some of the products that can really drive ROE improvement?
Yes. In general, Tory and I were having a conversation yesterday from a commercial perspective and a business perspective, there's really no product gap that we have that we need to go out and acquire or fill or build in regard to that. There are some things that we're doing on the consumer side to make it a little bit easier to come on board with Colombia. And so we'll be rolling some of that out in the first half of next year. In terms of how we finance that, right? We're a very disciplined company overall in terms of expense management. We had an opportunity with PPBI coming on board this year to really think about operating leverage in a very powerful way, right? We closed the PPBI deal last fall, and it was a unique opportunity where given the treasure trove of capital that they had within the bank, our capital ratio has actually increased. We had a situation where capital ratios are coming up, it allowed us to be a more profitable institution in general. And then we have the cost synergies, which were going out of the company over the first half of this year. So we had revenues going up expenses coming down, and that's been a fantastic part of the engine this year to drive that profitability profile that we have.
And maybe just sticking with the kind of the strategy side. You often describe yourself as relationship banking is the core differentiator which a lot of banks to be clear, kind of use that. How important is that to you, how do you execute on that? And how does that support growth?
I mean that's how we differentiate ourselves. And we've been relationship oriented for the entire 33-year history of our company. Tory mentioned being an adviser to our clients, and we think about that trusted adviser and you can't earn that without building those relationships. And so we think with our business customers, they have their advisery network with their attorneys, their accountants. We fit into that as their banker. I actually offended somebody a few weeks ago, I was at a lunch and I was explaining how we differentiate ourself in that trusted advisory capacity and he's in the insurance industry, and he says everybody always forgets about the insurance broker. So if there's anybody that thinks that the insurance is there. I think it's a necessary people. But for those insurance brokers, they're part of that as well.
Great. Shifting over to just a question on deposits, as customers have more -- become more rate-conscious face fewer barriers to moving funds around how are you winning deposit relationships today?
Again, our value proposition has never been rate. We don't compete on rate. I mean it's important. You have to be in the ballpark on that. But if you going back to my previous comment, if you're part of that trusted advisory network, you can be a little lower on deposit pricing. You can be a little higher on loan pricing. And I think that's where, in particular, a lot of the smaller banks get it wrong is they don't fully understand their value proposition, they start to compete on rate. And once you do that, you've already lost. I don't know, Tory, if you want to add?
Yes, we look at pricing in a very holistic way, so a full relationship pricing and it's a combination of -- on the loan side and the deposit side and the fee income part of the business and look at it that way as that's how we price and we can -- there's a bunch of different levers to pull. I think that's one way to Clint's point, you get somebody in the company and you have them as part of your customer base, you have multiple products and services that you're negotiating all the time on price, deposits seem to be one piece of it. It becomes less sensitive when you have a bunch of other things that you're working on with them versus just having -- focusing on just deposit pricing. And I think we've done a really good job looking at a holistic view of the value we bring and the value that we want from a customer.
We'll touch on AI later, but AI agents, what is the risk to [indiscernible] in the banking industry in terms of moving low-cost funds into higher-yielding products?
So on Monday, I was at a function that we hosted for some of our family-owned businesses. And I asked them the question about did they ever see a day where they would trust AI to move their money around either personally or with their business. And without exception, they were absolutely not. I think it's a real thing. We joke around kind of half joking for those of you that are familiar with us and know our Chief Strategy Officer, Aaron Deer. Aaron will be the one on our team. He is probably working on building an agent right now to move this money around between this 27 bank accounts to get that 3 basis points. He claims it's for R&D purposes to see what other people are doing.
Everyone has hobbies.
Yes. But in all seriousness, I don't want to diminish the potential for that. But I think that we're better situated than most because we're a main street commercial first bank. And while we have roughly 40% of our deposits are consumer oriented, I don't think that our customer base is going to be a fast adopter of using AI to manage their money flows. But like everything else, things [indiscernible] scale coin and tokenized deposits. We don't see a demand or a need from our customers. That doesn't mean that we're not studying it, that we're not staying abreast of the developments there so that if it does become something that's important that we're able to [indiscernible] on that.
My personal view just to add on top of that is that if there is a risk of that in the industry, it's going to be in the more rate-sensitive and digitally native deposit bases, which really, as you get to know our companies is not how you would describe our deposit base. I would describe ours as, again, diverse geographically, diverse between consumers, small businesses and commercial and tends to be much more of a main street style banking model. So that's my personal view.
And when you're traveling across your footprint, meeting with customers, what are you hearing from business leaders?
A lot of optimism. I'll say, cautiously optimistic. There's a lot of volatility. But for the last 6, 7 years, there's been one thing after another that they've had to navigate. We strive to bank the best operators in any industry that we're in. And the good operators tend to find a way to navigate through uncertainty and actually benefit from it. So I mean that's, I guess, that cautiously optimistic is how I would characterize it broadly. Tory, you spend as much time on the road as I don't know if you have anything else to add?
Not much, but we do a survey every year, a business barometer about 1200 small, medium and probably up to $0.5 billion in revenue businesses across the country. And there's 60 questions. We get the results back in April. And was very surprisingly optimistic from that group. And I've had a follow-up with a few people involved in it. And to your point on the advisory group, the optimism has waned a bit over the last several months. I think because there's a lot of things -- obviously, some things going on in the macroeconomic world. But still optimistic, still surprisingly so. You got a lot of customers who have pent-up demand to do something. They want to make an investment. They've been on the sidelines for a bit. They're like ready to go. At some point, I think that kind of can be unleashed. But I think, to your point, they're still cautiously kind of sitting on the sidelines and optimistic that they'll get that chance in the near future.
And then maybe sticking with you, Tory. You mentioned talent. What are you doing to retain, develop and add talent and bankers?
Mean it's a full-time all out of salt. I mean it starts with the story of the bank. I mean we -- we tell the story of being a large enough company to matter where we have the capabilities, we have a balance sheet, and we have the services to kind of compete wit anybody, but we combine that with a community bank service model. So we kind of look at it as we're big enough to matter small enough to care kind of mentality. And when you tell that story to bankers in all of our markets, it's a very attractive story. Nothing against big money center banks, but sometimes you can't, you work for a place like that. You don't move the needle much. At Columbia Bank, you can move the needle. And you can be a very powerful part of the success of the company. That's attractive to a lot of people. So part of it is just is that itself. I said earlier, talent attracts talent when you've got talent in the company and they see the people that we have, and they're like, "I want to be a part of that team. And at the end of the day, the team with the best people usually wins most of the time. So that's kind of the mentality around it.
Obviously, years of significant interest rate volatility. How do you approach balance sheet positioning and franchise optimization, how has that evolved?
So I'll jump in on that one. So from a balance sheet perspective, what we strive for is neutrality, right? I think it's anyone's guess what's going to happen in terms of interest rates. I think if you go back 12 months ago, everyone was probably sitting in the room here, expecting a rate cut in December and probably 2 more over the course of 2026. And here we stand with the rate increase last -- I guess, 2 months ago now and potentially another 1 coming in December. So if you look at the ALM posture that we have, it's generally around neutrality, right? And I think we do a good job of managing to that within a reasonable range in a first year effect. We are going through a balance sheet transformation. And so I'll take it back to about a year ago as we put PPBI into the company. We had about $8 billion of our $48 billion loan portfolio, that's transactional in nature. And this really came from think of legacy multifamily legacy mortgage assets, long duration, low yield, about $8 billion that was yielding just north of 4% coupon. And so we've been evaluating that and working that off over the course of the last year. There's no credit concerns. It's not a good bank, bad bank type concept. It's just that we've got about $600 million of our capital base stock within loans where there's no other relationship with those borrowers outside of the credit itself. It's just not part of our business model going forward. So as that's been coming down off the balance sheet to the tune of about $250 million per quarter, we're replacing that with core relationship lending -- it's about a 200 basis point yield pickup comes [indiscernible] the deposits, the core fee income, what Tory talked about earlier, merchant card, all the different services that we want to wrap around our clients in regard to that. And so that's really allowed us to continue to move the needle from a net interest margin perspective. We have added approximately 25 basis points to our NIM. So we're operating just north of 4% today. And we expect that story to continue as we go into 2027. On the flip side, we talked about deposits earlier. I think everything has to come in tandem. And so from a deposit perspective, low to mid-single-digit core deposit growth has allowed us to continue to optimize the funding stack as well. We saw about $5 billion of what I consider wholesale funding costs that are higher. And so we look to continue to whittle away at that over the course of several years. And then finally, the third part of our balance sheet that's moving has been around capital, strong capital position. We go through a capital stress test every single quarter as part of our processes. And so that's allowed us to unlock the share repurchase program that we announced a year ago, just completed our first year of that and announced a few weeks ago as part of our earnings call that we'll be continuing that story going into Q4 in 2027.
Maybe one more for me and then I'll open it up. The margin -- net interest margin in Q3 exceeded expectations. Was that a function of you being conservative as you thought about the quarter? Or was there some positive underlying trends that drove that outperformance? And continue that theme as you think about your comments on fourth quarter and first quarter, do you feel like you're being conservative there as well?
It's a great question. So there were a couple of different things that factored into it. So the printed number is 4.11% margin in Q3. Included within that, we will disclose if there's a discount recognition on a loan that pays off early. We had 2 loans that paid off, which contributed about 3 basis points of that. And I see that as kind of a short-term pop in the net interest margin for Q3 that we don't expect to repeat in Q4. The core of it was just the strength of the funding stack. And so we put up a quarter where we had $1.2 billion of core client deposits. We outperformed what we had expected in terms of maintenance of the deposit costs. So we actually had deposit cost decrease over the course of Q3, which I think was very strong and positive in regard to that. As we go into Q4, one of the factors that we talked about during our earnings call is we've got a little bit of excess debt on our balance sheet over the course of the quarter. And what we're doing there is, we raised about -- well, exactly $250 million of 10 non-call 5 sub debt in September, mid-September of last quarter. The purpose of that is not to bolster our capital ratios. It's basically a refinancing of our Tier 2 capital. So we have, I want to say, 23 tranches of trust preferred securities, of which about 17 of them we're going to work through and redeem over the course of this quarter. And so what that does is we'll have a slightly higher costs associated with our term debt over the course of Q4, and that will contribute about 3 or 4 basis points of pressure. So the way I would describe it is I think it's going to take a breather kind of where it's at, steady state within a few basis point range of that adjusted Q3 NIM. And then as we get into next year, we do expect to continue to see that NIM story continue as we optimize the balance sheet, like I talked about earlier.
See if there's any questions in the audience?
[indiscernible] I was just wondering, how do you beat your gaining market share is to the big guys, Bank America -- and you mentioned you're big [indiscernible] to matter is small on the care. Can you give us some more stories about how you beat them in the market share gain?
Question is, do you know how to pronounce [indiscernible], that's where it gets a little bit more difficult.
So I'll start and then Tory and Ivan can jump in. Columbia Bank was founded in 33 -- a little over 33 years ago, and it was after Keybanc acquired [indiscernible] National Bank. And the reason I'm kind of going back to that point in time is that's where the CEO -- former CEO of PG Sound National Bank, partnered with somebody else and did an IPO and started Columbia Banking System because he wasn't ready to be done and his bank got sold out from under him. Our market share is just about double Keybanc's in the Northwest. So I think that's kind of an important thing over the last 30 years that they started with something, right? They started with in the Northwest of [indiscernible] Sound National Bank franchise. We started from -- they put a couple of bank charters together a couple of hundred million in assets to the point where now we're fifth. We have Wells, that's a little bit ahead of us; Chase, it's a little bit ahead of us; U.S. and then BofA. We take -- and that's in deposit market share. That's the easiest thing that we can track. The other thing is as we look at where we're attracting talent from we're attracting talent from all of those banks. We look at customers. I had -- I was in Oregon on Monday, and I had breakfast with somebody that's part of a Fortune 500 company. And he said all of their deposits in Oregon are at Wells Fargo and they're getting terrible service. All of their deposits in Washington are a U.S. Bank and they're getting terrible service. And it's about $300 million of deposits. He goes, we're bringing them all to Colombia. So it's back to that place where we're at. And I'm not trying to -- I don't want to be too critical of our competitors and the larger banks, but it's a matter of what Tory said, we're big enough that we can handle all of their needs, but we're small enough that they still matter to us and small enough to care and they get that access. Jamie Diamond is not going to go out and meet with the 45 customers I've met with in the last week. So that's how we differentiate ourselves is we know where we can win, and we're very targeted and competing where we can win, and we're pretty successful at it.
Yes. I'll give you 1 example. I mean this kind of stuff happens frequently in the company, but I'll give you an example in Arizona a couple of years ago in Phoenix. We had a new team there, kind of growing the bank there. There was a family -- basically a family-owned company that was -- had been a customer of BofA's for quite a long period of time, and they tripped a covent they had a rough year trip to covenant. The response from the bank was like no one is talking to us, no one -- they kind of don't want us. They don't feel like we're wanted in the company anymore. And so we sat down with them on a couple of occasions talked about where they had been previously what their forecast was, where they were taking the company, the shifts changes that we're making, we felt comfortable enough that we would provide a $50 million or $60 million credit facility to them, took them from the bank brought them into Columbia Bank, all the deposits, all the -- every part of the relationship. And it was because we sat down and spend enough time to kind of go through it and understand -- why did you have a little bit of a struggle on what are you doing about it going back to your comment around by trying to bank the best operators possible. People that have been doing their business for a long period of time, they figure out the good ones to figure out how to get through a struggle and come out the other end. It's 1 example. Since then, they've turned the company around completely. They paid off the credit facility, which I guess I'm happy that they pay us back, but also disappointed that they pay us back kind of thing, but it's a 4 strong relationship. And that's just 1 example of, I think, what happens a lot throughout our company and different footprint -- different parts of the footprint.
Any other questions? Front here.
Janet from TD Cowen. If you look at -- given the strength or the good performance on the deposit and you're obviously optimizing the balance sheet, improving profitability. If I look at your prior cycle, I think your beta on the deposit was in the mid-50s. You're guiding to about 50%. I feel like there could -- it seems pretty conservative given that you're not rapidly growing your balance sheet. Is there some sort of conservatism baked into the 50% in your deposits?
It's a fair question. So a couple of things. When you go back to the prior year, we've done a couple of different things that I think have allowed us to outperform that. One is, if you go back a year ago, we had several billion dollars of brokered CDs within the deposit portfolio as well. And we've really remixed that entirely off the balance sheet. And so that goes into the equation. We've also had about $450 million of the PPBI deposit portfolio that was single service, higher cost retail CDs that didn't fit the bill in terms of how we operate our business going forward. And so that's also come off. So there's been a few things within there that's allowed us to outperform that. I still think 50% is a good expectation on a through-the-cycle basis. But as I look at Q4, I do think there is potential opportunity to outperform that just in what we're seeing in terms of initial discussions from a client perspective. But overall, through the cycle, I still expect something in the 50% ballpark to be reasonable.
[Operator Instructions] commercial real estate portfolio. So round ones, it's like 40% of your loans, excluding occupied. So I'm curious where -- which bits that you expect to be relatively worse if 5-year rates went up a. Also curious on the [indiscernible], which is about half of what the trends are in vacancy, supply and [indiscernible] footprint? And then just finally, how do you expect this [indiscernible] et in terms of loans over time. I think it's shrinking. And Fitch actually getting more negative watch based -- like is that a consideration as well? What do you think is an ideal percentage do you over time?
I can start with a few things and then you guys can jump in there. From a multifamily perspective, we really are not seeing a whole lot of pressure within that portfolio. I think we were talking about a 6 basis point overall delinquency level within the multifamily portfolio. debt service coverage is still above 1.5. And so very comfortable from that perspective. You're absolutely right that over time, the percentage of our balance sheet that is within commercial real estate assets will continue to decline. We have an overall goal of eventually getting to 50% of what we consider to be commercial balances. So C&I as well as owner occupied. We jumped up to -- I'm going to go from memory here. I want to say it was a 315% commercial real estate concentration ratio in Q3 of last year, in part because of PPBI coming on board. We're now below 300 and kind of in the 25% type range, and we expect that to continue to drift further south as we go through the remix that we talked about earlier. Overall, the transformation that we're doing on the loan side of the balance sheet has delevered the balance sheet by about $1 billion. And we expect that the guide for Q4 is flat to slightly down. I would expect that in Q1 and Q2, you'll hear a fairly similar guide for me, although you can wait another 85 days or so for that officially. But there will reach an inflection point where we've kind of seen most of that growth headwind diminish and then we'll start to grow again. And from a capital allocation perspective, that will make my job a little bit more difficult in terms of balancing between the things we're doing on the share repurchase program versus consuming capital for our client needs. So that's a little bit of how I would think of it at a high level.
Let me talk about occupancy and stuff. So most of our multifamily lending is in the Western West Coast. So a lot of it in California. Occupancy is still very high in apartment complexes, the restrictions and the cost to build are significant in that part of the country. You also have a very high single-family home pricing. So the demand for multifamily is still very strong in the West. The cost of rent has increased over the last several years. And it's kind of -- the one thing that has happened is that that's kind of stalled out a bit. There's a little more concession that's being given by developers and owners of projects than there was before, but it's very slight. But you have seen kind of a stall in the actual rent that they can charge but the performance of the loan portfolio is still very pristine.
So I can't help myself. Our Director of Investor Relations, Jackie Bolan is here. She's going to kill me for this. But you mentioned the Fitch having us on negative watch. I guess we're going to have to start bringing one of those T-shirts to these things and T-shirts out to the audience that says, we're not those guys because whenever there's something, whether it's DFI, anything office software, you all get [indiscernible] life sciences. We all get painted with the same brush. And so I think that Fitch's work was a little bit lazy and incomplete, and they painted us with a broad brush. I mean our credit metrics remain some of the best in the industry. Our underwriting standards, we've not deviated 1 bit from those. We pass on hundreds of millions of dollars of deal flow every quarter, simply because we don't either like the underwriting, the guarantor or somebody else is willing to lend much, much deeper into the collateral. So I'll stop my rent now, but I just -- I couldn't help myself. I gave it 3 minutes to see if I could let it pass, and I couldn't.
The other thing that I think that we talk about with rating agencies as well is around our capital ratios. And when you come out and announce a $700 million share authorization, and we've been very clear that we intended to use that, I think that, that was something that we wanted to make sure was out there with them. As you look back at our capital ratios, we measure twice in ketone. I'm a very conservative person by nature. And so the remit for my treasury team is Fortress balance sheet. And included within Fortress balance sheet is ensuring capital and liquidity for good times and bad times. We go through that stress test piece of it. I think as we go quarter to quarter to quarter, and we continue to execute that, we've got more of a track record in terms of how we will continue to thoughtfully return capital to shareholders, diminish our share count over time, but also manage to within a fairly tight band from a regulatory capital ratio perspective. And so I think that that's been part of the conversation that we've had, and we do take their feedback seriously. But that's been the other factor that I suppose I would comment on.
This is an AI question, but from a very different lens. Clint and Tory talked about going from alone. It's just is transactional, and then you move into an advisory relationship, hopefully and getting to be a trusted adviser. But that wasn't a period of time when AI didn't exist in the customers hands. And you talk years nowadays, they're finding more and more that counts are showing up fairly informed in a way that they have never been more for legal matters. And it used to be if I was a client that had an attorney. I can go through some [indiscernible], but I can connect the dots together. How do you start to deal with a customer who is bringing information to you and remain an adviser if their knowledge base is starting to get more connected and far more sharper. And I guess what are you doing about that?
No, that's -- that's a really, really good question. AI hulucinates still. And so I think it's a matter of they want to inform themselves, but a lot of our customers, they want to spend time on building their business, whatever that business is. If they're running a steel fabrication business, they want to build stuff. And we have that relationship. And so they're not lacking a resource where they have to go out and get it. I'd say differentiating factor between us and say, an attorney, is we don't bill in 6-minute increments. So our advice to a certain extent is free. It's kind of -- it's included in the package deal of the relationship. But that's a very insightful question and one that I think we'll see as time goes on. But -- but I think there's a little nuance difference between, say, what somebody might ask us that free advice component versus getting $500 bill from the attorney. I don't know if you feel any differently?
No. I mean I think it's a potential transition evolution of multiple industries, if you will, making happens to be 1 of them. At the end of the day, we have to educate our workforce. They need the knowledge they need the information. I will still say today, people want to bank with people and relationships are people driven. That adviser role is about having a seat at the table, and being a part of a solution that a business needs and wants. And that's what we built this franchise on and feel that it's incredibly powerful does that change over time? As you said, I don't know yet really.
[indiscernible] In 3Q, it seemed like the traditional loan book payoff slowed for the first time in a handful of quarters given the backup in rates. I guess what have you seen quarter-to-date? Has that trend continued into the fourth quarter? And then maybe a separate question kind of on a similar topic. Once [indiscernible] does return -- what is Colombia's ability to maintain a 4% plus margin in an environment where you're growing?
Yes, I'll jump in on both of those. The first answer is yes, not in a way that's dramatically different. But the 1 area that I monitor most closely is the pace of that transactional portfolio run down. For a while, you could almost set it like a metronome, right? I mean it was very consistent in terms of the daily reductions that we would see out of that portfolio. I think what's happened in the bond markets over the last 90 days, you have seen CPRs diminish in regard to that. And so I would expect that we would see a slightly lower level of prepayments overall through the portfolio over the course of Q4. In terms of the second question, I think the answer generally would be yes, right? I think that -- if you look at our balance sheet and take a step back, we still have, like I mentioned earlier, $7.1 billion worth of transactional loans that are yielding coupons of 4.25%. And we're funding it in part through $5 billion of wholesale financing that's approaching 4%. It's not a good trade. So you've got $600 million of capital locked into those assets. And so as that continues to mature and come off, that is going to continue to be -- that keeps on giving from a net interest margin perspective. And so one of the conversations we have pretty consistently is this balance between growth and optimization. And clearly, we've been on the optimization journey for the last year. We expect that to continue. Whether that tied ships in we reached the low ebb in May or June or July or September of next year is anyone's guess we have obviously forecast, and we do think that will reach kind of a low point at some point in 2027. And then we'll see that continue. But in the meantime, we're going to continue to optimize return capital we're available and see that net interest margin continue to expand.
And with that, please join me in thanking Columbia Bank. Thank you.
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