Good day, ladies and gentlemen, and welcome to the Zions Bancorporation Third Quarter 2016 Earnings Results Webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, today's conference call is being recorded. I would now like to turn the conference over to Mr. James Abbott, Director of Investor Relations. Please go ahead.

Thank you, Candace, and good evening. We welcome you all to this conference call to discuss our 2016 third quarter earnings. Our primary participants today will be Harris Simmons, Chairman and Chief Executive Officer; Scott McLean, President and Chief Operating Officer; and Paul Burdiss, our Chief Financial Officer. I would like to remind you that during this call, we will be making forward-looking statements, although actual results may differ materially. We encourage you to review the disclaimer in the press release or the slide deck dealing with forward-looking information, which applies equally to statements made in this call. A copy of the full earnings release, as well as a supplemental slide deck, are available at zionsbancorporation.com. We will be referring to the slides during this call. The earnings release, the related slide presentation, and this earnings call contain several references to non-GAAP measures, including pre-provision net revenue and the efficiency ratio which are common industry terms used by investors and financial services analysts. Certain of these non-GAAP measures are key inputs into Zions' management compensation and are used in Zions' strategic goals that have been and may continue to be articulated to investors. Therefore, the use of such non-GAAP measures are believed by management to be of substantial interest to the consumers of these financial disclosures and are used prominently throughout the disclosures. A full reconciliation of the difference between such measures and GAAP financials is provided within published documents, and participants are encouraged to carefully review this reconciliation. We intend to limit the length of this call to one hour, which will include a question-and-answer section. We ask you to limit your questions to one primary and one related follow-up question to enable other participants to ask question. With that, I will turn the time over to our Chairman and CEO, Harris Simmons.

Thanks very much, James, and welcome to all of you today to our call to discuss the third quarter results. On slide three are some highlights for the quarter. Earnings per share increased to $0.57 from $0.41 per share in the year-ago quarter. By using the same adjustments we used to compute our efficiency ratio, which primarily adjusts for securities portfolio gains in this case, earnings per share increased about 26% over the prior year third quarter. I'll cover the rest of the key indicators listed on this page as we move through the presentation. If you go to slide four, we're on track with all of the targets we outlined in our June 2015 efficiency announcement. We continue to look for opportunities to reduce expenses. For example, the number of total full-time equivalent employees was down 251 or about 2.5% at the end of September from where it was a year ago. And revenue growth also remains a primary focus to drive earnings growth. On slide five, we are pleased with the continued trend of strong increases in pre-provision net revenue, which is the result of both solid net interest income growth, which increased 10.7% over the past year, and a 10.3% improvement in adjusted noninterest income with the primary adjustment again being the elimination of securities gains. And as noted, we're also focused on maintaining expenses at a level that we expect to be essentially flat to the back end of last year. Turning to slide six, we posted an efficiency ratio of 66% in the third quarter and are at 66.3% for the year-to-date number. Recall our goal for 2016 is to achieve an efficiency ratio of less than 66% while maintaining adjusted noninterest expense below $1.58 billion. Although not shown on this page, I'll point out…

Thank you, Harris, and good evening, everyone. Thank you for joining us. I'll begin on slide 10. For the second quarter of 2016, Zions reported net earnings applicable to common shareholders of $117 million or $0.57 per share. Harris has just discussed the increases in two key revenue line items and I'll talk a bit more about expenses shortly. But before we leave this page, I'd like to highlight two key areas. First, return on assets has increased to 84 basis points, up from 69 basis points in the year-ago quarter. Return on average tangible common equity increased 7.9% from 6.1% in the year-ago period. We are committed to increasing these measures of balance sheet return on profitability and we are certainly encouraged by the recent improvement. Let me make a few comments about our revenue. About three-quarters of our revenue comes from net interest income driven primarily by loan and securities growth, coupled with solid customer-related funding. Slide 11 is a graphical representation of our loan growth by type relative to the year-ago period. As a reminder, the size of the circles represent the relative size of the loan portfolios. We remain encouraged with growth in the areas that are targeted for growth although we certainly would have liked to see more growth in the third quarter, especially in C&I. As we mentioned in the second quarter earnings call, we expect growth in commercial real estate to be moderate going forward. And, indeed, in the third quarter relative to the second quarter CRE loans increased at an annualized rate of just less than 5% which is slower than the 11% rate of increase relative to the year-ago period. Total originations in CRE declined more than 30% from the prior two quarter average for more than $450 fewer originated. We…

Thank you, Paul. Well, let me start with just a high level commentary on the oil and gas portfolio, and that is that we remain cautiously optimistic. We've seen strong equity injections into the companies during the third quarter and borrower and sponsor sentiment has certainly improved in many of the segments. However, at the same time we continue to experience difficult challenges in the oilfield services portfolio that we believe will continue well into next year. On balance, we think the impact to earnings from oil and gas problem credits over the next several quarters will be substantially less than what we've been experiencing over the last year or so. Simply because, over the last two years, we've been building the reserve against the oil and gas portfolio and charge-offs were ramping up. And over the next year or more, we expect the charge-offs will be tapering down and we are in the early innings of seeing reserve releases. Over the next four quarters we expect oil and gas net charge-offs to trend downwards somewhat from the last 12 months, reflecting our continued cautious optimism. And we expect that we'll experience the gradual release of the oil and gas allowance for credit losses over the coming quarters. On slide 18, we show on the left side of the slide the oil and gas loans broken down by upstream, services and other, which is essentially the mid and downstream portfolio primarily centered in midstream. Energy loan outstanding balances decreased $256 million from the prior quarter. This was probably the greatest decline in energy outstandings we've seen in any quarter to date. Additionally, we're seeing a fairly large number of favorable resolutions each quarter. Over the last six months, approximately $625 million of criticized balances were resolved through payoffs, paydowns or…

Thanks, Scott. I'll draw your attention to slide 22 (sic) [slide 21] which depicts our outlook for the next 12 months relative to the most recent quarter. We are maintaining our outlook for loan growth at moderately increasing, which could be interpreted as an annual growth rate in the sort of mid-single digits. We continue to expect net interest income to increase in the mid to high-single digit growth rate, driven primarily by loan and investment securities growth. Although our efficiency target, looking forward into 2017 includes the assumption of one additional quarter rate point hike in December, we believe we can achieve our targeted growth rate in net interest income without an increase in the target Fed funds rate. Turning to the provision for credit losses, we posted a provision of just over $15 million this quarter which includes the provision for both funded loans and unfunded loan commitments. This was assisted by various net recoveries outside of the oil and gas portfolio. We do not believe that it is a sustainable level and thus, we believe the provision for credit losses will likely be more consistent with the level that we experienced in the first half of 2016, assuming no significant adverse change in market conditions. We expect that customer-related fees, which we define in our press release and which exclude dividend income and securities gains and losses, will be stable from the level reported in the third quarter, which had been noted on the slide to include about $3 million of miscellaneous income that we don't consider likely to recur, at least on a sustainable basis. We remain committed to achieving our goal of adjusted noninterest expense of less than $1.58 billion for 2016 which implies about $395 million or less in the fourth quarter. In the first half of 2017 we expect to experience the typical seasonal variation as was seen in the first half of 2016 with most of that variation occurring in the first quarter. Although we are striving to keep expenses low and stable, the outlook for the next four quarters is consistent with the initial goal outlined in June 2015 which called for a slight increase in 2017 relative to 2016. We expect our effective tax rate to be in the range of 34% to 35% over the next four quarters and we expect preferred dividends to be between $40 million and $45 million over the next 12 months. And, as mentioned in my earlier remarks, we do anticipate redeeming up to $144 million of higher cost preferred equity, although we do not expect that to have a material benefit to the forward four quarter outlook. This concludes our prepared remarks. Candace, would you please open the line for questions? Thank you.

Absolutely. And our first question comes from Bob Ramsey of FBR. Your line is now open. Bob H. Ramsey - FBR Capital Markets & Co.: Hey, good afternoon. I just wanted to talk a little bit about commercial loan demand and, outside of energy, I know you guys said you were hoping it would be a little bit stronger although it was a big contributor in the quarter. Some of your peers have talked about softer demand in C&I lending. I'm just curious what you're seeing.

I think that's consistent with what we saw during the third quarter. The third quarter has generally been a softer quarter. You get kind of the summer vacations and everything else baked into it, but this was softer than I think we would have expected. And so we'll see what happens through the remainder of the year. But it was a softer quarter in C&I than we would have hoped for. Bob H. Ramsey - FBR Capital Markets & Co.: Okay.

You'll notice, also, it was similar last year. We had the same period of softness last year. Bob H. Ramsey - FBR Capital Markets & Co.: Okay. But it sounds like this is more than seasonal, is the sense you all have from customers.

Well, from the actual activity you've seen, I think that's probably the case. As we noted, you do have this other factor of oil and gas-related loans declining, which is pretty good headwind. I mean that was $250 million during the quarter, and so in a C&I portfolio that's pretty significant headwind. Bob H. Ramsey - FBR Capital Markets & Co.: Fair enough. And then just on the commercial loan yield, some of your peers saw a little bit of lift this quarter from the move in LIBOR, and it looks like your commercial loan yield wasn't up. I'm just kind of curious, any thoughts there about maybe why you didn't see a little more strength on that.

Yeah. This is Paul. We did not see a – as you know, the one month LIBOR changed a little bit. Three months LIBOR changed a little bit more. The change in one month LIBOR really wasn't that material, and the majority of our loans that are LIBOR-based are really based on that shorter part of the curve. So, I noted several items that contributed to the 5 basis points of margin compression related to fees and FDIC-related income. The change in LIBOR was not enough to offset those headwinds. Bob H. Ramsey - FBR Capital Markets & Co.: Okay. Thank you.

Thank you, and our next question comes from Brad Milsaps with Sandler O'Neill. Your line is now open. Bradley Jason Milsaps - Sandler O'Neill & Partners LP: Hey. Good afternoon.

Hey, Brad. Bradley Jason Milsaps - Sandler O'Neill & Partners LP: Hey, just wanted to follow up on the provision guidance. I appreciate the color there, but just curious kind of what's driving the increase maybe from this quarter. You guys still have one of the strongest reserves out there. A lot of the provisioning in the first half of the year was related to the oil and gas industry. It seems like, Scott, your comments around that are pretty positive in terms of kind of where the charge-offs are heading. Just kind of curious why that can't stay low, was that all a function of maybe the slightly higher loan growth that you guys are seeing coming down the pipe.

Yeah a couple of comments, Brad. I think this quarter benefited by a pretty significant level of debt recoveries, generally in the C&I portfolio, and so that muted the provision to a certain degree. And I think also it's just very hard to project out four quarters, particularly as it relates to our energy services portfolio, number one. Number two, we'll finish this year – well, let me just say it this way. Through nine months we're net recovered on 94% of our loan portfolio. So while we generally trend around 10 basis points to 12 basis points in net charge-offs per year over the last three or four years, we're running right now to net recovered positions. So I think our assumption is while we think we'll see improvement, we're optimistic on the oil and gas charge-off front. We do believe we should naturally see some charge-offs on the non-oil and gas piece. Bradley Jason Milsaps - Sandler O'Neill & Partners LP: Sure. And just one follow-up on the oil and gas piece, what price per oil and gas were you using in your slide decks these days, in your price decks for new credits, or as you review the book going forward?

Yeah. Generally, we're going to run somewhere around 90% of NYMEX on oil and on natural gas, and so our oil price tag starts in the low $40s and escalates about $5, $6 over a six-year period of time. Natural gas, there's been quite a run up in natural gas right now and we're probably a little less than 90% in terms of NYMEX on the natural gas price tag we're using. Bradley Jason Milsaps - Sandler O'Neill & Partners LP: Great. Thank you.

Thank you, and our next question comes from John Pancari of Evercore. Your line is now open.

Good afternoon.

Hey, John.

Back to the commercial loan growth, just wanted to get if you have any early indications at all around how growth is coming out so far in the fourth quarter or if you've seen a little bit of a turn in that sluggishness? And then also, what C&I growth rate is needed to meet your mid single digit growth guidance? What's baked in there in terms of C&I growth? Thanks.

Well I guess I'd say, in terms of loan growth, I mean we kind of got a report card every Monday morning and last week I was discouraged and this morning I was encouraged. And it'll probably seesaw back and forth. I think it's still a little early in the quarter to make much sense of it.

And in terms of loan growth rates in general, it's sort of a 5% to 7% growth rate for C&I. The CRE portfolio we're projecting to kind of grow in the 4% to 5% growth rate range. Even though it's softened in the recent quarters, we are still anticipating growing that. And then we are seeing nice increases on the consumer side this year principally through our mortgage related products. The C&I growth rate is very consistent with the mid-single digit growth rate we need for the entire portfolio.

Got it. And Scott, on that CRE comment you made, does that include owner occupied or do you include that in the commercial when you say that?

No. Owner occupied is part of C&I.

Okay good. All right. And then secondly, just wanted to ask around the energy reserve, as you see these reserve releases materializing, if you don't see a material change in other areas of the loan portfolio, would you expect that there's going to be outright releases or do you think there's a likelihood of reallocation. And then, secondarily, where was your loan loss reserve for energy before we saw the slide in oil prices a little while back? Thanks.

I don't recall exactly where. Our energy reserve was probably not too different than our total reserve, so it would have been around 1.6%, 1.5% going into the downturn. Now, it's at 8%. I tried to provide in my remarks a little bit of a multi-year reconciliation of that. And the guidance that Paul was providing around provision for the entire company really would lead you to believe that we would see moderate releases in that energy reserve.

Yeah, this is Paul. I'd just add on as a reminder the energy reserve is over 8% and, in fact, this quarter, on a dollar basis, there was a little bit of release in energy. But because the decline in the portfolio outpaced that, the energy reserve on the portfolio remains at over 8%.

Got it. All right, thanks.

Thank you, and our next question comes from Ken Zerbe of Morgan Stanley. Your line is now open. Ken Zerbe - Morgan Stanley & Co. LLC: Great, thanks. Just in terms of the margin, actually the cash that you guys have the redeployment from cash and money market into securities, can you just remind us how much more of cash or money market do you actually have that is easily switchable into securities from here?

Well, I'm going to change your question around a little bit if I could. You say easily switchable. We've got an enormous amount of on-balance sheet liquidity and off-balance sheet liquidity, right? So our cash position is a couple of billion dollars and so, certainly, we would be looking to redeploy that. But I would just remind everybody that we do have a lot of liquidity in addition to just on the cash balance sheet that could allow us to continue purchasing through this year and as we get into 2017. Ken Zerbe - Morgan Stanley & Co. LLC: Yeah, and I guess I was just trying to separate out the cash that you want to keep in cash versus the cash you that you've clearly identified as going into securities over, say, the next couple quarters. And, if I heard you right, it was a couple billion? So $2 billion? Is that fair or?

No, I wouldn't say that. Sorry if I wasn't clear. The amount of cash you need to hold on the balance sheet is not a big number although it's probably going to be in the hundreds of millions, and maybe a billion dollars. The fact of the matter is, is that the securities we're buying are so liquid that it really minimizes the need for on-balance sheet cash. If that gets to your question? Ken Zerbe - Morgan Stanley & Co. LLC: Okay. Maybe a slightly different question, just you mentioned the premium amortization was a component of the NIM compression. Is that something that, now that we're at a lower level, NIM should remain at that lower level? Or is there any part of premium amortization next quarter cause some pop upwards in the margin?

Yeah, the premium amortization is due to prepayments on the portfolio as you know, and there are kind of two big chunky parts of the portfolio. One related to our SBA bonds, and the other related to our mortgage-backed securities. Incidentally they're both impacted by kind of different macro factors. I will say that the primary factor this time was accelerated prepayments on mortgages. And so you can look at kind of the Refi Index as probably an indication of where that amortization is going. And so what we saw was increased amortization due to increased prepayments on the mortgage-backed securities portfolio. To the extent the yield curve steepens, my expectation would be that those prepayments would slow down and you would see a corresponding impact on the mortgage-backed securities portfolio. I would also note that there are a lot of macro impacts related to the "Brexit" that appeared to have slowed prepayments down as we have moved into October. Ken Zerbe - Morgan Stanley & Co. LLC: Got it. Okay. All right. Thank you.

Thank you. And our next question comes from Jill Shea of Credit Suisse. Your line is now open. Jill Shea - Credit Suisse Securities (USA) LLC (Broker): Good evening. Maybe could you just touch on the guidance around NII and the ability to attain the mid-to-high single-digit growth even without a December rate hike? Can you just speak to the confidence there? Is it NIM stability, is it loan growth or is it the cash deployment into the securities book? Maybe just dig into that guidance and how we should think about the outlook for the NIM going forward.

Yeah, sure. This is Paul. It's kind of a combination of all those things. As a reminder, we would expect net interest income to be over 12 months positively impacted by about kind of $25 million to $30 million for every 25 basis point rate increase. But the big mover, as we've seen over the course of the last year, and you saw this in our PPNR, which Harris noted was up over 20% over the course of last year, a lot of that is related to improvements in net interest income. And a lot of that is related to kind of our ability to maintain coupon on the loan book, and while we're growing the loan portfolio, and then deploying cash and liquidity into the investment portfolio kind of moving out of assets earning 25 basis points to earning closer to kind of 1.25% to 1.50% (37:39) or more potentially. But also importantly to the extent we're deploying kind of off balance sheet liquidity it continues to lever our capital which we would expect to continue to grow net interest income. So we feel pretty good about our ability to grow loans, maintain margins and as you know redeploy cash in the investment portfolio.

And Jill, this is James. I might just jump in and mention that on as we look at the book of business, particularly on the commercial loan side, as we look out over the next several quarters, the loans that are maturing have a coupon that is very similar to the loans that we're producing so we're not seeing a lot of compression. As a total book of business the coupon on our loan portfolio only declined 1 basis point and so you see in the GAAP yield table that the yield on the loan portfolio declined 5 basis points. Only one out of the 5 basis points was due to the coupon declining. The rest of it was due to the changes in the way that fees are amortized on that book of business in the FDIC and so forth. So we're really not seeing a lot of compression on the margin side. So Paul talked to the volume side and the margin is probably relatively stable. Jill Shea - Credit Suisse Securities (USA) LLC (Broker): Okay. That's really helpful. And then just in turn, I think you already touched on some of the securities portfolio adds but you noted in the slide that you're not necessarily limited by the cash currently on the balance sheet. Can you just walk us through how you think about the size of the securities book? Is it a percentage of earning assets? How should we think about the potential securities build over time?

Yeah. The securities portfolio exists first and foremost as a source of liquidity for the balance sheet. And historically we've held a lot of cash for that purpose and now as noted we're deploying that into investment securities, highly liquid HQLA if you will, highly liquid assets as defined by the LCR, in order to maintain what is a very strong position as it relates to the LCR. Looking ahead, we use the investment portfolio again primarily for liquidity but also to manage interest rate risk. And as we think about our interest rate risk positioning over time, I think you had seen us slowly decrease that. That is our asset sensitivity so that process may continue and so that's kind of a secondary use if you will. The investment portfolio is a mechanism to add duration to the balance sheet that helps to balance kind of the very short term, short duration assets we have with the relatively longer duration liabilities. So it's really those two components that drive the size and composition of the investment portfolio. Jill Shea - Credit Suisse Securities (USA) LLC (Broker): Okay. Got it. Thank you.

Thank you. And our question comes from David Eads of UBS. Your line is now open.

Hey. Good afternoon. Maybe just kind of touching on this balance sheet theme, you saw a really nice increase in noninterest bearing deposit and deposits in general seem like they're up pretty solidly. I guess, anything unusual going on there and in the event deposit growth exceeds loan growth that most of that will end up being deployed in securities?

My expectation would not be that deposit growth exceeds loan growth, certainly over the medium term. In the near term, as noted, we're deploying our balance sheet liquidity into securities and so to the extent to your question if that were to happen, it would probably affect the types of products that we're buying on the asset side because of the kind of relative nature perhaps or length of time we might expect to hold those securities. But certainly, I would see us continuing to deploy that excess cash into securities.

David, it's Scott. The growth in demand deposit is principally a function of just our business banking orientation and our industry leading treasury management products. And generally there will be some ebbs and flows in that, but you'll generally see growth in demand deposits in the second half of the year kind of from the late summer through the end of the year, would be a seasonal occurrence that we would expect.

All right. Thanks. And then, in the kind of geographic loan growth chart, I see that if you look at the C&I ex-energy, the biggest negative growth market was in energy. I'm just kind of curious whether you would characterize that as just kind of the same typical just slowing demand. Or was there anything different going on in Texas this quarter?

This is Scott. That's where you would see this principally the majority of this $250 million of energy paydowns.

I was talking about the ex-energy, the $86 million of negative growth.

Oh, excuse me. Yes, I wouldn't really comment much on that other than the economy has obviously slowed in Texas, particularly in Houston. And I really should be careful to say it really has not slowed at all in the Dallas-Fort Worth Metroplex. Their job growth is very strong where we have a bank. There's solid growth in San Antonio, the economy there where we have a bank. But Houston, particularly, you're seeing activity level decrease across the board, and so my guess is that the fundamental driver of those lower non-energy C&I outstandings.

And David, this is James. I'll just comment, I'm familiar with some payoffs due to some merger activity, so we don't do a tremendous amount of leverage buy out financing, and so some of our middle market companies were purchased during the quarter. And that accelerated some of the payoff rates.

Great. Thanks for the color.

Thank you. And our next question comes from Steven Alexopoulos with JPMorgan. Your line is now open.

Everybody.

Hello.

So the company made nice progress over the past year in growing PPNR, that's pretty clear. With a guidance calling for a slight increase in expenses in 2017, what are your thoughts on a more aggressive cost containment program in 2017? Maybe something similar to what we saw out of Comerica?

Well, I expect that you'll continue to see progress in terms of head count and I mean we're continuing to identify opportunities. We're doing a lot of work in terms of process in back office. I think for us and probably for the industry that the pace of branch closures probably slows, though it won't stop. For us, we've been at this now for several quarters. We're not likely to bring in a lot of consultants to try and figure out refresh what we're going to do next. I think we've got a pretty good game plan. I would note, I'd just remind everyone, that we're doing something that nobody else in the industry is doing, and that is we're in the process of replacing all of our core processing systems. We think that that's actually a really important kind of long-term investment to be making in a digital age that we're in. It cost us about $35 million this year and about the same next year. I think when we come out the other end of this, which is still it's kind of three years away, but I do expect that's going to create a much simpler back office in this place. And that's where the real opportunity is and so we're really focused on doing things that aren't just very short term but really reinvent how we do business, starting with systems. And so I don't envision changing course but I think we're going to continue to make pretty good progress. And, like I said, I think expenses are going to be pretty flat, but you have to run pretty hard to keep flat because you have, I mean cost of labor is starting to increase. We're seeing increases here and there and, like I said, a lot of systems work going on. So I think we can keep expenses flat, that'll actually be a pretty good achievement.

I appreciate that perspective. Maybe just a second one for Scott, if we look at the $256 million reduction in energy loans in the quarter, how did that split between performing loans and distressed credits. Thanks.

Steven, I don't have that number right in front of me.

My recollection, if I could jump in, Scott, was that the composition was pretty similar to the remaining portfolio, but we could verify that.

Yeah. There wasn't anything particularly unusual, although there was a significant positive impact we had in problem credits. So one way to think about that is recall that our oilfield service portfolio, which has outstandings of about $500 million – that, that portfolio is going to amortize about $100 million a year even in a difficult environment, and we're seeing that because most of – as I noted, 90% of our energy credits are performing as agreed regardless of how we have them classified.

Then maybe I could ask this way. Are you seeing some of your more distressed credits get access to the capital markets and use those proceeds to pay you guys down?

Yes. The answer to that question is most certainly. I sort of vaguely referenced it earlier, but we had about $200 million of new either private equity injections or capital markets injections into our oil and gas portfolio companies. That was the largest quarterly increase that we had seen. That number is about $450 million now since January 1 of 2015. So $200 million in a quarter is very significant, and I'd say about 40% of that number came from capital markets activities. 50% to 60% came from private equity injections. And we've seen that private equity phenomenon all throughout the downturn, but the public markets have opened to back up to a certain degree.

Great. Thanks for all the color.

Thank you, and our next question comes from Ken Usdin of Jefferies. Your line is now open.

Thanks. Good afternoon.

Hi, Ken.

Just one more question on the securities portfolio. Paul, you mentioned a year ago that you'd find about $6 billion or so. It looks like you've already kind of gotten to that point, and you're still growing at about $1 billion a quarter. So is that the kind of pace that we should be expecting to see the book grow? And is there any stopping point where you get to that right level of the book with a combination of securities and you add this on the swap side?

The answer to that is yes, there is a stopping point and we're not there yet. So to your point we outlined, initially, we outlined a plan to move cash into the investment portfolio. As we've done that I think we recognized the benefits of that and so we're continuing to work on that position, if you will. Ultimately, kind of the "stopping point" would most likely be defined by kind of our target asset sensitivity and with a minimum required on balance sheet liquidity in the form of high quality liquid assets. And so perhaps as we move through time we'll be able to give kind of a more search and outlook around that but I think for the time being your point is a good one, which is we've kind of achieved what we said we were going to achieve and we're continuing on the path.

Okay. And we saw that with your FHLBs up as well so I guess is that how should we assume it would be largely funded if loans are growing the same pace as deposits.

Well, I think what you saw, you're talking about the quarter-end number, had some modest increase in FHLB borrowings. Is that what you're referring to?

Yeah.

Yeah. Those were actually relatively short-term and they were there to take advantage of a kind of very short-term, I'll say, anomaly in the capital markets that were related to money market reform that allowed us to kind of pocket a little extra money there at quarter end. So those are not long-term borrowings but I will say that over time as we move through cash over time I would expect us to access the Federal Home Loan Bank system in sort of the normal course of business.

Okay. And just one quick one on ROE, it got close to 8% this quarter on ROTCE. You've talked about a desire to get to double digits. You mentioned previously that you think you could get there with rates in 2017. Can you get there without rates in 2017? And if not, is it possible in 2018?

Well, look, is it possible? Certainly. But I would say that we'll be in a position I think to provide kind of a better kind of outlook and guidance as we get to the December earnings call in January. So there are a lot of things that go into that measure. As you know, we're really focused right now on improvement to the efficiency ratio and we're going to continue to be focused on that. Ultimately, an improved efficiency ratio should drive better balance sheet returns, should lead to better ROE. We're also very focused on through the CCAR process, managing our capital more effectively. And because there are two components to that, we kind of control the numerator. The denominator is subject to the kind of regulatory CCAR process. It's hard for us to provide a lot of clarity and guidance on precisely when we're going to get there.

And Ken, this is James. I just wanted to jump in on the outlook for double-digit returns on tangible common equity, I think what we've said was it was more of a 2018 aspirational goal as opposed to 2017. I would just modify the year there and tell you more to come on that.

Okay. Thanks for the clarification James.

Thank you. And our next question comes from Marty Mosby of Vining Sparks. Your line is now open.

Thanks. I wanted to build on Steven's question earlier about the – as you're seeing the run-off in energy loans. The graphs that I was looking at is page 9, if you look at the criticized loans in oil and gas to your overall loans and classified to loans and nonperforming to loans, those are all trending much higher as percentages. But when you look at the actual numbers when you got back to page 18, I was surprised to see that the actual levels, or dollar amounts, went down. So it does seem like there may be more of an exodus of the performing loans versus what we're seeing in criticized or classified. So I just wanted to make sure we kind of focus back on that question again just to kind of reconcile those two pages.

Sure, Marty. Let me, I was actually going to bring us back to that. It's a fairly technical question, I have the information, but it wasn't totally committed to memory. We started the quarter at about $800 million in classified loans and ended the quarter a bit down from there, about $770 million in classified loans. We had about $220 million in what I would call very positive favorable reductions of classified loans either through payoffs, or paydowns. I'm not talking about charge-offs, okay, $220 million. That was one of our strongest quarters of positive resolutions. But far more important than that is that the inflow of new classifieds or increase in existing classified oil and gas loans was the lowest inflow, the smallest inflow that we've had since the middle of 2015. So if you want to think about it, we started out with about $800 million in classifieds with about 25% of those had positive resolutions and we were not replacing them as fast as they were running off, so.

And the net, if you look from $800 million to $770 million, you positively dealt with $220 million. That means that you had inflows of about $190 million, I guess. Is that about right?

That's exactly right.

Okay. All right. So still about equal in a sense of what's leaving and what's coming back as you kind of go through that process. But yet still, like you said, improving from what you've seen before.

Yeah.

Paul, I want to ask you on the mortgage-backed securities, trying to reconcile again two things that seem a little bit contradictory. One is you have no extension whatsoever in duration when rates go up, but when rates come down you have cash flows and prepayments. I know you can buy some CMOs that are more one-sided in the sense they don't extend, but they do because they're in the early tranches, get paydowns. Is that what's driving that, is that there's that hard stop on the extension but yet you have the risk of the prepayments when rates go lower? Is that why that discrepancy is kind of coming out?

Marty, I guess the trick in our investment portfolio, the part of it that does look a little bit different is that we do have these SBA pools and the prepayments on those are not correlated to rate necessarily. So what we see is they are positively convexed instead of negative convexed. And so in our models as we run the rate shocks, what we're seeing is that, if you will, the positive convexity of the SBA pools and the negative convexity of the MBS roughly offset each other, which is why you don't see the extension risk in the plus 200 basis points rate environment as disclosed. Does that help?

So the netting of that is why you don't get the extension, but on the short end, the mortgage-backed prepayment is what caused you the impact this quarter.

Well, again, the mortgage prepayments are related to changes in rate and the flattening curve.

Right.

Yeah, accelerated prepayments there. There was not a corresponding impact in the SBA pools.

Got you. All right, thanks.

Okay.

Thank you, and our next question comes from Gary Tenner of D.A. Davidson. Your line is now open. Gary Peter Tenner - D.A. Davidson & Co.: Thanks. Good afternoon. Just wanted to hit on the fee side for a second, I recall, I think it was this past year's Investor Day or possibly the one before, you talked a lot about bringing that fee income contribution up to, I think, 25% as sort of an intermediate term goal. Over the last year you've made some progress on bringing up obviously the customer fees, but the percentage hasn't changed much. I wonder if you could update kind of what you're thinking there given the relative moves of net interest income versus fees.

Sure, thank you, Gary. This is Scott. First of all, the fee income ratio with the pace of which net interest income is growing because of loan growth and the repositioning of cash, I don't think you're going to see us make a lot of progress in terms of that ratio, just the pure math of it, because we're trying to grow our customer fees in the kind of mid-single digit rate 5% to 7% range. And net interest income is growing at a faster rate and may continue to, based on the guidance we've provided. So I think the more important number we're focused on is just the absolute dollar amount of customer related fees and total fee income and how that's accretive to earnings. So and that number is again very nicely a little bit stronger than we would've expected so – and it's across the board which is really important. It's in our work horse fee income item is treasury management. It's about 30% of our $500 million in fee income. It's growing very nicely on a linked quarter year-over-year basis as well as year-to-date. Our credit card income is growing nicely. Wealth management, we basically had two wealth management platforms. We had two of virtually everything. We have now gone through the organizational process of creating one business and it's terrific to see that business growing. The insurance component of that business has been a leader for us as well as just our core investment management business. So good solid progress in wealth management after making a lot of tough decisions there. Mortgage as we've noted is up. Foreign exchange, a nice business for us, is up. Really we're seeing good solid progress across the entire fee income spectrum. Gary Peter Tenner - D.A. Davidson & Co.: All right, Scott. Thanks for the color.

And, Candace, this is James. We'll take one more question here. I believe we have – it's John Moran from Macquarie. We'll go ahead and take John's question and then we're out of time. So, John, go ahead with your question. John Moran - Macquarie Capital (USA), Inc.: Hey. How's it going? Can you hear me?

Yeah. We can. Thanks, John. John Moran - Macquarie Capital (USA), Inc.: Okay. Great. Yeah. Okay. So, hey, I appreciate the detail you guys I think called out some healthcare and professional fees in legal on OpEx. The other line ran heavy this quarter. I just wondered if you could explain what was going in there and kind of what the outlook would be there for that line.

John, this is Paul. A big chunk of that was really that legal accrual that I discussed. I think the key, as you think about expenses, I think the key is what we published on slide 21 of the investor deck which just says that we would expect noninterest expense for the next four quarters to be roughly stable with what we experienced in the third quarter 2016. John Moran - Macquarie Capital (USA), Inc.: Got you. Thanks.

Good.

I think I'll just turn the time back over to Harris for some closing comments and we appreciate you joining the call today.

Yeah, thank you very much. We will look forward to talking to all of you next quarter and the couple of conferences in between. Overall I think we feel quite good about the quarter and the direction things are headed. If we see a little better loan growth that'll obviously help us and others around the industry, if we see a little better loan demand. But all in all, we're really pleased with the year that's starting to come to a close, and we appreciate all of your support. Thank you.

Thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Have a great day, everyone.