Financial Data and Key Metrics Changes - Earnings for the fourth quarter were $262 million, up 19% from the prior quarter and 31% year-over-year, driven by stronger revenues and lower provision for credit losses [5] - Net interest margin expanded for the eighth consecutive quarter to 3.31%, benefiting from an improved funding mix [5][9] - Annualized average loans were flat compared to the last quarter, but period-end balances increased by $615 million [5][16] - Tangible book value per share increased by 21% year-over-year, marking the third consecutive year of growth over 20% [7][22] Business Line Data and Key Metrics Changes - Adjusted PPNR for the quarter was $331 million, down 6% sequentially but up 6% year-over-year [7] - Customer-related noninterest income reached $177 million, a record for the company, up from $163 million in the prior period [12] - Capital markets fees, excluding net CVA, increased by 25% compared to the full year 2024, driven by higher customer swaps and investment banking revenues [13] Market Data and Key Metrics Changes - Average deposits increased by 2.3% compared to the prior quarter, with average non-interest-bearing deposits growing by $1.7 billion or 6% [16][17] - Period-end deposit balances grew by $766 million versus the prior quarter, allowing for a reduction in higher-cost short-term borrowings [18] Company Strategy and Development Direction - The company aims to increase capital distributions while continuing to strengthen capital [6][22] - Focus on small business lending is central to growth strategy, with a near doubling of SBA 7(a) loans and a 53% increase in dollars produced [44] - Increased marketing and business development expenses are part of a strategy to revamp products and drive growth [31][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of performance despite industry disruptions, particularly in credit quality [6][22] - The outlook for net interest income for 2026 is moderately increasing, supported by favorable earning asset and interest-bearing liability remix [10] - Management is cautious about potential rate cuts and their impact on asset sensitivity, indicating a balanced approach to growth and risk management [39][102] Other Important Information - The company made a $15 million donation to its charitable foundation, which will be spent over the next three years [6] - The allowance for credit losses as a percentage of loans declined to 1%, with net charge-offs at 5 basis points [20] Q&A Session Summary Question: Clarification on expense guidance - The base for the moderately increasing guide should exclude the charitable contribution for the quarter [25][26] Question: Increased competition in markets - Management acknowledged ongoing competition but emphasized that increased marketing spend is driven by internal product revamps rather than new entrants [29][31] Question: NII outlook for 2026 - Management indicated potential for remixing on both sides of the balance sheet contributing to NII outcomes, with a focus on granular deposit growth [34][36] Question: Loan growth dynamics - Management highlighted strong growth in small business lending and a focus on C&I and owner-occupied loans, with expectations for continued growth in these areas [43][46] Question: Capital return timing - Management indicated that they are nearing a position to consider capital returns, with expectations for acceleration in the second half of the year [51][52] Question: Non-interest-bearing deposits growth - Management reported growth in new customer acquisitions and emphasized the importance of building a solid base of granular accounts [61][63]

Financial Data and Key Metrics Changes - Earnings for Q4 2025 were $262 million, up 19% from the prior quarter and 31% year-over-year, driven by stronger revenues and lower provision for credit losses [4] - Net interest margin expanded for the eighth consecutive quarter to 3.31%, benefiting from an improved funding mix [4] - Tangible book value per share increased by 21% year-over-year, marking the third consecutive year of growth greater than 20% [6][22] - Diluted earnings per share rose to $1.76, up from $1.48 in the previous quarter and $1.34 a year ago [6] Business Line Data and Key Metrics Changes - Net interest income increased by $56 million or 9% compared to Q4 2024 and by $11 million from the prior quarter [10] - Customer-related noninterest income was $177 million for the quarter, up from $163 million in the prior period and $176 million year-over-year [12] - Adjusted noninterest expense was $548 million, up 5% from the prior quarter and 8% year-over-year, including a $15 million charitable donation [15] Market Data and Key Metrics Changes - Average loans were flat compared to the previous quarter but increased by 2.5% year-over-year, with period-end loans rising by $615 million sequentially [11][16] - Average non-interest-bearing deposits grew by $1.7 billion or 6% compared to the prior quarter [17] - The cost of total deposits declined by 11 basis points sequentially to 1.56% [18] Company Strategy and Development Direction - The company aims to increase capital distributions while continuing to strengthen capital [6][22] - Focus on small business lending is central to growth strategy, with a near doubling of SBA 7 loans and a 53% increase in dollars produced [54] - Increased marketing and business development expenses are part of a strategy to revamp products and drive growth [33][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of performance despite past industry disruptions, highlighting stability in credit outcomes [5] - The outlook for net interest income for 2026 is moderately increasing relative to 2025, supported by favorable asset and liability remix [10] - Management anticipates continued growth in commercial loans, particularly in C&I and owner-occupied subcategories [17] Other Important Information - The company reported a $6 million provision for credit losses, which, combined with net charge-offs, reduced the allowance for credit losses by $1 million [20] - The allowance for credit losses as a percentage of loans declined to 1% [21] - The Common Equity Tier 1 ratio for the quarter was 11.5%, indicating a strong capital position [22] Q&A Session Summary Question: Clarification on expense guidance - Management clarified that the base for expense guidance should exclude the charitable contribution for the quarter [25][26] Question: Increased competition in markets - Management acknowledged ongoing competition but emphasized that increased marketing spend is driven by internal product revamps rather than new entrants [29][33] Question: NII outlook for 2026 - Management indicated that funding for loan growth will come from deposit growth and potential remixing from securities [39][44] Question: Loan growth dynamics - Management highlighted a focus on small business lending and noted strong growth in SBA loans, with expectations for continued growth in this area [54][56] Question: Timing of share buybacks - Management suggested that they are nearing a position to consider capital returns, potentially in the second half of the year [65][66] Question: Non-interest-bearing deposits growth - Management reported growth in new customer acquisitions and emphasized the importance of building a solid base of granular accounts [84][89]