Core Insights - Bank of Hawaii continues to prioritize community service and maintains strong credit performance with a loan portfolio predominantly in Hawaii, comprising 93% of total loans [1][4] - The bank reported a solid quarter with net interest income increasing by 4.6% to $125.8 million, marking the fourth consecutive quarter of improvement [4][11] - Deposit growth was measured, with total deposits growing 7.3% to $21 billion, while credit quality remained strong with net charge-offs at 13 basis points [4][20] Financial Performance - Net interest margin expanded to 2.32%, driven by asset cash flow repricing and lower deposit rates [11][20] - Noninterest income for the first quarter totaled $44.1 million, slightly down from the previous quarter due to market volatility [16][17] - Total expenses for the first quarter were reported at $110.5 million, with a projected increase of 2% to 3% for the year [19][46] Loan Portfolio - The loan portfolio is well-diversified, with consumer loans making up 56% and commercial loans 44% [5][6] - The commercial real estate segment is stable, with a weighted average loan-to-value (LTV) ratio of 55% and no sector exceeding 7% of total loans [6][7] - Credit metrics remain stable, with criticized loans at 2.08% of total loans, primarily secured by real estate [10][20] Market Conditions - Economic conditions in Hawaii remain stable, with unemployment below the national average and a stable visitor market, although some impacts from the Maui market are noted [2][4] - The bank's exposure to tariffs is minimal, with only 4% of the loan portfolio potentially affected, primarily in service-oriented sectors [54][55] - The outlook for loan growth remains cautious but stable, with a solid commercial pipeline and increased consumer applications [34][39]

Core Insights - The company reported strong loan growth across all segments, with a $262 million increase in commercial loans for the quarter, representing over 10% annualized growth [1]. - Year-to-date net income reached $111.2 million, a 28% increase from the first half of 2024, with earnings per share rising to $1.92, up 30% [2]. - The company maintained a tangible common equity ratio of 8.92%, providing optimal capital flexibility [2]. Financial Performance - The second quarter net income was $56.4 million, a 43% increase from the previous year, supported by improved credit quality and a lower provision for credit losses of $5.6 million compared to $24.5 million in the same quarter last year [3]. - Total revenues in Q2 showed strong growth, with net interest income increasing by $2.7 million and noninterest income by $1.3 million [8]. - The efficiency ratio was reported at 54%, consistent with the company's high-performance goals [3]. Loan and Deposit Growth - The total loan portfolio yield increased by 11 basis points to 6.32%, driven by loan originations and refinancings at an average yield of 7.04% [11]. - The commercial segment was the primary driver of deposit growth, with a total increase of $347 million [6]. - Non-maturity deposit balances increased by $108 million year-to-date, reflecting a focus on core accounts [7]. Asset Quality and Credit Metrics - The company experienced balanced loan growth with a $298 million increase quarter-over-quarter, translating to a 9.2% annualized growth rate [16]. - Net charge-offs were minimal at 0.07% of average loans annualized, indicating stable asset quality [22]. - The allowance for credit losses stood at $195.3 million, with a coverage ratio of 1.47% [12]. Capital Management - The tangible common equity ratio increased by 65 basis points over the last 12 months, reflecting strong capital management [14]. - The company returned capital to shareholders through $36.2 million in share repurchases and $82.3 million in dividends [14]. - The company plans to continue using cash flow from scheduled principal and interest payments to fund loan growth rather than reinvesting in bonds [11]. Future Outlook - The company expects to maintain loan growth and increasing market share activities through the third quarter, supported by a strong pipeline [5]. - Noninterest income is anticipated to grow in the mid-single digits in the back half of the year, despite a modest decline in mortgage activity due to lower rates [27]. - The company remains focused on organic growth while being selective in potential mergers and acquisitions [21].

Financial Data and Key Metrics Changes - Adjusted diluted earnings per share increased by 18% quarter-over-quarter and 29% year-over-year, with an adjusted return on assets (ROA) improving to 1.29% from 0.99% in the previous year [3] - Net interest income rose by $1 million or 1.7% from the prior quarter, driven by a higher interest margin [7] - The net interest margin increased to 3.7% from 3.64% in the prior quarter and from 3.36% in the fourth quarter of the previous year [8][9] Business Line Data and Key Metrics Changes - Total loan balances increased by $14 million in Q4, with the loan portfolio growing by 5.54% [5] - Total deposits increased by $63 million in Q4, primarily due to a $100 million increase in interest-bearing demand deposits [5] - Investment balances decreased by $31 million, with the yield on the investment portfolio dropping to 3.26% from 3.35% in the previous quarter [6] Market Data and Key Metrics Changes - The commercial lending group closed $254 million in new loan commitments, down from $317 million in the previous quarter [15] - The commercial loan pipeline ended the fourth quarter at $468 million, down from $511 million in the previous quarter [15] - Average interest rates for new commercial loans were 6.56%, down 11 basis points from the previous quarter [17] Company Strategy and Development Direction - The company plans to close the merger with Olympic Bancorp at the end of January, which is expected to enhance profitability and position the company for growth in the Puget Sound market [4] - The focus remains on integrating Olympic and ensuring successful operations while exploring future M&A opportunities [73] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating future challenges and capitalizing on growth opportunities, with expectations for loan growth to return to historical levels in 2026 [16][18] - The company anticipates continued improvement in net interest margins and deposit costs due to recent rate cuts [22] Other Important Information - The company reported a reversal of provision for credit losses of $18,000 in Q4, attributed to a change in the loan portfolio mix [8] - Non-accrual loans totaled $21 million at year-end, representing 0.44% of total loans, an increase from 0.37% at the end of the previous quarter [10] Q&A Session Summary Question: Outlook for adjustable rate opportunity and margin - Management indicated that despite recent rate cuts, loan yields slightly grew, and they expect further improvement in margins without the merger [21][22] Question: Loan growth expectations and industry focus - Management expects loan growth to return to low single digits in Q1 and upper single digits as the year progresses, with visibility improving in the loan pipeline [25][31] Question: Operating expense growth and merger-related expenses - Management anticipates approximately $20 million-$21 million in merger-related expenses, with a projected run rate for Q2 and Q3 around $56 million [33][34] Question: Capital priorities post-merger - The primary focus is on closing the merger, which will utilize about 100 basis points of capital, with potential for buybacks considered after the deal closes [51][52] Question: Competition in loan yields and deposit costs - Management noted that competition remains strong but consistent, with expectations for deposit costs to continue decreasing [44][48]

Core Viewpoint - First Horizon reported a strong finish to 2025, highlighting improved profitability metrics, solid loan and deposit trends, and substantial capital returns, while providing an optimistic outlook for 2026 with expected revenue growth and expense discipline [4]. Financial Performance - The company ended Q4 with earnings per share of $0.52, a net interest margin (NIM) of 3.51%, and 2% loan growth, benefiting from deposit pricing and loan growth in certain categories [3][6]. - Net interest income increased by approximately $2 million compared to the prior quarter, although NIM compressed by four basis points [2]. - The average interest-bearing deposit cost declined by 25 basis points to 2.53% [1]. Loan and Deposit Trends - Period-end loans increased by $1.1 billion, or 2%, from the prior quarter, with significant growth in loans to mortgage companies, which rose by $776 million [7]. - The company also reported broad-based strength in commercial and industrial lending, with a $727 million increase in the C&I portfolio [8]. Fee Income and Expenses - Fee income rose by $3 million from the prior quarter, primarily driven by service charges and elevated activity in the equipment finance lease business [9]. - Adjusted expenses increased by $4 million, with personnel expenses rising by $12 million due to annual bonus adjustments [10][11]. Credit Trends and Capital Return - Credit results remained stable, with net charge-offs increasing by $4 million to $30 million, and the net charge-off ratio at 19 basis points [14]. - The company ended the quarter with a Common Equity Tier 1 (CET1) ratio of 10.64%, having repurchased nearly $335 million of common shares in Q4 and a total of $894 million for 2025 [16][17]. 2026 Outlook - For 2026, management expects PPNR-driven revenue growth of 3%–7%, with NIM around the mid-340s and net charge-offs projected at 15–25 basis points [5][20]. - The company aims to deepen client relationships and invest in technology while maintaining efficiency and discipline [13][19].

Financial Data and Key Metrics Changes - The company reported strong loan growth, solid organic deposit growth, and significant loan fee income, indicating a robust performance in 2025 [3][4] - The net interest margin (NIM) experienced slight compression but remains within historical ranges, with a current NIM of approximately 4.45% [14][16] Business Line Data and Key Metrics Changes - Loan growth was particularly strong in Oklahoma and Texas, with expectations of $35-$45 million in new fundings needed monthly to sustain growth [10] - The company achieved better results on the deposit side compared to the loan side, reflecting effective team performance [10] Market Data and Key Metrics Changes - The company noted that the local economies in Oklahoma and Texas are thriving, contributing to the strong loan growth [10] - Deposit competition has intensified, with depositors becoming more aware of interest rates, impacting the company's ability to lower deposit costs [23][24] Company Strategy and Development Direction - The company is focused on maintaining discipline in loan pricing and underwriting standards while pursuing market share in key regions [11][32] - There is a strategic emphasis on accumulating capital for potential M&A opportunities, while avoiding share buybacks to maintain financial flexibility [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to perform at a high level despite economic uncertainties and competitive pressures [4][26] - The company anticipates challenges in maintaining margins due to potential interest rate cuts and deposit competition, but remains optimistic about future growth [16][21] Other Important Information - The company highlighted that oil and gas revenues are expected to have a minimal impact on overall financial performance, with a gradual decline anticipated [39][40] - The current cost of funds has decreased to 2.40%, influenced by balance sheet growth and new deposits [21] Q&A Session Summary Question: Loan growth expectations and payoff activity - Management noted that while there was accelerated payoff activity, the fourth quarter saw lighter payoffs than earlier in the year, with expectations of continued strong growth [9][10] Question: Net interest margin trends - Management indicated that slight NIM compression was expected due to rate cuts, but they remain confident in maintaining a healthy margin [12][14] Question: Deposit cost direction and competition - Management acknowledged that recent rate cuts did not significantly impact deposit betas, indicating a challenging environment for deposit pricing [23][24] Question: Capital management and stock performance - Management emphasized a focus on producing strong results rather than share buybacks, with confidence that the market will recognize the company's performance over time [26][27] Question: M&A opportunities and market conditions - Management stated that while AOCI pressures have eased, high valuations for quality deposit franchises remain a challenge for M&A activity [31][32] Question: Non-interest-bearing deposits and seasonality - Management explained that the decline in non-interest-bearing accounts is a response to increased customer awareness of interest rates, with minimal seasonality expected [34][35]

Financial Data and Key Metrics Changes - The company reported strong loan growth, solid organic deposit growth, and significant loan fee income, indicating robust performance in 2025 [3][4] - The provision for loan losses was not increased significantly despite the growth, reflecting improved asset quality [4] Business Line Data and Key Metrics Changes - The company experienced accelerated loan growth primarily in Oklahoma and Texas, with a focus on capturing market share in these regions [8][9] - Deposit growth outpaced loan growth, showcasing the effectiveness of the company's strategies [9] Market Data and Key Metrics Changes - The current cost of funds decreased to 2.40%, driven by balance sheet growth and new deposits [20] - The company noted that deposit competition has intensified, with depositors becoming more aware of interest rates [21][22] Company Strategy and Development Direction - The company aims to maintain discipline in pricing and underwriting while pursuing growth opportunities in dynamic markets [10][29] - There is a focus on accumulating capital for potential mergers and acquisitions, while remaining cautious about share buybacks [24][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to perform at a high level despite market fluctuations [4] - The company anticipates challenges in maintaining net interest margins due to potential rate cuts and competitive pressures [12][15] Other Important Information - The company highlighted that oil and gas revenues are expected to have a minimal impact on overall financial performance moving forward [36][37] - Management emphasized the importance of controlling expenses and maintaining operational efficiency [35] Q&A Session Summary Question: Loan growth expectations and payoff activity - Management noted that while loan growth was strong, payoff activity was lighter than expected, with a forecast of $25 million in monthly payoffs [6][9] Question: Net interest margin trends - Management indicated slight compression in net interest margin but remains optimistic about maintaining it within historical ranges [11][12] Question: Deposit costs and competition - Management discussed the current cost of funds and the competitive landscape for deposits, noting that recent rate cuts did not significantly affect deposit betas [20][21] Question: Capital management and stock performance - Management stated that while capital is accumulating, they are focused on producing strong results rather than engaging in share buybacks [24][31] Question: M&A opportunities and market conditions - Management acknowledged challenges in acquiring quality deposit franchises due to high valuations but remains disciplined in their approach [28][29]

Financial Data and Key Metrics Changes - Hilltop reported net income of approximately $46 million or $0.74 per diluted share for Q3 2025, with a return on average assets of 1.2% and return on average equity of 8.35% [4] - Net interest income increased by $7.4 million or 7% year-over-year, driven by improving deposit costs and growth in higher yielding commercial loans [14] - The allowance for credit losses declined by $2.8 million to $95 million, resulting in a coverage ratio of 1.16% [12][13] Business Line Data and Key Metrics Changes - PlainsCapital Bank generated $55 million of pre-tax income on $12.6 billion of average assets, with a return on average assets of 1.34% [4] - PrimeLending reported a pre-tax loss of $7 million due to subdued mortgage origination volumes, with existing home sales at their lowest level in over 30 years [6][7] - Hilltop Securities Inc. generated pre-tax income of $26.5 million on net revenues of $144.5 million, with a pre-tax margin of 18% [7][8] Market Data and Key Metrics Changes - Total core deposits at PlainsCapital increased by 6% on a linked quarter basis, attributed to seasonal cash inflows from large balance customers [5] - Mortgage revenues declined by $3.4 million year-over-year, with origination volumes stable but gain on sale margins improving by 8 basis points [17][18] - The fixed income business showed a 13% increase in net revenues year-over-year, reflecting robust industry volumes [8] Company Strategy and Development Direction - The company aims to increase market share despite elevated competition in Texas, focusing on core loan growth and managing interest expenses [5][22] - Hilltop Securities continues to invest in core areas of expertise, leveraging its national brand built on trust [9] - The leadership transition at PlainsCapital Bank is seen as an opportunity for continued growth while maintaining the bank's legacy and credit culture [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the bank's ability to manage credit risks and maintain a conservative credit culture despite competitive pressures [22][23] - The outlook for 2025 reflects current assessments of the economy and market conditions, with a focus on producing quality outcomes for clients and communities [24] - Management anticipates continued challenges in the mortgage market but expects gradual improvement into 2026 [18] Other Important Information - Hilltop maintains strong capital levels with a common equity tier one capital ratio of 20% and tangible book value per share increased by $0.67 to $31.23 [9] - The company returned $11 million to stockholders through dividends and repurchased $55 million in shares during the quarter [9] Q&A Session Summary Question: NII guidance and near-term outlook - Management explained that the NII guidance was not increased due to expected rate cuts and potential paydowns impacting loan growth [26][28] Question: Stock buyback strategy and M&A outlook - Management confirmed a consistent approach to share repurchases given excess capital and discussed opportunities in the Texas market for potential M&A [30][31] Question: Auto portfolio exposure - Management addressed concerns regarding the auto portfolio, noting a reduction in commitments and ongoing workout efforts for non-accrual clients [32][33] Question: Broker-dealer fee income - Management highlighted strong performance in public finance and other segments, but anticipated a reversion to lower pre-tax margins in the future [42][44] Question: Effects of government shutdown - Management indicated no primary effects on the broker-dealer from the government shutdown, but noted potential processing delays in mortgage and SBA areas [51][52]

Financial Data and Key Metrics Changes - Year-to-date net income totaled $167.5 million, an increase of $31.9 million or 23.5% from the nine months ended 2024, while earnings per share totaled $2.90, an increase of $0.59 or 25.5% during the same period [6][13] - Return on assets (ROA) was 1.22%, and the efficiency ratio was 55% [3][6] - Total revenues in Q3 showed meaningful growth in both net interest income of $0.7 million and non-interest income of $1.2 million, resulting in overall pre-tax, pre-provision earnings of $70.5 million [13] Business Line Data and Key Metrics Changes - Commercial loan growth for the quarter was $268 million, over 10% annualized, with year-to-date growth of $699 million, over 9% annualized [8][9] - The consumer segment contributed $21 million of loan growth for the quarter, driven by residential mortgage, HELOC, and private banking relationships [9] - Non-interest income totaled $32.5 million, with customer-related fees of $29.3 million reflecting continued momentum [16] Market Data and Key Metrics Changes - Total deposits declined by $23 million in aggregate, but core relationship or operating account balances grew by 4.9% or $56 million [10] - Non-maturity deposit balances increased by $178 million, while maturity deposit balances decreased by $198 million year to date [9][10] Company Strategy and Development Direction - The company announced the acquisition of First Savings Financial Group, adding approximately $2.4 billion in assets and expanding its presence into Southern Indiana [3][4] - The strategy remains commercially focused across all business segments and primary markets of Indiana, Michigan, and Ohio [7] - The company aims to enhance fee income through SBA lending and HELOCs, leveraging the acquired portfolio [4][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining loan growth and increasing market share activities into the fourth quarter [8] - The company anticipates a mid-first quarter closing for the First Savings acquisition and a mid-second quarter integration [5] - Management expects to manage deposit costs effectively in response to anticipated rate cuts [28][36] Other Important Information - The tangible common equity ratio increased to 9.18%, providing meaningful capital flexibility [16] - The company repurchased 162,474 shares totaling $6.5 million during the quarter, bringing total share repurchases year to date to 939,271 shares, totaling $36.5 million [19] Q&A Session Summary Question: Expense outlook for Q4 and 2026 - Management expects Q4 core expenses to be relatively in line with Q3, with no meaningful increase anticipated [25][26] Question: Impact of potential rate cuts on margin - Management predicts a few basis points of margin compression in Q4 if rate cuts occur, with a historical model indicating a decline of about two basis points for each 25 basis point cut [27][28] Question: Deposit pricing and competition - Management noted that deposit costs increased due to competitive pressures, but they are hopeful for more rational pricing following recent rate cuts [29][36] Question: Future M&A ambitions - Management indicated that while they are focused on organic growth and the integration of First Savings, they are open to opportunities but do not prioritize additional M&A at this time [41][42] Question: Sustainability of loan growth - Management believes the current loan growth is sustainable, driven by normal business activity and a strong economic outlook in the Midwest [47][48] Question: Asset quality and reserves - Management explained that the reserve remains high due to a conservative approach in their quantitative model, despite positive credit migration [94][95]

Financial Data and Key Metrics Changes - For Q2 2025, the company reported net earnings of $50.6 million or $0.36 per share, marking the 193rd consecutive quarter of profitability [5][6] - The return on average tangible common equity was 14.08% and return on average assets was 1.34% for Q2 2025 [5] - Net interest income for Q2 2025 was $111.6 million, slightly up from $110.4 million in Q1 2025 and $110.8 million in Q2 2024 [15][16] - Non-interest income was $14.7 million in Q2 2025, down from $16.2 million in Q1 2025 [24] Business Line Data and Key Metrics Changes - Total loans as of June 30, 2025, were $8.36 billion, a decline of $5 million from Q1 2025 and a decrease of $178 million or 2.1% from December 31, 2024 [11][12] - Commercial real estate and single-family loans increased by $27 million and $19 million respectively from Q1 2025 [12] - Non-interest expense was $57 million in Q2 2025, down from $59.1 million in Q1 2025 [25][26] Market Data and Key Metrics Changes - Total deposits and customer repurchase agreements totaled $12.4 billion as of June 30, 2025, an increase of $123 million from March 31, 2025 [8][9] - Non-interest bearing deposits grew by $63 million compared to Q1 2025 and were $157 million or 2.2% higher than the end of Q2 2024 [10] Company Strategy and Development Direction - The company continues to focus on banking small to medium-sized businesses and their owners through all economic cycles [92] - The management indicated a potential shift in acquisition strategy to consider opportunities outside California, reflecting a strategic decision to expand geographic reach [80][81] Management's Comments on Operating Environment and Future Outlook - The economic forecast indicates lower GDP growth, higher unemployment, and declining commercial real estate prices, with real GDP expected to remain below 1% until 2026 [18][19] - Management expressed confidence in the loan pipelines and anticipated that originations could outpace payoffs in the latter half of the year [63] Other Important Information - The company authorized a new $10 million share repurchase plan in November, with 1.28 million shares repurchased at an average price of $17.3 [22] - The efficiency ratio improved to 45.6% in Q2 2025 compared to 46.9% in Q1 2025 [8][27] Q&A Session Summary Question: Can you quantify the prepay income this quarter versus last? - Management noted that prepayment penalties were down, impacting overall loan yields, and indicated that without these factors, yields would have been up about five basis points [31][32] Question: What is the outlook for the competitive environment? - Management described the competition as intense, particularly from regional banks, and indicated that they would remain disciplined in underwriting while focusing on the right relationships [52][64] Question: How is the specialty banking group contributing to deposit trends? - The specialty banking group had a good year, contributing positively to deposit trends, although they are cautious about high earnings credit rates [66][69] Question: Are there any plans for M&A activity? - Management confirmed ongoing conversations regarding M&A, with expectations for reasonable pricing and potential announcements by the end of the year [70][71]

Summary of the Conference Call Company and Industry Overview - The conference call involved Zion, a bank focused on serving small and medium-sized businesses across various states in the U.S. [4][10] - The discussion highlighted the impact of tariffs and economic uncertainty on customer sentiment, particularly among small and medium-sized enterprises (SMEs) [4][5]. Key Points and Arguments Customer Sentiment and Economic Environment - Customer sentiment remains uncertain due to ongoing tariff threats, affecting approximately 65% to 70% of Zion's revenue from SMEs [4][5]. - SMEs are likely to increase inventory and shift supply chains back to the U.S. as a precaution against tariffs, which could positively influence loan growth [6][8]. - Large companies are hesitant to commit to long-term capital investments due to economic volatility and uncertainty [7][8]. Loan Growth and Business Strategy - Zion's loan growth is currently moderate, with a focus on commercial lending, which constitutes about 50% of the loan portfolio [16][17]. - The bank aims to increase its Small Business Administration (SBA) lending, targeting 1,500 loans this year, up from 700, with a goal of reaching 3,000 loans in the next 12 to 18 months [18][19][20]. - The bank's strategy includes deepening relationships with existing customers, as 70% of small businesses do not currently borrow from banks [23][25]. Competition and Market Position - Zion faces competition from both regional and large banks, as well as private credit providers. However, the bank is confident in its ability to compete based on strong customer relationships and service [33][36][40]. - The bank's competitive advantage lies in its relationship management, which is supported by high customer satisfaction scores from Greenwich Research [46][47]. Deposit and Interest Income Management - Zion has experienced five consecutive quarters of net interest margin (NIM) expansion, attributed to a strong deposit franchise and effective management of deposit costs [50][51]. - The bank's cost of deposits is among the lowest in the industry, with a significant portion being non-interest-bearing deposits [51][52]. - The bank anticipates further reductions in deposit costs as time deposits roll over and stabilize [55][56]. Fee Income and Growth Opportunities - Zion's fee income is diversified, with treasury management services contributing about 30% of total fees. The bank expects moderate growth in this area [61][62]. - The capital markets business has shown significant growth, with revenues increasing from $70 million to $107 million, indicating strong potential for future revenue generation [64][66]. Credit Quality and Risk Management - Zion has maintained a low net charge-off ratio of about 10 basis points, significantly better than many peers, due to strong underwriting practices [68][69]. - The bank's commercial real estate (CRE) portfolio has shown resilience, with negligible losses despite rising classified loans [71][73]. Capital Management - Zion is focused on maintaining a strong Common Equity Tier 1 (CET1) ratio, with transparency regarding the impact of accumulated other comprehensive income (AOCI) on capital [75][76]. - The bank is well-positioned to meet regulatory requirements and maintain capital buffers [77][79]. Additional Important Insights - The bank's modernization efforts, including a core transformation project, have allowed bankers to focus more on client relationships rather than internal systems [28][30]. - Zion's proactive marketing strategy aims to enhance its small business initiatives and overall fee income growth [32][66]. This summary encapsulates the key insights and strategic directions discussed during the conference call, providing a comprehensive overview of Zion's current position and future outlook in the banking industry.