Financial Data and Key Metrics Changes - The company recorded earnings per diluted share of $1.58 for the fourth quarter, representing a 32% increase from the third quarter of 2025 and a 33% increase from the fourth quarter of 2024 [9] - Full year earnings per share was $5.25 on an operating basis and $5.06 on a GAAP basis [9] - Net income available to common shareholders was $86.4 million for the quarter and $276.5 million for the year [9] - The return on average assets was 1.62% for the year, and the return on common equity was nearly 17% [9] - The tangible book value grew 4% to $33.62 per share [9] - The net interest margin rose from 2.92% in the first quarter to 3.38% in the fourth quarter [10] Business Line Data and Key Metrics Changes - Loan growth for the quarter was annualized at 12%, with a significant increase in the loan pipeline, which rose by 11% quarter-over-quarter [3] - The C&I book experienced nearly 10% growth during the year, marking the highest growth rate in that segment in several years [7] - Non-interest revenue saw a 26% growth from the full year 2024 to 2025, driven by service charge increases [12] Market Data and Key Metrics Changes - The company has expanded its correspondent banking relationships to 388, including 145 that settle at the Federal Reserve Bank [5] - The new Texas banking team is expected to drive growth, with a focus on C&I lending rather than commercial real estate [49] Company Strategy and Development Direction - The company is focused on organic growth, particularly through the expansion in Texas, which is expected to contribute significantly to loan balances and deposits in 2026 [49] - The company aims to maintain a best-in-class efficiency ratio while managing costs and increasing operating leverage [10][15] - The company is optimistic about the opportunities in the Texas market and plans to hire more personnel to support growth [49][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan demand, particularly in the C&I sector, indicating a positive trend compared to previous quarters [24] - The company is prepared for potential economic fluctuations and is focused on maintaining strong liquidity levels without relying on brokered deposits [15] - Management acknowledged the challenges posed by rising interest rates but remains confident in their ability to manage loan pricing effectively [30] Other Important Information - The company paid down $30 million of subordinated debt at a cost of 4.5% [14] - The efficiency ratio is expected to remain in the low 30s for 2026, reflecting the anticipated expenses associated with the Texas expansion [51] Q&A Session Summary Question: Loan Payoff Trends - Management noted that projected payoffs have dropped significantly quarter-over-quarter, leading to a more optimistic outlook for loan growth [21] Question: Commercial Loan Demand - Management rated current commercial loan demand as slightly better than before, indicating a positive trend in C&I growth [23] Question: Margin Expectations - The December margin is expected to serve as a good starting point for 2026, with continued margin expansion anticipated [30] Question: Charge-Off Details - The $5 million charge-off was related to a healthcare asset, which was anticipated and largely reserved for [36] Question: Tax Rate for 2026 - The company plans to continue leveraging tax credits, particularly around solar credits, to manage the tax rate going forward [44] Question: Texas Expansion Growth - The budgeted growth for the Texas team is expected to be higher than any other region, with a focus on C&I lending [49]

Financial Data and Key Metrics Changes - The company reported earnings per diluted share of $1.58 for Q4 2025, representing a 32% increase from Q3 2025 and a 33% increase from Q4 2024 [9] - Full year earnings per share was $5.25 on an operating basis and $5.06 on a GAAP basis [9] - Net income available to common shareholders was $86.4 million for the quarter and $276.5 million for the year [9] - The tangible book value grew 4% to $33.62 per share [9] - The net interest margin increased from 2.92% in Q1 2025 to 3.38% in Q4 2025 [9][10] Business Line Data and Key Metrics Changes - Loan growth for the quarter was annualized at 12%, with a notable 10% growth in the C&I book during the year, marking the highest growth rate in that segment in several years [4][7] - Non-interest revenue saw a 26% growth from full year 2024 to full year 2025, driven by increased service charges [12] - Non-interest expense remained flat compared to the same quarter last year and increased only 2% for the full year [12] Market Data and Key Metrics Changes - The company has expanded its correspondent banking relationships to 388, including 145 that settle at the Federal Reserve Bank [6] - The new Texas banking team is expected to significantly contribute to growth, with a budgeted growth for 2026 higher than any other region [42] Company Strategy and Development Direction - The company is focused on organic growth, particularly through the expansion in Texas, and aims to attract high-cost deposits back if loan demand remains robust [5][14] - The management is optimistic about the Texas team's performance and anticipates hiring more personnel in the first and second quarters of 2026 [5][42] - The company plans to maintain a strong efficiency ratio while managing expenses related to the new Texas team [44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan demand, particularly in the C&I sector, indicating a positive trend compared to previous quarters [21] - The company is prepared for potential economic fluctuations and is focused on maintaining a disciplined approach to loan pricing and cost management [10][28] - The management expects continued margin expansion throughout 2026, supported by repricing opportunities on low fixed-rate loans [26] Other Important Information - The company recorded net charge-offs of approximately $6.7 million for Q4, primarily related to one credit, with an allowance for loan losses ratio of 1.25% [7][11] - The efficiency ratio dipped below 30% for the quarter, with an adjusted efficiency ratio of around 32% for the full year, marking a 14% improvement over 2024 [10] Q&A Session Summary Question: Trends in loan payoffs and expectations for loan growth - Management noted that projected payoffs have dropped substantially quarter over quarter, indicating a positive trend in loan growth [19] Question: Commercial loan demand outlook - Management rated current commercial loan demand as slightly better than before, particularly in the C&I sector, which has shown significant growth [21] Question: Margin sustainability and fee collection impact - Management indicated that the December margin is a good starting point for 2026, with expectations for continued margin expansion due to disciplined loan pricing [25][26] Question: Charge-off details and non-performing loans - The charge-off was related to a healthcare asset, which was anticipated and reserved for, and management is actively working on a multifamily asset portfolio [32] Question: Tax rate expectations for 2026 - Management plans to continue leveraging tax credits, particularly around solar credits, to manage the tax rate going forward [36] Question: Growth expectations for the Texas team - The Texas team's budgeted growth for 2026 is expected to be higher than any other region, with optimism about their performance in the market [42] Question: Overall expense growth for 2026 - Management anticipates high single-digit expense growth for 2026, primarily due to new hires that are expected to generate revenue [49]

Core Thesis - Fiserv, Inc. is viewed as a "fallen angel" at a strategic inflection point, with potential for long-term growth despite recent challenges and a significant share price decline [4][5]. Company Overview - Fiserv, Inc. provides essential banking infrastructure and payment solutions across the U.S., but has faced challenges due to an overemphasis on Payments, leading to a 39% decline in share price over the past year [2]. - As of December 1st, Fiserv's shares were trading at $62.69, with trailing and forward P/E ratios of 9.69 and 7.39 respectively [1]. Strategic Changes - Under the leadership of new CEO Mike Lyons, Fiserv is consolidating 16 core platforms into five strategic cores, aiming to simplify legacy infrastructure and enhance client experience [3]. - This re-architecture is intended to restore operational agility and long-term profitability, with the company maintaining a 12% return on equity (ROE) and expected earnings growth of around 10% annually, resulting in a PEG ratio of 0.7 [3]. Growth Initiatives - Strategic acquisitions, such as Smith Consulting and StoneCastle Cash Management, are enhancing Fiserv's capabilities in community banking and deposit management, supporting its ambitions in embedded finance [4]. - Fiserv's assets, including Clover and its partnership with ADP, serve over one million small and medium-sized business (SMB) clients, positioning the company for a return to growth [4]. Market Sentiment - Despite market pessimism and execution fatigue leading to a 69.02% depreciation in stock value since previous coverage, the current strategic initiatives and platform consolidation are seen as key drivers for a potential turnaround [5].

Financial Data and Key Metrics Changes - The first quarter of 2025 showed a strong start with a 4.8% annualized loan growth and a 23 basis point increase in return on assets [5] - Total assets reached $18.4 billion, with total loans at $13 billion and total deposits at $14.5 billion [5] - Net income for the first quarter was $54.9 million, an increase of $7.4 million or 15.6% year-over-year [5] - GAAP earnings per share increased to $0.94 from $0.80 a year ago, reflecting a 17.5% increase [6] - Tangible common equity stood at 8.9%, providing optimal capital flexibility [8] Business Line Data and Key Metrics Changes - The commercial segment drove loan growth, increasing by $169 million or a 7% annualized growth rate, with C&I loans growing by $248 million [10] - The consumer portfolio saw a 15% increase in mortgage unit volume and over 30% increase in dollar volume year-over-year [13] - Total deposits declined by 1.6% on an annualized basis, primarily due to a $208 million decline in public funds [15] Market Data and Key Metrics Changes - The company operates primarily in Indiana, Michigan, and Ohio, focusing on commercial banking [9] - The commercial deposit balance decline was largely attributed to public funds, which are high-cost deposits [15] Company Strategy and Development Direction - The company maintains a commercially focused strategy across all business segments [9] - There is a focus on organic growth and high performance, with a selective approach to M&A [41] - The company plans to continue its share repurchase program, having already repurchased $10 million in shares [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about maintaining loan growth despite market volatility and potential impacts from tariffs [42] - The loan pipeline remains strong, with expectations of mid to high single-digit loan growth for the year [42] - Management is actively monitoring the impact of tariffs on their customer base [42] Other Important Information - The company has a new $100 million share repurchase program approved by the board [7] - Noninterest income totaled $30 million, with customer-related fees declining from the previous quarter [26] Q&A Session Summary Question: Expectations on additional charge-offs related to multifamily NPA - Management does not expect any additional loss and is optimistic about the closing of the nonperforming asset [46][47] Question: Outlook on fee income for the second quarter - Management expects mid to high single-digit growth in fee income, with double-digit growth anticipated in mortgage banking [51][52] Question: Impact of fixed-rate loans on loan yields - There are $190 million of fixed-rate loans that will be repricing through the end of 2025, with a rate of about 4.65% [58] Question: Updated outlook on expenses - Guidance remains at 1% to 3% expense growth over the 2024 base, with current trends running ahead of that [66][67] Question: Strategy for cash flows from the securities portfolio - The company is reallocating cash flows to support loan growth rather than reinvesting in securities [68] Question: Thoughts on M&A strategy - The company continues to stay close to potential partners in its primary markets, but the current volatility makes it challenging to create momentum [71] Question: Expectations for margin in the second quarter - Management expects margin to remain stable, with potential for slight expansion depending on Fed actions [76][79] Question: Areas of exposure due to tariffs - Management is analyzing the impact of tariffs on various portfolios but finds it too early to quantify specific risks [100][102]