Summary of Conference Call Company Overview - The company has focused on creating consistent, sustainable, long-term performance over the last 10 years, prioritizing soundness, profitability, and growth [2][3][4] - Investments have been made in business, talent, and technology to diversify revenue [2][6] Key Financial Performance - The company has improved credit risk management and capital allocation, leading to strong results in the CCAR process [3] - Shareholder value has been driven by a compound annual growth rate of over 10% in dividends over the last six years and significant share buybacks [3][4] - The return on tangible common equity has improved from the bottom to the top of the peer group over the last five years [4] - Earnings per share growth has been in the top quartile over the last three, five, and ten years [4] Market Position and Growth Strategy - The company has experienced top deposit growth among peers at a lower cost [6] - Eight priority markets have been identified for growth, contributing over 50% of deposit growth in the last five years [6] - Plans to add 170 bankers over the next three years to enhance service in key markets [6][7] Economic and Client Sentiment - The economy in the company's markets is characterized as decent, with good job creation and consumer confidence [12][14] - Client sentiment in the wholesale business has improved, with a 75% probability to close pipeline up 84% year-over-year [14] Competition and Market Dynamics - Increased competition from larger banks is noted, but the company believes its long-standing presence and local leadership provide a competitive edge [16][19] - The company aims to leverage disruptions in the market to grow its share [19] Loan Growth and Capital Management - Loan growth has been impacted by strategic de-risking, with a focus on maintaining soundness and profitability [27][28] - Total client liquidity is expected to lead to loan growth in 2026 as customers begin to draw down excess liquidity [14][28] Revenue Components and Fee Income - Fee income has grown by 5% year-to-date, with expectations for continued growth in service charges, treasury management, and wealth management [37][38] - The company is focused on enhancing its treasury management services and small business opportunities [41][42] Technology and Systems Upgrade - A significant technology project is underway, expected to be completed by 2027, which will modernize the deposit system and improve operational efficiency [59][74] - The new system is anticipated to increase speed to market for new products and services, providing a competitive advantage [74] Capital Allocation and Share Buybacks - The company maintains a CET1 ratio of almost 11%, with capital priorities focused on supporting organic growth, paying dividends, and potential non-depository acquisitions [50][52] - A new $3 billion share buyback plan has been announced, but the company prefers to use capital for growth rather than buybacks [52][54] Conclusion - The company is positioned for strong performance in 2026, with a focus on loan growth, margin improvement, and continued investment in technology and talent [33][35][63]

Financial Data and Key Metrics Changes - The company reported strong quarterly earnings of $534 million, resulting in earnings per share of $0.59, with adjusted earnings of $538 million or $0.60 per share [4] - Pretax pre-provision income increased by 14% year over year to $832 million, with a return on tangible common equity of 19% [4][10] - Average deposits grew organically by over 30% over the last five years, among the highest in its peer set [5] Business Line Data and Key Metrics Changes - Ending loans grew by 1%, while average loans remained stable; growth in ending business loans was driven by commercial and industrial (C&I) and real estate sectors [13][14] - Wealth management revenue has grown at more than an 8% compounded annual growth rate since 2018, contributing to record fee income [8] - Treasury management revenue increased by 8% year to date, with a 10% increase in the total number of clients served [7] Market Data and Key Metrics Changes - Consumer deposits in priority markets grew 20% more than in core markets during the quarter [15] - Average deposit balances grew over 1% sequentially, while ending balances remained stable [16] - The company expects full-year average balances to be up modestly compared to the prior year [16] Company Strategy and Development Direction - The company is focused on growth across its businesses, with a commitment to delivering top quartile results and shareholder value [10][12] - A significant technology modernization project is underway, including a new cloud-based core platform expected to enhance efficiency and service delivery [9][75] - The company is not currently interested in depository M&A, preferring to focus on executing its existing strategic plan [38] Management's Comments on Operating Environment and Future Outlook - Management noted that both business and consumer customers are in good shape, maintaining liquidity and managing debt levels well [32][34] - There is some uncertainty regarding interest rates and inflation, but overall sentiment among business customers has improved [31][34] - The company expects to maintain momentum into 2025 and beyond, with opportunities for continued growth [12] Other Important Information - The company executed $144 million in share repurchases and paid $224 million in common dividends during the quarter [24] - The common equity Tier one ratio increased from 9.1% to an estimated 9.2% due to strong capital generation [24][25] - The company has increased its dividend at a compounded annual growth rate of over 10% over the last six years, the highest among peers [10] Q&A Session Summary Question: Implications of the tax bill on loan growth and consumer spending - Management indicated that the tax package creates certainty for businesses and consumers, which is expected to lead to positive momentum in 2025 and 2026 [34][35] Question: Perspective on bank M&A activity - Management stated they are not interested in depository M&A, focusing instead on executing their current plan and technology projects [38] Question: Details on net interest margin dynamics - Management explained that the margin growth was aided by the removal of negative hedges and improved deposit cost management, with expectations for stable to modest growth in the future [46][50] Question: Loan growth dynamics and competitive landscape - Management highlighted a 17% year-over-year increase in pipelines and emphasized disciplined portfolio management while experiencing growth in commercial and consumer lending [60][62] Question: Credit quality and economic uncertainty - Management noted improved credit quality metrics and strong consumer balance sheets, with expectations for charge-offs to remain within the anticipated range [110][113] Question: Approach to stablecoin and payment systems - Management expressed intent to participate in a consortium of banks for stablecoin solutions, similar to their involvement with Zelle [115] Question: Operating leverage expectations - Management committed to delivering positive operating leverage over time while balancing necessary investments in technology and business segments [125][126]