Financial Data and Key Metrics Changes - The company reported net income available to shareholders of $67.4 million, or $0.42 per diluted share, which was up 11% from $0.38 per diluted share in the third quarter [13] - Net interest income was $251.4 million, down modestly from the prior quarter due to the timing of loan growth and lower loan income [13] - Adjusted EPS grew 69% year over year, and tangible book value per share increased by 11% [6][11] Business Line Data and Key Metrics Changes - Loan production disbursements were $9.6 billion, up 31% from 2024, with Q4 loan production at $2.7 billion, up 32% quarter over quarter [5][8] - Non-interest-bearing (NIB) deposit accounts increased by nearly 2,500, with new NIB deposit balances of nearly $530 million, approaching 30% of total deposits [6][8] - The adjusted efficiency ratio improved to 55.6%, down 266 basis points from the prior quarter [20] Market Data and Key Metrics Changes - The company achieved a double-digit return on average tangible common equity of 10.75%, an increase of 319 basis points since the start of the year [7] - The average yield on loans declined to 5.83% compared to 6.05% in Q3, reflecting the impact of Fed rate cuts [16] - Total loan balances were $25.2 billion, up 15% on an annualized basis for the quarter and 6% for the year [17] Company Strategy and Development Direction - The company aims to continue building on its momentum by focusing on high-quality, consistent, and sustainable earnings growth while maintaining disciplined expense management [23] - The strategy includes investing in technology and talent to support long-term growth and capitalizing on opportunities arising from disruptions in the California banking landscape [24] - The company plans to achieve full-year net interest income growth of 10%-12% from 2025 and expects pre-tax, pre-provision income to grow 20%-25% [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver consistent high-quality earnings growth and long-term value for shareholders in 2026 and beyond [12][23] - The company anticipates that loan production activity will remain healthy across all business units, with strong pipelines and continued positive trends in credit quality [9][10] - Management noted that the economic environment and potential Fed rate cuts could provide additional tailwinds for growth [28] Other Important Information - The company returned significant capital to shareholders by repurchasing 13.6 million shares, or 8% of its common stock outstanding [6] - Non-interest income was $41.6 million, up 21% sequentially, driven by gains on the sale of lease residuals and higher market-sensitive income [19] - The company maintained its allowance for credit losses at 1.12% of total loans, with minimal net charge-offs [21] Q&A Session Summary Question: What is the trajectory for net interest margin (NIM) and net interest income (NII) if the Fed cuts rates? - Management indicated that typically, the margin expands a couple of basis points each quarter, and a rate cut could lead to faster margin expansion [27][28] Question: Is the NII growth guidance of 10%-12% including accretion? - The guidance includes baseline accretion, but there is little expectation for accelerated accretion [32] Question: Can you clarify the base for the pre-tax, pre-provision income growth guidance? - The base is the full-year 2025 results [34] Question: What is the outlook for loan growth in 2026? - The company expects mid-single-digit loan growth, with strong performance anticipated across all business lines [17][19] Question: How does the company view its expense growth in 2026? - The company is targeting a 3%-3.5% increase in expenses, reflecting a conservative approach while allowing for necessary investments [20][42] Question: What is the expected impact of Fed rate cuts on expenses and investments? - Management believes that any efficiencies gained from rate cuts would drop to the bottom line rather than being absorbed by increased spending [91]