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]