Financial Data and Key Metrics Changes - The company reported record sales of $6.4 billion for Q4 2025, representing a 49% increase in U.S. dollars and a 37% organic growth compared to Q4 2024 [4][5] - For the full year 2025, sales reached approximately $23.1 billion, up 52% in U.S. dollars and 38% organically compared to 2024 [5][21] - The GAAP operating income for Q4 was $1.7 billion, with an operating margin of 26.8%, while the adjusted operating margin was 27.5% [6][7] - The company achieved a record adjusted diluted EPS of $0.97 for Q4, a 76% increase from $0.55 in Q4 2024 [11][21] Business Line Data and Key Metrics Changes - Communication Solutions segment sales were $3.4 billion, up 78% in U.S. dollars and 60% organically, with an operating margin of 32.5% [8] - Harsh Environment Solutions segment sales increased by 31% in U.S. dollars and 21% organically, with an operating margin of 27.6% [8] - Interconnect and Sensor Systems segment sales were $1.4 billion, up 21% in U.S. dollars and 16% organically, with an operating margin of 20.1% [8] Market Data and Key Metrics Changes - The defense market represented 10% of Q4 sales, growing 44% in U.S. dollars and 29% organically [23] - The commercial air market accounted for 5% of sales, with a 21% increase in Q4 and a 39% increase for the full year [25] - The IT datacom market represented 38% of Q4 sales, growing 110% in U.S. dollars, driven by demand for AI applications [33] Company Strategy and Development Direction - The company aims to leverage acquisitions to enhance its market position, having completed five acquisitions in 2025, including the significant CommScope acquisition [21][22] - The strategy focuses on expanding high-technology interconnect, antenna, and sensor offerings, both organically and through acquisitions [27] - The company is positioned to capitalize on long-term demand trends in various markets, particularly in defense and AI-related applications [24][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to market dynamics and capitalize on growth opportunities, particularly in AI and data center investments [37] - The company anticipates continued strong demand across its markets, with Q1 2026 sales expected to range from $6.9 billion to $7 billion, reflecting a growth of 43%-45% year-over-year [36] - Management highlighted the importance of empowering general managers to address challenges such as supply chain constraints and rising material costs [75] Other Important Information - The company returned approximately $1.5 billion to shareholders in 2025 through share repurchases and increased dividends [22] - Total debt at year-end was $15.5 billion, with net debt of $4.1 billion, reflecting a strong liquidity position of $17.5 billion [13][14] Q&A Session Summary Question: Book-to-bill ratio and order backlog concentration - Management noted strong orders across all end markets, with significant contributions from AI investments, and emphasized customer commitments as a positive sign for future growth [39][40] Question: Offerings for AI infrastructure customers post-CCS deal - Management highlighted the expanded capabilities in fiber optics and high-speed copper interconnects post-CommScope acquisition, enhancing the company's position in data center applications [45][48] Question: Integration of CommScope and its impact - Management stated that integration focuses on leveraging existing strengths and opportunities rather than merging operations, ensuring continuity and excitement among the teams [50][52] Question: Trends in industrial, automotive, and mobile device markets - Management observed broad-based strength in automotive and industrial markets, particularly in Europe, and noted innovation in mobile devices as a positive trend for 2026 [68][70]

Financial Data and Key Metrics Changes - The company reported record sales of $6.4 billion for Q4 2025, representing a 49% increase in U.S. dollars and a 37% organic growth compared to Q4 2024 [4][5] - For the full year 2025, sales reached approximately $23.1 billion, up 52% in U.S. dollars and 38% organically compared to 2024 [5][21] - GAAP operating income for Q4 was $1.7 billion with an operating margin of 26.8%, while adjusted operating income was $1.8 billion with a margin of 27.5% [6][7] - The company achieved a record adjusted diluted EPS of $0.97 for Q4, a 76% increase from $0.55 in Q4 2024 [11][21] - Free cash flow for the full year was a record $4.4 billion, representing 103% of net income [12] Business Line Data and Key Metrics Changes - Communication Solutions segment sales were $3.4 billion in Q4, up 78% in U.S. dollars and 60% organically, with an operating margin of 32.5% [8] - Harsh Environment Solutions segment sales increased by 31% in U.S. dollars and 21% organically, with a margin of 27.6% [8] - Interconnect and Sensor Systems segment sales were $1.4 billion, up 21% in U.S. dollars and 16% organically, with a margin of 20.1% [8] - For the full year, Communication Solutions sales were $12.1 billion, up 91% in U.S. dollars and 71% organically, with an operating margin of 26.2% [9] Market Data and Key Metrics Changes - The defense market represented 10% of Q4 sales, growing 44% in U.S. dollars and 29% organically [23] - The commercial air market accounted for 5% of sales in Q4, with a 21% increase in U.S. dollars and 19% organically [25] - The industrial market represented 18% of Q4 sales, growing 20% in U.S. dollars and 18% organically [27] - The automotive market represented 14% of Q4 sales, with a 12% increase in U.S. dollars and 9% organically [29] - The IT datacom market represented 38% of Q4 sales, growing 110% in U.S. dollars and organically [33] Company Strategy and Development Direction - The company aims to leverage acquisitions to enhance its market position, with the recent acquisition of CommScope expected to generate $4.1 billion in sales for 2026 [19][22] - The strategy focuses on expanding high-technology interconnect, antenna, and sensor offerings through both organic growth and acquisitions [27][22] - The company is positioned to capitalize on long-term demand trends in various markets, particularly in defense and IT datacom sectors [24][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to market dynamics and drive sustainable profitability [36] - The outlook for Q1 2026 includes expected sales of $6.9 billion to $7 billion, reflecting a growth of 43%-45% year-over-year [36] - Management highlighted strong customer demand, particularly in AI-related applications, as a key driver for future growth [35][58] Other Important Information - The company returned approximately $1.5 billion to shareholders in 2025 through share repurchases and increased dividends [22] - Total debt at year-end was $15.5 billion, with net debt of $4.1 billion [13] - The company closed the CCS acquisition in January 2026, funded by cash on hand and term loan facilities [14] Q&A Session Summary Question: Book-to-bill ratio and order backlog concentration - Management noted strong orders across all end markets, particularly driven by AI investments, with customers opening their order windows [39][40] Question: Post-CCS acquisition offerings for AI infrastructure - Management emphasized the expanded capabilities in fiber optics and high-speed copper interconnects post-CCS acquisition, enhancing their position in data center applications [45][48] Question: Integration of CommScope and its importance - Management highlighted the focus on collaboration with CommScope's existing leadership to leverage opportunities without disrupting their operations [50][53] Question: Trends in industrial, automotive, and mobile device markets - Management observed broad-based strength in automotive and industrial markets, particularly in Europe, and noted innovation in mobile devices as a positive trend [66][68]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported net income of $22.9 million, or $0.85 per diluted share, compared to $18.6 million, or $0.69 per diluted share in the prior quarter, reflecting a strong performance [9] - The return on average assets was 1.25%, and return on average equity was 15.41%, indicating continued profitability improvement [9] - Core earnings per share increased by 24% from the prior year, underscoring strong operating momentum [4] - Net interest income rose by 1.3% from the prior quarter to $62.1 million, with net interest margin expanding 7 basis points to 3.56% [10] - Total other operating income was $14.2 million, up $0.7 million from the previous quarter [11] Business Line Data and Key Metrics Changes - Total core deposits grew by $78 million during the quarter, with significant gains in interest-bearing demand, savings, and money market balances [6] - The total loan portfolio declined by $78 million from the prior quarter, driven by large construction and commercial mortgage loan payoffs [6] - The decline in total loans for the full year 2025 was $44 million, primarily due to a $190 million decrease in residential mortgage, home equity, and consumer portfolios [7] Market Data and Key Metrics Changes - Hawaii's economy remains resilient despite macroeconomic uncertainty, with strong construction activity at both public and private levels, as well as in the military sector [4] - The company is focused on deepening relationships in Hawaii and strategic partnerships in Japan and Korea to drive deposit growth [7] Company Strategy and Development Direction - The company is focused on organic growth, thoughtful diversification, and operational excellence to achieve consistent earnings growth and enhance shareholder returns [4] - A strategic partnership with Korea Investment & Securities was signed to expand international reach and create new deposit opportunities [5] - The company is guiding for full-year net loan and deposit growth in the low single-digit percentage range for 2026 [8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, expecting stronger growth in commercial portfolios and less drawdown on consumer portfolios [32] - The company plans to continue investing in technology to drive returns and efficiency while maintaining strong expense discipline [35] - The effective tax rate was 18.9% in Q4, benefiting from greater tax-exempt income and additional tax credits [12] Other Important Information - The board declared a first-quarter cash dividend of $0.29 per share, an increase of 3.6% from the prior quarter [13] - A new share repurchase authorization for up to $55 million in 2026 was approved, reflecting strong earnings and capital position [14] Q&A Session Summary Question: Delay in new loan fundings - Management confirmed that some loan closings were delayed and expected to be weighted more towards the second quarter [23] Question: Deposit costs and competition - The current deposit beta is about 30%, with expectations to remain in the 25%-30% range [25] Question: Share buyback plan - The company plans to be active in the buyback as they return capital that cannot be used for organic growth [26] Question: Loan growth outlook - Management expects a seasonally slower quarter for loan growth in Q1, with potential acceleration later in the year [43] Question: Drivers behind payoffs and paydowns - Payoffs were attributed to a smaller construction portfolio, and efforts are being made to build this portfolio [47] Question: Competitive landscape for deposits - Core deposit growth is a combination of new customer acquisition and deepening existing relationships [50]

Financial Data and Key Metrics Changes - The company reported record sales of $6.4 billion in Q4 2025, representing a 49% increase in U.S. dollars and a 37% organic growth compared to Q4 2024 [3][4] - For the full year 2025, sales reached approximately $23.1 billion, up 52% in U.S. dollars and 38% organically compared to 2024 [4][22] - GAAP operating income for Q4 was $1.7 billion with an operating margin of 26.8%, while adjusted operating income was $1.8 billion with a margin of 27.5% [5][6] - The company achieved a record adjusted diluted EPS of $0.97 in Q4, a 76% increase from $0.55 in Q4 2024 [11][22] Business Line Data and Key Metrics Changes - Communication Solutions segment sales were $3.4 billion, up 78% in U.S. dollars and 60% organically, with an operating margin of 32.5% [7] - Harsh Environment Solutions segment sales increased by 31% in U.S. dollars and 21% organically, with an operating margin of 27.6% [7] - Interconnect and Sensor Systems segment sales were $1.4 billion, up 21% in U.S. dollars and 16% organically, with an operating margin of 20.1% [7] Market Data and Key Metrics Changes - The defense market represented 10% of Q4 sales, growing by 44% in U.S. dollars and 29% organically [24][25] - The commercial air market accounted for 5% of sales, with a 21% increase in Q4 and a 39% increase for the full year [26][27] - The IT datacom market represented 38% of Q4 sales, growing by 110% in U.S. dollars, driven by demand for AI applications [34][35] Company Strategy and Development Direction - The company aims to leverage acquisitions to enhance its product offerings, with the recent acquisition of CommScope expected to generate $4.1 billion in sales for 2026 [20][23] - The strategy focuses on expanding high-technology interconnect, antenna, and sensor offerings through both organic growth and acquisitions [28][29] - The company is positioned to capitalize on long-term demand trends in various markets, particularly in defense and AI-related applications [25][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to market dynamics and continue growing its market position while maintaining strong profitability [37] - The company anticipates Q1 2026 sales in the range of $6.9 billion to $7 billion, reflecting a growth of 43%-45% year-over-year [36][37] - Management highlighted the importance of customer commitments in driving order growth and the positive outlook for AI investments [41][44] Other Important Information - The company returned approximately $1.5 billion to shareholders in 2025 through share repurchases and increased dividends [23] - Total debt at year-end was $15.5 billion, with net debt of $4.1 billion, reflecting a strong liquidity position of $17.5 billion [13][14] Q&A Session Summary Question: Book-to-bill ratio and order backlog concentration - Management noted strong orders across all end markets, particularly driven by AI investments, with customers opening their order windows [41][42] Question: Post-CCS acquisition offerings for AI infrastructure - Management emphasized the expanded capabilities in fiber optics and high-speed copper interconnects, enhancing their position in data center applications [48][49] Question: Integration steps at CommScope - Management highlighted the focus on collaboration with the existing CommScope team to identify growth opportunities without disrupting their operations [52][53] Question: Challenges in management and supply chain - Management acknowledged the challenges of growing rapidly while empowering general managers to address issues as they arise [75][77]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported net income of $22.9 million, or $0.85 per diluted share, compared to $18.6 million, or $0.69 per diluted share in the prior quarter, indicating a strong profitability improvement [10] - The return on average assets was 1.25%, and return on average equity was 15.41%, reflecting continued profitability improvement [10] - Core earnings per share increased by 24% from the prior year, underscoring strong operating momentum [4] - Total net interest income rose by 1.3% from the prior quarter to $62.1 million, with net interest margin expanding by 7 basis points to 3.56% [11] - For the full year 2025, net income was $77.5 million, or $2.86 per diluted share, representing a meaningful 24% increase over 2024 [10] Business Line Data and Key Metrics Changes - Total core deposits grew by $78 million during Q4, with significant gains in interest-bearing demand, savings, and money market balances [6] - The total loan portfolio declined by $78 million from the prior quarter, driven by large construction and commercial mortgage loan payoffs [7] - The decline in total loans for the full year 2025 was $44 million, primarily due to a $190 million decrease in residential mortgage, home equity, and consumer portfolios, partially offset by growth in commercial mortgage and construction [8] Market Data and Key Metrics Changes - Hawaii's economy remains resilient despite macroeconomic uncertainty, with strong construction activity in both public and private sectors, as well as the military sector [4] - The company is focusing on deepening relationships in Hawaii and strategic partnerships in Japan and Korea to drive deposit growth [8] Company Strategy and Development Direction - The company is focused on organic growth, thoughtful diversification, and operational excellence to achieve consistent earnings growth and enhance shareholder returns [4] - A strategic partnership with Korea Investment & Securities was signed to expand international reach and create new deposit opportunities [5] - The company plans to continue using capital for organic loan growth, dividends, and share repurchases to optimize its capital position [14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, guiding for low single-digit net loan and deposit growth [9] - The company expects to see stronger growth in commercial portfolios and less drawdown on consumer portfolios in 2026 [31] - Management highlighted a strong capital position to support the bank through the credit cycle and against unexpected outcomes [17] Other Important Information - The effective tax rate was 18.9% in Q4, benefiting from greater tax-exempt income and additional tax credits [13] - The board declared a first-quarter cash dividend of $0.29 per share, an increase of 3.6% from the prior quarter [13] - A new share repurchase authorization for up to $55 million in 2026 was approved, reflecting strong earnings and capital position [14] Q&A Session Summary Question: Delay in new loan fundings - Management confirmed that some loan closings were delayed and expected to be funded in the first half of 2026, with a heavier weighting towards the second quarter [23] Question: Deposit costs and competition - The deposit spot rate at year-end was 89 basis points, with an interest-bearing deposit beta of about 30% [24][25] Question: Buyback plan for 2026 - Management confirmed plans to be active on the buyback as they return capital that cannot be used for organic growth [26] Question: Loan growth outlook in Hawaii - Management indicated a cautious optimism for stronger growth in commercial areas, with a focus on optimizing the loan portfolio towards more commercial lending [30][31] Question: Drivers behind payoffs and paydowns - Management noted that the construction portfolio's size impacts loan growth, and efforts are being made to build this portfolio [47]

Financial Data and Key Metrics Changes - In Q2 2026, the company originated $42.1 million in loans held for investment, a 42% increase from $29.6 million in the previous quarter [4] - Loan principal payments and payoffs were $46.7 million, a 35% increase from $34.5 million in the prior quarter [4] - Non-performing assets were $999,000, or 8 basis points of total assets, a decrease from $1.9 million at the end of the previous quarter [5] - The net interest margin increased by 3 basis points to 3.03% compared to 3% in the previous quarter [8] - Operating expenses rose to $7.9 million from $7.6 million in the previous quarter [13] Business Line Data and Key Metrics Changes - Loans held for investment decreased by approximately $4.1 million, with declines in multifamily, commercial business, and commercial real estate loans, partially offset by increases in single-family and construction loans [5] - The weighted average rate of loans originated in Q2 2026 was 6.15%, compared to 5.22% for loans held for investment as of December 31, 2025 [10] Market Data and Key Metrics Changes - The company’s loan pipelines are moderately higher than the previous quarter, suggesting origination volume in Q3 2026 will be within the range of recent quarters [4] - Approximately $112.2 million of loans are set to reprice in Q3 2026 at an expected rate 14 basis points lower than current rates [10] Company Strategy and Development Direction - The company is focusing on disciplined balance sheet growth by expanding its loan portfolio, which is deemed suitable for the stable economic environment and ongoing normalization of the yield curve [14] - The company aims to maintain its cash dividend and recognizes stock buybacks as a responsible capital management tool, having repurchased approximately $96,000 of common stock in Q2 2026 [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current credit quality, noting no loans in early stages of delinquency and a strong performance of commercial real estate loans [6] - The company believes that any government initiatives to make housing more affordable would be beneficial, especially in California where demand exceeds available inventory [24][25] Other Important Information - The allowance for credit losses to gross loans held for investment was 55 basis points, a slight decrease from 56 basis points in the previous quarter [8] - The company distributed $906,000 in cash dividends to shareholders and repurchased approximately $1.5 million worth of common stock in Q2 2026, representing a 170% distribution of the quarter's net income [15][16] Q&A Session Summary Question: What is the probability that the loan portfolio remains flat over the next four quarters? - Management indicated that it is difficult to predict loan payoffs, but they have been focusing on increasing origination volume each quarter, suggesting a potential for higher origination in Q3 2026 [20] Question: Do loans repricing in the June quarter pose a potential headwind to loan growth? - Management does not foresee significant headwinds from repricing, as the rates are not substantially higher than new loan production [21] Question: Would government plans to make housing more affordable be a net positive for the business? - Management believes that any initiatives to expand available housing would be beneficial, particularly in California where demand significantly outstrips supply [24][25]

Financial Data and Key Metrics Changes - In Q2 2026, the company originated $42.1 million in loans held for investment, a 42% increase from $29.6 million in the previous quarter [4] - Loan principal payments and payoffs were $46.7 million, a 35% increase from $34.5 million in the prior quarter [4] - Non-performing assets decreased to $999,000, or 8 basis points of total assets, down from $1.9 million at the end of the previous quarter [5] - The net interest margin increased by 3 basis points to 3.03% compared to 3% in the previous quarter [8] - Operating expenses rose to $7.9 million from $7.6 million in the previous quarter [13] Business Line Data and Key Metrics Changes - Loans held for investment decreased by approximately $4.1 million, with declines in multifamily, commercial business, and commercial real estate loans, partially offset by increases in single-family and construction loans [5] - The weighted average rate of loans originated in Q2 2026 was 6.15%, compared to 5.22% for loans held for investment as of December 31, 2025 [10] Market Data and Key Metrics Changes - The company’s loan pipelines are moderately higher than last quarter, suggesting origination volume in Q3 2026 will be within the range of recent quarters [4] - The average cost of deposits decreased to 1.32%, down 2 basis points, while the cost of borrowing decreased by 20 basis points to 4.39% [9] Company Strategy and Development Direction - The company focuses on disciplined balance sheet growth by expanding its loan portfolio, which is deemed suitable for the stable economic environment and ongoing normalization of the yield curve [14] - The company aims to maintain its cash dividend and recognizes stock buybacks as a responsible capital management tool, having repurchased approximately $96,000 of common stock in the last quarter [14][15] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the current credit quality, noting no loans in early stages of delinquency and a strong performance of commercial real estate loans [6] - The company anticipates opportunities for net interest margin expansion in the upcoming quarters due to expected repricing of maturing wholesale funding at lower rates [12] Other Important Information - The allowance for credit losses to gross loans held for investment was 55 basis points, a slight decrease from 56 basis points in the previous quarter [8] - The company distributed $906,000 in cash dividends and repurchased approximately $1.5 million worth of common stock, representing a 170% distribution of the net income for the quarter [15] Q&A Session Summary Question: What is the probability that the loan portfolio will be flat in the next four quarters? - Management indicated that it is difficult to predict loan payoffs, but they have been focusing on increasing origination volume each quarter, suggesting a potential for higher origination in Q3 2026 [19] Question: Do loans repricing in the June quarter pose a potential headwind to loan growth? - Management does not foresee significant headwinds from repricing, as the rates are not substantially higher than new loan production [20] Question: Would government plans to make housing more affordable be a net positive for the business? - Management believes that increasing housing availability would be beneficial, especially in California where demand exceeds supply [23][24]

Financial Data and Key Metrics Changes - In Q2 2026, the company originated $42.1 million in loans held for investment, a 42% increase from $29.6 million in the prior quarter [5] - Loan principal payments and payoffs increased to $46.7 million, up 35% from $34.5 million in the previous quarter [5] - The net interest margin increased by 3 basis points to 3.03% compared to 3% in the previous quarter [9] - The average cost of deposits decreased to 1.32%, down 2 basis points, while the cost of borrowing decreased by 20 basis points to 4.39% [10] Business Line Data and Key Metrics Changes - Loans held for investment decreased by approximately $4.1 million, with declines in multifamily, commercial business, and commercial real estate loans, partially offset by increases in single-family and construction loans [6] - Non-performing assets were $999,000, or 8 basis points of total assets, a decrease from $1.9 million at the end of the previous quarter [6][7] - The allowance for credit losses to gross loans held for investment was 55 basis points, slightly down from 56 basis points [8] Market Data and Key Metrics Changes - The loan pipelines are moderately higher than last quarter, suggesting origination volume in Q3 2026 will be within the range of recent quarters, between $28 million and $42 million [5] - The weighted average rate of loans originated in Q2 2026 was 6.15%, compared to 5.22% for loans held for investment as of December 31, 2025 [11] Company Strategy and Development Direction - The company focuses on disciplined balance sheet growth by expanding its loan portfolio, which is deemed suitable for the stable economic environment and ongoing normalization of the yield curve [15] - The company aims to maintain its cash dividend and recognizes stock buybacks as a responsible capital management tool, having repurchased approximately $96,000 of common stock in Q2 2026 [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current credit quality, noting no loans in early stages of delinquency and a strong performance of commercial real estate loans [7] - The company anticipates opportunities for net interest margin expansion in Q3 2026 due to expected repricing of maturing wholesale funding to lower costs [13] Other Important Information - Operating expenses increased to $7.9 million in Q2 2026 from $7.6 million in the previous quarter, including a $214,000 pre-litigation settlement expense [14] - The company distributed $906,000 in cash dividends and repurchased approximately $1.5 million worth of common stock, representing a 170% distribution of the quarter's net income [16] Q&A Session Summary Question: What is the probability that the loan portfolio is flat over the next four quarters? - Management indicated that it is difficult to predict loan payoffs, but they have been focusing on increasing origination volume each quarter, suggesting a potential for higher origination in Q3 2026 [20] Question: Do loans repricing in the June quarter pose a potential headwind to loan growth? - Management noted that while repricing could have implications, it is not expected to significantly hinder loan growth as the repricing is not substantially higher than current market conditions [21] Question: Would government plans to make housing more affordable be a net positive for the business? - Management believes that any initiatives to expand available housing would be beneficial, especially in California where demand exceeds supply [23][25]

Financial Data and Key Metrics Changes - For the year ended December 31, 2025, net income was $543 million, an increase of $63 million or 13.2% compared to $480 million for the same period in 2024 [6] - Net income per diluted common share was $5.72 for the year ending December 31, 2025, compared to $5.05 for the same period in 2024, an increase of 13.3% [6] - For the three months ending December 31, 2025, net income was $139.9 million, an increase of $9.8 million or 7.6% compared to $130 million for the same period in 2024 [7] - The annualized return on average assets was 1.49% and on average tangible common equity was 13.61% for the three months ending December 31, 2025 [7] - The efficiency ratio was 43.6% for the three months ending December 31, 2025 [7] Business Line Data and Key Metrics Changes - Net interest income before provision for credit losses for the three months ended December 31, 2025, was $275 million, an increase of $7.2 million compared to $267.8 million for the same period in 2024 [15] - The net interest margin on a tax-equivalent basis was 3.30% for the three months ended December 31, 2025, an increase of 25 basis points compared to 3.05% for the same period in 2024 [16] - Non-interest income was $42.8 million for the three months ended December 31, 2025, compared to $39.8 million for the same period in 2024 [17] - Non-interest expense was $138.7 million for the three months ended December 31, 2025, compared to $141.5 million for the same period in 2024 [18] Market Data and Key Metrics Changes - Deposits were $28.4 billion at December 31, 2025, an increase of $700 million from $27.7 billion at September 30, 2025 [9] - Nonperforming assets totaled $150 million, or 46 basis points of quarterly average interest-earning assets at December 31, 2025, compared to $119 million, or 36 basis points at September 30, 2025 [10] Company Strategy and Development Direction - The company is focused on delivering shareholder value through low-cost core deposits, operational efficiency, sound credit quality, and growth via opportunistic M&A [14] - The acquisition of Stellar Bancorp is seen as a significant milestone, enhancing the company's Texas footprint and making it the largest Texas-based bank in the market [14] - The company plans to prioritize the integration of the three banks it is acquiring, focusing on customer and associate care [36][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth momentum heading into 2026, with expectations for improved net interest margins and overall performance [32][34] - The company anticipates realizing cost savings related to the acquisitions after system conversions scheduled for later in the year [19] - Management highlighted strong tailwinds for growth in 2026 and beyond, with expectations for a minimum net interest margin of 3.5% [86] Other Important Information - The company completed a merger with American Bank on January 1, 2026, and expects to finalize the merger with Southwest Bancshares on February 1, 2026 [11][12] - The allowance for credit losses on loans was $333 million, with a strong coverage ratio of 2.21 times non-performing assets [10] Q&A Session Summary Question: Can you explain the difference in earnings estimates for Stellar compared to consensus? - Management indicated that Stellar's fourth quarter earnings influenced the estimates, and they are confident in the earnings level coming from Stellar [28][29] Question: Why is this acquisition different from past ones? - Management emphasized the long-standing relationship with Stellar and the similarities in operational discipline, which reduce risks associated with the acquisition [36][37] Question: Can you discuss the price of the acquisition and the expected synergies? - Management acknowledged the premium price for a quality bank and highlighted the expected earnings growth and synergies from the merger [40][45] Question: What are the capital deployment plans moving forward? - Management indicated a focus on integration but also mentioned the potential for opportunistic buybacks and dividend increases [48][50] Question: How will the company manage multiple bank integrations simultaneously? - Management stated that designated teams will handle integrations, allowing core operations to continue without distraction [53][56] Question: Can you provide details on the increase in nonperforming assets? - Management confirmed that a specific $35 million Shared National Credit was part of the increase and noted ongoing resolution discussions [108][109]

Financial Data and Key Metrics Changes - For the year ended December 31, 2025, net income was $543 million, an increase of $63 million or 13.2% compared to $480 million for the same period in 2024 [6] - Net income per diluted common share was $5.72 for the year ending December 31, 2025, compared to $5.05 for the same period in 2024, an increase of 13.3% [6] - The net income for the three months ending December 31, 2025, was $139.9 million, compared to $130 million for the same period in 2024, an increase of $9.8 million or 7.6% [7] - The annualized return on average assets was 1.49% and on average tangible common equity was 13.61% for the three months ending December 31, 2025 [7] - The efficiency ratio was 43.6% for the three months ending December 31, 2025 [7] Business Line Data and Key Metrics Changes - Net interest income before provision for credit losses for the three months ended December 31, 2025, was $275 million, an increase of $7.2 million compared to $267.8 million for the same period in 2024 [15] - The net interest margin on a tax-equivalent basis was 3.30% for the three months ended December 31, 2025, an increase of 25 basis points compared to 3.05% for the same period in 2024 [16] - Non-interest income was $42.8 million for the three months ended December 31, 2025, compared to $39.8 million for the same period in 2024 [17] - Non-interest expense was $138.7 million for the three months ended December 31, 2025, compared to $141.5 million for the same period in 2024 [18] Market Data and Key Metrics Changes - Deposits were $28.4 billion at December 31, 2025, an increase of $700 million from $27.7 billion at September 30, 2025 [9] - Nonperforming assets totaled $150 million, or 46 basis points of quarterly average interest-earning assets at December 31, 2025, compared to $119 million, or 36 basis points at September 30, 2025 [10] Company Strategy and Development Direction - The company completed a merger with American Bank on January 1, 2026, and expects to finalize the merger with Southwest Bancshares on February 1, 2026 [11][12] - The acquisition of Stellar Bancorp is seen as a significant milestone, enhancing the company's Texas footprint and deposit rank [14] - The company aims to deliver shareholder value through low-cost core deposits, operational efficiency, sound credit quality, and growth via opportunistic M&A [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth momentum from the second half of 2025 into 2026, with expectations for improved net interest margins and earnings [32][34] - The company anticipates a minimum net interest margin of 3.5% for 2026, with potential upside from the acquisition of Stellar Bank [79][80] - Management highlighted a strong capital position and plans for capital deployment, including potential stock buybacks and dividend increases [48][49] Other Important Information - The company repurchased approximately $157 million, or 2.34 million shares of its common stock at an average weighted price of $67.04 under its 2025 stock repurchase program [8] - The allowance for credit losses on loans was $333 million, with a strong coverage ratio of 2.21 times non-performing assets [10] Q&A Session Summary Question: Can you discuss the Stellar acquisition and the difference in earnings estimates? - Management noted that the earnings estimates are influenced by Stellar's recent performance and expressed confidence in the projected earnings from the acquisition [28][32] Question: Why is this acquisition different from past ones? - Management emphasized the familiarity and alignment between the two banks, which reduces risk and enhances growth potential [35][37] Question: Can you elaborate on the capital deployment strategy post-acquisition? - Management indicated a focus on integration of the three banks and potential for opportunistic buybacks, with a strong capital position allowing for flexibility [48][50] Question: How will you manage multiple bank integrations simultaneously? - Management assured that designated teams are in place for integration, allowing core operations to continue without distraction [53][56] Question: What is the outlook for nonperforming assets and credit quality? - Management acknowledged an increase in nonperforming assets but expressed confidence in the overall credit quality of the portfolio [108][109]