Financial Data and Key Metrics Changes - The company reported a same-store NOI growth of 8.2%, with the street retail portfolio delivering 13% growth during the quarter [27][28] - The quarterly FFO increased to $0.29 compared to $0.28 in the previous quarter, despite short-term dilution from the City Point loan conversion [34][35] - The company maintained its FFO guidance for 2026, moving to a simplified reporting metric that excludes investment management gains [36][37] Business Line Data and Key Metrics Changes - The company executed $3.7 million in new leases during the third quarter, bringing total signed leases year-to-date to $11.4 million [16][21] - The average GAAP spread for new and renewal leases was 32%, with a notable 36% spread in high-growth markets [16][18] - The leasing pipeline increased to $8 million, indicating strong tenant demand and leasing velocity [16][21] Market Data and Key Metrics Changes - Sales in SoHo increased by 15%, Bleecker Street by over 30%, and the Gold Coast of Chicago by over 40% year-to-date [21][22] - Despite concerns in Washington, DC, sales on M Street rose by 16% year-over-year, showcasing resilience in urban markets [22] - The company noted a resurgence in foot traffic and consumer spending, particularly among affluent consumers, driving demand for street retail [6][9] Company Strategy and Development Direction - The company aims to become the premier owner-operator of street retail in the U.S., focusing on internal growth and external acquisitions [12][13] - The strategy includes enhancing the leasing portfolio in key urban markets and capitalizing on the demand for direct-to-consumer retail locations [6][12] - The company is confident in its ability to invest accretively despite rising costs of capital, leveraging its reputation as a buyer of choice in the street retail space [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing recovery in consumer spending, particularly among affluent consumers, which is expected to continue driving demand for retail space [46][47] - The company anticipates achieving 10% REIT portfolio NOI growth in 2026, supported by strong internal growth and a robust acquisition pipeline [33][38] - Management acknowledged the importance of adapting to market conditions and maintaining flexibility in funding strategies to support growth initiatives [64][66] Other Important Information - The company has raised approximately $212 million in equity to fund its acquisition pipeline and redevelopment projects [38] - The investment management platform is seeing increased interest from institutional investors, indicating a strong demand for retail assets [70] - The company is focused on simplifying its financial reporting to provide clearer insights into its core operating results [27][36] Q&A Session Summary Question: Can you provide details on the acquisition pipeline? - Management indicated that the $500 million pipeline is gross and includes specific negotiations, with a focus on street retail opportunities [56][57] Question: Are you seeing signs of slowing tenant demand? - Management confirmed strong tenant demand, driven by affluent consumers and the shift towards direct-to-consumer retail strategies [46][47] Question: What factors will influence the 5% to 9% same-store growth range in 2026? - Management highlighted that achieving the higher end of the range depends on the speed of leasing and market conditions, with confidence in surpassing 5% growth [51] Question: How is the company managing its balance sheet for future investments? - Management emphasized maintaining a pro-rata debt to EBITDA ratio and leveraging both equity and debt markets to fund acquisitions [64][66] Question: What is the level of demand from institutional partners for the investment management platform? - Management reported broad demand from institutional investors seeking retail opportunities, indicating a strong interest in partnering [70]

Financial Data and Key Metrics Changes - The company reported Q3 AFO of $0.45 per share, a 3% increase from Q3 last year [17] - Q3 cash rental income was $66.1 million, representing a growth of 12.6% compared to the same quarter last year [18] - Annualized cash-based rent for leases in place as of quarter end is $255.6 million, with a weighted average five-year annual cash rent escalator of 1.4% [18] Business Line Data and Key Metrics Changes - The company acquired 28 properties in Q3 for $82 million at a blended cap rate of 6.8%, with a weighted average lease term of 12 years [10] - Over the first 10 months of 2025, the company acquired 77 properties for $229 million, also at a blended 6.8% cap rate [10] - The in-place portfolio has zero exposure to problem retailers or sectors, maintaining a rent coverage of 5.1 times for the majority of the portfolio [6][18] Market Data and Key Metrics Changes - The company has diversified its rent sources, with Olive Garden and LongHorn Steakhouse now accounting for 32% and 9% of rent, respectively, down from a combined 94% at spin-off [8] - 35% of rents now come from sectors outside of casual dining, including automotive service (13%), quick service restaurants (11%), and medical retail (10%) [8] Company Strategy and Development Direction - The company aims to continue its acquisition strategy while maintaining a focus on quality tenants and properties, avoiding sacrificing quality for volume [5] - The company has a strong competitive advantage in its ability to modulate acquisition pace based on the cost of capital [5] - The company is well-positioned with $270 million in combined dry powder to fuel growth before reaching a mid-five times leverage target [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current acquisition pipeline and the improved debt market, indicating a favorable environment for growth [9][28] - The company has maintained a strong balance sheet with a net debt to Adjusted EBITDA ratio of 4.7 times, near a seven-year low [16] - Management noted that the portfolio remains resilient, with strong occupancy and collection rates, and low bad debt expense [56] Other Important Information - The company has implemented a new disclosure on its website, providing a full list of properties with detailed data to enhance transparency for investors [20] - The company has a healthy fixed charge coverage ratio of 4.7 times and no debt maturities until the end of 2026 [17] Q&A Session Summary Question: On underwriting standards and potential adjustments - Management indicated that they do not foresee lowering their strict underwriting standards, emphasizing the importance of maintaining a high-quality portfolio [23] Question: Funding pipeline with remaining forward equity - Management clarified that the remaining $100 million in forward equity, combined with $170 million in debt capacity and retained cash flow, provides substantial acquisition capacity [24] Question: Assessment of the acquisition environment - Management expressed a favorable view of the current acquisition environment, noting a capable team and a strong balance sheet to support accretive acquisitions [28] Question: Confidence in Darden lease renewals - Management expects very high renewal rates for Darden leases, citing strong coverage and the value of their menu offerings [30] Question: Competition in the net lease sector - Management acknowledged increased competition from private equity but emphasized their diverse sourcing strategy, which includes both large portfolios and smaller acquisitions [45]

Financial Data and Key Metrics Changes - In Q3 2025, total revenue was just over $1 billion, reflecting a year-over-year increase of approximately 2% on both a reported and core basis [11] - Adjusted EBITDA grew by 10% year-over-year to $309 million, with an adjusted EBITDA margin expanding by approximately 200 basis points to 30% [12] - Adjusted EPS was $0.68, up 15% year-over-year, driven by growth in adjusted EBITDA and favorable interest expense on lower debt balances [12][19] Business Line Data and Key Metrics Changes - Intelligent Operating Solutions (iOS) segment revenue grew just over 2.5% on a reported basis, with core revenue growth at 2% [14] - Advanced Healthcare Solutions (AHS) segment revenue was $328 million, growing approximately 2% year-over-year, with adjusted EBITDA margin expanding from roughly 27% to 28% [17] Market Data and Key Metrics Changes - North America showed solid growth, improving sequentially from Q2, driven by strengthening demand trends for professional instrumentation and healthcare equipment [11] - Europe experienced a year-over-year decline, worsened modestly from Q2 due to weakening macro conditions [11] - The rest of the world showed mixed results, with significant acceleration in South Asia, particularly India, which is expected to drive strong momentum in the coming years [9] Company Strategy and Development Direction - The company is focused on driving profitable organic growth through its Fortive Business System, with a strategy centered on innovation acceleration, commercial acceleration, and recurring customer value [6][24] - Capital allocation priorities include investing in organic growth, pursuing accretive bolt-on M&A, returning capital through share repurchases, and maintaining a modest growing dividend [10][39] - The company is committed to maximizing medium to long-term shareholder returns and has demonstrated this through significant share repurchases [5][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth trajectory, emphasizing the importance of customer-centric operations and the simplification of the organizational model [22][23] - The company expects overall core growth to moderate in Q4, with AHS core growth broadly in line with Q3 levels and very modest core growth at iOS [19][95] - Management remains confident in the healthcare market's resilience, citing aging demographics and increasing healthcare needs as long-term growth drivers [97] Other Important Information - The company successfully completed the spin-off of its Precision Technologies segment, now operating independently as Rallian, on June 28, 2025 [2] - Free cash flow for Q3 was $266 million, with trailing twelve-month free cash flow growing to $922 million [13][18] Q&A Session Summary Question: Margin performance and Q4 guidance - Management noted that Q3 margin performance was driven by revenue performance and cost discipline, with expectations to maintain cost discipline while reinvesting some resources in Q4 [31][32] Question: Impact of government shutdown on performance - The company indicated that its exposure to federal government funding is minimal, and the shutdown has not significantly impacted performance [34] Question: Capital allocation and buyback strategy - Management explained that the $1 billion share repurchase was based on strong free cash flow and attractive valuations, with a focus on smaller bolt-on acquisitions for growth [38][39] Question: Demand trends in AHS segment - Management reported sequential improvement in demand for healthcare capital equipment and consumables, driven by more certainty in legislative conditions [52] Question: Tax rate outlook - The CFO indicated that a mid-teens tax rate is a good framework for modeling through 2026, with potential risks from new proposals [53] Question: Demand by region - North America continues to perform strongly, while Western Europe remains soft, with mixed results in other regions [69]

Financial Data and Key Metrics Changes - Third quarter reported earnings were $133 million, or $0.32 per share, while adjusted earnings were $1 billion, or $2.52 per share, reflecting a $52 million increase in total company adjusted earnings [10][11] - Generated $1.2 billion of operating cash flow, with operating cash flow excluding working capital at $1.9 billion [10][11] - Returned $751 million to shareholders, including $267 million in share repurchases, with a net debt to capital ratio of 41% [10][11] Business Line Data and Key Metrics Changes - Midstream results decreased mainly due to lower margins, partially offset by higher volumes [11] - Chemicals improved on higher margins and lower costs, with year-to-date adjusted Chemicals EBITDA at $700 million [3][11] - Refining results increased on stronger realigned margins, despite environmental costs associated with the Los Angeles Refinery [11] Market Data and Key Metrics Changes - In chemicals, global O&P utilization rate is expected to be in the mid-90% [12] - In refining, worldwide crude utilization rate is anticipated to be in the low to mid-90% [12] Company Strategy and Development Direction - The company is focused on integrating the Wood River, Borger, and Ponca City Refineries to capture operational and commercial synergies [4][8] - Aiming for an adjusted controllable cost per barrel of approximately $5.50 on an annual basis by 2027 [9] - The Western Gateway pipeline project is expected to enhance supply reliability to Arizona, California, and Nevada from Mid-Continent refineries [5][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining high utilization rates due to long-term strategic decisions and reliability programs [56][58] - The company anticipates continued improvement in refining margins and operational efficiencies [11][81] Other Important Information - The acquisition of the remaining 50% interest in the Wood River and Borger Refineries simplifies the portfolio and enhances operational synergies [4][8] - The company is targeting a capital budget of approximately $2.5 billion, with a focus on low-capital, high-return projects [20][46] Q&A Session Summary Question: Discussion on WRB acquisition and synergies - Management highlighted the strategic importance of the Mid-Continent Central Corridor and the flexibility gained from full ownership of WRB, which opens up organic growth opportunities [15][16] Question: Rationale behind the Western Gateway project - Management explained that the project aims to leverage Mid-Continent strengths to meet growing demand in California, Arizona, and Nevada, amidst declining refining capacity in California [24][25] Question: Pathway to $17 billion debt target by 2027 - Management confirmed the commitment to reduce debt, projecting $1.5 to $2 billion available for debt reduction annually, supported by operating cash flow and asset dispositions [44][46][48] Question: Insights on refining margins and market conditions - Management noted expectations for widening light-heavy crude spreads and the impact of increased Canadian production on market dynamics [50][51] Question: Chemical segment performance and future outlook - Management indicated that CP Chem's margins improved due to a favorable feedstock blend and operational efficiencies, with expectations for continued strength in the chemical market [64][66]

Financial Data and Key Metrics Changes - In Q1 2026, the company originated $29.6 million in loans held for investment, a 1% increase from $29.4 million in the previous quarter [5] - Loan principal payments and payoffs decreased by 18% to $34.5 million from $42 million in the previous quarter [5] - Nonperforming assets increased to $1.9 million from $1.4 million in the previous quarter [6] - The allowance for credit losses to gross loans held for investment decreased to 56 basis points from 62 basis points [7] - Net interest margin increased by six basis points to 3% compared to 2.94% in the previous quarter [8] Business Line Data and Key Metrics Changes - Loans held for investment decreased by approximately $4 million, with declines in multifamily and commercial real estate loans, partially offset by an increase in single-family loans [6] - The weighted average rate of loans originated in September was 6.62%, compared to 5.2% for loans held for investment as of September 30, 2025 [9] Market Data and Key Metrics Changes - The company has approximately $107 million of loans repricing in December, expected to increase to a weighted average interest rate of 6.89% [10] - The average cost of deposits increased to 1.34%, while the cost of borrowing also increased to 4.59% [9] Company Strategy and Development Direction - The company is focusing on prudent adjustments to underwriting requirements to encourage higher loan origination volume [6] - The short-term strategy for balance sheet management is more growth-oriented than the previous fiscal year, with a disciplined loan growth approach [12] - The company aims to maintain cash dividends and has repurchased approximately 67,000 shares of common stock [13] Management's Comments on Operating Environment and Future Outlook - Management noted that real estate investors remain cautious due to market uncertainties, although there has been an increase in activity as mortgage interest rates decline [5] - The company expects modest or moderate net interest margin expansion in the upcoming quarters [20] - Management is optimistic about the potential for refinance activity due to declining mortgage interest rates [16] Other Important Information - Operating expenses remained unchanged at $7.6 million, representing a normalized run rate [12] - The company distributed $921,000 in cash dividends and repurchased approximately $1.1 million worth of common stock in the first quarter [14] Q&A Session Summary Question: Challenges in loan growth trajectory for 2026 - Management acknowledged hesitancy among borrowers in multifamily and commercial real estate due to higher mortgage rates, but noted that declining rates could present more opportunities [16] Question: Expectation for margin expansion - Management indicated that it is reasonable to expect margin expansion similar to the previous quarter, citing a growth in net interest margin from 2.74% to 3% over the past year [20] Question: Impact of lower interest rates on loan portfolio - Management explained that lower interest rates could lead to increased refinance activity, shortening the average life of the loan portfolio and potentially impacting credit loss provisions [22][24]

Financial Data and Key Metrics Changes - In Q3 2025, the company generated $157 million in revenue, a 17% increase year-over-year, and for the first nine months, revenue totaled $740 million, reflecting a 55% increase compared to the prior year [23][24] - TRYNGOLZA product sales reached $32 million, representing a nearly 70% increase over the second quarter [23][24] - Royalty revenues increased by approximately 13% to $76 million in Q3, driven by contributions from SPINRAZA and WAINUA [24] - The company raised its 2025 financial guidance, now expecting total revenue between $875 million and $900 million, an increase of $50 million from prior guidance [25][26] Business Line Data and Key Metrics Changes - TRYNGOLZA, the FDA-approved treatment for familial chylomicronemia syndrome, continues to show strong momentum with significant sales growth [5][14] - DAWNZERA, approved for hereditary angioedema, has seen strong early adoption, with initial prescriptions being filled shortly after approval [19][20] - The company anticipates two additional independent launches next year, with olzarsen for severe hypertriglyceridemia and zilganersen for Alexander disease [6][10] Market Data and Key Metrics Changes - The U.S. prophylactic HAE market is well established, with approximately 20% of patients switching treatments annually, indicating a significant opportunity for DAWNZERA [20] - The severe hypertriglyceridemia (sHTG) patient population is estimated to exceed 1 million in the U.S., with many patients struggling to manage triglyceride levels with current treatments [16][17] Company Strategy and Development Direction - The company is focused on executing its commercial strategy for TRYNGOLZA and DAWNZERA while preparing for upcoming launches of olzarsen and zilganersen [22][27] - The company aims to achieve cash flow breakeven by 2028, driving long-term value creation [26][27] - The commercial team is expanding outreach to healthcare providers and enhancing patient identification efforts to maximize the potential of its therapies [15][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued success of TRYNGOLZA and DAWNZERA, highlighting the strong early feedback from physicians and patients [19][20] - The company is optimistic about the upcoming data presentations and regulatory submissions, which are expected to further validate its pipeline and market potential [9][11] - Management emphasized the importance of addressing unmet needs in serious diseases and the potential for multi-billion dollar revenue from its pipeline [7][10] Other Important Information - The company announced the retirement of Richard Geary, Chief Development Officer, recognizing his contributions over the past 30 years [28] - The company is preparing for a significant data presentation at the American Heart Association (AHA) conference, which is expected to highlight the efficacy of olzarsen [38][39] Q&A Session Summary Question: What is the expected launch curve for olzarsen in sHTG? - The company anticipates strong interest from healthcare providers and plans to target approximately 20,000 HCPs covering around 360,000 patients with sHTG [31][33] Question: Any concerns regarding acute pancreatitis events in olzarsen studies? - Management expressed confidence in the groundbreaking results and emphasized that the data will be presented at AHA, with no significant concerns noted [37][38] Question: What are the peak revenue expectations for olzarsen and DAWNZERA? - Peak sales for DAWNZERA are expected to exceed $500 million, while olzarsen is anticipated to surpass $1 billion [39][40] Question: What is the pricing strategy for olzarsen? - The company is still evaluating pricing and will announce final pricing upon approval of the sHTG indication [44][45] Question: How is the early adoption of DAWNZERA progressing? - Early adoption is strong, with both switching patients and newly diagnosed patients starting treatment [72] Question: What is the source of revenue growth for WAINUA? - The revenue growth is primarily driven by new patient identification and the product's performance in improving quality of life [73]

Financial Data and Key Metrics Changes - In Q3 2025, the company generated $157 million in revenue, a 17% increase year over year, and for the first nine months, revenue totaled $740 million, reflecting a 55% increase compared to the prior year [23][24] - The company raised its 2025 financial guidance, now expecting total revenue between $875 million and $900 million, an increase of $50 million from previous guidance [25][26] - Operating loss is anticipated to be between $275 million and $300 million for the full year, with a cash balance expected to exceed $2.1 billion [25][26] Business Line Data and Key Metrics Changes - Tringolsa reported $32 million in net product sales, a nearly 70% increase quarter over quarter [14][23] - Royalty revenues increased by approximately 13% to $76 million in Q3, driven by contributions from Spinraza and Waylivra [24] - Donzera's launch is showing strong early adoption, with initial prescriptions being filled shortly after approval [19][20] Market Data and Key Metrics Changes - The U.S. prophylactic HAE market is well established, with approximately 20% of patients switching treatments annually, indicating a significant opportunity for Donzera [20] - The severe hypertriglyceridemia (SHTG) market is estimated to have over 1 million high-risk patients in the U.S., with Olzarsen positioned to address unmet needs in this population [16][17] Company Strategy and Development Direction - The company is focused on executing its strategy with two independent launches underway and plans for two additional launches next year [27][22] - The advancing wholly owned late-stage pipeline and a robust partnered portfolio are expected to drive sustained growth [7][26] - The company aims to achieve cash flow breakeven by 2028, emphasizing long-term value creation [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued success of Tringolsa and the upcoming launches of Olzarsen and Zilganersen, highlighting the strong momentum across the business [5][27] - The management team is optimistic about the potential for multi-billion dollar revenue from the new product launches and the overall pipeline [7][25] Other Important Information - Richard Geary, Chief Development Officer, will retire at the end of the year, marking his last earnings call with the company [28] Q&A Session Summary Question: Thoughts on the launch curve for Olzarsen in SHTG - Management indicated strong interest from healthcare providers and plans to target approximately 20,000 HCPs covering around 360,000 patients [30][32] Question: Concerns regarding acute pancreatitis events in Olzarsen studies - Management reassured that the data is groundbreaking and that the acute pancreatitis outcomes will be detailed at the upcoming AHA presentation [36][38] Question: Peak revenue potential for Donzera and Olzarsen - Management expects peak sales for Donzera to exceed $500 million and for Olzarsen to exceed $1 billion [39] Question: Pricing strategy for Olzarsen - Management is still working on pricing and expects to provide more clarity next year [44][45] Question: Early prescriptions for Donzera - The launch is going well, with both switching patients and newly diagnosed patients contributing to early prescriptions [70][72]

Prosperity Bancshares (NYSE:PB) Q3 2025 Earnings Call October 29, 2025 11:30 AM ET Company ParticipantsAsylbek Osmonov - CFOKevin Hanigan - President and COOTim Timanus, Jr. - ChairmanBen Gerlinger - VP of Equity ResearchDavid Zalman - Senior Chairman and CEOMichael Rose - Managing Director of Equity ResearchJon Arfstrom - Associate Director of US ResearchCatherine Mealor - Managing DirectorCharlotte Rasche - SEVP and General CounselJared Shaw - Managing DirectorConference Call ParticipantsDave Rochester - ...

Financial Data and Key Metrics Changes - Gates reported third-quarter total sales of $856 million, translating to core growth of 1.7% year-over-year, with total revenues growing by 3% due to favorable foreign currency effects [9][10] - Adjusted EBITDA was $196 million, with an Adjusted EBITDA margin of 22.9%, representing a record margin for the third quarter and an increase of 90 basis points year-over-year [10][11] - Adjusted earnings per share increased by approximately 18% year-over-year to $0.39, driven by operating performance and a lower tax rate [11][12] - The net leverage ratio improved to 2.0 turns, a reduction of 0.4 turns compared to the previous year [7][16] Business Line Data and Key Metrics Changes - In the power transmission segment, revenues were $533 million with core growth of 2.3%, driven by personal mobility growth exceeding 20% [11][12] - The fluid power segment generated $322 million in sales, with core growth just under 1%, impacted by mid-teens decline in commercial on-highway sales [12][13] - Automotive replacement sales grew in the low single digits, while OEM sales were flat, reflecting mixed performance across different channels [10][11] Market Data and Key Metrics Changes - North American core sales were flat, with a low double-digit decline in industrial OEM sales due to demand weakness in agriculture and commercial on-highway [14][15] - EMEA saw core sales growth of 2.6%, with personal mobility growing almost 75% [15][16] - East Asia and India posted approximately 5% core growth, while South America experienced low to mid-single-digit declines [15][16] Company Strategy and Development Direction - The company is focused on restructuring plans, including closing multiple factories and implementing an ERP system conversion expected to be completed by mid-2026 [18][19] - The board approved a new $300 million share repurchase authorization, indicating a commitment to returning value to shareholders while maintaining flexibility for potential acquisitions [7][24] - The company anticipates achieving an Adjusted EBITDA margin of approximately 24% by the end of 2026, driven by ongoing cost optimization and strategic initiatives [22][24] Management's Comments on Operating Environment and Future Outlook - Management noted that while macro-industrial demand remains subdued, they are optimistic about stability and potential improvement in demand across most end markets by 2026 [9][23] - The company is experiencing uneven end market performance, with expectations for a gradual recovery in industrial demand [8][9] - Management expressed confidence in the growth potential of personal mobility and data center opportunities, projecting a compound annual growth rate of around 30% for personal mobility from 2025 to 2028 [36][38] Other Important Information - The company has updated its 2025 guidance, raising the adjusted EPS midpoint to $1.50 per share while slightly lowering the core sales growth outlook [7][17] - Free cash flow was reported at $73 million, representing a 73% conversion to adjusted net income, impacted by increased restructuring cash outflows [16][17] Q&A Session Summary Question: Clarification on margin targets and restructuring costs - Management confirmed that the 24% margin target for 2027 serves as a foundational floor, with expectations for growth in 2026 [29][30] - Additional costs related to restructuring and ERP implementation were discussed, with expectations for improved efficiencies post-implementation [32][33] Question: Growth visibility in personal mobility and data center markets - Management expressed optimism about personal mobility growth, projecting a 30% compound annual growth rate over the next three years [36][38] - The company is seeing increased design activity in liquid cooling for data centers, indicating strong future demand [38] Question: Impact of tariffs and volume expectations - Management noted a 30-40 basis point dilution in gross margins due to tariffs, but emphasized that the overall impact on EBITDA remains manageable [51][52] - There is cautious optimism regarding stabilization in agricultural markets and potential recovery in 2026 [53][54] Question: Insights on regional growth and market conditions - North America faces challenges in agriculture, while EMEA and Asia are showing positive growth trends, particularly in automotive replacement [85][88] - Management highlighted the potential for growth in South America and India as economic conditions improve [86][88]

Financial Data and Key Metrics Changes - Prosperity Bancshares reported net income of $137.6 million for Q3 2025, an increase from $127.3 million in Q3 2024, reflecting a year-over-year growth of 8.2% in net income per diluted common share, which rose to $1.45 from $1.34 [7][8] - The net interest margin on a tax-equivalent basis improved to 3.24% for Q3 2025, up from 2.95% in Q3 2024, indicating a significant increase of 29 basis points [8][14] - Deposits increased by $308 million or 1.1% to $27.7 billion at the end of Q3 2025 compared to $27.4 billion at the end of Q2 2025 [9] Business Line Data and Key Metrics Changes - Loans outstanding, excluding warehouse purchase program loans, decreased to $20.7 billion at September 30, 2025, down from $20.9 billion at June 30, 2025, a decline of $160 million [8][9] - Non-interest income for Q3 2025 was $41.2 million, slightly down from $43 million in Q2 2025, while non-interest expense remained stable at $138.6 million [14] Market Data and Key Metrics Changes - The company noted a competitive lending environment with aggressive terms being offered, leading to a cautious approach in loan participation [9][27] - Non-performing assets totaled $119 million or 36 basis points of quarterly average earning assets at September 30, 2025, compared to $110 million or 33 basis points at June 30, 2025, indicating a slight increase in non-performing assets [9][16] Company Strategy and Development Direction - The company is focused on completing pending acquisitions of American Bank Holding Corporation and Southwest Bancshares, which are expected to enhance its market presence in Texas [10][11] - The board approved an increase in the quarterly dividend to $0.60 per share, reflecting confidence in the company's performance and market conditions [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the Texas economy, highlighting its resilience and growth potential despite national economic challenges [10][11] - The company anticipates continued improvement in net interest margins over the next 24 to 36 months, regardless of interest rate fluctuations [8][49] Other Important Information - The company has no brokered deposits and emphasizes the importance of core deposits in its growth strategy [9][12] - The efficiency ratio improved to 44.1% for Q3 2025, down from 46.9% in Q3 2024, indicating better cost management [15] Q&A Session Summary Question: Outlook for loan growth given recent declines - Management indicated that loan growth is expected to be flat in the near term due to competitive pricing and elevated payoffs, but they remain optimistic for next year with approved construction deals pending funding [23][25] Question: Buyback activity and stock price considerations - Management stated that buyback activity will be price-dependent, with intentions to be more active given the current undervaluation of the stock [32][34] Question: Hiring efforts to bolster loan growth - Management confirmed ongoing efforts to hire more lenders to support loan growth, with recent approvals for new hires [39][40] Question: Deposit competition and loan-to-deposit ratio - Management is comfortable with an 80% loan-to-deposit ratio and focuses on core deposits, noting that competition from out-of-state banks may ease as they establish market share [112][113] Question: Margin outlook amid potential rate cuts - Management remains confident in margin expansion over the next 12 to 36 months, despite potential rate cuts, projecting a margin of around 3.38% in the future [95][96]