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Operator: Greetings, and welcome to ServisFirst Bancshares' Fourth Quarter and Year-End Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the call over to Jim Harper. Thank you. You may begin. Davis Mange: Good afternoon, and welcome to our year-end earnings call. Today's speakers will cover some highlights in the quarter and then take your questions. We'll have Tom Broughton, our CEO; Jim Harper, our Chief Credit Officer; and David Sparacio, our CFO. I'll now cover our forward-looking statements disclosure. Some of the discussion in today's earnings call may include forward-looking statements. Actual results may differ from any projections shared today, due to factors described in our most recent 10-K and 10-Q filings. Forward-looking statements speak only as of the date they are made, and ServisFirst assumes no duty to update. With that, I'll turn the call over to Tom. Thomas Broughton: Thank you very much, Davis, and good afternoon, and thank you for joining our fourth quarter earnings call. I'll give you a few highlights, and then Jim Harper will give a credit update and then David Sparacio will give financial update. So let's start with loans in the quarter. Loan growth was really in line with our pipeline projection with annualized growth of 12% for the quarter. Our pipeline quarter-over-quarter increased by 11%, but net of projected payoffs had increased by 80%. I believe that projected payoffs are most likely understated, but it does appear the payoff headwind is diminishing to some extent. A loan pipeline is an exact, but we have found is indicative of a trend over several quarters. So we're pleased with the quarterly loan growth and a little bit optimistic that things will improve a bit as we go forward. On the deposit side, we did continue to manage down our high-cost deposits, primarily of municipal deposits for both the quarter and the year. We given that if we have some robust loan demand, we find that we can attract some of those type deposits back if they are needed. I talk about new markets, we are excited -- very excited about our new Texas banking team based in Houston that joined us in early December and some during the course of December as we went on. They are in the process of opening an office, but they have been productive in temporary office space already. This group has worked together in the past. So they have hit the ground and running. So we have 9 members on the Houston team today and anticipate hiring more in the first and second quarters of the year. This is a much larger team than we have hired in the recent past since opening the bank in 2005. In addition, the new Texas team, our correspondent -- Texas correspondent division has 35 active correspondent banking relationships and 2 correspondent bankers based in Texas. Speaking of correspondent banks, we do have 388 correspondent banks today, including 145 for which we settled at the Federal Reserve Bank. Our Asian credit card program is also not only endorsed by the American Bankers Association by 12 state banking associations. We have 150 Asian credit card banks in a robust pipeline of new clients and banks in 27 states. In the past year, we added Ohio and Maryland State Banking Association that endorse our agent program. So we're very pleased with the corresponding growth and outlook. I'll now turn it over to Jim Harper for a credit update. Jim Harper: Thanks, Tom. As Tom noted, loan growth for the year was solid, highlighted by a very busy fourth quarter of loan activity that produced an annualized growth rate of 12%. While loan growth was not centered in any particular geography or industry, I'd like to draw a particular attention to the nearly 10% growth in our C&I book during the year, which reflects the highest growth rate in that portion of our portfolio in the past several years. From a credit metric standpoint, net charge-offs for the fourth quarter were approximately $6.7 million, with the majority being related to 1 credit and charge-offs for the full year 2025 coming in at 21 basis points. Our allowance to total loans remain relatively stable throughout the course of the year, ending the year with an allowance to loan loss reserve to total loans of 1.25%. Nonperforming assets to total assets at the end of the year were 97 basis points, which was higher compared to 26 basis points at the end of fiscal year '24, but largely consistent with the 96 basis points we ended at third quarter. But the driver of that notable increase being a year-over-year change associated with exposure to a single merchant developer, which we've gone into detail about previously. We continue to proactively manage our loan portfolio achieving a number of successful outcomes within our problem loan book during the fourth quarter. And as always, we'll continue to actively manage this portion of our portfolio throughout the year. As Tom noted, we're really excited about the addition of our Texas team and based off early activity, they've really hit the ground running. I'll turn it over to David for our discussion of financial performance. Rodney Rushing: Thank you, Jim. Good afternoon, everyone. As you have seen from our press release, we recorded $1.58 of earnings per diluted share for the fourth quarter, which is a 32% increase from the third quarter of 2025 and a 33% increase from the fourth quarter of 2024. Full year earnings per share was $5.25 on an operating basis and $5.06 on a GAAP basis. Net income available to common shareholders was $86.4 million for the quarter and $276.5 million for the year. Our adjusted net income generated a return on average assets of 1.62% for the year and a return on common equity of nearly 17%. During the quarter, our tangible book value grew 4% to $33.62 per share. Our net interest margin experienced healthy growth throughout 2025, rising from 2.92% in the first quarter to 3.38% in the fourth quarter. This expansion was driven by disciplined loan pricing, including a 40% increase in loan fee collection and boosted by deposit rate reductions in the fourth quarter. We continue to experience tailwinds from our repricing opportunities on low fixed rate assets. Our efficiency ratio dipped below 30% for the quarter and as we maintain our cost control and increase our operating leverage. For the full year, the adjusted efficiency ratio stood near 32%, which is a 14% improvement over 2024. Looking deeper into our income statement, we will start with our net interest income. Our asset yields remain strong at 5.79% for the quarter, which is down 3 basis points from the third quarter of 2025 and up 10 basis points from the first quarter of 2025. Loan yields dropped slightly during the quarter to 6.30%, which was pleasing given the 75 basis point reduction in benchmark interest rates during the quarter. We are confident about our asset yields as we continue to be disciplined on our loan repricing efforts as we enter 2026, we are armed with a steady pipeline. During the quarter, we aggressively reacted to the rate cuts and customers responded favorably. This allowed us to reduce our cost of interest-bearing liabilities by 40 basis points versus linked quarters and by 65 basis points versus the same quarter last year. During this 2025 declining rate cycle, we experienced a strong deposit beta of 83 basis points. As Jim mentioned, our credit metrics remained normalized, and as a result, our CECL model, we recorded $7.9 million of provision expense for the quarter and ended the year with an allowance for credit losses ratio of 1.25%. On the noninterest revenue front, we continue to experience lift in service charges driven by our fee increases implemented on July 1, which are reflected in our 26% growth from full year 2024 to full year 2025. We also experienced an 11% annual increase in mortgage banking fee income driven by increased mortgage volume. Excluding our adjustments during the year, our operating noninterest revenue is up 12% for the full year. From an expense standpoint, our noninterest expense compared to the same quarter last year is flat and down about 3% versus linked quarters. For the full year, our noninterest expense is up only 2%. As we enter 2026 and continue to build the Texas franchise, we expect to see growth in our expense base. However, this should be neutral to our efficiency ratio as their book of business grows and generates revenue. In regards to our balance sheet, our loan growth was equally split between our C&I and real estate portfolios with about 10% annual growth in each. As you will recall, we recorded securities losses in both the second and third quarters of this year in relation to a conscious decision to restructure our bond portfolio. The remaining portfolio value has little in regards to embedded losses as evidenced by our small unrealized loss in accumulated other comprehensive income. From a liabilities perspective, year-over-year deposits grew by 5%, and our Fed funds purchase dropped by 26% which was driven by our downstream correspondent banks positioning for year-end. Additionally, during the quarter, we paid down $30 million of sub debt at the holding company level at a cost of 4.5%. Our dividend was recently increased in keeping with our long-standing policy of returning capital to our shareholders. We continue to make investments in our organic growth, as highlighted by our Texas expansion. Our liquidity levels remain strong and we continue to operate without broker deposits or FHLB debt. From a financial standpoint, we are pleased with the company's performance in 2025 and we are in a solid position entering 2026. Now I will turn it back over to Tom for closing comments. Thomas Broughton: Thank you, David, and we appreciate you joining -- we'll take your questions in a minute, but we are pleased we wrapped up 2025 with a good ending. And all of our markets are profitable, except our newest market in Texas, of course. So we do continue to have best-in-class efficiency ratio. We're -- we are excited about 2026, an outlook for banking, and we'll take your questions now. Operator: Thank you. And with that, we will be conducting a question-and-answer session. [Operator Instructions] And our first question comes from the line of David Bishop with Hovde Group. David Bishop: Good evening, gentlemen. Tom, I think last quarter, you mentioned that for every dollar of like new loans, you were seeing maybe half of that go out the back door in terms of payoffs, I think, it was 50 set of payoffs. Just maybe curious how you're seeing payoff trend this quarter from maybe a dollar perspective and maybe expectations in terms of loan growth as you head into the early part of this year? Thomas Broughton: Yes. The -- our net pipeline is way up this quarter over last quarter. And it all has to do with the projected payoffs are much lower this quarter, and I don't completely believe that's true. But the payoff -- projected payoffs has dropped substantially quarter-over-quarter. So again, I don't -- it's an inexact science, and there are probably payoffs we don't know about that are that are coming, though, based on the 10-year treasury yields today, maybe not anytime soon based on the Greenland change in treasury deals today, whatever the Greenland has got to do with it. But nevertheless, we are pleased to see -- at least it's trending in the right direction, Dave, the payoffs will be declining. David Bishop: Got it. Then I think we last spoke, I think on the call, you were saying, I guess, loan demand was okay, not great. Just curious with that in mind in terms of what's happening from an economic backdrop, 10-year rising. Just curious what you're seeing in terms of commercial borrower loan demand on both the C&I and CRE front? Thomas Broughton: It's a little bit better than I'd give it A minus, something like it right now, certainly not A plus, probably not an A. I give an A minus stay, which better than it has been. So we're certainly hitting in the right direction. And of course, you could there are certain asset classes we could book 100% of our loans and hospitality. There are a lot of hospitality loans out there in the market and -- we are pleased that we were very pleased to see C&I demand pick up during the quarter, and that was the best C&I growth we've had in a good while. So we're pleased with that. David Bishop: Got it. I'll stop there and get back in the queue. Operator: And our next question comes from the line of Steve Moss with Raymond James. Stephen Moss: Maybe just starting on the margin here. David, I heard your comment about there was more fee collection in the margin. Just wondering, is that juiced up the margin a little bit more than expected? And -- or should we use this December margin of 350 as a good run rate for you guys into 2026? David Sparacio: Yes, Steve, I think using the December spot margin is a good starting point for 2026. What we did on loan collection piece. The reason it's up was we added a metric in our bankers' incentives to pay them for fees that they collected. And so believe it or not, people do what you incent them to do. And so we've realized some of the loan fees coming through in our income statement. I haven't quantified it in regards to how much it is and margin, how many basis points it is in margin. I mean, I can tell you, our margin, we expect to continue to expand. We talked about how our loan rates, the loan yields are remaining steady in a declining rate environment or at least they're not declining as fast as index rates or even the deposit costs are dropping. So -- we've talked about in the past our repricing opportunities on low fixed rate loans, and we continue to see those throughout 2026. So we expect continued margin expansion -- expansion throughout 2026. Stephen Moss: Could you size up the repricing opportunity for 2026, David? David Sparacio: Yes. I mean, on the fixed rate loans, low fixed rate loans, we have right around $1 billion throughout 2026 that's going to reprice and the weighted average yield on those is 5.18%. So if you look at that compared to our going on rate of about 6.47%, then we got an opportunity to pick up 130 basis points or so on the loan side. And so that's kind of -- that offsets any rate reductions we're seeing on variable rate loans. And of course, we have the floors in as well. We've talked about that in the past. We have floors on about 86% of our variable rate loans and the weighted average rate on those floors is 4.74%. So I think we're in a good position given this rate environment. We remain slightly liability sensitive. And I talked about our beta. We were aggressive in reducing deposit costs. So we were able to take advantage of rate reductions late in the year. And we're going to get benefit of that going into 2026. As far as expectations of rate cuts in 2026. I mean, you guys know how crazy the market is right now. We don't know what's going to happen with Powell, if he can be removed early or not, but there's pressure on him to reduce rates. If you look at the economic projections that the Fed put out at their December 10th meeting, their projection is only a 25 basis point reduction in Fed funds rate for all of 2026. So it's not exactly science right now on what we expect the Fed rates to do. Thomas Broughton: And the $1 billion of repricing you mentioned, that does not include cash flow from loans. David Sparacio: Does not include cash flow. We have an additional $700 million roughly in cash flows and then we also talk about covenant valuations and loan modifications. We see about at least in 2025, we saw about $300 million in repricing as a result of covenant violations and loan modification. So all in, it's about a $2 billion opportunity we have going forward in the next 12 months, Steve. Stephen Moss: Appreciate all that color there. And then -- the other question I have here is just kind of curious in terms of the $5 million charge-off in the quarter. Just wondering which NCL that came from? And -- just curious as to how you guys are feeling about the multifamily workforce housing nonperforming from last quarter? Thomas Broughton: So the charge was related to the health care asset that's -- and this was not surprising in any way, and we were -- we were largely reserved for the charge before this happens. So this was not a surprise, largely has been put behind us now that we're through the fourth quarter. Now with regards to the multifamily asset that we discussed several times last quarter. I think Tom can weigh in here. I'd just say we're continuing to work with the borrower to try to manage those assets and find an orderly way to produce the best outcome we can across the portfolio of 8 loans. The process of trying to sell -- most all of this portfolio slow process in the course of this year. Yes. Stephen Moss: Okay. Great. Appreciate that color there. And I guess just 1 last 1 for me. Just curious as to what you guys were thinking about for the tax rate for 2026? Thomas Broughton: Yes. Tax rate, we're going to continue to take advantage of any kind of tax credits we can -- we did it, of course, in the third quarter, we saw that come through. And we saw really our state rates jump up. Our state apportionments in fourth quarter, so it bounced up a little bit from that. I mean we're going to continue to evaluate, Steve any opportunities we have, particularly around solar credits. That's what we got introduced to and that's what we like. So that we're going to continue to try to manage that down going forward. Operator: And it looks like we do have a follow-up from David Bishop with Hovede Group. David Bishop: Tom, maybe you noted in the preamble about the Texas lift out that the team you got going there. I assume probably too early to talk about balances, anything they booked here. But curious we think about 2026, any thoughts in terms of how big that group can get from a size perspective in terms of loan balances and deposits? Thomas Broughton: Yes. We've got their budgeted growth for 2026 is higher than any other region. To give you an answer. So we have great expectations from Texas, Dave. So we're optimistic. And again, it's -- they're primarily C&I lenders. They're not commercial real estate lenders and our commercial real estate has been -- we've got under 300% of capital right now, and our AD&C is down to 71% of capital. So we feel really good about the reduction in our CRE exposure and where we are. So we're optimistic. We think -- and they're optimistic. They're pretty active in the market. Feel good about the opportunities. David Bishop: Got it. And it sounded like from an expense drag perspective, any additional expenses there you expect to offset on a top line basis. So it sounds like you're expecting the efficiency ratio to hold in and fairly steady, it sounds like? Jim Harper: Yes. I mean we're not going to remain below 30%, David. -- especially with bringing Texas on, I mean, right now, they don't have a book of business, but they do have expenses right. We're paying salary benefits and releasing space. So they're going to be a drag not a significant drag, but there will be a drag, albeit on the efficiency ratio for the short term until they build their book of business and start to generate some revenue, but I think an expectation is in the low-30s for our efficiency ratio to closer to somewhere probably between 30% and 33% is where we expect to see it shake out for 2026. Operator: And it looks like we do have a follow-up from Steve Moss with Raymond James. Stephen Moss: David, you just partially answered my question there. In terms of just thinking about overall expense growth for 2026, it sounds like you're kind of thinking like high single-digit expenses for the upcoming year? David Sparacio: Yes. We're thinking high single digit, Steve. I mean we have -- we actually just went through the budget process for 2026, right? And so we've built in there some additional hires, but there's no back-office hires that are going to be drag -- drags on the efficiency. I mean what we have plugged in or producers who are going to generate a book of business and generate revenue for us as well as expenses. So -- but a good expectation is high single digits for expense growth, yes. Stephen Moss: Okay. Great. And then maybe just along those lines, just in terms of the investment thought process here. And obviously, helping the group hires in Texas. Just curious what you guys think will be the opportunity for the upcoming year. obviously we've had a lot of M&A, whether it's pinnacle or cadence. Do you think there could be additional large team hires that maybe push you guys above that number? Just kind of curious what your -- your guys' thought process thoughts are around the M&A disruption and your ability to hire? Thomas Broughton: Yes. As you obviously are well aware, there are a number of mergers going on, both in the Southeast and the Southwest. I don't know what you include in the Southeast, so I'd add to the Southwest there as well. So we think there will be significant people to talk to. But again, everybody wants to hire the same people. I think right? There's not that many good bankers out in the market. And you read people say they're going to hire 200 new bankers this year, like from where? I don't think there was 200 good ones in the Southeast, if I had to -- if I had to put my money on the line, I'd say there's not 200 good ones in the Southeast, but there -- certainly, we're going to hire everybody we can hire. One of our directors asked us today, if you have a choice between meeting and the earnings, our earnings budget or hiring people which you're going to do. And my answer is we're going to hire the people. We'll let the budget take care of itself next year instead of this year, if we need to. So we're going to hire as many good people as we can find. Stephen Moss: Got it. Appreciate that. And then 1 other cleanup question for me here, just in terms of the BOLI, I think $4.3 million was a death benefit. So the run rate here going forward about $4 million a quarter. Thomas Broughton: Yes, that's correct. We had a $4.3 million debt benefit. So yes, if you back that out, that would be a run rate going forward. Operator: Thank you. And with that, this does conclude today's question-and-answer session as well as today's teleconference. We'd like to thank you for your participation. You may now disconnect your lines at this time, and have a wonderful day.
Operator: Greetings. Welcome to Zions Bancorp Fourth Quarter Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Shannon Drage, Senior Director of Investor Relations. Thank you, and you may begin. Shannon Drage: Thank you, Bonn, and good evening, everyone. Welcome to our conference call to discuss the fourth quarter and full year earnings for 2025. My name is Shannon Drage, Senior Director of Investor Relations. I would like to remind you that during this call, we will be making forward-looking statements. Please note that actual results may differ materially, and we encourage you to review the disclaimer in the press release or Slide 2 of the presentation dealing with forward-looking information and the presentation of non-GAAP measures, which applies equally to statements made during this call. A copy of the earnings release as well as the presentation are available at zionsbancorporation.com. For our agenda today, Chairman and Chief Executive Officer, Harris Simmons, will provide opening remarks. Following Harris' comments, Ryan Richards, our Chief Financial Officer, will review our financial results. Also with us today are Scott McLean, President and Chief Operating Officer; Derek Steward, Chief Credit Officer; and Chris Kyriakakis, Chief Risk Officer. After our prepared remarks, we will hold a question-and-answer session, and the call is scheduled for 1 hour. I'll now turn the time over to Harris Simmons. Harris Simmons: Thanks very much, Shannon, and good evening to all of you. You've seen on Slide 3, our fourth quarter results reflected continued progress and steady improvement across a variety of key financial metrics. Earnings of $262 million were up meaningfully, 19% from the prior quarter and 31% from a year ago, driven by stronger revenues and notably lower provision for credit losses. Our net interest margin expanded for the eighth consecutive quarter to 3.31%, benefiting from an improved funding mix as customer deposit initiatives reduced our reliance on short-term borrowings. Customer deposits grew at a healthy pace, up 9% annualized. Average loans were essentially flat compared with last quarter, reflecting the payoffs we saw at the end of last quarter, though period-end balances increased by $615 million on solid production. Credit quality was strong with net charge-offs of just 5 basis points annualized of total loans. This quarter's results also included a $15 million donation to our charitable foundation to be spent down over the next 3 years to make charitable donations that we expect would otherwise have been nondeductible for tax purposes as a result of the recent tax law changes. Turning to Slide 4. Full year results were similarly improved relative to the prior year. Earnings grew 21% and net interest margin expanded by 21 basis points. Adjusted PPNR increased 12%. And when excluding the charitable contribution, we achieved over 300 basis points of positive operating leverage. After several years of industry-wide disruption from the 2020 pandemic to the 2023 regional bank crisis and stress in the commercial real estate sector, we're pleased with the resilience of our performance, particularly the stability in credit outcomes throughout that period. Tangible book value per share increased 21% this year, the third straight year of growth greater than 20%, and we believe that we are nearing the point where we'll be able to increase capital distributions while continuing to further strengthen capital. On Slide 5, diluted earnings per share was $1.76, up from $1.48 last quarter and $1.34 a year ago. This quarter's figure includes an $0.08 per share headwind from the charitable contribution, offset by a positive $0.11 per share combined impact from the reversal of the FDIC special assessment and net gains in our SBIC portfolio. As shown on Slide 6, adjusted PPNR of $331 million was down 6% sequentially and up 6% year-over-year. When further adjusted for the aforementioned charitable contribution, it was down 2% versus last quarter and up 11% versus the year ago quarter. With that high-level overview, I'm going to turn the time over to our Chief Financial Officer, Ryan Richards, for additional details related to our performance. Ryan? R. Richards: Thank you, Harris, and good evening to all. Beginning on Slide 7, you will see the 5-quarter trend for net interest income and net interest margin. Net interest income increased by $56 million or 9% relative to the fourth quarter of 2024 and increased by $11 million relative to the prior quarter. For the second consecutive quarter, growth in average customer deposits in excess of loan growth aided our ability to improve funding mix and reduce overall funding costs. As a result, net interest margin expanded for the eighth consecutive quarter to 3.31%. Our outlook for net interest income for the full year of 2026 is moderately increasing relative to the full year of 2025, supported by favorable earning asset and interest-bearing liability remix in addition to growth in loans and deposits. Our guidance assumes 225 basis point cuts to the Fed funds rate occurring in June and September of this year. Slide 8 presents additional details on changes in the net interest margin. The linked quarter waterfall chart on the left outlines changes in both rate and volume for key components of the NIM. The net interest margin expanded by 3 basis points sequentially as improved funding mix and lower borrowing costs offset reductions in asset yields. Against the year ago quarter, the right-hand chart on this slide presents the 26 basis point improvement in the net interest margin, which benefited from the improved cost of deposits. Moving to noninterest income and revenue on Slide 9. Presented on the left in the darker blue bars, customer-related noninterest income was $177 million for the quarter versus $163 million in the prior period and $176 million 1 year ago. You'll recall that last quarter's customer-related noninterest income results included an $11 million impact from the net CVA loss, primarily driven by an update in our valuation methodology. Adjusted customer-related noninterest income, which excludes net CVA, was $175 million for the quarter, representing a new record quarter for the company. This increased $1 million versus the prior quarter and $2 million versus the year ago quarter. The chart on the right side of this page presents both total revenue and adjusted revenue for the most recent 5 quarters, which were impacted by the factors previously noted for net interest income and customer-related fee income. While not presented on this page, it is notable that on a full year basis, capital markets fees, excluding net CVA, increased 25% compared to the full year 2024, driven by higher customer swaps, investment banking and loan syndication fee revenues. As was mentioned in prior earnings call, we set an aspirational goal to double capital markets fees when Zions Capital Markets was formally launched in 2020, consolidating existing product offerings under new executive leadership with a mandate to invest in additional capabilities. We have accomplished that goal and see continued opportunity for outside growth in this business. Our outlook for customer-related fee income for the full year 2026 is moderately increasing relative to the full year 2025. We currently expect that we will be at the top end of that guide. Growth will continue to be led by capital markets, followed by loan-related fees with broad-based growth in the remaining categories from increased activity. Slide 10 presents adjusted noninterest expense in the lighter blue bars. Adjusted expenses of $548 million increased by $28 million or 5% versus the prior quarter and increased 8% versus the year ago quarter. As presented here, adjusted noninterest expense includes the aforementioned $15 million charitable donation. When further adjusting for the donation, expenses were up 2% versus the prior quarter and up 5% versus the year ago quarter. Expense increases for the quarter include increased marketing and business development expenses, higher costs associated with application software licensing and maintenance costs and normalization of legal fees after an approximate $2 million reimbursement of attorney fees last quarter. We expect to continue to manage expenses prudently while investing in revenue generation to support growth. Our outlook for adjusted noninterest expense for the full year 2026 is moderately increasing relative to the full year of 2025. The expense outlook considers increased marketing-related costs, continued investments in revenue-generating people and business lines and increases in contractual technology costs. We continue to expect positive operating leverage in 2026 that we currently estimate around 100 to 150 basis points. Slide 11 presents the 5-quarter trend in average loans and deposits. Average loans were flat over the previous quarter and 2.5% over the year ago period. [ Average ] loans increased by $615 million sequentially with strong commercial growth in our Texas, California and Pacific Northwest markets. Total loan yields decreased 15 basis points sequentially. Our outlook for period-end loan balances for the full year of 2026 is moderately increasing relative to the full year of 2025 and assumes growth will be led by commercial loans, primarily in the C&I and owner-occupied subcategories with additional growth from commercial real estate loans. Average deposit balances are presented on the right side of the slide. Relative to the prior quarter, total average deposits increased 2.3%. Average noninterest-bearing deposits grew $1.7 billion or 6% compared to the prior quarter. This was partially as a result of the approximate $1 billion of migration into a new customer interest-bearing product -- excuse me, migration of a consumer interest-bearing product into a new noninterest-bearing product at the end of the last quarter, which is now being fully reflected in average balances, but also represents the success our bankers have had this quarter in executing on deposit gathering initiatives. The cost of total deposits declined by 11 basis points sequentially to 1.56%, aided somewhat by the lag effect from the time deposit repricing from benchmark rate cuts in the latter part of 2025. Further opportunities to reduce deposit costs will depend upon the timing and speed of short-term benchmark rate changes, growth in customer deposits and market competition and market deposit behavior. Slide 12 provides additional details on funding sources and total funding costs. Presented on the left are period-end deposit balances, which grew by $766 million versus the prior quarter, enabling us to reduce higher cost short-term borrowings, which declined by $653 million or 17% during the quarter. As seen on the chart on the right, our total funding costs declined by 16 basis points during the quarter to 1.76%. The trending in our securities and money market investment portfolios over the last 5 quarters is presented on Slide 13. Maturities, principal amortizations and prepayment-related cash flows from our securities portfolio were $554 million during the quarter or $288 million when considered net of reinvestment. The paydown and reinvestment of lower-yielding securities continues to contribute to the favorable remix of our earning assets. The duration of our investment securities portfolio, which is a measure of price sensitivity to changes in interest rates is estimated at 3.8 years. Credit quality is presented on Slide 14. Realized net charge-offs in the portfolio were $1 million -- excuse me, were $7 million this quarter or 5 basis points annualized. Nonperforming assets remained relatively low at 52 basis points of loans and other real estate owned compared to 54 basis points in the prior quarter. Classified loan balances declined sequentially by $35 million, driven by a $132 million reduction in CRE, offset in part by a $92 million increase in C&I classified loans. We expect the CRE classified balances will continue to decline going forward through payoffs and upgrades. During the fourth quarter, we reported a $6 million provision for credit losses, which when combined with our net charge-offs, reduced the allowance for credit losses by $1 million relative to the prior quarter. The allowance for credit losses as a percentage of loans declined 1 basis point to 1.19% and the loan loss allowance coverage with respect to nonaccrual loans increased to 215%. Slide 15 provides an overview of the $13.4 billion CRE portfolio, which represents 22% of loan balances. Notably, this portfolio continues to maintain low levels of nonaccruals and delinquencies. The portfolio is granular and well diversified by property type and location with its growth carefully managed for over a decade through disciplined concentration limits. As it continues to be of interest, we have included additional details on certain CRE portfolios in the appendix of this presentation. Our loss absorbing capital position is shown on Slide 16. The common equity Tier 1 ratio for the quarter was 11.5%. This, when combined with the allowance for credit losses, compares well to our risk profile as reflected in performance for loan losses. We expect our common equity, both from a regulatory and GAAP perspective, to continue increasing organically through earnings and the AOCI improvement will continue through unrealized loss accretion in the securities portfolio as individual securities pay down and mature. Importantly, our organic earnings growth when coupled with AOCI unrealized loss accretion has enabled us to grow tangible book value per share by 21% versus the prior year. And as Harris noted earlier, is our third year of tangible book value growth in excess of 20%. We believe that we are nearing a position to increase capital distributions while continuing to invest in our franchise to support profitable growth. Slide 17 summarizes the financial outlook slide over the course of our prepared remarks for the full year of 2026 as compared to the full year of 2025. Our outlook represents our best estimate of financial performance based upon current information. Shannon Drage: This concludes our prepared remarks. [Operator Instructions] Bonn, can you please open the line for questions? Operator: [Operator Instructions] Our first question comes from Manan Gosalia with Morgan Stanley. Manan Gosalia: I just wanted to start with a quick clarification question. Just on the guide for expenses. What is the base for the moderately increasing guide? I know you have at the back of the earnings release an adjusted noninterest expense number of $2.1 billion, $2.122 billion. Does that -- is that the right base? Or should we also be stripping out the charitable contribution for this quarter? R. Richards: Yes. I would ask you to think about the base stripping out the charitable contribution for this quarter and then rolling forward into next year, thinking about really that activity relates to, as Harris mentioned, the 3 years forward look about things that might otherwise be tax deductible with the spend outlay at that time. So that's probably where I would anchor you. Manan Gosalia: Got it. So basically take that $2.122 billion number and then strip out the charitable contribution from that and then to moderately increasing off of that. R. Richards: Yes, that's certainly how I think about our core result, yes. Manan Gosalia: Got it. All right. Perfect. And then just a broader question on expenses. You guys operate in a pretty attractive footprint, and we've seen a lot of larger banks come out and highlight growth in branches in new markets and including some of yours. Are you seeing any increased competition in your markets? And if you are, is that the driver behind some of the increased marketing and tech spend that you called out in the deck? Harris Simmons: I think we have -- for as long as I can remember, we faced new competition, particularly during good times. These times are reasonably good. And sometimes they go away when times turn tough. But it's -- that is not per se what is driving our focus on increased marketing spend. It's a revamp of some of our products. And it's a belief that after spending the better part of a decade doing a lot of internal kind of reengineering and fixing a lot of plumbing that we're really in a position to be able to grow at a better clip than we had been over the last decade. So we want to do it prudently and carefully. We care a lot about the credit culture in the company, et cetera. But we're determined to actually spend more on growth initiatives. And so that's what you've seen this past year. You'll continue to see that in the coming year. It's not because of any particular new entrant or anything like that, although they're certainly there. We're in markets that are pretty attractive. And so that's wonderful, but the dark underside of that is it's attractive to folks who aren't here yet. So that's always part of the story. Operator: Our next question comes from Dave Rochester with Cantor Fitzgerald. David Rochester: Just want to start on the NII outlook for '26. I appreciate all the color on the rate cuts. I was just wondering what you're assuming for the funding of loan growth if you're assuming that securities runoff continues and you fill in the rest with deposit growth. And then the magnitude of any kind of funding remix out of broker deposits or out of wholesale funding that you're assuming within that guide. Any color on any of that would be great. R. Richards: Yes. Thanks, Dave. And I can give you some broad strokes. We don't typically deconstruct deposit growth or have any specific guidance about that moving forward to a year. But to your earlier point, certainly, we see the potential for remix on both sides of the balance sheet contributing to the NII outcome. We believe we still have some room to run with the investment securities portfolio before we really feel pinched on the sort of how we think about liquidity stress testing and liquidity ratios. That said, I don't know that we'll continue to see it maybe as forceful as it has been in the past. We're probably getting closer to a taper point. But there is room for additional remixing out of securities into loans and/or paying down broker deposits or wholesale funding. We're spending a lot of time building back from Harris' comments, thinking about growth and what growth looks like for 2026. And we certainly have some aspirations and some plans more than aspirations to build out our deposit base, focusing on granular deposit growth and putting marketing dollars behind initiatives that would help us drive that with the intent, of course, of continuing to pay down those broker deposits where we've had good success year-over-year, but also other short-term borrowings and the like. So stopping short of giving you a specific number because I'd be hazarding a number of assumptions, that is certainly where we're headed -- intend to be headed as an organization. David Rochester: Great. Sounds good. And then I know you guys have -- we talked about this in the last call, talked about a 3.50% margin. We're only 19 bps away from that now. We're in '26. Is this something you think that we can hit by the end of '27? Harris Simmons: I'm not going to hazard a -- put a time frame on it. I think it has so much to do with what happens with rates. And we're going to have a new Fed Chair. We're going to have more going on there that I want to hazard a guess about. But as I've said previously, my comment about is really intended to suggest that I think over time that that's probably getting pretty close to what a stable state could look like for us. We've made a lot of progress. We've got a ways to go. I continue to believe that over a longer period of time that the risk is to higher rates. And so we've reduced our asset sensitivity somewhat. We're closer to neutral right now, but I think very mindful of the possibility of higher rates. I want to be careful that we can deal with that. And -- but in a little -- in a prolonged period where you have kind of moderate short-term rates, some slope to the curve, I think that's where we can get to. But whether that happens in the next 7 or 8 quarters, hard to say. Operator: Our next question comes from John Pancari with Evercore ISI. John Pancari: On the loan growth front, I appreciate the moderately increasing guide. Underneath that, could you help unpack it a little bit in terms of what type of dynamics you're seeing on the loan growth front? Are you seeing demand strengthen? Are you seeing some pull-through in terms of line utilization? And are any of these growth initiatives that you just discussed, Harris, in response to the question, is that banker hiring that in certain areas that can drive some of this growth? Harris Simmons: Yes. I mean we've hired some really good bankers, particularly in the California market, but elsewhere as well. We are very focused on small business lending. That's really central to our thinking about growth is banking smaller businesses. They bring great deposits. We think that our history and our organizational structure and our people are really geared toward that kind of business in a big way. We've seen this past year a near doubling of the number of SBA 7(a) loans that we made, and about a 53% increase in dollars produced. I expect that we'll continue to see very strong growth in that category. I mean we're putting training dollars and marketing dollars and a lot of focus into that. It's not just the SBA program, but just banking smaller businesses generally. And so if there's a particular sweet spot for me, it's kind of watching what happens there. $1 of growth there is better than typically than a couple of dollars of growth in a lot of other places. And so it's not always just the percentages, it's kind of the quality. I mean we're really trying to build a balance sheet that is more productive and it's growing and serving more customers at the same time. So that's -- anyway, that's in a nutshell, how I think about it. Scott McLean: John, this is Scott. I would just add to that, that similar to what I said last quarter, the growth is really going to come in C&I and owner-occupied. We do think we're going to see some growth in CRE. Our goal for as long as you've been covering us has been that we want to grow CRE a little less than we're growing the overall portfolio. And we've fallen a little short on that recently. But I think you'll see some CRE growth where we haven't seen much in the past. I think our municipal business and our energy business are two businesses that have some nice upside potential, and they've been a little flat. And so clearly, the real estate -- the sentiment about CRE and tariffs and economy has caused the whole industry to see sort of sobering loan growth numbers. But I think we're well positioned as business sentiment improves for the reasons Harris said, but also our -- this is going to sound kind of squishy, but it's true. Our call programs are more energized than ever before. And this advertising spend and marketing spend that Harris referenced, it's not just incrementally. It's not just sort of a sequential thing. I mean it's a significant change, and it's very targeted to small and medium-sized businesses, granular deposits, this SBA initiative that Harris mentioned. Harris Simmons: I'd add one other thing that is if you look across the industry, a lot of the commercial loan growth has come out of increased exposure to the NDFI sector. And notwithstanding having stepped on landmine in the fourth quarter, we have not been growing that portfolio and don't really intend to in any kind of meaningful way, any deliberate way. And so in a relative sense, that's actually kind of a headwind comparatively to peers. My hope is that we can actually make up for that again, in some of these areas we've been talking about, small business. We will have some CRE growth. And we'll probably see a little bit of municipal growth, but a lot of it will be commercial. R. Richards: And just underscoring what both Harris and Scott have said and bring you back to Dave's earlier question, it's not just the trade-off between securities and loans or broker deposits or wholesale borrowing, it's the mix within the loan portfolio that both Harris and Scott described that will be beneficial for NII as we're seeing it. The other part that I didn't pick up in my earlier response was, and we talked about it, the terminated swap effect, speaking of headwinds, that's been a headwind for us that's been diminishing thankfully over time that we -- as we chart the year of 2026, we see about $29 million worth of headwind associated with that, about half of what it was in 2025 as being another contributor towards a better NII outcome for 2026. John Pancari: Got it. All right. And then separately on capital, just wanted to get your updated thoughts on the potential timing of a return of share buybacks. I believe you had indicated you're kind of nearing the point where you could consider capital return and increase in it. I think your CET1 ratio, which you've been watching a little more closely, increased about 40 basis points this quarter and then your CET1 up 60 bps. And so both TCE and CET1 heading in the right direction. So curious what your updated thoughts are there. Harris Simmons: I think it's probably this year, but not -- probably not this next quarter. In the second half, I think you'll see -- I would expect we're going to be in a position to start to accelerate capital returns. But I'm not going to give you a target amount, et cetera. At some point, we're in a position to do so, we'll announce something. And -- but I don't think it's a long ways off. Operator: Our next question comes from Chris McGratty with KBW. Christopher McGratty: Just following up on that question on the buyback. I know during the 2023 banking drama, the rating agencies got pretty loud about capital levels. I guess when you do announce or when you are preparing to announce the buyback, how important is that? And again, what -- is that a tangible common equity consideration versus the CET1? How are you thinking about all the constituents? R. Richards: Listen, clearly, it's an important stakeholder for us, and we really appreciate the engagement that we get. And certainly, I think they've appreciated the fact that we've been in a build back mode here for a good long time. So we're not suggesting there's a wholesale change here. I think that it's more of a recognition that we're still building back on an AOCI inclusive basis to where we think peers are. It's just the timing, whether there's an opportunity to kind of change the pacing of how long it takes to converge. So as Harris pointed out, it's yet to be determined, all those things are subject to OCC approval and Board approval. But we continue to -- thank you for John's acknowledgment earlier that there's been some really good trending on this basis. We've seen that as well, and it's showing up in our statistics and how we're growing our tangible book value, all really, really positive. And when you look at that headline number, there's a lot to like on it. We still tend to screen lower among our peer set when you include AOCI. So we're not giving up on this kind of tangible book value accretion path that we're pursuing. It's just a question of whether or not there's an opportunity to do something along the way while you're driving convergence. Harris Simmons: I think it's helpful that a good portion of this tangible common equity build has been facilitated by -- it's locked in place. I mean it's highly predictable. And that ought to be important to rating agencies. It is to us that it's something that time takes care of as much as anything. So we'll feather things in. It's not going to be a cliff event, but we want to continue to build capital, and we're looking at it CET1. We think about it in a world where AOCI is included in the number. But also from a regulatory perspective, it looks like there's nothing really imminently on the horizon that would change the current treatment of AOCI in capital. So -- and I think we'll have some room. Christopher McGratty: Great. And then the follow-up would be on the source of deposit growth. You may have touched on it, so I apologize. Ryan, about 5% noninterest-bearing growth in 2025, I hear you on the initiatives. Within your guide for '26, did I miss what are you assuming for NIB growth or NIB mix? R. Richards: Yes. We don't typically guide on deposit side of that, Chris. And certainly, we just try to roll it into our NII and how we see that holistically. But suffice to say, based upon the things that we're prioritizing for strategic initiatives that we certainly would expect to see growth across the noninterest-bearing dimension as well as interest-bearing deposits, trying to pull those whole relationships, net new relationships into the bank. So that's where that whole growth orientation you're hearing from us, not just this year, but going into last year, putting some marketing dollars and some real focus behind those campaigns. In terms of the refreshing, as Harris alluded to before, of our offerings, potential to bundle products that we think are really relevant for our clients and the like. Operator: Our next question comes from Bernard Von Gizycki with Deutsche Bank. Bernard Von Gizycki: Maybe just following up on noninterest-bearing deposits. I'm just curious that most of the growth there, the $1.1 billion year-over-year and then the decline $310 million sequentially. Was there growth from new customer acquisitions within the consumer gold account? And can you just share now that legacy account migration has now ended, how do you expect this to trend from what you've been hearing from the branches? Harris Simmons: Yes, there was -- yes, there has been growth, although it's -- these accounts, we've opened new -- these aren't just conversions of existing accounts, but the new accounts, we've opened close to about 4,000 of them since we kind of relaunched this a few months ago. I expect that number to pick up in '26. We're seeing average balances of about $10,000 per account. For established accounts, we're seeing -- it's about triple that. And so in other words, it's attracting a kind of clientele that we think actually can lead to really substantial balances. The total size of deposit relationship in this whole portfolio of almost 50,000 accounts is -- averages about $125,000 per customer. And so we think it's a really attractive kind of focus that group to be focused on. And that -- yes, it should help. But it also -- I mean, noninterest-bearing accounts are also -- they're subject to what happens to interest rates. A big portion of the commercial loans are supporting the provision of services through account analysis, for example. There are a lot of other things going on that can move these numbers around. But we're trying to make sure that as we think about the long term that we're continuing to build a really solid base of granular accounts that are -- they're smaller, they're insured, but they're not tiny. They're actually really good business. So that's what we're trying to do. Scott McLean: And I would just add that the number Harris referenced on sort of net new kind of accounts, we're really just kicking this campaign off. We were piloting it in the second half of '25 and -- but it's now rolling out with greatly enhanced marketing across the entire company. Bernard Von Gizycki: Got it. I appreciate that. Just my follow-up. I think you've indicated in the past that you expect 2 to 3 basis points a quarter of fixed rate asset repricing. You mentioned the 2 rate cuts assumed in '26. Just update us here, same assumption. And if the rate -- if the Fed is at a rate cut pause, how does that estimate change, if at all? R. Richards: Yes. Thanks, Bernard. I mean what we're currently seeing now, obviously, with the changes we had later last year, we're not seeing quite that level in terms of fixed loan repricing impacts on our earning asset yields. Right now, we would say is that around 1 basis point as opposed to where we were previously. And then with additional cuts in the future, you can imagine that it would erode that value opportunity for us. Operator: Our next question comes from Ken Usdin with Autonomous Research. Kenneth Usdin: Just wondering -- I know the question of tailoring has come up on prior calls, but now that there's been even more discussion from the regulatory front about the potential to either index levels or maybe even raise the bar fully. Are you thinking about anything differently with the asset base still hanging around $90 billion in terms of either future growth investments you have to make, your outlook on acquisitions, et cetera, as we wait maybe a more formal change than we've seen in a couple of years? Harris Simmons: Yes, Ken, I think as we've seen -- as we've said periodically over the last couple of years, the -- even without the announcements from the OCC with respect to their heightened expectations rule and others, similar kinds of changes that have been proposed or made. We didn't see the $100 billion threshold as posing any real kind of a threat to -- as we noted, we were -- because we were the -- we were actually the smallest systemically important financial institution in the wake of the passage of Dodd-Frank back in 2011. I mean, we were subject to all of the industrial strengths that JPMorgan Chase and Bank and everybody else wants. And so we built the capabilities, the models, not only for credit stress testing and stressing the balance sheet, liquidity, et cetera, all of the work that went into building sort of COSO compliant, three lines of defense, risk management infrastructure, et cetera. Our intent is to never dismantle that. We found a lot of value in it. I mean, some of it was taken to extreme, some of it was -- some of the documentation, et cetera, was painful and overly expensive, et cetera. But we've maintained the capabilities and it, I think, makes us a stronger company. And so we just don't think there's even much of any kind of speed bump going across $100 billion. We don't feel compelled to try and boy, you're going to cross 100, you got to get to 200 or anything like that sort. It's going to be about the same as crossing 80 was, which was kind of a nonevent. So that's how we're thinking about it. It's not an inhibitor in terms of thinking about deals. It's not a reason that we would think about deals. We only think about deals in the event that they were really attractive. And right now, it's -- I don't know that we're likely to see anything. And we need to improve our valuation. Something comes along that is absolutely compelling, we'll certainly consider it. We're not going to be taking pledges or painted into a corner of thinking about things in a particular way. I hope we'll think about it as good long-term ownership of the business would. But the $100 billion threshold isn't a factor one way or the other in that thinking. Kenneth Usdin: Understood. And Ryan, one just follow-up on the operating leverage point earlier. So is it the right way to think about it? You mentioned the core base and then add back the charitable -- take out the charitable contribution. That's the base in which you're talking about the 100 to 150 basis points of operating leverage. R. Richards: Yes, that's correct. Kenneth Usdin: And just the range, it's great to hear you guys focusing to the $100 billion, $150 billion. But what would be the difference on your expense growth? Would it just be like how revenues come out and you have some flex to triangulate up and down? Sorry for that extra one. R. Richards: Yes. I think you always have to recognize that if the revenue environment changes, you have to rethink the way that you approach your expense side of it. But I just -- I included that as part of my written remarks and spoken remarks because it wasn't obvious, of course, with our forward guidance and the words we choose, whether or not there was a positive operating leverage in there. And we absolutely believe that's the case as we see it today. And that's where we -- if you look at what our results have been for quite a long time, we've been pretty consistent in driving customer fee growth on a compound annual growth rate of about 4%. That's really what we showed up with this past year as well. And we think we see an opportunity to do a little better on that dimension moving forward, building on some of the momentum we've been having in our businesses. And that's going to be, we think, really helpful in driving some of that leverage. But we'll pay attention to expenses as we move through the year. Harris has always said we're going to run this place for the long term. We're going to invest in growth and do things that maybe in the moment don't pay for themselves, but we've had some pretty nice returns on the investments we've been making in recent years. So that's how we're thinking about it. Operator: Our next question comes from David Smith with Truist. David Smith: On credit, you highlighted an expectation for CRE classified to continue to decline. There had been an uptick in C&I classified offsetting some of the CRE decline we had this past quarter. Is there anything chunky in that $92 million C&I increase this quarter in terms of like a few big particular names? And just as a follow-up, would you also expect general stability in the C&I classified size of the portfolio? Or would there be a bias towards an increase or a decrease as you see things today? Scott McLean: Sure, David. This is Derek. Let me answer the second question first. It's hard to say exactly where the C&I downgrades may come from or improvement. It just generally depends on the economy. We do see CRE improving throughout the year. We have a good line of sight on that. We just continue to see it taking a little longer for some companies to perform. One thing I will say because we're not concerned with losses, I think we're going to try to retain a lot of the loans. We may be willing to carry some of the criticized and classified real estate loans a little bit longer just because they're on their way to performance and an upgrade. As far as the C&I downgrades, I wouldn't say there's anything chunky in there. It's pretty broadly distributed across industries. And it's something we're watching. Again, it depends on where the economy goes. I would point out that while we've seen the uptick this quarter in the C&I classifieds, we're actually down since year-end 2024 for C&I classifieds. So it's not jumping out as concern at this point, but something that we're paying attention to. Operator: Our next question comes from Anthony Elian with JPMorgan. Anthony Elian: A follow-up on operating leverage. You gave us the base for expenses backing out the foundation contribution. But just to clarify the base for revenue, Ryan, does the base for fee income exclude the adjusted noncustomer fees? I think that was $44 million you have in the back of the press release. Harris Simmons: Yes, can you say that one more time? Anthony Elian: Yes. I'm just curious if you can give us the base for fee income, right? You have some items you back out on Slide 5 and the back of the press release. So if you can give us the base to use for operating leverage, that would be great. Harris Simmons: I think the customer fee income. R. Richards: It's hard to predict year-to-year what we're going to get on the security gains and losses. So that's just kind of how we think about core expenses. Harris Simmons: [indiscernible] related noninterest income, yes. Anthony Elian: Okay. And then my follow-up -- so from this call, it sounds like there's a lot more emphasis on growth initiatives this year, including hiring, which I fully appreciate. But you left the expense outlook unchanged. So I'm wondering if there's directionally a range you point us to for expenses within your guidance of moderately increasing. R. Richards: Yes. I mean, listen, if we first the tape about a year ago, we were coming out of a time when we were keeping things, I think, pretty tight, slightly increasing would have been more and maybe at times slightly to moderately, we allowed that to start migrating up because of this growth agenda. So I don't know that would point you to a specific point. We usually talk about moderately being like a mid-single digits type number. I probably just warrant you somewhere in the middle of that. We'll see what we get. But really, the intent here is to do things that feel strategic to us and to -- and it should feel different and look different if we're successful reaching in our growth goals. But the types of numbers that we're talking about that Scott alluded to before, may not be fully evident, but we have some real aspirations in driving commercial loan growth and allowing for some increased CRE. There could be some offsets there in the sense that we've talked a little bit in the past about what we're doing on our 1 to 4 family resi strategy and having more of an orientation to held for sale. So we think that there's potential for more of that to show up this year. But without that, we could really put, I think, some decent loan numbers up. Scott McLean: On the expense guide, also, I would just say that there's -- and we've said this in previous years, but there's probably about $40 million of savings initiatives in there that keep us at the expense growth rate number that we're at. So this isn't just -- it's just the same as last year, plus a little bit more. It's there's quite a bit of work on continued efficiency gains and optimization and particularly with AI and some of the things we're doing with process change and new technologies that can help us lower cost as well as outsourcing. We have a lot of levers to pull on, and that helps keep the expense number down and has for years. There's nothing new about it. Operator: Our next question comes from Janet Lee with TD Cowen. Sun Young Lee: For clarification on NIM. So if I look at your earning asset yields in the fourth quarter, it looks like lower rates had an impact on your earning asset yields declining about 15 basis points. And you talked about 1 basis point of fixed rate asset repricing lift. So if I assume 2 to 3 rate cuts in 2026, is it fair to say earning asset yields are declining through 2026 and the NIM trajectory is really dependent on the shape of the yield curve and what you can do on the deposit front? R. Richards: Yes. Listen, I think those are all fair observations and deposit production and our success there will always have an outsized impact on how we show up on NIM. Our success year-over-year has been able to manage down our funding costs more aggressively than what we're seeing in terms of on the asset side because we've had some really nice remix that as an offset to some of the things that would otherwise play through on the resetting of benchmark rates. We haven't guided yet, and it's almost like -- I can't imagine we go through a call without saying something about latent and emergent type things. But we do include some of those materials in the back. I think Harris alluded to before, we took a little bit of the edge off of some of our asset sensitivity metrics that you would have otherwise seen us maybe earlier through some hedging activities that we put on, just trying to guard against maybe some near-term rate cuts. What the asset sensitivity would tell you is that we still think there's opportunities for things to play through on a latent basis, things that haven't already found price discovery on fixed assets playing through. We have about 60% of our term deposits that are set to reprice in the first quarter of 2026. So -- but as somebody who as a group that's still asset sensitive on the whole, we say -- we show with the overlay of the forward curve that, again, just using a sensitivity view that we could stand to have a better 1-year quarter forward outcome even against the backdrop of a forward curve that would apply two more rate cuts. And that, of course, doesn't take into account our prospects for loan growth and a dynamic balance sheet, the mix of our loans, how we would be taking cash flows from our securities portfolio and reinvesting them in other places, including loans and other gainful uses. So there's lots of contributing factors in there. Hopefully, that gives you a little bit of direction about how we feel and how we're guiding for NII 1 year hence. Sun Young Lee: That was very helpful. And clearly, you've made some good strides in improving your capital levels, including AOCI accretion that has happened over the past years. Could you -- and clearly, you're more open to doing buybacks over the near to intermediate term. Could you give us a refresh on your M&A stance? Harris Simmons: Well, I think I did a few minutes ago. Our stance is we're not -- we don't have a stance per se. We're not looking for deals. They come along and they make a whole lot of sense, might be interested. I don't see us doing anything really large. That would surprise me at the moment. And so it's just not -- it's not a part of our daily day-to-day kind of thinking, frankly, in terms of what we're really focused on. So I've been pretty determined not to say that we're not -- that we would never do a deal or anything of that sort. That said, we're not looking to do deals to -- as I said earlier, to become a particular size or we do things that we think are really, really attractive financially and fit culturally, et cetera. It has to check some boxes before I'd be particularly interested. Operator: We have another question from Manan Gosalia with Morgan Stanley. Manan Gosalia: I think you mentioned in the prepared remarks that you could come in at the top end of the guide on customer-related fees. Can you just talk about what the drivers are there? Scott McLean: Yes. Manan, this is Scott. I think we're inclined to make that comment principally because we're seeing really good momentum across a wide range of our customer fee product areas, and we see that carrying into the new year. So that, combined with this additional advertising in these products, just give us really a nice outlook, we think, on customer fee income. But it's -- instead of capital markets dominating the growth in our fee income, we're very encouraged by what we're seeing across almost all of our fee income businesses. And that's a little bit different story and a little bit different guide. Manan Gosalia: Relative to what you've said before. Got it. Scott McLean: Yes, yes. Operator: Our next question comes from Jon Arfstrom with RBC Capital. Jon Arfstrom: A couple of follow-ups. Scott, one for you. When you look in the earnings release, the FTEs are down the last couple of quarters. And you might have just touched on it a few minutes ago, but can you talk a little bit more about what you're doing in terms of AI and tech and just the general FTE outlook? Are you seeing real impacts and that's what's showing up in the FTE count? Or is it... Scott McLean: Yes, Jon. Thank you for that question. And you'll remember a high point for us was August, really the third quarter -- second quarter of 2019 when we were at about 10,300 colleagues. We're now down below 9,300. And we think that, that number will continue to go down over the next couple of years. And it's -- over the short term here, outsourcing -- our outsourcing strategy, we've been reengaging with that and with three outstanding partners that work with us in other ways as well. And so that will continue to have momentum. We probably -- a year ago, we were well below where peers are. Most peers would report that they outsource somewhere between 10% to 15% of their stated FTE base, and we were probably around 3%. So we're really just leaning into a lever that has always been available to us, but we're more encouraged and confident about it. So that's where you're going to see some of it. But the use of AI, again, we've been using AI for a long time for things like fraud detection, client authentication, product recommendations, financial statements spreading, some unstructured document processing, et cetera. And so -- but the proliferation of new ideas that can remove touches, human touches from a process, can remove multiple data entry, can streamline what we do, it's significant. And we're moving kind of from an exploratory phase, which I'd say we've been in for the last 1.5 years to really highly focused on a small couple of handfuls of projects where we can see the most leverage in simplifying what we're doing in end-to-end processes. So those would be the kind of automation, AI, outsourcing would be pretty meaningful contributors. Jon Arfstrom: Okay. And then just one more on loan growth. Just the improved expectations, are the borrowers more optimistic? Or is it you becoming more comfortable or a combination of both? And then I'm just also curious kind of what's going on at Commerce Bank. The growth numbers were pretty strong there, if you could touch on that. Scott McLean: I'm happy to take the first one. I mean I think borrowers are business owners, CEOs, they're kind of in the same place they've been for the last couple of years, again, between commercial real estate industry concerns, tariffs, the economy in general, whatever happens to be in the newspaper this morning, it just has people a little uncertain. So I think that's one piece. And the other piece is just we are -- we feel very encouraged about all the steps we're taking to grow, which we've talked about in this call. Harris Simmons: I'd say Commerce Bank, their relative size can produce more volatility probably in terms of growth numbers than you'd see in other parts of the company. So I don't think there's anything that's probably necessarily trend there. Operator: This now concludes our question-and-answer session. I would like to turn the call back over to Shannon Drage for closing comments. Shannon Drage: Thank you, Bonn, and thanks, everyone, for joining us tonight. We appreciate your interest in Zions Bancorporation. If you have additional questions, please contact us at the e-mail or phone number listed on our website, and we look forward to connecting with you throughout the coming months. This concludes our call. Operator: Ladies and gentlemen, thank you for your participation. This concludes today's conference. Please disconnect your lines, and have a wonderful day.
Yahoo Finance speaks with financial experts about President Trump's tariff threats as he tries to annex Greenland to the United States and the future of the CLARITY Act, as the Senate canceled the markup of the bill. Other topics discussed are the growing backlash over AI data centers and emerging markets.
Earnings season is picking up steam as some of the market's biggest publicly traded companies report quarterly financial results this week and into the weeks ahead. This week's lineup features 35 S&P 500 names and four members of the Dow Jones Industrial Average.
James West, Melius Research head of energy and power research, joins 'Power Lunch' to discuss West's thoughts on the battery stocks and much more.
Scott Chronert, Citi U.S. equity strategist, joins 'Power Lunch' to discuss Chronert's investing activity, what Citi's focused on and much more.
Andy Laperriere, Piper Sandler head of U.S. policy, joins 'Power Lunch' to discuss the battle over Greenland, if the issue could all blow over and much more.
Renewed tariff fears have led to a selloff in bonds and most stocks. Gold and silver, energy and small-caps are faring better.
President Donald Trump's threat to place new tariffs on some European countries resisting his effort to obtain Greenland has put trade fights back on the front burner and rattled global financial markets.
Opportunities exist in the tech sell-off, says Lisa Martin, making the case that fundamentals remain strong. Even after sentiment soured, Lisa explains that the big picture for tech doesn't change even as leaders like Nvidia (NVDA) face U.S. regulation pressures.
Lynn Martin, NYSE president, joins CNBC's Sara Eisen to discuss the IPO landscape for 2026.
We're only two weeks into 2026, and it already seems like precious metals like gold and silver will likely continue outperforming as geopolitical tensions rise – Iran, Russia, Venezuela, Greenland, you name it.
The saga over President Donald Trump's efforts to reshape the Fed has another twist to it, revolving over whether current Chair Jerome Powell will leave after his term at the helm is finished. Historical precedent has been for outgoing Fed chairs to leave their governor roles as well, but Powell could decide to buck that trend if he feels threats to central bank independence are stark enough.
Investors are finding few other places to safeguard their portfolios after President Donald Trump threatened new tariffs on European allies.
Jeff Kilburg, KKM Financial, joins 'The Exchange' to discuss the equity market's standing, if Kilburg would be a buyer and much more.
Market Catalysts anchor Julie Hyman breaks down the latest market news for January 20, 2026. The Senate Banking Committee cancelled its vote on the US CLARITY Act last week after Coinbase Global CEO Brian Armstrong withdrew his support of the crypto regulation bill, essentially leaving the bill in legislative limbo.
The Treasury secretary who previously urged Trump not to fire the Fed chair is now publicly building the case against him.
E-mini S&P500 and Nasdaq 100 futures break key support levels today as Trump tariff threats trigger long liquidation. Analysis shows potentially bearish turn.
President Trump received fairly good news in the November Consumer Price Index (CPI) report,[1] with inflation coming in lower than expectations though still higher than the Federal Reserve's target of 2%. Meanwhile, the American consumer continues to struggle with affordability as prices and inflation continue to top polls of voters concerns about the country/the economy.
Stocks slumped in morning trading on Wall Street Tuesday after President Donald Trump threatened to hit eight NATO members with new tariffs as tensions escalate over his attempts to assert American control over Greenland.