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Operator: Welcome to the Five Star Bancorp Fourth Quarter and Year-End Earnings Webcast. Please note, this is a closed conference call, and you are encouraged to listen via the webcast. [Operator Instructions] Before we get started, we would like to remind you that today's meeting will include some forward-looking statements within the meaning of applicable securities laws. These forward-looking statements relate to, among other things, current plans, expectations, events and industry trends that may affect the company's future operating results and financial position. Such statements involve risks and uncertainties, and future activities and results may differ materially from these expectations. For a more complete discussion of the risks and uncertainties that may cause actual results to differ materially from the company's forward-looking statements, please see the company's annual report on Form 10-K for the year ended December 31, 2024, and quarterly reports on Form 10-Q for the 3 months ended March 31, 2025, June 30, 2025, and September 30, 2025, and in particular, the information set forth in Item 1A, Risk Factors in those reports. Please refer to Slide 2 of the presentation, which includes disclaimers regarding forward-looking statements, industry data, unaudited financial data and non-GAAP financial information included in this presentation. Reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures are included in the appendix to the presentation. The presentation will be referenced during this call but not followed exactly and is available for closer viewing on the company's website under the Investor Relations tab. Please note, this event is being recorded. I would now like to turn the presentation over to James Beckwith, Five Star Bancorp President and CEO. Please go ahead. James Beckwith: Thank you for joining us to review Five Star Bancorp's financial results for the fourth quarter and year ended December 31, 2025. These results were released yesterday and are available on our website, fivestarbank.com, under the Investor Relations section. Joining me today is Heather Luck, Executive Vice President and Chief Financial Officer. 2025 was another outstanding year of achievement underpinned by exceptional growth across all of the markets we serve and consistent strong financial performance. During 2025, we expanded our footprint in the San Francisco Bay Area through the opening of our Walnut Creek office. We expanded our agribusiness vertical, and we also added 10 more seasoned business development professionals to facilitate ongoing organic growth. In 2025, Five Star Bank achieved year-over-year growth in total loans held for investments of 15%, total deposit growth of 18%, net income growth of 35% and an increase in earnings per share of 28% to $2.90 a share. Financial highlights for the fourth quarter include $17.6 million in net income, earnings per share of $0.83, return on average assets of 1.50% and return on average equity of 15.97%. Our net interest margin expanded 10 basis points to 3.66% and our total cost of deposits declined by 21 basis points to 2.23%. Our efficiency ratio was 40.62% for the fourth quarter. Financial highlights for the year included a $61.6 million of net income, earnings per share of $2.90, return on average assets of 1.41% and return on average equity of 14.74%. Our net interest margin expanded by 23 basis points to 3.55% and our cost of total deposits declined 16 basis points to 2.40%. Our efficiency ratio was 41.03% for the year. In the fourth quarter, we saw continued balance sheet growth. Loans held for investment grew by $187.7 million or 19% on an annualized basis and total deposits increased by $97.6 million or 10% on an annualized basis. Over the course of the year, we experienced outstanding balance sheet growth. Loans held for investment grew by $542.2 million or 15% and total deposits increased by $643.1 million or 18%. We successfully reduced our balance of wholesale deposits by $95 million or 17% in 2025, and we grew our balance of non-wholesale deposits by $738.1 million or 25%. Our asset quality continues to remain strong with nonperforming loans representing only 8 basis points of total loans held for investment. We continue to be well capitalized with all capital ratios well above regulatory thresholds for the quarter and year. Our strong financial performance and dedication to delivering shareholder value drove an increase to our cash dividend of $0.05 per share for a total dividend of $0.25 per share for the quarter. This is the first increase in the dividend since April 2023. The dividend is payable to the company's shareholders of record as of February 2, 2026, and is expected to be paid on February 9, 2026. Our total assets increased during the fourth quarter and full year by $113.1 million and $701.6 million, respectively. This growth was largely driven by loan growth within the commercial real estate portfolio, which increased by $161.4 million in the fourth quarter and $448.5 million in the year. Our loan pipeline remains strong. Our prudent underwriting standards, comprehensive loan monitoring and focus on relationship-driven lending have contributed to maintaining the strong quality of our loans. As a result, we have a very low volume of nonperforming loans despite an increase of $1.0 million during the fourth quarter related to 2 separate faith-based real estate loans entering nonperforming status. We recorded a provision of $2.8 million for credit losses during the fourth quarter, primarily related to loan growth for the total provision of credit losses of $9.7 million for the year ended December 31, 2025. Growth in our total liabilities during the fourth quarter and full year was a result of growth in interest-bearing and noninterest-bearing deposits related to both new accounts and inflows from the existing customer base. Non-wholesale deposits increased $139.1 million during the quarter and $738.1 million during the year. Wholesale deposits decreased by $41.4 million during the quarter and $95 million during the year. Total noninterest-bearing deposits accounted for 26% of total deposits. Approximately 61% of our deposit relationships totaled more than $5 million. These deposits have a long tenure with the bank. With an average of 8 years, we believe our deposit portfolio to be a stable funding base for future growth. On that note, I will now hand it over to Heather to discuss the results of operations. Heather? Heather Luck: Thank you, James, and hello, everyone. Net interest income increased $2.7 million or 7% from the previous quarter, primarily due to a $1.8 million increase in loan interest income driven by new loan production and a $1.1 million decrease in interest expense. The decline in interest expense is primarily related to a 21 basis point decline in the average cost of deposits quarter-over-quarter driven primarily by 2 rate cuts occurring in the 3 months ended December 31, 2025. The average balance of deposits increased by 4% during the 3 months ended December 31, 2025, but the substantial decrease in the cost associated with deposits led to a net reduction in total interest expense. Net interest income increased by $32.2 million or 27% from 2024, primarily due to a $35.9 million increase in loan interest income driven by new loan production at higher rates, contributing to overall improvement in the average yield on loans. This was partially offset by a $10 million increase in deposit interest expense related to a 19% increase in the average balance of deposits during the year. The average cost of deposits was 2.40% for the year ended December 31, 2025, a decrease of 16 basis points compared to the prior year, which helped to moderate the increase in interest expense related to deposit growth. Noninterest income decreased to $1.4 million in the fourth quarter from $2 million in the previous quarter, primarily due to an overall decline in earnings related to equity investments and venture-backed funds during the 3 months ended December 31, 2025, compared to the prior quarter. Noninterest income increased by $100,000 in 2025, primarily due to an increase from fees from swap referrals and income from credit card activity, an improvement in earnings related to equity investments and venture-backed funds and an increase on earnings on bank-owned life insurance related to the purchase of additional policies. These gains were almost entirely offset by a lower gain on sale of loans, which declined due to the strategic reduction in origination of loans held for sale during the year. For the 3 months ended December 31, 2025, there was a $1.1 million increase in noninterest expense. And for the full year ending that date, the increase amounted to $10.5 million. The primary driver for higher noninterest expense was related to an increase in headcount, leading to elevated salaries and benefits. Provision for income taxes for the quarter ended December 31, 2025, decreased by $500,000 or 9% as compared to the prior quarter due to a $900,000 benefit recorded during the fourth quarter related to the purchase of transferable tax credits. This was partially offset by an increase in pretax income recognized during the quarter and an adjustment related to the true-up of amortization expense related to low-income housing tax credits during the 3 months ended December 31, 2025. The provision for income taxes increased by $3.1 million or 16% for the year ended December 31, 2025, as compared to the prior year due to a 29% increase in pretax income recognized during the year. This is partially offset by a $900,000 benefit recorded during the quarter related to the purchase of tax credits. And now I will hand it back to James for closing remarks. James? James Beckwith: Thank you, Heather. 2025 was an outstanding year of achievement for Five Star Bank. As we not only celebrated our 25th year in business, but also reflected on a quarter century of growth, innovation and commitment to our core values. Since our founding, Five Star Bank has steadily evolved from a [ small ] entrepreneurs into a $4.8 billion financial institution with 9 branches and over 230 employees. This remarkable expansion is a testament to our enduring dedication to authentic relationship-based service, a philosophy that places the needs of our customers, the well-being of our employees and communities and the interest of shareholders at the heart of everything we do. Throughout these 25 years, Five Star Bank has consistently prioritized building deep, meaningful relations with our clients, understanding that true success comes from trust, transparency and mutual benefit. Our employees play a crucial role in this journey, embodying our values through personalized service, expert financial guidance and active participation in the community initiatives. We take immense pride of our achievements, which include not only financial growth, but also positive impacts on the local economies, support for small business and contributions to the social and environmental causes. Looking ahead to 2026 and beyond, our vision remains steadfast. We are committed to further developing all of our business verticals while expanding our reach into new markets. It is increasingly -- in an increasingly digital world, we recognize the importance of blending cost-cutting technology with the human touch that defines Five Star Bank's high-tech and high-touch approach to business. As we move forward, Five Star Bank will remain focused on innovation and service excellence. We are excited about the opportunities ahead and are confident of our proven strategy will drive continued growth, strength in client relations and creating lasting value for our shareholders. We appreciate your time today. This concludes today's presentation. Now we will be happy to take any questions you might have. Operator: [Operator Instructions] And the first question today will come from David Feaster with Raymond James. David Feaster: I wanted to start on the origination side. You saw a real nice acceleration in originations this quarter. I just wanted to -- I was hoping you could give us maybe a sense of some of the drivers behind it? I know it's hard to peg, but how much of that growth is from new hires versus increasing demand? And then just any thoughts on how pipelines are shaping up heading into the new year and where you're seeing opportunity for growth? James Beckwith: Sure. We saw all of our verticals perform extremely well in the fourth quarter. Our ag -- our food and ag group did extremely well in terms of onboarding some clients whose lending cycle, if you will, is kind of gears up during the fourth quarter, especially in some of our nut tree processing clients who are paying growers. So that was a significant component. So it's seasonal in nature. But also some of the deals that we did down in the Bay Area, I think we had a fair amount of volume that came out of that. But across all of our geographies and our verticals, it was a very big quarter for loan production. Now as we enter into 2026, the pipeline looks good. It's been higher, it's been lower, but it looks good as we roll into 2026, David. David Feaster: Okay. That's great. And maybe just switching to the other side of the balance sheet, your deposit growth has been phenomenal. You've done a great job driving core deposit growth and reducing the wholesale funding and significantly improved your deposit costs. I just wanted to -- I was hoping you could touch on, first, the competitive landscape for deposits from your perspective today? And then just how you think about core deposit growth going forward and your ability to continue to fund your outsized loan growth with core deposits? James Beckwith: Sure. Well, the markets that we're in right now are very competitive. For the best clients that [ I'm going ] to see the Tier 1 clients, if you will, or prospects, it's a very competitive space. And it doesn't really matter what geography you're in. It's just competitive. And so we don't expect that to change. But our secret sauce, David, is the fact that we've got 42 business development folks that -- that's their job is to bring in core deposit and core relationships into the bank. We feel that's our competitive advantage. We brought some folks in down in Orange County that are deposit gatherers. They're starting to see a fair amount of traction down there. We've got folks that are in the Bay Area that are primarily deposit -- have a deposit orientation, they're doing well. But we also saw great growth in North State in our Redding office and also our Yuba City office. So we're excited about what that might mean for 2026. We seem to be doing fine so far. So we expect that we'll be able to continue to execute. Don't think we're going to be able to do what we did in 2026, what we did in 2025, David. That's just -- that's asking a lot. And a lot of things [ are ] away so we're projecting on both sides of the balance sheet, 10% growth as we roll into 2026. If we can achieve that, which is really quite substantial, we're happy with that. A couple of drivers of that is that on the loan side, we expect a fair amount of payoffs. We saw a fair amount of payoffs in the fourth quarter. And we expect the same or similar that we're going to see in 2026. So we're going to have to run that much harder. And then on the deposit side, we're trying to get rid of all of our wholesale -- excuse me, our broker deposits. And that's $175 million as we ended the year. And so in order to grow total deposits by 10%, I think what is it, Sarah, we're going to have to grow by 13 or so percent? So we're going to have to hustle in order to achieve those types of goals for us as we enter into 2026. David Feaster: Okay. And one of the things that supported your growth has really been your hiring efforts. I mean you talked about adding 10 BDOs this year. You've had a lot of success. I got to imagine what you guys are doing is resonating in the market. I mean it's -- you guys are putting up pretty -- it's just -- it's fun growing like you guys are, and I know you're getting recognized. I'm just curious, there's still a lot of disruption across your footprint in Northern California. How do you think about your ability to continue to recruit bankers and BDOs? And are there any markets or segments that you're notably focused on or expanding into? James Beckwith: Sure. I think we did a nice job with the East Bay and our Walnut Creek opening. It's a nice office. We expect that to grow. But when you consider about what we're doing down in the Bay Area, we're not yet on the Peninsula or South Bay. So that certainly would be an area from a geographical perspective that's of interest to us, highly competitive in terms of getting qualified bankers to come work for you. And frankly, a lot of those salaries have been bid up. And it's not a bad time to be a business development and a seasoned business development person in the Bay Area. Let me tell you that much. Operator: The next question will come from Andrew Terrell with Stephens. Andrew Terrell: Maybe if I could just start on expenses, Heather, hoping you could help us out with just kind of thoughts on the expense run rate into the first quarter. And if I look back at 2025, you guys grew, I think it was around high teens on overall expenses. You obviously had a pretty tremendous amount of revenue growth as well throughout the year. But just as we look out into 2026, any thoughts on kind of where the expense growth head? Should it moderate from here or stay elevated as you guys keep hiring and continue making investments? Heather Luck: Yes, sure. So from a dollars perspective for Q1, you could probably add about $300,000 to that expense amount. We do have plans that have brought on a few new people into our group. So that will help support that. But if you look at the full year for 2026, I think our target for a range on expenses as a percent of total assets or average assets, should be like 1.48% to 1.55% in that range. And we believe that, that will help accommodate growth as well as regular maintenance on there, too. So I think that range for 2026 would be 1.48% to 1.55%. James Beckwith: I think, Heather, what we end the quarter at or in the year at -- we're right at 1.50%? Heather Luck: Yes, the quarter was at 1.50% average assets. James Beckwith: That's something that we think about constantly, Andrew, in just terms of a percentage to total assets. And it's not a bad guide as we continue to grow. Andrew Terrell: Yes. Okay. Yes, you guys have stayed pretty consistent in that band we've talked about for a while. Okay. James, I wanted to get a sense from you just on competitive dynamics on rate competition on loans specifically. I know you guys do have somewhat of a repricing story as we move forward. Just wanted to get a sense on where new originations are coming at -- coming on that from a yield standpoint. We've heard from several of your peers, just the competition they're seeing on the loan side is impacting spreads. I'm just curious what you're seeing. James Beckwith: Yes. I think we're seeing the same thing, but we have the -- an ability to generate new credit within our MHC and RV efforts that usually will allow us to get our normal spreads, which could be anywhere between 275 to 350 over the 5 years. So we have a competitive advantage from that perspective because it's just not a lot of players in that market. But if we're going toe to toe with folks on an owner-occupied real estate and line of credit for an operating entity, it can be very competitive. And you could see spreads as low as 200 over 205 over and at prime or prime minus 25 even for their operating line. So it's constant. There's a lot of folks that are interested in the -- certainly in the Bay Area that have come in. And so we've -- it's a highly competitive environment and not just in the Bay Area, but up and down the Valley, the capital region. So we recognize this. There is pressure. We do have a lot of refinancings coming up in '26 and those fundamentally from everything that we did in '21 since we have, for the most part, our MHC and RV and probably outside of that, too, anything with the CRE patina to it, it's a 5-year reset, usually a 25- or 30-year [ ammo due ] in 10 with one reset after the 60th month. So big years of origination, you're going to have some resets happen. We don't expect all those loans to stay with us. A lot of those operators are going to take their loans to agency because they can get a better deal, lose the personal guarantees, take cash out. So we just -- it's going to have an impact to us. So a lot of those credits were 4 handles in terms of interest rates. So we're going to see a lot of that happen in 2026. Hopefully, we can keep up to half of them, okay? But they're going to reset, and we'll just see how that goes. We're actively -- I'm going to say, because they have other credits with it. We're actively in those discussions about what they're going to do when their loans reset. Andrew Terrell: Yes. Got it. Okay. I appreciate all the color there. And if I could just ask one more. You leveraged capital a little bit this quarter with the strong growth. I think your CET1 down around 10.5% now, maybe 10.6%. But I just wanted to get your sense on comfortability with capital as it stands today and kind of the outlook. I'm sure organic earnings can fund kind of 10% growth rate. But just wanted to get your thoughts on the current position and kind of capital expectations. James Beckwith: Sure. We had outsized growth in 2025. So you saw a decline in our capital ratios. But as we go forward, we believe that we'll be able to maintain our capital positions with a 10% growth. We do anything like 15% growth. I think that's another matter. But I think we like where we are. We need to be highly profitable so we can fund our growth. And I think we -- we'll be able to do that in terms of what we see in front of us in 2026 from a profitability perspective. So we'll just see how that goes, Andrew. If we have outsized growth that's another conversation. Heather Luck: Yes. If we stick to that 10% growth rate throughout our entire forecast period, we usually budget on a 5-year forecast. We are able to sustain ourselves and fund ourselves through that even with the elevated dividend that we just announced recently. But if we did grow like 15% to 20%, that clearly will accelerate capital needs, and we won't be able to self-generate. So we would likely have to have a capital event sometime in '27 or '28, depending on how fast that growth happens. Operator: The next question will come from Gary Tenner with D.A. Davidson. Gary Tenner: I wanted to dig a little bit into kind of the efficiency ratio. I know you talked about the expense-to-asset ratio earlier in the call. But as I'm thinking about the margin expansion kind of outlook, thinking that NII should run somewhat ahead of your loan growth outlook and balance sheet outlook, it seems like it will be kind of in line with the expense side of things. So I'm just wondering, with your efficiency ratio at 40%, down a little bit from a year ago, is there any -- is there much more room to push that lower? Or is it really just making $1 on every $0.40 from here? James Beckwith: Well, I think it's probably more the latter. And we have -- because we're constantly investing in our business. We're constantly growing our front end, adding more [ biz dev people ], and they're expensive. And we're constantly throwing coal into the boiler and trying to maintain our growth rates. As we get bigger and bigger, doing 10% is harder to do because the numbers are just bigger. But -- so we think that constantly having some form, Gary, of investment in the business in the form of new front-end people, which has a rippling effect across our cost structure because you hired some more biz dev folks, you've got to have some backup from a depository perspective. And then, of course, you got to have a few more lenders that will be able to underwrite their business. So that's how we think about it. It really starts with the folks that are on the front end. And we're not backing off. If we see a team that we think we can get, Gary, we're going to do it. And I think that's evidenced in what we've been able to do over the last 3, 4 years. So we're reinvesting. We're constantly reinvesting in our business. Imagine -- I think our profitability would be a lot higher if we didn't do that. But this is really a long-term play for our shareholders. And so we're a long-term organic growth shop, and we want to maintain that focus. Gary Tenner: Appreciate that, James. And then just as it relates to kind of the near-term outlook, the ability to generate that kind of 10% threshold of loan growth or really both sides of the balance sheet, is that -- do you have the headcount to accommodate that or to accomplish that today? Or is there any assumption that there's adds early in the year that help generate some of that growth? Or is it basically kind of -- is it based on the current team, I guess, is the question? James Beckwith: Kind of based on the current team. Wouldn't you say, Heather? Heather Luck: Yes, I think so. We really have -- if you think about it, we've -- in the Bay Area specifically, we've been hiring in tranches. And so it started in 2023, but we continue to add headcount as we go. So we have new hires. We hired 12 BDOs in 2025, and it does take some time to really understand our system, our platforms, our processes to really get their feet under themselves to run hard. And so they'll come online. But really, I think 10% growth is achievable with the current team that we have in place. Operator: [Operator Instructions] No further questions, this will conclude our question-and-answer session. I would like to turn the conference back over to management for any closing remarks. James Beckwith: Thank you. We are proud to have achieved another quarter and year of significant organic growth, built on a strong foundation of client service, expanded relationships and products and the loyalty of our exceptional clients. We will always remember that we exist because of our clients' trust us, and we believe in them. We will continue to answer the call of businesses and organizations who desire a time-honored banking partner through the geographies and verticals we serve. Five Star Bank is here to stay. It is our privilege to be a driving force of economic development, a trusted resource for our clients and a committed advocate for our communities. We look forward to speaking with you again in April to discuss the earnings for the first quarter of 2026. Have a great day, and thank you for listening. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good day, and welcome to the WSFS Financial Corporation Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I'd now like to turn the call over to your host for today, Mr. David Burg, Chief Financial Officer. Sir, you may begin. David Burg: Great. Thank you very much, and good afternoon, everyone, and thank you for joining our fourth quarter 2025 earnings call. Our earnings release and earnings release supplement, which we will refer to on today's call can be found in the Investor Relations section of our company website. With me on this call are Rodger Levenson, Chairman, President and CEO; and Art Bacci, Chief Operating Officer. Prior to reviewing our financial results, I would like to read our safe harbor statement. Our discussion today will include information about management's view of our future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements due to risks and uncertainties, including, but not limited to, the risk factors included in our annual report on Form 10-K and the most recent quarterly reports on Form 10-Q as well as other documents we periodically file with the Securities and Exchange Commission. All comments made during today's call are subject to the safe harbor statement. I will now turn to our financial results. Our businesses continued to perform very well in the quarter, providing strong momentum moving into 2026. For the fourth quarter, WSFS delivered a core earnings per share of $1.43, a core ROA of 1.42% and core return on tangible common equity of 18%, which are all up meaningfully on a year-over-year basis. These results closed out a successful 2025 that included a full year core EPS of $5.21, core ROA of 1.39% and core return on tangible common equity of 18%. Our 4Q core EPS is up 29% over the prior year, and our 2025 full year EPS increased 19% over the prior year. These core results for the fourth quarter exclude several non-core items, which resulted in a $5 million impact to net income as well as the $0.09 impact to EPS in the quarter. These items are outlined on Page 5 of the supplement. Net interest margin was 3.83% for the quarter, down 8 basis points linked quarter, driven by the rate cuts and a onetime interest recovery last quarter, which accounted for 4 basis points of the decline. Importantly, our NIM is up 3 basis points year-over-year while absorbing 75 basis points of interest rate cuts since the fourth quarter of 2024. We continue to successfully reprice our deposits, and our exit deposit beta for December was 43%. Core fee revenue increased 2% linked quarter and 8% year-over-year driven by double-digit growth in Wealth & Trust, capital markets and home lending. Our Wealth & Trust business continues to perform very well and grew 13% year-over-year with 29% growth in WSFS Institutional Services and 24% growth in BMT of Delaware. For the full year 2025, WSFS Institutional Services was the fourth most active U.S. asset-backed and mortgage-backed securities trustee with nearly 12% market share, moving up 2 spots in the rankings relative to 2024. Total gross loans grew 2% linked quarter or 9% annualized, driven by broad-based growth across our businesses. In commercial, growth was led by C&I, which delivered growth of 4% linked quarter or 15% annualized. And overall, we saw the largest quarterly fundings in over 2 years. Our residential mortgage and WSFS originated consumer loans continued to build on a strong momentum and grew 5% linked quarter. Total client deposits increased 2% linked quarter or 10% annualized, with growth across trust, private banking and consumer. Importantly, our noninterest-bearing deposits grew 6% linked quarter and now represent 32% of our total client deposits. Turning to asset quality. We saw a meaningful improvement across our problem assets due to favorable net migration and payoffs and ended the year at the lowest level in over 2 years. Nonperforming assets were essentially flat compared to the prior quarter and ended the year down approximately 40% compared to year-end '24. Delinquencies increased 46 basis points linked quarter due to several previously identified non-performing and problem assets moving to delinquent status in the quarter, 14 basis points of this increase was driven by non-performing loans. The remainder is primarily comprised of 2 office loans and 1 multifamily condo loan in our footprint. One of the office loans was already resolved in January, while the other is a medical office expected to be sold in the first half of '26, which would result in a full repayment of our loan. We continue to work with the borrower on the remaining loan and believe we're well secured. Net charge-offs increased 16 basis points to 46 basis points of average loans, primarily due to the partial charge-off of a nonperforming land development loan. Net charge-offs were 40 basis points for the year, excluding Upstart, which is on the midpoint of our prior outlook. During the fourth quarter, WSFS returned $119 million of capital including buybacks of $109 million or 3.7% of our outstanding shares. This took our total buybacks for the year to $288 million, representing over 9% of our outstanding shares. On Slide 15 of the supplement, we provided our 2026 outlook, which assumes a continued stable economy and three 25 basis point rate cuts throughout the year in March, July and December. Overall, we expect to deliver another year of high performance and growth with a full year core ROA of approximately 1.40% and double-digit growth in core EPS. As a reminder, we intend to maintain an elevated level of buybacks in line with our previously communicated glide path towards our capital target of 12%, while retaining discretion to adjust the pace of buybacks based on the macro environment, business performance and potential investment opportunities. We expect mid-single-digit loan growth overall with low single-digit growth in our consumer portfolio, where we expect continued momentum in residential mortgage and other real estate secured consumer loans, partially offset by the continued runoff of our Spring EQ partnership portfolio. Building on a strong momentum in deposits in 2025, we expect continued broad-based deposit growth across our businesses in '26. Our outlook calls for deposit growth in the mid-single digits from 4Q levels. Our outlook for NIM is approximately 3.80% for the year, which incorporates the impact of the 3 additional interest rate cuts I mentioned. We continue to focus on deposit repricing opportunities while growing our portfolio and expect to maintain an interest-bearing deposit beta of low to mid-40s throughout the year. While the path and timing of future rate cuts remains uncertain, it's important to note that the impact of additional rate cuts on our financial results will not be linear. As we continue to manage our margins through several levers, including deposit repricing actions, our hedge program and the securities portfolio strategy. We continue to see momentum and growth opportunities in our fee businesses, which contribute approximately 1/3 of our total revenue. Our overall fee revenue will grow mid-single digits, excluding Cash Connect. Wealth & Trust is expected to continue the strong momentum and again grow double digits in 2026. Cash Connect revenue is expected to decline due to interest rates but will be more than offset in expenses. Our focus in Cash Connect continues to be on driving the profit margin which has increased meaningfully in 2025. Our outlook for net charge-offs is 35 to 45 basis points of average loans for the year, consistent with our 2025 results. While we have seen strong improvement in problem loans and nonperforming assets, commercial loan losses may remain uneven. Our outlook calls for an efficiency ratio in a high 50s for the year. We plan to maintain strong expense discipline, but we'll continue to leverage opportunities to invest in the franchise, which, coupled with normal seasonality, may result in some variances quarter-to-quarter. We're excited about the future and remain committed to delivering high performance. Thank you, and we will now open the line for questions. Operator: [Operator Instructions] Our first question comes from Manuel Navas from Piper Sandler. Manuel Navas: On the loan growth, can you talk a little bit about the better commercial trends? And kind of what are you seeing out there in terms of sentiment? There's some better line utilization, the footings were up. Just kind of talk about what you're seeing in commercial that's driving this kind of strong originations and a good outlook. David Burg: Yes. Sure. And well, good afternoon I'll start off. So in commercial, as you know, in the first half of last year, there was quite a bit of uncertainty in the economy with the tax bill pending some of the tariffs and legislative issues that were ongoing. And I think as you heard Rodger mentioned a couple of times in our calls in the first couple of quarters of the year that small business owners and entrepreneurs were, when faced with that kind of uncertainty, we're kind of delaying some business decisions. And so what happened over the course of the year was we continue those discussions with clients. We saw that pipeline really build in the third quarter and our pipeline reached over $300 million in the third quarter. And in the fourth quarter, when some of those things crystallized, we -- the environment -- people felt better about making some of those decisions with the passage of the tax bill, a little bit more clarity on legislative front. And so we saw very strong originations and fundings, and we continue to see good momentum. We're not going to see that kind of growth every single quarter. But we feel good about the momentum going forward from here. Manuel Navas: I appreciate that. Can I switch over to capital return for a moment. David Burg: Sure. Manuel Navas: This was a really strong quarter in terms of buybacks. What are kind of your parameters there? Is it just that CET1 ratio? This quarter also had return on AOCI, a little bit lower pricing, tangible book value per share growth you hit the 110% total payout. Like what should be the guidepost beyond CET1 going forward? David Burg: I think, Manuel, we look at all of those factors, I would say, primarily CET1 and TCE, which does incorporate that AOCI volatility. And of course, if we see our price dip, we take advantage of those opportunities. But generally, our approach is, as you know, the majority of our capital philosophy, our capital return philosophy is through buybacks. Our dividend is kind of in the mid-teens. So about 85% of our capital returns is through buybacks. And we are continuing on this kind of multiyear glide path to get to the capital to our capital target. And so I think we have the capacity and you can kind of think about it as returning roughly 100% of net income a year. But I think importantly, we will talk about up and down depending on what we see. If there are investment opportunities, we want to take advantage of those. And similarly, if there's some kind of stress in the economy or the market, we may slow that down. So I think that's kind of the glide path, but all of the factors you mentioned are things we take into account. Operator: Our next question comes from Russell Gunther from Stephens. Russell Elliott Gunther: I wanted to start on Cash Connect, if we could. So 3 cuts baked into the outlook. I know 4Q tend to see some seasonally lower ATM volume. But as you look at the year ahead, what type of revenue hit are you guys anticipating here? And then within that, if you could talk to just overall margin expectations, you mentioned the improvement, I think from what was a high single-digit margin to a low double-digit one now. So just helpful to get the puts and takes positive and negative over the course of '26 in terms of profitability improvement here. David Burg: Yes, sure, sure, Russell. So yes, when you look at Cash Connect, as you mentioned, the interest rates do have an impact on the pricing, on the top line, but that's more than offsetting the expenses. So we do have a margin benefit there. I think the way to think about it is roughly about $2.5 million annual impact per 25 basis point rate cut is kind of roughly what you should think about. On the topline. And so the impact of the rate cuts, like you said, about 3 rate cuts for the year, that's really kind of the way to think about the impact on the topline for Cash Connect. But you mentioned the margin. That's really been the story that we've been focused on because some of that macro pricing. But not only are the interest rates accretive to margin, but we've also been taking a number of other actions to continue to drive margin. And those are: number one, pricing. We've leveraged some of the scale that we have in the market to increase pricing across our products, and that's been a meaningful benefit. Number two, we've had a couple of things that we're doing around expenses, and that includes both optimizing kind of in-transit cash as well as just efficient management of expenses in the business. And the third thing that we're doing is we're taking a look at the client portfolio across that business and thinking about and there's a page in the supplement, which shows the mix of that business between Smart Safes and bailment and you can see that Smart Safes have increased year-over-year from about 25% of total volume to about 33% of total units, rather. And the Smart Safes generally come with higher margin and higher kind of value-add products. And so as we continue to grow that business, which we think is kind of a growth vector within that business, that should also be accretive to our margins, and that's part of our strategy. So it's a combination of not just rates, but all of those actions that have allowed us to drive the margin. And the goal is that we continue to drive that into the mid-single digits and hopefully higher. Russell Elliott Gunther: That's very helpful, David. And then just switching gears overall to expenses. Great to see the high single -- the high 50 deficiency. But outside of the lower result we'll get like from the Cash Connect as we just discussed, are there areas of outright reduction that can support a lower run rate for the year? Just trying to think through what's a decent core not just for noninterest expense growth rate for WSFS? David Burg: Yes, Russell, I would say a couple of things there. Our efficiency for the year this year was 59%. We said high 50s. So we'd like to be in that range or a little bit better next year. We don't want to give a specific number because as you know, we want to take advantage of opportunities and invest in the franchise. And so if those opportunities exist with talent additions, or technology, we want to take advantage of those opportunities. And so that's why quarter-to-quarter, there may be fluctuations. But to give you a little bit of a sense of other things that we're doing on expenses, we do have a number of different productivity actions that we're taking. For example, we've been optimizing our real estate portfolio, and that's been a nice tailwind for us and will continue to be. So we're really leveraging those opportunities hard. Another one is we have divested a number of products or businesses that are not central to our strategy. Those include upstart -- earlier in the year, powder mill, we exited the joint venture with Commonwealth and all of those things are also taking out expenses for things that are, again, not central to our strategy. And in addition to all of that, I think we're having really good strong discipline around our head count and expenses overall, including particularly in the shared functions. So I mean all of those things give us confidence, but importantly, we want to really continue to invest in the business if those opportunities... Russell Elliott Gunther: I hear you. I appreciate it. And then just last one for me. Curious as to the anticipated mix of deposit growth. So you guys are basically looking to match fund loan growth. Just wondering any willingness to flex with the below peer loan-to-deposit ratio around 76%, right? Just maybe fewer market rate deposits. And then I guess an adjacent question really would be just expectations around the overall size of the balance sheet, if you can touch on the investment portfolio and cash balances, how they could trend over the course of the year? David Burg: Sure. So first on deposits. So that's a trade-off that we do take into account. We've been running off, if you look over the course of the year, we've been reducing a little bit of our CD book, and that's been really price driven. So it's not an intentional runoff but we've been aggressive on pricing there, and that's really because of the strength of the deposit growth in other businesses, we were able to do that, particularly for clients that are -- that only have the CD relationship. So we will continue to look at opportunities to flex pricing. But as you know, a lot of our deposit growth has come from noninterest-bearing deposits. And those are clearly kind of core operating deposits that we certainly want to continue to bring in and our super-accretive in the long run. So I would say, we are trying to be fairly aggressive on pricing while continuing to grow core clients and relationships. And on your question around securities portfolio, we have -- over the course of the year, we've been bringing down our portfolio a bit, I'll say, over the course of the past couple of years from elevated levels. Now we've reached the point where it's in the low 20s, about 21%. And our intention is to keep it here. So from this point forward, we're going to -- anything that really that comes off the securities portfolio, we will look to reinvest it in the same type of securities that we essentially have. So agency, not taking a lot of credit at all credit risk in any way, MBS, those types of securities. But we're going to keep it flat at this level. Operator: Our next question comes from Kelly Motta from KBW. Kelly Motta: Just at a high level, you over the past year or so, exited a couple of businesses where the risk-adjusted returns aren't there. It feels like given your guide and outlook, these the headwinds are abating somewhat. Are there any -- as you strategically look at your diversified businesses, are there any things that you're continuing to evaluate that you could share or kind of thresholds of profitability you look at of these kind of niche businesses and deposit and loan verticals that you have. David Burg: Yes. I'll start off, and I'm sure Rodger will weigh in as well. So Kelly, we continue to -- we have an initiative here, we call it relook where we continue to look at different parts of our business and think about the fit and the strategic fit of that going forward. And that's something that we continue to do. And like you said, we've done a good job of shedding some of those things. At the end of the day, I can't really discuss anything specific that's on the horizon right now, but it's really, I would say, part of our strategic plan and part of our ongoing strategy to always evaluate those type of things. Rodger Levenson: Yes, Kelly, it's Rodger. I would just add to what David said is I think if you look at the actions we took in '25, those were primarily decisions made and WSFS look very different than we are today. And because they were low scale, low profitability partnerships or businesses that we had, we thought it just made sense for the reasons that David said to move on from those. I don't think there's a large group of followers to that, but I do think, as David said, there's opportunities to relook at a lot of things that we're doing based on the evolution of the company, and I think this was an important year to kind of start to build some of that muscle. We've always been very disciplined, obviously, about evaluating our profitability by business line and shared service area. I think this will -- this exercise will help us continue to do that. going forward. So it's -- when you go through a period of rapid growth like we did 4, 5 years ago, I think as you settle into your scale and you see whether you're getting that higher growth you're looking to free up capital and resources to continue to invest in those areas and in areas where we're not seeing that to either redeploy that capital or resources. So it's an important part of our strategic plan and will continue to be going forward. Kelly Motta: Got it. That's helpful. Maybe a question on M&A, if I could. It's been several years now since the last deal. I know you've been internally focused and clearly, you've had a nice glide path with what you're doing organically, but just as we get another year out entering 2026. I'm wondering if you have any updated thoughts here given the integration and work you've done so far? Rodger Levenson: Yes. This is Rodger again. I'm sure you're referring to bank M&A, which I'll address in a second. But as David said a couple of times, we're continuing to invest very heavily in the business, whether it's the fee businesses or the banking business, and that could come through one-off lift apps or talent or small firms or it could come to something larger. As it relates to traditional banking we've been clear over the last year or so that if something came along that would strengthen our position, our very strong position in the greater Philly Delaware region, we would absolutely consider that. And I think we have demonstrated now our ability to execute on those very well. But we also feel good about the organic growth. And so we can continue to achieve our objectives as we outlined for '26 by focusing on the organic opportunity, and then we'll supplement those with inorganic opportunities should they come along. Operator: Our next question comes from Christopher Marinac from Janney Montgomery Scott. Christopher Marinac: I wanted to look at sort of risk-adjusted returns in the loan portfolio, and particularly as Upstart is now behind you. Do you see those getting stronger? Or does the rate environment sort of limit what you can get on a risk-adjusted return? David Burg: Chris, it's David. Yes, I think -- so when you look at our loan pricing, our risk-adjusted returns, it's really a combination of the different businesses that we have. Like you said, when you -- if you look at the consumer business, we've divested Upstart and really, most of the portfolio is now a real estate secured portfolio. And so when we think about kind of risk-adjusted returns and going a little bit to the previous question, really, we want to focus on things where we feel we have a competitive advantage and are able to originate better than others in the market. And that's really around the home lending product. And that goes both to -- and that really goes to risk-adjusted returns and our ability to not just grow but also grow at the right price points. And so that's why when you think about our growth going forward, it's really on the residential side on the home equity line side, installment line side, but kind of in that real estate secured portfolio, where losses are -- have a very different profile than on the unsecured portfolios that we've seen. On the commercial side, we continue to be -- the primary product is really the C&I relationship product, and that's really where we continue to see the growth. We are not the lowest price point in the market. We are -- we sell kind of our relationship, our ability to provide different products, our ability to provide superior customer service and that personalized touch. That's really what we think is our competitive advantage. And so we're not the lowest price point in the market, but we think we're the best service in the market and the most responsive in the market. And so that's what we're going to continue to lean on. So C&I is our primary product, but commercial real estate continues to be an important product that we're going to continue to grow with the right sponsors with whom we have relationships and who are known in our footprint. Rodger Levenson: Chris, this is Rodger. Obviously, 100% agree with what David. The other component which you'll hear us continue to talk about more is getting more out of our client relationships, particularly C&I, but across the platform by referrals throughout our franchise, especially on the wealth side. So I think it's taking that total relationship view and allocating that to various products is where we see an opportunity to get a little bit more overall profitability through the franchise just because of the strength of the relationship. I think we've done a good job on that front, but we also feel like we're just getting started, particularly on those referrals into wealth and vice versa. Christopher Marinac: Great. I appreciate it. And then, David, just a quick question on taxes. Is that sort of 24%, 25% range still a good number to think about going forward? David Burg: Yes, yes, that's a good number. Yes, the tax bill really didn't have a material impact on our business, maybe a little bit of a negative impact because some deductions are no longer allowed charitable deductions, for example, up to a certain point. So a small impact, but generally, that's the right range. Operator: Our next question comes from Janet Lee from TD Cowen. Sun Young Lee: I want to step back and understand the driver behind your strong -- very strong noninterest-bearing deposit growth in the quarter. I assume a lot of that has to do with wealth and trust momentum that has been growing. In terms and aside from the deposits, the wealth and trust revenue on the fee side is also growing double digits. So I want to understand, is it a function of your overall institutional trust market increasing? Or are you taking market share? I want to understand the competitive dynamics there and whether that $340 million of noninterest-bearing deposit increase in the quarter should normalize in the quarter ahead? David Burg: Janet, it's David. Thanks for the question. So yes, I think generally, we expect that our noninterest deposit growth will be consistent with our interest bearing deposit growth. So we want to continue to at least maintain that NIB ratio and, of course, try to grow it. So I'm not sure the growth that you saw this quarter, the 6% quarter-over-quarter growth, that's probably not -- we're not going to put up that kind of growth every single quarter. But generally, we want to continue to grow those at least in line with total deposits. And I would say importantly, the growth that you've seen came from 2 businesses. One is trust and two is private banking, predominantly in this particular quarter. But importantly, when you look at the composition of noninterest-bearing deposits across our business, it's pretty broad-based. About 40% of that is in consumer. About 35% of that is across trust and private banking and about 25% of that is in commercial. So every business is contributing meaningfully to that noninterest-bearing balance and really comes with the relationship growth and the relationship account growth that we have. So again, while private banking and trust have been and predominantly trust have been the engines this quarter, I think the composition is pretty broad across the business. Sun Young Lee: Got it. And in terms of credit problem assets and NPAs were down quarter-over-quarter, NCOs increased a bit. So given the favorable migration in those problem assets, which I believe you cited at the lowest level in over 2 years, how should we think about -- how do you -- how does this impact your expectations around where your NCO could land versus that 35 to 45 basis points guide? David Burg: Yes. So it's the -- so you're absolutely right in terms of our problem assets, and we've had the migration, we're down about $95 million. It was a combination of just migration as well as payoffs and paydowns that contributed to that. I would say in terms of our net charge-off guide, this year, if you exclude upstart, we were 40 basis points, and we assume we're going to be in the same position next year. Really, commercial is going to continue to be uneven, and that's really kind of the message. So you may see some fluctuations there. Some of the nonperforming assets, you may see some of those go to loss. But at the end of the day, I think we continue to feel good about our portfolio. And one of the things that differentiates us in our commercial real estate portfolio is the fact that we have a very high level of recourse. So -- we have -- in our office portfolio, we have 80% recourse in our multifamily portfolio with 86% recourse. And so those, in addition to the asset collateral makes us feel better about those portfolios, but they will continue to be uneven. And then on the consumer side, with the divestiture of the upstart portfolio, really the majority of it is real estate secured. And so that portfolio from a net charge-off perspective has been low and continues to be very well. Operator: Our last question comes from Manuel Navas from Piper Sandler. Manuel Navas: Hopping on to try to clarify something. Is the double-digit EPS growth on core or reported EPS? David Burg: It's on -- it's looking at core relative to core, Manuel. Manuel Navas: Okay. Great. A quick question on the NIM with that guide has there been any shifts in your hedging profile? Any other kind of wildcards in the NIM outlook? David Burg: No, no wild cards. As you know, our NIM -- as you see, our NIM outlook is for 3.80%. We finished -- the quarter was 3.83%. Our exit rate for the quarter in December was also 3.83%. We are -- we're trying to manage the interest rate cuts that are -- that we're forecasting or assuming in outlook for next year. And we do that through 3 ways. Deposit pricing being the main one, but also the hedging program in the securities portfolio. And on the hedging program, we are -- to give a quick update there, we have about $1.3 billion of hedges that are currently in the money. And with another rate cut, we would have $1.5 billion of hedges that are in the money. So that's an important tool that we use to mitigate subsequent rate cuts. And then the securities portfolio, as I mentioned earlier, we're reinvesting that now and kind of keeping it flat, and that's providing an uplift because the security portfolio is yielding. The yield on that portfolio is like 2.35%, 2.4%, and we're reinvesting that at about 4.3%, 4.4%. So so about 200 basis point uplift, which is offsetting some of the interest rate impact. So all of that put together, that's why the impact for next year is a bit less than what the sensitivity would suggest. But that's -- those are the things we continue to manage. Manuel Navas: And with that, you described really strong deposit growth with this outlook. And I think you talked a little bit about it in the trust business, but -- where do you see all the growth across all your other businesses? What are kind of the opportunities for deposit growth? David Burg: So yes, so our outlook, our goal is really for continued mid-single-digit deposit growth. As you know, in institutional services, we've continued to increase share and we believe we're going to continue to do that. So that continues to be a growth engine. Rodger mentioned the referrals that we are working on within commercial and wealth, and we think there's a huge opportunity for us around that, that we haven't tapped yet. So that's -- that should power additional deposit growth as well. And again, growing the C&I portfolio is also an important source of deposits for us. So the combination of all those things, I would say as well as small business is also an important contributor of deposits that we think the growth is going to accelerate there. So we do feel good about the mix of businesses and all of them contributing. Operator: And with no further questions in queue, I would like to turn the conference back over to David Burg. David Burg: Okay. Thank you, everyone, for joining the call today. If you have any specific follow-up questions, feel free to reach out to Investor Relations or me, and have a great day. Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good morning, and welcome to Nucor's Fourth Quarter 2025 Earnings Call. [Operator Instructions] And today's call is being recorded. [Operator Instructions] I would now like to introduce Chris Jacobi, Director of Investor Relations. You may begin your call. Chris Jacobi: Thank you, and good morning, everyone. Welcome to Nucor's Fourth Quarter Earnings Review and Business Update. Leading our call today is Leon Topalian, Chair and CEO; along with Steve Laxton, President, COO and CFO. Other members of Nucor's executive team are also here with us today and may participate during the Q&A portion of the call. Yesterday, we posted our fourth quarter earnings release and investor presentation to Nucor's IR website. We encourage you to access these materials as we will cover portions of them during the call. Today's discussion will include the use of non-GAAP financial measures and forward-looking information within the meaning of securities laws. Actual results may be different than forward-looking statements and involve risks outlined in our safe harbor statement and disclosed in Nucor's SEC filings. The appendix of today's presentation includes supplemental information and disclosures, along with a reconciliation of non-GAAP financial measures. So with that, let's turn the call over to Leon. Leon Topalian: Thanks, Chris, and welcome, everyone. For as long as I've been Nucor's CEO, we have opened our earnings calls by recognizing our safety performance, and I am pleased to continue that tradition again. In 2025, our team achieved the lowest injury and illness rate in our history, marking the eighth consecutive year of improvement. And we finished the year with incredible momentum as the final 2 months of the year were the safest 2 months we have ever recorded. These milestones have occurred during a period of significant growth and transformation for Nucor, and I am extremely proud of how our team continues to prioritize safety in everything we do. However, as we pursue our goal of becoming the world's safest steel company, our safety journey will not be complete until we operate injury-free every day. Before I comment on our results, I would like to briefly address the management changes we announced at the end of last year. Effective January 1, Steve Laxton was promoted to President and Chief Operating Officer. Throughout his 23 years at Nucor, Steve has demonstrated strong leadership and has played an important role in shaping our growth strategy. In this expanded role, he will have an even greater impact on the company's future. Steve will also continue to serve as CFO until a successor is named. Congratulations, Steve. I would also like to acknowledge the many contributions of Dave Sumoski. Dave has served as our Chief Operating Officer since 2021 and will retire in June after more than 30 years at Nucor. Over that time, Dave has been a trusted leader, and his deep operational expertise and strong commitment to advancing our safety culture have made a lasting impact on the company. He will be missed by all of us when he begins a well-deserved retirement in June. On behalf of our teammates across Nucor, we wish Dave and his family all the best. Turning to our financial performance. We delivered adjusted earnings of $1.73 per share in the fourth quarter and $7.71 per share for the full year. EBITDA totaled $918 million for the quarter and approximately $4.2 billion for the year. We remain committed to balancing long-term growth with meaningful shareholder returns while maintaining the strongest credit profile in our industry. For 2025, we reinvested $3.4 billion into the company, with the majority of that capital going to projects that were completed in 2025 or will be completed later this year, returned $1.2 billion to shareholders through dividends and share buybacks, representing approximately 70% of net earnings and finished the year with $2.7 billion in cash, providing ample liquidity to support the business and finance our growth objectives. We begin 2026 with real momentum built on years of hard work, disciplined investment and a relentless commitment to Grow the Core, Expand Beyond and Live Our Culture. Since 2019, we have strengthened our steel mills segment through 15 major projects across our sheet, bar and plate groups. These investments have enhanced our capabilities while shifting our product mix toward higher-margin products that address growing customer needs in key markets. We have also expanded our steel products portfolio by delivering more comprehensive customer solutions and adding steel adjacent businesses supported by strong secular demand trends. The progress we made in 2025 marked a meaningful inflection point as a number of projects transitioned from the construction phase to the ramp-up phase. Major projects completed include our new rebar micro-mill in Lexington, North Carolina, a new melt shop at our bar mill in Kingman, Arizona, a new Nucor Towers & Structures facility in Alabama and new galvanizing and prepaint lines at our Crawfordsville sheet mill in Indiana. All of these projects are on track to be fully ramped up and operating at positive EBITDA run rates within the year. Our growth strategy has never been about simply getting bigger. It's about generating more value for our customers, shareholders and teammates. Even as we've executed on these growth projects, we've also taken deliberate steps to realign our asset base and improve our cost structure by restructuring operations and repurposing facilities to better serve fast-growing end markets. For example, we converted 2 existing steel products facilities to support our Nucor Data Systems business as it supplies the rapidly expanding data center market. This demonstrates a core strength of Nucor. With the broadest range of capabilities in the North American steel industry, we are uniquely positioned to capitalize on new opportunities wherever they emerge. Turning to 2026. Several remaining projects will reach completion this year, and our teams are focused on bringing them online safely, on time and on budget. Within the sheet group, we are on schedule to complete construction of our new mill in West Virginia by year-end. Once online, this mill will begin supplying some of the cleanest and most advanced sheet steel in North America, serving automotive, construction and industrial customers. We will also start up the new galvanizing line at our Berkeley County mill with commissioning planned for mid-2026. Within towers and structures, construction continues on our greenfield utility pole production facility in Indiana, which is expected to begin full operations in the second quarter. Our third greenfield project in Utah remains on track for completion in 2027. When these facilities are fully online, we will operate 4 highly automated state-of-the-art production sites with national coverage in the high-growth utility transmission tower market. Since 2020, we have invested approximately $20 billion through CapEx and acquisitions to grow our core steelmaking capabilities and expand into downstream businesses while returning nearly $14 billion of capital to shareholders and improving our credit profile. With the majority of our recent investments largely complete, I'm confident it sets up Nucor to enter its next phase of growth from a position of strength, focused on disciplined capital allocation while driving long-term value for our shareholders. Moving to trade policy, vigorous enforcement of our trade remedy laws and the full reinstatement of the Section 232 steel tariffs without exemptions last year have helped drive down steel imports. Foreign import share of the U.S. finished steel market has dropped from approximately 25% at this time last year to 16% in October and an estimated 14% in November. We expect imports will continue to trend at or below those levels in 2026 as the market absorbs the full impact of the Section 232 tariffs and recent trade case determinations. During 2025, the Department of Commerce and the International Trade Commission made important rulings regarding unfairly traded imports of corrosion-resistant steel and rebar. Together, the Section 232 tariffs and product-specific trade cases provide vital defenses against countries that seek to dump their steel into the U.S. market. We appreciate the efforts the federal government took in 2025 to level the playing field for the American steel industry. Looking ahead, the trade policy will remain a priority for our industry. The formal USMCA review beginning in July offers the opportunity to drive additional steel demand in North America, crack down on efforts to transship steel through Mexico and Canada and address steel subsidies provided by the Canadian government. We must also continue to implement common-sense policies like Buy America that incentivize the use of American-made steel for infrastructure, shipbuilding and defense. Turning to our expectations for 2026. We continue to see strength in many of our primary end markets, including infrastructure, data centers and energy and in energy infrastructure. We are also seeing healthy demand related to advanced manufacturing in the border fence. While those markets remain strong, we have yet to see much improvement from interest rate-sensitive markets like automotive and residential construction. In total, we expect domestic steel demand to be slightly up relative to 2025. And as I mentioned earlier, we expect the full impact of the Section 232 tariffs and recent trade determinations will lower levels of imported steel in 2026. Against this supply and demand backdrop, we entered the year with historically strong backlogs, up nearly 40% year-over-year in the steel mills segment and 15% in steel products. Within that, our structural group really stands out. The team set a record in the first quarter of 2025, and the structural backlog we are carrying into this year is more than 15% above that, reflecting sustained demand across key nonresidential and infrastructure markets. For the full year, we currently expect Nucor steel mill shipments to increase approximately 5% compared to 2025. With that, I will turn the call over to Steve to provide additional details on our fourth quarter and full year performance as well as our outlook for the first quarter. Steve? Stephen Laxton: Thank you, Leon, and thank you all for joining us on the call this morning. During the fourth quarter, Nucor generated adjusted net earnings of $400 million or $1.73 per share. For the full year, adjusted net earnings were approximately $1.8 billion or $7.71 per share. As noted in our earnings news release, adjusted fourth quarter earnings exclude $27 million or $0.09 per share of charges related to onetime noncash asset impairments, primarily related to discontinued operations that were recognized during the period. Full year results also exclude approximately $23 million or $0.10 per share of after-tax charges incurred in the first quarter, primarily related to closing or repurposing facilities in the steel products segment and ceasing production of wire rod at our Connecticut bar mills. Turning to the segment level results. For the fourth quarter, the steel mills segment generated $516 million of pretax earnings, down roughly 35% from the prior quarter. Shipment volumes declined 8%, reflecting seasonal effects, fewer shipping days in Nucor's fiscal fourth quarter and the impact of both planned and unplanned outages. While average realized pricing improved in our bar and structural groups, those gains were more than offset by lower pricing in our sheet and plate groups. This decline was expected as lagging sheet prices from the fall flowed through in the quarter. Sheet prices began to rise in November and December, with most of that benefit expected to be realized in the first quarter. Turning to steel products. We generated pretax earnings of $230 million, down from $319 million in the third quarter. Consistent with our steel mills segment, volumes declined sequentially across the steel products portfolio. Our rebar fabrication business accounted for roughly half of the quarter-over-quarter volume decline, in line with its typical seasonal volume trend. Turning to our raw materials segment. We generated pretax earnings of approximately $24 million compared to $43 million for the prior quarter, primarily reflecting the impact of 2 scheduled outages at our DRI facilities. As we continue to advance our long-term multiyear growth strategy, 2025 CapEx totaled approximately $3.4 billion. With several major projects reaching completion this past year, we will see a meaningful step down in capital spending for 2026. Our current estimate for 2026 CapEx is approximately $2.5 billion. Growth-oriented investments will represent roughly 2/3 of our planned spending with our West Virginia sheet mill remaining the largest single use of capital. Our growth efforts are also having a pronounced near-term impact on profitability. For 2025, pre-operating and start-up costs totaled $496 million. Looking ahead, we expect these costs to remain elevated in 2026 as several projects move beyond the start-up phase, offset by higher expenses associated with others, particularly bringing West Virginia online. Nucor remains committed to a balanced capital allocation framework anchored by 3 principles: maintaining a strong balance sheet, investing for value-creating growth and making meaningful direct returns to shareholders. In the past 3 years alone, Nucor has invested over $9.5 billion through capital spending and acquisitions. During that same period, Nucor returned over $6 billion to shareholders in dividends and share repurchases, an amount equal to roughly 73% of Nucor's net earnings during that time frame. Even with these historically sizable investments and returns, we have preserved low leverage and substantial liquidity, supporting our industry-leading A- and A3 credit ratings from all 3 major rating agencies. It is worth noting that in December, our Board approved an increase in the quarterly dividend to $0.56 per share, extending our record of paying and increasing our regular quarterly dividend for 53 consecutive years. Turning to our first quarter outlook. We expect higher consolidated earnings with improved results across all 3 operating segments. Shipment volumes should increase in each segment, supported by a healthy demand environment, typical positive seasonal trends and fewer outages relative to the fourth quarter. The steel mills segment is expected to drive the largest portion of the sequential earnings growth due to higher volumes and higher realized pricing. All product groups within this segment should see improved results with our sheet business contributing the most to the overall increase. In the steel products segment, we expect higher volumes and stable pricing. And in our raw materials segment, earnings are expected to improve modestly following the successful completion of planned DRI outages in the prior quarter. These gains will be partially offset by higher profit eliminations upon consolidation. Before we take questions, I'd like to spend a minute on what has long been both a source and evidence of Nucor's resilient and sustainable business model, our ability to generate free cash flow across a wide range of market conditions. Last year, Nucor had negative free cash flow, something that is very rare in our company's history. But this event was not a surprise. It was a measured and intentional result that was the product of advancing our aggressive growth initiatives and strategy. We prudently positioned the company with ample liquidity ahead of these expected results to afford the ability to maintain our growth and return commitments. With lower capital spending, incremental EBITDA from recently completed capital projects and improved market conditions as a backdrop, we expect Nucor to generate meaningfully higher free cash flow in the year ahead. We enter 2026 with healthy, favorably priced backlogs, supporting both higher shipments and better margins across most of our product lines, and we remain confident that with the broadest range of capabilities and solutions in the North American market, our driven and dedicated team is exceptionally well positioned to create value for our customers and shareholders. And with that, we'd like to hear from you and answer any questions you may have. Operator, please open the line for questions. Operator: [Operator Instructions] Our first question comes from Lawson Winder from Bank of America. Lawson Winder: Steve and Dave, I would say congratulations on your new adventures going forward. If I could ask about CapEx and look out to 2027. And by the way, thank you for the detailed guidance on 2026 CapEx. As we think of how falling CapEx might help support Nucor's unfolding free cash flow inflection, could you just speak to your current view on CapEx for 2027? And in particular, maybe address -- one would be the $950 million for West Virginia in 2026 and how that might be expected to follow on in 2027 with some additional CapEx. And then the breakdown in 2026 CapEx suggests non-expansionary and non-improvement CapEx of about $950 million. And I think we've talked about $600 million in the past. Like what is the latest thinking on sort of ongoing non-expansionary CapEx to kind of keep the business running? Leon Topalian: Lawson, I'll kick this off and then ask Steve to provide a little bit of color as we think about CapEx flowing into 2027, but I do want to begin where you started in thanking Dave and Steve both for their commitment. Dave's 30 years with our company. And again, he and I started our careers together building Nucor Berkeley in the mid-90s, and we appreciate everything you've done. And on behalf of our 33,000 team members, Dave, thank you. David Sumoski: Thanks, Leon. Leon Topalian: And look, Lawson, the other thing I'll also just mention briefly is 8 straight years of safety performance, that our team continues to just exemplify the value of safety and what it means to accept the challenge of becoming the world's safest steel company. It is something that gives me tremendous pride in all of us in Charlotte as they execute each and every day across all of our product groups to these start-ups, the enhancements, the build-outs, the new lines and greenfield operations. It's an incredibly exciting time for Nucor that positions us well for the long term. And as again, we move to the future, we do see a day in time where Nucor will go an entire year without a single injury to any of our team members. So we're going to continue to focus on that as our primary value as we drive all of our business results and again, thanking our team for that. Finally, the last comment I'll make specific to the CapEx. Look, when we began this journey in 2020, it was to make sure Nucor remained a growth company. We've invested heavily. We've taken meaningful steps. But against that backdrop, Lawson, one of the wonderful things then and now is we didn't have to pivot. We didn't have to change tack of where the company was headed or the direction. In fact, we were coming off some of the best years we've ever achieved as a company when we added the Expand Beyond portion of our growth strategy, and it remains the same today that we can be incredibly prudent and disciplined with how we think about spending our valuable shareholder capital to grow this company meaningful. Again, the culmination of West Virginia that will start up later this year will really absorb the majority of that CapEx as we move into 2027. But Steve, maybe provide some additional details? Stephen Laxton: Yes, sure. Lawson, just to kind of follow up on what Leon said there. West Virginia will be done at the end of this year, and that team is doing a fantastic job moving that project forward. Busy, as you could imagine, it's a big project. And in the past, we have guided figures of what we would call maintenance capital. But included in maintenance capital, I would put safety, environmental compliance and a certain amount of efficiency projects that are smaller in nature that don't necessarily add new capabilities to us. I would guide you to a figure closer to $800 million a year now for that just because of the inflation that we've seen in the last several years post-COVID and just the size of our company. We're larger now. So as you think about modeling out things beyond '27 and beyond, I'd guide you more toward an $800 million figure plus whatever projects are going on. Lawson Winder: Fantastic. And I guess just a follow-up would be on those potential expansionary projects. It feels like you're quite satisfied with the long product business at this point with the step back from a potential Pacific Northwest expansion. Are there areas of the business that you might be able to highlight today as places where you actually might consider some expansionary capital beyond '26? Leon Topalian: Yes. Look, Lawson, I think without getting very specific and completely not answering your question, I would just guide you to the things that you've seen and how we've looked for growth. And it's coming through the megatrends in our economy, things like data centers, energy, energy infrastructure. Obviously, the ability for us to pivot very quickly and handle the increase in the border wall has been a nice boom for our businesses across Nucor. But -- and finally, the towers and structures segments of our growth that we are tremendously excited about. Every one of those continues to provide a platform for additional growth. For example, in data centers today, Nucor supplies about 95% of the overall steel demand required for the entirety of a data center. And so again, we look for, okay, what's the next step? How can we continue to maximize our capability set and continue to enhance the growth profile for our shareholders? So we're looking for things that aren't high CapEx. We're looking for businesses that might be countercyclical to the steel industry and trends that we've been a part of for 6 decades. And then lastly, I think in the core side, it's how do we continue to invest for the long term that moves us up the value chain and higher-value products. And again, you're seeing that in our galvanizing lines in Crawfordsville and Nucor Berkeley, the 2 galvanizing lines that West Virginia is building. So again, we're thinking about how do we continue to grow and enhance our differentiated position that we have to supply our customers with products that they're going to need today and down the road. Operator: Our next question will be from Timna Tanners from Wells Fargo. Timna Tanners: I wanted to take a step back and recall your November 2022 Investor Day where you talked about through the cycle EBITDA at $6.7 billion. And if you could just refresh us on where we stand relative to that number, what it might take to get there considering the projects that you have. I know those were -- that number was assuming they are complete. But should we assume that, that could be the run rate in 2027 as you finalize some of these projects? Or any updated thoughts there, please? Leon Topalian: Yes. A couple of thoughts. First, thank you for referencing that. For me, it was my first Investor Day as CEO. And again, Steve and his new role as Chief Operating Officer as well as CFO, at least for a short time until we announce his successor. Look, we're thinking hard about when the next Investor Day is, Timna, again, to provide an update against that backdrop. But look, it's something we spent a lot of time thinking through the investments we're making at that time. So look, to answer your question broadly, yes, I think you're thinking about it the right way as we culminate the West Virginia start-up and then bring that to its full ramp capabilities. At the same time, I would tell you, look, I'm an optimist, and I believe in the long-term growth strategy Nucor has had, but I also think we've reached a time in our economy where we've seen import levels, for example, I've never seen in my 30 years at Nucor. So we're poised today to capitalize on those trends as well as the opportunities. And again, I know your background and obviously, how well you understand sheet. The material decrease in the import levels on sheet alone are 4 million tons of consumption that the domestic supply chain gets to now contribute. It is a meaningful number. And so again, I don't know what the next administration brings, but certainly, as we look to '26 in the short-term horizon, may we see import levels staying or maybe even slightly coming down some more. So Steve, anything you'd add on the Investor Day or the EBITDA that we projected at that point? Stephen Laxton: No, not really. I think what I would be a little bit clear on, I think I heard you ask about is that good guidance for '27. And I want to hesitate to say that it's guidance for '27, the Investor Day materials, which you're familiar with, but others on the call may not be, was a mid-cycle guidance around -- after all projects at that time were completed, including West Virginia and the others. And just -- so I'd back off of that being a specific guide toward '27. All the points Leon made are solid and can be baked into your thinking around '27. But with respect to the ramp-up of West Virginia, that's a big complex mill. It's not going to be at its run rate of EBITDA in '27 among other projects, for example. Timna Tanners: Okay. Appreciate that color. Along the lines of what Leon was talking about with the loss of imports, it does make sense that the domestic mills can take share. Can you just give us some thoughts on the spare capacity across your operations and what you might be able to do incrementally to take share from imports? Leon Topalian: Yes. Look, again, I think overall, we're in a great position. We're roughly about 85% utilization across our sheet mills. That gives us opportunity to contribute into the spot market and as well as think about the long term. So again, with an import level overall ADC about 15%. It creates some unique opportunities that we have the room. We have the capability set in our mills and again, really creates a wonderful time for a ramp-up of a new facility in West Virginia. And so we see more opportunities there as well. I think the Northeast and Midwest corridors provide some unique geographic opportunities for Nucor. And again, I think from a cost position, that mill is going to provide a significant value for our shareholders. Operator: Our next question comes from Bill Peterson from JPMorgan. William Peterson: Again, congrats to Steve and Dave here. I wanted to follow up on the last question. You discussed shipments are -- your shipments are projected to increase by 5%, implying a higher share of U.S. market demand. I think you talked that there's some uplift you can see in utilization, you mentioned sheet. But I guess should demand support, is there upside to that 5% expectation? And what would drive that? Would that be more in your view, sheet, plate or I guess, bar considering that you have Lexington and Kingman coming online? Leon Topalian: Well, yes, Bill, look, do I think it's sustainable? 100%. If you look at our backlogs, again, they're up 40% year-over-year in the steel group, 15% or 16% in our products group. In many of our product groups today, they are record-setting backlogs. I think maybe the -- our earnings call in Q3 and 4, I actually shared some volumes in our structural backlogs. And again, in my opening comments, they are record backlogs, and they are historic backlogs for what we've seen, and it's a market and an end-use customer in our nonres and industrial sectors that we know incredibly well. So when I'm talking to our customers and our customers' customers, the demand picture is robust, and it's very optimistic for 2026. We believe that the 5% is not only an achievable number, but the demand profile is going to create some uplift for virtually every product group. Finally, I'd tell you that as you look, it's a commodity across the board. We've -- it's a supply and demand environment. It's not tariffs or a single thing that's driving pricing, but the pricing that Nucor has realized that were announced in Q4 hits almost every product group, sheet, plate, bar, beam and many of the product group segments themselves that are all seeing that stick. So look, I think we're entering what should be a better year in 2026. We're very optimistic. And again, we -- the timing of our start-ups in several of the expand businesses and core are coming at a perfect time in a demand environment that's peaking in energy, infrastructure, nonres, border fence, energy infrastructure, towers and structures, and yes, I think positions Nucor incredibly well. William Peterson: I wanted to follow up on your comments around trade policy with your expectations that the tariffs are going to continue without exemptions. So is that kind of a statement on 2026? I guess, are you expecting that to be durable beyond? I'm also trying to get a sense for the risk of lower tariff rates and/or quotas. Maybe these are on the table for the upcoming USMCA negotiations. And maybe what is Nucor lobbying for or positioning for? I guess bottom line is, are you supportive of lower rates for Mexico and Canada if they have equally high steel tariffs to other regions in order -- basically in order to mitigate transshipments? Any sort of specifics on your expectations around trade policy would be helpful. Leon Topalian: Yes, Bill, I'll touch on it. And look, let me begin with the end in mind. What Nucor is most in favor of is banning illegally dumped subsidized imported steel to come in and ravage the shores of the U.S. economy period, full stop. How we do that, how that's affected? Obviously, it matters greatly. And if you would ask me and you did a year ago, hey, did I think our trade agreement with USMCA as we reinstituted or Trump reinstituted the 232 tariffs would be resolved very quickly. I would have told you, absolutely, I believe that would have been resolved very quickly. But here we are a year later, still that not done. And then again, July, the renegotiations come up. But the reality is I can't tell you, does that end up with a trilateral agreement, a bilateral agreement and again, the one-offs on what this current administration is going to do. What I can tell you is what we've seen out of Commerce and USTR is a very supportive trade environment that's pro-America and pro-U.S. manufacturing. So what would we like to see ultimately? Manage strength in the rules of origin, continued enforcement of the 232 policies that are already on the books, the enforcement of them. That's why we've been such staunch supporters of the Level the Playing Field Act 2.0 (sic) [ Leveling the Playing Field 2.0 Act ] and still think that needs to pass. But look, I think as we look to the second half of President Trump's administration, you will see a continuation of those pro-America first trade policies and remedies. Operator: Our next question comes from Phil Gibbs from KeyBanc. Philip Gibbs: On West Virginia specifically, can you just update all of us on some of the new products and end market capabilities that, that mill may give you relative to the current fleet of assets that you have right now on the sheet side, just to kind of go back over the investment case and why you're making the move here? And yes, that's effectively the question. Just kind of want a refresher in terms of what it brings because I know it's a different mill relative to what you currently have. Leon Topalian: Yes. Look, Phil, I appreciate the question. I'll kick it off and then ask Noah Hanners to actually give you the specifics of that capability because it's going to be very unique for Nucor. But if we step back to the macro question you asked about why, look, it's the right opportunity. If you look at Nucor's market share in the largest sheet consuming region in the U.S., it's about 15% or 16%. So we have a huge opportunity to grow in that space against what we believe is some competitors that we have ample opportunity to continue to provide a better differentiated value proposition in that market. So the geography of West Virginia, coupled with the state in the Mason County, West Virginia, the people of that state fuels what we believe is going to be an unprecedented growth for us and a capability set unlike anything Nucor has brought to bear in the market. So we couldn't be more excited about the geographic, the technical and again, the people side of the state of West Virginia. They've been an amazing group to work with. We couldn't be prouder of the team we've hired, the work that's being done there. But Noah, why don't you touch on some of the capability sets in the mill. Noah Hanners: Yes. Maybe just to add a little bit more detail to Leon's excitement there. One, we feel great about the strategy to get into higher value-added products. And specifically at West Virginia, that's about 1/3 of that production going into the automotive market. And some of those grades, the quality of the production there will be into exposed automotive, an area where EAF production really hasn't played broadly before in the U.S., and we're really excited about the capability to get there mostly because of the demand we hear from customers. We've recently gotten qualified on exposed automotive through another route to our mills, and that will really open the door for us to expand our business into the highest quality automotive production. The other point I'd highlight is in the consumer durables. We haven't had great market share there with especially items like appliances. And Leon hit the regionality of this, but we see some pretty substantial growth in demand through some reshoring projects that are being built in that region. So probably those are the 2 areas that I'd highlight for you, 1 million tons of galvanizing is going to play really well with that. We're going to have the capabilities to match what is really robust growth in demand for us. Philip Gibbs: And do you have any carryover CapEx from these major projects like West Virginia into 2027, Steve? I know you talked about $800 million maintenance plus whatever growth you have, and you always have some sort of growth element. But anything left on West Virginia or these other major projects in '27? Stephen Laxton: Yes, there'll be a small amount, Phil. That's very normal for us to have some carryover between calendar years. We'll update you more on the outlook in '27 as we get toward the end of '26. So I'd love it if that team beats every time and we don't do that, but that's been the historic pattern year on. Philip Gibbs: And then if I could sneak one more in just on kind of just a modeling question, high-level question, just because I don't have it in my model. Do you guys have an idea what mill utilizations were for Nucor in general in 2025? Leon Topalian: Yes, we do. As I think about our major product groups, somewhere in that 82%, 84% range is about the right utilization, Phil. Operator: Our next question comes from Katja Jancic from BMO Capital Markets. Katja Jancic: I think earlier, you talked about beyond the current project pipeline, you would be looking at growth opportunities that would be less capital intensive. In the future, could you talk -- or could you provide a little more color on what the, let's say, annual growth CapEx could potentially be in a more normalized environment without these major projects? Leon Topalian: Well, Katja, yes, I appreciate the question, and I'll probably have you back into the numbers because we're not going to exactly tell you the exact amount of dollars. What I would tell you is this, we are committed to a long-term investment-grade credit rating. We're committed to returning at least 40% of our net earnings back to our shareholders in dividends and share repurchases. And quite frankly, beyond that, I want to use the rest 60% for growth, period, full stop. So I want us to be using the money that Nucor is generating to continue to fuel our growth for the next 10, 12, 15, 20 years and beyond. And so that's how you can be thinking about it. We -- again, we provided some details in the 2022 Investor Day that we had. And so again, if you think of a through-cycle EBITDA of $7 billion, okay, everything that didn't go back to our shareholders is then going to be used for growth. So again, our M&A teams are working hard, and we're really looking really hard this year at, okay, how do we invest that, how do we grow -- continue to grow Nucor in meaningful ways. And I think you're going to see a shift from heavy core investments to heavy adjacencies or what we call the Expand Beyond investments over the next several years. Katja Jancic: Maybe just a follow-up to your comment about M&A, can you talk a little bit more? I know you said adjacencies, are there specific products? Or how should we think about these type of businesses? Leon Topalian: Yes, Katja, again, I shared a little bit earlier, but look, we've been fairly open with our investment filters and strategy in M&A and particularly adjacencies that they're going to have some steel centricity. There's going to be some connection to Nucor gaining and using and having the opportunity to have synergies. So it's something that's going to connect us to, for example, like C.H.I., with the overhead door businesses in Rytec and what a wonderful adder, where they've been a huge player in the residential space, a little less so in the commercial. Well, again, that's where we play in the commercial side. So our teams and our Buildings Group, our Nucor Warehouse Systems groups to be able to use and combine forces to be able to provide that, the hyperscalers and colocators in the data center. It provides a wonderful platform for us to continue to grow Nucor and as well that business footprint. So when you think about the megatrends in the U.S. today, energy, energy infrastructure, data centers, towers, structures, those are the areas you can be looking and expect that Nucor is searching really hard for those companies that would be additive and where we see synergies and value [ in creating EVA ] for our shareholders. Operator: Our next question comes from Andrew Jones from UBS. Andrew Jones: Just a few questions. First of all, on pricing. I'm just curious how you're looking at your pricing policy now given, obviously, we have on import parity, your traditional importers are probably getting sort of close to $1,000 on HRC, I would guess. But I guess if you're talking about like East Asia, they can probably land HRC in the U.S. at close to $800. So given that gap is now growing to import parity versus, say, some of these East Asian countries, like what stops those volumes starting to tick up in the coming months? And do you see that as a material risk? And does that hold you back from potentially lifting prices much further from here? How do you think about that in the context of changing trade flows? And I've got a second question, if you answer that first. Leon Topalian: Yes, Andrew, I want to make sure I'm getting at the heart of your question. I think I understood what it is. But Steve, if I miss parts of that or -- jump in. But look, we had similar questions back in '21 and '22 when the U.S. economy was so hot and the world pricing was less, right? We saw spreads of HRC that were $200, $300 a ton or in some cases, in short points greater than that. And what's sustainable? And are you taking -- look, we are a commodity-driven business who values our shareholders and our customers a great deal. It is that bedrock that ultimately dictates pricing, not our wishes. It is what the demand profiles and supply chain is looking like in the U.S. And what I would tell you is that the separation today in the U.S. from the world market is for a good reason. Look at the demand profile against the backdrop of a really healthy and robust economy outside of just steel. You're seeing growth, reshoring, investments, nuclear energy, like just a number of facets that are creating this. So it's not a false narrative that it's the only reason pricing is up because President Trump put in place tariffs. That's not it at all. Shoot, it wasn't 5, 6 months ago, we saw HRC at $800 a ton. So it's not that. It's a much broader economic picture of strength of the U.S. and why every foreign investment wants to come and build here. It's why you saw -- and now what was the -- a U.S. company, now a Japanese company and U.S. Steel. It's not an American company today. It is a Japanese-owned company. And you're going to see continued investments from foreign companies that are looking to capitalize and come to the U.S. because of that strength. And so, look, the forecasted [ touch on ] pricing, look, I'm not going to try to predict. What I would tell you is based on what we're sharing with you our historic backlogs, volumes, the demand, the robustness that we see in this economy, again, I think '26 is shaping up to be a very, very solid year for Nucor. Andrew Jones: Okay. That's clear. And then just on the CapEx, I mean, you sort of talked about it a bit already, but I guess the guide for '26 was lower than what the Street had in. And if there isn't substantial overspill into '27, it looks like the cost of some of those projects have come down despite obviously all the tariff risks. I mean, what do you attribute that to? I mean were you building in a lot of contingency that hasn't come to pass? Or like what's changed? Stephen Laxton: Andrew, this is Steve. In many regards, it's the -- you have to look at '25 coupled with '26. So if you're only looking at '26, it looks like maybe relative to what your estimate would have been that our forecast is lower. But we also -- we ended up spending $3.4 billion, which is a little bit more than a year ago on this call, we would have guided you closer to $3 billion for the spin. So our teams did an outstanding job advancing those projects. And we -- as Leon mentioned in his opening comments, we brought a number of projects online this year. So kudos to our team. They covered a lot of ground. We -- almost arbitrarily, there's a year-end stuck in there. But under the course of time, when you look at both of those 2 numbers together, it's in line. So it's not that there's been a reduction in cost. It's really just timing difference between the 2 periods. Andrew Jones: Okay. That's clear. And just finally, on the M&A front, I mean, obviously, your peers have been pretty active. From the perspective of your market share, I mean, do you think that M&A would be possible for you on the actual upstream steel side of the market, given how large you are relative to others, obviously, with imports going down? I mean, do you have scope or interest in expanding in the upstream side? Or is it mainly just focused on some of those downstream areas you've alluded to? Leon Topalian: Yes, Andrew, look, we are the largest steel producer in the Western Hemisphere. So yes, every M&A opportunity in our pipeline holds interest. And so where we think we can grow and do and move, we will absolutely do so. But make no mistake, Nucor is a steel company at its heart, and we will continue to grow through adjacencies and Expand Beyond, but it's the capabilities through our steel that fuel and fund all of that growth. And so yes, as those opportunities emerge, you can bet Nucor's looking hard and evaluating hard of how we think about growth in the core businesses. Operator: Our next question comes from Tristan Gresser from BNP Paribas. Tristan Gresser: The first one is on the incremental EBITDA from the completed projects. Could you give us a sense of how much those projects contributed in 2025? And what do you expect in terms of EBITDA contribution for 2026? Stephen Laxton: Yes. Tristan, that's a great question. So if you just took -- are you talking about just -- I want to clarify, just if you're talking about the projects that came online last year, there's 4 major projects that came online. When you put those along with continued progress at Brandenburg, the delta in the EBITDA is about $500 million between just those 4 projects and progress at Brandenburg. So it's a meaningful uplift in 2026's outlook for us just from those recently completed projects. Tristan Gresser: Okay. Sorry, just to clarify, you expect a $500 million additional contribution from those projects plus Brandenburg in 2026 versus 2025? Stephen Laxton: Yes. That's the delta in EBITDA between all projects together. Correct. Tristan Gresser: Okay. Got it. And second question, could you provide us a bit of an update on the plate market? You referenced Brandenburg. It would be good to know where the -- what's the situation today. But also on plate, I think we've seen some price hike announcement in December, January. But when I look at spot prices, they've not moved too much. So are you facing some resistance? Can you discuss a bit the demand environment? And also keen to get some sort of update on the rebar market and where do you see the ramp-up at Lexington? That would be great. Leon Topalian: Okay. Tristan, you have -- Brad Ford will kick us off on plate. And then maybe, Randy, why don't you touch on the start-up in Lexington? Brad Ford: Yes. Thanks for the question. Overall, we're pretty excited about where we're at on plate entering '26. As we touched on a few times on this call, backlogs are strong. Backlogs in plate are up 40% from this time last year. And we're coming off a pretty good year in terms of overall domestic consumption, which was up 15% year-over-year and really the best since we've seen since 2019. Obviously, couple that with an import picture where imports ended 20% down on cut-to-length plate for '25. And a lot of that was in the second half of the year as the market kind of worked through higher levels of imports from earlier in the year. So all told, we feel pretty strong going into '26. Strength in certain end-use markets, specifically energy, line pipe, transmission, wind are pretty strong. Nonres construction continues to be robust. I know Leon has referenced our structural backlog. And then infrastructure and specifically bridge continue to remain robust. So strong demand picture, low import levels and strong backlogs, we feel pretty confident going into '26. Randy Spicer: Tristan, just to give you an update on Lexington. First, I certainly want to thank our Lexington and Kingman teams for their continued focus on safely and successfully ramping up these new investments. We are extremely encouraged by those operations. They're ramping up, developing and how that team is executing on those projects. We continue to hit more and more milestones. Each week, we're setting and breaking production records on a regular basis. So this is an absolutely fantastic time to be bringing these investments up. We are currently sitting with record backlog on that side of the business. So we remain confident that both, quite frankly, our Lexington and Kingman operations will be EBITDA positive by the end of the first quarter, and we would expect both also to be fully ramped by the end of the year. Operator: We currently have no further questions, and I would like to hand back to Leon Topalian, Chair and CEO, for any closing remarks. Leon Topalian: Well, thank you for joining us for today's call. We feel very good about the position we're heading into 2026 and look forward to the opportunities we have before us. Thank you to our team for the safety, operational and financial performance you delivered in 2025. And thank you to our customers for choosing to do business with Nucor each and every day. And thank you, finally, to our shareholders for investing your valuable shareholder capital with us. Have a great day. Operator: Thank you. This now concludes today's call. Thank you all for joining. You may now disconnect your lines.
Operator: Greetings, and welcome to the RBB Bancorp Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]. And please note, this conference is being recorded. I will now turn the conference over to your host, Rebeca Rico, financial analyst. Ma'am, the floor is yours. Rebeca Rico: Thank you, Ali. Good day, everyone, and thank you for joining us to discuss RBB Bancorp's results for the fourth quarter of 2025. With me today are President and CEO, Johnny Lee; Chief Financial Officer, Lynn Hopkins; Chief Credit Officer, Jeffrey Yeh; and Chief Operations Officer, Gary Fan. Johnny and Lynn will briefly summarize our results, which can be found in the earnings press release and investor presentation that are available on our Investor Relations website, and then we'll open up the call to your questions. I would ask that everyone please refer to the disclaimer regarding forward-looking statements in the investor presentation and the company's SEC filings. Now I'd like to turn the call over to RBB Bancorp's President and Chief Executive Officer, Johnny Lee. Johnny? Johnny Lee: Thank you, Rebeca. Good day, everyone, and thank you for joining us today. The fourth quarter was a strong finish to 2025 with solid loan growth, improving performance ratios and normalizing credit. The entire RBB team continues to work hard to return the bank to its historic performance, and I'm very proud of what the team has accomplished. We still have work to do, particularly with respect to resolving remaining nonperforming assets but we're confident that we turned the corner on credit, and that performance will continue to improve in future quarters. Fourth quarter net income totaled $10.2 million or $0.59 per share which was stable from the third quarter but more than double our earnings for the same quarter a year ago. ROA and NIM showed similar trends and were stable from the third quarter while increasing sharply from a year ago. For the year, loans grew at a solid 8.6%, which we believe demonstrate the progress we have made, returning RBB to its historical rate of growth. We had another quarter of strong originations to $145 million. And for the year, loan originations were 32% higher than they were in 2024. Our pipeline remains healthy and in line with this same time last year, so we are optimistic we will see another year of high single-digit growth in 2026. We continue to maintain pricing and structuring discipline with fourth quarter originations yielding 31 basis points above our current loan portfolio yield. Despite the Fed rate cuts of 75 basis points in 2025, we were able to drive our fourth quarter yield on loans up 4 basis points to 6.7% compared to the same quarter a year ago. Deposits were not the bright spot of 2025 and we show the progress we made by focusing on community outreach to attract retail deposits and expanding relationships with our business clients. Fourth quarter total deposits increased 6.6% compared to the fourth quarter a year ago, with strong growth in interest-bearing nonmaturing deposits supporting loan growth and a reduction in FHLB advances. Average demand deposits remained stable in 2025 and currently comprise 16% of total deposits. The fourth quarter rate on average interest-bearing deposits declined by 55 basis points from the fourth quarter of 2024 or 73% of the rate cuts we saw last year. While we were successful reducing funding costs last year, competition for deposits has been increasing and recent rate cuts have not delivered the same pace of reductions in our deposit costs. We made significant progress addressing our nonperforming assets during 2025. Nonperforming loans decreased 45% and nonperforming assets decreased 34% since the end of last year and included ongoing improvement during the fourth quarter. Criticized and classified assets also improved during 2025, decreasing by 43% for the full year and 25% since end of the third quarter. With that, I'll hand it over to Lynn to talk about the results in more detail. Lynn? Lynn Hopkins: Thank you, Johnny. Please feel free to refer to the investor presentation we have provided, as I share my comments on the fourth quarter and annual 2025 financial performance. As Johnny mentioned, and you can see on Slide 3, net income for the fourth quarter was $10.2 million or $0.59 per diluted share, which is stable from the third quarter. Fourth quarter pretax pre-provision income was $2.3 million or 21% higher than a year ago, which is 4x the growth rate in assets over the same time period. Net interest income increased slightly, the sixth consecutive quarterly increase, adding 1 basis point to the net interest margin, which was $2.99 in the fourth quarter. Asset yields declined by 7 basis points, driven primarily by the 4 basis point decrease in loan yield due to the market decreases in the prime rate in the last 4 months of the year. At the same time, average funding costs declined 8 basis points, driven mostly by a 7 basis point decrease in the cost of deposits, which included a 12 basis point reduction in the average cost of interest-bearing deposits. For the year, net interest income increased by 13% to $112 million due to loan growth, relatively stable asset yields and a 38 basis point decline in funding costs. Our spot rate on deposits was 290 at the end of the year, which was 6 basis points lower than the average cost of deposits in the fourth quarter. To this end, we expect to see some incremental improvement in deposit costs in the first quarter. But as Johnny mentioned, competition remains intense, so it is difficult to quantify what the impact will be. Fourth quarter noninterest income declined by $486,000 from the third quarter, which had included a $0.5 million gain related to 1 equity investment. During the fourth quarter, in addition to SBA loans, we sold $22 million of mortgages, which drove an increase in gain on sale and we remain optimistic that our SFR production levels will continue to support ongoing loan sale activity. Compared to the fourth quarter of 2024, all categories of noninterest income increased, except for other income. Fourth quarter noninterest expenses increased by $282,000 mostly due to year-end accruals, but were in line with expectations. Our operating expense ratio was stable from the third quarter at 1.80% of average total assets. First quarter expenses are expected to increase due to seasonal taxes and salary adjustments and then stabilize for the next few quarters in the $18 million to $19 million range as professional service fees are expected to moderate in 2026 compared to 2025. We also reduced the quarterly effective tax rate by 330 basis points in the fourth quarter when compared to the third quarter of 2025. This was mostly due to a reduction in the multistate blended tax rate and benefits from ongoing state tax planning. The overall 2025 effective tax rate benefited from purchased federal tax credits and state apportionment tax planning. The effective tax rate in 2026 is expected to be between 27% and 28%. Slides 6 and 7 have additional color on our loan portfolio and yields. As Johnny mentioned, originations have been strong at $145 million in the fourth quarter and $73 million for all of 2025, which was 32% higher than the originations we saw in 2024. Slide 7 has details about our $1.7 billion residential mortgage portfolio, which represents 50% of our total loan portfolio and consists of well secured non-QM mortgages primarily in New York and California with an average LTV of 54%. Slides 10 through 12 have details on asset quality, which continues to improve. As Johnny mentioned, we did a lot to work -- we did a lot of work to stabilize and revolve our NPAs in 2025. We believe we are appropriately reserved on our NPL and REO assets as we work towards their resolution. The provision for credit losses totaled $600,000 in the fourth quarter due mainly to charge-offs and loan growth, partially offset by the impact of positive changes in economic forecast and credit quality metrics. We expect future annual credit costs to be much lower now that credit has stabilized. Slide 13 has details about our deposit franchise. The decrease in total deposits during the fourth quarter of 2025 was due to a $42 million decrease in brokered deposits, offset by a $26 million increase in retail deposits which has supported our loan growth. Tangible book value per share increased 7.8% during 2025 to end the year at $26.42 while at the same time, returning over $25 million in capital to our shareholders through dividends and the repurchase of approximately 4% of our outstanding shares. Our capital levels remained strong with all capital ratios above regulatory and well-capitalized levels. With that, we are happy to take your questions. Operator, if you would please open up the call. Operator: [Operator Instructions] Our first question is coming from Matthew Clark with Piper Sandler. Matthew Clark: Just want to start on the deposit beta this quarter, 30% in terms of interest-bearing. It sounds like competition is still pretty intense. How should we think about that beta going forward? Should you think you can hold that 30%? Or do you feel like you need might that come down throughout the year? Lynn Hopkins: Matthew. Thank you. So the 30% for the linked quarters, I would say we're sort of just getting started. So kind of year-over-year, we were able to achieve, I think, closer to that 70% and I think given that we still have a very large portion of our funding base and deposits that will mature over the next year. We think the deposit beta will continue to increase. Matthew Clark: Okay. Great. And then just any update on your plans for the sub debt leases in -- Lynn Hopkins: Yes. So you're right. We have $120 million of sub debt that's eligible to be redeemed and will reprice effective April 1 of this year. So I think that we're looking at the opportunities to rightsize it for our balance sheet and for our capital stack. So I think -- if it was set just to reprice on its own, we're just under 7%. I think the market is more attractive. So we'll be looking at something maybe more holistic in addition to, like I said, rightsizing it for our balance sheet. So I think that's where we're at right now. Matthew Clark: Okay. Great. And then just last one for me on capital. You still have a lot of excess capital, how should we think about the buyback this year? Lynn Hopkins: Yes. I feel like once we rightsize the sub debt, I think there'll be an opportunity for us to be more active on a buyback program. I think one step at a time. I think the end of the 2025 had a continuing to be a little bit more inward facing as we resolved credits wrapped up 2025. So I would expect both the sub debt and then returning to being more active on the buyback. Operator: Our next question is coming from Brendan Nosal with Hovde Group. Brendan Nosal: Maybe just starting on the margin. Definitely, I hear your comments earlier on the pace of deposit competition. But I guess when I look at the margin, the pace of improvement was a bit muted this quarter versus recent quarters. Can you maybe just talk about how you view the path of the margin as we move through '26? Lynn Hopkins: Sure. So let me add just a little bit more color to why we think there is an opportunity, I think, for deposit costs to continue to come down. So again, 99.5% of our $1.7 billion in CDs will mature within the next 12 months. And 40% of those are actually in the first quarter. I think the average price of those is in the high 3s, and I think funding has come down to probably at the high end around the 30% mark. So I think a portion is going to have an opportunity to reprice into the current interest rate environment and we haven't fully seen that. And then I think for -- and then we've also shifted a portion of our funding from traditional CDs into non-maturity interest-bearing products. They have kind of some similar yields, but I think will give us more flexibility as rates continue to come down based on forecast. So I don't know if that's helpful, Brendan or if you're looking for something more specific. Brendan Nosal: Yes. No, that's helpful. I mean, is it fair to say, based on that outlook for downward funding cost repricing that there's room for the margin to continue to expand? Lynn Hopkins: Yes. We are still, I would say, slightly liability sensitive, maybe a little bit more neutral than we've been in the past. You're absolutely right that from a NIM perspective, what we saw in the fourth quarter as our earning asset yields came down a little bit as liquidity repriced into the current environment and then our loan yield came down just slightly. I think there's still opportunity to hold our earning asset yield and our loan yields based on the shape of the yield curve, the repricing characteristics of our loan portfolio. But there's definitely downward pressure on it. It's not that without being very careful, especially since our loan-to-deposit ratio sits around 99%. So I think we're looking at having some attractive deposit beta. We're looking at NIM expansion. One of our biggest opportunities for NIM expansion is our nonperforming assets and continuing to resolve them. They held relatively flat kind of quarter-over-quarter, but we've made progress in, I think, ultimate resolution. So that would also have a positive impact on our net interest margin being able to return over $50 million to an earning asset status. Brendan Nosal: Okay. Okay. Great, Lynn. That's helpful. One more for me just on credit. First of all, congrats on the workout this quarter and the improvement in virtually all metrics. As we look forward, I get that there's a ton of moving pieces here, but can you just kind of talk in broad strokes on where you hope to see credit metrics by the time we sit here in 12 months and look back on 2026? Johnny Lee: I'll talk. That's quite, I would just say in a few quarters, we always stated that we're staying very laser focused on resolving much of our classified, criticized credits and hopefully, this quarter's results demonstrates our ability to continue to kind of moving positively to get most of the results. So let's also keep on track on what we're doing right now. I would hope that certainly 12 months now, you'll see much continuously see improvements in our credit picture. Lynn Hopkins: Yes. I think in addition to what Johnny stated, so our NPLs are well understood. 90% of them are represented by 4 relationships. Of those 4 relationships, 3 of them are continuing to make payments based on agreements, which is good because it continues to lower the balance towards what could be ultimate resolution. So we're really only focused on a few. I think that gives us a really good opportunity to get them worked out during 2026. We're optimistic that, that will happen in the first half of this year. But one of them is the partially completed construction project, which represents about half of that balance and that one will probably take the longest. So as we sit here a year from now with credit stabilized, we look to have sold our OREOs and to have these resolved. Obviously, there may be regular activity, but expect that these larger ones will be moved out. Operator: Our next question is coming from Kelly Motta with KBW. Kelly Motta: Maybe on loan growth, it slowed down a bit from the past 2 quarters to low single digits. Wondering if you could speak more to the pipeline where you're seeing opportunity? And if the decline was more of a function of payoffs or lower demand or just maybe some deposit constraints given your loan-to-deposit ratio and the competitive dynamics that you cited earlier in the call. Johnny Lee: Kelly, this is Johnny. I think quite a combination of all the things that you have mentioned. But I mean, overall, again, obviously, we have some loan sales and we had some strategic exits on a couple of classified credits. And for loan sort of momentum, actually, we certainly want to do more, but compared to previous year, overall, I think we're doing pretty well as far as keeping that momentum going. The pipeline is still relatively healthy right now, both for the commercial and the residential mortgage side. So I think even though Q4 seems a bit light, but I think overall on average, are new funded loans for commercial is about $65 million per quarter and mortgage is about $90 million per quarter. And looking at the pipeline right now, certainly, we feel very optimistic that we can continue to keep that pace. Lynn Hopkins: I think as we sit here today, we are in as good as, if not better position at the same time last year when we were able to achieve over 8% annualized growth. I would kind of comments, the fourth quarter loan growth was a little bit muted, but we did have a higher volume of loan sales, as Johnny mentioned. And we were working to resolve some substandard credits. So we were happy on those exits. And I think with the interest rate environment, payoffs and paydowns can tend to come up a bit, but they are actually a little bit lower than third quarter. So we think that our ongoing production will fall through to net loan growth as we go forward. But I think those things just kind of had a little bit downward pressure, but I think every -- all the metrics are healthy to sit behind it. Kelly Motta: Got it. Maybe last question for me on expenses. You've rewarded about $19 million in the quarter. Just looking into '26. I'm wondering if this is a good run rate to build off of? And any kind of puts and takes. Like I know legal and professional has been maybe more elevated than past years, probably related to the workout but should be presumably declining. And then any kind of thoughts for additional things we should be baking in as we look ahead to next -- this year, sorry, I keep saying next year -- this year, 2026. Lynn Hopkins: I know. I'm doing the same thing. I think that the run rate in the fourth quarter is a pretty good indication of our overhead or quarterly overhead to achieve the production levels we were able to achieve in 2026. So I think what we saw is compensation is a bit higher to reflect the growth inside of the company. We also have management transition this year that we wouldn't necessarily expect to reoccur, and we can reallocate those dollars into higher cost of doing business. You're exactly right, legal and professional. We think there is an opportunity for those costs to come down as credit is stabilized. So while there is a step-up when I look from 2024 to 2025, I don't know that it requires that same step-up in order to achieve mid- to high single-digit loan growth. I think there's also other opportunities to grow top line, if for some reason, expenses go higher. So -- but I think just when you look at just that part of it, we're looking in that $18 million to $19 million range. I think you can tell. So first quarter based on kind of pay raises and taxes kind of has an extra kind of $0.75 million, I think, is kind of what pops through in the first quarter and then it normalizes after that. Operator: Our next question is coming from Tim Coffey with Janney. Timothy Coffey: Then, I guess my first question for you would be, do you see this year as an opportunity to lower the loan to deposit ratio considering the potential to reduce interest expense through the course of the year as well as grow interest income? Lynn Hopkins: Great questions. So I would say a couple of things. One, we lowered our reliance on wholesale funding. And I think it's relatively low and very manageable. So obviously, to lower the loan-to-deposit ratio, deposit growth would have to outpace our loan growth. And I think we're looking at some attractive loan growth in 2026. Our retail deposit growth did keep pace with our loan growth in 2025. So we would expect the same. I think pushing down significantly would maybe take some opportunistic loan sales that we would then put that benefit into the equity. But I would say, generally, I think there's some opportunity to maybe get into the mid-90s. But I don't know if it would get much lower than that, Tim. Timothy Coffey: Okay. Yes, I wasn't contemplating that you sell loans to get there. I thought that you'd be able to grow retail deposits faster. And then, Johnny, as we talked a little bit about the pipeline for this year in terms of loan growth, and we are going to see another a year just like the past one. How -- what is the competition like for commercial real estate loans right now in your footprint? Johnny Lee: Actually, still -- competition is always there. But again, we want to be very strategic about the kind of relationships that we bring in. Certainly, the rate has a little bit more challenged as far as we're trying to maintain the yield that we had in, let's say, prior first half of the year last year. But the -- but overall, I think we've been able to, I think, hold our ground pretty well, because, again, we're a very relationship-driven bank. And so we look at each one of these prospects of contract that we are considering lending to. We look at the overall potential of the relationship, not just what we might be able to generate from a yield standpoint, but any other additional ancillary businesses that might come along with it such as deposits, of course. So with that, I think from a relationship standpoint, we still are able to be fairly competitive. But again, the reality is, certainly, we always face competition on the rate side. Timothy Coffey: Yes. Okay. Yes. Are you seeing competitors undercutting the spreads on these loans relative to where the yield curve is? Johnny Lee: Well, I think we are from a yield standpoint, we've actually given a given up quite a bit of businesses for sort of competitor against some of our peers who are offering these 5-year fixed rates below 5.75% on average or 5.5% to 5.75% by the way, so far, I think we're holding pretty well above the 6% or higher right now with a yield that were much of the pricing that we've been proposing. Operator: As we have no further questions on the line at this time, I would like to hand the call back over to Mr. Lee for any closing remarks. Johnny Lee: Okay. Thank you. Once again, thank you for joining us today. We look forward to speaking to many of you in the coming days and weeks. Have a great day, everybody. Operator: Thank you. Ladies and gentlemen, this does conclude today's conference. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Good day, everyone. Welcome to Western Alliance Bancorporation's Fourth Quarter and Full Year 2025 Earnings Call. You may also view the presentation today via webcast through the company's website at www.westernalliancebancorporation.com. I would now like to turn the call over to Miles Pondelik, Director of Investor Relations and Corporate Development. Please go ahead. Miles Pondelik: Thank you, and welcome to Western Alliance Bancs Fourth quarter 2025 conference call. Our speakers today are Ken Vecchione, President and Chief Executive Officer; and Vishal Idnani, Chief Financial Officer. Before I hand the call over to Ken, please note that today's presentation contains forward-looking statements which are subject to risks, uncertainties and assumptions, except as required by law, the company does not undertake any obligation to update any forward-looking statements. For more complete discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements, please refer to the company's SEC filings included in the Form 8-K filed yesterday, which are available on the company's website. Now for opening remarks, I'd like to turn the call over to Ken Vecchione. Kenneth Vecchione: Thank you, Miles. Good afternoon, everyone. I'll make some brief comments about our fourth quarter and full year 2025 performance before handing the call over to our new Chief Financial Officer, Vishal Idnani to discuss our financial results and drivers in more detail. I'll then close our prepared remarks by reviewing our 2026 outlook. Dale Gibbons, now back by popular demand and our new Chief Banking Officer for deposit initiatives and innovation and Tim Bruckner will join us for Q&A. Our Western Alliance closed 2025 with strong momentum delivering record quarterly financial results and broad-based performance across the franchise. We saw robust loan growth, reduced seasonal deposit outflows, positive net interest income trends, stable NIM, rising fee income and continued expansion in PPNR, all while maintaining steady asset quality and demonstrating meaningful operating leverage. In the fourth quarter, net interest income, net revenue and PPNR all reached record levels. EPS for the quarter was $2.59, up 33% from prior year. Return on average assets was 1.23%, return on average tangible common equity was 16.9%, and tangible book value per share rose 17% year-over-year to $61.29. For the full year, we generated diversified HFI loan growth of $5 billion or 9% across regional banking and our specialized C&I verticals. Deposits increased $10.8 billion or 16% supported by strong regional banking inflows and approximately 40% growth in our specialty escrow businesses, which Dale is now leading. Net interest income rose 8.4% on a linked quarter annualized basis driven by loan growth and higher average earning assets and accompanied by a stable margin. We continue to build momentum in commercial banking fees. Cross-selling treasury management, commercial products and digital escrow disbursement services drove a 77% increase in service charges and fees in 2025. Q4 mortgage banking revenues did not experience a large seasonal decline and hence, we're only down $5 million compared to prior quarter. Our Juris banking team delivered a standout quarter completing the first round of more than $17 million in digital payments in connection with the Facebook, Cambridge Analytica consumer data privacy settlement, the largest in U.S. history. Demonstrating the power of our comprehensive disbursement platform. Mortgage banking fundamentals continue to firm and quarterly results exceeded expectations despite typical seasonal softness. We are constructive on this business heading into 2026 due to the current administration's focus on delivering affordable homeownership, potential capital relief on MSRs and continued mortgage rate reductions which point to a stronger results for this business. Operating leverage was a major theme in 2025 with net revenue growth outpacing noninterest expense growth by 4x. Our multiple -- multiyear investments to prepare for large financial institution status are serving us well. And even if the Category IV threshold remains unchanged, we expect to cross $100 billion in assets by year-end 2026 without a notable step-up in expenses. Asset quality remained steady in Q4 with total criticized assets declined by $8 million and staying well below midyear levels. We are working to proactively resolve nonaccrual balances with meaningful improvement expected by the end of the second quarter. We expect net charge-offs to remain elevated in the first half of the year as we work through nonaccrual loans with reserves adjusting modestly as our mix shifts towards higher return C&I growth. However, these actions reinforce the strength of our credit discipline and should enhance our powerful risk-adjusted earnings engine supported by an expanding revenue base and operating leverage. We are well positioned for 2026 and excited about our organic growth opportunities. With that, Vishal will now walk you through our results in more detail. Vishal Idnani: Thanks, Ken. Turning to Slide 4. In 2025, Western Alliance produced record net interest income of $2.9 billion, net revenue of $3.5 billion and pre-provision net revenue of $1.4 billion. Net income available to common shareholders was $956 million and EPS was $8.73. Net revenue and pre-provision net revenue increased 12% and 26%, respectively, from the prior year, demonstrating the continued successful execution of the bank's organic growth strategy. Noninterest income rose 25%, primarily driven by stronger commercial banking and disbursement fees as mortgage banking remained essentially flat and in line with our prior expectations. Noninterest expense growth slowed to 4%. Lower deposit costs and reduced insurance expense were key drivers of this moderate expense growth and reinforced our operating leverage. These factors were key to strong annual EPS growth of 23%. Now shifting to Slide 5, record net interest income of $766 million grew $16 million or 8% on a linked quarter annualized basis as a result of strong organic loan growth, leading to a higher average earning asset balances, while NIM remained relatively steady from the prior quarter. Noninterest income rose 14% from Q3 to approximately $215 million from stronger commercial banking and disbursement fees. We experienced continued firming in mortgage banking revenue during what is typically a softer quarter. Loan servicing revenue was slightly down from accelerated MSR amortization as prepayment speeds increased with recent lower mortgage rates, which has benefited gain on sale income. Noninterest expense increased about $8 million from the prior quarter to $552 million. Overall, we delivered solid operating leverage this quarter with net revenue growing nearly 5%, which outpaced the 1% growth in noninterest expense. Pre-provision net revenue of $429 million marked another record quarter. Provision expense of $73 million declined $7 million from Q3 to account for stronger loan growth, the continued remixing of the portfolio into C&I categories as well as the replenishment of net charge-offs. Turning to balance sheet on Slide 6. HFI loans grew a robust $2 billion in the quarter, bringing full year loan growth to $5 billion, which matched our 2025 full year guidance. Deposit growth across regional banking, specialty escrow services and HOA remains strong and helped offset typical seasonal pressure in mortgage warehouse. Notably, mortgage warehouse deposits performed better than expected, reflecting our efforts to improve stability by increasing the share of more durable principal and interest escrow balances. As a result, total deposits were essentially flat for the quarter. For the full year, deposits exceeded expectations by a wide margin, increasing $10.8 billion or nearly $2.5 billion above our revised guidance from last quarter. In late November, we successfully issued $400 million of subordinated debt to bolster our total capital ratio. Overall, total assets expanded by $1.8 billion from Q3 to approximately $93 billion. Total equity ended the year at $8 billion, supported by organic earnings and an improved AOCI position, partially offset by higher dividends and the initiation of share repurchases. Tangible book value per share continued its upward trajectory, rising 17.3% year-over-year. Turning to Slide 7. Loan growth accelerated in Q4, increasing $2 billion from the prior quarter or $5 billion for the year. Regional Banking posted about $1 billion of loan growth with leading contributions from innovation banking, in-market commercial banking and hotel franchise finance. These businesses made consistent sizable contributions to overall loan growth throughout the year. Additionally, if you look at the chart in the upper right corner, you'll see most of our quarterly and annual growth came from C&I. Mortgage warehouse and MSR financing were leading loan growth contributors from the national business lines. Now looking at Slide 8, impressive deposit growth in 2025 was driven by a notable acceleration in regional banking deposits across both in-market commercial banking and Innovation Banking, along with continued momentum in specialty escrow services and HOA. To put numbers on it, in Q4, regional banking deposits grew $1.4 billion of which $500 million came from Innovation Banking, while specialty escrow services deposits rose over $850 million and HOA deposits increased over $400 million. As noted earlier, the small decline in period-end deposits from Q3 reflected strength in these businesses largely offsetting expected mortgage warehouse outflows. This is a notable improvement from the $1.7 billion net quarterly deposit decline experienced in Q4 2024. Turning to Slide 9 here. Turning to our net interest drivers. Interest-bearing deposit costs fell 23 basis points from reduced costs across product categories. Solid average balance growth in lower cost interest-bearing DDA and savings and money market deposits reflect this deposit cost optimization. Overall liability funding costs also declined, compressing 18 basis points from the prior quarter from lower borrowing costs. Looking at average earning assets, the securities yield declined 18 basis points from Q3 to 4.54% from lower rates on a relatively stable average balance. The HFI loan yield compressed 17 basis points following the resumption of FOMC rate cuts in September, which continued in Q4 with two additional 25 basis point reduction. Looking at Slide 10. Net interest income rose $16 million from Q3 to $766 million, driven by strong loan growth that pushed average earning assets $2.5 billion higher. The modest 2 basis point compression in net interest margin to 3.51% stemmed primarily from a 20 basis point decline in the yield on average earning assets from higher cash balances along with the impact of lower loan and security yields. The outperformance of deposit growth led to the spike in average cash balances, which we expect to revert to more normalized levels going forward. Turning to Slide 11. Non-interest expense only increased 1% quarter-over-quarter. Deposit costs of $171 million resulted from higher average balances in deposit businesses such as HOA. The Q4 efficiency ratio of 55.7% and the adjusted efficiency ratio of 46.5% both fell about 5 points year-over-year. Looking just at non-deposit cost OpEx, the quarterly increase reflects higher corporate bonus accrual related to our financial performance, partially offset by lower FDIC assessments. As has been reported by other banks, we also recognized a reduction in the FDIC special assessment, which lowered the insurance expense by about $7.5 million. Concurrent with this benefit, AmeriHome recognized mortgage servicing deconversion costs of a like amount. Now looking at Slide 12, we remain asset sensitive on a net interest income basis, but essentially interest rate neutral on an earnings at risk basis in a ramp scenario. This offset is supported by a projected deposit cost decline and an increase in mortgage banking revenue based upon our rate cut forecast of 25 basis point cuts in April and July. Turning to Slide 13. Asset quality remains stable. Criticized assets decreased nominally from Q3 and totaled $1.4 billion. Reductions in classified accruing assets and nonaccrual loans were partially offset by modest increases in special mention loans and OREO. Turning to Slide 14. Quarterly net charge-offs were $44.6 million or 31 basis points of average loans. Provision expense of $73 million was primarily a function of strong C&I driven loan growth and net charge-off replenishment. Our allowance for funded loans moved about $20 million higher from the prior quarter to $461 million. The total loan ACL to funded loans ratio edged up 2 basis points to 87. Our total ACL fully covers nonperforming loans at 102% and rose 10 points from the prior quarter. Now looking at Slide 15. Our tangible common equity to tangible assets ratio increased approximately 20 basis points from September 30 to 7.3% from strong earnings growth, while our CET1 ratio edged down to 11% at our target level. Our solid capital levels are indicative of our ability to generate sufficient capital organically, support robust balance sheet growth while returning value to shareholders through share repurchases. We also issued $400 million of subordinated debt at the bank level in late November that augmented our total capital to 14.5%. We repurchased about 0.7 million shares during the quarter for $57.5 million at a weighted average share price of $79.55. Turning to Slide 16. Tangible book value per share increased $2.73 from September 30 to $61.29. From strong growth in organic retained earnings and complemented by a 16% improvement in our AOCI position. Since initiating our share buyback program in September, we have repurchased over 0.8 million shares to date and have utilized just over $68 million of the current $300 million authorization. Our quarterly cash dividend was hiked $0.04 during the quarter. Consistent upward growth in tangible book value per share remains a hallmark of Western Alliance and has exceeded peers by 4.5x over the past decade. Turning to Slide 17, Western Alliance has been a consistent leader in creating shareholder value over the medium and long term. We have provided on this Page 11 metrics, we believe, are key factors in driving leading financial results, strong profitability and sustainable franchise value that ultimately compounds tangible book value and produces long-term superior total shareholder return. For the last 10 years, our EPS growth and tangible book value per share accumulation have ranked in the top quartile relative to peers. We are also the leader in tenure EPS, tangible book value, loan, deposit and revenue growth compared to peers. Lastly, ROATCE growth, the last 2 quarters has made solid progress toward achieving top quartile performance. I'll now hand the call back to Ken. Kenneth Vecchione: Thanks, Vishal. Given the strong macroeconomic tailwinds, we continue to see including an increasingly pro-growth regulatory stance, constructive sentiment across our commercial client base and improving visibility on rate normalization, we remain confident in another year of strong earnings momentum for Western Alliance. Our 2026 outlook is as follows: We entered 2026 with strong loan pipelines across business lines, supported by a healthier macro backdrop and what we view as increasingly accommodative regulatory and political environments. These factors are broadening the risk appetite of our commercial customers. As a result, we expect loan growth of $6 billion and deposit growth of $8 billion. We continue to feel confident operating with CET1 around 11% with our strong organic earnings trajectory, we expect to continue opportunistic share repurchases, subject to market pricing while maintaining capital broadly in line with current levels. Our strong loan growth outlook combined with continued opportunities to lower funding costs, supports our expectation for net interest income growth of 11% to 14%. We assumed two 25 basis point rate cuts in this outlook. We also expect modest expansion in net interest margin throughout the year driven by ongoing remixing into higher-return C&I categories and sustained momentum in core deposit growth. We expect non-interest income to grow between 2% to 4% off an elevated starting point. The building momentum exhibited in service charges and fees and the constructive environment for mortgage points to continued growth in noninterest income. The combination of these emerging tailwinds favor a more robust revenue environment for mortgage and MSR-related income even as we continue to operate with a conservative forecast. Noninterest expense will rise primarily as a function of scale and targeted investments that support top line growth and operational efficiency. For 2026, total operating expenses are expected to increase between 2% and 7% for the year. Deposit costs are projected to decline again between $535 million to $585 million from continued rate relief. Operating expenses, excluding deposit costs are expected to be between $1.62 billion and $1.67 billion, reflecting continued investments in several new business lines and future technology. Looking at asset quality, we expect net charge-offs between 25 and 35 basis points as we proactively reduced nonaccrual balances over the next couple of quarters. As I discussed in my opening remarks, with the ongoing loan growth shift into C&I, the reserve level should adjust as the mix evolves. Our risk-adjusted PPNR trajectory remains strong, and we are confident in continued robust EPS growth. Finally, we project our full year 2026 effective tax rate to be approximately 19%. At this time, Vishal, Dale, Tim and I look forward to your questions. Operator: [Operator Instructions] Our first question today comes from the line of Andrew Terrell with Stephens. Andrew Terrell: I was hoping to maybe start on just the balance sheet growth guidance. Obviously, loans up $6 billion in 2016, deposits up $8 billion, unchanged versus kind of your 2025 expectations. You gave a lot of positive commentary about the momentum. I'm just wondering why maybe not a higher loan and deposit growth guidance? Or do you feel like you're being conservative this year? Kenneth Vecchione: Yes. Well, number one, our loan growth and deposit growth as projected is -- leads the peer group. And I'll just point that out. That's one. Number two, what you see here is all organic growth, which is very important. Number three, we are deemphasizing certain areas of our loan portfolio, i.e., mostly we're doing less in residential loan growth. So as that runs off, it puts more pressure on the other areas to accommodate the runoff in volume. And I guess, number 4 is that $6 billion and $8 billion seems about right. And as we continue to move forward throughout the year, if the projections are proving to be conservative, we will adjust accordingly. But going into this year, $6 billion to $8 billion will produce something along the order of a consensus EPS that's out there today in the $10.38 range, which is about 19% EPS growth, which is, again, leading the peer group for any bank for organic growth. I actually think maybe leading the peer group even for banks that have had M&A activity during the course of the year. Andrew Terrell: Great. And then, Ken, just on the charge-off commentary as well, it sounds like the charge-offs could be a little bit front half loaded. I guess just should we think about first half charge-offs is potentially above your full year guided range before normalizing back to that 20 basis point type level that you've been guiding to previously as we move into the back half? Or just how should we think about the timing of charge-offs or magnitude throughout the year? Kenneth Vecchione: Yes. I would say, I would think about the range as the midpoint coming into the year for modeling purposes at 30. You could see it a little bit higher than that in the first half of the year as we look to get rid of a number of nonaccrual loans that have been on our books -- that is our effort to bring that number down well below our loan loss reserve. And we think that will be good -- look, personally, good for the business. It's good business overall and it will be healthy for our PE expansion and improving our market capitalization. So we are doing that. I think you saw some of that in Q4. Charge-offs were a little bit higher than maybe you thought but classified and criticized loans remained flat. And in terms of our visibility into the first half of the year, we have a number of properties designated to be either upgraded or sold or notes sold or properties sold. And the hard part will be to determine whether or not a lot of that happens in Q1 or Q2. There's, as you know, a lot of paperwork that goes along with that and negotiations but we do have a confident level that by the end of the Q2, the nonaccrual loans will be down. Operator: Our next question comes from Chris McGratty with KBW. Christopher McGratty: Vishal, maybe you could talk about the strength in noninterest income, big service charge number in the quarter. Again, I want to make sure I understand the sustainability of it. I guess what's in that line? And obviously, I heard you on mortgage, but any near-term expectations for mortgage in a seasonally tough quarter. Vishal Idnani: Yes, sure. Happy to take that one. I think the big one there is the service charges. Two primary drivers in that, Chris. The first one is treasury management. We've made a lot of investments in that and we continue to see a pickup in that on the cross-sell there. And the second one is going to be what Ken and I mentioned in the prepared remarks. There's a big improvement in fee income related to the digital disbursements business. Right? So we did handle one of the largest settlements that Facebook, Cambridge Analytica. And we're actually when you get the settlement, we're distributing it to the end claimants and there's fees associated with that. So it's going to depend on what that business looks like going forward, but we've already have other settlements that have come in. So we do feel positive on where that line is going in terms of sustaining that trajectory. On the mortgage side, I think Ken hit this well. Kenneth Vecchione: Let me -- I'll take that. So first, Chris. We are constructive on the mortgage business, as I said, as we begin 2026. And we see several tailwinds that could provide additional alpha earnings to our 2026 projections. As a starting point, we are assuming a 10% year-over-year increase in total mortgage fee-related revenues. However, if several of the administrations make housing affordable programs take hold, combined with favorable regulatory changes and a lower interest rate environment, we think AmeriHome could outperform these projections. As a data point and it's an early data point, so I caution everyone on this. But as a data point, entering the year here, we expect Q1 total mortgage revenues to be nearly equal Q4 results, but I'll tell you that January's volumes and margins as of close of business last night, we're presently trending above our planning assumptions. So a little conservative on the mortgage income. It's based on some tailwinds, which we think are going to come. We'll wait. Those happen to be whether or not there's access to 401(k) funds or the GSEs buying $200 billion more of mortgage bonds. We also see certain areas of the United States seeing supply exceed demand. So we think some housing pricing may come down and certainly in the Southeast and we expect a couple of rate cuts certainly with potentially a more sympathetic Fed chair in May. So with all that going on, I think that's the economic and administration tailwinds that we have. There's also a couple of regulatory tailwinds and we're going to wait to see what happens here but it's our understanding coming out of Q1 that the FRB may give us additional guidance on MSRs. And the two things that we're looking at is, one, will the FRB reexamine the MSR 25% cap to CET1 capital? And if they do that, that will allow us to either hold on to -- that will allow us to hold on to more MSR receivables and those have a double-digit yield to them. And so we like that. On the other hand, there's another consideration, which is the change the risk weighting of the asset -- of the MSR asset, which you know is 2.5x to 1. If that comes down, that will either free us up to hold on to more MSRs or it could allow us to buy back more stock or support more growth to the first question today that we received or we just want to go to capital and we build a higher capital base. So we have some things going on here that potentially could be very strong as it relates to the mortgage business. So a little wait and see, but we have some optimism and trying to restrain it, but I'm hoping that it does come to fruition. Christopher McGratty: That was great. And just as a follow-up for the NII, 11% to 14% with the two cuts. I guess, what puts you at the high end versus the low end? Kenneth Vecchione: The higher end is the average earning assets. If that comes in and grows at a faster pace. We had a great Q4. Our average earning assets in Q4 were up $2.5 billion. So that was fabulous. And usually, it all depends on the loan and deposit growth and when it comes in. That's the hardest thing for us to forecast on an average basis. We can usually get it right on an ending quarter basis. But on an average basis, it's always the one thing that's a little bit softer for us to predict. But we're confident that, that range is good. And I would think it's 12% or greater as a floor, if I was modeling. Dale Gibbons: We're also hopeful that on the deposit side that the categories that are lower cost to us that would pull down our average cost and expand the margin are some of the ones that we're going to be focusing on in terms of digital assets, our trust company and business escrow services in particular. Operator: Our next question comes from David Smith with Truist Securities. David Smith: Can you give us an update on your ECR deposit expectations? How do you expect the mix of ECR within total deposits to shift with the $8 billion of growth in the outlook for this year? And then can you also give an update about how the mix inside of ECR is shifting? Like is there less mortgage warehouse and more settlement services? And how does this affect the ECR rate paid and your beta to changes in short rates over the next year? Vishal Idnani: Yes. I'll start and Tim can add. So first thing I'd say is when you think about the ECR deposits to our total deposits today, if you think about it on an average basis, around 37% today, if you think about end of period, it's around 33%, right? So about 1/3 -- when you think about what that mix shift is going forward on the $8 billion of deposit growth, I think you can largely expect it to hold constant from a mix perspective. We're obviously hoping to push more of that towards the non-ECR. But I think as the forecast stands today and things will move around, I think you can assume the mix is going to move pretty consistent with where we are today. When you think about the beta on the ECRs, we would say think about a 65% to 70% beta on those ECR deposits, but appreciate there's very specific businesses that drive that, right? On the mortgage warehouse side, that's more like 100% beta. When you think about the HOA, I think like 35% to 40% beta and then you've got Juris. So there's a mix of different things in there. So hopefully, that gives you a little bit of sense of what the mix is and what the deposit betas are for the ECRs. Timothy Bruckner: Yes. I'll just add one other thing, too, and I'll tie it back to the first question, which was gee, we thought your deposit growth would even be greater than $8 billion. We're coming into the year of projecting warehouse lending as a division to have flat deposit growth. And what we're trying to do is remix that so that deposit growth comes from the cheaper deposits. Now one of the things that's interesting here, and this will tie into the mortgage fee income question that Chris asked as well, in Q4, we did $1.5 billion better, meaning our deposits in warehouse lending were $1.5 billion higher than we expected because of the mortgage activity and the refinancing activity that was occurring. So one of the things that's -- so what's the good news about that? Well, if there's a lot of refinancing activity, deposit levels should be up for warehouse lending going forward. So that's something to consider. But also with that type of refinancing activity, it should give more volume opportunities to AmeriHome. What it means to your question is, even though we're coming into the year flat for warehouse lending in terms of deposit growth, you could see it spike up accordingly with the volume growth and the movement in that industry. David Smith: And then just as a follow-up, how are spreads trending on new loan origination? And have you seen any changes from competition there? Kenneth Vecchione: We're sort of ending the year or the spot rate now, at the end of the year is about the same as you see in the book. There isn't a day that we don't wake up and have competition and have to worry about yield coming from different players. As the economy gets better and more banks get aggressive to start driving in their organic growth. That, of course, puts a little bit of pressure on us. For us, we keep a tighter lid on the operating expenses while we continue to invest in future businesses for future revenue growth. So if we have to give up a little bit in yield to get loan growth, so be it, as long as it's safe and sound and credible credits, we will go ahead and do that. Tim, do you want to add anything about what's happening on the regional side in pricing? Timothy Bruckner: Yes. What we're really seeing is our specialty business lines are insulating us a bit. There's a definite flight to quality in the market. And our specialties have well-established relationships, control environments and structures where folks are doing business with us for something other than rate. I think that's really important. And we're seeing the strongest growth in those deep channels. Operator: The next question comes from Jared Shaw with Barclays. Jared David Shaw: Maybe sticking on the deposit side. Any update, Dale, early update on some of the initiatives you're working on because it feels like maybe there's a little more of a margin tailwind from the funding side as we look at that NII guide. Dale Gibbons: Sure. Well, maybe I'll just run through them. I really do think these are -- really have awesome opportunities in front of them. I love the bank. I've been here a long time, but I think some of the more interesting things are likely to happen in some of these sectors. The first one is our HOA group, and we talked about how well that's done. The bank is about 30 years old. This has been around about half that time, started at 0 and is now the largest HOA provider in the country. Notably, for the past 8 years, every quarter, they've exceeded our new record balance for them. And that consistency, we think, is important, and we think we're out in front. And frankly, we want to be pulling away from where we're going to be going, going forward, and they're going to have strong performance in 2026. The next one is our Juris Banking operation. We talked about that with the combination with digital disbursements that's already received some color during this call. We're the largest class action mass tort claims settlement entity in the country. We've now expanded that into providing banking services for basically law firms nationwide. We expect to triple their loan volume in 2026. Our digital asset group, we're serving our clients 24/7, which is, of course, digital asset markets are open 24/7. I'm a big believer in kind of the tokenization of everything, and we want to be out in front and facilitating that process. Our trust company, we started that 3 years ago. In under 3 years, we are now broken into the top 10 of the largest CLO trustees worldwide. And they have doubled basically in 2025 and they're going to -- we think they're going to be doubling again in 2026. And our business escrow services function, that's where we provide services to ease the M&A process for private companies selling to either public or private ones for collection of funds, disbursement and also holding on to earn-outs and reps and warranties. So in total, we think these are going to grow about 3x as fast as the bank overall, north of 30% in growth. And most of these have notably lower costs than what we're incurring in our other deposit channels as mortgage warehouse is the largest one for some of the ECRs and that one, as Ken mentioned, will be holding relatively flat, we expect. Jared David Shaw: Okay. Great. I appreciate all that detail. I guess shifting back to the credit question with the expectations for higher charge-offs at the beginning as you work through some of those NPLs. How should we think about provisioning and the allowance with that backdrop? Vishal Idnani: Yes, sure. Happy to jump in there. In terms of where the allowance is for funded loans on the HFI balance today, it's 78 basis points. That's about flat quarter-over-quarter, up about 8 basis points from 70 a year ago. As we think about where that's going next year, I think you can see that allowance drift up a little bit, maybe into the low 80s. And that's largely just a function of, as we said, we see the loan growth mainly coming on the C&I side. So there will be a little bit of a remixing as we do that. And then in terms of the charge-offs, the other piece to get to the provisions, how you can back into it, it's exactly what Ken said. You've got the 25 to 30 bps guidance for the full year. We think right now, it's going to be around that midpoint. So hopefully, that gives you the data points you need. Operator: Our next question comes from Casey Haire with Autonomous. Casey Haire: So I want to follow up on the NIM outlook. Ken, I think you said you expect it up throughout '26. And it sounds like it's positive mix shift on the loan side, moving to more -- less resi and more higher-yielding C&I and the deposit side, as Dale just mentioned, the growth in lower cost deposits. Just wondering, any color you can provide like what C&I categories are you growing faster and sort of the yields around them? And then this growth in lower cost deposit channels, is this going to up the deposit beta in a meaningful way? Just trying to get a better sense on the magnitude of NIM expansion. Kenneth Vecchione: Yes. Okay. Starting on the liability side on the deposits. I think you saw -- if you look at the numbers for Q4, you can see how much we were down in CDs. And so we meaningfully took our CD funding down and that helped our deposit costs decline. We continue -- we will continue to do that through 2026 and that will give some support to NIM. Let me just say about NIM. It's not going to jump up dramatically, but it's going to slowly cascade up throughout the year, okay? Remember, we have 2 rate cuts embedded in there as well, right? For planning purposes, I would always assume NIM is flat, but it does have a slight gentle stream upward to the right. We also are accentuating the businesses growth that Dale is running. And these businesses price more attractively than our traditional deposits. One of the things Dale didn't fully touch on, and I may just throw it over to him in a second, is in our digital asset group, the fact that we now do 24/7 interbank trading. And for that, we get a premium, i.e., a larger discount in what we pay for funding. I'll give that to Dale in just one second. The combined -- on the other side of the balance sheet, I'll take something that Tim Bruckner said, which is the business lines of lot banking, hotel financing, resort financing. Even private credit, all those yields are holding on to where they are. I won't say we have pricing power, but we have the ability to bring in volume based on the pricing that we're holding. And so you'll see more volume come out of those groups in 2026. Dale, did you want to say anything about IBT at all? Dale Gibbons: Yes. Let me just describe what we're doing on this IBT 24/7 that I alluded to and Ken amplified on. I mean, my analogy is it's like the SPDR Gold Trust. SPDR Gold Trust is the largest gold repository in the ETF in the world. And what you do is you just buy and sell your ETF. You don't have to actually own the gold anymore. Well, we're not holding gold, but we're holding U.S. dollars. And these clients can come to us and 24/7, unlike the ETF, which only turns when the markets are open, 24/7, they can convert money to U.S. dollars or from U.S. dollars to any kind of where they are. And that service level is important. And there's things like this in our other businesses as well that lead to lower funding costs. It's because we're providing services that are not widely available. And as a result, we're going to actually have a lower beta, not a higher beta on these types of things. I might note that our deposit growth in 2025 is actually a little bit better than maybe as advertised. You haven't seen this yet, but our broker deposits fell by more than $1 billion on top of that. So the $10.8 billion is already net. There's more like $12 billion. So I think we really outperformed this last year. I know our guidance for 2026 and I feel like we're going to be able to meet that guidance for sure. Casey Haire: Okay. Great. And then just one more on expenses. So if I look at the core expense growth actually the ECR deposit costs, it implies about a 9% to 13% growth understanding you guys got a lot going on. But is there a wiggle room if the deposit cost relief does not materialize, meaning you could maybe flex that lower? Kenneth Vecchione: Sorry, the question is, can deposit costs go lower to drive down more year-over-year operating expense growth? Casey Haire: Yes. The expense growth ex the deposit costs, right? So that implies 9% to 13% growth. If deposit cost relief doesn't kind of materialize the way you guys, can you flex that core expense lower? Kenneth Vecchione: Yes. So embedded in our expectations is that there is no change to LFI guidance. So we've got the full boat of expenses embedded in there that we need to spend in order to meet the $100 billion threshold. Now if the LFI guidance is moved up from $100 million to some larger number, some say $150 million, some say it will be $250 million, then the dollars that we spend there will be reduced, will not be eliminated, but will clearly be reduced because there are certain things that we want to get to and we think are better for the company. So we have room there. We also have room in looking at business expansion and revenue initiatives. But I'll tell you, the secret to our success and the secret to our growth is that we always work on new businesses or new products and services, new business lines so that we can develop an S-curve so that 2 years from now, some of the things we're working on begins to take form and it drives higher revenue. The stuff that Dale mentioned with the IBT network, we started working on that 2 years ago, all right? And so now it's coming to fruition, and we think it's going to drive future success. Juris Banking, we worked on 4 to 5 years ago. BES 3 to 4 years ago. So all these businesses have taken time. Go back and only because Dale is here, I'll say HOA, we worked on 12 years ago, all right? And we did it in such a way that we're now the #1 market share leader in HOA, and we continue to pump out significant deposit growth there as well. So my answer to you is, can we flex on things? Of course. But we're going to balance that with what's good for the short term and what's really good for the long term. And so far, we've done a fairly good job of managing short-term and long-term expectations and driving in long-term growth, whether it be on the balance sheet or in fee income as well. Operator: The next question comes from Janet Lee with TD Cowen. Sun Young Lee: So it appears that some of the confidence... It appears that some of the confidence in your 2026 ECR deposit cost guide is coming from a remix of ECR deposits into lower costs and away from mortgage warehouse for the time being. Are you able to share the composition of ECR deposits among mortgage warehouse, HOA versus Juris? I believe those are the 3 biggest today versus, let's say, the end of the year or what your internal targets might be? Kenneth Vecchione: No. That makes me feel very uncomfortable just because of the competitive environment we're in. I mean it's -- in terms of ranking them, warehouse lending is the biggest, followed by HOA, followed by Juris. And that's what I would tell you. But absent of that, I'm not going to provide what our deposit levels are for any one of those businesses, I'm sorry. Sun Young Lee: Okay. That's fair. And your ACL ratio going up from 78 basis points to low 80s by the end of this year, you said it's really driven by the C&I loan growth and NCO replenishment and I guess, the nonaccrual cleanup. Is there any update you could share on either Cantor or First Brands on that note? Kenneth Vecchione: Okay. Yes. Let me handle First Brands first. And it's really -- our loan is not to First Brands, but it is to Point Bonita, which is a subsidiary of Jefferies. That loan continues to pay down at an accelerated pace. Last quarter, I think we said it was about $168 million outstanding. Today, it sits at $124 million outstanding. So it went from a 19% advance rate against receivables to investment-grade retailers to about 14% to 15%. And so we have good visibility into that. That continues to pay down. That is a past loan, and we're not carrying much concern about that. It's behaving as expected. And as I said, the payments are coming in a little bit faster than what we modeled. And so we're very pleased there. As it relates to Cantor, as you can imagine, I am going to be somewhat limited as to what I can say because of the ongoing legal action that we have. But we have gotten a -- put in a receiver into the business. And that was with the support of the 2 ultra-high net worth individuals. That receiver has ordered all the appraisals for all the properties. We are expecting those appraisals to come in, in early March. Once we see what those appraisals are, we'll have a better understanding of the value of the collateral relative to the outstanding loan. The outstanding loan is $98 million, and then we can proceed from there. So at this point, that's all that I can really tell you that what we're up to, but we hope to have a better insight, better clarity when we present our first quarter numbers. Operator: The next question comes from Ebrahim Poonawala with Bank of America. Ebrahim Poonawala: I guess maybe just one more on credit. So you provided good clarity in terms of the charge-off provisioning outlook. Ken, is the takeaway also that you don't expect classified like special mention went up a little bit this quarter? Like are you feeling good about the pipeline in terms of credit metrics should keep improving from here? Or what could kind of cause any incremental deterioration that could surprise to the downside, if you can talk about that? Kenneth Vecchione: Yes. So asset quality remains stable, and there have been several notable areas of improvement. First, the number of new or rising credits has declined. So that's a positive. We also are seeing an increased willingness from the borrowers to collaborate and work to measurably reduce nonaccrual loans by midyear. We always had this mantra, Tim Bruckner is sitting across to me. He started when he was Chief Credit Officer of early identification and early elevation. Our new Chief Credit Officer, Lynne Herndon, has taken that and modified it just slightly, early identification, early elevation and now accelerated resolution. And so we are working to do that in order to move the classified and criticized numbers down. I will say they are clearly down from second quarter. And interesting to note is that when we look at our credit quality, and we look at, for example, classified loans to Tier 1 capital plus ACL for Q4, that stands at 11.7%. But that compares very favorably to our peer group, $50 billion to $250 billion, and we're using Q3 peer median. So you have to give me a little bit of what leeway here since you haven't calculated everything for the -- for Q4. But that stands at 14.7%. We're at 300 basis points better, all right? So we do -- our asset quality is improving. We came up off the floor of nearly 0 losses. And so it looks a little bit worse than it is, but we're running with our guidance about equal to or slightly below where the peer group is. Tim Bruckner, I don't know if I said too much. I don't know if you want to add anything to that. Timothy Bruckner: No, I think that's a great synopsis. The focus as we continue to communicate was on office loans identified, I think, first discussed with this group in Q1 '23. We've had ongoing discussion. There's a finite inventory of those loans as we've continued to reference and it's shrinking. And the classified office loans are down 1/3 from midyear 2025. And we have deliberate strategies at the asset level around each asset. The elevation brings our executive management team to bear on every situation. And those loans are marked to as is values less liquidation costs. So we feel that, that takes the beta out as we work through resolution. Ebrahim Poonawala: That was good color. And I guess just a separate question. I think, Ken, you talked about all the things over the years you've done to build the pipeline for future growth. As we think about deposits, is inorganic make any sense at all for Western Alliance when we think about maybe transforming the distribution network, having a greater branch footprint? Are all of those things something that you think about? Or just given the momentum you have on organic growth, all of that would be a huge distraction. Kenneth Vecchione: Well, I think the last part of your statement is true. It would be a huge distraction. And when we -- first of all, we do think about it, we should think about it, and it is a discussion point among the senior members of the team. One of the things we consider when we look at alternative inorganic opportunities is return on management's time. And if we went and did anything, would it take away from all the organic growth that we have. We think we're unique with this organic growth. We think it's important. We think it comes with less execution and operational risk. And I'll tell you truth, it's certainly a lot more fun trying to grow a business and go into different products and services or regions than it is to sit on a call and announce, guess what, we just converted our general ledger, and we're very excited about it. So the entrepreneurial spirit here at the bank is more towards organic growth. Having said that, if something fell into our lap that was able to make us bigger and better, okay? That's the key. I look at a lot of deals that are done for people wanting to get bigger, all right? What we -- our criteria is bigger and better. So if there is a bigger and better that help get us into a series of deposit lines that could reduce deposit costs, we'd be very excited to look at something like that. But bigger for big's sake, I think would take away from the organic momentum that we have. Dale Gibbons: Ken mentioned earlier that we have, based upon the estimates out there for 2026, one of the strongest EPS growth targets out there. And so the challenge -- one of the challenges to look at somebody else is to say, gosh, we're growing at 19%. What is everyone else going to be doing and how that might be diluted because our growth is so strong and that not necessarily reflected in RPE. Operator: The next question comes from Matthew Clark with Piper Sandler. Matthew Clark: Just want to circle back to the service charge line. Can you maybe quantify how much the Facebook disbursement fees were this quarter? And it sounds like you've got some settlements coming to help mitigate that headwind going forward. But how should we think about kind of a sustainable run rate there before we see some seasonality again in the fourth quarter? Kenneth Vecchione: Yes. Unfortunately, we're not going to be able to give you any numbers around the settlement and what we generated in terms of fee income. Okay. That's number one. And number two, the thing about settlements, they're hard to predict for us quarter-by-quarter. The Cambridge settlement, we actually thought was going to happen earlier in the year. And so when we get awarded these mandates, we feel great about them, but it's hard for us to predict when they're going to come in. We take a best guess of cost. And so we're not going to be able to give you any very specific data on that. It exposes us to too much competitive risk here, sorry. Matthew Clark: Okay. And then just on the interest-bearing deposit costs, you had a 55% beta this quarter. Could you give us the spot rate on deposits at the end of the year and then your outlook for that beta going forward? Vishal Idnani: Yes, sure. Happy to. So the spot rate on interest-bearing deposits is 2.81%, and that's down from the average rate for the quarter of 2.96%, right? So you're already seeing it come down very nicely. And in terms of where it goes going from here, I'd put it in that mid-50s range is probably the right place when you think about that bucket. Operator: The next question comes from Gary Tenner with D.A. Davidson. Gary Tenner: I just had one quick follow-up to clarify the earlier question on the non-deposit cost expense growth for the year. So it sounds like from what you're saying, if I interpret it correctly, any flexibility there is around the CAT IV threshold more than any tethering of that expense growth to the revenue side, right? Because the majority of that is investment for longer-term opportunities. Is that the right way to think about it? Kenneth Vecchione: Yes. Yes, it is. Gary Tenner: Okay. And then the second question, just, I guess, also a follow-up on that commercial business or the commercial banking fee line. Maybe just even any first quarter sense. I mean, is kind of a blend of 3Q, 4Q kind of the more reasonable expectation than anything closer to the fourth quarter? Kenneth Vecchione: For servicing fees, is that the question? Gary Tenner: Yes. Yes. Dale Gibbons: I think that's fair. I mean it is going to fade from Q4 numbers. We can't really guide you exactly where it's going to go. It is lumpy, but the pipeline for future transactions that we'd be out there in front in terms of helping facilitate disbursements looks good. So -- but this was the largest case basically in U.S. history with 17 million claimants. And so that is going to be diminished in Q1, Q2. Operator: The next question comes from David Chiaverini with Jefferies. David Chiaverini: So I had a follow-up on the IBT network and tokenized deposits. There's been a lot of talk about the strong growth in stablecoins and the potential to disrupt banking deposits. Is it fair to say the IBT network is competing with stablecoins? And can you talk about the client uptake and growth outlook here? Dale Gibbons: I don't think it competes. I think it complements. I mean at the end of the day, people still want to do -- have fiat currency or be able to figure out how they can get back to fiat in quick order. And so what stablecoins do is like my analogy has been McDonald's. I don't think you're ever going to drive through a McDonald's and see a price of a Big Mac in Satoshis. But you're going to see it in U.S. dollars, and you're going to be able to pay for it with USDC with your phone with a flash. And in the background, we're there and saying, okay, so here's something that pain that came in on USDC delivery of that and then what's going to be going out is to -- is U.S. dollars. Within our walled garden, working with stablecoin providers, we facilitate that. We complement what they do more than compete. David Chiaverini: Perfect. And then I wanted to ask about average earning asset growth, particularly on securities portfolio and held-for-sale loans. Any commentary there? Is it right to think about average earning asset growth similarly to deposit growth? Kenneth Vecchione: Well, yes, deposit growth will drive average earning asset growth. You're absolutely right there. Dale Gibbons: We're liability-based in terms of the value of the franchise. We always have been. I think if you get it the other way around, you tend to push on credit underwriting. So we used to have a strong deposit growth at low cost gives us opportunities to make good loans, move into high-quality securities, whatever that might be. Operator: Our next question comes from Bernard Von Gizycki with Deutsche Bank. Bernard Von Gizycki: On the $535 million to $585 million in ECR-related deposit costs you expect for full year '26, you've been rate dependent in the past, and now you're moving to shifting to lower ECR-related balances. Could you provide some sensitivity on the ECR costs if we get 2 rate cuts versus if the Fed is on pause from here? Vishal Idnani: I think we'll still be able to -- we continue to work on. I think we'll be able to drive it down as well. But obviously, it will not go down as much if we don't see those rate cuts, right? I think that will help us move it down further. So I think you can see that being a little bit more sticky if we don't see a drop in rates from here. Bernard Von Gizycki: Okay. On loan growth, the $6 billion for full year '26, so you noted the strong pipelines across business lines, and you noted the C&I will continue to lead the way. Just curious, any color you can share on how big CRE could be a contributor given some of the expected maturities expected in full year '26? Timothy Bruckner: Sure. So in 2025, you can see that we curtailed our growth and pressed out in some cases, CRE loans as a percentage of total loans, they decreased. In 2026, we're not projecting significant dependence on CRE in our total growth numbers. So we call it a modest increase. The preponderance of the increase is coming from our commercial strategy-based and segment-based business strategies where we're aligning our fee-based and treasury products with the credit discipline that we have. And really with that, garnering a broader -- driving a broader spectrum of revenue. So you won't see a significant increase coming from CRE for those reasons. Operator: Our final question today comes from Anthony Elian with JPMorgan. Anthony Elian: Your CET1 is 11% as of 4Q, which is at your target for this year. I know on the outlook slide, you say buybacks remain opportunistic, but should we expect buybacks to take a step back relative to the $57 million you did in 4Q, given you're already at your target for CET1? Kenneth Vecchione: Yes. So 11% is where we feel comfortable. Would we like that to rise? Yes. In regards of the stock buybacks, we don't have anything really layered into our models. We're there in case there's a disruption in the market. We think the capital that we need is -- needs to be there to support the $6 billion in loan growth. And if there's any weakness in the $6 billion in loan growth, then we can switch in support with the EPS goals by buying back the stock. But it wouldn't be something I'd model in. And if we reported that we bought back some stock, it's because we had an opportunity to buy at a discount price vis-a-vis the market. Anthony Elian: Okay. And then on the ECR, so I get your guide $535 million to $585 million this year. But is there a scenario where you can actually see that expense rise from last year relative to the $630 million? If I just think you're not getting as much relief this year from lower rates with only a couple of cuts. You call out the steady investments you have in growth on Slide 18. And the ECR mix from Vishal's comments on the $8 billion of deposit growth is expected to stay constant. I just think about those items as limiting some of the relief you're expecting to get on ECR costs. Vishal Idnani: The first thing I'd say is part of that, just at the beginning, remember, we did have a rate cut at the end of last year. So not all of that is actually baked into where the current rates are. So I think you could continue to see some trend down there. And then we're going to continue pushing on the mix, right? Appreciating what it is. It's hard to kind of say exactly for the year where this is going to land out. So trying to give you some broad level parameters here, but we're going to continue to push and the business is very focused on trying to drive down those costs. The irony here is that it could be higher than our guide. And if we have a very strong mortgage market, which is going to result in refis and those balances that now have a refi coming in or a sale of a house, those come through, and those can add hundreds of millions of dollars to those balances in short order that would actually be a good problem to have. And now we've got more deposits from this sector that we're actually kind of controlling a little bit, have more of an opportunity to tamp down their pricing, but you still could have a higher dollar number. So there's a way that we miss that actually results in better value creation. Operator: Those are all the questions we have time for today. And so I'll turn the call back to Ken Vecchione for closing remarks. Kenneth Vecchione: We're very pleased with the quarter, very proud of what we produced here and we thank you for taking the time to join us today to talk about our results, and we look forward to talking to you again in a couple of months for the Q1 results. Thank you, and happy and healthy New Year to everyone. Operator: Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.
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