Hancock Whitney Q4 2025 Hancock Whitney Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Hancock Whitney Corp Earnings Call
Speaker #1: I would now like to introduce your host for today's conference, Kathryn Mistich, Investor Relations Manager. You may now begin.
Speaker #2: good Thank you and afternoon . During today's call , we may make forward looking statements . We would like to remind everyone to carefully review the safe harbor language published with the earnings release and that was presentation , and in the company's most recent 10-K and 10-q , including the risks and uncertainties identified therein .
Speaker #2: You should keep in mind that any forward-looking statements made by Hancock Whitney Corp speak only as of the date on which they were made.
Kathryn Mistich: Thank you and good afternoon. During today's call, we may make forward-looking statements. We would like to remind everyone to carefully review the safe harbor language that was published with the earnings release and presentation, and in the company's most recent 10-K and 10-Q, including the risks and uncertainties identified therein. You should keep in mind that any forward-looking statements made by Hancock Whitney speak only as of the date on which they were made.
Speaker #2: everyone As understands the current economic environment is rapidly evolving and changing , HANCOCK WHITNEY CORP ability to accurately project results or predict the effects of future plans or strategies , or predict market or economic developments , is inherently limited .
Speaker #2: We believe that the expectations reflected or implied by any forward looking statements are based on reasonable assumptions , but are not guarantees of performance or results , and our actual results and performance could differ materially from those set forth in our forward looking statements .
Kathryn Mistich: As everyone understands, the current economic environment is rapidly evolving and changing. Hancock Whitney's ability to accurately project results or predict the effects of future plans or strategies, or predict market or economic developments, is inherently limited. We believe that the expectations reflected or implied by any forward-looking statements are based on reasonable assumptions, but are not guarantees of performance or results, and our actual results and performance could differ materially from those set forth in our forward-looking statements. Hancock Whitney undertakes no obligation to update or revise any forward-looking statements, and you are cautioned not to place undue reliance on such forward-looking statements. Some of the remarks contain non-GAAP financial measures. You can find reconciliations to the most comparable GAAP measures in our earnings release and financial tables. The presentation slides included in our 8-K are also posted with the conference call webcast link on the Investor Relations website.
As everyone understands, the current economic environment is rapidly evolving and changing. Hancock Whitney's ability to accurately project results or predict the effects of future plans or strategies, or predict market or economic developments, is inherently limited. We believe that the expectations reflected or implied by any forward-looking statements are based on reasonable assumptions, but are not guarantees of performance or results, and our actual results and performance could differ materially from those set forth in our forward-looking statements. Hancock Whitney undertakes no obligation to update or revise any forward-looking statements, and you are cautioned not to place undue reliance on such forward-looking statements. Some of the remarks contain non-GAAP financial measures. You can find reconciliations to the most comparable GAAP measures in our earnings release and financial tables. The presentation slides included in our 8-K are also posted with the conference call webcast link on the Investor Relations website.
Speaker #2: Hancock , Whitney undertakes no obligation to update or revise any forward looking statements , and you are cautioned not to place undue reliance on such forward looking statements .
Speaker #2: Some of the remarks contain non-GAAP financial measures. You can find reconciliations to the most comparable GAAP measures in our earnings release and financial tables.
Speaker #2: The presentation included in slides 8-K is also posted, along with the conference call webcast link, on the Investor Relations website. We will reference some of these slides in today's call.
Speaker #2: Participating in today's call are John Hairston, President and CEO; Mike Achary, CFO; Chris Aluka, Chief Credit Officer; and Shane Loper, Chief Operating Officer.
Speaker #2: I will now turn the call over to John Hairston.
Speaker #3: Thank you , Katherine . Happy New Year to everyone , and thank you for joining us today . The fourth quarter of 2025 was a strong finish to a remarkable year .
Kathryn Mistich: We will reference some of these slides in today's call. Participating in today's call are John Hairston, President and CEO, Mike Achary, CFO, Chris Ziluca, Chief Credit Officer, and Shane Loper, Chief Operating Officer. I will now turn the call over to John Hairston.
We will reference some of these slides in today's call. Participating in today's call are John Hairston, President and CEO, Mike Achary, CFO, Chris Ziluca, Chief Credit Officer, and Shane Loper, Chief Operating Officer. I will now turn the call over to John Hairston.
Speaker #3: We saw year over year improvement in EPs of 8% Ppnr growth of 6% , and tangible book value per share . Increased 12% .
Speaker #3: As we look forward to 2026 , we remain focused on growing our balance sheet and continuing to improve profitability . As part of our multi-year Organic growth plan , we expect to hire up to 50 additional revenue generating associates this year .
John Hairston: Thank you, Kathryn. Happy New Year to everyone, and thank you for joining us today. The fourth quarter of 2025 was a strong finish to a remarkable year. We saw year-over-year improvement in EPS of 8%, PP&R growth of 6%, and tangible book value per share increased 12%. As we look forward to 2026, we remain focused on growing our balance sheet and continuing to improve profitability. As part of our multi-year organic growth plan, we expect to hire up to 50 additional revenue-generating associates this year. Additional offensive players will meaningfully support growth targets while improving profitability through a focus on full relationship clients. We are pleased to announce today that we completed a bond portfolio restructuring last week, which is detailed on slide seven of the investor deck.
John Hairston: Thank you, Kathryn. Happy New Year to everyone, and thank you for joining us today. The fourth quarter of 2025 was a strong finish to a remarkable year. We saw year-over-year improvement in EPS of 8%, PP&R growth of 6%, and tangible book value per share increased 12%. As we look forward to 2026, we remain focused on growing our balance sheet and continuing to improve profitability. As part of our multi-year organic growth plan, we expect to hire up to 50 additional revenue-generating associates this year. Additional offensive players will meaningfully support growth targets while improving profitability through a focus on full relationship clients. We are pleased to announce today that we completed a bond portfolio restructuring last week, which is detailed on slide seven of the investor deck.
Speaker #3: Additional offensive players will support meaningful growth targets while improving profitability through a focus on full relationship clients. We are pleased to announce today that we completed a bond portfolio restructuring last week, which is detailed on slide seven of the investor deck.
Speaker #3: On an annual basis, we expect the restructuring exercise to benefit NIM by seven basis points, and EPS will improve $0.23 per share.
Speaker #3: Mike will give more details on the restructuring in his remarks. We provided guidance on page 22 for what we believe will be a very successful new year.
Speaker #3: This guidance reflects our organic growth , benefits as well as impact from the bond portfolio restructuring . Now , for a few notes on the fourth quarter , we had another quarter of very solid earnings with an ROA of 1.41% and an efficiency ratio under 55% .
John Hairston: On an annual basis, we expect the restructuring exercise to benefit NEM by seven basis points, and EPS will improve $0.23 per share. Mike will give more details on the restructuring in his remarks. We provided guidance on page 22 for what we believe will be a very successful new year. This guidance reflects our organic growth benefits as well as impact from the bond portfolio restructuring. Now, for a few notes on Q4, we had another quarter of very solid earnings with an ROA of 1.41% and an efficiency ratio under 55%. Fee income growth again continued this quarter, and expenses remained well managed, including thoughtful investments supporting revenue-generating activities. Net interest income continued to grow as we reduced the cost of funds and enjoyed higher security yields.
On an annual basis, we expect the restructuring exercise to benefit NEM by seven basis points, and EPS will improve $0.23 per share. Mike will give more details on the restructuring in his remarks. We provided guidance on page 22 for what we believe will be a very successful new year. This guidance reflects our organic growth benefits as well as impact from the bond portfolio restructuring. Now, for a few notes on Q4, we had another quarter of very solid earnings with an ROA of 1.41% and an efficiency ratio under 55%. Fee income growth again continued this quarter, and expenses remained well managed, including thoughtful investments supporting revenue-generating activities. Net interest income continued to grow as we reduced the cost of funds and enjoyed higher security yields.
Speaker #3: Fee income growth again continued this quarter , and expenses remained well managed , including thoughtful investments , supporting revenue generating activities income grow as continued to .
Speaker #3: Interest net, we reduced the cost of security, hired funds, and enjoyed yields. NIM was relatively flat, down one basis point from the prior quarter.
Speaker #3: As a decline in loan yield outpaced our higher yield on securities and lower cost of funds. Loans grew $362 million, or 6% annualized, as shown on slide 11 of the investor deck.
Speaker #3: Our production was quite strong. Our increase in production this quarter more than offset an increase in prepayments, which produced a net growth of mid-single digits.
John Hairston: NIM was relatively flat, down one basis point from prior quarter, as a decline in loan yield outpaced our higher yield on securities and lower cost of funds. Loans grew $362 million, or 6% annualized. As shown on slide 11 of the investor deck, our production was quite strong. Our increase in production this quarter more than offset an increase in prepayments, which produced a net growth of mid-single digits. With the investments we're making into new revenue producers, we expect this trend to continue, and loan growth in 2026 will be mid-single digits compared to the previous year-end. Deposits were up $620 million, or 9% annualized, largely driven by seasonal activity in public fund DDA and interest-bearing accounts, which increased $417 million. As a reminder, we usually experience seasonal public fund outflows in the first quarter of each year.
NIM was relatively flat, down one basis point from prior quarter, as a decline in loan yield outpaced our higher yield on securities and lower cost of funds. Loans grew $362 million, or 6% annualized. As shown on slide 11 of the investor deck, our production was quite strong. Our increase in production this quarter more than offset an increase in prepayments, which produced a net growth of mid-single digits. With the investments we're making into new revenue producers, we expect this trend to continue, and loan growth in 2026 will be mid-single digits compared to the previous year-end. Deposits were up $620 million, or 9% annualized, largely driven by seasonal activity in public fund DDA and interest-bearing accounts, which increased $417 million. As a reminder, we usually experience seasonal public fund outflows in the first quarter of each year.
Speaker #3: With the investments we're making into new revenue producers, we expect this trend to continue, and loan growth in '26 will be mid-single digits compared to the previous year-end.
Speaker #3: Deposits were up $620 million , or 9% annualized , largely driven by seasonal activity in Public Fund and interest bearing accounts , which increased 417 million .
Speaker #3: As a reminder, we usually experience seasonal public fund outflows in the first quarter of each year. Our bearing interest transaction balances were up $223 million, with higher balances driven by competitive products and pricing.
Speaker #3: Retail time deposits decreased $90 million due to maturities during the quarter, and DDA balances were up $70 million, inclusive of a $191 million increase in public fund DDAs.
Speaker #3: DDA mix ended the quarter at a strong 35%. We expect our investments in financial centers and revenue producers will support our guidance for deposits, which we anticipate will increase low single digits from 2025 levels.
John Hairston: Our interest-bearing transaction balances were up $223 million, with higher balances driven by competitive products and pricing. Retail time deposits decreased $90 million due to maturities during the quarter, and DDA balances were up $70 million, inclusive of a $191 million increase in public fund DDAs. DDA mixed into the quarter at a strong 35%. We expect our investments in financial centers and revenue producers will support our guidance for deposits, which we anticipate will increase low single digits from 2025 levels. As previously announced, we fully exhausted our share buyback authority last quarter, which impacted capital ratios. Despite enhanced repurchase volume, we ended the quarter with TCE a little over 10% and a Common Equity Tier 1 ratio of 13.66%. Our board approved a new 5% buyback plan that will be effective through the end of 2026. We are very optimistic as we look forward to the coming year.
Our interest-bearing transaction balances were up $223 million, with higher balances driven by competitive products and pricing. Retail time deposits decreased $90 million due to maturities during the quarter, and DDA balances were up $70 million, inclusive of a $191 million increase in public fund DDAs. DDA mixed into the quarter at a strong 35%. We expect our investments in financial centers and revenue producers will support our guidance for deposits, which we anticipate will increase low single digits from 2025 levels. As previously announced, we fully exhausted our share buyback authority last quarter, which impacted capital ratios. Despite enhanced repurchase volume, we ended the quarter with TCE a little over 10% and a Common Equity Tier 1 ratio of 13.66%. Our board approved a new 5% buyback plan that will be effective through the end of 2026. We are very optimistic as we look forward to the coming year.
Speaker #3: As previously announced, we fully exhausted our share buyback authority last quarter, which impacted capital ratios despite enhanced repurchase volume. We ended the quarter with TCE a little over 10% and a common equity tier one ratio of 13.66%.
Speaker #3: Our board approved a new 5% buyback plan that will be effective through the end of '26. We are very optimistic as we look forward to the coming year.
Speaker #3: Our work over the past several years has resulted in solid capital levels , a robust allowance for losses , superior profitability , ample liquidity , benign asset quality and now positive trends in balance sheet growth .
Speaker #3: We are excited for the opportunities in the coming year and believe we are positioned well for a successful and growing 2026. Lastly, I would like to introduce you all to President of Hancock Whitney Bank and Chief Operating Officer, Shane Loper.
John Hairston: Our work over the past several years has resulted in solid capital levels, a robust allowance for credit losses, superior profitability, ample liquidity, benign asset quality, and now positive trends in balance sheet growth. We are excited for the opportunities in the coming year and believe we are positioned well for a successful and growing 2026. Lastly, I would like to introduce you all to President of Hancock Whitney Bank and Chief Operating Officer Shane Loper. He will be joining us on our earnings calls going forward. With that, I'll invite Mike to add additional comments.
Our work over the past several years has resulted in solid capital levels, a robust allowance for credit losses, superior profitability, ample liquidity, benign asset quality, and now positive trends in balance sheet growth. We are excited for the opportunities in the coming year and believe we are positioned well for a successful and growing 2026. Lastly, I would like to introduce you all to President of Hancock Whitney Bank and Chief Operating Officer Shane Loper. He will be joining us on our earnings calls going forward. With that, I'll invite Mike to add additional comments.
Speaker #3: He will be joining us on our earnings calls going forward. With that, I'll invite Mike to add additional comments.
Speaker #4: John . Thanks , Good afternoon everyone . Fourth quarter's earnings were $126 million , or $1.49 per share , compared to 127 million , or $1.49 per share , in the third quarter .
Speaker #4: PPNR for the company was down slightly from the prior quarter to $174 million. Expressed as a return on average assets, that continues to be a solid 1.96%.
Mike Achary: Thanks, John. Good afternoon, everyone. Q4 earnings were $126 million, or $1.49 per share, compared to $127 million, or again $1.49 per share in Q3. PP&R for the company was down slightly from the prior quarter to $174 million, expressed as a return on average assets that continues to be a solid 1.96%. NII increased 1% this quarter, driven by favorable volume and mix for both average earning assets and interest-bearing liabilities, partly offset by a slightly lower NIM, which decreased or narrowed one basis point this quarter. As John mentioned, our fee income business had a solid quarter, and expenses were up due to continued investments in revenue-generating activities. Our efficiency ratio was 54.9% for the quarter and 54.8% for the year. That was down 58 basis points from 2024's 55.4%, reflecting our net interest income growth, strong fee income performance, and well-controlled expenses.
Mike Achary: Thanks, John. Good afternoon, everyone. Q4 earnings were $126 million, or $1.49 per share, compared to $127 million, or again $1.49 per share in Q3. PP&R for the company was down slightly from the prior quarter to $174 million, expressed as a return on average assets that continues to be a solid 1.96%. NII increased 1% this quarter, driven by favorable volume and mix for both average earning assets and interest-bearing liabilities, partly offset by a slightly lower NIM, which decreased or narrowed one basis point this quarter. As John mentioned, our fee income business had a solid quarter, and expenses were up due to continued investments in revenue-generating activities. Our efficiency ratio was 54.9% for the quarter and 54.8% for the year. That was down 58 basis points from 2024's 55.4%, reflecting our net interest income growth, strong fee income performance, and well-controlled expenses.
Speaker #4: NII increased 1% . This quarter , driven by favorable volume and mix for both average earning assets and interest bearing liabilities , partly offset by a slightly lower Nim , which decreased or narrowed one basis point .
Speaker #4: This quarter, as John mentioned, our fee income business had a solid quarter and expenses were up due to continued investments in revenue-generating activities.
Speaker #4: Our efficiency ratio was 54.9 for the quarter and 54.8 for the year . That was down 58 basis points from 2020 fours , 55.4% , reflecting our net interest income growth , strong fee income performance and well controlled expenses .
Speaker #4: Fee income grew in each of the four quarters this year, totaling $107 million in the fourth quarter. We enjoyed solid performance across each category with the increase this quarter, driven by higher income specialty.
Speaker #4: We expect fee income will be up between 4% and 5% in 2026, with the continued focus on core deposit account growth that often delivers multiple categories of fees.
Mike Achary: Fee income grew in each of the four quarters this year, totaling $107 million in the fourth quarter. We enjoyed solid performance across each category, with the increase this quarter driven by higher specialty income. We expect fee income will be up between 4% and 5% in 2026, with a continued focus on core deposit account growth that often delivers multiple categories of fees. As mentioned, expenses remain well controlled, up only 2% from the prior quarter. Much of this increase was from investments that we believe will enhance our revenue-generating capabilities in 2026. We expect expenses will be up between 5% and 6%, including an impact of about 185 basis points from the execution of our organic growth plan, and a full year of expenses related to our acquisition of Sabal Trust Company. Expense growth year-over-year was well controlled at only 3.6%, inclusive of ample reinvestments.
Fee income grew in each of the four quarters this year, totaling $107 million in the fourth quarter. We enjoyed solid performance across each category, with the increase this quarter driven by higher specialty income. We expect fee income will be up between 4% and 5% in 2026, with a continued focus on core deposit account growth that often delivers multiple categories of fees. As mentioned, expenses remain well controlled, up only 2% from the prior quarter. Much of this increase was from investments that we believe will enhance our revenue-generating capabilities in 2026. We expect expenses will be up between 5% and 6%, including an impact of about 185 basis points from the execution of our organic growth plan, and a full year of expenses related to our acquisition of Sabal Trust Company. Expense growth year-over-year was well controlled at only 3.6%, inclusive of ample reinvestments.
Speaker #4: As mentioned , expenses remain well controlled , up only 2% from the prior quarter . Much of this increase was from investments that we believe will enhance our revenue generating capabilities in 2026 .
Speaker #4: We expect expenses will be up between 5% and 6%, including an impact of about 185 basis points from the execution of our organic growth plan and a full year of expenses related to our acquisition of Stable Trust Company. Expense growth year over year was well controlled at only 3.6%, inclusive of ample reinvestments.
Speaker #4: The one basis point contraction in our NIM was driven by lower loan yields on both new fixed and variable rate loans and existing variable rate loans.
Speaker #4: Following the two rate cuts , this quarter , partially offsetting this was higher bond yields , lower cost of deposits , and a favorable mix , and rates for other borrowings .
Speaker #4: Our overall cost of funds was down seven basis points to 1.52%, due to a lower cost of deposits and better funding rates and mix.
Mike Achary: The one basis point contraction in our NEM was driven by lower loan yields on both new fixed and variable rate loans and existing variable rate loans following the two rate cuts this quarter. Partially offsetting this was higher bond yields, lower cost of deposits, and a favorable mix and rates for other borrowings. Our overall cost of funds was down seven basis points to 1.52% due to a lower cost of deposits and better funding rates and mix, as we ended the quarter with lower FHLB advances. Our cost of deposits was down seven basis points to 1.57% for the quarter, with the cost of deposits down to 1.53% in the month of December. Following the rate cuts in October and December, we reduced promotional rate pricing on our interest-bearing transaction accounts, and retail CDs.
The one basis point contraction in our NEM was driven by lower loan yields on both new fixed and variable rate loans and existing variable rate loans following the two rate cuts this quarter. Partially offsetting this was higher bond yields, lower cost of deposits, and a favorable mix and rates for other borrowings. Our overall cost of funds was down seven basis points to 1.52% due to a lower cost of deposits and better funding rates and mix, as we ended the quarter with lower FHLB advances. Our cost of deposits was down seven basis points to 1.57% for the quarter, with the cost of deposits down to 1.53% in the month of December. Following the rate cuts in October and December, we reduced promotional rate pricing on our interest-bearing transaction accounts, and retail CDs.
Speaker #4: We ended the quarter with lower advances. Our cost of deposits was down seven basis points to 1.57% for the quarter, with the cost of deposits down to 1.53% in the month of December.
Speaker #4: rate cuts Following the in October and December . We reduced promotional rate pricing on our interest bearing transaction accounts and retail CDs . In CDs will expect 2026 , we continue to mature and renew at lower rates , which will support improvement in our cost of deposits .
Speaker #4: The yield on the bond portfolio was up six basis points to 2.98%, due to cash flows of $213 million rolling off at 3.55% and reinvestment in $290 million of bonds at a yield of 4.45%.
Mike Achary: In 2026, we expect CDs will continue to mature and renew at lower rates, which will support improvement in our cost of deposits. The yield on the bond portfolio was up six basis points to 2.98% due to cash flows of 213 million rolling off at 3.55% and reinvestment in 290 million of bonds at a yield of 4.45%. In addition, we had a $0 loss bond swap of 230 million with a yield pickup of 45 basis points. As John mentioned, we completed a bond portfolio restructuring in the first two weeks of January 2026. We sold 1.5 million of bonds at a yield of 2.49% and reinvested the proceeds in bonds carrying a yield of 4.35%.
In 2026, we expect CDs will continue to mature and renew at lower rates, which will support improvement in our cost of deposits. The yield on the bond portfolio was up six basis points to 2.98% due to cash flows of 213 million rolling off at 3.55% and reinvestment in 290 million of bonds at a yield of 4.45%. In addition, we had a $0 loss bond swap of 230 million with a yield pickup of 45 basis points. As John mentioned, we completed a bond portfolio restructuring in the first two weeks of January 2026. We sold 1.5 million of bonds at a yield of 2.49% and reinvested the proceeds in bonds carrying a yield of 4.35%.
Speaker #4: In addition , we had a $0 loss bond swap of 230 million with a yield pickup of 45 basis points . As John mentioned , we completed a bond portfolio restructuring in the first two weeks of January 2026 .
Speaker #4: We sold 1.5 million of at bonds a yield of 2.49% and reinvested the proceeds in bonds carrying a yield of 4.35% . We're expecting the annual impact will support our NII and Nim growth in 2026 , and will contribute seven basis points to our Nim 24 million to and NII about $0.23 to earnings per share .
Speaker #4: Our forward guidance for 2026 is on slide 22 of the earnings deck and includes the expected impact of the bond portfolio restructuring. But excluding the pre-tax charge of $99 million, we are assuming 225 basis point rate cuts.
Mike Achary: We're expecting the annual impact will support our NII and NEM growth in 2026 and will contribute seven basis points to our NEM, $24 million to NII, and about $0.23 to earnings per share. Our forward guidance for 2026 is on slide 22 of the earnings deck and includes the expected impact of the bond portfolio restructuring, but excluding the pre-tax charge of $99 million. We are assuming two 25 basis point rate cuts in April and July of 2026. We expect NII will be up between 5% and 6% from 2025 with modest NEM expansion, and our PP&R guide is to be up between 4.5% and 5.5%. Our efficiency ratio is expected to fall in the range of 54% and 55% in 2026. For the fourth consecutive quarter, our criticized commercial loans improved, decreasing $14 million to $535 million. Non-accrual loans decreased $7 million to $107 million.
We're expecting the annual impact will support our NII and NEM growth in 2026 and will contribute seven basis points to our NEM, $24 million to NII, and about $0.23 to earnings per share. Our forward guidance for 2026 is on slide 22 of the earnings deck and includes the expected impact of the bond portfolio restructuring, but excluding the pre-tax charge of $99 million. We are assuming two 25 basis point rate cuts in April and July of 2026. We expect NII will be up between 5% and 6% from 2025 with modest NEM expansion, and our PP&R guide is to be up between 4.5% and 5.5%. Our efficiency ratio is expected to fall in the range of 54% and 55% in 2026. For the fourth consecutive quarter, our criticized commercial loans improved, decreasing $14 million to $535 million. Non-accrual loans decreased $7 million to $107 million.
Speaker #4: In April and July of 2026 . We expect NII will be up between 5 and 6% from 2025 , with modest Nim expansion and our Ppnr guide is to be up between four and a half and 5.5% .
Speaker #4: Our efficiency ratio is expected to fall in the range of 54 and 55% in 2026 , for the fourth consecutive quarter , our criticized commercial loans improved , decreasing 14 million to 535 million Non-accrual loans decreased 7 million to 107 million , net charge offs at 22 basis points .
Speaker #4: Our loan loss reserves are solid at 1.43% of loans . We expect net charge offs to average . Loans will come in at between 15 and 25 basis points for the full year 2026 .
Speaker #4: Lastly , a comment on capital our capital ratios remain remarkably strong , even with the full exhaustion of our share repurchase plan , where we bought back about 147 million of shares in the fourth quarter of our board 2025 , authorized a new 5% repurchase plan in 2026 , and we expect share repurchases will occur at a more even pace across Changes in 2026 .
Mike Achary: Net charge-offs came in at 22 basis points. Our loan loss reserves are solid at 1.43% of loans. We expect net charge-offs to average loans will come in at between 15 and 25 basis points for the full year 2026. Lastly, a comment on capital. Our capital ratios remain remarkably strong, even with the full exhaustion of our share repurchase plan, where we bought back about 147 million of shares in Q4 2025. Our board reauthorized a new 5% repurchase plan in 2026, and we expect share repurchases will occur at a more even pace across 2026. Changes in the growth dynamics of our balance sheet, economic conditions, and share valuation could impact that view. I will now turn the call back to John.
Net charge-offs came in at 22 basis points. Our loan loss reserves are solid at 1.43% of loans. We expect net charge-offs to average loans will come in at between 15 and 25 basis points for the full year 2026. Lastly, a comment on capital. Our capital ratios remain remarkably strong, even with the full exhaustion of our share repurchase plan, where we bought back about 147 million of shares in Q4 2025. Our board reauthorized a new 5% repurchase plan in 2026, and we expect share repurchases will occur at a more even pace across 2026. Changes in the growth dynamics of our balance sheet, economic conditions, and share valuation could impact that view. I will now turn the call back to John.
Speaker #4: growth dynamics of our balance the sheet , economic conditions , and share valuation could impact that view . I will now turn the call back to John .
Speaker #3: Thanks, Mike. Let's open the call for questions.
Speaker #1: Thank you, and thank everyone. If you would like to ask a question, please press star one on your telephone keypad. Once again, that is star one.
Speaker #1: To ask a question. The first question is from Michael Rose at Raymond James.
Speaker #5: Hey good afternoon guys . Thanks for taking my questions . Notice that the the fourth quarter loan production was up about 7.5% Q on Q but but Paydowns were also up , you know , maybe Michael , John , if you can just talk about , you know , what your expectations are for kind of , you know , gross production versus expected paydowns as we as we move through the year , inclusive of those two cuts .
John Hairston: Thanks, Mike. Let's open the call for questions.
John Hairston: Thanks, Mike. Let's open the call for questions.
Operator: Thank you. Everyone, if you would like to ask a question, please press star one on your telephone keypad. Once again, that is star one to ask a question. The first question is from Michael Rose, Raymond James.
Operator: Thank you. Everyone, if you would like to ask a question, please press star one on your telephone keypad. Once again, that is star one to ask a question. The first question is from Michael Rose, Raymond James.
Speaker #5: Thanks
Michael Rose: Hey, good afternoon, guys. Thanks for taking my questions. Noticed that the Q4 loan production was up about 7.5% Q1Q, but paydowns were also up. Maybe Mike or John, if you can just talk about what your expectations are for kind of gross production versus expected paydowns as we move through the year, inclusive of those two cuts. Thanks.
Michael Rose: Hey, good afternoon, guys. Thanks for taking my questions. Noticed that the Q4 loan production was up about 7.5% Q1Q, but paydowns were also up. Maybe Mike or John, if you can just talk about what your expectations are for kind of gross production versus expected paydowns as we move through the year, inclusive of those two cuts. Thanks.
Speaker #3: to
Speaker #3: ask start with answer . Go Thanks .
Speaker #3: Shane to that . . Thanks , Michael . That I'm going ahead Shane okay .
Speaker #6: John . And Thanks ,
Speaker #6: do is I'll try to really what I'll cover , you know , just kind of where the production came from . And then tie out with what , what see , you know , into we the to the future .
Speaker #6: But first, I'd just like to say thanks to the entire team for delivering a good year of operating results. And, you know, just thanks for that contribution to success.
John Hairston: Thanks, Michael. I'm going to ask Shane to start with that answer. Go ahead, Shane.
John Hairston: Thanks, Michael. I'm going to ask Shane to start with that answer. Go ahead, Shane.
Speaker #6: I think you know, it's important to note that loan production increased for the third consecutive quarter, with nearly $1,000,000,006 of production in the fourth quarter.
Shane Loper: Okay. Thanks, John. And really, what I'll do is I'll try to cover just kind of where the production came from and then tie out with what we see into the future. But first, I'd just like to say thanks to the entire team for delivering a good year of operating results and just thanks for that contribution to success. I think it's important to note that loan production increased for the third consecutive quarter with nearly $1.6 billion of production in the fourth quarter. Typically, we'll see 35% of all that production funded and then grow to around about 40%. In the fourth quarter, the team produced an additional $260 million in production over the third quarter, which contributed pretty significantly to that 6% growth that we're talking about. Geographically, the banking teams delivered growth across all of our core markets in Texas, Louisiana, and Florida.
Shane Loper: Okay. Thanks, John. And really, what I'll do is I'll try to cover just kind of where the production came from and then tie out with what we see into the future. But first, I'd just like to say thanks to the entire team for delivering a good year of operating results and just thanks for that contribution to success. I think it's important to note that loan production increased for the third consecutive quarter with nearly $1.6 billion of production in the fourth quarter. Typically, we'll see 35% of all that production funded and then grow to around about 40%. In the fourth quarter, the team produced an additional $260 million in production over the third quarter, which contributed pretty significantly to that 6% growth that we're talking about. Geographically, the banking teams delivered growth across all of our core markets in Texas, Louisiana, and Florida.
Speaker #6: You know, typically we'll see 35% of all that production funded and then grow to about 40% in the fourth quarter.
Speaker #6: The team produced an additional 260 million in production over the third quarter , which contributed pretty , pretty significantly to that . That 6% growth that we're talking about geographically , the banking teams delivered growth across all of our core markets in Texas , Louisiana and Florida .
Speaker #6: And this is also important because as we intentionally improve our commercial and middle market segment mix, that's going to deliver higher-spread relationships that may offset some of the thinner spreads in the specialty segments.
Speaker #6: Commercial real estate continues to deliver consistent production, which will fund up once that initial equity burns off in those deals. And we expect to experience sustained fundings that really have occurred with production over the last 18 to 24 months.
Shane Loper: And this is also important because as we intentionally improve our commercial and middle market segment mix, that's going to deliver higher spread relationships that may offset some of the thinner spreads in the specialty segments. Commercial Real Estate continues to deliver consistent production, which will fund up once that initial equity burns off in those deals. And we expect to experience sustained fundings that really have occurred with production over the last 18 to 24 months throughout the year in 2026, with expected and planned paydowns as a headwind to CRE growth. And I don't think that's anything new that we're talking about there. And a lot of those paydowns will get to lease up CO and go maybe to the permanent market. CRE production for 2026 looks to continue to be steady as the 2025 production funds up.
And this is also important because as we intentionally improve our commercial and middle market segment mix, that's going to deliver higher spread relationships that may offset some of the thinner spreads in the specialty segments. Commercial Real Estate continues to deliver consistent production, which will fund up once that initial equity burns off in those deals. And we expect to experience sustained fundings that really have occurred with production over the last 18 to 24 months throughout the year in 2026, with expected and planned paydowns as a headwind to CRE growth. And I don't think that's anything new that we're talking about there. And a lot of those paydowns will get to lease up CO and go maybe to the permanent market. CRE production for 2026 looks to continue to be steady as the 2025 production funds up.
Speaker #6: Throughout the year in 2026, with expected and planned paydowns as a headwind to CRE growth. And I don't think that's anything that new that we're talking about.
Speaker #6: There a lot of those paydowns will get to lease CEO up and go maybe to the permanent market CRE production for 2026 looks to be continue to steady as the 2025 production funds , looking at healthcare , that team continues to deliver growth with current and new banker adds the production delivers good NII , but slightly thinner that's one of those spreads than the commercial and middle market segments .
Speaker #6: And I expect healthcare to continue to deliver as we've shifted our focus more to healthcare, real estate, and a selective focus on senior care.
Speaker #6: Sponsor operators , commercial finance , which is our equipment , finance and teams . ABL They also continue to deliver strong production and balanced growth .
Shane Loper: Looking at healthcare, that team continues to deliver growth with current and new banker adds. The production delivers good NII, but that's one of those slightly thinner spreads than the commercial and middle market segments. I expect healthcare to continue to deliver as we've shifted our focus more to healthcare real estate and a selective focus on senior care sponsor operators. Commercial finance, which is our equipment finance and ABL teams, they also continue to deliver strong production and balance growth. We're experiencing good deal flow there so that we can screen credit and are considering and executing on capital those companies that are considering and executing on capital investments. As I said about healthcare, these balances produce positive NII, but are at a little bit lower spread.
Looking at healthcare, that team continues to deliver growth with current and new banker adds. The production delivers good NII, but that's one of those slightly thinner spreads than the commercial and middle market segments. I expect healthcare to continue to deliver as we've shifted our focus more to healthcare real estate and a selective focus on senior care sponsor operators. Commercial finance, which is our equipment finance and ABL teams, they also continue to deliver strong production and balance growth. We're experiencing good deal flow there so that we can screen credit and are considering and executing on capital those companies that are considering and executing on capital investments. As I said about healthcare, these balances produce positive NII, but are at a little bit lower spread.
Speaker #6: We're expecting we're experiencing good deal flow there so that we can screen credit and are considering and executing on capital . Those those companies that are considering and executing on capital investments , as I said about balances produce positive NII .
Speaker #6: But a little are at bit lower spread . We saw some consumer loan growth one of the for first times , and it grew about 5 million in the quarter , led by HELOC production , fourth quarter 25 was our first healthy growth quarter in 25 .
Speaker #6: About $15 million and a three-year high of applications in the quarter. So we believe HELOCs will continue to be a solid consumer product into '26, and we get about 40% line utilization.
Shane Loper: We saw some consumer loan growth for one of the first times, and it grew about $5 million in the quarter, led by HELOC production. Q4 2025 was our first HELOC growth quarter in 2025, about $15 million, and a three-year high of applications in the quarter. So we believe HELOCs will continue to be a solid consumer product into 2026, and we get about 40% line utilization there. And finally, kind of wrapping up on growth, I'd like to call out our business banking team. They produced a strong $36 million in growth this quarter at our highest spreads. We recently recruited an accomplished executive from the super regional bank to lead our business banking segment and have high expectations of that team concerning loan and deposit growth throughout 2026.
We saw some consumer loan growth for one of the first times, and it grew about $5 million in the quarter, led by HELOC production. Q4 2025 was our first HELOC growth quarter in 2025, about $15 million, and a three-year high of applications in the quarter. So we believe HELOCs will continue to be a solid consumer product into 2026, and we get about 40% line utilization there. And finally, kind of wrapping up on growth, I'd like to call out our business banking team. They produced a strong $36 million in growth this quarter at our highest spreads. We recently recruited an accomplished executive from the super regional bank to lead our business banking segment and have high expectations of that team concerning loan and deposit growth throughout 2026.
Speaker #6: There . And finally , kind of wrapping up on on growth , I'd like to call out our business banking team . They produced a strong 36 million in growth this quarter at our highest spreads .
Speaker #6: We recently recruited an accomplished executive from the super regional bank to lead our Business Banking segment, and have high expectations of that team concerning loan and deposit growth throughout 2026.
Speaker #6: You know, our goal is to be the best bank for privately owned businesses in the country, and we're committed to delivering on that aspirational goal with Crick.
Speaker #6: Credit execution , market leading deposit products and sophisticated wealth management for both businesses and business owners . So if I look forward to 2026 , I believe our team is on the right clients and prospects to deliver on a better segment .
Speaker #6: Mix and deliver on our mid-single digit growth guidance . So kind of wrapping up , when you look at Paydowns , I think , you know , we can expect paydowns in CRE .
Shane Loper: Our goal is to be the best bank for privately owned businesses in the country, and we're committed to delivering on that aspirational goal with quick credit execution, market-leading deposit products, and sophisticated wealth management for both businesses and business owners. So if I look forward to 2026, I believe our team is calling on the right clients and prospects to deliver on a better segment mix and deliver on our mid-single-digit growth guidance. So kind of wrapping up, when you look at paydowns, I think we can expect paydowns in CRE. I think we can still expect some entrance of private credit and other lending opportunities like that with some of our clients. But right now, we feel like we've got a fairly stable base to work from, and it's all about generating business going forward.
Our goal is to be the best bank for privately owned businesses in the country, and we're committed to delivering on that aspirational goal with quick credit execution, market-leading deposit products, and sophisticated wealth management for both businesses and business owners. So if I look forward to 2026, I believe our team is calling on the right clients and prospects to deliver on a better segment mix and deliver on our mid-single-digit growth guidance. So kind of wrapping up, when you look at paydowns, I think we can expect paydowns in CRE. I think we can still expect some entrance of private credit and other lending opportunities like that with some of our clients. But right now, we feel like we've got a fairly stable base to work from, and it's all about generating business going forward.
Speaker #6: I think we can still get some entrant of, you know, private credit and other lending opportunities like that with some of our clients.
Speaker #6: But , you know , right now we we feel like we've got a fairly stable base to from . And , work you know , it's all about generating business going forward .
Speaker #3: Michael, any follow-up?
Speaker #5: It's a very detailed response . So I appreciate all the color . Maybe just as my follow up question so looks like the ROA target has been moved a little bit higher from from last year .
Speaker #5: But the TCE ratios is also higher . Can you just walk us through some of the other assumptions that kind of underlie , you know , meeting some of those targets ?
Speaker #5: The three your CSOs—I know you have the Fed funds rate at 3.25%, but we would just love some other colors around kind of the base case expectations.
John Hairston: Michael, any follow-up?
John Hairston: Michael, any follow-up?
Kathryn Mistich: It's a very detailed response, so I appreciate all the color. Maybe just as my follow-up question. So it looks like the ROA target has been moved a little bit higher from last year, but the TCE ratio is also higher. Can you just walk us through some of the other assumptions that kind of underlie meeting some of those targets, the three-year CSOs? I know you have the Fed funds rate at 3.25%, but we'd just love some other colors around kind of the base case expectations. Thanks.
Michael Rose: It's a very detailed response, so I appreciate all the color. Maybe just as my follow-up question. So it looks like the ROA target has been moved a little bit higher from last year, but the TCE ratio is also higher. Can you just walk us through some of the other assumptions that kind of underlie meeting some of those targets, the three-year CSOs? I know you have the Fed funds rate at 3.25%, but we'd just love some other colors around kind of the base case expectations. Thanks.
Speaker #5: Thanks , Mike .
Speaker #7: Sure , Michael , this is Mike . I can add some color to that in a few comments . I think the biggest thing is , you know , this notion of consistent growth , organic balance sheet growth over the next three years , you know , our guidance for loans has stepped up this year to the mid-single digits from what we achieved last year , which was akin to more , more low single digits .
Speaker #7: So, kind of continuing, you know, this notion of consistent balance sheet growth over the next couple of years is really important.
Shane Loper: Sure, Michael. This is Mike. I can add some color to that in a few comments. I think the biggest thing is this notion of consistent balance sheet growth, organic balance sheet growth over the next three years. Our guidance for loans has stepped up this year to the mid-single digits from what we achieved last year, which was akin to more low single digits. So kind of continuing this notion of consistent balance sheet growth over the next couple of years is really important. You called out the rate environment. We're assuming, just to keep the assumptions straightforward, Fed funds at three and a quarter, which is where we expect Fed funds to end at the end of this year.
Mike Achary: Sure, Michael. This is Mike. I can add some color to that in a few comments. I think the biggest thing is this notion of consistent balance sheet growth, organic balance sheet growth over the next three years. Our guidance for loans has stepped up this year to the mid-single digits from what we achieved last year, which was akin to more low single digits. So kind of continuing this notion of consistent balance sheet growth over the next couple of years is really important. You called out the rate environment. We're assuming, just to keep the assumptions straightforward, Fed funds at three and a quarter, which is where we expect Fed funds to end at the end of this year.
Speaker #7: You know , you called out the rate environment . You know , we're assuming , you know , just to keep the assumptions , you know , straightforward fed funds at three and a quarter , which is where we expect fed funds to end at the end of this year .
Speaker #7: You know , we'll continue to reinvest back in the So I would company . expect expense growth to be , you know , something on par with what we're guiding for this year , which if you kind of strip away , you know , the investments that were kind of calling out in the and the guidance annualized impact of Sable , you know , is still a pretty reasonable run rate of , you know , somewhere around three and a half to 4% .
Shane Loper: We'll continue to reinvest back in the company, so I would expect expense growth to be something on par with what we're guiding for this year, which, if you kind of strip away the investments that we're kind of calling out in the guidance and the annualized impact of Sabal, is still a pretty reasonable run rate of somewhere around 3.5% to 4%. So that kind of continuing for the next couple of years. And then, look, we've been tremendously successful in terms of kind of upscaling our fee-income businesses. The guidance for next year is in the 4% to 5% range. So to kind of continue that going forward is equally important. We'll grow the deposit side of the balance sheet somewhere over the next couple of years, I think, in low to mid-single digits. And then the NIM expansion will follow along with NII growth.
We'll continue to reinvest back in the company, so I would expect expense growth to be something on par with what we're guiding for this year, which, if you kind of strip away the investments that we're kind of calling out in the guidance and the annualized impact of Sabal, is still a pretty reasonable run rate of somewhere around 3.5% to 4%. So that kind of continuing for the next couple of years. And then, look, we've been tremendously successful in terms of kind of upscaling our fee-income businesses. The guidance for next year is in the 4% to 5% range. So to kind of continue that going forward is equally important. We'll grow the deposit side of the balance sheet somewhere over the next couple of years, I think, in low to mid-single digits. And then the NIM expansion will follow along with NII growth.
Speaker #7: So that kind of continuing for the next couple of years. And then, look, we've been tremendously successful in terms of kind of upscaling our fee income businesses.
Speaker #7: The guidance for next year is in the 4% to 5% range. You know, so to kind of continue that going forward is equally important.
Speaker #7: know , we'll we'll grow the deposit side of the balance sheet . You know , somewhere over the next couple of years , I think in low to mid single digits .
Speaker #7: you know , And the Nim expansion will follow along with NII growth . So those are the main things now in terms of , you know , the TCE guide of 9 to 9.5% , you we're well know , north of that now at just over 10% .
Speaker #7: You know , you can assume that we'll continue buybacks at the levels we've done . You know , both in 25 . And again , what we're guiding for for 26 .
Speaker #7: So I think the combination of continuing , you know , a pretty robust buyback program , along with addressing the dividend and organically balance growing the sheet , should help us get our TCE down to those levels .
Shane Loper: So those are the main things. Now, in terms of the TCE guide of 9% to 9.5%, we're well north of that now at just over 10%. You can assume that we'll continue buybacks at the levels we've done, both in 2025 and, again, what we're guiding for 2026. So I think the combination of continuing a pretty robust buyback program along with addressing the dividend and organically growing the balance sheet should help us get our TCE down to those levels. So those are kind of the main assumptions.
So those are the main things. Now, in terms of the TCE guide of 9% to 9.5%, we're well north of that now at just over 10%. You can assume that we'll continue buybacks at the levels we've done, both in 2025 and, again, what we're guiding for 2026. So I think the combination of continuing a pretty robust buyback program along with addressing the dividend and organically growing the balance sheet should help us get our TCE down to those levels. So those are kind of the main assumptions.
Speaker #7: So those are kind of the main, main assumptions.
Speaker #3: This is John. Just to add,
Speaker #3: Very. Michael, this is it. But I need a little to think—if we kind of step back, or at 60,000 feet, and you take what you and Shane both shared to Mike, the ROA guidance being a little bit steeper than where we are today doesn't seem like a tall task.
Speaker #3: If we weren't reinvesting back in future years, revenue would look like we are today and what we guided to. But you know, our goal is not to just become, or be, a very high profitability organization.
John Hairston: Michael, this is John. I'll add very little to it, but I think if we kind of step back to or step up to 60,000 feet and you take what Mike and Shane both shared, the ROA guidance being a little bit steeper than where we are today doesn't seem like a tall task if we weren't reinvesting back in future years' revenue like we are today and what we guided to. But our goal is not to just become a very or be a very high profitability organization. It's also to deliver on pretty reliable balance sheet growth year in and year out so investors see PP&R continue to grow but still maintain a pretty profitable book. And that's a hat trick to pull all that off at the same time. And just for a bonus, maintain excellent to very solid credit quality.
John Hairston: Michael, this is John. I'll add very little to it, but I think if we kind of step back to or step up to 60,000 feet and you take what Mike and Shane both shared, the ROA guidance being a little bit steeper than where we are today doesn't seem like a tall task if we weren't reinvesting back in future years' revenue like we are today and what we guided to. But our goal is not to just become a very or be a very high profitability organization. It's also to deliver on pretty reliable balance sheet growth year in and year out so investors see PP&R continue to grow but still maintain a pretty profitable book. And that's a hat trick to pull all that off at the same time. And just for a bonus, maintain excellent to very solid credit quality.
Speaker #3: Also, it's been pretty reliable to deliver sheet growth year in and year out. So investors continue to see PPNR grow, but we still maintain a pretty profitable book.
Speaker #3: And that's a hat trick to pull all that off at the same time . And , you know , just for a bonus , maintain , you know , excellent .
Speaker #3: Very solid credit quality. So, if we slowed the expense growth down some through reinvesting less, then our profitability guide would have been higher.
Speaker #3: But our goal is to to add bankers and add offices , the latter perhaps year or next year . And and continue balance growing a bigger sheet and higher growth markets so that on an overall basis , investors can see that value build over time .
Speaker #3: So, I hope that helps you kind of bring all those pieces together.
John Hairston: So if we slowed the expense growth down some through reinvesting less, then our profitability guide would have been higher. But our goal is to add bankers and add offices, perhaps the latter part of the year or next year, and continue growing a bigger balance sheet in higher growth markets so that, on an overall basis, investors are going to see that value build over time. So I hope that helps you kind of bring all those pieces together.
So if we slowed the expense growth down some through reinvesting less, then our profitability guide would have been higher. But our goal is to add bankers and add offices, perhaps the latter part of the year or next year, and continue growing a bigger balance sheet in higher growth markets so that, on an overall basis, investors are going to see that value build over time. So I hope that helps you kind of bring all those pieces together.
Speaker #5: Yeah , it's all very helpful . I appreciate all the color . I'll step back . Thanks for taking my questions .
Speaker #3: You bet. Thanks, Michael. Happy New Year.
Speaker #1: The next question comes from Catherine Mueller from KBW.
Speaker #8: Thanks . Good afternoon
Speaker #8: .
Speaker #3: Happy New Year. Hey, Catherine.
Speaker #8: A just on question on the margin . You talked about Modest seeing Nim 26 . expansion in But we're getting seven basis points immediately upfront from the bond restructure .
Kathryn Mistich: Yeah, it's all very helpful. I appreciate all the color. I'll step back. Thanks for taking my questions.
Michael Rose: Yeah, it's all very helpful. I appreciate all the color. I'll step back. Thanks for taking my questions.
Speaker #8: do you Are kind of walk us through you're thinking about the margin kind of outside of that , that one time event , is it do you still see a core margin having upside , or is it or is really that modest expansion coming from the bond And restructure ?
Shane Loper: You bet. You bet. Thanks, Michael.
Shane Loper: You bet. You bet. Thanks, Michael.
John Hairston: Happy New Year.
John Hairston: Happy New Year.
Operator: The next question comes from Catherine Mealor from KBW.
Operator: The next question comes from Catherine Mealor from KBW.
Michael Rose: Thanks. Good afternoon.
Catherine Mealor: Thanks. Good afternoon.
Shane Loper: Hey, Happy New Year, Kathryn.
Shane Loper: Hey, Happy New Year, Kathryn.
Operator: A question just on the margin. You talked about seeing modest NIM expansion in 2026, but we're getting seven basis points immediately upfront from the bond restructure. Do you kind of walk us through kind of what you're thinking about the margin kind of outside of that one-time event? Do you kind of still see a core margin having upside, or is it really that modest expansion coming from the bond restructure and outside of that, we're kind of stable once we hit that new rate? Thanks.
Catherine Mealor: A question just on the margin. You talked about seeing modest NIM expansion in 2026, but we're getting seven basis points immediately upfront from the bond restructure. Do you kind of walk us through kind of what you're thinking about the margin kind of outside of that one-time event? Do you kind of still see a core margin having upside, or is it really that modest expansion coming from the bond restructure and outside of that, we're kind of stable once we hit that new rate? Thanks.
Speaker #8: outside of that , we're kind of stable . Once we hit that , that new , that new rate . Thanks .
Speaker #7: glad to Sure . Be , Catherine . So I think the the main underpinnings of what we're referring to in terms of our ability to widen the margin , you know , and grow NII next year is really around the balance sheet .
Speaker #7: So , you know , we've got the the loan growth pegged at mid-single digits . So if you assume somewhere that between 4 and 5% , you know , that should add a healthy amount of volume to our balance sheet .
Rachel Smith: Sure. I'd be glad to, Kathryn. So I think the main underpinnings of what we're referring to in terms of our ability to widen the margin and grow NII next year is really around the balance sheet. So we've got the loan growth pegged at mid-single digits. So if you assume that's somewhere between 4% and 5%, that should add a healthy amount of volume to our balance sheet. And certainly, coming with that will be an intended increase of average earning assets. So I think, first and foremost, it's organically expanding the balance sheet. Then you called out the bond portfolio restructure. So that'll contribute 32 basis points in terms of the bond yield and about 7 basis points on the NIM.
Mike Achary: Sure. I'd be glad to, Kathryn. So I think the main underpinnings of what we're referring to in terms of our ability to widen the margin and grow NII next year is really around the balance sheet. So we've got the loan growth pegged at mid-single digits. So if you assume that's somewhere between 4% and 5%, that should add a healthy amount of volume to our balance sheet. And certainly, coming with that will be an intended increase of average earning assets. So I think, first and foremost, it's organically expanding the balance sheet. Then you called out the bond portfolio restructure. So that'll contribute 32 basis points in terms of the bond yield and about 7 basis points on the NIM.
Speaker #7: You know , and certainly coming with that will be , you know , an intended increase of average earning assets . So I think first and foremost , it's organically the expanding balance sheet .
Speaker #7: Then you called out the the bond portfolio restructure . So you know , that'll contribute , you know , 32 basis points in terms of the the yield about seven basis points on the Nim .
Speaker #7: But related to the bond portfolio, we also have about $1.15 billion of cash flow, principal cash flow, coming back to us next year.
Speaker #7: That will be coming back at about 3.75 and going back on the balance sheet , it call between four and a quarter and 4.5% , depending on where rates are .
Speaker #7: So that's a significant improvement on top of , you know , the 32 basis points related to the bond restructure . So that could be as much as , you know , somewhere between 45 and 50 basis points of bond yield improvement from the fourth 25 to the fourth quarter quarter of of 26 .
Rachel Smith: But related to the bond portfolio, we also have about $1.15 billion of principal cash flow coming back to us next year that'll be coming back at about 3.75% and going back on the balance sheet, call it between 4.25% and 4.5%, depending where rates are. So that's a significant improvement on top of the 32 basis points related to the bond restructure. So that could be as much as somewhere between 45 and 50 basis points of bond yield improvement from Q4 2025 to Q4 2026. So that's significant. Then in terms of our cost of deposits, we're assuming the two rate cuts next year, one in April and one in July. So given that, we've got anywhere from about 25 to 30 basis points improvement in our cost of deposits from Q4 to Q4.
But related to the bond portfolio, we also have about $1.15 billion of principal cash flow coming back to us next year that'll be coming back at about 3.75% and going back on the balance sheet, call it between 4.25% and 4.5%, depending where rates are. So that's a significant improvement on top of the 32 basis points related to the bond restructure. So that could be as much as somewhere between 45 and 50 basis points of bond yield improvement from Q4 2025 to Q4 2026. So that's significant. Then in terms of our cost of deposits, we're assuming the two rate cuts next year, one in April and one in July. So given that, we've got anywhere from about 25 to 30 basis points improvement in our cost of deposits from Q4 to Q4.
Speaker #7: So that's that's significant . Then in terms of our cost of deposits , you know , we're assuming the two rate cuts next year , one in April and one in July .
Speaker #7: So given that , you know , we've got anywhere from about 25 to 30 basis points , improvement in our cost of deposits , you know , from fourth quarter to fourth quarter , a lot of that's coming from our continued ability to reprice CD maturities .
Speaker #7: We've got about $8 billion of CD maturities next year. Those will come off at about 3.30%. Is that assumption they'll go back on at about 2.80% or so?
Speaker #7: That is inclusive of about an 81% renewal rate . So the organic growth of the balance sheet , the securities yield improvement , our ability to continue to reduce our cost of deposits , those are the main tailwinds , if you will , toward Nim improvement next year .
Rachel Smith: A lot of that's coming from our continued ability to reprice CD maturities. We've got about $8 billion of CD maturities next year. Those will come off at about 334. The assumption is that they'll go back on at about 280 or so. That is inclusive of about an 81% renewal rate. So the organic growth of the balance sheet, the securities yield improvement, our ability to continue to reduce our cost of deposits, those are the main tailwinds, if you will, toward NIM improvement next year. Probably one of the headwinds would be, we do expect with a couple of rate cuts next year, our loan yield will continue to decline a bit next year, but I think at a slower pace than what you saw over the course of the fourth quarter.
A lot of that's coming from our continued ability to reprice CD maturities. We've got about $8 billion of CD maturities next year. Those will come off at about 334. The assumption is that they'll go back on at about 280 or so. That is inclusive of about an 81% renewal rate. So the organic growth of the balance sheet, the securities yield improvement, our ability to continue to reduce our cost of deposits, those are the main tailwinds, if you will, toward NIM improvement next year. Probably one of the headwinds would be, we do expect with a couple of rate cuts next year, our loan yield will continue to decline a bit next year, but I think at a slower pace than what you saw over the course of the fourth quarter.
Speaker #7: Probably one of the headwinds would be, you know, we do expect with a couple of rate cuts next year, our loan yield will continue to decline a bit next year.
Speaker #7: But I think at a slower pace than what you saw over the course of the the fourth quarter , I think all that together you put and , you know , our Nim improvement , you know , call it somewhere between , you know , 12 and 15 basis points , maybe a little bit north of that , you know , again , with , with seven coming from the the bond restructure .
Speaker #7: That's so how we're kind of thinking about the NIM. And I—next year.
Speaker #3: By next you year mean
Speaker #7: Yes . I'm
Speaker #7: Sorry, 2626. This is the fourth quarter.
Rachel Smith: I think you put all that together, and our NIM improvement, call it somewhere between 12 and 15 basis points, maybe a little bit north of that, again, with seven coming from the bond restructure. So that's how we're kind of thinking about the NIM and NII next year.
Rachel Smith: I think you put all that together, and our NIM improvement, call it somewhere between 12 and 15 basis points, maybe a little bit north of that, again, with seven coming from the bond restructure. So that's how we're kind of thinking about the NIM and NII next year.
Speaker #3: Call .
Speaker #8: I , I , I understand I this is that was really helpful , so Mike . Thank you much . And then maybe follow up back to the revenue producer and hiring plans that you have , you hired , I think you said 22 new bankers , third quarter , 24 through fourth quarter , 25 .
John Hairston: By next year, you mean '26?
John Hairston: By next year, you mean '26?
Speaker #8: So, call it over the past year. And we're now going to 50 in '26. So we're doubling the amount of bankers that we're hiring.
Rachel Smith: 2026, yes. I'm sorry. This is a fourth quarter call.
Mike Achary: 2026, yes. I'm sorry. This is a fourth quarter call.
Speaker #8: I know part of we've kind of gained momentum in that plan I know throughout the course of the year , but maybe just walk us through kind of what gives you confidence in being able to hire that many more bankers .
Operator: I understand. That was really helpful, Mike. Thank you so much. And then maybe just as a follow-up back to the revenue producer and hiring plans that you have, you've hired, I think you said, 22 new bankers Q3 2024 through Q4 2025, so call it over the past year. And we're now going to do 50 in 2026. So we're doubling the amount of bankers that we're hiring. I know part of you've kind of gained momentum in that plan, I know, throughout the course of the year. But maybe just walk us through kind of what gives you confidence in being able to hire that many more bankers this upcoming year versus last year, and maybe kind of the pace that we should expect that to come on board as we move through the year.
Catherine Mealor: I understand. That was really helpful, Mike. Thank you so much. And then maybe just as a follow-up back to the revenue producer and hiring plans that you have, you've hired, I think you said, 22 new bankers Q3 2024 through Q4 2025, so call it over the past year. And we're now going to do 50 in 2026. So we're doubling the amount of bankers that we're hiring. I know part of you've kind of gained momentum in that plan, I know, throughout the course of the year. But maybe just walk us through kind of what gives you confidence in being able to hire that many more bankers this upcoming year versus last year, and maybe kind of the pace that we should expect that to come on board as we move through the year.
Speaker #8: This coming year versus last year, and maybe kind of the pace that we should expect that to come on board as we move through the year.
Speaker #6: Sure . Katherine , this is Shane . Thanks . Thanks for that . So we're confident in it . You know , however , hiring is bank competitive as every is looking to hire from , you know , a limited pool of bankers .
Speaker #6: And the reason we're confident is we've significantly enhanced our banker hiring discipline to really look just like our client acquisition process . You know , our our goals are to hire probably a split of 60% business bankers , 40% commercial bankers .
Rachel Smith: Sure. Kathryn, this is Shane. Thanks for that.
Shane Loper: Sure. Kathryn, this is Shane. Thanks for that.
Speaker #6: Of that , up to 50 and 26 . And those folks , you know , really are targeted to intentionally generate a better mix a little more portfolio , granular business .
Operator: Shane.
Catherine Mealor: Shane.
Rachel Smith: So we're confident in it. However, hiring's competitive as every bank is looking to hire from a limited pool of bankers. The reason we're confident is we've significantly enhanced our banker hiring discipline to really look just like our client acquisition process. Our goals are to hire probably a split of 60% business bankers, 40% commercial bankers, of that up to 50 in 2026. Those folks really are targeted to intentionally generate a better portfolio mix, a little more granular business. The enhanced recruiting process is yielding expected results. We're out of the gate strong in Q1. We began this early Q4, and it's a process that is really pretty tight in terms of ongoing meetings, pipeline review of potential hires, and where they are and what their skill sets are. We're following up on that on a very regular basis.
Shane Loper: So we're confident in it. However, hiring's competitive as every bank is looking to hire from a limited pool of bankers. The reason we're confident is we've significantly enhanced our banker hiring discipline to really look just like our client acquisition process. Our goals are to hire probably a split of 60% business bankers, 40% commercial bankers, of that up to 50 in 2026. Those folks really are targeted to intentionally generate a better portfolio mix, a little more granular business. The enhanced recruiting process is yielding expected results. We're out of the gate strong in Q1. We began this early Q4, and it's a process that is really pretty tight in terms of ongoing meetings, pipeline review of potential hires, and where they are and what their skill sets are. We're following up on that on a very regular basis.
Speaker #6: The enhanced recruiting process is yielding results . We're expected gate , out of the strong in the first quarter , we began this early fourth quarter , and it's it's a process that is really pretty , pretty tight in terms of , you know , ongoing meetings , pipeline review of potential hires and where they are and what their skill sets are .
Speaker #6: And we're following up on that on a very regular basis. So I think the strength of that process has been greatly enhanced.
Speaker #6: And as I've said before, and we've said before, this organic hiring plan is designed to be, you know, like a flywheel, with bankers hired in previous years and quarters ramping up production as those current year bankers are oriented to ourselves and credit processes.
Speaker #6: So we're getting the production from those folks that the 22 that we've hired last year , as we're hiring up to the 50 this year and really to date , the bankers hired are performing as expected and contributing to our growth .
Rachel Smith: So I think the strength of that process has been greatly enhanced. And as I've said before and we've said before, this organic hiring plan is designed to be like a flywheel with bankers hired in previous years and quarters ramping up production as those current-year bankers are oriented to ourselves and credit processes. So we're getting the production from those folks, the 22 that we've hired last year, as we're hiring up to the 50 this year. And really, to date, the bankers hired are performing as expected and contributing to our growth. And we monitor that performance on an ongoing basis to ensure that we're getting what we expect. We're also going to continue to be opportunistic in hiring bankers in our specialty segments, so CRE, healthcare, equipment to finance, and ABL.
So I think the strength of that process has been greatly enhanced. And as I've said before and we've said before, this organic hiring plan is designed to be like a flywheel with bankers hired in previous years and quarters ramping up production as those current-year bankers are oriented to ourselves and credit processes. So we're getting the production from those folks, the 22 that we've hired last year, as we're hiring up to the 50 this year. And really, to date, the bankers hired are performing as expected and contributing to our growth. And we monitor that performance on an ongoing basis to ensure that we're getting what we expect. We're also going to continue to be opportunistic in hiring bankers in our specialty segments, so CRE, healthcare, equipment to finance, and ABL.
Speaker #6: And we monitor that performance on an ongoing basis to ensure that we're getting what we expect. We're also going to continue to be opportunistic in hiring bankers in our specialty segments.
Speaker #6: So Cree Healthcare equipment finance and ABL . So at this given the point , enhanced processes and the work that's going on , the pipeline , if you will , of potential candidates to bring into the company , is is good .
Speaker #6: I feel very good about getting that up to 50 and 26.
Speaker #8: Great. Very helpful. Thank you. Great quarter, guys, and great year.
Speaker #3: Thank you .
Speaker #1: Up next, we'll take a question from Casey here from Autonomous Research.
Rachel Smith: So at this point, given the enhanced processes and the work that's going on, the pipeline, if you will, of potential candidates to bring into the company is good. I feel very good about getting that up to 50 in 2026.
So at this point, given the enhanced processes and the work that's going on, the pipeline, if you will, of potential candidates to bring into the company is good. I feel very good about getting that up to 50 in 2026.
Speaker #9: Yeah great . Good Thanks . afternoon everyone . So I wanted to touch on fees . The the fee guide I know 4 to 5% .
Speaker #9: Seems like a lot , but it's you did have Sable which closed in the middle of the year . And it doesn't . It feels a just little conservative because if I , if I run rate this fourth quarter here , you're already at that .
Operator: Great. Very helpful. Thank you. Great quarter, guys. And great year.
Catherine Mealor: Great. Very helpful. Thank you. Great quarter, guys. And great year.
Rachel Smith: Thank you.
Shane Loper: Thank you.
Operator: Up next, we'll take a question from Casey Haire from Autonomous Research.
Operator: Up next, we'll take a question from Casey Haire from Autonomous Research.
Speaker #9: That that 425 level . So I'm just wondering if there's if we're missing something or if it's just a little conservative . Thanks .
John Hairston: Yeah. Great. Thanks. Good afternoon, everyone. So I wanted to touch on fees. The fee guide, I know 4% to 5% seems like a lot, but you did have Sabal, which closed in the middle of the year. It feels a little conservative because if I run rate this Q4 here, you're already at that 4.25 level. I'm just wondering if we're missing something or if it's just a little conservative. Thanks.
Casey Haire: Yeah. Great. Thanks. Good afternoon, everyone. So I wanted to touch on fees. The fee guide, I know 4% to 5% seems like a lot, but you did have Sabal, which closed in the middle of the year. It feels a little conservative because if I run rate this Q4 here, you're already at that 4.25 level. I'm just wondering if we're missing something or if it's just a little conservative. Thanks.
Speaker #6: Thanks . This is Shane and I'll that one too . take So fee income across all of our banking segments and products , you know , as you just articulated , continues to deliver in the fourth quarter , we've grown consumer days in the fourth quarter and throughout the year .
Speaker #6: That's to service charges , which will contributing contribute even more as a full year of those accounts are on the books . Mobile openings have increased by 20% year over year , as well as 80% of our new checking accounts are digitally active .
Rachel Smith: Thanks. This is Shane. I'll take that one too. So fees and income across all of our banking segments and products, as you just articulated, continues to deliver in the fourth quarter. We've grown consumer DDAs in the fourth quarter and throughout the year. That's contributing to service charges, which will contribute even more as a full year of those accounts are on the books. Mobile openings have increased by 20% year over year, as well as 80% of our new checking accounts are digitally active. So that really makes them very sticky and kind of primary accounts. Business service charges continue to perform, and those are reflective of the book that we have and our strong treasury service products and services. As we improve our overall execution in business banking, as I mentioned before, I would expect those deposits and deposit fees to follow along that improvement curve.
Shane Loper: Thanks. This is Shane. I'll take that one too. So fees and income across all of our banking segments and products, as you just articulated, continues to deliver in the fourth quarter. We've grown consumer DDAs in the fourth quarter and throughout the year. That's contributing to service charges, which will contribute even more as a full year of those accounts are on the books. Mobile openings have increased by 20% year over year, as well as 80% of our new checking accounts are digitally active. So that really makes them very sticky and kind of primary accounts. Business service charges continue to perform, and those are reflective of the book that we have and our strong treasury service products and services. As we improve our overall execution in business banking, as I mentioned before, I would expect those deposits and deposit fees to follow along that improvement curve.
Speaker #6: So that really makes them very sticky and kind of primary accounts , you know , business service charges continue to perform , and it's those are reflective of the book that we have and our strong Treasury service products and services .
Speaker #6: And as we improve our overall execution and business banking, as I mentioned before, I would expect those deposits and deposit fees to follow along that improvement curve.
Speaker #6: Card now, our fees are generally holding flattish in a trajectory quarter over quarter. But I think there's an opportunity there to grow in 2026 through our purchasing card.
Speaker #6: And business card growth. Merchant is another area where we have solid opportunity to grow as that business banking execution improves and our product bundling strategy gains momentum.
Speaker #6: There . Mortgage fees again continue to perform and we're ready for anything that may happen in the mortgage market with our direct to to consumer digital offering have that we there .
Rachel Smith: Card fees, right now, are generally holding flattish in a trajectory quarter over quarter. But I think there's an opportunity there to grow in 2026 through our purchasing card and business card growth. Merchant is another area where we have solid opportunity to grow as that business banking execution improves in our product bundling strategy, gains momentum there. Mortgage fees, again, continue to perform, and we're ready for anything that may happen in the mortgage market with our direct-to-consumer digital offering that we have there. You mentioned the Sabal trust fees. Wealth management continues to contribute in their strong execution with the Sabal team to retain clients and grow the base there. Annuity sales are a little softer in the fourth quarter but have remained historically strong for us with our managed money contributing recurring fees at about 15.6 billion of AUM.
Card fees, right now, are generally holding flattish in a trajectory quarter over quarter. But I think there's an opportunity there to grow in 2026 through our purchasing card and business card growth. Merchant is another area where we have solid opportunity to grow as that business banking execution improves in our product bundling strategy, gains momentum there. Mortgage fees, again, continue to perform, and we're ready for anything that may happen in the mortgage market with our direct-to-consumer digital offering that we have there. You mentioned the Sabal trust fees. Wealth management continues to contribute in their strong execution with the Sabal team to retain clients and grow the base there. Annuity sales are a little softer in the fourth quarter but have remained historically strong for us with our managed money contributing recurring fees at about 15.6 billion of AUM.
Speaker #6: You mentioned the Sable Trust fees . The , you know , wealth management continues to contribute . And their strong execution with the Sable team to retain clients and grow the base .
Speaker #6: There . You know , annuity sales are a little softer in the fourth quarter . But have remained historically strong for us know , with our managed .
Speaker #6: money You contributing , you know , recurring fees at about , you know , about 15.6 billion of , of AUM . So given those things in our focus on growing core deposit accounts , continuing to deepen wealth management , I think the fee income target of 4 to 5% is solid , and we should be able to chin that bar .
Speaker #7: So . So , Casey , this is Mike one one item just for consideration . You know , certainly , you know , the four and a half 4 to 5% might look or a little anemic compared to what we were able to do this year .
Rachel Smith: So given those things and our focus on growing core deposit accounts, continuing to deepen wealth management, I think the fee income target of 4% to 5% is solid, and we should be able to chin that bar. So Casey, this is Mike. One item just for consideration. Certainly, the 4.5% or 4% to 5% might look a little anemic compared to what we were able to do this year, 25%. But certainly, you have the impact of Sabal year over year, which kind of distorted the 25% numbers a bit. And certainly, 25% was an absolutely outstanding year for something like annuity fees, which is just hard to imagine that that's going to repeat at that same level in 2026. The other reminder, I think, is we have a pretty healthy series of specialty lines of business in our fee income book.
So given those things and our focus on growing core deposit accounts, continuing to deepen wealth management, I think the fee income target of 4% to 5% is solid, and we should be able to chin that bar.
Speaker #7: 25 . But but certainly you have the impact of stable year over year , which kind of distorted the the 25 numbers a bit .
Speaker #7: And certainly, '25 was an absolutely outstanding year for something like annuity fees, which is just hard to imagine that that's going to repeat at that same level in '26.
Mike Achary: So Casey, this is Mike. One item just for consideration. Certainly, the 4.5% or 4% to 5% might look a little anemic compared to what we were able to do this year, 25%. But certainly, you have the impact of Sabal year over year, which kind of distorted the 25% numbers a bit. And certainly, 25% was an absolutely outstanding year for something like annuity fees, which is just hard to imagine that that's going to repeat at that same level in 2026. The other reminder, I think, is we have a pretty healthy series of specialty lines of business in our fee income book.
Speaker #7: The other reminder , I think , is , you know , we have a pretty pretty , healthy specialty series of specialty lines of business and our fee income book .
Speaker #7: things Those are or , you know , very unpredictable quarter to even year to quarter and year , you know , things like Boli , SBA fees , derivatives , very dependent upon the rate environment , syndication fees , Sbic fees .
Speaker #7: if you dig into the quarter , one of the things that really drove the quarter , the fourth quarter was we had a really healthy quarter in terms of sbic fees , which again , is one of those things that's really hard to predict .
Rachel Smith: Those things are very unpredictable quarter to quarter and even year to year. Things like BOLI, SBA fees, derivatives, very dependent upon the rate environment, syndication fees, and SBIC fees. So if you dig into the quarter, one of the things that really drove the fourth quarter was we had a really healthy quarter in terms of SBIC fees, which, again, is one of those things that's really hard to predict and really hard to count on year to year. So I think overall, we feel pretty good about the 4% to 5%. And certainly, we'll look at adjusting that if necessary as we go through the year.
Those things are very unpredictable quarter to quarter and even year to year. Things like BOLI, SBA fees, derivatives, very dependent upon the rate environment, syndication fees, and SBIC fees. So if you dig into the quarter, one of the things that really drove the fourth quarter was we had a really healthy quarter in terms of SBIC fees, which, again, is one of those things that's really hard to predict and really hard to count on year to year. So I think overall, we feel pretty good about the 4% to 5%. And certainly, we'll look at adjusting that if necessary as we go through the year.
Speaker #7: And really hard to count on year to year. So I think overall we feel pretty good about the 4 to 5%, and certainly, you know, we'll look at it as we go, necessarily adjusting that through the year.
Speaker #9: All right . Great . That's that's that's super detailed okay . And then just want to finish up on on the M&A question .
Speaker #9: You guys are doing all the right things. And, you know, upping the buyback this quarter and pulling TCE, your UP ratio.
Speaker #9: And you know , clearly making a lot of hires . And you know , committed to organic the strategy . You know , but when you talk to investors there's for whatever reason there's just a lot of concern that that you guys are still in the M&A market .
John Hairston: All right. Great. That's super detailed. Okay. And then just want to finish up on the M&A question. You guys are doing all the right things and upping the buyback this quarter and pulling up your TCE ratio and clearly making a lot of hires and committed to the organic strategy. But when you talk to investors, for whatever reason, there's just a lot of concern that you guys are still in the M&A market and open to a deal, even though you're saying you're not focused on it. So I guess just what would you say to that concern regarding M&A appetite?
Casey Haire: All right. Great. That's super detailed. Okay. And then just want to finish up on the M&A question. You guys are doing all the right things and upping the buyback this quarter and pulling up your TCE ratio and clearly making a lot of hires and committed to the organic strategy. But when you talk to investors, for whatever reason, there's just a lot of concern that you guys are still in the M&A market and open to a deal, even though you're saying you're not focused on it. So I guess just what would you say to that concern regarding M&A appetite?
Speaker #9: And , you know , open to a deal , even though you're saying you're not focused on it . I guess So just what would you what would you say to that to that that concern regarding M&A appetite
Speaker #9: ?
Speaker #7: Well , the I think I think the most important thing for us to say is really consistency with what we've been saying the last couple of quarters , which is really what you of just kind in terms of , you know , not something we're particularly focused on .
Speaker #7: And I think the best way to describe our stance is really opportunistic. And I don't know what else to say about it other than to describe it that way.
Rachel Smith: Well, I think the most important thing for us to say is really consistency with what we've been saying the last couple of quarters, which is really what you just kind of repeated in terms of not something we're particularly focused on. I think the best way to describe our stance is really opportunistic. I don't know what else to say about it other than to describe it that way. Again, as we've mentioned before, we're aware of the things that are going on around us. We're not sticking our head in the sand. So we pay attention to those things and talk to folks just as an effort to get to know folks and let them get to know us. But at the end of the day, opportunistic is really, I think, the best way we can describe how we look at that. Hopefully, that helps.
Mike Achary: Well, I think the most important thing for us to say is really consistency with what we've been saying the last couple of quarters, which is really what you just kind of repeated in terms of not something we're particularly focused on. I think the best way to describe our stance is really opportunistic. I don't know what else to say about it other than to describe it that way. Again, as we've mentioned before, we're aware of the things that are going on around us. We're not sticking our head in the sand. So we pay attention to those things and talk to folks just as an effort to get to know folks and let them get to know us. But at the end of the day, opportunistic is really, I think, the best way we can describe how we look at that. Hopefully, that helps.
Speaker #7: know , You as we've aware of the things that are going on around us . We're not before , we're again , sticking mentioned our head in in the sand .
Speaker #7: So we pay attention to those things and talk to folks just as an effort to get to know folks and let them get to know us.
Speaker #7: But at the end of the day, really, I think 'opportunistic' is the best way we can describe how we look at that.
Speaker #7: Hopefully that helps .
Speaker #9: It does . I just , you know , when you say opportunistic , is there is , you know , an opportunity above a three year runback , is that something that's not an opportunity for , for Hancock , or is that something that you guys would consider ?
Speaker #7: I mean , look , in today's world , I think that this threshold of , you know , not exceeding a three year earned back is something that if we were to go that route , we would not cross that line .
John Hairston: It does. When you say opportunistic, is there an opportunity above a three-year earnback? Is that something that's not an opportunity for Hancock, or is that something that you guys would consider?
Casey Haire: It does. When you say opportunistic, is there an opportunity above a three-year earnback? Is that something that's not an opportunity for Hancock, or is that something that you guys would consider?
Speaker #7: But look, that comment does not mean we're doing anything other than just approaching this from an opportunistic point of view. It doesn't mean we have something out there ready to reveal.
Rachel Smith: I mean, look, in today's world, I think that this threshold of not exceeding a three-year earnback is something that if we were to go that route, we would not cross that line. But look, that comment does not mean we're doing anything other than just approaching this from an opportunistic point of view. It doesn't mean we have something out there ready to reveal. Does that make sense?
Mike Achary: I mean, look, in today's world, I think that this threshold of not exceeding a three-year earnback is something that if we were to go that route, we would not cross that line. But look, that comment does not mean we're doing anything other than just approaching this from an opportunistic point of view. It doesn't mean we have something out there ready to reveal. Does that make sense?
Speaker #3: Thanks , Casey .
Speaker #1: Next question comes from Brett Rabatin from Hovde Group.
Speaker #10: Hey, guys. Good afternoon. I wanted to start on the purchases of securities during the quarter, and the $1.4 billion at 435.
Speaker #10: Can you talk maybe about what kind of securities those were then? Will that change the effective duration of 3.9 that you had at the end of the year?
John Hairston: Understood. Yep. Understood. Thank you.
Speaker #7: will It not . First off , Brett , and in terms of the securities that we bought and sold in the the bond that we restructure announced , those were almost entirely commercial backed mortgage securities .
Operator: The next question comes from Brett Rabatin from Hovde Group.
Operator: The next question comes from Brett Rabatin from Hovde Group.
Michael Rose: Hey, guys. Good afternoon. Wanted to start on the purchases of securities during the quarter and the $1.4 billion at 4.35. Can you talk maybe about what kind of securities those were, and then will that change the effective duration of 3.9 that you had at the end of the year?
Brett Rabatin: Hey, guys. Good afternoon. Wanted to start on the purchases of securities during the quarter and the $1.4 billion at 4.35. Can you talk maybe about what kind of securities those were, and then will that change the effective duration of 3.9 that you had at the end of the year?
Speaker #7: The vast majority of the we bonds that sold , as you can imagine , were bought , you know , kind of in the 2020 and 2021 vintage , you know , some in 2019 .
Speaker #7: But almost exclusively commercial mortgage backed securities in terms of the no loss bond swap that we did during the quarter , that was also entirely commercial .
Rachel Smith: It will not, first off, Brett. In terms of the securities that we bought and sold in the bond restructure that we announced, those were almost entirely commercial mortgage-backed securities. The vast majority of the bonds that we sold, as you can imagine, were bought kind of in the 2020 and 2021 vintage, some in 2019, but almost exclusively commercial mortgage-backed securities. In terms of the no-loss bond swap that we did during the quarter, that was also entirely commercial mortgage-backed securities. In terms of the bonds that we bought during the quarter, it was a variety of commercial mortgage-backed, some residential, some SBA.
Mike Achary: It will not, first off, Brett. In terms of the securities that we bought and sold in the bond restructure that we announced, those were almost entirely commercial mortgage-backed securities. The vast majority of the bonds that we sold, as you can imagine, were bought kind of in the 2020 and 2021 vintage, some in 2019, but almost exclusively commercial mortgage-backed securities. In terms of the no-loss bond swap that we did during the quarter, that was also entirely commercial mortgage-backed securities. In terms of the bonds that we bought during the quarter, it was a variety of commercial mortgage-backed, some residential, some SBA.
Speaker #7: Mortgage backed securities in terms of the bonds that we bought during the quarter . It was a of variety commercial , mortgage backed , some residential , some SBA .
Speaker #10: Okay , so you you effectively didn't change the duration of the portfolio . It was more just an opportunity . You felt like with capital to improve the yield .
Speaker #7: Yeah, certainly we have the capital to invest in something like this. So, we decided to pull the trigger on the $100 million.
Speaker #7: like the It felt right time . The markets at the time were behaving . I'm sure glad we did that when we did it , instead of , commencing that in the current environment .
Michael Rose: Okay. So you effectively didn't change the duration of the portfolio. It was more just an opportunity you felt like with capital to improve the yield.
Brett Rabatin: Okay. So you effectively didn't change the duration of the portfolio. It was more just an opportunity you felt like with capital to improve the yield.
Speaker #7: So we're very fortunate in terms of that timing . But but yeah , I think so . It was just an opportunity to to enhance our NII , enhance our Nim , you know , and improve on our the yield bond portfolio .
Rachel Smith: Yeah. Certainly, we had the capital to invest in something like this. So we decided to pull the trigger on the $100 million. It felt like the right time. The markets at the time were behaving. I'm sure glad we did that when we did it instead of commencing that in the current environment. So we're very fortunate in terms of that timing. But yeah, I think so. It was just an opportunity to enhance our NII, enhance our NIM, and improve the yield on our bond portfolio.
Mike Achary: Yeah. Certainly, we had the capital to invest in something like this. So we decided to pull the trigger on the $100 million. It felt like the right time. The markets at the time were behaving. I'm sure glad we did that when we did it instead of commencing that in the current environment. So we're very fortunate in terms of that timing. But yeah, I think so. It was just an opportunity to enhance our NII, enhance our NIM, and improve the yield on our bond portfolio.
Speaker #10: Okay. And then the other question I had was just around deposits, you know, and obviously solid flows in the fourth quarter.
Speaker #10: Some of that somewhat seasonal , you know , if you look at last year's deposits didn't grow , they were they were down slightly .
Speaker #10: And it sounds like, from the comments you've made so far, you're expecting to price down CDs and be fairly aggressive with managing funding costs in '26.
Speaker #10: I'm just curious how you guys think you're going to grow the deposits . You know , is there will there be categories where you're more aggressive or is there anything in particular that would drive deposit growth relative to what we saw last year ?
Michael Rose: Okay. And then the other question I had was just around deposits. Obviously, solid flows in the fourth quarter, some of that somewhat seasonal. If you look at last year, deposits didn't grow. They were down slightly. And it sounds like from the comments you've made so far, you're expecting to price down CDs and be fairly aggressive with managing funding costs in 2026. I'm just curious how you guys think you're going to grow the deposits. Will there be categories where you're more aggressive? Is there anything in particular that would drive deposit growth relative to what we saw last year?
Brett Rabatin: Okay. And then the other question I had was just around deposits. Obviously, solid flows in the fourth quarter, some of that somewhat seasonal. If you look at last year, deposits didn't grow. They were down slightly. And it sounds like from the comments you've made so far, you're expecting to price down CDs and be fairly aggressive with managing funding costs in 2026. I'm just curious how you guys think you're going to grow the deposits. Will there be categories where you're more aggressive? Is there anything in particular that would drive deposit growth relative to what we saw last year?
Speaker #7: Well, I'll start just real briefly, but again, the guidance for next year for '26 related to deposits is low single digits.
Speaker #7: I know that 'you' means 1% to 3%, I guess. But in terms of how we get that, I'll let Shayne answer that question.
Speaker #7: I think it has all to do with the new hires that we're seeing next year.
Speaker #7: planning for Yeah ,
Speaker #6: It's Brett. It has to do with some new hires. It has to do with our business banking, really that segment, getting traction in '26.
Rachel Smith: I'll start just real briefly. But again, the guidance for next year or for 2026 related to deposits is low single digits. That means 1% to 3%, I guess. But in terms of how we get that, I'll let Shane answer that question, but I think it has all to do with the new hires that we're planning for next year.
Mike Achary: I'll start just real briefly. But again, the guidance for next year or for 2026 related to deposits is low single digits. That means 1% to 3%, I guess. But in terms of how we get that, I'll let Shane answer that question, but I think it has all to do with the new hires that we're planning for next year.
Speaker #6: We believe that , you know , quick credit execution . There brings a multiple of those credit balances . And deposits . You know , you heard me talk a lot about the growth that we're experiencing in our geographies .
Shane Loper: Yeah. Brett, it has some to do with new hires. It has to do with our business banking segment really getting traction in 2026. We believe that quick credit execution there brings a multiple of those credit balances and deposits. You heard me talk a lot about the growth that we're experiencing in our geographies. That's core business in new relationships as we bring new bankers on and are calling on different types of clients that bring enhanced deposits. So we're adding—we talked about investments. We're adding new capabilities in terms of treasury services, which will also be attractive to clients to bring additional deposits to us. So I think it's a combination of new bankers, good calling efforts in our core markets, and additional investments that will be attractive to clients to bring additional deposits to us.
Shane Loper: Yeah. Brett, it has some to do with new hires. It has to do with our business banking segment really getting traction in 2026. We believe that quick credit execution there brings a multiple of those credit balances and deposits. You heard me talk a lot about the growth that we're experiencing in our geographies. That's core business in new relationships as we bring new bankers on and are calling on different types of clients that bring enhanced deposits. So we're adding—we talked about investments. We're adding new capabilities in terms of treasury services, which will also be attractive to clients to bring additional deposits to us. So I think it's a combination of new bankers, good calling efforts in our core markets, and additional investments that will be attractive to clients to bring additional deposits to us.
Speaker #6: That's core business in new relationships. As we bring new bankers on and are calling on, you know, different types of clients that bring enhanced deposits.
Speaker #6: So , you know , we're we're adding we talked about investments , we're adding new capabilities in terms of treasury services , which will also be attractive to clients to bring additional to us .
Speaker #6: So deposits, I think it's a combination of new bankers, good calling efforts, and our core markets. In addition, investments that will be attractive to clients will bring additional deposits to us.
Speaker #10: Okay , great . That's Color . great . I appreciate it .
Speaker #3: Thanks , Brett .
Speaker #1: Ben Gerlinger from Citi has the next question.
Speaker #11: Good afternoon, everyone. Again, just wanted to touch base. I know we've talked through the hires quite a bit in the notable step up on '26 expectations.
Speaker #11: Just kind of curious , did you have any sort of mandates when the new banker kind of signs on the dotted line , do they expect to have a loan within X amount of time frame or be profitable in certain time frame ?
Michael Rose: Okay. Great. That's great. I appreciate it.
Brett Rabatin: Okay. Great. That's great. I appreciate it.
Rachel Smith: Thanks, Brett.
Mike Achary: Thanks, Brett.
Operator: Ben Gerlinger from Citi has the next question.
Operator: Ben Gerlinger from Citi has the next question.
Speaker #11: Because I think 50 bankers is great for '26, but in reality, is it fair to think that that actually sets up a much stronger '27 and '28 for growth expectations?
Christopher Marinac: Good afternoon, everyone. I just wanted to. I know we've talked through the hires quite a bit and the notable step up on 2026 expectations. I was kind of curious, did you have any sort of, I'm going to say, mandate? When a new banker kind of signs on the dotted line, do they expect to have a loan within X amount of time frame or be profitable in a certain time frame? Because I think 50 bankers is great for 2026, but in reality, is it fair to think that that actually sets up a much stronger 2027 and 2028 for growth expectations?
Ben Gerlinger: Good afternoon, everyone. I just wanted to. I know we've talked through the hires quite a bit and the notable step up on 2026 expectations. I was kind of curious, did you have any sort of, I'm going to say, mandate? When a new banker kind of signs on the dotted line, do they expect to have a loan within X amount of time frame or be profitable in a certain time frame? Because I think 50 bankers is great for 2026, but in reality, is it fair to think that that actually sets up a much stronger 2027 and 2028 for growth expectations?
Speaker #3: Yeah , Ben .
Speaker #6: Go ahead John .
Speaker #3: I was going to say, Ben, your questions about, like, time to break even, time to get to target operating model.
Speaker #3: Is that the question ?
Speaker #11: Exactly. Yep, yep.
Speaker #6: Yeah . Go ahead . Ben , this is Shane . You know all all new bankers they're , whether business , banking , commercial or middle market .
Speaker #6: We measure their effectiveness by risk adjusted revenue . And we look at that from a total managed and self perspective . And I think it's been said on on previous calls typically we'll see kind of median breakeven at that .
Rachel Smith: Yeah. Ben.
Shane Loper: Yeah. Ben.
Shane Loper: Go ahead, John.
Rachel Smith: I was going to say, Ben, your question's about time to break even, time to get to target operating model. Is that the question?
John Hairston: I was going to say, Ben, your question's about time to break even, time to get to target operating model. Is that the question?
Shane Loper: Exactly. Yep. Yep.
Ben Gerlinger: Exactly. Yep. Yep.
Rachel Smith: Go ahead.
Shane Loper: Go ahead.
Shane Loper: Yeah. Ben, this is Shane. All new bankers, whether they're business banking, commercial, or middle market, we measure their effectiveness by risk-adjusted revenue. We look at that from a total managed and self-originated perspective. I think it's been said on previous calls. Typically, we'll see kind of median break even at that 24 to 26-month range. So when you look at new bankers hired last year, a lot of those folks are approaching halfway through where their break-even point is. Then this year, of that 50, I would think by the end of 2027, they would be producing very well on a risk-adjusted revenue basis. We measure that typically in multiples of the cost of that banker.
Yeah. Ben, this is Shane. All new bankers, whether they're business banking, commercial, or middle market, we measure their effectiveness by risk-adjusted revenue. We look at that from a total managed and self-originated perspective. I think it's been said on previous calls. Typically, we'll see kind of median break even at that 24 to 26-month range. So when you look at new bankers hired last year, a lot of those folks are approaching halfway through where their break-even point is. Then this year, of that 50, I would think by the end of 2027, they would be producing very well on a risk-adjusted revenue basis. We measure that typically in multiples of the cost of that banker.
Speaker #6: You know , 24 to 26 month range . So you know , when you look at new bankers hired last year , a lot of those folks are , you know , approaching halfway through where they're , you know , their break even point is and then this year of that 50 , I would think , you know , by the end of 27 , they would be producing very well on a risk adjusted revenue basis .
Speaker #6: And we measure that typically in yield, you know, multiples of the cost of that banker.
Speaker #11: Gotcha . That's Is there helpful . any kind of mandates on whether it be the legacy core team you have today or new bankers being added on any deposit gathering efforts , specifically , given the new kind of rate environment or how do you think about both sides of the balance sheet when you hire somebody new ?
Speaker #3: Yeah . Questions around kind of our expectations on deposits versus loans , correct . Is that right , Ben ? Have a little trouble hearing you .
Christopher Marinac: Gotcha. That's helpful. Is there any kind of mandates on, whether it be the legacy core team you have today or new bankers being added on any deposit-gathering efforts, specifically given the new kind of rate environment? Or how do you think about both sides of the balance sheet when you hire somebody in?
Ben Gerlinger: Gotcha. That's helpful. Is there any kind of mandates on, whether it be the legacy core team you have today or new bankers being added on any deposit-gathering efforts, specifically given the new kind of rate environment? Or how do you think about both sides of the balance sheet when you hire somebody in?
Speaker #3: I'm sorry to ask you to repeat . You want to tackle Shane that one , , deposit expectations versus loans .
Speaker #6: Yeah , I think it's , you know , for all of these bankers , you know , we're expecting a blended portfolio . You know we're not interested in you know bringing on bankers that are just going to generate , you know , loan balances .
Rachel Smith: Yeah. Questions around kind of our expectations on deposits versus loans.
John Hairston: Yeah. Questions around kind of our expectations on deposits versus loans.
Speaker #6: mean that's I great . But we need the full relationship because with the full relationship , when I talk about that risk adjusted revenue , you know , you get the credit for the deposits , you get the additional fee income that comes through Treasury and Card and other activities like that .
Christopher Marinac: Correct.
Ben Gerlinger: Correct.
Rachel Smith: Is that right, Ben? I'm having a little trouble hearing you. I'm sorry to ask you to repeat. You want to tackle that one, Shane? Deposit expectations versus loans?
Mike Achary: Is that right, Ben? I'm having a little trouble hearing you. I'm sorry to ask you to repeat. You want to tackle that one, Shane? Deposit expectations versus loans?
Shane Loper: Yeah. I think for all of these bankers, we're expecting a blended portfolio. We're not interested in bringing on bankers that are just going to generate loan balances. I mean, that's great, but we need the full relationship. Because with the full relationship, when I talk about that risk-adjusted revenue, you get the credit for the deposits. You get the additional fee income that comes through treasury, card, and other activities like that. So when you think about how we are asking our folks to go to market, it's obviously you're going to have to have a credit relationship at some point maybe to get into a new relationship. But we are expecting a full service to include treasury, card, and all the other fee products to include our sophisticated wealth management products for those business owners that I spoke about.
Shane Loper: Yeah. I think for all of these bankers, we're expecting a blended portfolio. We're not interested in bringing on bankers that are just going to generate loan balances. I mean, that's great, but we need the full relationship. Because with the full relationship, when I talk about that risk-adjusted revenue, you get the credit for the deposits. You get the additional fee income that comes through treasury, card, and other activities like that. So when you think about how we are asking our folks to go to market, it's obviously you're going to have to have a credit relationship at some point maybe to get into a new relationship. But we are expecting a full service to include treasury, card, and all the other fee products to include our sophisticated wealth management products for those business owners that I spoke about.
Speaker #6: So , you know , when you think about , you know , how we are asking our folks to go to market , it's it's obviously you're going to have to have a credit relationship at some point , maybe to get into a new relationship .
Speaker #6: But we are expecting a full service , you know , to include treasury card and all the other fee products to include our sophisticated wealth management products for , you know , those business owners that I spoke about .
Speaker #3: Yeah , Ben , this is John . I'll add some color think may be helpful , which I in what you're looking for .
Speaker #3: We've invested a tremendous amount of money and time over the last decade with tools that help our bankers understand what the implications are of their own portfolio balance sheet.
Speaker #3: , for So example , if they're in a specialty line that generates credit , really doesn't but have the capacity to generate a deposits , then they're portfolio under their view is transfer priced .
Rachel Smith: Yeah. Ben, this is John. I'll add some color, which I think may be helpful in what you're looking for. We've invested a tremendous amount of money and time over the last decade with tools that help our bankers understand what the implications are of their own portfolio balance sheet. So for example, if they're in a specialty line that generates credit but really doesn't have the capacity to generate deposits, then their portfolio, under their view, is transfer priced. And on the lending side, risk-adjusted for credit and credit degradation or improvement. So they really sort of are the balance sheet manager for their portfolio. And their conversations with leadership around their goals look almost like an overall corporate balance sheet discussion at our ALCO meeting. It's a very sophisticated model that took us a long time to put together.
John Hairston: Yeah. Ben, this is John. I'll add some color, which I think may be helpful in what you're looking for. We've invested a tremendous amount of money and time over the last decade with tools that help our bankers understand what the implications are of their own portfolio balance sheet. So for example, if they're in a specialty line that generates credit but really doesn't have the capacity to generate deposits, then their portfolio, under their view, is transfer priced. And on the lending side, risk-adjusted for credit and credit degradation or improvement. So they really sort of are the balance sheet manager for their portfolio. And their conversations with leadership around their goals look almost like an overall corporate balance sheet discussion at our ALCO meeting. It's a very sophisticated model that took us a long time to put together.
Speaker #3: And on the lending side, risk-adjusted for credit and credit degradation or improvement. So they really sort of are the balance sheet manager for their portfolio.
Speaker #3: And they're having conversations with leadership around their goals. It looks almost like an overall corporate balance sheet discussion. And our ALCO meeting—it's a very sophisticated model that took us a long time to put together.
Speaker #3: And that really was the secret sauce to the improvement. We had an overall cost of funds while pivoting to loan growth. The last year, and what we're in expecting 2026.
Speaker #3: So it's a very balanced assessment. So I wouldn't call it as much a mandate as it is an overall risk-adjusted revenue target for the year.
Speaker #3: And based on their tenure with the company, if that's a building revenue set over time, then the core folks really have to produce the liquidity to keep up the funding requirement for the new folks.
Rachel Smith: That really was the secret sauce to the improvement. We had an overall cost of funds while pivoting to loan growth the last year and what we're expecting in 2026. It's a very balanced assessment. I wouldn't call it as much a mandate as it is an overall risk-adjusted revenue target for the year. Based on their tenure with the company, if that's a building revenue set over time, then the core folks really have to produce the liquidity to keep up the funding requirement for the new folks if they're credit-focused. Ultimately, their time to generate fees and deposit income will have to continue. When we say risk-adjusted revenue, that's literally, as Shane said, that's deposits, fees, and loans offset by the risk. Does that make sense?
That really was the secret sauce to the improvement. We had an overall cost of funds while pivoting to loan growth the last year and what we're expecting in 2026. It's a very balanced assessment. I wouldn't call it as much a mandate as it is an overall risk-adjusted revenue target for the year. Based on their tenure with the company, if that's a building revenue set over time, then the core folks really have to produce the liquidity to keep up the funding requirement for the new folks if they're credit-focused. Ultimately, their time to generate fees and deposit income will have to continue. When we say risk-adjusted revenue, that's literally, as Shane said, that's deposits, fees, and loans offset by the risk. Does that make sense?
Speaker #3: If their credit focused . But ultimately their time to fee and generate deposit income will have to have to continue . So when we say risk adjusted revenue , that's literally a Shane said .
Speaker #3: That's deposits, fees, and offset loans by the risk. Does that make sense?
Speaker #3: Okay. You bet. Thanks for the question.
Speaker #1: We'll take the next question today from Gary Tenner from D.A. Davidson.
Speaker #13: Thanks . Good afternoon . Had two quick follow up questions . I guess the first Mike , on your comment about Nim improvement that 12 to 15 basis points .
Speaker #13: You mentioned . Just wanted to clarify to me that sounded more like A4Q to four Q number , not necessarily not not fully year over a full year .
Christopher Marinac: Yes. Absolutely. That's helpful. Thank you.
Ben Gerlinger: Yes. Absolutely. That's helpful. Thank you.
Rachel Smith: Okay. You bet. Thanks for the question.
John Hairston: Okay. You bet. Thanks for the question.
Speaker #13: Is that the right way to think about it?
Speaker #3: Yeah .
Speaker #7: That's exactly right. Fourth quarter of '25. The fourth quarter of '26.
Operator: We'll take the next question today from Gary Tenner from D.A. Davidson.
Operator: We'll take the next question today from Gary Tenner from D.A. Davidson.
Speaker #13: Okay . And then the second , just in terms of the buyback , so I don't want to put words in your mouth , but based on what you were talking about , you know , it being on a more level basis over the course of the year , you know , subject to maybe leaning in if there were to be some kind of sell off .
Christopher Marinac: Thanks. Good afternoon. I have two quick follow-up questions. I guess the first, Mike, on your comment about NIM improvement, that 12 to 15 basis points you mentioned. Just wanted to clarify to me that sounded more like a Q4 to Q4 number, not necessarily not full year over full year. Is that the right way to think about it?
Gary Tenner: Thanks. Good afternoon. I have two quick follow-up questions. I guess the first, Mike, on your comment about NIM improvement, that 12 to 15 basis points you mentioned. Just wanted to clarify to me that sounded more like a Q4 to Q4 number, not necessarily not full year over full year. Is that the right way to think about it?
Speaker #13: It doesn't sound like there maybe is a great deal of price sensitivity at this point. It's more about working down the capital ratios a little bit.
John Hairston: Yeah. That's exactly right. Q4 2025, the Q4 2026.
Speaker #13: Is that also fair ?
Speaker #7: Well , I think it's fair to say that we're cognizant of the price So sensitivity . , you know , that's something we'll we'll certainly consider as we execute that program over the year .
Christopher Marinac: Okay. And then the second, just in terms of the buyback, because I don't want to put words in your mouth, but based on what you were talking about, it being on a more level basis over the course of the year, subject to maybe leaning in if there were to be some kind of sell-off, doesn't sound like there maybe is a great deal of price sensitivity at this point. It's more about working down the capital ratios a little bit. Is that also fair?
Gary Tenner: Okay. And then the second, just in terms of the buyback, because I don't want to put words in your mouth, but based on what you were talking about, it being on a more level basis over the course of the year, subject to maybe leaning in if there were to be some kind of sell-off, doesn't sound like there maybe is a great deal of price sensitivity at this point. It's more about working down the capital ratios a little bit. Is that also fair?
Speaker #7: The comment was that really meant that you will not see, you know, a big aggregation or will be unlikely to see a big aggregation of buybacks in one quarter like we did in '25.
Speaker #7: I think it will be all things equal , a little bit more spread evenly across the year . May not be literally evenly , you know , close .
Rachel Smith: Well, I think it's fair to say that we're cognizant of the price sensitivity. So that's something we'll certainly consider as we execute that program over the year. The comment was really meant that you will not see a big aggregation or be unlikely to see a big aggregation of buybacks in one quarter like we did in 2025. I think it'll be all things equal, a little bit more spread evenly across the year. I mean, not be literally evenly, but closer.
John Hairston: Well, I think it's fair to say that we're cognizant of the price sensitivity. So that's something we'll certainly consider as we execute that program over the year. The comment was really meant that you will not see a big aggregation or be unlikely to see a big aggregation of buybacks in one quarter like we did in 2025. I think it'll be all things equal, a little bit more spread evenly across the year. I mean, not be literally evenly, but closer.
Speaker #13: It makes sense. Thanks, man.
Speaker #7: Thank Okay . you .
Speaker #1: Up next, we'll take a question from Christopher Marinac from Janney Montgomery Scott.
Speaker #13: Hey thanks . Good afternoon . Just want to dig a little bit into credit and just was quality curious if there's anything on the commercial charge offs in Q4 that would sort of be more just temporary from year end cleanup or would you see perhaps a slightly higher trend going into 26 ?
Christopher Marinac: Got it. Makes sense. Thanks, Ben.
Christopher Marinac: Got it. Makes sense. Thanks, Ben.
Speaker #3: Thanks, Chris, for the question. We'll wake up to answer that.
Rachel Smith: Okay. Thank you.
John Hairston: Okay. Thank you.
Operator: Up next, we'll take a question from Christopher Marinac from Janney Montgomery Scott.
Operator: Up next, we'll take a question from Christopher Marinac from Janney Montgomery Scott.
Speaker #14: thanks for the Chad , question . Appreciate it . Yeah . So from a credit quality perspective , actually , we really are quite pleased with with what we see as kind of a very resilient portfolio over the past really couple of years , we've fine tuned our underwriting and portfolio management processes .
Christopher Marinac: Hey, thanks. Good afternoon. Just wanted to dig a little bit into credit quality and just was curious if there's anything on the commercial charge-offs in Q4 that would sort of be more just temporary from year-end cleanup, or would you see perhaps a slightly higher trend going into 2026?
Christopher Marinac: Hey, thanks. Good afternoon. Just wanted to dig a little bit into credit quality and just was curious if there's anything on the commercial charge-offs in Q4 that would sort of be more just temporary from year-end cleanup, or would you see perhaps a slightly higher trend going into 2026?
Speaker #14: we So feel that that's helping us kind of navigate any of specific issues . And as you can see , you know , with both Non-accruals and criticize going down in the quarter , you know , we saw a lot less inflows in general this quarter , which kind of helped that with situation .
Rachel Smith: Thanks, Chris, for the question. We'll wake up Ziluca to answer that.
Shane Loper: Thanks, Chris, for the question. We'll wake up Ziluca to answer that.
Shane Loper: Yeah. Thanks for the question. Appreciate it. Yeah. So from a credit quality perspective, actually, we really are quite pleased with what we see as kind of a very resilient portfolio. Over the past, really, couple of years, we've fine-tuned our underwriting and portfolio management processes. So we feel that that's helping us kind of navigate any sort of specific issues. And as you can see, with both non-accruals and criticized going down in the quarter, we saw a lot less inflows in general this quarter, which kind of helped with that situation. And then on the charge-off side of things, if I look at, for instance, the top four charge-offs in the quarter, they're really in many different industries. There's not a single industry in there that is similar to the other. So they really are very situationally specific.
Shane Loper: Yeah. Thanks for the question. Appreciate it. Yeah. So from a credit quality perspective, actually, we really are quite pleased with what we see as kind of a very resilient portfolio. Over the past, really, couple of years, we've fine-tuned our underwriting and portfolio management processes. So we feel that that's helping us kind of navigate any sort of specific issues. And as you can see, with both non-accruals and criticized going down in the quarter, we saw a lot less inflows in general this quarter, which kind of helped with that situation. And then on the charge-off side of things, if I look at, for instance, the top four charge-offs in the quarter, they're really in many different industries. There's not a single industry in there that is similar to the other. So they really are very situationally specific.
Speaker #14: then on And the the charge off side of things , you know , if I look at , for instance , like the top four charge offs in the quarter , they're really in many different , you know , different industries .
Speaker #14: There's not a single industry in there that is similar to the others . So they really are very situationally specific and and in many instances we had , you know , some reserves in place , some specific reserves in place on those matters that were already in our criticized and non-accrual book .
Speaker #14: And one of the reasons why , so that's you see , you know , if you go into the more details , specific reserves actually did come down a little bit this quarter because , you know , we made the decision to charge those off .
Shane Loper: In many instances, we had some reserves in place, some specific reserves in place on those matters that were already in our criticized and non-accrual book. So that's one of the reasons why you see, if you go into the more details, specific reserves actually did come down a little bit this quarter because we made the decision to charge those off.
In many instances, we had some reserves in place, some specific reserves in place on those matters that were already in our criticized and non-accrual book. So that's one of the reasons why you see, if you go into the more details, specific reserves actually did come down a little bit this quarter because we made the decision to charge those off.
Speaker #13: Great. So I guess the question, I think, is: Is there room for you to let the reserve kind of run down over next year?
Speaker #13: this I mean , you're still having low losses relative to 3 or 3 and a half year for the whole book . And I'm just curious if , you know , you've got cover to kind of gradually lower that over time .
Speaker #7: Yeah . Chris , this is Mike . I mean , admittedly , we're fairly high where we are at 143 basis points . So I think the answer is , short yeah , there's probably a little bit of an opportunity .
Christopher Marinac: Great. So I guess the question, I think, is, is there room for you to let the reserve kind of run down over this next year? I mean, you're still having low losses relative to a three or three-and-a-half-year maturity for the whole book. And I'm just curious if you've got cover to kind of gradually lower that over time.
Christopher Marinac: Great. So I guess the question, I think, is, is there room for you to let the reserve kind of run down over this next year? I mean, you're still having low losses relative to a three or three-and-a-half-year maturity for the whole book. And I'm just curious if you've got cover to kind of gradually lower that over time.
Speaker #7: But you know , we're very cognizant of not letting that that ratio get too low . I don't So know you that would see us , you know , below 125 or 130 basis points .
Speaker #7: And again, by making that comment, it doesn't mean that we're trying to get to that level. It just means, you know, all things equal.
Rachel Smith: Yeah. Chris, this is Mike. I mean, admittedly, we're fairly high where we are at 143 basis points. So I think the short answer is, yeah, there's probably a little bit of an opportunity, but we're very cognizant of not letting that ratio get too low. So I don't know that you would see us below 125 or 130 basis points. And again, by making that comment, it doesn't mean that we're trying to get to that level. It just means all things equal, I don't think we would go below that threshold.
Mike Achary: Yeah. Chris, this is Mike. I mean, admittedly, we're fairly high where we are at 143 basis points. So I think the short answer is, yeah, there's probably a little bit of an opportunity, but we're very cognizant of not letting that ratio get too low. So I don't know that you would see us below 125 or 130 basis points. And again, by making that comment, it doesn't mean that we're trying to get to that level. It just means all things equal, I don't think we would go below that threshold.
Speaker #7: We would go—I don't think that. That threshold is below.
Speaker #13: Great . And then as this year plays out , depending on how many we we do or don't get in terms of fed rate cuts , how does that impact just kind of risk adjusted pricing ?
Speaker #13: As you and I know, if you think about it, nominal returns are coming down, or nominal yields are coming down, but is the risk adjusted?
Speaker #13: Do you think going to be stable? Or maybe that's more internal than you can share with us. But just curious how you think about it.
Speaker #7: I Yeah , don't I don't think at it would be least stable compared to where we are now , even with a couple of rate cuts , you know , again , from Shane's comments and I'll let him add some color if he'd like to .
Christopher Marinac: Great. And then as this year plays out, depending on how many we do or don't get in terms of Fed rate cuts, how does that impact just kind of risk-adjusted pricing as you think about it? I know the nominal returns are coming down or nominal yields are coming down, but is the risk-adjusted, do you think, going to be stable? Or maybe that's more internal than you share with us, but just curious how you think about it.
Christopher Marinac: Great. And then as this year plays out, depending on how many we do or don't get in terms of Fed rate cuts, how does that impact just kind of risk-adjusted pricing as you think about it? I know the nominal returns are coming down or nominal yields are coming down, but is the risk-adjusted, do you think, going to be stable? Or maybe that's more internal than you share with us, but just curious how you think about it.
Speaker #7: But , you know , we're very deliberate in terms of the kind of , you know , new loan growth we're trying to add to the balance sheet .
Speaker #7: Very deliberate in terms of the credit quality that we consider . So , you know , the risk adjusted spreads , you know , should not all things equal compress considerably .
Rachel Smith: Yeah. I don't think it would be at least stable compared to where we are now, even with a couple of rate cuts. Again, from Shane's comments, and I'll let him add some color if he'd like to, but we're very deliberate in terms of the kind of new loan growth we're trying to add to the balance sheet, very deliberate in terms of the credit quality that we consider. So the risk-adjusted spreads should not, all things equal, compress considerably.
Mike Achary: Yeah. I don't think it would be at least stable compared to where we are now, even with a couple of rate cuts. Again, from Shane's comments, and I'll let him add some color if he'd like to, but we're very deliberate in terms of the kind of new loan growth we're trying to add to the balance sheet, very deliberate in terms of the credit quality that we consider. So the risk-adjusted spreads should not, all things equal, compress considerably.
Speaker #6: Yeah, you know, I think we can get better at our pricing and, you know, overall deal execution to improve the overall loan yield.
Speaker #6: And I know you're asking about risk-adjusted spread. But I think the better we can execute, the better we can price.
Speaker #6: And you know, one of our strategic initiatives for 2026 is to, you know, calibrate how we actually price and our pricing models to win business and to put some positive pressure, you know, on yields.
Shane Loper: Yeah. I think we can get better at our pricing and overall deal execution to improve the overall loan yield. And I know you're asking about risk-adjusted spread, but I think the better we can execute, the better we can price. And one of our strategic initiatives for 2026 is to calibrate how we actually price and our pricing models to win business and to put some positive pressure on loan yields. And that calibration is going to require intentional focus given potential rate reductions, competition for new deals, and pressure on current clients. So I feel like we have an opportunity to put that positive pressure in. And Emory Mayfield, who's our new Chief Banking Officer, will be leading that strategic initiative as we go into the year.
Shane Loper: Yeah. I think we can get better at our pricing and overall deal execution to improve the overall loan yield. And I know you're asking about risk-adjusted spread, but I think the better we can execute, the better we can price. And one of our strategic initiatives for 2026 is to calibrate how we actually price and our pricing models to win business and to put some positive pressure on loan yields. And that calibration is going to require intentional focus given potential rate reductions, competition for new deals, and pressure on current clients. So I feel like we have an opportunity to put that positive pressure in. And Emory Mayfield, who's our new Chief Banking Officer, will be leading that strategic initiative as we go into the year.
Speaker #6: And that calibration is going to require intentional focus given , you know , potential rate reductions , competition for new deals and , and pressure on on current clients .
Speaker #6: So I feel like , you know , we we have an opportunity to put that positive pressure in and Emery Mayfield , who's our new chief banking officer , will that be leading strategic initiative as we go into the year .
Speaker #13: Great. Thank you for your feedback today. I appreciate it.
Speaker #3: Bet. Thank you for the call.
Speaker #1: And a final reminder , everyone . It is star one . If you have a question , we'll pause for just a moment .
Speaker #1: And everyone, at this time, there are no further questions. I'll hand the conference back to Mr. John Hairston for any additional closing remarks.
Speaker #3: Lisa , for Thanks , moderating the call . Thanks , everyone for your attention . Have a wonderful New Year and we look forward to seeing you on the road .
Christopher Marinac: Great. Thank you for your feedback today. I appreciate it.
Christopher Marinac: Great. Thank you for your feedback today. I appreciate it.
Rachel Smith: You bet. Thank you for the call.
Shane Loper: You bet. Thank you for the call.
Operator: And a final reminder, everyone, it is star one if you have a question. We'll pause for just a moment. And everyone, at this time, there are no further questions. I'll hand the conference back to Mr. John Hairston for any additional or closing remarks.
Operator: And a final reminder, everyone, it is star one if you have a question. We'll pause for just a moment. And everyone, at this time, there are no further questions. I'll hand the conference back to Mr. John Hairston for any additional or closing remarks.
Rachel Smith: Thanks, Lisa, for moderating the call. Thanks, everyone, for your attention. Have a wonderful new year, and we look forward to seeing you on the road.
John Hairston: Thanks, Lisa, for moderating the call. Thanks, everyone, for your attention. Have a wonderful new year, and we look forward to seeing you on the road.
Operator: Once again, this does conclude today's conference. We would like to thank you all for your participation today. You may now disconnect.
Operator: Once again, this does conclude today's conference. We would like to thank you all for your participation today. You may now disconnect.
