Anthony Elian

Anthony Elian asked about the expected deposit balances for Q1, considering typical seasonal declines, and the full-year outlook for commercial, retail, and public deposits. He also inquired if the tight full-year NIM guide of 3.16%-3.18% implies each quarter will fall within this range, and sought direction for the Q1 NIM relative to the 4Q print of 3.21%.

Answer

James Moses, Vice Chair and CFO, First Hawaiian Bank, confirmed that a seasonal decline in deposits is expected in Q1. He projected low single-digit growth for commercial and retail deposits for the full year, with public deposits fluctuating but generally seeing GSP-type increases. Regarding the NIM guide, he stated that expecting each quarter to be within the tight range might be "a little too far," as it depends on the amount and timing of Fed rate cuts (contemplating a May/September scenario). He anticipates the Q1 NIM to come down a few basis points from the December number of 3.21%.

Anthony Elian asked about the expected deposit balances for Q1, noting a typical seasonal decline in past first quarters. He also inquired about the full-year NIM guide of 3.16%-3.18%, asking if each quarter is expected to fall within this tight range, and sought specific direction for the Q1 NIM relative to the 3.21% reported in Q4.

Answer

Vice Chair and CFO James Moses confirmed that a seasonal decline in Q1 deposit balances is expected, with a focus on low single-digit growth for commercial and retail deposits for the full year, and normal GSP-type increases for public deposits. Regarding the NIM guide, he clarified that the tight range depends on the amount and timing of Fed rate cuts (contemplating a May/September scenario) and that the Q1 NIM is expected to come down a few basis points from the 3.21% exit NIM in December due to two rate cuts in the quarter.

Anthony Elian from JPMorgan Chase & Co. followed up on the net interest margin (NIM) discussion, specifically inquiring about the remaining tailwind from loan repricing in Q4 and beyond, considering the outlook for future rate cuts. He also asked for clarification on the expected $54 million fee income run rate for Q4, seeking to understand which areas or headwinds might lead to a decline from the strong Q3 performance.

Answer

Vice Chairman and CFO Jamie Moses confirmed a significant tailwind from loan repricing, noting $1 billion of fixed-rate cash flows repricing higher at an average 125 basis point spread over the next 12 months, and investment portfolio runoff repricing at a 225-250 basis point spread. He emphasized that this tailwind is dependent on achieving sufficient loan growth to replace cash flows. Moses clarified that the $54 million fee income expectation for Q4 reflects a normalized run rate, as Q3 benefited from non-recurring positive surprises, rather than anticipating specific headwinds or declines. Chairman, President, and CEO Bob Harrison added that the $54 million is an upward adjustment from previous guidance of $51-$52 million, reflecting overall fee business strength.

Anthony Elian asked about the remaining tailwind from loan repricing on First Hawaiian Inc.'s net interest margin (NIM) for Q4 and beyond, considering the outlook for rate cuts. He also sought clarification on the expected $54 million fee income for Q4, specifically identifying areas of anticipated decline or headwinds.

Answer

Jamie Moses, Vice Chairman and CFO, confirmed a significant tailwind from loan repricing, with $1 billion of fixed-rate cash flows repricing higher over the next 12 months, contributing to NIM expansion into Q1 and Q2. He noted that the spread would tighten with Fed cuts. Moses explained that the $54 million fee income expectation for Q4 reflects a normalized run rate, as Q3 benefited from non-recurring positive surprises, rather than anticipating specific headwinds or declines.

Anthony Elian followed up on loan growth, asking if the second quarter could show growth and if the full-year guidance of low-to-mid-single digits remains intact. He also asked about other loan portfolios, besides dealer floor plan, that are being monitored due to tariff and supply chain risks.

Answer

CEO Bob Harrison reiterated the full-year loan growth guidance but noted it is subject to economic uncertainty, making it hard to pinpoint growth by quarter. He identified the broader C&I portfolio as an area receiving heightened attention due to potential cost impacts on small businesses. CFO James Moses added that the risk teams view tariff impacts as customer-specific rather than portfolio-wide, underscoring the value of their direct client relationships.

Anthony Elian of JPMorgan asked about the potential impact on the NIM outlook if no rate cuts occurred in 2025 and sought clarification on the drivers behind the fee income guidance.

Answer

CFO Jamie Moses projected that with no rate cuts, the quarterly NIM expansion would likely be 1-2 basis points higher than the current guide. He explained the fee income guidance of ~$51 million per quarter reflects a normalization from the back half of 2024, which benefited from non-recurring items like insurance proceeds and extra BOLI income, and may include a touch of conservatism.

Anthony Elian requested the specific dollar amount of unexpected loan payoffs that impacted Q3 growth and asked if the current level of noninterest-bearing deposits, at 34% of total deposits, has reached a floor.

Answer

CFO Jamie Moses estimated the unexpected loan payoffs were in the range of $90 million to $95 million. Regarding deposits, he noted the noninterest-bearing mix has been stable for two quarters and expressed hope that this level, which is consistent with pre-pandemic figures, represents a floor as the bank focuses on growing relationships.

Anthony Elian asked about Flagstar Bank's specific expectations for Net Interest Margin (NIM) and Net Interest Income (NII) in Q1, after backing out the $20 million hedge gain from Q4. He also inquired about the updated asset forecast for 2027, comparing it to the previous guidance of $108 billion-$109 billion.

Answer

Lee Smith, Senior Executive Vice President and CFO, stated that while specific quarterly guidance was not provided, the bank expects to see continued NIM improvement quarter-over-quarter, building on Q4's 2.05% (excluding the one-time gain). He updated the asset forecast for year-end 2027 to be around $103 billion, a reduction from the previously guided range.

Anthony Elian asked about the specific Net Interest Margin (NIM) and Net Interest Income (NII) expectations for Q1 2026, after excluding the 9 basis points and $20 million benefit from hedge gains. He also inquired about the updated asset projections for 2027, relative to the previous guidance of $108 billion to $109 billion.

Answer

Lee Smith, Senior Executive Vice President and Chief Financial Officer, declined to provide specific quarterly guidance but noted that Q4 NIM (excluding the one-time hedge gain) was 2.05%, representing a 14 basis point increase from Q3, and he expects continued quarter-over-quarter NIM improvement. For 2027 assets, Lee Smith stated that the bank now expects the balance sheet to be around $103 billion.

Anthony Elian inquired whether Flagstar Bank N.A.'s expected reduction in non-accruals for Q4 and through 2026 would occur organically or include asset sales. He also asked if the bank had conducted any reviews of procedures or policies, particularly within the asset-based lending (ABL) vertical of specialized industries, following recent credit events in the market.

Answer

Joseph Otting, Chairman, President, and CEO, and Lee Smith, Chief Financial Officer, clarified that most non-accrual reductions would be organic, employing various strategies such as DPOs, workouts, and some sales, often resulting in slight gains. They noted that a significant portion of non-accrual borrowers have never missed a payment. Joseph Otting confirmed a detailed review of the NDFI book, including MSR lending and lender finance, stating that the bank has no exposure to recently publicized names and feels confident about the quality of its book.

Anthony Elian highlighted the adjusted ROE exceeding the 2025 guide and asked for an update on the timeline to achieve the 15% ROE goal, previously set for late 2027 or early 2028, given the outlined tailwinds. He also sought clarification on the Q1 2026 expense outlook, considering elevated payroll taxes and other items.

Answer

Travis Lan, CFO, stated that the ROE timeline would not be updated but expressed confidence in achieving the 50% efficiency ratio target. Regarding expenses, he noted that Q4's elevated items would normalize, and the typical $7-8 million Q1 headwind from payroll taxes would likely result in general stability in operating expenses for Q1 2026.

Anthony Elian asked for an update on the timeline to achieve the 15% adjusted ROE goal, given the strong Q4 2025 performance, and sought clarification on the Q1 2026 expense outlook, considering elevated payroll taxes.

Answer

Travis Lan, Senior EVP and CFO, stated there was no update to the ROE timeline but expressed strong confidence in the start of 2026. Regarding Q1 expenses, he anticipates general stability, as the normalization of elevated Q4 items is expected to roughly offset the typical $7 million-$8 million headwind from payroll taxes.

Anthony Elian asked for more details on the increase in non-accrual loans, particularly the construction loan and other commercial real estate migrations. He also questioned how low Valley National Bancorp's commercial real estate concentration could go and when CRE balances might start growing again.

Answer

Mark Saeger, Chief Credit Officer, explained that the increase was primarily due to a $135 million land loan with strong value, expected to be refinanced without issues. He noted that 50% of non-accrual loans are current on payment, indicating positive movement in the real estate market. Travis Lan, CFO, stated that Valley is targeting C&I growth to further reduce the CRE ratio, aiming for 300% by late 2026/early 2027, with C&I balances expected to stabilize and then grow.

Anthony Elian from JPMorgan Chase & Co. requested more details on the increase in non-accrual loans, particularly the construction loan and other commercial real estate migrations. He also inquired about Valley National Bancorp's commercial real estate concentration, asking how low the ratio could go and when CRE balances might resume growth.

Answer

Chief Credit Officer Mark Saeger clarified that the primary increase in non-accruals was a $135 million land loan with strong value and an anticipated refinance, expecting no loss. He noted that 50% of non-accrual loans are current on payment and observed positive movement in the real estate market. CFO Travis Lan stated that Valley National Bancorp targets low single-digit CRE growth for 2026 and beyond, aiming for the CRE concentration ratio to decline to 300% by late 2026 or early 2027.

Anthony Elian asked about the updated loan growth guidance of 3-5%, now expected at the low end, and whether Q2 could be a growth quarter or if growth would be back-half weighted. He also requested an update on the large nonperforming loans from Q4.

Answer

Executive Travis Lan stated that Q2 can 'absolutely be a loan growth quarter,' with momentum in C&I and consumer lending continuing and CRE originations picking up. CEO Ira Robbins supported this by noting the commercial pipeline grew from $2.0 billion to over $2.7 billion. Chief Credit Officer Mark Saeger confirmed the large Q4 problem loans were written down and resolved, with Q1 charge-offs stemming from two new, unique situations involving fraud.

Anthony Elian asked for details on the expected cadence of the reserve build throughout 2025 and inquired about the primary drivers behind the successful $1.7 billion growth in direct customer deposits.

Answer

Chief Credit Officer Mark Saeger indicated the reserve build would likely be more weighted towards the beginning of the year before tapering off. Executive Travis Lan and CEO Ira Robbins added that the deposit growth was broad-based across both branch and specialty channels, highlighting strong activity in international and technology verticals. Robbins emphasized that investments in technology, particularly the Treasury Solutions platform, were key drivers, contributing to a $0.5 billion increase in associated deposit balances in the latter half of the year.

Anthony Elian of JPMorgan Chase & Co. asked about the specific drivers behind the growth in specialized deposits, particularly in the technology segment, and inquired about the company's normalized loan growth potential.

Answer

Executive Travis Lan attributed the deposit growth to a strong pipeline of technology companies and broad-based strength in other commercial and online channels. President Tom Iadanza projected a normalized loan growth rate in the mid-single-digit range, as strong C&I growth will be partly offset by the managed reduction in CRE concentration through 2025.

Anthony Elian asked if Western Alliance's share buybacks would take a step back relative to the $57 million in Q4, given that the CET1 ratio is already at the 11% target. He also questioned if there was a scenario where ECR expenses could rise from last year's $630 million, considering limited rate relief, steady investments, and a constant ECR mix.

Answer

Ken Vecchione, President and CEO, stated that 11% CET1 is a comfortable target, and buybacks are not modeled in but would be opportunistic for market disruptions or if loan growth weakens. Vishal Idnani, CFO, noted that a Q4 rate cut is not fully baked into current rates, suggesting some continued downward trend in ECR costs, and they will continue to push on mix. Mr. Vecchione added that ECR expenses could ironically be higher than guided if a very strong mortgage market leads to increased balances, which would be a 'good problem to have' resulting in better value creation.

Anthony Elian asked if Western Alliance's share buybacks should be expected to step back relative to the $57 million executed in Q4 2025, given that the CET1 ratio is already at the 11% target. He also inquired if there was a scenario where ECR expenses could rise from the previous year's $630 million, considering fewer rate cuts, steady investments in growth, and a constant ECR mix.

Answer

President and CEO Ken Vecchione stated that 11% CET1 is a comfortable level, and while they would like it to rise, buybacks are not layered into models but remain opportunistic for market disruptions or if loan growth is weaker than expected. He advised against modeling buybacks. Regarding ECR expenses, Mr. Vecchione acknowledged that a very strong mortgage market leading to increased refinancing activity could result in higher ECR balances and thus higher dollar expenses, even if the bank works to tamp down pricing, describing it as a "good problem to have" that results in better value creation. CFO Vishal Idnani added that not all of the previous year's rate cut impact is fully baked into current rates, suggesting continued downward trend, and the bank remains focused on pushing for a favorable mix.

Anthony Elian asked why Western Alliance Bancorporation increased its ECR costs range while maintaining the NII range, specifically if the ECR increase was balance-driven or due to lower repricing ability.

Answer

President and CEO Ken Vecchione stated that the increase in ECR costs was "really balance-driven," as the bank received more deposits in Q3 than anticipated, which he described as a "good problem to have." In a follow-up, regarding a broader review of credit procedures beyond note finance and NDFIs, CFO Dale Gibbons emphasized that executive management is highly concerned with credit governance. He highlighted the existing robust control environment, active involvement of the second line credit risk review, and ongoing broad-scale portfolio reviews as part of the bank's continuous process.

Anthony Elian asked if the increased range for ECR costs, while maintaining the NII range, was due to higher balances or a lower ability to reprice deposits. He also inquired if Western Alliance Bancorporation would review loan portfolio credit procedures more broadly beyond note finance and NDFIs, given investor concerns.

Answer

President and CEO Ken Vecchione stated that the increase in ECR costs was "really balance-driven," with higher-than-expected balances in Q3 impacting expenses and adjusted efficiency ratio/NIM. CFO Dale Gibbons emphasized that executive management is highly concerned with credit governance and asset quality, highlighting existing robust control environments, active credit risk review, and ongoing broad-scale portfolio reviews, assuring that these processes are continuously engaged.

Anthony Elian asked for the potential impact on ECR deposit costs if no rate cuts occur and questioned the long-term growth potential for the digital asset deposit segment.

Answer

CEO Ken Vecchione advised looking at the total PPNR impact, noting that if rates don't fall, higher net interest income would offset higher ECR costs. CFO Dale Gibbons addressed the digital asset segment, stating the bank has a 4% concentration limit but could see it moving higher over time, while emphasizing that funding diversification remains a key principle.

Anthony Elian of JPMorgan Chase & Co. asked for anecdotal feedback from customers regarding tariff uncertainty and whether the bank was paying closer attention to any specific business lines.

Answer

President and CEO Kenneth Vecchione noted that clients are cautious, but growth is coming from longer-term projects like homebuilder finance that are less affected by immediate uncertainty. Chief Banking Officer Tim Bruckner emphasized that their diversified business model, with its ability to dial exposures up or down and its focus on domestic borrowers, is the core strategy for managing risk in any environment.

Anthony Elian asked about the potential impact on the NII and ECR cost outlook if the Fed does not cut rates in 2025. He also inquired about the bank's latest perspective on M&A, given the regulatory environment and its proximity to the $100 billion asset threshold.

Answer

Interim CEO and CFO Dale Gibbons asserted that the financial guidance would remain the same even with zero rate cuts, citing the bank's negligible and manageable interest rate sensitivity. On M&A, he stated the bank is not dependent on a deal to cross the $100 billion threshold, preferring to focus on its strong organic growth engine and complete its LFI transition before considering a major acquisition.

Anthony Elian asked if the Q4 2024 deposit guidance, which projects a $2 billion decline, includes any further paydowns of brokered deposits. He also questioned why other deposit-gathering channels are not expected to fully offset the seasonal outflows.

Answer

CFO Dale Gibbons stated that the Q4 deposit decline is driven almost entirely by seasonality in the mortgage warehouse business and that brokered deposit levels are expected to remain fairly flat. CEO Ken Vecchione explained that while other channels partially offset the outflow, the mortgage warehouse business is a very large contributor and its inflows were particularly strong in Q3 as competitors retreated, creating a larger-than-usual seasonal reversal.

Anthony Elian asked about the sequential uptick in Q4 2025 expenses, seeking clarification on a good run rate for 2026 and if mid-single-digit expense growth remains appropriate. He also followed up on the share buyback program, asking about the anticipated pace of using the new authorization and any price sensitivity.

Answer

Head of Investor Relations William Matthews attributed the Q4 expense increase to performance-based compensation, seasonality, and growth initiatives, confirming that the guidance incorporates these factors. CFO Jeremy Lucas added that hiring relationship managers is opportunistic. William Matthews also stated that capital return decisions are flexible, depending on share price, economic outlook, growth, earnings, and capital ratios, noting that the Q4 payout ratio of 97% is not sustainable long-term, with a target range of 40-60% for dividends plus repurchases.

Anthony Elian (via Mike) from JPMorgan Chase & Co. asked about the sequential uptick in Q4 expenses, seeking clarification on any non-recurring items and whether the previously guided mid-single-digit expense growth for 2026 remains appropriate. He also inquired about the anticipated pace of using the new 5.5 million share buyback authorization and the bank's price sensitivity for repurchases.

Answer

William Matthews, Head of Investor Relations, attributed the Q4 expense increase to higher performance-based compensation from strong non-interest income and loan growth, Q4 seasonality, and increased investment in growth initiatives like hiring and marketing. He confirmed that the guidance of a 4% increase over 2025 NIE levels of $1.407 billion incorporates these factors. Regarding the buyback, William Matthews stated that capital return decisions are flexible, depending on share price relative to intrinsic value, economic outlook, growth, earnings, and capital ratios. He noted the Q4 payout ratio of 97% was higher than sustainable long-term, suggesting a more typical 40%-60% range, subject to circumstances.

Anthony Elian asked if Webster Financial anticipates loan and deposit growth to be spread evenly throughout 2026 or weighted towards a specific half, and whether all necessary infrastructure is in place to support the projected $1 billion-$2.5 billion incremental HSA deposit growth.

Answer

CEO John Ciulla noted that predicting even growth is difficult due to unpredictable payoffs, though Q1 is typically slower. President and COO Luis Massiani confirmed that all necessary technology infrastructure for HSA Bank's incremental deposit growth is already in place, ensuring scalability without additional cost.

Anthony Elian asked whether loan and deposit growth is expected to be evenly spread throughout the year or weighted towards a specific half, and if the necessary technology infrastructure is in place to support the projected HSA deposit growth.

Answer

CEO John Ciulla stated that while it's difficult to predict, an even growth trajectory can be modeled, though Q1 is typically slower and Q4 strongest, with payoffs being a key unpredictable factor. President and COO Luis Massiani confirmed that all necessary technology infrastructure for HSA deposit growth is already in place, with full capabilities and scalability to handle potential surges without incremental cost.

Anthony Elian asked if Webster Financial is scrutinizing any portfolios beyond NBFI after recent market events and about the types of commercial real estate (CRE) loans originated in Q3, and if this level of originations is sustainable.

Answer

John Ciulla (CEO) stated that no other portfolios are currently flashing yellow or red lights, mentioning small auto exposure, ongoing office resolution, and monitoring rent-regulated multifamily, but expressed overall comfort with the portfolio. Luis Massiani (President and COO) explained that Q3 CRE growth reflected pent-up pipeline activity, with diversified industrial and multi-asset class originations. He expects good but not Q3-level originations in Q4 and 2026 due to potential accelerated payoffs and the absence of pent-up demand. John Ciulla (CEO) added that the bank remains comfortable with its CRE concentration.

Anthony Elian from J.P. Morgan questioned whether the inflection in credit quality metrics is sustainable and if further improvement should be expected in the coming quarters.

Answer

Chairman & CEO John Ciulla confirmed that underlying credit trends are positive, with stabilized risk rating migration and no new problem areas. He noted that existing non-performing loans are concentrated in well-managed portfolios, suggesting that while cautious, the company expects the downward trend in problem assets to continue over time.

Anthony Elian of JPMorgan Chase & Co. pointed out that period-end loan balances were significantly higher than the quarterly average and asked for clarification. He also inquired about the biggest swing factors that could move Net Interest Income (NII) to the high or low end of its guidance range.

Answer

CEO John Ciulla confirmed that a number of large transactions closed late in the quarter, leading to higher period-end loan balances. CFO William Holland identified the long end of the yield curve as a key sensitivity for NII, noting that a 50 basis point move impacts NII by about $25 million. He added that more robust economic activity and loan growth could push NII to the high end of the guide, while a recession or flatter curve would push it toward the low end. Short-term rate changes were described as having a less material impact.

Anthony Elian from JPMorgan Chase & Co. asked about the sensitivity of the 2025 NII guidance to a delay in Fed rate cuts and inquired if the 4-5% loan growth forecast is back-half weighted, seeking details on the expected drivers.

Answer

CFO William Holland explained that NII guidance is not highly sensitive to the timing of rate cuts, with a "no cuts" scenario still falling within the guided range. CEO John Ciulla clarified that loan growth is expected to be steady throughout the year, driven by a diversified mix across sponsor finance, national businesses, middle market, business banking, and residential mortgages.

Anthony Elian asked Clint Stein if his expanded role as Chair, in addition to CEO and President, would lead to any changes in the company's strategic direction.

Answer

Clint Stein, Chair, CEO, and President, stated that the short answer is no, as this transition was anticipated and discussed by the board since mid-2024. He emphasized that while roles are changing, the board's priorities remain consistent, with an initial focus on board size and refreshment, including the positive impact of new directors from Pac Premier.

Anthony Elian inquired about the net interest income (NII) expectations for Q1, considering day count and the absence of the time deposit premium, and later asked if Clint Stein's new role as Chair would change strategic perspectives.

Answer

Ivan Seda (EVP and CEO) projected NII to dip just below $600 million in Q1 before trending upward sequentially throughout 2026. Clint Stein (Chair, CEO, and President) stated that his new role as Chair would not change strategic perspectives, as it was an anticipated board transition focused on board size and refreshment.

Anthony Elian of JPMorgan Chase & Co. asked about the quarterly cadence of the 2025 expense guide and requested more detail on planned technology investments and their expected revenue impact.

Answer

CFO Ron Farnsworth explained that Q1 expenses will see a bump due to payroll taxes and insurance, with merit increases impacting Q2. CEO Clint Stein added that the timing of reinvestments, including five new branches and banker hires, will also shape the quarterly expense build. Regarding tech, Executive Torran Nixon described ongoing enhancements to payment platforms that drive core fee income, while Stein noted that specific monetization strategies are competitive but focus on developing scalable, recurring revenue streams from customer-driven solutions.

Anthony Elian asked for a follow-up on the adjusted net interest margin (NIM), questioning if a similar level of expansion seen in Q3 could be reasonably expected in Q4 given the outlined funding tailwinds.

Answer

CFO Ron Farnsworth tempered expectations, stating the NIM would likely "bounce along the bottom." He emphasized that deposit flows, which are historically variable, would have a much larger impact on the margin than the known repricing tailwinds, making a similar increase uncertain.

Anthony Elian asked about the specific drivers behind the sequential increase in Q4 average mortgage finance balances and sought more color on the increase in special mention credits, including why it surfaced now and expected resolution.

Answer

CFO Matt Scurlock attributed the Q4 mortgage finance balance increase to lower rates driving higher aggregate originations, including refi activity, and slightly longer dwell times. Regarding special mention credits, Matt Scurlock detailed that the $250 million in Special Mention commercial real estate was tied to a handful of Central Texas multi-family properties facing net operating income pressure from rental concessions, emphasizing that grading is based on cash flow. Chairman, President, and CEO Rob Holmes reinforced the firm's proactive and disciplined approach to credit, noting high reserve levels and a history of managing such issues without significant credit problems.

Anthony Elian from JPMorgan Chase & Co. asked about the specific drivers behind the sequential increase in Q4 average mortgage finance balances, including any pickup in refi activity. He also sought more color on the increase in special mention credits, why it surfaced now, and the expected resolution timeline.

Answer

CFO Matt Scurlock explained that lower-than-anticipated rates drove a pickup in aggregate originations, including refi, and slightly longer dwell times contributed to the increase in average mortgage finance balances. Regarding special mention credits, he clarified it was $100 million of commercial real estate within a $5.5 billion portfolio, specifically a handful of Central Texas multi-family properties facing net operating income pressure from rental concessions. Chairman, President, and CEO Rob Holmes emphasized the firm's proactive approach to credit and strong reserve levels, noting that the percentage is high because the numbers are small.

Anthony Elian asked for details on the maturities of Certificates of Deposit (CDs) in Q4, including their maturing rates and recently posted rates. He also inquired about the firm's strategy now that the Return on Average Assets (ROA) target has been achieved, asking if it's purely about execution, incremental hires, or if new targets will be announced.

Answer

CFO Matt Scurlock stated that $765 million in CDs mature in Q4 at a weighted average rate of 4.22%, with current posted rates at 4%. CEO Rob Holmes emphasized that achieving the ROA target is a significant milestone, not the end goal. He highlighted the firm's excitement for the future, focusing on realizing revenue and cost synergies, meeting client demand, and leveraging investments in technology and operations. While not committing to new long-term guidance, he affirmed the management team's commitment to continued transparency.

Anthony Elian of JPMorgan Chase & Co. asked for more details on the timing and nature of planned derivative or securities actions and the timeline for implementing enhanced credit structures on the mortgage finance portfolio.

Answer

CFO Matt Scurlock confirmed that future securities actions are included in the revenue outlook and noted the addition of $300 million in forward-starting swaps this quarter. He mentioned significant swap maturities in Q2 and Q3 provide opportunities to manage balance sheet duration. Regarding the credit structures, Scurlock expects to have 30% of the mortgage finance portfolio moved into the new, more capital-efficient structure by the end of Q2.

Anthony Elian followed up on the 2025 outlook, questioning an implied change in the Net Interest Income (NII) guide based on the total revenue forecast. He also asked if the planned hiring of additional frontline talent was for existing business segments or an expansion into new areas.

Answer

CFO Matt Scurlock clarified that the NII outlook has not fundamentally changed and that achieving mid-to-high single-digit loan growth could push the firm to the higher end of the total revenue guide. CEO Rob Holmes responded to the hiring question, confirming that the new talent is being added to deepen the skill set within existing industry verticals and segments, such as investment banking and treasury services, rather than to launch entirely new product lines.

Anthony Elian from JPMorgan Chase & Co. requested updated assumptions on the 2026 loan marks, particularly the shift of approximately two-thirds of PAA to longer duration residential mortgages, and asked for NII sensitivities if the mark were to shift back to shorter duration. He also sought updated thoughts on the combined company's deposit beta, assuming the forward curve's interest rate movements.

Answer

Jamie Gregory, CFO, Synovus Financial, confirmed that approximately two-thirds of the PAA is expected from residential mortgages, which are long duration, and he does not anticipate material shifts in marks between products. He stated that the blended deposit beta for both companies combined in the current easing cycle is about 48%, and for the next two anticipated rate cuts, a 45%-50% deposit beta is considered appropriate for the remainder of 2026.

Anthony Elian from J.P. Morgan requested updated assumptions for 2026 loan marks, particularly regarding the two-thirds allocation to residential mortgages, and inquired about NII sensitivities if the mark shifted to shorter duration loans. He also asked for updated deposit beta expectations for the combined company, assuming the forward curve.

Answer

Jamie Gregory (CFO, Synovus Financial) stated that approximately two-thirds of the PAA is expected from long-duration residential mortgages, and significant material shifts in marks between products are not anticipated. He added that the blended deposit beta for both companies in the current easing cycle is about 48%, and a 45%-50% deposit beta is deemed appropriate for the next two expected rate cuts in 2026.

Anthony Elian from JPMorgan Chase & Co. questioned whether Pinnacle Financial Partners' legacy hiring strategy would remain effective post-merger, given the doubling of assets, and what factors underpin confidence in its continued success. He also asked about the specific drivers of BHG's strong Q3 originations and the rationale behind the projected decline in BHG income for Q4 to $30 million.

Answer

President and CEO Terry Turner expressed high confidence in the enduring success of Pinnacle's unique, relationship-driven hiring model, citing its proven track record even after previous acquisitions. CFO Harold Carpenter explained that BHG's Q3 originations were driven by strong production and demand from credit aggregators, while the anticipated Q4 income decline reflects a cautious outlook due to potential year-end personnel costs, despite continued strong production.

Anthony Elian from J.P. Morgan asked for more color on the drivers of the strong C&I loan growth and questioned whether the talent pool for experienced bankers in the Southeast remains robust amidst growing competition for hires.

Answer

CFO Harold Carpenter noted the 22% annualized C&I growth was broad-based across the franchise, not concentrated in any single area. President & CEO Terry Turner addressed the hiring question by emphasizing Pinnacle's differentiated recruiting model, which relies on internal referrals and a superior work environment. He pointed to Greenwich ratings and accelerating hiring momentum as evidence that their ability to attract top talent remains exceptionally strong, despite competition.

Anthony Elian of J.P. Morgan asked for details on the drivers of the strong C&I loan growth and questioned whether increased competition for talent in the Southeast is shrinking the available pool of experienced bankers.

Answer

CFO Harold Carpenter noted the C&I growth was broad-based across the franchise rather than concentrated in a specific sector. CEO Terry Turner addressed the talent question by emphasizing their 'extraordinary success' in hiring, which he attributed to a differentiated recruiting model based on internal referrals and a superior service platform, as evidenced by top Greenwich ratings, which gives them a competitive advantage.

Anthony Elian from J.P. Morgan asked for more detail on the drivers of the strong C&I loan growth in the quarter and questioned whether the talent pool in the Southeast remains robust enough to support Pinnacle's hiring strategy amidst growing competition.

Answer

CFO Harold Carpenter noted that the C&I growth was broad-based across the franchise and not concentrated in any single area. President & CEO Terry Turner affirmed that their hiring success remains 'extraordinary,' citing the high volume and quality of new associates. He credited their differentiated recruiting model, which relies on internal referrals, and their top-tier service reputation (evidenced by Greenwich ratings) as key advantages that allow them to consistently attract the best talent.

Anthony Elian of JPMorgan Chase & Co. asked for the size of the trucking loan portfolio, anecdotal feedback from clients on investment plans following tariff announcements, and whether the firm's Southeast footprint provides insulation for future loan demand.

Answer

Harold Carpenter (Executive) estimated the total transportation portfolio, which includes trucking, at approximately $700 million. M. Turner (Executive) stated that economic loan demand is near zero as clients pause amidst uncertainty, reinforcing that Pinnacle's growth relies on moving existing client relationships, not new economic activity. He agreed that the Southeast footprint is extraordinarily advantaged for growth once certainty returns.

Anthony Elian requested more color on the drivers of the exceptionally strong loan and deposit growth in Q4 and asked about any further business optimization plans at BHG following its exit from the SBA loan program.

Answer

M. Turner (executive) attributed the strong loan growth to fundamental performance across geographies and product lines. Harold Carpenter (executive) added that relationship managers are seeing increased inbound client interest, signaling growing confidence. Regarding BHG, Harold Carpenter revealed it also exited its 'buy now, pay later' business, reducing headcount to sharpen its focus on the core franchise.

Anthony Elian asked how a persistently inverted yield curve would impact the optimistic 2025 revenue outlook. He also sought clarification on whether the cumulative growth capacity figures shown for 2025-2026 represent a blue-sky scenario or an average expectation.

Answer

Executive Harold Carpenter responded that while a traditional, upward-sloping yield curve is better for all banks, Pinnacle is advantaged by its neutral balance sheet positioning, which helps manage through a difficult rate environment. He expressed hope for a more traditional curve from the overnight rate to the 5-year mark in 2025. Regarding the growth capacity slide, Carpenter clarified that the figures shown represent an average expectation based on their historical model, not a best-case scenario.

Anthony Elian inquired why First Horizon's fixed income revenue and average daily revenue (ADR) did not grow in Q4, despite tailwinds like a lower rate outlook and moderate volatility. He also asked for a more precise understanding of how incremental commissions from the fixed income business could impact the overall expense outlook.

Answer

Hope Dmuchowski, CFO, attributed the Q4 fixed income performance to a significant slowdown caused by the government shutdown in early October, which led to volatility and low ADR during that period. Bryan Jordan, CEO, also noted that the latter half of December tends to be slow. Regarding expenses, Ms. Dmuchowski provided a rule of thumb: assume 60% commission as revenue increases year over year for countercyclical businesses. Mr. Jordan characterized commission-based expense growth as a 'high-class problem,' indicating it's associated with profitable business and deepening client relationships.

Anthony Elian of JPMorgan Chase & Co. asked why fixed income and ADR revenue did not grow in Q4 2025, despite tailwinds like a lower rate outlook, moderate volatility, and a steep yield curve. He also requested a finer point on the degree to which incremental commissions from the fixed income business could impact the expense outlook.

Answer

Hope Dmuchowski, Chief Financial Officer, attributed the flat fixed income and ADR revenue in Q4 to a significant slowdown caused by the government shutdown in early October, which led to low ADR during that period, though it averaged out. Bryan Jordan, CEO, added that the latter half of December also tends to be very slow. Regarding commissions, Ms. Dmuchowski provided a rule of thumb: assume 60% commission as revenue increases year over year for countercyclical businesses. Mr. Jordan characterized commission-based expense growth as a 'high-class problem,' indicating it's profitable and deepens relationships, and while not anticipated to drive the expense number, it would be a positive outcome if it did.

Anthony Elian from JPMorgan Chase & Co. questioned First Horizon's maintained revenue outlook despite strong NII and fee performance in Q3, asking if revenue was expected to trend towards the high end of the range. He also inquired about the company's loan exposure to Non-Depository Financial Institutions (NDFIs) and any deeper dives being conducted given recent market events.

Answer

CFO Hope Dmuchowski stated that, barring unexpected events, revenue is expected to be towards the higher end of the range, contingent on FHN Financial's performance. Chief Credit Officer Thomas Hung explained that the NDFI book is carefully monitored, with consumer lending remaining strong and the smaller consumer financing portion (auto and retail) having elevated but controlled NPLs and classifieds, supported by experienced field examiners.

Anthony Elian questioned First Horizon's maintained revenue outlook of flat to up 4% despite strong Q3 performance, asking if there was conservatism. He also asked Chief Credit Officer Thomas Hung about the bank's loan exposure to Non-Depository Financial Institutions (NDFIs) and if a deeper dive was being conducted given recent market events.

Answer

CFO Hope Dmuchowski indicated that First Horizon expects to be at the higher end of the revenue range, but noted FHN Financial's strong Q3 was partially offset by a recent slowdown. Chief Credit Officer Thomas Hung explained that the NDFI book is carefully monitored, broken into three components, and while consumer financing NPLs are elevated, they are well within control due to extensive expertise and collateral examination.

Anthony Elian of J.P. Morgan asked if it was fair to assume the revenue growth mix for the year is now skewed more towards Net Interest Income (NII) rather than fee income. He also questioned whether the necessary technology infrastructure is fully in place to support the incremental $100 million PPNR opportunity.

Answer

Senior EVP & CFO Hope Dmuchowski confirmed that the revenue mix is absolutely more skewed towards NII, as delayed rate cuts have kept NII higher while weighing on countercyclical fee businesses. She also affirmed that the technology infrastructure to support the PPNR opportunity is now built out, with the benefits from these multi-year investments starting to open up revenue opportunities.

Anthony Elian of J.P. Morgan asked for confirmation that the revenue mix is now more skewed to NII and whether the tech infrastructure is fully in place to support the $100 million incremental PPNR opportunity.

Answer

CFO Hope Dmuchowski confirmed that the revenue mix has shifted more toward NII, as the lack of Fed rate cuts has supported net interest income while weighing on countercyclical fee businesses. She also affirmed that the necessary technology infrastructure to achieve the PPNR goal is now built out, with the benefits of this multi-year investment starting to materialize.

Anthony Elian asked if total deposits could grow in the second quarter, given new campaigns versus potential brokered deposit runoff. He also inquired about which loan portfolios are most exposed to tariff and trade uncertainty and their approximate size.

Answer

CFO Hope Dmuchowski stated that Q2 should be a 'great quarter for deposits,' driven by seasonal home buying boosting the mortgage warehouse business and new-to-bank promotional campaigns. Chief Credit Officer Thomas Hung identified retail trade, consumer finance, manufacturing, and construction as sectors receiving particular attention due to tariff risk, but emphasized the C&I portfolio is highly diversified with no single industry over 12% of exposure. Chairman, President and CEO Bryan Jordan added that the broader risk is a potential hit to the consumer, which would have a widespread credit impact.

Anthony Elian followed up on deposit costs, asking if further declines were expected beyond the 2.8% spot rate reported at year-end. He also asked about the expense control levers available if revenue growth comes in at the low end of the guidance range.

Answer

CFO Hope Dmuchowski acknowledged the lower spot rate will benefit Q1 averages but cautioned that the ability to continue cutting rates depends heavily on the competitive environment. Regarding expenses, she explained that lower revenue would naturally reduce commission-based expenses, and the company remains committed to finding operational efficiencies to deliver positive PPNR growth regardless of the revenue scenario.

Anthony Elian asked Harris Simmons for his perspective on investor concerns regarding NDFI portfolios, specifically whether they are overblown or reasonable, and his views on private credit risk, potential spillover effects, and the impact of recent issues like Tricolor and First Brands. He also followed up on the new slide 36 detailing NDFI allocations, asking which buckets are of highest and lowest concern from a credit quality perspective, with a specific mention of leveraged lending.

Answer

Chairman and CEO Harris Simmons stated that NDFI is broad, with some safe categories like capital call lines. He expressed concern about private credit due to its rapid growth, lack of regulation, and potentially more liberal structures, seeing it as a 'yellow flag' for potential spillover risk to credit markets if stress occurs. He noted that recent events might have led to unwarranted connections between unrelated credits. Chief Credit Officer Derek Steward emphasized paying attention to all NDFI segments, including leveraged lending, but highlighted capital call lines as historically more stable despite lower returns.

Anthony Elian from JPMorgan Chase & Co. asked Chairman and CEO Harris Simmons for his perspective on whether investor concerns regarding Non-Deposit Funding Institution (NDFI) portfolios are overblown or reasonable, considering the broad spectrum of NDFI categories. He also followed up on slide 36, requesting identification of the highest and lowest credit quality concerns within the NDFI allocation buckets, beyond the generally safer capital call lines.

Answer

Chairman and CEO Harris Simmons stated that while NDFI is broad, he sees greater risk in private credit due to its rapid growth, lack of regulation, and potentially more liberal structures, which could pose spillover risk to credit markets. He noted that recent incidents might have led to unwarranted connections between different credits. Chief Credit Officer Derek Steward emphasized paying attention to all NDFI segments, including leveraged lending, and reiterated that capital call lines are typically more stable despite lower returns.

Anthony Elian of J.P. Morgan asked if total deposits could return to growth in the third quarter after recent declines. He also followed up on the potential for stablecoins and digital assets to contribute to deposit growth, given Zions' new core system.

Answer

Chairman & CEO Harris Simmons responded that it was too soon to predict a return to deposit growth, emphasizing the focus remains on managing the total funding structure and cost. Regarding digital assets, he opined that tokenized deposits would likely be more impactful for the banking system than stablecoins, but noted Zions' new core platform provides the necessary plumbing to operationalize these innovations as they evolve.

Anthony Elian asked if Q1 loan growth was due to a pull-forward and requested details on portfolios with outsized exposure to tariffs and supply chain disruptions.

Answer

An executive clarified that the difference between period-end and average loan balances was due to the late-quarter First Bank branch acquisition. Another executive identified manufacturing, trucking and transportation (a <$500M portfolio), and retail as the primary segments being monitored for tariff-related impacts.

Anthony Elian asked whether the 'slightly increasing' loan growth guidance was more weighted to the second half of 2025 and requested more color on the increase in classified loans, specifically if it was broad-based or driven by large credits.

Answer

CEO Harris Simmons stated he expects steady loan growth throughout the year, not particularly back-half weighted. Chief Credit Officer Derek Steward explained the increase in classified loans was granular and distributed across the footprint, not driven by a single large credit. He specified the increases were primarily in CRE, driven by multifamily and industrial, due to construction delays, slower lease-up, and higher costs.

Anthony Elian of JPMorgan Chase & Co. questioned the change in the modeled NII benefit from rate sensitivity, which was guided at 6.3% last quarter but is now modeled at 1.4% on Slide 13. He also asked if the increase in classified multifamily loans was concentrated in specific markets.

Answer

An executive explained that a significant portion of the previously guided benefit has already been realized, contributing to a 4% NII increase. He also stressed that the 1.4% figure is based on the September 30 rate path, which has since changed, and that the official guidance is more important as it includes dynamic management assumptions. Chief Credit Officer Derek Steward stated that the increase in classified multifamily loans was not concentrated in any single market but was diversified across their footprint.

Anthony Elian asked for more color on the specific areas or drivers behind Synovus's consistent $2 billion loan production for the second straight quarter, and how sustainable that level is. He also inquired about the sustainability and potential for growth in capital markets income, especially with an outlook for lower interest rates.

Answer

CEO Kevin Blair indicated that loan production was broadly diversified across middle market banking, specialty lending, CIB, senior housing, and commercial real estate (CRE), with no single area dominating. He noted that Q4 pipelines suggest continued production at similar levels. CFO Jamie Gregory detailed that capital markets income was driven by derivatives (40%), syndication/lead arranger fees (40%), and debt capital markets (10%). He expressed confidence in continued momentum, citing client demand for fixed rates as rates decline, growth in larger loans, and opportunities to expand businesses like foreign exchange hedging and SBA loans, especially with the Pinnacle merger.

Anthony Elian of J.P. Morgan asked for more detail on the timeline for new banker hires and questioned the reason for the implied step-down in the second-half fee income guidance.

Answer

CEO Kevin Blair confirmed they are on track with their multi-year hiring plan, adding 12 of the 25 commercial bankers planned for 2025. EVP & CFO Jamie Gregory clarified that the fee income outlook for the second half is expected to be relatively stable and in line with Q2's performance, viewing Q1's lower result as an anomaly.

Anthony Elian asked if strong Q1 loan production was driven by clients stockpiling inventory ahead of tariffs and sought confirmation that the reduced expense guidance would not alter hiring plans for relationship managers (RMs).

Answer

CEO Kevin Blair stated that loan production was broad-based and not a pull-forward of demand due to tariffs, as confirmed by line utilization monitoring. He also affirmed that RM hiring plans remain unchanged, with CFO Andrew Gregory adding that the expense reduction came from other areas like project costs, facilities, and lower credit-related expenses.

Anthony Elian questioned the potential impact on the 3% to 7% revenue growth guidance if the Federal Reserve does not cut rates in the first half of 2025, and asked if expense growth would moderate if revenue comes in at the low end of the range.

Answer

CFO Jamie Gregory clarified that the negative lead-lag impact from rate cuts has been about half of what was previously modeled ($2-4 million per 25 bps cut) due to effective deposit repricing, implying that a delay in cuts would be a positive variance to guidance. He also confirmed that while some expenses are variable, strategic investments in hiring and technology are more fixed and are expected to proceed regardless of revenue performance within the guided range.

Anthony Elian from JPMorgan Chase & Co. asked about the potential catalysts needed to drive an increase in C&I loan utilization rates and whether noninterest-bearing deposit balances could begin to grow in 2025.

Answer

CEO Kevin Blair identified post-election certainty and continued consumer strength as key catalysts that could lift line utilization, potentially adding $1 billion in loan growth. CFO Jamie Gregory expressed optimism for growth in noninterest-bearing balances in 2025 but acknowledged that the trend remains uncertain.

Anthony Elian asked for specifics on the levers available to rightsize expenses to potentially beat the $190-$195 million quarterly guidance. He also sought to reconcile the reduced loan growth outlook with management's stated optimism for the Southern California market.

Answer

CFO Joseph Kauder and CEO Jared Wolff identified adjusting incentive compensation accruals and slowing project spending as key levers for expense management. Wolff explained the reduced loan growth forecast was a conservative nod to potential second-half slowdowns, not a change in their positive long-term view of the market opportunity.

Anthony Elian requested more detail on the growth of total client funds at SVB and its sustainability. He also asked about specific loan portfolios being monitored due to potential tariff and supply chain exposure.

Answer

Executive Marc Einerman attributed the client fund growth to SVB's ability to win business despite market headwinds but acknowledged future uncertainty. Executive Andrew Giangrave identified textile, footwear, retail, auto, and equipment finance as portfolios being watched closely, noting it is still early to assess the full impact.

Anthony Elian asked for more detail on the drivers of SVB's total client fund growth in Q4, particularly the impact of large, late-stage venture capital deals, and whether this growth is sustainable. He also inquired about Chairman and CEO Frank Holding's current perspective on M&A.

Answer

Executive Marc Cadieux responded that while a few very large financings contributed significantly to Q4 VC investment, the bank also performed well in capturing sub-$1 billion deals and benefited from lower client cash burn. He noted that expectations for SVB growth in 2025 are cautious. Chairman and CEO Frank Holding added that while the company remains opportunistic, it is not projecting any material M&A activity for 2025.

Anthony Elian asked for an update on the pace of new client additions within the SVB business and questioned if the elevated pace of the share buyback program would continue into mid-2025.

Answer

Executive Marc Cadieux confirmed that the bank continues to add new clients and see former clients return, viewing it as a positive sign despite market headwinds. Executive Tom Eklund stated that the current pace of share repurchases is expected to continue through year-end before slowing slightly to meet the $3.5 billion target by Q3 2025.

Anthony Elian asked if the fee income outlook includes an uptick in capital markets activity and inquired about current trends in that business. He also questioned the potential impact of supply chain issues and tariffs on the national dealer portfolio.

Answer

Chief Banking Officer Peter Sefzik confirmed the outlook assumes a capital markets uptick, citing strength in syndications, risk products, and a growing M&A advisory business. Regarding the dealer portfolio, he described a 'wait and see' approach from clients, who are well-prepared from their COVID experience but are currently cautious.

Anthony Elian asked if the 2025 loan growth outlook assumes an increase in loan utilization rates and requested more detail on the drivers behind the quarterly increase in non-performing assets (NPAs).

Answer

Chief Banking Officer Peter Sefzik confirmed the loan growth outlook does not factor in an increase in utilization rates. Chief Credit Officer Melinda Chausse explained the modest NPA increase was granular, noting one ~$30 million CRE loan and a theme of pressure from higher rates on companies serving the consumer discretionary sector. She added that NPA levels remain about half of the long-term average.

Anthony Elian asked if Comerica expects to grow loans faster than the industry once economic hurdles clear and inquired about the drivers of deposit growth in the equity fund services segment.

Answer

Chief Banking Officer Peter Sefzik stated that, excluding the CRE headwind, the bank expects to grow at or above the industry rate in 2025-2026, a sentiment echoed by CEO Curt Farmer, who highlighted the bank's strong positioning. Sefzik explained that growth in equity fund services deposits is driven by a strategy of securing more comprehensive bilateral relationships, which yields more core deposits and fee income.