Jon Arfstrom • RBC Capital Markets

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Chairman & CEO Mariner Kemper and President Jim Rine explained that the loan production was in line with expectations and is expected to remain strong in the next quarter. They noted that growth is broad-based and that the Heartland team is contributing significantly, driven by pent-up demand and higher lending limits. Regarding portfolio alignment, Mariner Kemper stated that while some adjustments are ongoing, any resulting payoffs are expected to be immaterial to the combined balance sheet.

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Chairman and CEO J. Kemper identified cultural assimilation and instilling UMB's risk management philosophy as the top priority. He stated that the deployment of UMB's lending process would be 'immediate' through the placement of experienced regional credit officers into the new territories. CFO Ram Shankar explained the sensitivity slide shows a well-matched balance sheet, resulting in a neutral rate position, with hedges in place as a conservative measure against falling rates.

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CEO Phillip Green stated that lending competition comes from all bank sizes but noted an increase in aggressiveness from smaller banks. CFO Dan Geddes quantified the impact of a single 25 basis point rate cut at approximately $1.8 million per month to NII. He also explained that the expansion project is currently at breakeven in aggregate, detailing how mature branches in Houston are funding newer ones in Dallas and Austin, with overall accretion expected in 2026 as more locations mature.

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CFO Dan Geddes explained that the inclusion of four rate cuts in the guidance reflects a conservative stance relative to the market. CEO Phillip Green stated his view on loan growth is largely unchanged, balancing economic uncertainty with strong execution by his bankers. Geddes suggested potential upside to noninterest income could come from volume-driven fees like interchange as the bank continues to add new customer relationships through its expansion.

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CEO Phillip Green stated that higher-than-expected CRE payoffs could push loan growth to the low end of the range, while a pickup in economic activity could drive it to the high end. CFO Dan Geddes confirmed the guidance is for full-year average growth. Geddes explained the conservative noninterest income guide reflects not expecting a repeat of 2024's exceptional Capital Markets performance and uncertainty around potential fee regulation.

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Incoming CFO Dan Geddes confirmed that Q4 deposit trends appear similar to past seasonal patterns and that the cost of incremental interest-bearing deposits is declining. CEO Phillip Green stated there are no plans to change the balance sheet strategy, as using their ample cash liquidity is more efficient than paying premiums for hedging instruments. Dan Geddes noted that service charge growth is driven by new customer volume from the expansion, but the recent 5% non-annualized pace may be high to sustain.

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Senior Chairman & CEO David Zalman expressed optimism that M&A approval timelines are returning to a more normal three to four months, seeing a clearer path forward. He identified San Antonio as the primary market needing more density. President and COO Kevin Hanigan addressed the revolver question, stating that after digging into the issue, he expects utilization to not only stabilize but likely increase going forward.

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CFO Asylbek Osmonov explained they are replacing maturing 15-year mortgage-backed securities with new ones yielding around 5.25% to 5.50% with a duration of 4 to 5 years. Senior Chairman and CEO David Zalman added that much of the recent cash flow went to pay down borrowings. On capital, Zalman acknowledged the 11.2% TCE ratio is high but stated he has no doubt the capital will be deployed through M&A or buybacks. He considers a minimum TCE of 8% to be a comfortable target, though he would accept a temporary dip below that for the right large deal.

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CFO Asylbek Osmonov explained that of the $1.9 billion in annual securities cash flow, a portion will pay down borrowings while the rest will be reinvested at higher yields, boosting the portfolio's return. Senior Chairman and CEO David Zalman stated a clear preference for preserving capital for M&A over buybacks, citing a more favorable regulatory environment and increased inbound interest from potential sellers post-election, including three calls he received.

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CEO Stacy Kymes explained that loan growth accelerated during the quarter as payoff headwinds in the energy and healthcare portfolios abated, allowing underlying C&I growth to become more visible. He described the lending environment in their markets as 'hypercompetitive,' noting some spread compression on high-quality C&I loans. EVP & CFO Martin Grunst added that this pressure is most visible on borrowers with access to capital markets.

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CEO Stacy Kymes confirmed that loan pipelines are strong but borrower uncertainty is a wildcard. While not providing specific volume estimates for the new mortgage finance business, he said it reinforces their confidence in full-year loan guidance. EVP Scott Grauer explained that the mix shift toward trading NII is a more traditional and expected composition in a normal, steeper yield curve environment, a sentiment echoed by CEO Stacy Kymes and CFO Martin Grunst.

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CEO Stacy Kymes explained that payoffs in healthcare, CRE, and energy were due to temporary capital market conditions and he expects a return to normal growth. He noted that sustained Core C&I growth combined with this recovery supports their guidance. On energy, Kymes stated that while the new administration may be supportive, borrower discipline will ultimately drive activity. EVP Marc Maun added that energy lending saw a strong rebound in Q4 with new relationships, a trend he expects to continue.

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CFO Marty Grunst advised that averaging Q2 and Q3 personnel expense provides a good run rate, smoothing out timing-related incentive compensation. Grunst and EVP Marc Maun explained that deposit growth was broad-based across commercial and wealth, driven by both new clients and existing clients shifting funds from DDA to interest-bearing accounts. CEO Stacy Kymes added that the Q3 energy payoffs were a unique coincidence, not a fundamental shift, and he expects those balances to grow over the next 12 months.

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EVP & CFO David Stoehr and Vice Chairman & Chief Lending Officer Richard Murphy confirmed that loan growth is expected to remain in the mid-to-high single-digit range. President, CEO & Director Timothy Crane noted that the strong deposit growth was broad-based but the Q2 level should not be considered the new norm. He also confirmed the wealth management platform conversion to LPL is largely complete.

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Executive Timothy Crane stated that despite client uncertainty, the loan growth outlook remains unchanged, supported by a strong local economy and an expected robust Q2. Executive Richard Murphy added that while clients are cautious, key segments like premium finance are less affected. CFO David Dykstra explained the credit provision was increased due to a qualitative overlay for late-quarter market volatility, such as wider credit spreads, even as the baseline economic forecast improved.

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Richard Murphy, an executive, acknowledged increased competitive pressure, particularly in commercial real estate, but affirmed the company's mid- to high-single-digit loan growth guidance, stressing that Wintrust will not chase deals with unfavorable pricing or structures. Executive Timothy Crane added that a mortgage rate near 6% previously triggered a material pickup in activity, but low housing inventory remains a challenge.

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Richard Murphy, EVP and Chief Credit Officer, explained that loan growth is driven by a diversified portfolio, including strong pipelines in core C&I and new opportunities in asset-based and mortgage warehouse lending, making the current pace sustainable. David Stoehr, CFO, clarified that the Q3 provision was lower due to improved macroeconomic forecasts and fewer specific reserves, suggesting future provisions would primarily be tied to loan growth.

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CFO John Moran explained that 'active portfolio management' involves reducing criticized and classified assets through payoffs and refinancings. He noted the retained $2.4 billion in CRE loans are similar to ONB's existing underwriting standards. Moran also detailed upcoming time deposit maturities, highlighting a significant repricing opportunity in the brokered deposit bucket next quarter.

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Executive John Moran noted the 25% qualitative reserve is up slightly from the low 20s in early 2024. Executive James Ryan stated there is still room to lower deposit costs, particularly in the short-duration time deposit and exception-priced books. Regarding Bremer, Ryan emphasized that the immediate priority is 'cultural integration,' focusing on spending significant time with new team members and clients to ensure a smooth transition and to leverage the combined company's enhanced scale.

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An executive explained that the higher payoffs were driven by increased capital markets activity, secondary market refinancings, and a few large, non-recurring transactions. Regarding credit, it was described as a 'quiet quarter' with continued normalization. Executive James Ryan expressed significant enthusiasm for the Bremer partnership, calling it a potential 'pivot point' for the company and highlighting the strong talent and positive reception from the Bremer team.

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Executive Jim Sandgren acknowledged that competitive pressures are picking up on both loans and deposits but expressed confidence in their ability to win. CFO John Moran added they will remain 'on offense' with deposits as long as spreads are attractive. Regarding credit, Executive Mark Sander clarified that a recent delinquency bump was an administrative non-event and that while some risk rating downgrades could occur, they are well-managed and mitigated by a proactive approach.

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EVP & Chief Credit Officer Derek Stewart clarified that the activity reflects construction loans converting to permanent term loans upon completion. CFO Ryan Richards confirmed that latent factors, such as fixed-asset repricing, provide enough momentum that they could still achieve net interest income growth over the next year, even with the rate cuts included in their forecast.

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Executives, including Derek Steward and Scott McLean, affirmed they expect moderate loan growth to continue in Q2. Chairman and CEO Harris Simmons expressed encouragement with the current regulatory environment, anticipating a more 'sensible' approach focused on real risks rather than political issues, which he views as a welcome change.

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Chairman and CEO Harris Simmons expressed more optimism for commercial loan growth but tempered it with expected headwinds from refinancing in commercial real estate and a shift to an "originate and sell" model for 1-to-4 family residential loans. President and COO Scott McLean commented on the energy portfolio, noting that while outstandings ticked down slightly, the business fundamentals are strong due to fewer bank competitors, better underwriting, and improved pricing. He remains optimistic about balanced growth in that portfolio.

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CEO of Centennial Bank, Stephen Tipton, confirmed the core NIM rose to 4.47% in June. President & Chief Lending Officer Kevin Hester described the mortgage business as inconsistent and not expected to see a sustained positive trend until rates fall. Mr. Hester and Chairman & CEO John Allison confirmed a single yacht loan was the main reason for the NPL increase, adding that no loss is expected on the loan.

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Executive John Allison and Executive Brian Davis explained the plan to pay off $140 million in high-cost subordinated debt while continuing to actively repurchase stock. Executive Christopher Poulton confirmed it was fair to assume the CCFG portfolio is near a bottom, as the recent decline was a controlled exit from C&I loans. Executive Kevin Hester identified Southeast Florida and metro markets in Florida and Dallas as particularly strong for loan growth but noted that higher payoffs in Q2 could be a headwind.

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Chief Lending Officer Kevin Hester clarified that NPAs rose as certain credits were moved to non-accrual status but expects $30-$40 million in dispositions in Q1 to reduce the balance. Chairman John Allison stated he is comfortable with the current reserve, does not anticipate significant near-term provisions, and affirmed that the company's earnings run rate is strong and consistent.

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Chairman John Allison clarified that the $20 million figure was a potential additional reserve for Hurricane Milton, but it is too early to determine the final amount. He expressed optimism that losses would be minimal. Mr. Allison also confirmed that a mid-$0.50s EPS run rate, equating to a 1.96% ROA, is a reasonable expectation for the company's current operational performance.

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CEO Kevin Blair attributed the strong loan growth to successful talent acquisition and robust pipelines, which are up 14% entering Q3. EVP & CFO Jamie Gregory explained that Q2's deposit decline was a strategic move to lower costs and that he anticipates 1-3% core deposit growth for the full year, driven by new client acquisition and seasonal inflows.

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CEO Kevin Blair explained that despite uncertainty from tariffs, client sentiment remains constructive, with strong production and pipelines in high-growth segments. He noted higher production and line utilization could push growth to the high end. CFO Andrew Gregory added that the NIM is expected to be relatively stable, as the temporary headwind from potential Fed rate cuts would likely offset the permanent benefit of asset repricing.

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CEO Kevin Blair expressed optimism for a return to normalized loan growth, citing improved post-election client sentiment, the highest committed production in eight quarters, maturing new hires, and reduced headwinds from portfolio runoff. CFO Jamie Gregory projected a stable NIM in the mid-3.20% range for the first half of 2025, with expansion expected in the second half to potentially reach the mid-3.30% range, driven by fixed-rate asset repricing.

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CFO Hope Dmuchowski stated she expects Q3 mortgage warehouse balances to be at or above current levels, contingent on industry trends. Head of IR Tyler Craft added that growth is also fueled by gaining wallet share with existing clients. Dmuchowski clarified that even at the high end of the revenue range, expenses are not expected to exceed the guided 2% increase due to sensitivity analysis already performed on commissions.

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Chairman, President and CEO Bryan Jordan described the borrower sentiment as a 'wait-and-see' approach due to tariff uncertainty, not pessimism, with pipelines remaining reasonably strong. Chief Credit Officer Thomas Hung added that while major investments are paused, the general sentiment is optimistic. Regarding reserves, Hung explained the 2 basis point increase was a prudent measure for macroeconomic uncertainty, not due to observed deterioration, noting that the ACL coverage remains among the strongest in their peer set.

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CFO Hope Dmuchowski expressed confidence in the margin's stability, noting the company's ability to manage deposit costs, but was cautious about providing exact guidance due to market volatility. CEO Bryan Jordan affirmed that momentum from Q4 should continue into Q1. Regarding regulation, Jordan stated his hope that the new administration would re-evaluate asset thresholds like the $100 billion 'cliff,' advocating for tiering based on risk profile rather than just size.

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CEO Bryan Jordan stated that current loan growth is muted due to market uncertainty around elections and Fed policy, but he remains optimistic about pent-up demand. Regarding fixed income, he noted significant weekly volatility, providing recent ADR figures but cautioning that a few weeks don't make a trend. CFO Hope Dmuchowski added that August and September were strong but activity spiked after the rate cut.

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CFO Derek Meyer confirmed that Q1 capital markets revenue was a more normal run rate compared to the abnormally high Q4. Chief Credit Officer Pat Ahern explained the NPL movements were normal course of business, with some resolution in C&I and one specific deal driving the CRE increase. Executive Andrew Harmening detailed that progress on the commercial expansion is measured by the increasing production from new hires as their non-solicitations expire, with the full revenue and ancillary business (deposits, HSA, Private Wealth) benefit expected to materialize over time.

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An executive confirmed that modest growth in the securities portfolio is expected and that Q2 likely marked the trough for net interest income. The executive also noted noninterest-bearing deposits have stabilized in dollar terms. CEO Andrew Harmening added that positive household growth should support these balances. Chief Credit Officer Pat Ahern stated that reserves are considered 'pretty solid' at their current level and future provisions will primarily reflect loan growth and other factors, not a need for a significant build.

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CEO Ira Robbins stated that while borrower sentiment is mixed, the loan pipeline remains fundamentally strong, and he believes their entrepreneurial clients are resilient. Executive Travis Lan outlined the drivers for noninterest income, citing a strong outlook for tax credit advisory revenue, continued growth in FX services, and anticipated swap activity from a pickup in CRE originations. He also noted the full-year benefit from repriced deposit service charges.

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CEO Ira Robbins confirmed that 2025 net charge-offs are expected to be significantly lower, aligning with historical norms. He and another executive elaborated that the reserve build is a mandatory consequence of the strategic growth in higher-reserve C&I loans, not a reflection of deteriorating credit quality in the current portfolio.

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CEO John Ciulla acknowledged the external focus on credit but expressed confidence in the bank's position, stating that normalized NPAs should be 'materially below 1%.' He emphasized that the bank is not under credit stress and can deliver high returns despite current credit costs. Regarding capital, Ciulla confirmed a willingness to buy back more shares given the stock's valuation and a stable economy. While 11% CET1 is the right current target, he said the bank would be willing to go below it quarter-to-quarter under the right circumstances.

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CEO John Ciulla cited more natural resolutions, loan restructurings where borrowers contribute equity, and an increase in payoffs as positive signs, leading to a stronger remaining portfolio. For his regulatory wish list, he advocated for a return to more "tailored supervision" based on a bank's actual risk profile and activities, rather than on artificial asset-size thresholds.

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CFO Ron Farnsworth confirmed that the NIM is expected to move toward the lower half of the range seen in recent quarters (Q2/Q3 2024 levels) due to seasonal deposit outflows in Q1 requiring an increase in higher-cost wholesale funding. For repricing, Farnsworth highlighted a significant opportunity with over $8 billion in CDs and borrowings maturing in the next six months, as detailed in the investor presentation.

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EVP & Chief Commercial Banking Officer Christopher Merrywell estimated the non-relationship loan pool at approximately $6 billion. President Torran Nixon added that a single large C&I loan payoff was an anomaly contributing to prepayments. CFO Ron Farnsworth explained the optimization slide highlights a current headwind that offers future optionality. Nixon clarified that new deposits are priced at standard posted rates, not special promotional rates.

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EVP and CFO Ron Farnsworth stated the NIM outlook remains unchanged and is contingent on deposit flows, but noted Q2's higher discount accretion is not expected to recur. He confirmed that rate cuts would be beneficial due to the bank's liability-sensitive position. President of Commercial Banking Torran Nixon and President of Consumer Banking Christopher Merrywell attributed deposit success to outbound efforts by the small business group, disciplined pricing without promotional gimmicks, and a calmer competitive environment, leading to stabilized costs.

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CFO Pete Graham confirmed the framework is a good reference point for buybacks, which remain a key part of the strategy, funded by capital generated from loan sales. CEO Jon Witter strongly reaffirmed the entire framework, emphasizing the goals of predictable balance sheet growth, strong EPS/ROE performance, meaningful capital return, and manageable risk, stating the past year has proven its power.

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CEO Jon Witter and CFO Pete Graham both confirmed that year-over-year is the correct way to analyze delinquencies due to seasonality. Graham declined to give a specific reserve rate target but pointed to the recent downward trend as indicative. On deposits, he noted market rates have fallen and Sallie Mae's rates will move accordingly, without providing a specific new money rate.

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President and CEO Ralph Andretta confirmed the new business pipeline remains strong, citing the recent Saks Fifth Avenue portfolio acquisition and the de novo Hard Rock program as key examples. He highlighted the strength of their renewal book, with the majority of top programs secured through the end of the decade, and credited the company's diversified product set and vertical strategy for their success.

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