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CFO Thomas J. Bell deferred providing specifics on the First Security acquisition's financial impact, stating that detailed guidance on marks and expenses would be given during the next earnings call. President Alberto Paracchini affirmed that growing fee income is a strategic priority, highlighting wealth management as a significant opportunity given the bank's existing commercial client base.

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CFO and Treasurer Thomas J. Bell noted that Q4 payoffs were elevated due to runoff from the Inland transaction and legacy syndications, which is expected to slow. President Alberto Paracchini added that the bank successfully recycled $321 million in runoff from the Inland portfolio in 2024 and expects growth in 2025 to be driven by commercial banking, leasing, and potentially commercial real estate. Tom Bell reiterated the full-year guidance for quarterly noninterest expense is between $55 million and $57 million.

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President Alberto Paracchini attributed the lower originations to normal quarterly volatility and noted that higher pay-offs were partly intentional, stemming from the run-off of non-core acquired loans, which frees up capital for relationship lending. CFO Thomas J. Bell added that pipelines remain strong. On deposits, Bell explained that the market has already reacted to expected rate cuts, with pricing on new accounts declining. Paracchini emphasized the long-term strategy of funding growth with customer deposits. Bell confirmed the BTFP facility was unwound as the spread became unattractive after the Fed's rate cut.

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Executive Barry Ray responded that while the company maintains strong expense control, significant improvement in the efficiency ratio will likely be driven by revenue growth, projecting a range of 55% to 59%. He added that potential Fed rate cuts would be a tailwind for deposit costs and that the core net interest margin has an opportunity to 'grind' upward, aided by asset repricing.

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EVP and CFO Barry Ray provided a Q4 expense run rate of approximately $34.5 million and a full-year 2025 forecast in the mid-$140 million range. President and COO Len Devaisher and Chief Credit Officer Gary Sims attributed the C&I growth to supporting client acquisition activity, primarily in the Denver and Twin Cities markets. Sims added that the agricultural portfolio is considered resilient due to an up-tiered customer base and strong local crop yields, which help offset price pressures.

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President and CEO Archie Brown and Chief Credit Officer William Harrod clarified that the C&I charge-offs were dominated by a single credit—a flooring manufacturer impacted by an upstream bankruptcy—and was not a systemic issue. Brown also provided an outlook for the specialty businesses, stating Agile is seasonally strong, Oak Street's asset quality is solid, and Summit is performing well in the middle market despite some pressure on smaller ticket items.

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CFO Jamie Anderson confirmed that variable compensation tied to fee income is included in the $128 million to $130 million expense guidance. Chief Credit Officer Bill Harry detailed that the classified asset is a receivable from a terminated FX forward contract that is fully collateralized by cash, real estate, and guarantees, with repayment expected in 2025.

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CFO James Anderson explained that the bank sold $140 million of securities mid-quarter and picked up approximately 330 basis points on the reinvestment, with a payback period of about 1.7 years; the benefit is factored into Q4 guidance. Chief Credit Officer Bill Harrod stated that the Summit portfolio is performing as expected, with some manageable stress in transportation but no unusual credit issues.

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CFO Derek Meyer confirmed that the $4 million OREO expense is included in the full-year guidance. He acknowledged that this suggests the first quarter's expense level was relatively high compared to the expected run rate for the remainder of the year.

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CEO Andrew Harmening explained that customer satisfaction is driving household growth, which moved from -1% in 2022 to +1% in 2024, with a 2% forecast for 2025. He noted each 1% of growth now adds about $150 million in higher-quality deposit balances. This, combined with a new deposit vertical, new RMs, and the HSA business, fuels confidence in deposit growth. Regarding competition, Harmening stated that the bank has not yet experienced significant pricing pressure on new commercial loans, attributing this to the strength of their RMs' market knowledge and relationships.

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CFO Derek Meyer explained that the bank has aggressively lowered deposit rates in line with the market and expects a total deposit beta of 45-46% on the way down. Chief Credit Officer Pat Ahern confirmed the CRE reserve increase was partly due to specific credit migration and a desire for extra cushion in the office portfolio. CEO Andrew Harmening noted that while the market helped, the strong wealth management fees are increasingly driven by sustainable referrals from new mass affluent and commercial banking initiatives.

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CEO Dennis Shaffer confirmed the loan yield increase was driven purely by disciplined pricing on new and repricing loans, with no unusual interest recoveries. He stated that $110 million in loans are set to reprice higher over the next two quarters. Regarding the nonperforming loans, Shaffer reported the multifamily loan was expected to pay off imminently, while the other C&I loan is taking longer to resolve with a bonding company. He described borrower sentiment as a "wait-and-see" approach, anticipating a near-term slowdown in CapEx spending as businesses assess the impact of tariffs.

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CEO Dennis Shaffer stated the bank is comfortable with a loan-to-deposit ratio between 90% and 95% and confirmed there is no regulatory pressure regarding brokered deposits; the focus on core deposits is a strategic move to secure cheaper funding. EVP Richard Dutton reported that the Ohio multifamily market remains healthy, with new projects seeing higher-than-projected rents and absorption rates meeting or exceeding expectations.

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President and CEO Dennis Shaffer outlined long-term goals of reducing wholesale funding to 15-17% of total funding, achieving a loan-to-deposit ratio around 90%, and bringing the CRE concentration under 300% of risk-based capital, primarily to manage stock price perception. SVP and Chief Lending Officer Chuck Parcher and SVP & COO Rich Dutton detailed that approximately $150 million in loans will reprice higher over the next 12 months, moving from rates around 4.75-5% to the high 6s or low 7s, providing margin uplift. Parcher also expressed confidence in their ability to restart loan growth back to mid-to-high single digits when desired, as they have been selectively passing on projects to manage concentration levels.

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CFO Michele Kawiecki stated that $190 million in fixed-rate loans are set to reprice through the end of 2025, with a current average yield of approximately 4.65%. Chief Credit Officer John Martin acknowledged a charge-off from the sponsor finance book but expressed overall satisfaction with its historical performance, noting that the portfolio is graded more aggressively and performance remains in line with expectations.

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Chief Financial Officer Michele Kawiecki reported that December deposit costs were 2.33% and noted a downward deposit beta of 46%, expressing confidence in managing costs down further. President Michael Stewart identified the manufacturing segment and market share gains in Michigan as key drivers for C&I growth. He added that the bank has ample capacity and desire to grow its commercial real estate portfolio with quality projects in preferred asset classes, differentiating itself from peers with higher concentrations.

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CFO Michele Kawiecki explained that while 2025 budgeting is ongoing, the focus is on growing net interest income despite potential margin pressure from rate cuts. She noted the branch sale and bond restructuring are long-term strategic moves. CEO Mark Hardwick detailed the new tech platforms (Terrafina, Q2, SS&C) aimed at driving core deposit growth and expanding the private wealth business. Chief Credit Officer John Martin estimated the remaining Q4 charge-off for the trucking relationship would likely be between $1 million and $2 million.

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Executive James Eccher responded that while the bank is largely through its office and healthcare challenges, some minor stress is appearing in the C&I portfolio, noting two specific downgrades that have been proactively reserved for. Executive Bradley Adams added that a slowdown in card transactions and a decline in average balances for lower-end customers is a trend that began over a year ago, and the key indicator to watch is whether that stress moves up the income ladder.

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Bradley Adams, an executive, projected mid-single-digit expense growth for 2025, likely in the 3% to 5% range, primarily driven by the salary and benefits line. He noted that significant technology and infrastructure investments were made over the past two years, so he does not anticipate major capital expenditures moving forward.

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EVP & CFO John Stewart confirmed the indirect auto portfolio yield is in the mid-3s, providing a favorable spread when redeployed. He maintained the full-year NII outlook but noted the exit NIM might be at the lower end of the 3.15%-3.20% range. EVP & Chief Commercial Banking Officer Lynn Kerber added that new commercial loans are originating between 7% and 8.4%, while maturing loans are in the 5-6% range. She attributed C&I growth to the new Equipment Finance division and noted it was well-diversified across sectors.

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John Stewart, EVP and CFO, clarified that the NIM exit rate for December was 3.03% and projected a Q4 2025 exit rate between 3.15% and 3.20%. He stated the FHLB advance payoff would provide a mid-single-digit basis point lift in Q2, with the remaining expansion driven evenly by earning asset mix improvement and liability repricing. He also confirmed the warehouse reserve was released in Q4. Executive Thomas Prame added that the gain from the sale will be recognized in Q1 and is not currently slated to be offset by other actions, thus boosting capital.

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EVP and CFO John Stewart stated that Q4 loan maturities have a yield around 6% and that the deposit cost beta on future rate cuts should be similar to the recent ~40% beta. Executive Thomas Prame highlighted the strategy of simplifying the business model and investing in core areas like treasury management, wealth, and mortgage. Mr. Prame anticipates a return to mid-to-high single-digit loan growth in 2025, which he sees as a potential breakout area.

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Executive James Ryan confirmed the hypothetical math was 'directionally correct' but cautioned that he still expects some 'selective pruning' of the portfolio, making it unlikely the full amount would be retained. Executive John Moran explained that the projected Q4 NII increase is driven by the timing of fixed-asset repricing and the back-end loaded nature of the company's organic loan growth forecast for the year.

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Executive James Ryan emphasized the importance of leadership in the Chicago market and confirmed they are considering both internal and external candidates for the COO role. On M&A, he noted that while regulatory processes may streamline, successful deals will still depend on long-term value creation. Executive John Moran provided the specific data point that 13% of the bank's securities are floating rate.

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CFO John Moran confirmed the Q4 NII guide assumes stable accretion of around $13 million and a 30% down-beta on deposits, which allows for offensive client acquisition. Executive Mark Sander explained that the credit migration was driven by a more conservative risk rating framework. He noted the four large non-accruals were in unrelated sectors, with one stemming from the SNC exam, and emphasized that expected loss content remains low.

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Tyler Wilcox, President, stated that while student loan debt will be factored into underwriting and debt-to-income calculations, he does not expect it to have a meaningful impact on their consumer loan businesses. Regarding charge-offs, he explained that the small ticket leasing portfolio is heavily weighted towards the restaurant and hospitality sectors, which is consistent with the business model and yields. He also noted they have curtailed lending in other areas like title trucking and brewing equipment.

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CFO Kathryn Bailey clarified the acquisition expense was a legal contingency from the Limestone deal and that Q4 swap fees were approximately $1.2 million. Executive Tyler Wilcox stated C&I growth was broad-based, noted about $350 million in CRE maturities for 2025, and confirmed the small ticket leasing portfolio would likely decline further as it moves toward a normalized charge-off rate.

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Executive Tyler Wilcox described competitor deposit pricing as varied and stated their strategy is to remain 'middle of the pack' while keeping CD durations short. He strongly defended the leasing business, arguing that its high profitability and contribution to the bank's powerful margin is a worthwhile trade-off for the attention it receives, and confirmed he believes it is accretive to shareholder value.

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Chief Banking Officer Peter Sefzik clarified that 'other markets' can include national business lines but highlighted strong progress in the expansion regions. He projected 'north of 50%' loan growth in the Southeast for the year and noted new leadership and hiring in the Mountain West markets of Phoenix and Denver.

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Chairman and CEO Brad Elliott explained that many customers have experience with tariffs and have built pass-through clauses into their contracts, though the bank has increased its loan loss reserve for general economic uncertainty. Bank CEO Rick Sems described the sales initiatives as being in the "middle innings," with increased calling activity in Q4 leading to strong Q1 loan growth, particularly in Kansas City and Tulsa. He anticipates a corresponding increase in fee income in the second half of the year.

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CFO Chris Navratil attributed the updated expense outlook to data processing costs and people initiatives, while noting fee income guidance reflects the current run rate with potential upside. Chairman and CEO Brad Elliott confirmed active M&A discussions with 6-8 parties, several in the modeling stage, expressing strong optimism for a busy 2025.

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CFO Chris Navratil stated that the bank has neutralized the initial 50bps rate cut impact and is positioned to manage further moderate declines by repricing funding downward while remaining disciplined on new business pricing. He identified Tulsa, Wichita, and Western Missouri as markets with strong traction. He noted that loan growth is the primary initial benefit, with deposit and fee income growth expected to follow more significantly into mid-2025.

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Executive Timothy Crane explained that the NIM outlook is supported by an interest-bearing deposit beta of around 65-67% and an expectation that noninterest-bearing deposits will remain stable at approximately 21% of total deposits. Executive Richard Murphy identified the premium finance businesses, the leasing business, and core C&I lending in the Chicago market as areas with strong competitive moats.

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Chief Banking Officer Mike Selfridge stated the bank plans to open approximately six new offices over the next year within its existing footprint, with a focus on building full client relationships to capture market disruption. He also highlighted the recent expansion into the Seattle/Bellevue market. CEO and President Michael Roffler confirmed that checking account attrition in 2022 did not differ from the long-term average.

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CEO and President Mike Roffler explained that the strategy is a mix of both offense and defense, as periods of uncertainty are excellent opportunities to acquire new long-term households while also deepening relationships with existing clients. Chief Banking Officer Mike Selfridge stated that high-yield online savings accounts are not considered a material competitor, as First Republic's clients value the relationship-based service model.

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