AI Investor Insight

CURN 2025 Q4 财报电话会议

Operator: Good morning, ladies and gentlemen, and welcome to the Currency Exchange International Q4 Year-end 2025 Financial Results. [Operator Instructions] Also note that this call is being recorded on Thursday, January 22, 2026. And I would like to turn the conference over to Bill Mitoulas, Investor Relations. Please go ahead, sir. Bill Mitoulas: Thank you, Sylvie. Good morning, everyone. Welcome to the Currency Exchange International conference call to discuss the financial results for the fourth quarter and 2025 fiscal year. Thanks for joining us. With us today are President and CEO, Randolph Pinna; and Group CFO, Gerhard Barnard. Gerhard will provide an overview of CXI's financial results, his latest perspective on the company's operations and Randolph will then provide his commentary on CXI's strategic initiatives, sales efforts and business activities, after which we'll open it up for your questions. Today's conference call is open to shareholders, prospective shareholders, members of the investment community, including the media. For those of you who may happen to leave the call before its conclusion, please be advised that this conference call will be recorded and then uploaded to CXI's Investor Relations website page, along with financial statements and the MD&A. Please note that this conference call will include forward-looking information, which is based on a number of assumptions, and actual results could differ materially. Please refer to our financial statements and MD&A reports for more information about the factors that could cause these different results and the assumptions that we have made. With that, I'll turn the call over to Gerhard. Gerhard, please go ahead. Gerhard Barnard: Good morning, Bill, and thank you, everyone, for joining today's call. My overview of the company's performance, CXI will also include the results of the discontinued operations of Exchange Bank of Canada, or EBC. These results are presented in U.S. dollars. As a reminder, on February 18, 2025, the group announced its decision to discontinue the operations of it's wholly owned subsidiary, Exchange Bank of Canada. Now EBC ceased operations as of October 31, 2025. And on December 19, EBC issued its year-end audited financial statements to its regulators. EBC has formally applied to OSFI to recommend approval from the Minister of Finance for the discontinuance from the Bank Act. Following final regulatory approval, management and the directors will liquidate the remaining assets and liabilities and distribute EBC's net assets to CXI, its sole shareholder. Management anticipates that all required regulatory approvals for discontinuance will be granted during the second quarter -- second fiscal quarter of 2026. Now starting the second quarter of 2025 and following the Board's decision to discontinue the bank's operations, the group updated its financial statements presentation to present continuing and discontinuing operations separately in accordance with IFRS accounting standards. Therefore, included in the group's financial statements are the results of the U.S. or United States operations, that's CXI, which is under continuing operations and the results of Exchange Bank of Canada, EBC under discontinued operations. Before we go into the detail of the various results, I'd like to note that the group measures and evaluates its performance using several financial metrics and measures, some of which do not have standardized meanings under general accepted accounting principles or GAAP and may not be comparable to other companies. We call these measures non-GAAP financial measures and/or adjusted results. Management believes that these measures are more reflective of its operating results and provide a better understanding of management's perspective on the performance of the company. These measures enhance the comparability of our financial performance for the current period with the corresponding period in 2024. Management included a full reconciliation of the key performance and non-GAAP financial measures in the MD&A. I think it's Page 24, 25. When we refer to reported results, we refer to results as reported in the financial statement based on IFRS, the audited results. Whether we refer to adjusted results such as adjusted net income, we refer to performance non-GAAP measures. Now the group reported net income of $10.3 million for the year ended October 31, 2025, an increase of $7.8 million or 317% over the prior year with yearly revenue growth of 5%. This 2025 reported net income reflected $14 million of net income from continuing operations at CXI and a net loss of roughly $3.7 million from discontinued operations, Exchange Bank of Canada. Reported unadjusted results for the continuing operations included nonrecurring items restructuring charges, roughly $300,000, $400,000 related to the closure of CXI's Miami vault and about $200,000 related to the discontinued operations in Canada. Now it is important to note that the reported results of the prior year 2024 included nonrecurring items related to the discontinued operations and represented impairment losses, regulatory compliance charges, other tax items, and that totaled $7.7 million. Now excluding restructuring and nonrecurring charges, adjusted net income from continuing operations increased to $14.5 million, a 10% increase, and the group's adjusted net income increased to $10.8 million, an increase of 6% -- the group's adjusted diluted earnings per share increased to $1.77 or $1.77, which is a 14% increase over the prior year. Now certain operating expenses and personnel costs previously shared with EDC were fully assumed by CXI during the year. The annualized estimate of these costs, we call the stranded costs, was initially approximately $3 million after tax. However, it is now expected that the actual figure will be closer to 90% of this original estimate once the full 12-month period has been completed. With that, here is a summary of our current fourth quarter's results compared to the same quarter in 2024. Revenue grew to $19.8 million, up by $1.4 million or 8%. Operating expenses increased to roughly $13 million, up by $743,000 or 6%. So revenue up 8%, expenses up 6%. Reported EBITDA grew to $6.4 million, roughly 4% and adjusted EBITDA grew to $6.8 million by close to $0.75 million or 10% over last year. Adjusted group net income grew to $3.3 million or by close to $0.5 million or 19% as a result of restructuring charges related to the closure of the Miami vault and charges related to EBC discontinued, which were partially offset by a recovery related to the judgment by the Federal Court of Canada, which reduced EBC's administrative monetary penalty by $1 million or CAD 1.4 million as agreed by both parties. Revenue growth was driven by 31% growth in the payments product line, 17% of CXI's total revenue is now from payments and a 4% growth -- in the banknotes revenue, 83% of CSI's total revenue is in the banknotes product line, primarily through direct-to-consumer channels. Now payments grew $800,000 or 31% of -- and it's roughly 17% of the total revenue. This growth was supported by a 40% increase in business trading volume and almost $2.1 billion due to the increased activity from existing financial institution customers and the onboarding of new customers. So that trading volume literally up 40% in this quarter. Wholesale banknotes revenue remained fairly flat year-over-year, presented roughly 40% of our revenue. Trading volumes declined slightly due to the impact of the U.S. federal government shutdown in October 2025, impacting several airports across the nation as well as a slowdown in inbound international travelers, especially from Canada. This slowdown of inbound international travelers has been substantially offset by an increase in outbound travel by U.S. citizens to Europe and Asia. Now let's look at direct-to-consumer banknotes revenue growth of roughly $600,000 or 8% and DTC represents 43% of our total revenue, with growth mainly in the online FX platform due to the increased demand for exotic foreign currencies. During the current quarter, CXI added South Carolina to the states in which CXI's online FX platform operates. Added more than 51 new non-airport agents in several locations and opened a new company-owned branch in New York. Now the following is a highlight of the operating expenses from continuing operations for the fourth quarter of 2025 compared to the prior year's fourth quarter. As I mentioned, CXI's operating expenses increased by roughly $0.75 million or 6%. Variable cost, postage shipping, bank charges, sales commission and incentive compensation totaled $3.4 million, an 8% increase, mostly attributable to shipping costs and bank service charges, partially offset by a decrease in variable compensation costs. Salaries and benefits remained fairly flat compared to the previous quarter, primarily due to general inflationary adjustments. This increase was partially offset by a reduction in headcount resulting from the closure of the Miami vault. Now bank service charges are related to processing payments and banknote transactions with the majority arising from the payments product line, where we realized 40% increase in volume. During the current quarter, CXI fully transitioned its check clearing and payment processing activities away from EBC, eliminating the use of EBC's correspondent bank for such transactions. As a result, 100% of CXI's bank fees for the current quarter were reported in continuing operations. Now in the same period last year, bank charges incurred through EBC's correspondent banking relations were reported under discontinued operations. So you can see a bit of a change there and where we reported it. This transition accounted for roughly $150,000 of the variance reported above, and you'll see the variance in the financial statements and the growth in that cost. The remaining difference was primarily attributed to the 40% significant increase in payment transaction volume and the associated processing costs compared to the prior year. Marketing and publicity efforts grew mainly, and there, we spend a lot of money on growing this marketing and publicity mainly because of CXI's strategic emphasis on target marketing initiatives, comprehensive campaigns, retail investments and the development of our customer referral programs. To align with our corporate objectives, partially supporting the growth of the direct-to-consumer business line. Online FX, DTC marketing campaigns were on Instagram, and social media, really making sure we get the word out. Restructuring impairment charges represented the closure of CXI's Miami vault, and that was roughly $400,000 and impairment charges of assets related to some of our company-owned branches of close to $270,000. Now interest revenue generated from excess cash holdings is noteworthy at the end of October 31, 2025. CXI maintained nearly $25 million in AAA-rated money market funds compared to 0 in the prior year. This was supplemented by interest earned on other investment-bearing bank accounts in the ordinary course of business. The increase in interest income reflects a substantial rise in available excess cash attributable to the decreased working capital requirements as a result of EBC's discontinuance and a well-executed exit plan. Income tax expense in the current quarter reflected an effective tax rate of roughly 18%, where the majority of the decrease below the statutory rate was reflected -- related to the tax benefit from a large amount of stock options exercised during the current quarter and accounted for roughly 9% of this effective tax rate. Now let's look at the year. Summarizing the results of the group for the year 12 months ended October 31, 2025, compared to 2024. Revenue grew to $72.5 million, up by about $3.5 million or 5% and expenses only grew by 3% or $1.2 million to a total of $48.5 million. That gave us net income from continuing operations that grew to $14 million or close to $1 million, $800,000 or 6%. Now reported EBITDA grew to $23.3 million, up $1.6million or 7% and adjusted EBITDA grew 10% to $24 million compared to the previous year, up by $2.2 million. Now it's important to note that adjusted reported group net income, as I said, grew to $10.8 million. That's an increase of $600,000 or 6% as CXI's restructuring charges related to the closure of Miami as well as some legal and advisory fees were adjusted as nonrecurring items. This is for the year now. Now looking at the group's results, EDC's adjusted adjustments almost netted out with recovery from the Canadian Federal Court's judgment reducing EDC's administrative monetary penalty, resulting in a benefit of USD 1 million, together with a net gain related to the lease terminations of roughly $360,000. These benefits were partially offset by severance costs, nonrecurring legal and advisory charges of $650,000 as reported in net discontinued operation results. Now let's look at continued operations consolidated performance for the year compared to the prior year. For the year, the revenue growth was driven by 19% growth in payments product line and a 3% growth in banknotes revenue, primarily through, as mentioned, for the quarter as well, the DTC channels that we have. Now payments revenue grew an impressive 19% or $2 million. As I mentioned, it's now 17% of our total revenue. The growth was supported on a yearly basis by a 31% increase in trading volumes. For the quarter, that was 40%. For the year, we're at 31% increase in trading volumes, primarily from new customers and a slight increase in volume from existing customers to almost $6.7 billion, up from $5.1 billion a year ago. Very proud of the team there. Wholesale banknotes revenue maintained relatively flat year-over-year, representing 42% of the total yearly revenue. Revenue growth came from both existing and new domestic financial institution customers with declining volume from monetary services businesses and international financial institutions. Our international travel levels were generally lower than last year, offset by an increase, as mentioned in the outbound U.S. travel to popular destinations in Europe, Asia and Mexico. Consumer demand for euros and Mexican pesos drove growth, while the Canadian dollar volumes remained lower. DTC direct-to-consumer banknotes revenue grew by $1.1 million or 4%, and that represents 41% of our yearly revenue with growth mainly from our online FX platform due to the increased demand for exotic currencies and the addition of 3 new states during the year. At October 31, 2025, CXI had 39 company-owned branch locations and operated in 50 airport agents, 3 more locations compared to last year, and we had 468 non-airport agent locations, almost 245 more locations than the prior year. The following is a highlight of our operating expenses for the continuing operations for the year. CXI operating expenses increased by $1.2 million or 3% year-over-year. Now that's an important number because variable costs posted shipping, bank charges, sales commission and incentive compensation totaled $11.8 million, only a 1% decrease due to a slight decline in variable compensation cost. The ratio comparing total operating expenses to revenue for the current year improved to 67% compared to 69% last year. Now stock-based compensation declined due to a 5% decline in share price throughout the year in comparison to last year where the share price grew roughly 25%, which in turn reflected the increase in debt expense last year. Foreign exchange gains for the current year were primarily driven by the U.S. dollars depreciation against major currencies during the second quarter and the first half of the third quarter. The euro and British pound strengthened notably against the dollar, while the Mexican peso recovered from early year weakness, contributing to the favorable revaluation of banknotes holdings. Gains on euro and a basket of unhedged currencies exceeded losses on Mexican peso inventory for the year. Foreign exchange losses in the same period in the prior year were largely driven by the weakening of the Mexican peso against the U.S. dollar compounded by higher overall hedging costs. Now let's look at discontinued operations related to Exchange Bank of Canada, where the bank had a net loss of $1.1 million in the fourth quarter of 2025 compared to a loss of roughly $6.1 million in the same period last year. For the year, the bank added a net loss -- the bank had a net loss of $3.7 million compared to a net loss of $10.7 million for the same period in the prior year. That's where all those adjustments and write-offs happens. Diluted loss per share from discontinued operations was a loss of $0.18 for the fourth quarter and a loss of $0.61 for the year compared to $0.97 and $1.70 for the same 3- and 12-month periods in the prior year. Once final regulatory approval has been obtained, the Board of Directors, as I said, plan to liquidate the remaining assets and liabilities of EBC and distribute those net assets to CXI, its sole shareholder. As of October 31, the net assets directly associated with the disposal group, EBC, were approximately USD 5 million. Now let's review the balance sheet at year-end. Due to the company's business being subjected to seasonality, CXI uses a 12-month trailing net income amount to calculate ROE, which has been relatively consistent at 13% over the last 12 months and includes the discontinued operations results. CXI had net working capital of $73 million and a total equity of $85 million and 100% available unused line of credit amounting to $40 million. As indicated on Page 22 of the year-end financial statements, CXI reported a cash balance of $95.5 million. Additionally, approximately $5 million, as I mentioned, is held in EBC, resulting in a total cash position slightly exceeding $100 million. Now it is important to note that cash serves as CXI's primary product. It is our widgets, primarily used for transactional activities within the banknote segment. CXI had $53.2 million cash held in the form of banknote inventory in transit in vaults, tolls and on consignment locations at year-end. CXI maintains cyclical banknote inventories with optimal levels ranging from $50 million to $70 million, depending on the travel season. Now cash deposited in bank accounts totaled $42.2 million. This total $42.2 million includes the $25 million of excess cash designated for investment purposes. So that's the $25 million that we had at the end of the year in AAA-rated money market funds. The remaining balance of this $42 million is comprised of minimum cash reserves maintained by CXI in bank accounts with select banking partners to support our banknote settlement operations as well as operating cash balances corresponding with customer holding accounts. Maximizing shareholder returns through share buybacks under the normal course issuer bid, NCIB or share buyback continues to be a primary objective. Over the past year, CXI acquired or acquired and canceled 312,300 common shares at prevailing market prices on the TSX totaling $4.75 million. On November 26, 2025, the TSX accepted CXI's notice of intention to make another NCIB and an automatic share purchase plan to purchase for cancellation, a maximum of 360,000 common shares, representing 10% of the company's public float as of November 18, 2025. As of yesterday, CXI purchased for cancellation approximately 170,000 common shares. Now at this time, I will turn the call over to Randolph Pinna, our CEO, to provide his perspective. Thank you, Randolph. Randolph Pinna: Thank you, Gerhard, for the detailed review. And thank you, everybody, for joining, especially those out West since I know it's quite early there. To give you guys time to ask questions, I'm going to try to keep this as short as possible, but I do want to highlight the main things from my perspective, please. So to begin with, as usual and top of mind is Exchange Bank of Canada's discontinuance. As you know, we executed on a discontinuance plan to the point where we are now, which is we have closed all operations last fiscal year. We took care of all the employees. So there -- most of them have all found new homes. All of our customers have been referred to the 2 referral relationships we have and the feedback has been good that the customers have switched and they are trading with those new providers. So therefore, in layman's term, I would say we're pretty much done. and we're just now waiting on the paperwork final process. But all dealings with regulators, employees, customers has all been satisfied, and it is just now in the final approval process for full discontinuance and our complete exit from Canada, which is expected in this second quarter that we're now just starting. Turning and my focus has been now 100% on CXI. And by the way, on Exchange Bank, I do want to just do a hats off to Katie Davis, our CFO of the bank and our Group Treasurer, who led the execution of that detailed discontinuance plan to a key. And I want to thank all of the parties, both regulators, employees, legal advisers, everyone involved for their contribution to sticking to the plan so that we can discontinue as expected. So back to CXI. The main business, as we all know, is banknotes. And I will address that at a high level after I just covered the consumer unit and the wholesale unit and what we're doing. The consumer unit is what has shown continued growth primarily because of our e-commerce channel. We now have the ability to deliver currency to homes or businesses in 46 states, representing over 93% of the entire U.S. population. We see tremendous growth in this. In fact, we've done a survey -- a qualified survey confirming that there is a huge upside potential to continue to be able to sell currencies across America, and this will remain a focus. We are also continuing to have brick-and-mortar stores. Some of our stores are very good, and we've identified new stores like in New York, Carolina and others to be announced. We will continue to invest in our direct-to-consumer business by adding agent locations. As you saw and Gerhard pointed out, we've grown our agents -- non-airport agents from 225 to 468, and we see a tremendous amount of opportunity going to existing retailers across the country and adding a significant value service like currency exchange to complement their current offerings. So we do see upside potential in all of the consumer area. While the wholesale banknote business was flat, this was primarily due to a reduction of a few customers and overall inbound travel being affected. We see upside potential in wholesale because our pipeline is full. We do have other financial institutions in the pipeline, both credit unions as well as banks, and we do have a renewed focus on banknote sales as a company. Before I go to payments, I do just want to talk about what some have called the melting iceberg. Reality is, if you look around the whole world, 5 of the major countries, America, Canada, Australia, Germany and England have all shown for the last 3 years that cash usage is slightly going up. Looking at cash providers such as the ATMs, Euronet, the largest operator of ATMs in the world continues to show growth in ATM output, cash output. So cash will be still king. Just as I'm looking at my notes on paper, people thought we would be paperless by now. Cash is here to stay. Central banks wanted to have digital currency. The U.S. abandoned its digital dollar project that was being led by the Federal Reserve and realized that cash is king. On a marketing front, I had verbal commitment from many of our customers as well as even competitors, banks, currency exchanges in Europe, Canada and America, including CXI, have already all verbally committed to putting marketing dollars towards educating younger consumers about cash as well as pushing for legal legislation to ban the stores that are going cashless. Not only are the currency exchanges and select banks willing to participate, there's been good support from the armored car companies who move this cash around the world as well as the manufacturers of note acceptance machines and cash processing machines. So there will be a unification soon of all of these -- a coalition, if you will, of all of these people that have a pro cash interest. And we feel that you will see an improvement in cash usage, and we will be a part of that trying to drive the cash is king movement because cash is freedom. So moving over to payments. We will continue to diversify our revenue sources in payments. You can see that our focus in the last few years in growing our payments business is compounding. We are continuing to see incredible demand for our payment offerings. While our investment with Jack Henry and Fiserv and the other core bank software providers is working well. We will continue to grow those relationships doing our service of international payments as well as U.S. dollar payments internationally and even potentially domestically. We will continue to invest into this business. We are now, as you know, EDC closed, so we gave up our Swift membership there. CXI is now fully a Swift member using the full services of Swift and that capabilities integrated with our technology has enhanced banks and credit unions' ability to offer international payments to their clients. We are also current with the new stablecoin movement. We have -- are in the final stages of onboarding with a major stablecoin operator to test a USDC capability for moving domestic dollars in America. So our focus is going to continue to invest into payments. And we are -- as I said, our pipeline is full, and we will continue to quickly grow this business as we focus our overall growth efforts for financial institutions credit unions and nonbank customers. Well, that turns us to the M&A area. We have a lot of cash. We are looking to do a strategic accretive type of transaction in the payment spaces, the prices are too high. We will not overpay for an asset, but that looking for strategic opportunities is a main focus of myself, the management team as well as the Board of Directors. Lastly, I just want to remind everyone in March is our Annual Shareholder Meeting since we're no longer really in Canada, even though we're on the TSX for now, we will be having our Annual Shareholder Meeting at our head office, our headquarters in Orlando. And so we really hope you can come in person. We are working on the technology capability so that you can video in should you not be able to physically attend, but I look forward to seeing you in person ideally in March. So I'll end it there and open it up for questions. Thank you. Operator: [Operator Instructions] And your first question will be from Robin Cornwell at Catalyst Research. Robin Cornwell: It's nice to see these results are perking up very well. My first question is with Gerhard. Gerhard, the $3 million expenses that we're talking about, are they now kind of fully reflected in the expenses? Gerhard Barnard: Robert, a lot of them are in there. Obviously, as we exited EBC, it moved from discontinued operations into continued operations. Bank charges are fully there in the fourth quarter, salaries and wages for the people that transferred are fully incorporated in the fourth quarter, not on the yearly numbers. As you know, we exited EBC during the 2025 financial year. But in our Q1 '26, it will be fully incorporated. Robin Cornwell: Okay. And Randolph, when you were looking for your future -- discussing your future growth, what about the software for as a service? I think I've asked this before, but where do you see that now because you've sort of got a new lease on life here going forward. And that's a very important part of your structure, your software. What are your thoughts on that? Randolph Pinna: We -- before we roll out nationally, we have done a pilot with 4 financial institutions in the U.S. utilizing our relationship with the Federal Reserve, part of what's called the Fed Direct program. And so we do have a direct connection to the Federal Reserve, and we are receiving monthly fee income for the usage of our software. Again, the domestic processing in America is not CXI actually touching the U.S. dollar moving from, let's say, a Florida bank to a California bank. We are actually using the connection, which is our software that is often in these 4 cases, we're already in the bank because they use us for either international wires and cash services. And they will -- it connects that bank to their own account at the Federal Reserve by using this one platform and us as the one provider. And so we do see that revenue from Software as a Service for this service will grow. At this point, it is not a material item to have a separate line item on it, but that is another way of growing our payments business. So we do, as I said, see that these growth rates in payments is sustainable this year and hopefully even larger based on the success of our previous investments and integrations that we've done. Does that answer your question, Robin? Robin Cornwell: Yes. Thank you. And the payments to grow that payments business, are you continually adding more people to drive that? Randolph Pinna: Well, we have been conservative on our hiring. We -- controlling our costs is critical, especially in this last year where there's been a lot of layoffs. We are, again, just using the existing integrations we have. So if you're familiar with how that works is the software providers that provide core banking systems have a whole variety of banks and credit unions using their software, and we have continued to grow that. So it's just a matter of working these lists, and we have a sales team of about 10, and we feel that's sufficient. We are adding one more person dedicated for banknote sales. But as far as payment sales, we are -- our pipeline is good, and we are executing on adding new clients every week doing new payments. And so therefore, I'm comfortable with the current team and our marketing to the existing customers we have that haven't switched to the wires to us yet or the new clients that are on these lists because of the integrations with these core software providers. Operator: [Operator Instructions] The next question will be from Jim Byrne at Acumen Capital. Jim Byrne: Randolph, maybe just on the online FX and direct-to-consumer, just thinking you're pretty much in all 50 states now. You mentioned some agency adds and some new stores as well. But I mean, when you go into a new state, can you talk about kind of the ramp-up of revenue and profitability on a new state versus something that's been operating for a couple of years? I mean is it -- you kind of see an immediate impact and then profitability grows after a certain level of revenue? Maybe just talk about that ramp up. Randolph Pinna: Yes. I'm not -- at least in my connection, your question was a bit faint. So hopefully, I got it. Basically, I think it is what do we expect when we go into a new state that we didn't have a license in. And so I've required that we have a business case to support why we're going to get a license in a certain state. For example, to take an extreme one, we don't have yet the business case to support having a license in Alaska. There are several states that we are still applying to because we do have a business case, and that is driven not just by the online home delivery service. So a business case that supports a new state license is usually a combination of the online home delivery, so the population of that state, but also the opportunity for agents. As you know, we are probably the primary provider to the largest automobile club in America, AAA. And they have what they call their AAA clubs in each of these states. And so that between the home delivery and the agent possibilities support us going in through the state. As far as the dollars and cents, each state is different, and Gerhard is probably closer to the numbers to answer it fuller if you need that. But basically, we do enter a state based on the projected expectation we see in a state, which will cover your administrative costs, the fees and all of that to do it. So did that answer your question, Jim? Jim Byrne: Yes. Sorry about that. I was kind of just thinking, as I said, you're kind of maxing out the number of states you're going to penetrate here. You still expect growth on the online platform as newer states kind of ramp up? Like have you got mature states that have kind of plateaued in terms of growth rates? Randolph Pinna: No. So that's -- okay. And one, I hear you much better now. Thank you. The online is where we see the most growth in the consumer unit. New stores will add growth as well. But the online, we spent a pretty penny doing a qualified survey of well over -- I think, over 1,000 proven international travelers -- and it shows that there's still about a 50% increase in capability of our home delivery, and we are refining our group marketing plan. The Cash and King campaign is a piece of that. But yes, we do see that there is still upside in every state we're in, and there's still 1 or 2 states that we are applying to now to have that. Eventually, we will probably be licensed in all 50 states. But again, I won't approve a new state approach until we have enough reason, financial incentive to do so. But I think overall, the consumer unit as well as the wholesale unit will show increased growth this year. And that's contrary to this perception of a melting iceberg. Gerhard Barnard: Nevada right now has allowed us an exemption. So we are operating in Nevada. Tennessee requires GAAP financial statements, which means we're reporting under IFRS. So that one will have to sit out until we get the approval to send them IFRS statements. And as Randolph said, Alaska and North Dakota, we are currently deferring just due to that, we call it that management case of determining what the return would be. And as Randolph mentioned, online FX is the scalability of that product is significant. If you think of we've doubled our marketing spend in the last year on driving that revenue growth. And in our planning, that is a very important product line, online FX payments. Jim Byrne: Okay. That's great. And then maybe just lastly, you mentioned the NCIB and the capital allocation priorities through M&A. You are sitting on quite a bit of cash and potentially more cash coming in the door here with the EBC closure. Any thoughts on maybe an SIB or a special distribution or anything like that? Randolph Pinna: Yes, that is a topic that has to be considered every quarter by the Board. Again, we have some -- our eyes set on 1 or 2 opportunities strategic, but because the owners of that business are incredibly large, that process is a very long and slow process. We've even got a focused team to help us try to carve out an asset. However, I can't say it's imminent. Nothing has been signed. As soon as it is, we would tell you, but we are continuing to look for the best use. And right now, the best use is to acquire our stock and retire it. There are restrictions. So an SIB is a next step of that. But as of this quarter, we have not chosen to do that. We do feel that cash -- capital allocation is critical and dividend or an SIB is definitely a good use of cash as well. However, the best use will be to continue to grow our payment and banknote business. But I do not have anything that I can announce today. Operator: The next question will be from Robin Cornwell at Catalyst Research. Robin Cornwell: I just have one quick follow-up. And have you considered changing your year-end back to December 31? Randolph Pinna: That's a good one, Robin. We have discussed that among the accounting team, we would really like to just finish this year-end at October. And then we'll revisit that because we've also, as you'll understand, just want to get through the discontinued operations, make sure we get our focus on the operating entity, CXI. And yes, that's a good point. I'm laughing because it came up in the last week in one of our discussions and say it would allow us to have a better Christmas than dealing with auditors. Operator: Next question will be from Peter Rabover of Artko Capital. Peter Rabover: Congratulations on a nice quarter. Randolph, I wouldn't be doing my job if I didn't ask you on the little thing that I caught when you were describing your listing on the Toronto Stock Exchange as for now. Any comment that you would like to share on your future listing plans? Randolph Pinna: We have been happy with the Toronto Stock Exchange and the Ontario Securities Commission. However, our exit from Canada does invite us to consider NASDAQ. Ironically, one of our employees that worked for me for several years is working there. So we have been in talks with them in sizing up that move. But as Gerhard just said, our focus right now is to really fully exit Canada, get -- which we are 100% focused on America and get some nice clean quarters going forward. But in like a '27, you could see a potential move of our listing from the TSX to NASDAQ. But as of right now, we are not -- just like the SIB, these are all topics that the Board do discuss each quarter, but we have not chosen to hurry up to do that. We don't think anything is on fire. And therefore, running our business as efficiently as we can, generating the highest return for our shareholders and having that cash in our business and growing the value of our business is our #1 priority. Peter Rabover: Great. I appreciate the color. And maybe my second follow-up is on the color for the payments business. I know you guys had a great quarter, 31% and I know it's now 17% of the business because you've exited Canada. Any I guess, how should we think about that 31% in terms of run rate? Is there -- I know you added a state and et cetera. But what do you think the natural growth rate of the market is and what your share is in that market? Maybe that's the way to ask that without asking for future growth guidance. Randolph Pinna: Thank you, Peter. And I do want to highlight which another shareholder told me that the foreign exchange market is probably one of the largest markets in the world because automotive, Toyota, there's a lot of foreign exchange, et cetera. So the payment business as well as cash the foreign exchange market is the largest market. And as I told you, our pipeline for the payments business is tremendous. And there was a good question from Jim saying, or Robin, whoever asked about, am I hiring more people? Right now, we have a sufficient team. We have improved our internal automation and onboarding. Our -- what we call our implementation team is geared up and ready to continue to add customers each week. And so while the new state helps us, it's really a matter of just getting through contract approval with the financial institution, training them, doing the testing and then going rollout, and that is underway. So that 31%, I'm confident to say is sustainable, if not even increasing because now that we're getting bigger, we have more reputation in the payment industry, and we can get even larger financial institutions than what we currently have. And so I feel that our payment business will continue to grow nicely each quarter. And our banknote business will continue -- will get back to growing like it used to do as we did just recently sign a very large financial institution for wholesale banknotes, which is going to be onboarded hopefully in this current quarter and start trading soon thereafter. So we are really doubling down on our sales and implementation of new clients across the United States. Peter Rabover: That's great. So maybe I'll sneak in one more. I know you mentioned Jack Henry and the Fiserv relationship. Any color out of that 31% or I guess maybe as part of your business. How big is that part of the distribution channel, I guess, or part of the growth and as part of the business? Randolph Pinna: So to broaden it than those 2, I named, we have about 5 or 6 integrations and the integrated relationship is well over the 50% mark for sure. So that is the significant component to our payments because, again, we do one provider, one product where we provide all the foreign exchange. And therefore, that allows a bank to use its platform that the tellers are already on and get all the benefits of our enhancements using the common denominator, their core banking system as we've integrated into it. So all the bells and whistles, the Swift lookup, the IBAN validation tool, all the functions that our -- the SWIFT gpi, all of the bells and whistles, if you want to use that term, are available to banks that are already using a core from a Jack Henry or Fiserv as an example. And therefore, that's where that pipeline is and the list of banks that say, yes, I'm already using them. And luckily, a lot of our -- some of these banks are using us for currency. So they're already familiar with us. So yes, that will continue to drive our payment growth. And then as Robin brought up that we soon will be having new opportunities with domestic payments as well, enabling the bank to use our software to do their own wires with the Fed. So we don't have the compliance cost of moving and touching the actual dollars. They will just use it and pay for the service by each login that they have, and that will generate new fee income to the business that's not dependent on international. And so that is an exciting expansion of our payment business this year. Peter Rabover: That's great. And then maybe -- sorry, I'll keep on. So what percent of the business -- or sorry, of your, I guess, distributor business, what you call the Jack Henry and the Fiserv relationships, what percent of that is penetrated relative to what's available? Randolph Pinna: What's available, every bank uses a core. So the entire market upside is there. We are still a very small provider. As you know, there's several large fintechs that have been acquiring other payment businesses and so forth. And so they're there. But the natural competitor are the 3 or 4 mega money banks up in New York example type that are correspondents for the smaller banks, and we are trying to pick those off because those banks are using a software like Jack Henry, and we are needing to convince them to switch to us as a boutique provider as opposed to being just using 1 of the 3 or 4 top largest banks in the country. So there's tremendous upside. And yes, to reiterate, it is because of that integration into these core software providers. Peter Rabover: Okay. Great. And I just want to say thanks for providing the really good color on the excess cash and the return on capital really good to see that as a shareholder. And have a great day. Gerhard Barnard: Thank you for always asking us to do a better job of that. As you see, we listen to our shareholders. Peter Rabover: Not unnoticed. Operator: Thank you. And at this time, gentlemen, it appears we have no other questions registered. Please proceed. Randolph Pinna: Okay. Thank you again for your support, for all the questions. We feel this year we just closed is a successful year. We're continuing to be strongly profitable as a business, all while executing on our strategic vision to focus on America and grow our core of banknotes as well as our payments business. So thank you for your support, and I look forward to hopefully seeing you at our Annual Shareholder Meeting in March. Operator: Thank you, sir. Ladies and gentlemen, this does conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.

107天前Insight Analytics约5分钟阅读

HBNC 2025 Q4 财报电话会议

Operator: Good morning, everyone, and welcome to the Horizon Bancorp, Inc. conference call to discuss financial results for the fourth quarter of 2025. [Operator Instructions]. Now I will turn the call over to Mark Secor, Executive Vice President, Chief Administration Officer, for the opening introduction. Mark Secor: Good morning, and welcome to our conference call to review the fourth quarter results. Please remember that today's call may contain statements that are forward-looking in nature. These statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those discussed, including those factors noted in the slide presentation. Additional information about factors that could cause actual results to differ materially is contained in Horizon's most recent Form 10-K and its later filings with the Securities and Exchange Commission. In addition, management may refer to certain non-GAAP financial measures that are intended to help investors understand Horizon's business. Reconciliations for these measures are contained in the presentation. The company assumes no obligation to update any forward-looking statements made during the call. For anyone who does not already have a copy of the press release and supplemental presentation issued by Horizon yesterday, they may be accessed at the company's website, horizonbank.com. Representing Horizon today are Executive Vice President and Senior Operations Officer, Kathie DeRuiter, Executive Vice President, Chief Administration Officer, Mark Secor, Executive Vice President and Chief Commercial Banking Officer, Lynn Kerber, Executive Vice President and Chief Financial Officer, John Stewart; and Chief Executive Officer and President, Thomas Prame. At this time, I will turn the call over to Thomas Prame. Thomas? Thomas Prame: Thank you, Mark. Good morning. We appreciate you joining us. Horizon's fourth quarter results demonstrate the core strength of our community banking model and the excellent execution of the balance sheet repositioning. We have delivered on our shareholder commitment to create a top-performing community bank with durable peer-leading performance metrics and shareholder returns. The fourth quarter exceeded our prior performance estimates with annualized return on average assets above 1.6%, return on average equity approaching 16% and a net interest margin of 4.29%. Within the quarter, loan growth and credit quality continued to be excellent, and the team performed well, strategically reducing our portfolio of higher cost transactional deposits. Fee income continued to make progress, and our expense management efforts reflect our commitment to continually improve our operating leverage. We are very pleased with the fourth quarter results for our shareholders and the transparency the quarter provided to highlight the strength of Horizon's core community banking model that truly remains the cornerstone of our value proposition. Additionally, the company is kicking off the new year from a position of strength with the franchise well positioned to deliver durable earnings and continued top-tier performance metrics. As we look ahead, our thesis remains consistent with management focused on creating sustainable long-term value for our shareholders through our disciplined operating model, consistent profitable growth and peer-leading capital generation. I'll pass the presentation over to Horizon's Executive Vice President and Chief Commercial Banking Officer, Lynn Kerber, who will share highlights for the quarter on our loan growth and our continued excellent credit performance. Lynn? Lynn Kerber: Good morning. Total loans were $4.9 billion at December 31, an increase of $60.7 million from September 30. Commercial relationship lending continues to be our lead strategy with modest declines in consumer loans and residential mortgage loans predominantly being sold into the secondary market. Commercial loans increased $76 million in the fourth quarter, representing 9% growth on an annualized basis. Growth in the portfolio mirrored our overall portfolio mix with 28% in commercial and industrial and 72% in commercial real estate. Our growth for the quarter was well balanced across our attractive footprint of Michigan and Indiana. This quarter, we experienced growth primarily driven by the markets of Troy and Kalamazoo, Michigan, Lake County, Indiana, Metro Indianapolis and Johnson County in Central Indiana. As noted on Slide 5, our commercial portfolio is well diversified by geography and remains consistent with the overall mix. As referenced in Slide 15 of the appendix, our portfolio remains very granular with our largest segment representing 6.3% of total loans. Overall, our pipeline remains steady and quarterly volumes are consistent with our averages, for new origination activity, payoffs and net line of credit activity. As we look forward to 2026, our focus remains on steady diversified growth, disciplined pricing and credit and growing well-rounded customer relationships to drive cross-sell activity with deposit gathering and treasury management services. Residential mortgage lending continues to be a foundation product for the bank and volume has been predominantly sold in the secondary market to align with our strategy to create capacity for commercial lending activities and the generation of gain on sale fee income. Balances for the fourth quarter were essentially flat in alignment with the strategy. Turning to credit quality and the allowance. Our credit quality metrics remain within expected ranges and are summarized on Slide 7 of the presentation deck. Substandard loans of $59.4 million represent 1.22% of loans for the fourth quarter, a decrease from 1.31% for the third quarter and 1.33% for the fourth quarter of 2024. Non-performing loans of $34.9 million represent 72 basis points of loans for the fourth quarter, an increase from 64 basis points in the third quarter and 56 basis points for the fourth quarter of 2024. The increase of $3.9 million in the fourth quarter is an increase of $2.2 million in commercial nonaccrual loans, $831,000 in residential nonaccrual loans and approximately $800,000 increase in consumer loans over 90 days past due. While there is a modest increase in this metric, our overall substandard loans have decreased by $5.2 million or 8% from the year ago period, and our net charge-offs remain within historical loan ranges and continue to compare favorably to the industry. Net charge-offs were $1 million in the quarter, representing 8 basis points on an annualized basis. Net charge-off results for the full year were very positive, totaling approximately $2.9 million, representing an annualized charge-off rate of 6 basis points. This is reflective of our conservative and consistent approach of Horizon's credit culture. Finally, our allowance for credit losses increased from $50.2 million to $51.3 million, representing 1.05% of loans held for investment. The net increase of $1.127 million was predominantly related to economic forecast assumptions. The related provision for credit losses of $1.6 million consists of the $1.1 million increase in the allowance, replenishment of our fourth quarter charge-offs, offset by a reduction in reserve for unfunded commitments with the completion of several large construction loans. We continue to monitor economic conditions and future provision expense will be driven by anticipated loan growth and mix, economic factors and credit quality trends. Now I'd like to turn things back to Thomas, who will provide an overview of our deposit trends. Thomas Prame: Thank you, Lynn. Moving on to our deposit portfolio displayed on Slide 8. Horizon's core relationship balances continue to show the strength of the franchise's community banking model. As noted in our Q3 earnings call, a deliberate strategy for the fourth quarter was to further reduce the organization's exposure to high-cost transactional deposits. As we review the quarter's results, we feel very confident in the strength of the deposit portfolio in terms of mix, relationship tenure and granularity entering 2026. Comparing the current portfolio to the fourth quarter of 2024 provides good insight in the stability of the noninterest-bearing balances, which are up year-over-year and the improved cost structure of the core relationships within the interest-bearing segments. The performance of the team transitioning and improving the profile of our balance sheet while capturing the benefits of previous rate cuts has created significant benefits for the organization heading into 2026. Additionally, we believe our deposit portfolio continues to have opportunity to benefit the organization moving forward with its granular composition and long-standing relationships in our local markets. The team is well positioned to fund our go-forward loans grow with a treasury management team that has renewed capacity, commercial relationship bankers with aligned deposit objectives and an excellent branch distribution in some of the most attractive markets in Michigan and Indiana. Let me hand the presentation over to our Executive Vice President and Chief Financial Officer, John Stewart, who will walk through additional fourth quarter financial highlights and provide an outlook to what we believe will be a very successful 2026. John Stewart: Thank you, Thomas. Turning to Slide 9. Q4 marks the ninth consecutive quarter of net interest margin expansion, totaling 188 basis points from the low in Q3 of 2023. What you see now reflects the true economic profitability of our organic community banking operations without the distractions of the non-core assets and liabilities that were impeding our returns previously. Through these efforts, we believe we have built a balance sheet that is relatively neutral to changes in interest rates with a cash flow profile that should create reliable returns for our shareholders. As of the year-end, the restructuring activities are now complete and balance sheet activity from here is expected to be marginal and tactical, where growth will be driven primarily through commercial lending relationships funded with organic core deposit generation. Specific to Q4, the net interest margin increased by 77 basis points to 4.29% and above the upper end of our guidance range. Certainly, the remainder of the balance sheet repositioning played a big role in the linked quarter expansion, which can be seen in the transition of the earning asset base to more than 80% in loans and deposits are now 93% of total non-equity funding. The margin did see some modest upside relative to expectations from the decision to increase the planned deposit runoff to nearly $200 million in the quarter, which carried a weighted average cost exceeding 4% versus the planned $125 million. However, on an organic basis, we continue to see notable stability in our loan yields, as origination spreads held up well and reductions in our core deposit costs that exceeded prior expectations as realized deposit betas approached 40% for the rate cuts during the quarter. Looking ahead, to account for some of the favorable outcomes just mentioned, you will note that we have increased our net interest margin outlook for the full year 2026, which we now expect to be in the range of 4.25% to 4.35%. Importantly, as has been the objective all along, we are not anticipating there to be much volatility in that result over the year. New loan production coupons above 6.5% continue to exceed cash flows rolling off the book. At the same time, we are anticipating somewhere in the range of $75 million to $100 million of principal cash flows from the securities portfolio over the year, which is coming off at a weighted average FTE rate of approximately 4.75%. Replacement yields in January thus far have modestly exceeded that rate. As you can see on Slide 10, reported noninterest income results were broadly in line with expectations at $11.5 million for the quarter. Excluding securities losses in the comparable period, total fee income was up 7% year-over-year, led by strong results in wealth management and total mortgage fees, which grew 19% and 14%, respectively. Results in Q4 did include a BOLI death benefit of just under $600,000, which is included in other income. On Slide 11, at $40.6 million, expenses were generally in line with expectations and as planned, included $0.7 million related to the write-off of the remaining unamortized issuance expense for the subordinated notes we called on October 1. Absent this item, expenses were up modestly from the linked quarter related to seasonal occupancy-related expenses and higher marketing costs. Results also include episodic legal fees related to certain legacy items that have now largely concluded. Turning to capital on Slide 12. Capital ratios have improved quite strongly in the quarter on the heels of a much more profitable balance sheet. Additionally, you'll recall in our prepared remarks last quarter that we anticipated the leverage ratio and the total risk-based ratio to revert closer to Q2 '25 levels as average assets caught up with the mid-Q3 balance sheet activities and the prior subordinated debt issuance was repaid in early Q4. You can see that these results were consistent with those expectations. As we have previously communicated, we are comfortable with the company's current capital position, particularly against what is a significantly derisked balance sheet. Additionally, as our 2026 outlook suggests, our peer-leading levels of profitability will accrete capital very quickly, which you will see over the course of the coming year. Turning to our 2026 guidance on Slide 13. Our overall outlook has generally improved from the preliminary commentary provided last quarter, which I will make a few comments about. Period-end loans and deposit balances are expected to grow mid-single digits. This outlook would suggest deposit balances will grow modestly more than loan balances. We anticipate balance sheet growth to be driven by organic deposit funding going forward, leveraging our relationship banking model and well-positioned 70-plus branches located throughout Indiana and Michigan. Non-FTE net interest income is now expected to grow in the low teens year-over-year. This will be driven by the FTE net interest margin in the range of 4.25% to 4.35%. Average earning asset balances are likely to modestly exceed $6 billion for the full year. The first quarter average earning assets are likely to be down from the fourth quarter averages, but should represent the low point for 2026. This outlook includes the assumption for two, 25 basis point rate cuts, one in April and October, but neither moves the needle much on the outlook as intended. Fee income in the mid-$40 million range generally expresses the continuation of trends we have seen over the back half of 2025. Expenses in the mid-$160 million range represents standard inflationary expense growth, modestly higher expenses in medical benefits compared with 2025 and the continuation of ongoing growth and marketing efforts. Finally, the effective tax rate is still anticipated to land in the range of 18% to 20%. Overall, 2026 should be a strong year for Horizon, steady growth with durable peer-leading returns on assets, returns on tangible common equity and top quartile internal capital generation. With that, I'll turn the call back over to Thomas. Thomas Prame: Thank you, John, and I appreciate the summary of the quarter and the updated outlook for the year. As you can see from our financial results, we're very well positioned entering 2026 to create significant shareholder value through durable top-tier financial metrics, excellent capital generation and a premier community banking franchise located in some of the best markets in the Midwest. As the leadership team, we'll continue to be front-footed in our execution and disciplined in our operating model, focusing on profitable growth and continued smart stewardship of capital decisions for our shareholders. We look forward to what we believe will be a very positive outlook for our shareholders, clients and the communities that we call home. At this time, I would like to turn the presentation back over to our moderator to open up the lines for questions for the management team. Operator: [Operator Instructions] The first question comes from Brendan Nosal with Hovde Group. Brendan Nosal: Maybe just to kind of start here at a top level, if you guys look at your outlook for 2026, pretty similar to what you guys offered last quarter. As you look at kind of the opportunities and risks, like what in that outlook could end up going better for you guys? And conversely, what are some downside risks as you look at the year ahead? John Stewart: Brendan, this is John. I think first and foremost, I commented on this in my prepared remarks. We actually view the outlook to be slightly more favorable than it was when we initially gave it. The NII, in particular, is where the leverage is higher base and more growth in the low teens. I think as you kind of generally push that through the numbers, you'll get a non-FTE number that's closer to $260 million. I think that guidance was maybe closer to mid-250s last quarter. FTE would be then about $4 million above that. So we do view there to be a more optimistic outlook. Maybe the very modest offset to some of that NII upside would be on the expenses, but really nothing materially there, just maybe $1 million delta or something from what we had initially put out there. I think some of the levers as you kind of work your way through the year, it's really going to come down to the ability to grow organic core deposits to fund organic core commercial loan growth. And I think a favorable outcome on that front is probably the biggest leverage point to upside to the outlook. And conversely, the opposite would be true. The loan growth pipeline, Lynn can talk a lot more about this. We feel really good about it. Spreads have held up really well. The team has done a fantastic job on the asset side, and it's going to come down on the liability side, I think, most notably. Brendan Nosal: Okay. All right. That's helpful, John. Maybe pivoting here to that topic of loan growth. Is there a point at which like the modest decline in the consumer category of the loans eases, which would allow the high single-digit commercial loan growth to shine through more visibly in that net growth number? Thomas Prame: Thomas, thanks for the question again. As we look at the portfolio of our loans, our business model is truly a commercial banking model. That has been our lead strategy and Lynn and her team has just done a fantastic job on that. our consumer loan portfolio right now is primarily made up of HELOCs and consumer closed-end mortgages that deal with real estate. We feel as though we are well positioned there. We have a great credit profile in that area. Again, that's something we feel like we're going to stretch and try to create demand and/or try to create excess growth in that with taking on extra risk. So for us, it's a good product, but we're not seeing the consumer side to be something that we're going to probably push to accelerate. We really found great value not only on the lending side in commercial, but truly getting the full relationships with the deposits. Brendan Nosal: Let me sneak one more in here. Just on asset quality, can you unpack the rise in NPAs over the past couple of quarters? Like each quarter's increase is relatively small, but I think they've been up in 5 in the past 6. Like is this normalization from a low base? Or is there perhaps pockets of stress that you're seeing at this point? Lynn Kerber: Thanks for the question. I appreciate your observation. We had a very low base that we're starting from, and our overall metrics continue to be very strong and within the expected ranges for our portfolio and credit risk appetite. So recognizing that we're starting from a very low point, any increase, while modest, may appear to be a larger percent. As I noted in my comments, substandard loans did increase this quarter, roughly $2.2 million of it was commercial, $800,000 mortgage, nonaccrual and over 90 days, $800,000 consumer. These are all relatively modest numbers. I don't see it as reflective of any one sector, any particular product. When I look at our commercial nonperforming, it's really more episodic with the customer. As I shared in some previous calls, we had one customer that started up a new business, they had road construction. It just caused some delays. Sometimes we use nonaccrual as a tool to help them weather some of those challenges that they have. And the goal always is to hopefully get them back on the right path and upgrade them. Sometimes, however, we recognize that it might be a liquidation and try to work hand-in-hand with the customer. I think ultimately, though, if you look at the bigger picture, substandard loans have decreased for the last 3 quarters and roughly 8% for 2025. And if you look at commercial specifically, our criticized loans have actually decreased 17% since December '23 and 7% since December '24. So I think our overall metrics are good. I look at this just really as the migration through the buckets. Operator: The next question comes from Nathan Race with Piper Sandler. Nathan Race: John, I was hoping you can just unpack some of the margin drivers over the course of this year? It seems like you guys are pretty well matched in terms of short-term rate-sensitive liabilities and assets. So I wonder if you could just hit on kind of what the asset repricing tailwinds look like and kind of where you're originating new loans these days relative to the portfolio yield? John Stewart: Yes, sure. Thanks for the question. Yes, as I said in my prepared remarks, new originations spreads continue to be really good. We see that continuing here in January. New origination yields continue to sit on a coupon basis above 6.5%. We've got cash flows coming off the portfolio on the loan side that are still below 6%. So you do have some front book, back-book repricing that will help as we just kind of grow through the year. On the other side, it's going to come down to just deposit -- core deposit generation. I think those are going to be the big drivers for the margin, as I mentioned earlier. The only other margin leverage that will flow through over the course of the year is just whatever the cash balance ends up looking like. So as the guidance suggested, based on where cash ended the year, the averages might be down in Q1 on a cash basis, the expectation deposit growth versus loan growth, the assumption there is that the excess is just flowing back into cash for the time being for liquidity purposes and nothing else. And of course, that's not -- that's NII accretive, but maybe at the margin on a NIM percentage, modestly dilutive. So those are -- where the cash kind of lands is going to be whether or not it's up a bit flat, whatever the outcome ends up being, but I think those are the big drivers. Nathan Race: Okay. That's really helpful. And changing gears a bit, as you guys alluded to in your comments, capital levels just with the profitability profile are going to build a pretty strong clips. I could see most capital ratios increasing by 100 basis points year-over-year by the end of this year. So just curious, maybe, Thomas, if you can update us on some of your capital deployment priorities. I imagine supporting growth is still #1, but would be curious to get your thoughts on the opportunity to deploy excess capital via acquisitions and kind of what you're seeing across that landscape these days? Thomas Prame: Thanks for the question. And also, thanks for the recognition of the strong capital generation of the new profile of the organization. We're very pleased with the performance of the company and also the positive capital generation from the results coming from the fourth quarter. As we have discussed previously, there's ample opportunity internally to grow and expand our organic business model. We are located in some of the best markets in Michigan and Indiana, and we still see significant upside potential just through organic growth in our community banking model. This is going to continue to be our primary focus. As we look at our capital going forward, as we mentioned in the third quarter, this isn't going to burn a hole in our pockets. In the near term, we believe we have ample runway to build capital to align with some of our industry peers. And again, as we review capital decisions in the future, we're going to continue to be disciplined about this and make sure that we focus on logical deployment that's accretive to our shareholder value proposition. Nathan Race: Got it. That's helpful. If I could just sneak one last one in. I appreciate the expense guide. Curious if that contemplates any additional commercial hires? Obviously, you guys have been active taking advantage of M&A disruption across your footprint in the past. And there's obviously been some notable M&A announcements with some larger competitors that are maybe more focused on some southern geographies these days. So just curious what you see in terms of the opportunity to either add talent or just benefit from the existing team to grow share on the commercial side? Lynn Kerber: Yes. Thank you for that. First of all, I'd say we have a stellar team. At this point, I don't see that we're going to be adding, although there may be some opportunities presented that we consider with some of the changes in the market. But our team has been performing really well, as you can see with our growth numbers, just doing a fantastic job, not only in volumes, rate management and credit quality. So really pleased with them. We do have a few retirements that are occurring. Really pleased with the candidates that we've hired and the talent there. So I would say that we're probably benefiting from some of that disruption in talent there. We have expanded our treasury management team over the last year. We may look at some opportunistic additional adds throughout the year there, too. Operator: The next question comes from Damon DelMonte with KBW. Damon Del Monte: First question, just on the outlook for fee income. I was hoping you could just talk a little bit about some of the drivers that you see leading to the kind of that mid-$40s million of revenues for 2026? I don't know if it's going to be driven more by fiduciary duties or do you have other treasury management services? Kind of I guess, what are your key assumptions behind that growth? John Stewart: Thanks for the question. This is John. As we kind of roll the year forward and look at our budgeted assumptions, there's not one piece of that fee business that is towing the line, so to speak, modest kind of low- to mid uptick in service charges and interchange would be the assumption. We've got some specific initiatives in the market around interchange, but nothing -- we're not assuming anything in that outlook that would significantly change that view for 2026 anyway. Fiduciary activities expect them to continue to be strong. Mortgage should continue to grow and hopefully benefit rates. We'll kind of see what the rate environment does. But as we get back into the seasonally strong years, we'll get a better -- strong quarters, excuse me, we'll get a better outlook there. But there's nothing in particular, Damon, that is really pushing the growth number for 2026. It's pretty well balanced. Damon Del Monte: Okay. That's helpful. And then just quickly on the margin. Do you happen to have what the spot margin was for December, kind of where you exited the year? John Stewart: Yes. It was slightly a couple of basis points above where the full quarter average was, Damon. Damon Del Monte: Okay. And I mean, based on your commentary, John, it seems like your guidance is including 225 basis point rate cuts. So it kind of seems like, again, based on what you've been saying, you guys seem to be pretty neutral. So we shouldn't see much movement either way if we do have a couple of cuts here in '26. Is that a fair characterization? John Stewart: Yes. We continue to believe that's the case. I mean, if you -- we've walked through some of these numbers before. If on a static balance sheet, what happens inside 30 days, it's -- we'll probably need about a 30% beta on our non-time deposit balances, interest-bearing deposit balances to be neutral. We exceeded that in the fourth quarter. The assumption is that we would be able to kind of just achieve that in 2026. And so with that outcome, with that set of assumptions, I think, yes, your statement is correct that the rate cuts would not significantly change the trajectory of NII or the margin for the year. Similarly, it's not a headwind if there is not a rate cut. Operator: The next question comes from Terry McEvoy with Stepehns. Terence McEvoy: Looking at the loan growth in 2025 on the commercial side, do you expect it to be weighted more towards CRE like we saw in the fourth quarter? Or do you expect more of a mix between C&I and CRE? And then I'm just curious, is leasing still, call it, a priority for Horizon? Lynn Kerber: Terry, in regards to your question, we've been really consistent with our commercial portfolio. Our mix hasn't changed much over the last 3 years that I've been in the seat. If you look at our quarterly origination mix, it's generally pretty consistent with the overall book mix. We have been intentionally looking to add some additional C&I. Our equipment finance division has been a very nice complementary piece to that. When I say it's a priority, I would say it's one of our core products. And so is it going to be outsized? No. It's going to be complementary to what we're doing. Nathan Race: And then as a follow-up, you opened up a pretty cool office in Kalamazoo last summer in terms of just history there. Lynn, I think you mentioned loan growth in that market. So my question is, are you planning to open up more offices, which, to John's point about funding loan growth, a new office would definitely help on the deposit generation side? Thomas Prame: Thanks for the question. And I appreciate the commentary on the Kalamazoo office. Very excited about that and glad to be part of the renovation that's happening in what we feel is just an outstanding community. We do have another office that will be opening up this summer in Indianapolis that we started about 1 year ago, and that should be coming to fruition. We will look at some different opportunities throughout Michigan and some of the core markets that we've talked about that we feel like there's an opportunity for additional distribution where our teams have just have done extremely well, in both loans and deposits and get benefit from perhaps a second or third location. Those will primarily be in the Grand Rapids, Lansing, the Holland area that we feel as though we've got the right people, the right teams, the right penetration, just again, need a little bit more market reach through distribution. But I wouldn't say it's going to be a wholesale branch strategy versus very optimistic as we see opportunities come to fruition in the marketplace. Operator: [Operator Instructions] The next question comes from Brian Martin with Janney Montgomery. Brian Martin: Just wondering, can you -- how has the pricing been both on the loan and deposit side in the markets? Have you seen any irrational pricing? Has it been -- it sounds as though it's not been irrational, but just hearing mixed commentary from other banks. So just thinking about that. Lynn Kerber: Yes, I'll speak to commercial. I would say that it really just depends on the segment of the customer and their profile. I mean we are seeing some rates that -- for commercial real estate credit tenant, very attractive deal profile, it's pretty aggressive. And we've been seeing some 180, 190 spreads, which is pretty low. And so is it irrational? I guess every organization has to make a decision on what works in the balance sheet. But it just -- it depends on the sector. I think for us, we're priced appropriately for the types of deals that we're doing. We're in market generally, and there's going to be some that are higher and a little bit lower. So I wouldn't say it's irrational. There's just some competitiveness in certain segments. Thomas Prame: This is Thomas, I completely agree with Lynn's answer there. Horizon has positioned itself for decades of being a relationship bank, not a price lead bank. And so for us in our markets where we are, there's always been great competition. And for us, I think whether rates are up or down, we've seen recovery in our marketplace, there's always rational pricing out there, both on loans and deposits. And I think it gets to your go-to-market strategy. Our go-to-market strategy is really about being embedded in our communities, doing more than just price and really about being a consultant to our clients, both on the loans and deposit side. So again, I think for us, how we approach our clients, how we approach our communities probably gives us a little bit of insulation from the edges on pricing and for us also from not just the pricing, but also a discipline around credit, I think it's been a forefront of the success we've seen over the years. Brian Martin: Got you. And last couple. Just in terms of the commercial pipeline, Lynn, did you talk about kind of the commercial loan pipeline here? I know you talked about what areas did well here in the fourth quarter and geographically, we did better. But just the pipeline today, where that stands heading into first quarter? Lynn Kerber: There's always a little bit of seasonality. And so you look at the first couple of months of the year, it's usually a little bit quieter. It tends to pick up in the second quarter or third quarter. So you'll hear me talk about fluctuations from quarter-to-quarter. That being said, our pipeline is pretty strong and steady. You're just going to see some fluctuations from quarter-to-quarter. We might have a couple of larger loans one quarter. We might have a larger commercial real estate project that goes to the secondary market or is sold that could impact results. But usually, it's pretty even. So at this point, I feel like it's steady as she goes. You just might see some fluctuation quarter-to-quarter based on seasonality. Brian Martin: Okay. So pipeline is likely down from what it was last quarter and just given seasonality. And I guess your expectation will be as you kind of build the loan growth, it's more second quarter and beyond, maybe less in the first quarter. Does that seem fair based on your comments? Lynn Kerber: I don't know that I would infer that. It's just first quarter is traditionally a little bit softer as far as originations, but the pipeline itself is solid, and we look out more than 90 days, we're tracking 30, 60, 90, 120 up to 190 days. So I don't see the pipeline softening at all. It's just -- my point was is you're just going to have some timing differences month-to-month. Brian Martin: Got you. Okay. That's helpful. And I don't know if it's maybe for John, but I think someone talked about the loan repricing or kind of the back book repricing being one opportunity. What -- can you just remind us what that that loan repricing looks like throughout the year? John Stewart: Sure. Yes, what I said before was new origination coupon yields have held up very well. Spreads have held up well. New production continues to be in excess of 6.5%. The roll-off amortizing, non-amortizing maturities, the cash flow coming off the book is still sitting below 6% in that 5.5% to 5.75% range. And it's pretty evenly distributed by quarter throughout the year in 2026. Brian Martin: Right. And how much is repricing, John, I guess, in terms of throughout the year? It's pretty even by quarter, but just in aggregate, what's repricing this year at kind of that range? John Stewart: Plus or minus $150 million a quarter. Brian Martin: Okay. So $150 million coming across the quarter. Okay. And last one for me, just more housekeeping. I think, John, you said the average earning asset level. I missed what you said there, but I thought it was down linked quarter, but up thereafter. Is that kind of what you suggested? John Stewart: Yes, that's right. Just based on where cash balances kind of ended the year, you might see that pull through the averages, slightly lower cash balances in Q1. We would anticipate that from -- that's the low point for the year, and it would grow and that the full year average would slightly exceed -- modestly exceed $6 billion. That's -- we had scripted that in the guidance slide as well. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks. Mark Secor: Again, we want to thank everyone for participating in today's earnings call. We appreciate your time and also your interest in Horizon, and we look forward to sharing our first quarter results in April. Have a wonderful day. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

107天前Insight Analytics约5分钟阅读

BKNIY 2025 Q4 财报电话会议

Laurie Shepard Goodroe: Good morning, and thank you for joining our 2025 full year earnings call. Financial statements were posted with market authorities early this morning. All materials can also be found on our corporate website. Please refer to disclaimer in the presentation and note that this call is being recorded. And we welcome today our Chief Executive Officer, Gloria Ortiz, and Chief Financial Officer, Jacobo Diaz. Gloria, over to you, please. Gloria Portero: Thank you, Laurie, and thank you all for joining us in this 2025 full year results presentation. Since we are reporting the full year, I believe it's appropriate to start with a brief overview of the environment in which our business has operated to provide context for the figures that we are about to review. 2025 was the year of Donald Trump's return to the White House and even that has set the political tempo of the international calendar. Continuing the trend of previous years, the events in 2025 confirmed that the international landscape is moving towards an increasingly turbulent and fragmented scenario. Long-standing conflicts, such as Ukraine, remain unresolved despite failed attempts to reach an end to the war. In Gaza, the ceasefire came only after months of escalating violence. Meanwhile, the Franco-German Axis, the traditional engine of the European Union, has been weakened by deep domestic political crisis. Without a doubt, tariff has been the most repeated word of the year. The imposition of tariffs on international trade has become the main diplomatic pressure tool of the Trump administration. The European Union, which for years has been a strategic partner of the United States, ultimately considered in trade negotiations and accepted a 15% tariff to maintain access to the U.S. markets. Thus, the balance of 2025 confirms an international landscape that is increasingly fragmented and less predictable, where open conflicts tend to become chronic, and long-lasting political solutions are replaced by fragile truces or unbalanced agreements. And indeed, what we have been observing in these first weeks of 2026, for example, in Venezuela or in the U.S. stance on Greenland, amongst others, confirms that this year will again be marked by geopolitical volatility just as 2025 was. At the same time, technology, led by artificial intelligence, continues to advance at a blistering pace, transforming operating and business models. And the banking sector is undoubtedly no exception. These are global trends shaping the broader environment. But if we focus on the countries in which we operate, it is worth noting that the 3 economies, Spain, Portugal and Ireland, are among the most dynamic in the Eurozone and have become the new growth locomotives of the union. In fact, the Eurozone in 2020 -- in fact, in the Eurozone in 2025 inflation, which had surged sharply after the pandemic and the Ukraine war, moderated. And as a result, the ECB accelerated interest rate cuts, especially during the first half of the year. With inflation under control at the European Central Bank's target level, benchmark rates stabilized at 2%, and no further cuts are expected in the short term. As a result, in 2025, the ECB reference rate averaged 2.2%, that is 1.4 percentage points lower than in 2024, while the 12-month Euribor fell by an average of 1.05%. Turning to financial markets. It's notable that despite escalating conflicts and increased political polarization, market performance remained robust. The IBEX 35 achieved a record increase of 50%. German equities rose by 23%, and the NASDAQ advanced by 19%. In this environment of geopolitical uncertainty and significantly lower interest rates compared to the previous year, we have delivered in 2025, very strong results, once again, record breaking. These results are built on solid foundations and driven by recurring client commercial activity. Moreover, in 2025, we executed major strategic projects that will underpin the bank's future growth such as the integration of EVO Banco and Avant Money, which is now Bankinter Ireland, a branch of Bankinter just like Portugal. Of course, before moving on, I want to express my thanks to all Bankinter Group employees for their dedication, effort and commitment because they are the true architects of the results that we present today. The results we present today are very satisfactory, driven by intense commercial activity that brings us to report a net profit of EUR 1,090 million in 2025, representing 14% growth over the previous year. 2025 was marked by diversified growth, both geographically and by business line. Overall, we grew 9% in total business volume, 5% in lending, 6% in customer funds and delivered a strong double-digit growth, 19%, in off-balance sheet products. Despite the sharp decline in interest rates, we managed to limit the falling interest income to 1.8% in 2025. And on a year-over-year basis, the inflection point was reached in the first quarter. From that point onward, net interest income grew quarter after quarter, thanks to credit growth and margin management. Customer spreads averaged 2.68% for the year with the overall NIM at 1.78%. Fee income from services had an exceptional year, growing 11%, which in nominal terms, almost doubled the reduction in interest income. This allowed us to grow gross margin by 5%, and I think it is important to note that the strong performance in fee income is due to the significant growth in our balance sheet funds and not to any increases in customer fees. All this growth has been achieved while keeping our risk appetite unchanged, improving the asset quality of our balance sheet, reflected in a nonperforming loan ratio below 2%, specifically 1.94%. Another key element of our business model is efficiency at 36%, indeed the best efficiency level across the industry. These 3 pilots, the diversified growth, asset quality and efficiency, are the foundation of our business profitability, which reached ROTE of 20%. As I have been commenting in previous quarters, commercial activity with clients has been very strong. Total customer business volume stands at EUR 241 billion, EUR 20 billion more than in 2024, representing 9% growth in the year or a compound annual growth rate of 8%, an increase of EUR 80 billion since 2020. This volume breaks down into EUR 84 billion in lending, representing 5% growth versus 2024 at year-end. Customer funds reached EUR 88 billion, EUR 5 billion more than a year ago, and we now manage EUR 69 billion in assets under management, 19% more than at the end of 2024. We have more than doubled the balance recorded at the end of 2020 with a compound annual growth rate of 17%. All this growth is organic and diversified with every geography contributing and outperforming the market. Our diversified customer business volume growth is what enables us to consistently strengthen revenue streams. Core revenue fees and interest income reached EUR 3,032 billion, a compound annual growth rate of 12% and a record for the series, exceeding 2024 by 1% despite the headwind of lower interest rates. We achieved this by limiting the decline in interest income to 1.8% through volume and margin management and through the excellent performance of fee income, which with an 11% growth rate more than offset the reduction in net interest income. The drivers of fee income are the strong growth in off-balance sheet funds, the increasing activity of Bankinter investment across all its business lines and the positive performance of the economies in which we operate. Regarding interest income, I would like to highlight its upward trend throughout the year. It bottomed out in the first quarter of 2025. And from that point on, revenues increased quarter after quarter. By the fourth quarter, we already grew on a year-on-year basis by 4%. So the outlook continues to be more positive, especially with the forward rate current scenario for 2024 -- 2026. In summary, sustained growth, asset quality and efficiency are what allows us, once again, to deliver results that surpass our own records, exceeding EUR 1 billion and representing 14% growth versus 2024, tripling our results over a 5-year period. Our ROTE now at 20% is also the highest in the entire series. Before I hand over to Jacobo to review in further detail the financial results, I wanted to quickly showcase one commercial strategy that was quite successful in 2025. In 2025, the 100% digital new client acquisition is what I'm referring to. Since the EVO integration, we have improved our digital customer experience with the use of AI in commercial and marketing processes. Our deposit gathering capabilities are now stronger, more granular and flexible. We increased customer funds in this channel by 64% in the year, now reaching EUR 12 billion, close to 14% of our total customer deposit base. New customer acquisition trends have doubled since 2022, and the digital channel now represents more than half of the new client acquisition in 2025. From an industry perspective, our digital offering is -- not only allows us to compete effectively with new entrants, but gives us a clear competitive advantage. Customers benefit from a full multichannel ecosystem, digital branches, contact center and also private banking network, which enhances loyalty and broadens upsell opportunities. In the second half of 2025, the strong growth of this channel generated some short-term pressure on deposit cost. However, looking ahead, our digital strategy and strengthened deposit gathering capabilities create meaningful upside supported by lower acquisition and servicing costs. Overall, our digital franchise has become a scalable and cost-efficient acquisition engine that strengthens loyalty, supports margin resilience and accelerates fee growth, a competitive moat that becomes more powerful each quarter. Jacobo, now over to you. Jacobo Díaz: Thank you very much, Gloria, and good morning, everybody. 2025 marks yet another year of increased revenues and profitability. In operating income, we have grown by 5% with increased volumes, continued strong fee growth and effective margin management. Operating costs were more balanced this year over the quarters with annual cost growth growing below revenue growth to end the year within guidance, confirming positive operating jaws another year. Cost of risk and related provisions declined by more than 15%, reflecting a continued positive trend in risk management. And net profit increased by 14.4% to well surpass our initial goal of EUR 1 billion in 2025. Onto NII and customer margins on the next page. NII contributed to EUR 2,237 million this year, slightly below our initial target. Asset yields for the year averaged 365 basis points and remained quite stable this quarter at 3.48%, down only 1 basis points from the third quarter given the good volume growth, especially in corporate and uptick in short-term interest rate. This helps soften the impact of a slight increase of 3 bps in quarterly deposit costs due to the same uptick in short-term rates as well as a successful commercial strategy that Gloria just mentioned regarding digital account deposit gathering. Customer margins for the year averaged 268 basis points, very near to our 270 longer-term target. We believe Q4 '25 mark a low point, as the downward repricing of digital account deposit is underway in Q1 '26. Therefore, we expect customer margins to recover moving forward. NIM averaged 178 basis points for the year as the noncustomer interest income improved in the quarter, leading to an increase of NIM of 4 basis points in Q4. Regarding the ALCO portfolio, this has been achieved through increased ALCO balances that you can see on Page 13 as well as reduced wholesale funding costs. Moving on to fees. Fees continued to deliver sequential increases each year, reaching EUR 795 million, up 11% versus 24%, reaching a double-digit compound annual growth rate of 10%. This sustained growth momentum is mainly attributable to the strong growth volume or strong volume growth in asset management, custody and brokerage services. Moving on to Page 15. Equity method and trading dividend income lines also up with an impressive 21% on a year-on-year basis. The diversification of sources of revenue is well represented here as a result of our business investment in the past. For example, Bankinter investment that we will look later in the presentation, insurance JVs as well with our JV in Portugal with Sonae called Universo. We also confirm the banking tax will have no impact in 2025 and expect this to be the case for '26 and '27. Moving into the contribution of gross operating income, there's been a very strong contribution from each geography in gross operating income, demonstrating increased diversification with Portugal and Ireland, growing from an 11% contribution to gross income in '22 up to 16% in '25. Moving to the expenses on page 17. We have contained total operating cost growth to 4%, notably with flat general expenses due to the tangible impact we are achieving through our IT and AI initiatives as well as with the EVO integration. Efficiency ratio improved to 36.1% this year, demonstrating our commitment to delivering positive operating jaws now and in the future. On Page 18, PPP more than doubled over a 5-year period to reach EUR 1,947 million in '25. Moving on, we see improvement in credit and other provisions. Significant decrease in cost of risk down to 33 basis points from 39 basis points in '24 with loan loss provision volumes now below those even of the ones in '23. Other provisions also performing well, down to 8 basis points for the year with no signs of deterioration in the market of -- in our portfolio, and our disciplined approach to risk management, we remain optimistic to maintain current levels for the coming quarters with potentially some upside risk. Next page, net profit reached once again historical levels at EUR 1,090 million, an exceptional increase of 14.4% in the year, maintaining similar growth rates seen in '24 even with the headwinds faced in interest rate during the year. Moving into the credit and asset quality indicators, as you can see, they continue to improve. Risk quality measure in terms of the nonperforming loan ratio has improved significantly this year breaking below 2% to reach 1.94%. The coverage ratio remains very solid at 68%, substantially higher than in the 2020. By geographies, Spain, down to 2.1%; Portugal at 1.4%; and Ireland, stable, 0.3%, all well below sector average consistently over time. Moving into capital. Our CET1 ratio ended the year at 12.72% and well above the minimum requirements of 8.36%, leaving an ample capital buffer of 4.4% as well as adequate MREL and leverage ratios. Main movements in the year related to retained earnings contributing to a total of 111 basis points, capital consumption of 51 basis points in RWAs and 35 basis points in operational and market risk. The implementation of the countercyclical buffer in Spain has resulted in a 41 basis point increase in minimum requirements. Moving into Page 24. Commercial activity, volumes and profit trends remain not only strong, but with a greater diversification each year across geographies. Customer volumes up 8% in Spain, 15% in Portugal and 23% in Ireland. Each region contributed at increasing levels to the profit of the bank as well we see on the following slide. Within Spain, loan growth this year, up 3% with a strong performance in the business lending segment growing 6%. I consider this satisfactory growth rate, especially when considering the intense competitive margin dynamics in Spain as well as our reduced appetite for open market consumer lending in Spain in 2025. Retail deposits continued to demonstrate solid and balanced growth, increasing by 5%, fueled by the successful digital campaigns we mentioned a little bit earlier. Stellar performance in Wealth Management, reflected by an 18% increase in assets under management balances as well as a 19% increase in assets under custody. Profit before tax, up 14%, reflecting solid contribution from our core Spanish business. Moving into Portugal, a continued momentum in lending activity across both business segments, up 9% in total with a strong deposit gathering growing 8% as well as a substantial increase in wealth management and custody balances, rising 28% on a year-on-year basis. Cost-to-income ratio at a very efficient low level of 33% even with increased investment in IT. Profit before tax, up 7% to EUR 210 million or 14% of total contribution to the group. Moving into Ireland. 2025 marked the year for our Irish business to convert into a branch of Bankinter, allowing for increased upside risk in terms of volume potential and efficiencies. We launched deposit in Q4, albeit with volumes still at marginal levels, definitively more to come in this space during 2026, as we begin to scale up deposit campaigns this quarter. Asset market dynamics and our Bankinter style commercial differentiation supported a 27% growth rate in the mortgage book in '25, with improved trends seen in the second half of the year. Consumer finance also growing at 11%. Profit before tax contribution reaching EUR 46 million, up 13% this year with important improvements in the cost-to-income ratio down to 44% from 48% last year. Now moving into the corporate and SME banking business. Business lending continues to deliver a strong performance, up 6% this year, consistently increasing market share year after year. One key growth catalyst continues to be our international business segment that has doubled loan volumes over a 5-year period, now reaching EUR 11 billion, representing 30% of the business lending book currently. This segment is also a strong recurring contributor to fee income from services. We also see increased activity and upside risk from other growth catalysts like our new ESG client solution across loan and servicing income products. For example, the loan advances we provide for energy certificates, where we were the first to launch in the market in 2025. Additionally, we are expanding substantially our Bankinter investment business that I will detail more in the next couple of slides. Bankinter investment has doubled income contribution to the group over the past 5 years with currently 31 alternative investment vehicles and associated vintages well distributed over the year since 2017. More than 15,000 Iberian Bankinter customers now invest in real assets. This franchise has been a key source for the increased fee income to the group, reaching a 12% compound annual growth rate with upside risk potential for the future. On the next page, you can see the strong diversification of the different investment strategy for the vehicles across many sectors and countries with more than 360 different underlying assets in the portfolio. Moving on now to review the Retail Banking business. Retail banking asset and deposit trends remained strong with increased core salary account balances up by 7%. New mortgage origination, up 10% year-on-year, with solid market shares of new production across Spain, Portugal and Ireland. Our mortgage back book is growing steadily at 5% annually despite rising competition in 2025. The Wealth Management business, on Page 32, shows our high-quality affluent client base that continues to drive exceptional incremental wealth volumes, up EUR 21 billion this year, a 16% increase on a year-on-year basis, of which half of it is new money to the bank. When excluding the market effect, the net new money has reached the EUR 10 billion level milestone, well above our historical range between EUR 5 billion to EUR 7 billion. Off-balance sheet, volumes under management and custody on Page 33 ended the year at EUR 156 billion, up EUR 25 billion, or 19%, increasing significantly with the markets and net new inflows in all categories. With the exception of fixed income security, we have provided additional details regarding commercial activity and trends for those key fee income growth catalysts in the annex, no doubt a key driver of continued fee growth for the future. Now, let me just spend a couple of minutes sharing our ambitions and targets for 2026 before I hand back to Gloria. We expect -- the first one, we expect solid macro outlook for all the regions where we are operating. Therefore, we expect growth across all segments and geographies, focus on our targeted type of customer and insurance and ensuring a disciplined risk-return approach for asset origination. Volumes are expected to grow at similar levels than in '25 and previous years. This means that lending volumes at mid-single-digit growth with deposit volumes targeting to keep our liquidity ratio stable, that is above 100% in terms of deposit to loan or below 100% in terms of loan to deposit. All geographies and business segments are expected to grow at similar levels with Portugal and Ireland keeping their successful track record, and Spain, keeping strong volumes in the corporate and retail businesses. Regarding NII, with the current Euribor 12 months rate outlook in '26 stable around current levels or slightly increasing towards the end of the year and next -- and following years, we expect customer average margin to recover 270 bps, our initial target. And therefore, we target in 2026 overall similar levels of client margins and NIM that the ones we saw in 2025. With residual negative repricing for mortgages and a downward repricing of our digital accounts in Q1, we expect minimal margin compression in the first half '26 with an upside bias to possibly reach a stable asset yields by the end of Q1 and beginning of Q2. Given these dynamics, we would expect NII for the entire 2026 to increase in correlation with volume growth. For fee growth, we target high single digit for the year, supported by increasing volumes from assets under management and assets under custody as well as from increased transactionality from each of the geographies, which are strongly correlated with the economic growth of each of them. With our strict cost allocation and management, while keeping strong IT investment around 10% of our gross income, efficiency remains one of our pillar or our main pillars, and we are committed to delivering positive operating jaws, again, in 2026, reducing cost-to-income levels below 35% for the year. In terms of credit quality, we have a stable outlook for cost of risk for the year around current levels of 33 basis points, albeit with a positive bias. And ROTE is expected to stay above 20%, ensuring attractive shareholder value creation. In summary, we expect 2026 to be another year of consistent growth in volumes and profitability reaching new records in volumes, gross income, efficiency, net income, and of course, profitability. Gloria, back to you, please. Gloria Portero: Thank you, Jacobo. Thank you for sharing our financial ambitions. In terms of our management priorities, all of these are well-integrated and will contribute to our financial goals with high-quality volume growth, a greater diversification of income from servicing fees and geographies. We will continue to invest in technology to achieve tangible benefits from our AI initiatives, driving both competitive differentiation and operational efficiencies. The outcome will undoubtedly result in a strong profitability and sustained improvement in shareholder returns. The key driver for this success centers around our clients and our employees. 2025 is a pivotal year for artificial intelligence, and we are committed to embedding AI tools and culture throughout the group. I will oversee project selection to ensure we achieve tangible results. Our program called AI First is designed to enhance our competitive advantage by integrating AI into all our customer-facing acquisition and service applications. We are committed to deploying personal productivity tools company-wide aiming to achieve 5% improvement in productivity over the medium term. Regarding process efficiency, ongoing initiatives across back, middle and front office focused on integrating AI gen applications into our banking operations. Coupled with leveraging AI tools for software development, we anticipate a 10% increase in capacity equivalent to approximately 1 million hours over the next few years. However, AI for Bankinter is not just a plan, it is a reality with substantial progress achieved in 2025. On Page 37, you can see the measurable improvements in productivity and efficiency thanks to the bank's digital transformation and the pragmatic and effective use of artificial intelligence in operational and commercial processes. We remain committed to investing 10% of our gross income in technology. On the lower left-hand side of the page, we have highlighted several examples of our use of AI in 2025, which have contributed to enhanced employee productivity. With EUR 36 million managed per employee, we compare very favorably to our peers with EUR 21 million per employee. And if we measure efficiency in terms of operating cost per billion managed, we also stand out. We allocate EUR 4.6 million of expenses per EUR 1 billion managed for our clients while our competitors require EUR 6.5 million for the same volume. Naturally, this is reflected in the efficiency ratio, which has improved year after year and now stands at 36%. Finally, I would like to highlight that all these gains in efficiency and productivity are not being achieved at the expense of service quality. In fact, service quality, measured in NPS, has improved by nearly 10 points since 2020 and now stands at 51%. Turning to the financial page -- the final page of our presentation. We report a ROTE of 20%, 100 bps above 2024, together with continued value creation for shareholders through both dividends and growth in book value. We are presenting another year of historical results driven by recurring customer activity and the disciplined execution of a long-term strategy that preserves our risk appetite while strengthening the balance sheet as reflected in the ongoing improvement of our NPL ratio. We continue to invest in initiatives that support business growth while at the same time improving efficiency. The drivers behind our performance, diversified growth, disciplined pricing, strong fee income engines and best-in-class efficiency are structural and provide strong visibility into continued profitable growth. In conclusion, 2025 demonstrated the resilience and strength of our business model even in a year of declining rates, geopolitical volatility and intense competition. Bankinter expanded volumes, protected margins and delivered record profitability. It was not just a record year, but a clear demonstration of the strength of our franchise, the quality of our growth and our ability to generate attractive returns and create long-term value for our shareholders. Back to you, Laurie. Laurie Shepard Goodroe: Thank you, Gloria, and thank you, Jacobo. We'll now open up for questions. [Operator Instructions] Our first caller is Maks Mishyn from JB Capital. Maksym Mishyn: Two questions from my side. The first one is on the competitive environment in lending in Spain. Your retail book is growing below the sector, and my question is whether it is intentional, why and when can this change? And the second question is just a clarification on the cost of risk guidance. You mentioned upside risks. What has to happen for them to materialize? And what kind of upside risk are we talking about? Could you please quantify them a bit more? Gloria Portero: I will answer you the first question, regarding competitive environment in Spain. Listen, I actually -- I think I pointed it out last quarter. We are seeing some irrational behaviors, particularly in the mortgage business, although also in other segments, but mainly, I would say, in the mortgage business. And you will understand it very, very quickly. I mean, there are offers, and I'm not talking to private banking clients. I'm talking to very standard clients, where they can get a 30-year mortgage at 2.20% for 30 years fixed, I'm talking. And as you know, the swap curve for the 30-year is over 3%. So basically, it's like selling a mortgage with Euribor minus 80 or even more. That is absolutely rational because even if that rate has a positive margin this year, obviously, you are building a portfolio that is not sustainable. And in 30 years, rates can do many things. So we are not into that world. We are not going to sell mortgages at 2.20% because we want to build a sustainable portfolio in any environment -- well, probably not in any environment, but in most of the environments, and we are not going to enter in that war. So we are producing with our clients, and we are competing in those clients where we think they deserve better rates. But we are not going to enter in that war. Jacobo Díaz: Maks, this is Jacobo. I'm going to answer your second question, and maybe there's a misunderstanding. The cost of risk that we're expecting for 2016 is quite similar to the current levels that we've seen here at the end of the year, which is around 30 bps -- 33 basis points. I think the word upside risk means -- it's meant in a positive way. That means that it could be even a little bit lower, not a little bit higher. So it's the way we can interpret that word. I think we think that we are under a good macro outlook for Spain, Portugal and Ireland. As you know, we are reducing our exposure to the consumer finance business with non-Bankinter client. We are reinforcing of being more prudent in all our activity. So the sense of the sentence that I mentioned of the upside risk doesn't mean this might go up in terms of cost of risk. I was trying to say that it can be even better than the current levels of cost of risk. I hope that I have clarified my point, and I expect that this was your question. Laurie Shepard Goodroe: Our next question comes from Francisco Riquel in Alantra. Francisco, go ahead. Francisco Riquel Correa: Yes. So my first question is I wanted to ask about your guidance of mid-single-digit growth in loans, if you can, please share indications by country. It seems to me that your guidance could be conservative if just the sector in Spain grows 4%, 5% in '26, which is nominal GDP growth. So you have grown a bit less than the sector in Spain. You were commenting that. So I wonder if you are willing to continue losing market share, particularly in retail mortgages in '26 or if you -- we could have upside risk to your volume guidance overall? And then my second question is regarding the guidance for cost inflation. So you have given cost-to-income reducing 1 percentage points, which means 2 percentage points cost inflation below revenue growth, meaning also cost inflation lower than in '25, but you need to invest in Ireland to become a full universal bank, also in Portugal. So that probably means very little cost inflation in Spain. So if you can, please elaborate on the cost guidance, the longer-term ambitions that you have presented for 2030, how do you plan to leverage technology to achieve that? I see other banks are still investing in technology. So if you can please elaborate. Gloria Portero: Thank you, Paco, for your question. I will try to answer the last question and maybe give some indications about the first one, but Jacobo will complete what I say. Okay. With respect to costs, obviously, technology is going to help, but this is not -- it's not a miracle. So we are not going to attain obviously, all that efficiency only with technology. I remind you that last year, we integrated EVO Banco. This year, 2025, we only had synergies for the half of the year. Next year, we will have the synergies of this operation for the full year. On the other hand, we just announced, I think, in December that we were absorbing consumer finance -- Bankinter consumer finance into Bankinter. And obviously, this means a simplification of the corporate structure that also brings some synergies. So it's a question of the traditional cost management technology and also all the simplification that we are undergoing in the corporate structure. And with respect to lending growth, listen, if the competitive dynamics continue to be in the mortgages -- in retail mortgages, the ones that we have seen during 2025, we are happy to be prudent and not to grow at the same pace as the market grows. But I hope because it doesn't make any sense that the market reacts and that we come back to a logic dynamic in pricing. Another thing where we are also reducing our growth rates is in everything that has to do with consumer credit in the open market. This means outside Bankinter clients in Spain because we are seeing already, as you can -- you know, there have been many announcements with regards to -- with regard to the new law, and well, there are a lot of problems in this -- I would say, a lot of compliance risks in this business. Do you want to complement? No? Jacobo Díaz: Yes, yes. Paco, good morning. No, no, I think in addition to -- I mean, basically, what Gloria is trying to say is that we are sticking to the same type of client or target of client that we've been sticking in the past, even with this exclusion of the consumer finance business in the open market activity. So this is one of the reason. We are targeting selective origination of lending. And even though we are able to keep the similar level of growth even if the market might grow a little bit more. But we prefer and we prioritize a good return and risk combination instead of volumes. Ireland is going to grow, again, quite strongly, double digit. Portugal is going to grow again strongly, double digit. And Spain behavior is going to be very positive. But always, we are prioritizing the combination of risk and return. Laurie Shepard Goodroe: Our next question comes from Marta Sánchez from JPMorgan. Marta Sánchez Romero: The first one is a follow-up on cost. So you're mentioning a commitment to positive jaws every year. You're going to be below 35% cost-to-income. What do you think is the right level to run the bank? And do you see a 1% positive progress every year for the next 3 to 5 years? And the second question is on the customer spread. You are committed to that 270 basis points. This quarter, we are a bit far from that level, 261. How are you going to be rebuilding that margin? And what is the outlook for net inflows into your digital account for next year? Jacobo Díaz: Marta, I'm going to start answering your second question about the customer spread. So Gloria has already mentioned that we are updating the cost of the digital accounts. This is going to be a good behavior in the first quarter of this year, and this is going to instantly recover part of the client margin, again, targeting the 270 in average that we've mentioned for the entire year. So for the year -- I mean, the cost of deposits are the ones that we will expect more contribution to this building up the 270. Loan spread that have ended the year at 3.48% last quarter also is intended to recover across the year. We expect or there is expectation of a steepened yield curve that will provide more upside in the second half of the year than in the first one, especially with mortgages. So we do expect that the contribution of the asset yield might be a little bit lower in the -- to recover that position. So maybe a couple of bps in average. But definitely, the cost of deposit is the one that will drive the most -- the majority of the building up of this 270s across the year. And in terms of cost, yes, I think one -- always it's very difficult to tell if it's 1 or 1-point-something point every year. But definitely, the message of Gloria is that we have a strong ambition to reach very low levels of efficiency. We think that we should aim to reach 30% not too far ago. This is where we want to be in terms of efficiency ratio. And this is something that we want to build in the next 3, 4 years, maybe. Laurie Shepard Goodroe: Our next question comes from Ignacio Ulargui from BNP Paribas. Ignacio Ulargui: I have 2 questions. The first one is on fees, looking to insurance fees and distribution fees related to insurance products. I mean, I just wanted to see if there could be any acceleration of that into 2026, if there is chances to rethink about the JVs that you had in the non-life business. What could be the strategy on the insurance business? And the second question is on the capital front in the quarter, that has been like 19 basis points positive effect from intangibles and other adjustments, if you could elaborate a bit what was the driver of that? Gloria Portero: Ignacio, I will try to answer your first question. As you know, we have to -- well, we have a JV with Mapfre that's in life insurance, but also in non-life in all segments but auto and home insurance. In home insurance, we are growing very nicely, actually, and also, in life insurance. But where we think that we could grow more is in all the other segments that are outside life and home insurance. And yes, we are working. We are working with Mapfre to see how we can give a greater push to this business. But we have no plans for the moment to make any changes in the JVs that we have. But as I mentioned, we are working with Mapfre to see how to improve this 7% growth rate. Jacobo Díaz: Ignacio, I'll answer your questions. Yes, I mean, at the end of the year, we reduced the deduction of intangibles just because all the IT assets that have been developed come into production in this fourth quarter. Therefore, we reduced the deduction as intangible, and then, we start the amortization of these IT assets. Laurie Shepard Goodroe: Our next question comes from Pablo de la Torre from RBC. Pablo de la Torre Cuevas: I had a first question on the potential uses of the excess capital that you're expected to generate going forward. So beyond organic growth in existing markets, how do you envision to use this excess capital? And I know Gloria has already commented on this last quarter, but you continue to be linked to a potential transaction in Ireland. What is kind of your latest thinking there? And given the outlook more generally for the bank, have you discussed plans to change the ordinary payout going forward? Then, it's more of a -- my second question is a follow-up on the corporate structure simplification point in consumer finance that you have already discussed. But I wanted to invite you to comment on the revenue opportunity from this change. Payments and collection services is already a large contributor to fee income for the bank, but it seems that the revenue growth there has been decelerating a little bit over recent years. And so can you just please provide a bit more color on how this change can -- how the change you have announced can contribute to revenue growth going forward? Gloria Portero: Thank you, Pablo. With respect to Bankinter consumer finance, and you are talking more about the payments, the new payments area, I suppose, that we announced at the end of the year. We have done this -- well, first, payment income is not growing so strong because the regulation with regard to payments for instant payments, well, is such that has an activity that was fee-generating, what has become an activity where you charge no fees at all. So that has had an impact this year. It won't have an impact next year because, obviously, we are already comparing equal things. But with respect to payments, we have started a strategic thinking about this because this is an area that is really being transformed by technology with everything that has to do with stablecoins, digital euro with request to pay in the transactions between businesses. And we need to have a strategy and a value proposition. We need to understand what will be value-creating in the future, what is just a bluff, as we say, because there is a lot of noise, and we have to take the noise out of the room. I think payments can be -- there is a side of this strategy that is going to be protecting our business and the other one is going to be how can I make my business grow more. For the moment, I cannot tell you anything because we are working on the strategy, as I mentioned, but I'm sure that we will have some news in the next quarter or maybe in June. With respect to capital, well, we are not changing. We are not going to change our dividend policy just because we have 30 basis points more capital than our objective level. And we are not building up capital for any purchase in Ireland. I mean, I've mentioned already we have -- our strategy there is organic growth. We are building a bank from scratch, and that is what we are going to do. We are not looking at PTSB. And -- I don't know, I cannot be any clearer here. So I think I've answered Pablo. Laurie Shepard Goodroe: Our next question comes from Borja Ramirez from Citi. Borja Ramirez Segura: I have 2 questions. Firstly is on Ireland. I would like to ask if -- given the ongoing sale of PTSB, if this is an opportunity for you to gain market share organically in the country? And then my second question would be if you could kindly provide the average cost of your digital accounts, which I think was 1.6% in Q3 and also the average duration of this, please? Gloria Portero: Okay, Borja. I will answer you with regard to Ireland. Well, as I've mentioned, we are not interested in acquiring any operations in Ireland. But obviously, as I have always said, when there is a corporate transaction, there is noise, and this is always an opportunity for the other established banks in the country. We have seen that in the past in Spain. And I'm sure that, that will be the same in Ireland. So yes, this could be obviously an opportunity to acquire clients there. And I pass the second question to Jacobo. Jacobo Díaz: Borja, yes, there is -- the current price is -- the current average cost is 20 bps lower then I think you mentioned the 1.6%. So now we are at 1.4% more or less. Laurie Shepard Goodroe: Our next question comes from Carlos from Caixa, BPI. Carlos Peixoto: So the first one was actually -- first one would actually be on fees. You have -- in this quarter, in the other fees caption, you have a substantial increase quarter-on-quarter and year-on-year. I'm guessing that this relates to the roughly EUR 10 million success fee on a transaction that you had mentioned in the previous quarter. Just wondering whether you see scope for similar fees of this nature in 2026 and whether the high single-digit guidance that you conveyed is with -- on the reported fee income or adjusted for that specific item. Then on -- well, you mentioned you expect ROTE to be above 20%. What type of net profit income growth are you expecting for 2026? Should we think about double digit or below that? Gloria Portero: Carlos, regarding the guidance on fees that we mentioned, it includes -- I mean, we are not -- we are considering the total fees of 2025, and then, we are -- our guidance is on the top of it. So we are not excluding these one-off fees because the volume is not huge, it's not relevant for the entire year. So we are not considering -- I mean, it's like it was usual BAU. And regarding the net income, I think we've provided enough guidance to provide you an idea of this increase. I mean, the level of efficiency is going to improve. Cost of risk is going to stay or even can perform a little bit even better. So yes, as you can imagine, the net income is going to grow. And again, it's going to be a new record year. Laurie Shepard Goodroe: Our following question comes from Ignacio Cerezo from UBS. Ignacio Cerezo Olmos: One is a follow-up from Marta's question on the digital account growth. So how much of your mid-single-digit deposit growth is explained this year by digital accounts? And the second one, I think, Jacobo, you mentioned that you're not expecting any impact from the banking tax in '26 and '27. So is that comment constraint to those 2 years? And that means that '28 onwards, you're going to start booking the levy actually in the P&L or you just wanted to constrain the comments actually to the next 2 years? Gloria Portero: Ignacio, I will answer you the second one. Actually, the banking tax is a temporary tax. So it is not expected to go beyond '28. Obviously, that is what I can say today. I don't know if they will again extend this stack. So it is not -- it is temporary. And with the figures we have in hand, we think that it will be 0 or absolutely immaterial because we have a cash tax rate that is very high and that absorbs very comfortably the figure that comes out from the theoretical banking tax. And I'll pass back to Jacobo for the first question. Jacobo Díaz: Yes. Ignacio, I think the digital accounts have played a relevant role in 2025. But again, it's a combination of many things because the level of term deposit has gone down, which is very important. Treasury accounts has also had a very good behavior because our business or the growth in our corporate banking business has also been very, very positive. And of course, digital accounts had a quite relevance, but it's not the only catalyst of the growth of deposits during 2025. We've been able to attract the deposits. Then afterwards, we've been able to convert into 2 assets under management that have brought a lot of fees. Digital accounts are very important in our commercial strategy. That's what can I tell you, but it's not the only thing that we have. We have salary accounts that also have a very good behavior. So it's important, but it's not the only driver of growth in our deposit base. Laurie Shepard Goodroe: Our next question comes from Sofie Peterzens from Goldman Sachs. Sofie Caroline Peterzens: Sofie from Goldman Sachs. So just going back to the digital accounts, we have seen almost a tenfold increase in digital accounts. Like could you give us the split of the digital client acquisition by country? So how much is coming from Spain, how much from Portugal and how much is coming from Ireland? And then my second question would be on the fee income side. When we look at the fee growth in Q4, which was very strong, we see a lot of the increase actually came from other fees, I believe around EUR 17 million quarter-on-quarter, which is almost a doubling quarter-on-quarter of this fee line. Could you just elaborate what that other fee income line includes? Gloria Portero: Sofie, I will answer the first one. Almost 100% of the client acquisition with digital accounts is Spanish. It comes from Spanish clients. We have actually acquired digitally in Spain around 130,000 new clients, and we have attracted around EUR 5 billion of new money from these clients. This has allowed us to do something, which is actually not be -- not have -- we have made -- changed these deposits with corporate deposits that were even more expensive. So actually, we prefer to pay an acquisition cost to acquire clients where we can cross-sell and make more money than to our corporate clients for the treasury excesses. We won the operative accounts from our corporate clients, which are much lower cost. But just to give you an idea, we have already cross-sell to these clients. It's very, very, very early to say, but we have already cross-sell payroll accounts. We have cross-sell lending, and we have cross-sell investment products. We are at around a 7% cross-sell. But another thing that I want to -- well, to say is that around 10% to 15% of these clients that we have acquired are in the maximum level of the digital account, which is EUR 100,000. And this means they are probably more in the affluent segment or the private banking segment, and we are going to concentrate on those clients where we see potential to develop them. Actually, we are doing some tests to see in which area of the bank, whether it is the branch network, whether it is the telephonic managers or whether it is digitally that we can actually develop these clients. And for the moment, we are having quite good results. I will pass you through to Jacobo to answer you the fee income question. Jacobo Díaz: Good morning, Sofie. Yes, I mean the fee -- we have recorded the EUR 10 million of success fee of alternative investment funds in that line. That's why you see in the other fees that amount. I must say that the alternative investment funds activity is performing very well. You've seen also that in the line of the equity method, we have recorded very good results. And I believe this is something that is going to be sustainable over time. We have 31 vehicles. We have a good average fees. We have quite strong expectations in the future. And as we mentioned during the call, we have brought to the bank around EUR 10 billion of net new money, and some of them flies to the alternative investment fund. So this is a business that is quite relevant for us. It's going to be another priority in coming years. And you should expect more fees to come from this business and more equity method income from this business in the future. Thank you, Sofie. Laurie Shepard Goodroe: Our last question comes from Britta Schmidt from Autonomous Research. Britta Schmidt: I have a question on the digital account. How should we think about the adjustment on the pricing of the stock and versus the flow? So maybe you can give us some sort of indication as to what basis point reduction in deposit cost you expect from this initiative? And on the acquisition cost of these customers, I think given that you just explained that these are mainly affluent, it's probably clear why the acquisition cost will be lower than for other channels, but maybe you can give us some sort of quantification of how much lower these acquisition costs are? Gloria Portero: Well, I will give you, for instance, the campaign where we acquired most was more successful this summer, summer in September, which was also after the acquisition of EVO. So it's really the digital organization. The acquisition cost was EUR 20 per client. So really, the acquisition cost is more the cost of the actual account. What we want to do is -- I mean, as you have seen, we have already reduced by 50 basis points every single account in the digital organization. And we will go on with this trying -- doing trials and reducing the cost. Obviously, the front -- so the front, the new production, the new acquisition, will have to be higher, and we will be always in the order of the reference, ECB reference rate or somewhere around there, obviously, depending on how the competition is behaving. And the second question... Laurie Shepard Goodroe: Thank you very much all for attending today. That has ended our Q&A. And on behalf of the entire Bankinter team, we definitely thank you for your interest and participation. As a reminder, the Investor Relations team will be available after the webcast to answer any questions that you may have. Thank you, and have a wonderful day and start to the new year. Jacobo Díaz: Thank you very much. Goodbye.

107天前Insight Analytics约5分钟阅读

EQT.ST 2025 Q4 财报电话会议

Olof Svensson: Good morning, everyone, and welcome to the presentation of EQT's full year results. We have a lot to cover today. Per will start off by reflecting on our strategic positioning and today's announcement that we're entering the fast-growing secondaries market by joining forces with Coller Capital. Teaming up with Coller strengthens our ability to serve clients globally and it unlock growth opportunities for both firms. The transaction is accretive to our fee-related earnings. It accelerates our growth outlook and it will further diversify our platform. Before handing over to Per to share more details, let me share a few highlights on 2025. First, it was our most active exit year ever with fund exits and realizations for co-investors of EUR 34 billion. We invested EUR 16 billion across our strategies globally while providing a co-invest ratio for our clients of close to 1:1. It was a pivotal year for EQT's expansion into evergreens and open-ended strategies across the globe with new product launches and accelerating inflows. We continued to deliver on our fundraising agenda, more than doubling gross inflows to EUR 26 billion. All our key funds continue to develop on or above plan, and our more recent vintages in particular performed strongly. EQT delivered total revenue growth of 16%, while keeping head count largely flat year-over-year. So with those remarks, let me hand over to Per to go through things in more detail. Next slide, please. Per Franzén: Thank you, Olof. Good morning, everyone, from Davos. We have very exciting news to share this morning, and we'll come back to Coller shortly. I'll start by saying a few words about the private markets industry and our strategic positioning. EQT remains well positioned to navigate a fast-changing world and to capture the growth opportunity ahead. There are a number of forces shaping our industry. The geopolitical backdrop remains volatile. We continue to see private market investors wanting to rebalance their portfolios as they are looking to achieve a better global diversification. At EQT, we are well positioned to navigate this environment and to help our clients achieve their strategic portfolio objectives. We want to be the most attractive global provider of international alpha. Through our global sector teams, we engage with our clients to align on their pipeline priorities. And with the help of our local teams in more than 25 countries, we can move quickly in times of market dislocation to unlock attractive thematic opportunities. The combination of our global sector teams with our strong local presence helps us deliver structural uncorrelated alpha as often the sources of alpha across those various countries and regions are uncorrelated. A good example of the investments that we've made into our global platform and how it's paying off is Japan. We built our local presence in Tokyo over many years. And in 2025, we were able to reap the benefits of those investments. In our private capital strategies, we created 2 attractive public to private opportunities, and we continue to have a very attractive pipeline in Japan going forward. The second force, AI that I'd like to touch upon, that will have an impact on most sectors and businesses that we invest into, including, of course, also our own industry and how we run our business at EQT. At EQT, we keep on investing in our AI capabilities. On the investment side, we continue to back AI-driven tailwinds in our early-stage strategies. We make investments into native AI companies. Harvey and Lovable are 2 good recent examples. In our infrastructure platform, we keep on investing into globally leading data center platforms. One of our companies, EdgeConnex is a good example of that, but also into fiber assets and into energy platforms. We're also driving AI adoption across our organization, deploying advanced solutions that enable better decision-making and help us realize synergies across our platform. Over time, we believe that this will help us run our business in a better way, but also in a more efficient way. Private wealth and insurance remain 2 attractive growth opportunities where we see new capital pools emerging. We're making the necessary investments to build our capabilities in those areas, and we expect to see significant capital inflows in this part of our business. Coller will be a catalyst for the insurance segment as we will get access to their capabilities within structured solutions. The rise of secondaries continues, and this part of the market will also going forward, outgrow the rest of the industry. There's a number of structural forces driving that growth. Private markets have grown in size and in relevance. And in some regards, they've become more complex, and we also see public and private markets converging. Clients want to be able to ride the winners, and they want to stay invested in compounding open-ended structures. On the other hand, there's also been a lack of distributions in our industry post pandemic, we saw a slowdown in dealmaking. And as a result, many firms are not able to raise new funds, and that has created more and more zombie funds in our industry. And all of this drives a need for clients to be able to restructure their private market portfolios and to find good liquidity solutions. And in this context, Coller will be an important enabler and really further strengthen our ability to be that strategic partner for our clients. Finally, we see the consolidation of the industry accelerating. Not everyone in the private markets will be able to navigate this environment. We'll be able to make the necessary investments to capture that growth opportunity ahead. So size and reach matter more than ever when it comes to creating real alpha and when it comes to serving clients in the best possible way. And our global platform, our size, being the largest private markets firm in the world outside of the U.S., will continue to be a true differentiator for us. Next slide, please. At EQT, we remain committed to our long-term strategic ambition to keep on building the most attractive scaled private markets firm, delivering industry-leading performance and solutions for clients. By continuing to be that client-centric firm focused on delivering attractive risk-adjusted returns for investors, real alpha, we will also be able to attract the best talent in our industry to our organization and to our portfolio companies. And really that way, creating that virtuous circle that will give us the license to keep on scaling our firm and as a result, over time, also delivering attractive sustainable value creation for shareholders. Next slide, please. In 2025, we made good progress on our strategic ambitions, and we executed well in a volatile environment. We took the opportunity to simplify our organization to ensure that we can remain that entrepreneurial, fast-paced, high-performing organization. We successfully completed a number of leadership transitions. We streamlined our organizational structures and reinforced our focus on accountability, performance and efficiency across the platform. We also integrated our client relations, capital raising and capital markets teams, creating one unified platform well set up to deliver a seamless experience for institutional clients and private wealth distribution partners. And all of this makes us also well prepared to add Coller now as a new business line to the EQT platform. In 2025, we stayed disciplined in our investment pacing, producing a record year for co-investments. We facilitated EUR 14 billion of co-investment opportunities for our clients. That is up from EUR 12 billion in 2024. And we want to -- this is an important tool for us to also going forward, create those deep strategic relationships with the institutional investors. And we want to -- we remain committed to continue to produce that most attractive co-invest to fund commitment ratio in our industry. We did a superb job really in driving realizations in a tricky exit environment. 2025 was actually our most active exit year ever with EUR 34 billion in total of realizations, and that includes EUR 14 billion of realizations out of co-investments that were done together with our clients. And that is just massive outperformance compared to the wider private markets industry in terms of those realizations. A good example is our equity strategy, which is our oldest strategy at EQT. In that part of our business, we sent back close to 30% of NAV, which is approximately 3x the industry average. And notably, we set a new record for distributions and capital gains from a single investment. So in Galderma, in 2025 alone, we realized more than EUR 9 billion of proceeds for fund investors and for our co-investors. And this actually excludes the stake sale that we have announced to L'Oreal that is yet to close. And this investment has generated more than $20 billion so far in capital gains for investors. As a result of that strong performance, we saw a good fundraising momentum. We more than doubled gross inflows to EUR 26 billion. Our evergreen offerings targeting the private wealth segment saw inflows of approximately EUR 2 billion. And we also introduced our first open-ended institutional product, which is exciting. This is the second generation of our active core infrastructure strategy. And the portfolio in Fund I is performing very nicely, and we really see a strong client interest for this fund. Next slide, please. As you've heard me say, I think, many times before, we have actively been looking to establish a presence in the secondaries market for some time now, actually. And this is one of the fastest-growing parts of our industry and building our capabilities in this area is really critical so that we can become an even more stronger and attractive strategic partner for our clients. And so today, I'm just very, very pleased to announce that we have reached an agreement to join forces with Coller Capital. This is really a highly strategic and complementary combination. By joining forces with Jeremy and his team, we want to build a market-leading secondaries platform together. We really have a very high bar for any M&A that we do at EQT and the fit must be just very, very strong. And in this case, from a strategic, performance, culture perspective, Coller checks all the boxes. The strategic fit between our 2 firms is simply excellent. It's highly complementary. And most importantly, the cultural fit, the values fit is very strong. Similar to EQT, Coller is a performance-driven and entrepreneurial organization focused on delivering consistent long-term solutions and returns for investors. And just like EQT, Coller also has that constant improvement mindset and that relentless drive to continue to drive innovation and stay ahead of the curve. At EQT, we like to say everything can always be improved everywhere at all times. Coller's version of this is better never stops. I'm very excited to welcome Jeremy and the entire Coller team to our firm. And I really look forward to working closely with Jeremy as part of the executive leadership team. And together, we will be just incredibly well placed to deliver the most attractive solutions and the most attractive performance for private market investors and to really fully capture that growth opportunity ahead that we see in secondaries. I'll now hand it over to Gustav, who will cover the highlights from our 2025 results together with Olof and Kim, and I believe starting with fundraising. So next slide, please. Gustav Segerberg: Thank you, Per, and good morning, everyone. In 2025, we executed strongly on fundraising across the platform and more than doubled inflows versus last year. Starting with the key funds. Fundraising for BPEA IX continued with strong momentum, having raised $14 billion as of today. We expect to close at the $14.5 billion hard cap in the first quarter. Fundraising for EQT XI continues to be off to a strong start, further helped by the strong exit pace during 2025. Note that in our reporting fee-paying AUM, it does not include EQT XI until activation. And later this year, we expect to launch fundraising for Infrastructure VII. So moving over to our other closed-ended strategies. We are advancing our Healthcare Growth and transition infrastructure fundraisings, having raised approximately EUR 3 billion combined, and we expect to conclude fundraising for Healthcare Growth momentarily. In the fourth quarter, we activated our latest European real estate logistics fund. The fund is expected to close in Q1, and our reporting fee-paying AUM includes almost EUR 3 billion of commitments versus the size of the last fund at EUR 2.1 billion. And then finally, on evergreens and open-ended institutional strategies. In 2025, EQT launched 3 new evergreens, Nexus Infrastructure and Nexus ELTIF Private Equity distributed in Europe and APAC, and a U.S. domiciled private equity vehicle. Hence, our evergreen offering consisted of 5 vehicles at the end of 2025, and we raised close to EUR 2 billion in 2025, while reaching an NAV of around EUR 3.5 billion by year-end. And just last week, we launched a U.S.-domiciled evergreen structure for infrastructure. During the year, we've also introduced our first open-ended structure for institutional clients, as Per mentioned, with our active core infrastructure strategy. This fund is yet to be activated and is not in our fee-generating AUM number as of year-end. However, we continue to be very excited about the prospects of scaling this strategy in the coming years. We've also decided to pursue our first continuation vehicle based on EdgeConneX. This will be an open-ended structure that will allow us to continuously support EdgeConneX's long-term growth opportunity. And with that, I will hand over to Olof to cover investments and realizations. Next slide, please. Olof Svensson: Great. Thank you, Gustav. So looking at the investment activity in 2025, I'd say it reflects our global sourcing machine and our thematic focus. 45% of the EUR 16 billion of fund investments were invested in Europe, about 1/3 in North America and the remaining 20-ish percent across APAC. We invested in a number of high-quality businesses throughout the year, be it the cloud-based software companies such as Fortnox or NEOGOV; industrial tech businesses like Fujitec in Japan or as Per mentioned, AI native investments such as Lovable and Harvey. In real estate, we continue to see attractive risk/reward dynamics. And in our flagship and transition strategy, we invested in areas such as energy, grids, AI infrastructure and transportation companies. And on that note, please do make sure to take the Arlanda Express when you next come and visit us in Stockholm. In total, we provided a further EUR 14 billion of co-invest for our clients, a co-invest ratio of close to 1:1. EQT X and Infrastructure VI are now about 60% to 65% invested, while BPEA IX is 5% to 10% invested. We expect to activate EQT XI around midyear 2026 and Infra VII around year-end. Next slide, please. Turning to exits. It was a breakthrough year in 2025 for exits. Volumes in the EQT funds amounted to more than EUR 19 billion or 70% higher than last year's volumes. Around 2/3 of the fund exits were from funds in carry mode. In addition, we realized EUR 14 billion for our co-investors. The strong activity means that we reached the ambition communicated at the start of the year to execute more than 30 exit events across our key funds. Key fund exits were made at an average gross MOIC of 2.6x above our target return levels. Roughly 40% of the fund exits were minority sales and secondary buyouts. Early in the year, we announced a minority sale in IFS at a gross MOIC of 7x. This is an example of how we actively work with portfolio construction, sending back EUR 3 billion to fund investors while continuing to own an asset that is expected to have an outsized impact on the fund returns for EQT IX. 1/3 of the exits were equity capital markets transactions. And as a result, EQT retained its position as the most active private markets firm across global equity capital markets for the second year in a row. Looking ahead, we believe that fund exits in 2025 is a relevant proxy for '26 if markets continue to be favorable. Our gross pipeline for 2026 is, in other words, similar to 2025 when we had gross realizations of close to EUR 20 billion. And with that, I'll hand over to Kim. Kim Henriksson: Thank you. Thank you, Olof, and good morning, everyone. All of our key funds continue to perform on or above plan. And during the year, key fund valuations increased by 8% on an FX-neutral basis, but let's look at performance by vintage. 4 out of 5 funds raised in 2019 or before are performing above plan, and most of these funds are in exit mode and already derisked. Funds raised 2020 to 2021, which are still in value creation mode, performed predominantly well with value creation of 10% plus on an FX-neutral basis. We did face some headwinds related to idiosyncratic events in a few individual portfolio companies. But with 350 portfolio companies globally, we will always have certain underperforming assets. Risk-taking is part of our model. As a reminder, historically, about 10% to 15% of our investments have returned less than 1x gross MOIC, while the total portfolios have still delivered on or above target returns. In 2025, we also realized some assets with subpar performance, enabling us to refocus on the part of the portfolio where we can create more value. Overall, underlying operational performance was solid across the portfolio and particularly so in our latest generation of key funds, which increased by 15%, excluding FX. 1/3 of our investments in these funds are already performing ahead of plan. Next slide, please. In 2025, carried interest and investment income increased to EUR 448 million on the back of the strong exit activity in funds in carry mode. Looking into 2026, we expect that carried interest will continue to be paced by the key funds already in carry mode. And please note that the figures on this page are based on a simplified and illustrative on-plan scenario. To date, the 4 funds in carry mode have recognized EUR 1.3 billion of carried interest and roughly EUR 600 million remains, and we continue to expect the remaining carry from these funds to be recognized over a multiyear period. The next 2 funds expected to enter carry mode, Infra IV and EQT IX are currently executing on their value creation and realization plans. And we do not expect these funds to enter carry mode in 2026, in line with our previous communication. The final bucket includes the most recent key fund vintages, which are still in value creation mode. In total, the remaining illustrative carry potential in the key funds activated as of today is approximately EUR 9 billion. This is a simplified round number based on a number of assumptions, which are outlined in the appendix. Next slide, please. Let's now look at the financials in a bit more detail. In 2025, we grew fee-related revenues by 9% and delivered a fee-related EBITDA margin of 52%, reflecting also the continued investments we make in our business, for example, the build-out of the evergreen offering. As you know, we initiated and completed a number of efficiency measures during the second half of 2025. And as a result, the number of FTEs was broadly flat year-over-year. We expect to see the full year cost effects of this in 2026 and therefore, expect mid-single-digit total OpEx growth this year. Run rate savings from the efficiencies will, to a degree, be reinvested to support future growth in our priority growth areas, including focused geographies such as Asia and the U.S., focus areas such as AI capabilities, private wealth and of course, the build-out of our new secondaries business. We're ramping up marketing and brand spend, which will remain at meaningfully higher levels going forward. We remain committed to reaching a 55% plus fee-related EBITDA margin at completion of the current fundraising cycle. And we're highly focused on efficiency, scaling and automating parts of our work, including through increased AI adoption. We will continue to keep you posted on this progress and how we see the OpEx outlook beyond 2026. Let me also come back later in the presentation on how the combination with Coller impacts our financials. The Board has proposed a dividend of SEK 5 per share for 2025, representing a growth rate of 16%. And during 2025, we distributed approximately EUR 460 million in dividends to shareholders. And in addition, we repurchased shares for around EUR 300 million. Let me also spend a brief moment on our new revenue disclosures. We have, in our income statement, introduced the concept of fee-related revenues, which consists of the underlying management fees, fee-related performance revenues and transaction, advisory and other fees. Fee-related performance revenues are revenues from our evergreen products that are measured and received on a recurring basis and do not require the realization of underlying assets to materialize. Transaction, advisory and other fees include fees from, for example, debt and equity underwriting and other capital markets activities. With that, I will hand over to Per to cover the Coller combination. Next 2 slides, please. Per Franzén: Thank you, Kim. As I mentioned earlier, secondaries and solutions is becoming an increasingly important part of the private markets ecosystem. GPs are looking for ways to hold on to their best assets for longer, driving the growth of continuation vehicles or GP-led secondaries and LPs are seeking strategic liquidity tools and the ability to actively rebalance their portfolios where LP-led secondaries are a key enabler. And secondaries have now become one of the fastest-growing parts of our industry, and that the market actually grew by more than 40% in 2025 and is expected to more than double from now until 2030. And continuation vehicles are today driving close to 20% of global exit volumes. Next slide, please. With Coller, we're really happy that we found the right partner to enter this segment at scale. Coller shares our values-driven culture, a strong performance mindset and that drive to constantly innovate for clients with an entrepreneurial approach. As a pure-play dedicated secondaries firm, Coller is 100% complementary and a perfect match for us. I'll now hand it over to Gustav to tell you more about Coller's track record, Coller's offering and its client base. Next slide, please. Gustav Segerberg: Thank you, Per. As a pioneer in secondaries, Coller has led many of the first in the industry, such as leading the first ever GP-led transaction almost 30 years ago and continuing to innovate across product categories and client channels. Coller has 35 years of proprietary data from more than 25,000 companies has incorporated AI-enabled underwriting into its investment process. This enables faster and more precise investment decisions, aligning very well with EQT's data-driven investment approach and leading AI capabilities. Their strong investment track record and ability to innovate has allowed them to expand from a single flagship fund in 2021 to today having a multiproduct and multichannel offering investing across both private equity and private credit secondaries. The private equity secondary strategy recently held a successful final close of Fund IX at USD 10.2 billion of fee-generating commitments, up more than 35% compared to the last generation. Since launching the private credit secondary strategy in 2021, Coller has already been able to raise 3 funds with a total of close to USD 5 billion in fee-generating commitments. Next slide, please. The team also shares our strategic commitment to the private wealth opportunity, and their journey closely resembles ours. They -- like us, they have a very deliberate and disciplined focused on product development to launch and ramp up products across asset classes and geographies. Since 2024, Coller has launched 4 evergreen products in total with the current combined NAV of more than USD 4 billion. And expansion continues to show great momentum and inflows are around USD 200 million per month. Coller also recently announced a strategic partnership with State Street along with State Street's investment in Coller. Their partnership gives a unique opportunity to go after the 401(k) market in the U.S. We look forward to exploring what we can do together to strengthen the global distribution of the combined evergreen platform. Next slide, please. Insurance is 1 of the most interesting capital pools in private markets. However, insurance companies operate in a highly regulated environment with strict requirements around capital charges, duration matching, liquidity, ratings and asset-liability management. To participate at scale credit exposure, secondaries and strong structure capabilities are required. This is an area where EQT on a stand-alone basis has been limited on a structural basis, and where Coller today is the clear market leader. Coller is the preferred partner to insurance clients with deep relationships and in-house structuring expertise. They have reached over USD 5 billion in structured products in the last 2 years, including the largest CFO backed by secondaries at USD 3.4 billion. This is a significant growth opportunity for the combined platform and where EQT's scale will be a key enabler. Next slide, please. We believe that this combination and more diversified secondaries platform by bringing together complementary strengths, we can accelerate innovation, deepen client relationships across both institutional and private wealth clients. Together, EQT and Coller are very well positioned to accelerate insurance-related product -- and to Per. Next 2 slides, please. Per Franzén: Thank you, Gustav. In 2025, we took the opportunity to simplify our organization and to clarify our governance to put us in the best possible position to be able to accelerate our strategic M&A agenda. So today, we are very well prepared to add Coller to EQT and to support Jeremy and the team to accelerate their growth independent investment committee. Next slide, please. The Coller team has demonstrated strong fundraising momentum, most recently with the successful close of Fund IX and has earned the strong client trust to expand into new strategies such as credit secondaries over recent years. Today, Coller has around 600 clients and more than half of those will represent new client relationships for EQT. At the same time, EQT brings a base of around 1,400 institutional clients, of which more than 900 clients are not currently invested with Coller, representing a significant opportunity to accelerate growth across the combined platform. The client bases are also complementary. EQT has a strong footprint with sovereign wealth funds, while Coller is more heavily weighted towards private wealth and insurance. So together, we will be able to offer clients a broader and more flexible range of solutions from primary investments to tailored liquidity solutions within one global platform with a real focus on generating alpha and performance. I'll now hand it over to Olof to comment on the transaction structure. Next slide, please. Olof Svensson: Thank you very much, Per. So let me talk about how we have structured this to ensure alignment of interest and this growth orientation. The transaction entails 100% of Coller and EQT will be entitled to 35% of carried interest in all the future funds in line with the EQT setup. We are also acquiring 10% of the carried interest in Private Equity Fund IX that Per just referred to. The deal construct includes a base consideration of $3.2 billion with a growth-oriented contingent consideration in 2029 of up to $500 million. The contingent consideration is structured to incentivize strong growth in the business with full consideration dependent on delivering high 20s, almost 30% fee-related revenue growth until 2029. The base consideration of $3.2 billion will be funded in newly issued EQT AB shares, creating a strong alignment to drive value. At closing, the shareholders of Coller will own approximately 6.5% of EQT, where Jeremy is the main shareholder of Coller's business today. Closing of the transaction is expected in the third quarter of '26. And with that, I'll hand over to Gustav to give us the combined fundraising outlook. Next slide, please. Gustav Segerberg: Thanks, Olof. I'll start on the evergreen side, where the joint offering will compromise more than 10 vehicles distributed across U.S., Europe and Asia. In terms of inflows, Coller increases the H2 2025 annual run rate to around EUR 4 billion. As only 7 out of the 10 plus evergreens where operational during that time frame, we hence expect 2026 to be significantly higher than the H2 2025 annual run rate. We believe that there are significant revenue synergies for the evergreens through the strengthened combined private wealth organization. By leveraging EQT's banking relationships to further accelerate Coller's distribution reach and by jointly tapping into EQT's brand and marketing capabilities. For reference 100% of Coller's evergreen inflows are incremental to fee-generating AUM. Next slide, please. So we are now a bit more than 1 year into our current of that EUR 100 billion based on the funds activated. 2026 is set up to be a very active fundraising year for EQT with 3 flagship funds, a number of other closed-ended strategies and of course EUR 25 billion to EUR 30 billion to the total amount effectively increasing it to roughly EUR 125 billion to EUR 130 billion. And with that, I will hand over to Kim. Next slide, please. Kim Henriksson: Thanks, Gustav. First, a few words on the latest flagship fund, the introduction of credit secondaries and the expansion into private wealth evergreens and structured products. Fee-related revenues were approximately $330 million, nearly all of which were management fees. This number includes catch-up fees as Fund IX was activated in July 2023 and closed on 31st of December 2025. However, it does not reflect the run rate management fees from evergreens due to fee holidays for some products in 2025. From 2026 onwards, all private wealth evergreens will be charging full fees. Across funds, the average fee rate is about 1% and in general, charged on committed capital. It's worth noting, though, that the private wealth evergreens in general charge somewhat higher fee rates with NAV as the fee base and that we see this channel growing faster than the closed-ended funds. Expect Coller to generate fee-related revenue of between $350 million to $375 million. Adjusting for catch-up fees, fee-related revenue is expected to grow in the range mentioned, the 2029 contingent consideration is based on growth in the high 20s. On costs, Coller has a similar profile to EQT, where the majority of operating expenses are salaries and other personnel-related costs. Then fee-related EBITDA margin at around 50%. Next slide, please. So what does the above then mean for the combined platform? We expect Coller to accelerate our fee-related revenue growth from day 1. In terms of carry, the acquisition will not impact our outlook for a number of years since the first fund where EQT has right to carry is a 2024 vintage. As I mentioned, today, Coller has a somewhat lower fee-related EBITDA margin than EQT. But in the near to midterm, however, we expect Coller to be in line with EQT's margin and to grow fee-related expenses. As a result, we maintain our ambition to reach a 55% fee-related EBITDA margin at completion of the current fundraising cycle. I'll now hand over to Per for some concluding remarks. Per Franzén: Adding Coller to EQT is a significant milestone in the development of our firm. Secondaries represents one of the fastest-growing parts of the private markets industry. We're confident that Coller is the best possible platform to build a market-leading secondaries franchise being a pioneer in the space with more than 3 decades of track record and experience. Next slide, please. The combination really means a step change for EQT in terms of scale, growth and revenue profile. Coller will add approximately EUR 28 billion of fee-paying assets under management and EUR 42 billion of total AUM. We will have a combined AUM of approximately EUR 312 billion. And to our business, we also significantly diversify our fee-related assets under management. Secondaries will represent about 15% initially of that fee-related fee-based assets under management, but it is expected to represent a significantly larger share over time. The acquisition will enhance our growth profile, and we aim to double Coller's fee-generating assets under management in less than 4 years. This means that 5 years from now, the mix of EQT's business will be much more well balanced across our business lines, private capital, infrastructure, real estate and secondaries. And we also see a very attractive opportunity to accelerate growth and scale of our real estate platform in the years ahead. Finally, we now manage strategies that, to some extent, are somewhat also countercyclical, if you will, creating an even more resilient and well-diversified revenue profile. As we look ahead with this transaction, we have created a platform that is even better positioned to attract and retain the best people in our industry and to continue to serve our clients, a more attractive, resilient and higher growing platform. With that, I open up for questions. Operator, please. Operator: [Operator Instructions] Olof Svensson: Operator, can I say a few words before we have the first question? Operator: Yes, please proceed. Olof Svensson: Thank you. So as you can imagine, Per is on a tight schedule in Davos today. So our suggestion is that we keep the Q&A open for about 45 minutes. And to make sure that everybody has time to ask questions, I would very humbly and politely suggest that you keep it to 2 questions each. And as always, we're, of course, available for any follow-ups after the call today. So let us aim for that and really looking forward to the Q&A session. Operator: And now we're going to take our first question, and it comes from the line of Oliver Carruthers from Goldman Sachs. Oliver Carruthers: Oliver Carruthers from Goldman Sachs. Two questions on Coller, please. So I guess you're acquiring a revenue fee stream in a growing asset class that's accretive to EQT, but you've also acquired this knowledge base in wealth. So can you talk to how you think this might help as you build out your existing wealth and evergreen business? And do you think this will accelerate the uptake of your existing Nexus products? So that's the first question. And the second question on this transaction. I may be wrong, but I don't think Coller has a dedicated infra secondary strategy. And so my guess would be that EQT is one of the largest global value-add infra managers, could add value here? And is this a kind of white space that you could go after? Because it feels like the use case for GP-led secondaries in infra could be even higher than it is in private equity over time because you have these platform build-outs like EdgeConneX that are very long-term assets that need capital and maybe don't fully belong in drawdown funds. So any thoughts there would be helpful as well. Per Franzén: Good questions, Oliver. I think the answer is that in both of those areas, on the private wealth side, evergreen side as well as on the infrastructure side, we see attractive growth opportunities ahead and are both good examples of why we're stronger together. But Gustav maybe you want to elaborate? Gustav Segerberg: Yes, happy to do that. And just echoing what you said, Per, so to speak. I think on the evergreen side, of course, this -- what this enables us, we get 2 strong evergreen organizations, both from a sales perspective, from a product development perspective, where we get to a completely different scale on a combined basis. So I think there's a lot of opportunity there, including joint products going forward in at least a midterm perspective. I think same on the infra side. This is, of course, one of the key areas where we see that there are complementary capabilities in terms of that Coller is very, very strong on the secondary side. We are very, very strong on the infra side and as well on the real estate side. So going forward, we see that this is, of course, a very interesting growth opportunity for us to attack on a joint basis and where we combined will have a very good right to win in that aspect. Operator: Now we're going to take our next question. And the question comes from the line of Arnaud Giblat from BNP Paribas. Arnaud Giblat: I've got 2 questions, one on Coller and one on your infra business. On Coller, could you -- when I step back and just look at who are the largest GP-led secondary fund, typically, there are quite a few, including Coller before the acquisition, being independent and not having a very large direct business. So I'm just wondering how you're thinking about that? Do you see a need to operate a bit at arm's length? How is that going to be pitched to investors? I'm just wondering if there's any risks around that and how you intend to put that to investors. My second question is -- thanks for the update on -- in terms of what you intend to do with EdgeConneX and wrapping that into a longer-term structure. I'm just wondering if you could give us a bit more detail in terms of the mechanics, how much of enterprise value would EdgeConneX come into this continuation or long-term fund? And how you're thinking about fundraising around that? Per Franzén: Good questions. I'll let Gustav talk about EdgeConneX and provide more details on that transaction. In terms of the combination with Coller. As I mentioned in my presentation, right, I mean, we've really organized ourselves in a way so that it's very easy to add on a platform such as Coller and also to have that platform continue to be run in a very independent way so that the Coller team can serve clients and its stakeholders in the right way and in the best possible way going forward. And that's the intention also with the combination. That's how we'll organize ourselves. As I said, Coller will have an independent investment committee going forward and will be a separate business segment of EQT, where we will, of course, collaborate as was mentioned earlier, is in the areas around branding, marketing, also on the client relations side, where we can leverage the strong combined sales force that we have, both on the institutional side and on the private wealth side, right? And that's also how previous transactions have been structured and done in this space in the past, and that's what we intend to do also here when it comes to the combination between EQT and Coller. And Gustav, why don't you address the question on EdgeConneX? Gustav Segerberg: Absolutely. So due to where we are in the process, I can't go into, let's say, details about the size or the terms at this point in time. So we'll come back to you on that at the right time. I think what we can say in general is, so to speak, that we're super excited about this opportunity because, of course, it allows us to really continue to support the company for the long term as there is a very, very significant growth opportunity here in the data center area, so to speak. And therefore, it was also important for us to create this into an open-ended structure. Operator: Now we're going to take our next question and it comes from the line of Hubert Lam from Bank of America. Hubert Lam: I've got 2 of them. Firstly, I just wanted to check your expectations for exits in 2026. I think you said you expect it to be similar to 2025. Just wondering why not better? And also, does this mean that we should expect a similar carried interest as in 2025? The second question is on Coller. Can you talk about the opportunity you see with State Street and the partnership there? And do you see this as a way to enter the U.S. target date funds and maybe the outlook for this partnership going forward? Per Franzén: Thank you for those questions. I'll start by addressing the first one, then I'll hand over to Kim to provide more details, and Gustav can talk about the partnership opportunity with State Street going forward. So when it comes to exit volumes, right, I mean, it's important to keep in mind that 2025 was a record year in the history of EQT for us, right? I mean we sent back EUR 34 billion of proceeds to clients, 3x industry average in our equity strategy. So the beauty, of course, the benefits of having a truly global diversified platform the way we have it at EQT is that in certain years, there will be higher amounts of distributions in relation to NAV in certain strategies. And then in other years, there will be a step-up in other parts of the business. And so that's what you should expect in 2026, right? In 2026, we do expect a pickup in distributions coming out of our infrastructure platform, for instance. And yes, I just wanted to provide a little bit of that background and color as to the outlook for 2026. And Kim, maybe you want to elaborate a little bit on the details and carried interest. Kim Henriksson: Yes. And what Per just said, how that sort of translates into carried interest really then goes into the framework I talked about earlier, where the carry will predominantly come from the funds that are in 2019 vintages or before. And you saw yourself that there's about EUR 600 million of carry left in those funds to be recognized, whereas the 2 flagship funds not -- next to come into carry mode are not expected to -- with the current exit plans it being carry mode still in 2026. So that's the guidance we can give you at this point in time. Gustav Segerberg: And maybe I'll touch upon the State Street partnership. I think, first of all, we're super excited about having State Street as a shareholder in EQT and the partnership that they already have in place with Coller. Of course, there is a lot happening in the private market side connected to private individuals and in the U.S., especially the target date funds and the 401(k) opportunity. We think that there is tremendous opportunities here, both in the form of over time broadening the partnership with State Street, and that's something that we look forward to having a positive dialogue with them around. But also when you think about how the target date funds operate and what's required to be able to win in that channel, it's very clear that secondaries is going to be a very attractive and key component of that solution, also given the need to trade on a daily basis which when you think about it from a primary versus secondary perspective, would just make it easier. So I think all in all, we're very excited about it. As we've talked about, we think that the 401(k) opportunity is very significant, but then it will also take time. And this, of course, is an important step for us in that journey to really create products that fit into that type of client base. Operator: Now we're going to take our next question. And it comes from the line of Ermin Keric from DNB Carnegie. Ermin Keric: Do you hear me now? Per Franzén: Yes, we can hear you. Ermin Keric: Maybe just you mentioned that you expect an increase in evergreen flows in 2026. Could you quantify that? And sorry, then the second question would be on branding. You're saying that you're increasing your spending on that. Could you give us any more kind of details on how much you expect to spend on branding and put it in context to what you spent before and also how the success of those efforts are measured? Per Franzén: Good questions. I'll leave both of them to Gustav and Kim. Gustav Segerberg: Yes. Maybe I'll start with the first one. I'm not going to quantify it into a number. I think that if you think about -- if I were you, I would think about it in 2 aspects. First of all, as I talked about, during that time frame, 7 out of the 10 or 10-plus were operational. So that kind of gives you, I think, a first piece of the puzzle of seeing how that could then be in the 2026 flow. I think the second piece of it is -- it's really that out of the 7 and of course, the remaining 3, 4 products, we still see an acceleration of the flows as we're ramping it up, so to speak. So I think what we're saying is that we expect that number to be significantly above the EUR 4 billion in 2026. Kim Henriksson: On the brand and marketing topic, in order to have a successful spend of brand and marketing, you first need to build a sort of organization and have the processes, et cetera, in place. And that is what we have been doing over the last few years, and we now have that foundation, which allows us to spend money efficiently externally on marketing campaigns and on brand events and branding more generally. The -- we're not going to go into the specific numbers here on a line-by-line basis, but it's -- the amount we will spend is a multiple of what we have done historically, but from a fairly low base to start with, I would say. Then it is a science of its own in terms of how this money will be measured, and it's quite different from a directed marketing campaign where you can sort of measure the exact clicks, et cetera, where from a more branding campaign where it's more about brand awareness, et cetera, in the market. But we have a great team focused on that with very specific sort of follow-up processes that are going to be in place. Operator: And the question comes from the line of Isobel Hettrick from Autonomous Research. Isobel Hettrick: Isobel Hettrick from Autonomous Research. So in your presentation, you touched on the significant number of new LP relationships the transaction opens up for both you and Coller. Can you provide some color on how you're thinking about the cross-selling opportunity from both ways, so existing EQT clients investing in new secondary funds and vice versa over time. So perhaps with reference to BPEA, how have you seen cross-selling develop since you acquired that manager? And what can we read across to Coller? Per Franzén: Good question. I'd say it's not only that we have a track record in terms of achieving cross-selling synergies on the institutional side from the merger with Barings. And we, of course, also acquired Exeter before making the Baring's transaction. And I think we have good data points and evidence from both of those transactions in terms of the synergies that we can generate. Gustav can provide more details. And then, of course, what's different also this time around is that the private wealth opportunity has developed further. And here, we really see an opportunity for us to leverage all of the investments that we've been making into our capabilities, into our brand, into our marketing in those areas, right? So -- but Gustav, why don't you elaborate? Gustav Segerberg: Yes. No. But I think as you say, Per, there, we have experienced from it both from Exeter and BPEA. Of course, BPEA is not fully closed yet, but what you will see in the appendix is that around 25% of the capital in BPEA IX is from, let's say, original EQT clients. I think the equivalent number for Exeter on the latest U.S. fundraise there is about 15%. So we -- I think we have good track record of showing that there is significant cross-selling opportunities in these transactions, of course, going both ways in it. And in this specific transaction, as Per points out, the private wealth opportunity, there is significant cross-selling opportunities there. And then, of course, we also have the insurance side where over time, there can also be, let's say, some joint opportunities going forward. Operator: Now we're going to take our next question, and the question comes from the line of Magnus Andersson from ABG Sundal Collier. Magnus Andersson: Just first of all, on the transaction, if you could, in any way, quantify potential income and cost synergies and any potential structural charges related to this transaction in 2026? And secondly, just on your fundraising, there seems to be very strong demand for infrastructure according to market data. So I was just wondering whether we eventually should expect your flagship infra funds to become larger than your traditional key funds and if we could see that already in the generations that will be on the fundraising in 2026? Per Franzén: Yes. Good questions. I think we're incredibly -- I think as we've mentioned in the past, we're incredibly excited and optimistic about the growth potential across our infrastructure strategies, and we see very good momentum here in the ongoing fundraises that we have. I'm not sure we're going to comment on or give guidance in terms of the sizes for the next generation of these funds. But I leave that to Gustav to comment on further. And then on Coller and the income and cost synergies in '26, maybe, Kim, you want to take that question? Kim Henriksson: Yes. Well, first of all, on Coller, as you heard, we gave the guidance that we intend to more than double the business in the next 4 years. That's really the income guidance we can give you. And that is based on all of the strengths that we just talked about of the combined business. And this is not a transaction that is done because of cost synergies. Having said that, as I mentioned, there's a number of, let's say, costs that are of a nature where you can spread them out over a larger base, and that will become more efficient. Then there are some areas of overlap on the back end that we will work together to solve in the most efficient ways, but that's not the reason for the transaction. There's likely to be some transaction costs associated with it, of course, but they are not in the big scheme of things of a magnitude that will move any needle. Gustav Segerberg: And then maybe on the infra side, I think we fully agree with you on the infra opportunity in general terms, so to speak. And that's also why we, in the last couple of years, have been very focused on broadening the infra offering which you've seen both with the Active Core, especially now going open-ended. You've seen it with Transition Infra. We talked today about the EdgeConneX opportunity on the [ CV ] side. So I think you should think about it that -- and I'm not going to comment specifically on Infra VII, so to speak. But we probably think that the large opportunity here is continuing to broaden the infra scope and scaling those things in a way that we can really be a market leader across from, let's say, more infra growth opportunities all the way to core plus. Operator: Now we're going to take our next question and the question comes from the line of Jacob Hesslevik from SEB. Jacob Hesslevik: So my first question is on the culture fit. When you acquired both BPEA and Exeter, you talked a fair bit about the strong culture and how EQT and the related partner would fit together. But you have said very limited today with the acquisition of Coller. So what are the key culture and operational integration priorities over the next 12 to 18 months? And how will you maintain both EQT and Coller's entrepreneurial culture while achieving the synergies? That's the first question. The second one is you highlighted a particularly strong pipeline for Japan for 2026. What makes Japan distinctive from other Asian markets in the upcoming year? And do you need to change your approach to capture the market potential? Per Franzén: Yes. I'll start with the second one. On Japan, the reason why we are particularly excited about the pipeline that we see in Japan right now is because of some of those corporate governance reforms that have been implemented in Japan and that just enable us to pursue opportunities where we can really unlock value creation opportunities. And it allows us to create sources of alpha that are uncorrelated to the type of value creation opportunities that we see elsewhere in Asia. So for instance, in India, there's a lot of tailwind from demographics, capital markets-related tailwinds, whereas in Japan, the alpha-generating opportunities really around unlocking that value creation opportunity, thanks to some of those corporate governance reforms. And of course, we are very well positioned to capture that. Why? Because we have a best-in-class value creation toolbox that we've developed over 30 years. We have best-in-class sector-based strategies and value creation playbooks that we can apply. And then, of course, in Japan, our brand resonates very well. We've been present in the country for 20 years, thanks to the Wallenberg connection. We were also seen as a very credible long-term player, which is particularly important in a market such as Japan. So for all of those reasons, we're very excited about the opportunity ahead in that country. When it comes to Coller and the cultural values fit, right, it is as strong as we have seen in previous combinations. We've spent -- Jeremy and I have spent a lot of time together to get to know each other. I'm sure we're going to have an excellent partnership. And we've also spent significant of time together at the next generation of the leadership team between Coller and EQT, exactly like we did it in the combination with Barings and also in the transaction with Exeter, right? So that's a good way to get to know each other, and that's why we can with confidence say that this fit from a values perspective, culture perspective, the entrepreneurial, the innovation drive, the performance drive, all of that is exactly similar as it is in EQT. And the way, of course, we maintain and retain that culture, that's how we run our business, right? And that's why it was so important that we took those steps in 2025 to simplify our organizational setup. What I spoke about in my presentation and what I've also talked about in previous instances. So today, we have organized ourselves around a number of highly accountable high-performing business lines. And then we have simplified our governance, our structure in a way so that we have one combined capital markets client relations team on the institutional side that will be very well positioned to serve all of these business lines going forward, including Coller EQT. And then finally, of course, we have a clear governance around how we run our backbone, our business on the operations side. And those would also then be areas where we can achieve synergies together, right? And so by having those highly accountable business lines, that's also how you can ensure that you retain that entrepreneurial performance-driven culture. Kim and Gustav, anything else you want to say on the synergies? Gustav Segerberg: No, I think maybe one more point, and that's we just had a partner meeting earlier this week where, of course, the real estate and the Asia team was there. And I think it's so clear to see how well those integrations have gone, how much they feel like part of EQT in a real way. There is only one company. And I think it also shows that the model works, and also that we're ready to do the next one. So I think from all of those perspectives, this timing is also a good one, I would say. Operator: And now we'll go and take our last question for today. And it comes from the line of Nicholas Herman from Citi. Nicholas Herman: Congrats on the deal. Two questions from me, please. One on accretion and synergies and one on cash. On the accretion and synergies, you referred to a doubling of fee-paying AUM in Coller over 4 years. Is that the time frame for the mid-single-digit FRE accretion? Or is the accretion time frame shorter? And related to that, what synergies are in that guidance? And how should we think about the sequencing of adjacencies and synergies. And then a quick one on cash. I guess given this transaction is almost entirely equity, should investors now have greater confidence that you will announce share buybacks over time? And I guess for avoidance of doubt, I'm assuming you have no ambition for further deals or especially larger deals for now at least? Per Franzén: Thank you. Olof and Kim, do you want to take those questions? Olof Svensson: Yes. Do you want to go ahead? So I mean, if you think about the accretion, we're buying, first of all, 100% management fees, right, over the next several years. And as we talked about before, the earn-out mechanics is based on a fee-related growth of close to 30% or high 20s, right? And to Kim's earlier comments on the margins, that means that you're going to have a very rapid top line growth, and that means that our margins are going to scale quite meaningfully over the next several years in this business. So if you think about this from a fee-related EBITDA multiple, it's based on the guidance that we gave, it's about 16 to 18x multiple that we're paying in '26, but that's not then capturing this significant ramp-up that you have in '27 and '28, right? So to your question, if you think about this transaction in, say, a couple of years' perspective, I'd argue it's high single-digit accretive to our earnings. And that means that this mid-single-digit guidance, that's an average over the next few years. Kim Henriksson: And in terms of cash and buybacks, yes, you're absolutely right. This is an all-share transaction and will, if anything, strengthen our balance sheet further over time. There's -- last year already, we did about EUR 300 million of share buybacks in 2025. So it's not that we haven't been doing share buybacks already. And what we have said in terms of guidance is that we will use share buybacks or extraordinary dividends for that matter as a tool if we, at any point, become overcapitalized, for example, if cash carry comes in at scale, but I can't give you any specifics around that in terms of timing or how that's going to look. But right now, we have a solid balance sheet, but we're not overcapitalized given the opportunities we have, both organic and inorganic going forward. Nicholas Herman: That's really helpful, guys. If I could quickly follow up on the synergies. Just what synergies, as you said, are in that guidance? And how should we think about the sequencing there from, I guess, from a -- presuming is it wealth first, then insurance then Asia, I mean how should we think about the way you're going to be tackling those -- the numerous opportunities there? Gustav Segerberg: Yes. And I think we're not going to go into specifics of it. Of course, as always in this, it's going to be evolving development in it. And there are a number of opportunities. But I think we also feel that we're very well equipped, both from a Coller perspective and from an EQT perspective in order to capture many of this. I think you should think about the guidance on, let's say, doubling the business on -- in less than 4 years that, that does not include a very significant new initiatives in that. It's, of course, a development of the business. It's continuing to scale of the PE and credit side. On the institutional side, it's maybe 1 or 2 new initiatives on the institutional side. And then, of course, it's a development of the evergreen as well as the insurance side. But it's a base case that we feel and the Coller team feels comfortable, which I think is good. Operator: Dear speakers, there are no further questions for today. I would now like to hand the conference over to management for any closing remarks. Olof Svensson: Okay. Well, everybody, thank you very much for great questions and for the discussion. As you can hear, we're extremely excited about this combination with Coller, and we are very pleased with the results that we delivered for 2025. As always, you know where to find us, we're available for any follow-up questions. So thank you very much. Kim Henriksson: Thank you all. Gustav Segerberg: Thank you. Olof Svensson: Thank you.

107天前Insight Analytics约5分钟阅读

CVBF 2025 Q4 财报电话会议

Operator: Good morning, ladies and gentlemen, and welcome to the Fourth Quarter of 2025 CVB Financial Corporation and its subsidiary, Citizens Business Bank Earnings Conference Call. My name is Sherry, and I'm your operator for today. [Operator Instructions] Please note, this call is being recorded. I would now like to turn the presentation over to your host for today's call, Allen Nicholson, Executive Vice President and Chief Financial Officer. You may proceed. E. Nicholson: Thank you, Sherry, and good morning, everyone. Thank you for joining us today to review our financial results for the fourth quarter of 2025. Joining me this morning is Dave Brager, President and Chief Executive Officer. Our comments today will refer to the financial information that was included in the earnings announcement released yesterday. To obtain a copy, please visit our website at www.cbbank.com and click on the Investors tab. The speakers on this call claim the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. For a more complete discussion of the risks and uncertainties that may cause actual results to differ materially from our forward-looking statements, please see the company's annual report on Form 10-K for the year ended December 31, 2024, and in particular, the information set forth in Item 1A, Risk Factors therein. For a more complete version of the company's safe harbor disclosure, please see the company's earnings release issued in connection with this call. I'll now turn the call over to Dave Brager. Dave? David Brager: Thank you, Allen. Good morning, everyone. For the fourth quarter of 2025, we reported net earnings of $55 million or $0.40 per share, representing our 195th consecutive quarter of profitability, which equates to more than 48 years. We previously declared a $0.20 per share dividend for the fourth quarter of 2025, representing our 145th consecutive quarter of paying a cash dividend to our shareholders. We produced a return on average tangible common equity of 14.4% and a return on average assets of 1.40% for the fourth quarter of 2025. Our net earnings of $55 million or $0.40 per share compares with $52.6 million for the third quarter of 2025 or $0.38 per share and $50.9 million or $0.36 per share for the prior year quarter. Pretax income grew by $5.4 million quarter-over-quarter and $6.3 million over the prior year quarter. Both the quarter-over-quarter increase in pretax income as well as the increase from the fourth quarter of 2024 were primarily the result of growth in net interest income. Net interest income grew by $7 million or 6% over the third quarter of 2025 and by $12.2 million or 11% over the fourth quarter of 2024. During the fourth quarter, we collected $3.2 million of interest on a nonperforming loan that was paid off during the quarter and incurred a $2.8 million loss on sale of investment securities. We also incurred $1.6 million of acquisition expense related to the pending merger with Heritage Bank of Commerce. Changes during the first quarter to our allowance for credit losses and reserve for unfunded loan commitments had the net impact of increasing pretax income by $3 million compared to the prior quarter and pretax income decreasing by $1.5 million compared to the fourth quarter of 2024. Noninterest income was $11.2 million in the fourth quarter, which was $1.8 million lower than the third quarter and $1.9 million lower than the fourth quarter of 2024. Trust and investment services income grew by $156,000 or 4% from the third quarter of 2025 and grew by $519,000 or 15% over the fourth quarter of 2024. Bank-owned life insurance income decreased by $1.1 million from the third to fourth quarters due to the annual amortization of revenue enhancements. In addition, other income declined by $800,000 from the prior quarter. This decrease in other income was the result of a smaller loss on sale of investments during the fourth quarter as we incurred a $2.8 million loss during the fourth quarter compared to the $8 million loss on sale incurred in the third quarter and the $6 million of income earned in the third quarter from a legal settlement. Now let's discuss loans. Total loans at December 31, 2025, were $8.7 billion, a $228 million or 2.7% increase from the end of the third quarter of 2025 and a $163 million or 2% increase from the end of 2024. The quarter-over-quarter increase in total loans was due to growth in nearly all loan categories. As typically happens at year-end, we experienced seasonal increases in dairy and livestock borrowings. Dairy and livestock loans grew by $139 million compared to the end of the third quarter, driven by higher line utilization. from 64% at the end of the third quarter to 78% at the end of the fourth quarter. Loan growth was also positively impacted by increases in line utilization for C&I lines of credit, increasing from 28% at the end of the third quarter to 32% at the end of the year. Compared to the end of the third quarter, C&I loans grew by $34 million, CRE loans grew by more than $39 million and SBA 504 loans grew by $17 million. The $163 million year-over-year increase in loans includes growth of CRE loans of $67 million, $49 million of growth in C&I loans, $25 million of growth in SBA 504 loans and $22 million of growth in construction loans. Loan originations were approximately 70% higher in 2025 than 2024, and the fourth quarter production was approximately 15% higher than the third quarter of 2025. Our loan pipelines remain strong going into 2026, although rate competition for the quality of loans we compete for continues to be intense. Loan originations in the fourth quarter had average yields of approximately 6.25%, which was consistent with the prior quarter. We experienced $325,000 of net recoveries during the fourth quarter compared to $333,000 of net recoveries for the third quarter of 2025. Net recoveries for the full year of 2025 were $539,000. Total nonperforming and delinquent loans decreased by $20 million to $8 million at December 31, 2025. A $20 million nonperforming loan was paid in full at the beginning of the fourth quarter. The sale of the building collateralizing this loan resulted in the bank receiving all principal and $3.2 million of interest income. Classified loans were $52.7 million at December 31, 2025, compared to $78.2 million at September 30, 2025, and $89.5 million at December 31, 2024. Classified loans as a percentage of total loans were 0.6% at December 31, 2025. Now on to deposits. Our average total deposits and customer repurchase agreements were $12.6 billion during the fourth quarter, which compares to $12.5 billion for the third quarter. Our noninterest-bearing deposits declined on average by $122 million compared to the third quarter of 2025, while interest-bearing nonmaturity deposits and customer repos grew by $234 million. On average, noninterest-bearing deposits were 58% of total deposits for the fourth quarter of 2025 compared to 59% for both the third quarter of 2025 and the fourth quarter of 2024. At December 31, 2025, our total deposits and customer repurchase agreements totaled $12.6 billion. Noninterest-bearing deposits declined from the end of the third quarter to the end of the year by approximately $440 million as we typically experience seasonal deposit declines at year-end. However, interest-bearing deposits and customer repurchase agreements increased by $430 million between the third and fourth quarter. Our cost of deposits and repos was 86 basis points for the fourth quarter compared to 90 basis points in the third quarter of 2025 and 97 basis points for the year ago quarter. I will now turn the call over to Allen to further discuss additional aspects of our balance sheet and our net interest income. Allen? E. Nicholson: Thanks, Dave. Net interest income was $122.7 million in the fourth quarter of 2025. This compares to $115.6 million in the third quarter of 2025 and $110.4 million in the fourth quarter of 2024. Interest income was $156 million in the fourth quarter of 2025 compared to $150.1 million in the third quarter and $147.6 million in the fourth quarter of last year. Average earning assets increased by $153 million in the fourth quarter when compared to the third quarter, and the earning asset yield increased by 11 basis points from 4.32% to 4.43%. The fourth quarter loan yield was 5.47% compared to 5.25% in the prior quarter. Excluding the $3.2 million of interest income on the nonperforming loan we previously discussed, the yield on loans would have increased quarter-over-quarter by 7 basis points. Interest expense was $33.3 million in the fourth quarter and $34.5 million in the third quarter of 2025. Our cost of funds decreased from 1.05% for the third quarter of 2025 to 1.01% in the fourth quarter of 2025. The average balances of interest-bearing deposits and repos increased by $232 million over the prior quarter. However, interest expense decreased as interest-bearing deposit costs declined by 17 basis points and the cost of customer repurchase agreements decreased by 24 basis points. Our allowance for credit loss was $77 million at December 31, 2025, or 0.89% of gross loans. In comparison, our allowance for credit losses as of September 30, 2025, was $79 million or 0.94% of gross loans. The decrease in the ACL resulted from a $2.5 million recapture of credit loss and net recoveries of $325,000. Our $77 million ACL is 133% of our combined nonperforming assets and classified loans. Our economic forecast continues to be a blend of multiple forecasts produced by Moody's. We continue to have the largest individual scenario weighting on Moody's baseline forecast with both upside and downside risks weighted among multiple forecasts. The resulting economic forecast at December 31, 2025, was modestly different from our forecast at the end of the third quarter, with loss rate assumptions for C&I loans experiencing a negative impact from the economic forecast. Real GDP is forecasted to stay below 1.5% through 2027 and not reach 2% until 2029. The unemployment rate is forecasted to reach 5% by the beginning of 2026 and remain above 5% through 2028. Commercial real estate prices are forecasted to continue their decline through the third quarter of 2026 before experiencing growth through 2029. So now switching to our investment portfolio. Available for sale or AFS investment securities were $2.68 billion at December 31, 2025. During the fourth quarter, we sold $30 million of securities with an average book yield of 1.5%, realizing a $2.8 million loss and then purchased $239 million of new securities at an average book value yield of approximately 4.75%. The unrealized loss on AFS securities decreased by $26 million from $334 million at September 30, 2025, to $308 million on December 31, 2025. The net after-tax impact of changes in both the fair value of our AFS securities and our derivatives resulted in a $20 million increase in other comprehensive income for the fourth quarter. Our held-to-maturity investments totaled $2.27 billion at December 31, 2025, which is $109 million lower than the balance at December 31, 2024. Now turning to the capital position. At December 31, 2025, our shareholders' equity was $2.3 billion, a $109 million increase from the end of 2024, including the $84 million increase in other comprehensive income. There were 1.96 million shares of common stock repurchased during the fourth quarter of 2025 at an average purchase price of $18.80. For all of 2025, we repurchased 4.3 million shares at an average share price of $18.60. The company's tangible common equity ratio was 10.3% at December 31, 2025, while our common equity Tier 1 capital ratio was 15.9%, and our total risk-based capital ratio was 16.7%. I'll now turn the call back to Dave for further discussion of our expenses. David Brager: Thank you, Allen. Noninterest expense for the fourth quarter of 2025 was $62 million compared to $58.6 million in the third quarter of 2025 and $58.5 million in the fourth quarter of 2024. During the fourth quarter, we incurred $1.6 million of onetime merger-related expenses associated with the pending merger with Heritage Bank of Commerce. The fourth quarter of 2025 also included a $1 million provision for off-balance sheet reserves compared to a $500,000 provision in the third quarter. Excluding acquisition expense and the provision for off-balance sheet reserves, operating expenses grew by 2.3% or $1.4 million over the third quarter of 2025 and by 1.6% or $1 million over the fourth quarter of 2024. Excluding the impact of acquisition expense and the provision for off-balance sheet reserves, we achieved positive operating leverage from both the prior quarter and the year ago quarter of 2% and 6%, respectively. Noninterest expense, excluding acquisition expense, totaled 1.53% as a percentage of average assets in the fourth quarter of 2025 compared to 1.50% for the third quarter of 2025 and 1.49% for the fourth quarter of 2024. This concludes today's presentation. Now Allen and I will be happy to take any questions that you may have. Operator: [Operator Instructions] And our first question will come from the line of Matthew Clark with Piper Sandler. Matthew Clark: Good morning, Matthew. I just want to start on the interest-bearing deposits. You mentioned some seasonality. It looked also like some mix change towards savings money market. Can you just speak to what you saw there and maybe whether or not there was some behavioral change among customers seeking rate. David Brager: Yes. No, I don't think there was any behavioral change. It's pretty standard for us. People pay bonuses, accrue for taxes, do different things. So I don't really think there was any major change. There wasn't any movement of any large relationships or deposits from noninterest-bearing to interest bearing. I think for the most part, it just was normal seasonality. The part that was different was that we actually grew the noninterest-bearing deposits, and that is something that is a little different, but it wasn't necessarily coming from the noninterest-bearing and moving to the interest-bearing . E. Nicholson: I mean, Matthew, I would just consistently say look at quarterly averages. Our deposit customers move fairly large amounts of money at any point in time. So point in time balances don't necessarily reflect exactly what's going on. So average balances, I think, are just more important. Matthew Clark: Yes. Yes. Okay. And then just on the nondairy and livestock loan growth. If you exclude it, it's up over 4% annualized this quarter. I know some of it was higher line utilization. But maybe speak to the higher line utilization, whether or not you think that might be more sustainable? And your thoughts overall on kind of nondairy and livestock loan growth this year. David Brager: Yes. It's kind of interesting. I think we ended the year year-over-year up about 2% in total loans. And it's kind of in line with what I thought at the beginning of the year. It just took us a little while to get their point-to-point. But loan pipelines remain strong. I think the utilization is normalizing I think people are a little more positive, I mean, as evidenced by just some of the GDP growth that we're seeing. So I think that that's probably going to remain a little more stable than it has been over the last 1.5 years or so. And candidly, that's anecdotal, but everybody we talk to is basically saying that they're ready to go and they think things are going to be okay. So that's a good sign. That's also evidenced, obviously, by the classified loans and the nonperforming loans that we reported at the end of the quarter. So I think all in all, the pipelines are strong. at least for the foreseeable future. And I believe that we'll be able to do more with our existing customers, and we're still attracting some pretty good relationships going forward. So all in all, I'm cautiously optimistic, maybe even positive and optimistic about 2026 so far. Matthew Clark: Great. And then last one for me. Just on the Heritage deal. Any update on how it's progressing? David Brager: Yes. So everything is going well. We've toured their offices and their headquarters, almost all of their offices. We are in -- we're getting ready from an application perspective and the proxy perspective. But everything is going according to plan right now. We still anticipate second quarter close and a second quarter systems conversion. And I think that's where we are. Obviously, there's still game to be played there, but everything is looking good so far. Operator: One moment for our next question, and that will come from the line of David Feaster with Raymond James. David Feaster: I wanted to circle back to the core deposit side. Obviously, we talked about the seasonal dynamics within NIB. But Wanted to get your thoughts on the competitive landscape for deposits from your standpoint. Where are you winning deposit business? And your thoughts on the -- obviously, you saw good interest-bearing deposit growth. And then just your thoughts on the ability to push through the Fed cuts and expectations for betas near term. David Brager: SPYes. So I think just from your first part of your question, I think the type of clients that we go after generally is an operating company. And so the majority of the new deposit relationships that we're bringing to the bank are 75% plus noninterest bearing. If you look back over the last 10 years of the bank, we always seem to have this sort of dip. And as Allen said, on any one given day, that money can move out and move back and there's a number of things that happen. And that's why I think the average number is better as well. But we are winning relationships. As you know, we are not a bank that goes out and offers the highest rate on our deposit accounts. And we're not really trying to attract that type of customer. So I think for the most part, it's pretty standard on the type of relationship. As far as the Fed rates are concerned, we basically -- during the last cut, we basically lowered everything by 25% that was earning over 1%. And so we're trying to capture as much of that as possible. I think the combination of -- on the interest-bearing deposit side with be trying to offset to the extent we can on the asset side of those rate cuts. I mean I think it was a good sign for us that our asset -- our loan yield still went up despite a Fed rate cut. And we added a slide in our investor deck in the appendix that really gives a very good overview of sort of the repricing reset time frames both on the truly variable stuff as well as the fixed rate stuff that's maturing or resetting over the next -- I think it's we go all the way up to 10 years and over. It's a very small number in that category. But there's a lot more granularity there than we had in the previous deck as well. But on the deposit side, David, it's pretty much the same type of thing. And -- and I think from a competition standpoint, we are seeing more competition utilizing earnings credit and that ability to pay. I mean we just had a relationship that came to us and said, that there was a bank, and I won't mention the name, but there was a bank that was offering them a 3% guaranteed ETR rate for 5 years with paying their accounting system, which is $120,000 a year as part of that 5-year deal. I don't know the outcome of that 1 yet, but we -- that's not something we would do. So -- that's what I'm seeing out there. And I don't know if that's just for the other banks to drive their noninterest-bearing or just deposits in general. But there is loan growth. So there's going to be funding pressure. So I think that's something that we need to stay on top of. But for the most part, it's pretty much status quo and business as usual for us. David Feaster: Okay. That's helpful. And to that point on the growth side, I was hoping you could touch on the competitive landscape state there. It sounds like you're seeing primarily just on the pricing side. But wanted to see if you're getting any more aggressiveness from competitors on the underwriting side? And then just -- how do you think about payoffs and paydowns. Obviously, there's pretty significant back book repricing in your story. But I'm just curious, with competition and potential Fed cuts still on the horizon. How do you think about payoffs and paydowns next year? Is that something that you would expect could be headwind? David Brager: Yes. Well, it's always a little bit of a headwind. The payoff and prepayment penalty activity in the fourth quarter was lower than the third quarter. But it's always something we have to deal with, and we anticipate that happening when we model and forecast internally, we look at those numbers and just sort of from a historical perspective. The one thing to your comment about the back book repricing -- the one thing that is becoming or not in a major way, but is an issue is that when there is a reset, we still have prepayment penalties in our loan. But when there is a reset there are people that are getting quotes theoretically from competitors that are lower than ours. I don't always see the actual quotes. So I always question whether that's true or not. But they're theoretically getting quotes from competitors out there saying they'll do the loan that lower rate than what our repricing rate would be or reset rate would be. And so we have a little protection with the prepayment penalty. But on the maturing book, we don't have any protection there. So we have to be a little more aggressive I was candidly very happy that our fourth quarter average yield was 6.25% because I would say some of the stuff we're doing now is closer to the 6% range just to be competitive on that. And look, treasuries are going up, at least in the last week or so, they're going up pretty good. So hopefully, people will remain disciplined. But it's really more pricing than credit. We're not we're not going to do something that we wouldn't do from a credit underwriting perspective, but we especially to protect relationships, we'll be a little more aggressive on the pricing aspect of it. David Feaster: Are you seeing more... E. Nicholson: We're seeing more short-term loans as well. So people are doing 5, 3-year instead of going out 7 or 10 years. So I think that's also part of the yield we're seeing. David Feaster: Okay. Have you started to see... David Brager: I'm sorry, David, I was just going to add one thing, and that's a very good point that Allen brought up. I don't know that, that's a good bet. Like trying to keep things 2 or 3 years. We'll see -- but if you just look at forward rates are especially on the longer end, could be higher just based on a lot of different factors. David Feaster: Yes. And so it doesn't sound like other than the duration that you've really seen much pressure on the underwriting structures or standards. . David Brager: No, not really. I mean, we wouldn't really consider it anyway. So it might not come all the way up to me... Operator: And that will come from the line of Andrew Terrell with Stephens. Andrew Terrell: If I could just start maybe asking on expenses, I think, post the adjustments you guys call out, it's around $59 million or so. But compensation up this quarter. Was any of that incentive accrual adjustments kind of at year-end? And then maybe just looking for a little bit of help around thoughts on organic expense growth into 2026 or kind of run rate expectations you guys have? E. Nicholson: Yes, Andrew, you're correct. There were some adjustments to our private bonus share accruals that elevated the expense quarter-over-quarter. We also -- every fourth quarter with the holiday season, there is extra benefit expense. So Q4 to Q4 might be a better indication of where dense growth is, and I think that was less than 2%. I think once again, particularly if you look at the full year numbers, the only expense line that's really growing more than very low single digits is the technology side, the software expense. And we'll continue to invest in that. And the percentages may not be quite as high as 24% to 25%, but an area we'll continue to invest in. Andrew Terrell: Yes. Okay. And then just on the margin overall, I appreciate the slide you guys gave on the loan repricing in the presentation. But if we look at margins for the industry right now, a lot of the banks out there approaching kind of that peak level or fairly close from back in 2019, you guys are still 50 or 75 basis points light versus the 4.25 level from 2019. So I guess the kind of question is, has anything structurally changed preventing you from getting back there? And then just keeping that loan repricing in mind, I know some of it looks decently far out there up to 10 years. How long does it take you guys to get margin back to what you would view as a normalized level? E. Nicholson: Well, of course, the yield environment plays a lot into that, Andrew. But yes, I mean, obviously, if you go back pre-pandemic, our securities book still has a much lower yield than it would have had back then. And so that's obviously going to play into it. And the loan book still as well. So it will take a little time for both cash flows and the security book to reprice as well as the loan book reprice. And that's why we added that slide. So I mean it's hard to tell. I don't know if I would comment on it knowing that there's so many variables, but I wouldn't be surprised if we get there over the next couple of years, but there's a lot of things that could change that. David Brager: Yes. And the only thing I would add to that, Andrew, is to the point that we have not done any large restructuring loss trade type transactions. And so in the fourth quarter, with the gain that we had or with the recapture of the interest income that we had, use that to take advantage of. So sort of all these onetime things that happen, we will still look at that and make determinations. And that's really part of the reason that we looked at the loss trade to utilize that $3.2 million where we recaptured an interest. So we'll just continue to do that. It's more singles. We're not planning on doing anything like we've said all along, anything larger than that. Matthew Clark: Yes. Okay. Yes, my follow-up to that was going to be on the securities, so I appreciate it. Operator: And that will come from the line of Gary Tenner with D.A. Davidson. Gary Tenner: I had just a follow-up on the loan yields in the quarter. Even excluding the interest recovery, as you pointed out, Allen, the loan yield was up 7 basis points. Was that pretty exclusively driven by the increased C&I outstandings between general C&I and the ag portfolio? I just wanted to make sure there weren't any other dynamics during the quarter that impacted. E. Nicholson: I mean I wouldn't point to anything -- one thing. I mean, dairy goes up, but really, I think the dairy borrowing to a higher percentage of our overall loans probably drove about a basis point improvement in loan yields. So a little bit on the mix. But once again, I think the bulk of our loans are commercial real estate, and it really goes back to the back book conversation. They're slowly repricing -- and as we have the payoffs, we're replacing them with higher yields. So that concept is probably still the biggest driver... David Brager: And new production. E. Nicholson: New production versus what's rolling off out there. Gary Tenner: Okay. Great. And then just looking forward to the HCP transaction, any expectations at this point of kind of any day 1 restructuring of their balance sheet or otherwise? E. Nicholson: The only thing we've announced, Gary, is that we do plan on selling approximately $400 million of single-family loans that Heritage has -- these are not really customers they were purchased. And the duration is very long on them. So even though we'll get to mark them to market, and there's a lot of accretion there that if we kept them at significant accretion, but still they're very low coupon, 30-year mortgages. We don't really care for the duration, and they're not associated with customers. So we'll sell those and reinvest into investments with shorter durations. Gary Tenner: Okay. And I was in the merger announcement, but beyond that, no other -- nothing at this point. Operator: And that will come from the line of Kelly Motta with KBW. Kelly Motta: Good morning. Thanks for the question. apologize. I joined a little bit late. I may have missed this. But just circling back to the noninterest-bearing flows. With those balances down a bit, can you just elaborate? I know you guys sold an NPL if there was any attrition of customers related to exits or anything that? Or if it was just normal seasonal movements post COVID getting back to more normal trends. David Brager: Yes. I think maybe you're just back checking me, Kelly, but no, there was no loss of relationships that, that represented and the comment that we made was really just around the point in time on December 31. There's a lot of movement around the deposits going back and forth or going out and this is actually pretty standard. The part that was a little surprising. I mean, I watch it every day, but not surprising, but a part that was different is we did grow noninterest-bearing deposits. The new relationships that we're attracting to the bank are probably in the 75% noninterest-bearing range. interest-bearing. So this is really just kind of normal stuff. If you go back 10 years, we always have this seasonality in the fourth and first quarter. I think, Allen, a while back, we had done an analysis of that. I think in the fourth quarter, we normally lose about 4% of our deposits going back like 10 years. This, on averages, that didn't occur this year. We sort of had the normal noninterest-bearing stuff that went out for taxes or bonuses or whatever the case may be. But no, there was nothing abnormal about it and no loss of relationship that -- and I'd say no loss, any material or significant relationship, nothing changed. E. Nicholson: And Kelly, I just mentioned that I think it's better to look at average balances. They are more indicative. Our customers move a lot of money. There's patterns day of the week and things like that, that depending on how a quarter end happens to land you're not really getting the -- probably the 2 picture. Kelly Motta: Got it. That's helpful. Maybe switching to the buyback. You were really this quarter. And then obviously, you had announced Heritage Commerce site in the quarter. Wondering, is it fair to say that you're out of the market at least until the deal closes, just wondering... E. Nicholson: Yes. I mean, obviously we're -- we'll be issuing an S-4 prospectus. So we've been out of the market since the beginning of December. And the Board reevaluate that once we close the merger. Operator: And our next question will come from the line of Tim Coffey with Janney Montgomery Scott. Timothy Coffey: Question on the loan modifications. Is there anything special causing the balances in that bucket to [indiscernible]. David Brager: Go ahead, Allen. I would have small on to say [indiscernible]. E. Nicholson: I wouldn't say there's anything abnormal about it. Timothy Coffey: Okay. What causes somebody to fall into that bucket? E. Nicholson: I'm sorry... David Brager: You're talking about the loan modifications. Timothy Coffey: Yes. David Brager: Yes. Well, it depends. I mean when we -- there's a lot of different reasons they can fall into that if they come to us and ask for help and they need to do something to make the payment. That's one way that they would get in there. Another way would be just through our normal evaluation when we're doing our annual term loan reviews, if we see something that's not accurate or not -- that isn't meeting our minimum debt service coverage or some other covenant that could cause us to go in there. That number in and of itself is still a material number relative to the total loan portfolio. But there's a lot -- there's a few different reasons that it could fall into that category. Timothy Coffey: Okay. And then post the closed deal with Heritage Commerce Bank, we look out back half of this year and the next year. Dave, do you anticipate the addition of Heritage Commerce to materially change your outlook for loan growth? David Brager: Yes. Well, look, I think it just depends on a couple of different factors. We are, as you know, sort of slow and steady wins the race. Heritage has been growing a little faster than we have. I'm sure there'll be some combination of that. We're going into new markets. We're going to be able to help their clients grow even -- they'll be able to do more for their clients than they can do for them today. So I think there's some definite tailwinds with respect to that. But we got to make sure we get to close, we get it integrated. We we go through the culture things to make sure they understand how we do things. So I think for the most part, there could be some benefit to that for our overall loan growth, but we're going to maintain the same credit quality that we've maintained and the same credit quality that they've maintained. So we'll have to evaluate that as we combine everything and see where we are. But I do think there's a lot of opportunity in those markets for what we have to offer, not just from the loan perspective, but also from just the overall product array that we have relative to the product array they have. Timothy Coffey: Sure. Yes. And a bigger balance sheet will help them a lot. David Brager: Exactly. Timothy Coffey: And then [Audio Gap] No check -- final no check for me, Allen. What was the core loan yield in the quarter? E. Nicholson: I would point you to the slide we added on Page 43. And that is what I would call a basic coupon, no loan fees, nothing else. And you can see where it ended the year. And then you can obviously see the relative repricing for the different buckets. David Brager: And Tim, that number was 5.12%. Operator: Thank you. I'm showing no further questions in the queue this time. I owuld now like to turn the call back over to Mr. Brager for any closing remarks. David Brager: Great. Thank you. Citizens Business Bank continues to perform consistently in all operating environments. Our solid financial performance is highlighted by our 195 consecutive quarters or more than 48 years of profitability and 145 consecutive quarters of paying cash dividends. We remain focused on our mission of banking the best small- to medium-sized businesses and their owners through all economic cycles. I'd like to thank our customers and associates for their commitment and loyalty, and we look forward to a successful 2026 and the pending merger with Heritage Bank Commerce. Thank you for joining us this quarter. We appreciate your interest and look forward to speaking to you in April for our first quarter 2026 earnings call. You can always let Allen and I know if you have any questions. Have a great day. Thank you. Operator: This concludes today's program. Thank you all for participating. You may now disconnect.

107天前Insight Analytics约5分钟阅读

GSBC 2025 Q4 财报电话会议

Operator: Good day, and thank you for standing by. Welcome to the Great Southern Bancorp's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, [Christina Maldonado]. Please go ahead. Unknown Attendee: Good afternoon, and thank you for joining Great Southern Bancorp's Fourth Quarter 2025 Earnings Call. Today, we'll be discussing the company's results for the quarter and year ended December 31, 2025. Before we begin, I'd like to remind everyone that during this call, forward-looking statements may be made regarding the company's future events and financial performance. These statements are subject to various factors that could cause actual results to differ materially from those anticipated or projected. For a list of these factors, please refer to the forward-looking statements disclosure in the fourth quarter earnings release and other public filings. Joining me today are President and CEO, Joseph Turner; and Chief Financial Officer, Rex Copeland. I'll now turn the call over to Joe. Joseph Turner: Okay. Thanks, Christina, and good afternoon to everybody on the call. We appreciate you joining us today. Our fourth quarter and full year 2025 results reflect the sustained success of our core banking operations and our commitment to long-term tangible book value appreciation despite a volatile economic environment. Throughout the year, we remain focused on preserving net interest margin, protecting credit quality, controlling noninterest expense and opportunistically repurchasing our stock. For the fourth quarter, we reported net income of $16.3 million or $1.45 per diluted common share compared to $14.9 million or $1.27 per diluted common share in the year ago quarter. For the full year, net interest income totaled $71 million -- net income, I'm sorry, totaled $71 million or $6.19 per diluted common share. These results happen because of resilient net interest income, strong asset quality, and prudent asset liability management despite ongoing loan and deposit competition and fundamental economic pressures. Net interest income for the 2025 fourth quarter totaled $49.2 million, which was a decrease of $371,000 or 0.7% compared to the prior year quarter. As you'll recall, we did lose the income from our terminated swap during the fourth quarter. We lost most of that income and the quarterly income had been $2 million. So that's the primary reason for the small decline. Additionally, we have lower loan balances, which resulted in some lower interest income. But despite those factors, effective management of funding costs reduced interest expense and mostly offset the decrease in interest income. This resulted in net interest margin expansion. Our margin grew from 3.70% this quarter, 3.7% from 3.49% in the year ago quarter. Core deposits remained relatively stable, reflecting continued customer engagement and the underlying strength of our relationship-based banking model. Net loans receivable totaled $4.36 billion at year-end, representing a decline of $333.5 million or 7.1% from where they were a year ago. We had declines in multifamily residential, commercial construction, one- to four-family and commercial business. The decrease primarily reflects elevated payoff activity as capital markets have eased during the year. Though loan production remained active, we continue to maintain a conservative underwriting posture focusing on pricing structure and borrower stream. Additionally, construction lending remained steady through the quarter and the full year into 2025, supported by a solid level of unfunded commitments. On the funding side, total deposits decreased $122.8 million or 2.7%. This really was almost exclusively in the brokered category that category declined $108.7 million. We did have a decline of $87.3 million in our core CDs or the CDs originated through our system of banking centers, but that was almost completely offset by the growth in our interest-bearing checking accounts that was $75 million. Deposit markets remain competitive across both core and brokered channels and we continue to balance pricing discipline with customer retention. We will continue to monitor repricing opportunities as interest rates and competitive dynamics develop and utilize nondeposit funding sources when appropriate. Credit quality remains a clear area of strength at year-end. Nonperforming assets for the fourth quarter totaled $8.1 million, representing 0.15% of assets. Compared to the linked quarter, nonperforming assets increased $319,000. We did not record a provision for credit losses on outstanding loans in the fourth quarter of 2025. We also recorded net recoveries of of $22,000 for the quarter compared to net charge-offs of $155,000 during the same quarter a year ago. For all of 2025, we recorded recoveries of $11,000. These results reflect stable borrower performance and the effectiveness of our underwriting and portfolio monitoring practices. Expense management remained a focus for the company during the year. Noninterest expense for the fourth quarter of 2025 was $36 million, down about $947,000 or 2.6% from the year ago quarter. The year-over-year decline was really exclusively a result -- in the year ago quarter, we had a $2 million charge associated with the settlement of a contract matter. And obviously, that did not recur this quarter. We did have some higher net occupancy and equipment expense that's driven by investment in facilities and really primarily driven by investments in technology. For the fourth quarter of 2025, we reported an efficiency ratio of 63.89%. Looking forward, our priorities remain centered on maintaining strong capital and liquidity, supporting our customers and communities, maintaining strong credit metrics and deploying capital thoughtfully. Though loan growth may remain challenging and economic conditions fluid, we believe our conservative approach and sound balance sheet management will continue delivering long-term value for our stockholders. With that, I'll turn the call over to Rex for a more detailed review of our financial results. Rex Copeland: Thank you, Joe, and good afternoon, everyone. I'll now provide a more detailed review on our fourth quarter and full year 2025 financial performance and how it compares to both the prior year period and the linked quarter. For the quarter ended December 31, 2025, we reported net income of $16.3 million or $1.45 per diluted common share compared to $14.9 million or $1.27 per diluted common share in the fourth quarter of 2024 and $17.8 million or $1.56 per diluted common share in the third quarter of 2025. For the full year, net income was $71.0 million or $6.19 per diluted common share compared to $61.8 million or $5.26 per diluted common share in the prior year. Net interest income totaled $49.2 million for the fourth quarter of 2025 compared to $49.5 million in the prior year quarter and $50.8 million in the third quarter of 2025. Interest income totaled $73.4 million for the fourth quarter of 2025 compared to $82.6 million in the fourth quarter of 2024 and $79.1 million in the third quarter of 2025. The year-over-year change primarily reflects the discontinuation of the previously terminated interest rate swap that Joe mentioned earlier, which was providing $2 million roughly in quarterly income prior to the fourth quarter. Also, along with that, we had lower average loan balances and lower average market interest rates in the fourth quarter of '25 compared to the fourth quarter of 2024. While market rates move lower, the impact on loan yields was somewhat moderated as cash flows from lower rate -- fixed rate loans originated in prior years were redeployed into loans with comparatively higher rates. Interest expense totaled $24.3 million in the 2025 fourth quarter, reflecting continued reductions in deposit and borrowing costs as repricing dynamics moderated and wholesale funding remained well managed. In addition, we repaid $75 million in subordinated debt in June of 2025, which resulted in $1.1 million in lower interest expense in the fourth quarter 2025 compared to the fourth quarter of 2024. These reductions in funding costs mostly offset the downward pressure we saw on interest income. Our proactive loan pricing in conjunction with disciplined management of funding costs resulted in net interest margin expansion as we realized an annualized net interest margin of 3.70% in the 2025 fourth quarter compared to 3.49% annualized in the year ago quarter. Noninterest income totaled $7.2 million for the fourth quarter of 2025 compared to $6.9 million in the prior year quarter and $7.1 million in the third quarter of 2025. The small increase in noninterest income was due primarily to a $289,000 increase in late charges and fees on loans resulting from the early payoff of really primarily one commercial real estate loan in the 2025 fourth quarter. Total noninterest expense for the fourth quarter of 2025 was $36.0 million compared to $36.9 million in the fourth quarter of 2024 and $36.1 million in the third quarter of 2025. The year-over-year decline primarily reflects, as Joe mentioned earlier, the $2 million decrease in other operating expenses, which resulted from the litigation and contract matter that we spoke of earlier. These reductions were partially offset by a $1.2 million increase in net occupancy and equipment expense, driven primarily by higher computer license and support costs related to core systems and disaster recovery enhancements, charges associated with branch closures and lease facility asset adjustments and seasonal expenses related to things like snow removal and some adjustments to real estate taxes. Our efficiency ratio was 63.89% in the fourth quarter of 2025 compared to 65.43% in the fourth quarter of 2024 and 62.45% in the third quarter of 2025. Turning to the balance sheet items now. Total assets ended the year at $5.60 billion down from $5.98 billion at the end of 2024 and $5.74 billion at September 30, 2025. Total net loans, excluding mortgage loans held for sale, totaled $4.36 billion at December 31, 2025, down from $4.69 billion at December 31, 2024, driven by primarily declines, as Joe mentioned, in multifamily, construction, one- to four-family residential and commercial business loans. And while the loan demand remains selective, the pipeline of unfunded loan commitments remain solid with the largest portion related to the unfunded portion of booked construction loans. Liquidity remained strong at year-end with cash and cash equivalents totaling $189.6 million. In addition, the company maintained access to approximately $1.63 billion of additional borrowing capacity through the Home Loan Bank and the Federal Reserve Bank. Total deposits were $4.48 billion at December 31, 2025, reflecting a decrease of $122.8 million or 2.7% compared to December 31, 2024. The reduction was primarily driven by a decrease in brokered deposits of $109 million and a decrease in time deposits of $87 million. Those are retail time deposits, not brokered. This was partially offset, as Joe mentioned before, by increases in interest-bearing checking deposits, which totaled about $75 million. As of December 31, 2025, we estimated that uninsured deposits, excluding deposit accounts of the company's consolidated subsidiaries were approximately $720 million, representing roughly 16.1% of total deposits. Asset quality remained excellent with nonperforming assets representing 0.15% of total assets at year-end, consistent with both the linked quarter and prior year quarter. During the fourth quarter of 2025, we recorded net recoveries of $22,000, an improvement from $155,000 in total net charge-offs recorded in the fourth quarter of 2024. For the full year 2025, we recorded net recoveries of $11,000. For the year ended December 31, 2025, we did not record a provision for credit losses on the portfolio of outstanding loans compared to a provision of $1.7 million recorded in 2024. In the fourth quarter of both 2024 and 2025, we did not record a provision for credit losses on the portfolio of outstanding loans. However, as a result of increased unfunded commitment balances, we recorded a provision for unfunded commitments of $882,000 in the 2025 fourth quarter, down from $1.6 million provision recorded in the fourth quarter of 2024. Capital levels remained a key strength at year-end. Stockholders' equity was $636.1 million at December 31, 2025, an increase of $36.6 million from $599.6 million at the end of 2024. Stockholders' equity represented 11.4% of total assets and book value per common share was $57.50 at year-end 2025. The increase in stockholders' equity over the prior year was driven primarily by full year earnings, improvements in unrealized losses on investment securities and interest rate swaps and proceeds from stock option exercises, partially offset by cash dividends declared and common stock repurchased throughout the year. Tangible common equity increased to 11.2% at December 31, 2025, compared to 9.9% at year-end 2024, reflecting the combined impact of retained earnings and improved market valuations within the securities portfolio. We ended the year with capital levels well in excess of regulatory requirements, providing flexibility to support the balance sheet, return capital to shareholders and navigate changing economic conditions. During the fourth quarter of 2025, we repurchased 241,000 shares of our common stock at an average price of $59.33. And during the full year 2025, we repurchased 755,000 shares of our common stock at an average price of $58.35. In the fourth quarter of 2025, our Board of Directors also declared a regular quarterly cash dividend of $0.43 per common share, consistent with the previous quarter. For the full year ended December 31, 2025, the Board declared regular quarterly cash dividends totaling $1.66 per common share. Overall, our balance sheet remains well positioned, supported by strong capital levels, ample liquidity and a healthy loan portfolio. That concludes my remarks. We are now ready to take your questions. Operator: [Operator Instructions] Our first question is going to come from the line of Damon DelMonte with KBW. Damon Del Monte: First question just regarding the margin. A pleasant surprise this quarter. I think given the impact from the swap, we're expecting the margin to come down pretty substantially, but you were able to offset that, it looks like with some lower funding costs. So just kind of curious as to how you think about the margin here as we start off 2026. Rex Copeland: I think so far, we -- as you said, we performed a little better than we thought we might in the fourth quarter with that. We were able to bring some of our funding costs down, we're trying to manage that pretty proactively with the different avenues that we have to provide funding whether it's deposits or wholesale funds, et cetera. So we're trying to work through that and manage those -- the cost side of it. I think what we're seeing, too, on the interest income side, we are seeing some of our loans, which were put on the books maybe a few years ago at maybe some lower short-term fixed rates, and some of those are renewing or we're just getting repayments on those and we're able to redeploy those funds in a little bit higher rate -- the current market rate than we had on the books before. So it's a combination of a few of those things. Obviously, the first quarter, there's fewer calendar days. That shouldn't affect the margin percentage as much per se, but dollar-wise, we'll expect to be down some because of just a number of days in the quarter. Damon Del Monte: So do you think you're able to manage it so there's just a modest amount of compression? Or I mean, do you think you can make it -- have it go higher from here? Rex Copeland: I don't know that -- I mean, you can jump in, Joe. I don't think we can expect to see it go higher necessarily. Joseph Turner: Yes. I think, Damon, until the Fed takes some action, I think we will see our -- maybe our core CD portfolio since that's sort of a lagging portfolio, maybe some of that will reprice and we'll see some interest expense go down there, but that's not a very big portion of our deposits. Most of our deposits reprice pretty well immediately. And so I think we've probably gotten about all we can done on the deposit portfolio. So there won't -- there probably won't be any more improvement there. The loan portfolio, as Rex said, I guess, if there is a bias, it would be a slight bias to go maybe a little bit higher, but it's not very meaningful in the overall scope of our level of net interest income. So I mean, as we said, we don't give guidance. But I think looking at the fourth quarter, I don't see anything that would make it be a whole lot different than that. Damon Del Monte: Okay. Got it. And then with respect to the outlook for loan growth, it sounds like you're continuing to have good production, pipelines are healthy, but you continue to face elevated payoffs. Do you expect those payoffs to slow down at all to a point where we can get some net growth here in 2026? Joseph Turner: Yes. I think it's still going to be a challenging loan growth market for us because there's just -- while there's good activity, it's not great, and there still is outsized loan portfolio or loan payoffs. So I think that's going to be our challenge going forward. Rex Copeland: In the fourth quarter, we did have 1 or 2 kind of unique loans. They were short-term loans and they paid off, and we knew that was going to happen. So that was one sizable one for sure. And we did generate new loans and had some growth. Some of the loans are construction deals where they are not going to fund immediately, but others were ones where they were existing projects, and so we did fund those day 1. I think there will just be, like Joe said, there will be some more continuation of that. But I don't know that I see that -- I don't have a lot of clarity as far as what might pay off. We do have a pretty sizable multifamily portfolio. And I think that was where we saw quite a bit of the repayment with the exception of the one loan I mentioned was in that multifamily. So it's hard to know exactly the timing and magnitude of how that's going to go. Joseph Turner: Yes. It really is hard, Damon. I mean we try to keep track of it. We try to guess, but it's sort of up to the borrowers. Some of them choose to maybe pay us off with a debt fund. Some of them choose to take a sale that's maybe at a lower price than they would be able to sell it for maybe a year or two down the road. So it's sort of the ball is in the borrower's court to a big extent. So it's really hard to give you any guidance on that. Damon Del Monte: Got it. And then if I could just ask one more question on expenses. Fourth quarter came in much better than what we were looking for. Should we kind of expect an uptick off of this quarter's level, just kind of given a reset with salaries and benefits and things of that nature? Joseph Turner: Yes. I mean, I think that's fair. Rex Copeland: We do have a lot of our employee base does have annual normal increases and a lot of those happened at the beginning of the year. Payroll taxes will reset. And generally, there will be some increase in that compared to the fourth quarter. So there are some factors, as you say, there that play into that. Operator: Our next question is going to come from the line of John Rodis with Janney. John Rodis: Joe, just sort of back to the loan question from before. Loans were down 7% this year. I know payoffs are hard to predict, so I appreciate that. But do you think maybe you've seen at least the worst of it? Or do you think loans could be down a similar amount in '26. Joseph Turner: It's just really hard to say, John. Obviously, I hope we've seen kind of the worst of it. We really like our loan portfolio. And we're working hard to originate stuff. So I hope that's kind of like a high watermark for paydowns. But because loan repayments is such a big part of the calculation, it's just hard to kind of guarantee that one way or the other. Rex Copeland: I continue to originate and -- but we are also maintaining some pricing discipline, obviously, credit term discipline. So we're going to continue that. We want to maintain credit quality obviously. So there's been growth, new loan originations in 2025. We just had payoffs that were outpacing a bit. John Rodis: Okay. That's helpful, Rex. Rex, just on the securities portfolio, how should we think about that going forward? It was down a little bit this year? What sort of cash flows do you expect for the year? Rex Copeland: Yes. I mean, the portfolio is about the same now as it has been for most of the year. So nothing really different about it. So probably similar type -- assuming rates don't change a whole lot, probably similar type of payments. Maybe since rates are lower now than they were to start 2025, maybe there'll be a little bit more repayment. But the portfolio is mostly, as you can see from our filings, it's mostly mortgage-backed. It's all agency stuff, some SBAs,some municipality stuff, but by and large, the bulk of it is going to be some sort of an agency pass-through types and things of that nature. So we do get some monthly payment stream from it, but it's not large amounts necessarily. The portfolio is fixed rate stuff. So it's not changing around based on rates from that standpoint as far as our yields and such go. So I don't know that -- I mean it's not probably going to be dramatically different in '26. I wouldn't think unless the rates move down enough that there's a kind of a larger amount of prepayments that go on. John Rodis: Okay. And as far as the cash flows, you're not really reinvesting right now, are you? Rex Copeland: No, we've pretty much been taking the cash flows and reinvesting in loans. John Rodis: Yes. Okay. Okay. Just one more question on the buybacks. You guys have been fairly active. And I think for the press release, you leave almost 700,000 shares currently. All things equal, would you expect to repurchase most of that this year? Joseph Turner: I mean, we're -- Yes, we like where our stock is trading at, John. Obviously, it's a little bit higher than it was in 2024, but I mean, our book value is a little higher, too. So I mean I think even with the recent run-up in stock price, we're still trading at less than 115% of book. So we see that as a good value. And particularly while we're not growing a lot, a good use of capital. John Rodis: Yes. You've definitely got the capital to support it. Joseph Turner: Thanks, John. Operator: And I'm showing no further questions at this time. And I would like to hand the conference back over to Joe Turner for closing remarks. Joseph Turner: All right. We appreciate everybody being on the call today, and we'll look forward to talking to you in April. Thank you. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

107天前Insight Analytics约5分钟阅读

EGBN 2025 Q4 财报电话会议

Operator: Good day, and thank you for standing by. Welcome to the Eagle Bancorp, Inc., fourth quarter and year-end 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Eric Newell, Chief Financial Officer of Eagle Bancorp, Inc. Please go ahead. Eric Newell: Good morning. This is Eric Newell, Chief Financial Officer of Eagle Bancorp. Before we begin the presentation, I would like to remind everyone that some of the comments made during this call are forward-looking statements. We cannot make any promises about future performance and we caution you not to place undue reliance on these forward-looking statements. Our Form 10-K for the fiscal year 2024, Form 10-Q and current reports on Form 8-K including our earnings presentation slides identify important factors that could cause the company's actual results to differ materially from any forward-looking statements made this morning, which speak only as of today. Eagle Bancorp does not undertake to update any forward-looking statements as a result of new information, future events or developments unless required by law. This morning's commentary will include non-GAAP financial information. The earnings release, which is posted in the Investor Relations section of our website and filed with the SEC, contains reconciliations of this information to the most directly comparable GAAP information. Our periodic reports are available from the company, online at our website or on the SEC's website. With me today is our President and CEO, Susan Riel; and our Chief Lending Officer for Commercial Real Estate, Ryan Riel. I'll now turn it over to Susan. Susan Riel: Thank you, Eric. Good morning, and thank you for joining us. The fourth quarter marked an important inflection point for Eagle Bank. Over the course of the year, we took actions to diversify our balance sheet, reduce risk and strengthen the overall quality of the franchise. These efforts became clearly visible in the fourth quarter as asset quality metrics improved meaningfully and our balance sheet mix moved closer to the profile we believe is necessary to sustainably support durable earnings. Importantly, these improvements were the results of intentional decisions, disciplined balance sheet management and a continued focus on reducing concentration risk. While these steps created near-term expense pressure, they significantly improve the underlying risk profile of the company and enhance our flexibility going forward. As we enter the new year, our focus shifts from remediation to execution, we are operating with a stronger foundation, improved asset quality and a more disciplined funding approach. This will position us to drive more consistent earnings and improve returns. I'll now turn the call over to Eric to walk through the quarter's results in more detail. Eric Newell: We reported net income of $7.6 million or $0.25 per diluted share compared with a $67.5 million loss or $2.22 per share last quarter. Let's start with asset quality. The fourth quarter results reflected the trade-offs we discussed on our prior call. Credit stability supported book value, while planned held for sale loan dispositions created some pressure on fourth quarter earnings. In the quarter, $14.7 million was recognized relating to higher expenses associated with the disposition of held for sale loans as well as mark-to-market expenses. At December 31, we had $90.7 million of loans held for sale, a decline of $45.9 million from the prior period, which includes $8.4 million of mark-to-market adjustments due to updated valuations informed by proposed or under contract disposition activities. We recognized $1.1 million of loss on the $77.9 million of loans sold during the quarter. At December 31, 2025, nonperforming loans declined to $106.8 million, down $12 million from the prior quarter and represented 1.47% of total loans. Slide 23 of our earnings deck shows the walk between linked quarters for inflows and outflows of nonaccrual loans. Total nonperforming assets declined $24 million to $108.9 million, representing 1.04% of total assets as compared to 1.23% in the prior quarter. The land loan transferred to OREO in the third quarter was sold during the fourth quarter with a gain of $900,000. Special mention and substandard loans totaled $783.4 million at year-end declining $175.1 million from the prior quarter. This represents 10.6% of total loans at year-end, declining from 13.1% at September 30. Provision for credit losses declined $97.7 million in the fourth quarter and totaled $15.5 million. Our allowance for credit losses ended the quarter at $159.6 million or 2.19% of total loans. Of that total, we have $73 million of reserves associated with income-producing office loans representing 13% of the $577.1 million outstanding at year-end. Net charge-offs declined $128.6 million from the third quarter and totaled $12.3 million in the most recent quarter. Loans 30 to 89 days past due totaled $50 million at December 31, up $20.8 million from last quarter primarily due to a participation loan, which was in the process of being renewed and was booked yesterday for closure. Office loans totaled $577.1 million, and of that total, $469.2 million are pass rated. Loans that exceed $5 million in our pass rated are undergoing quarterly reviews. Smaller office loans have stronger credit enhancements than the larger office loans that we've worked through cycle to date. The fourth quarter saw dramatic reductions in our CRE and ADC concentrations as expected payoffs, resolutions and the completion of construction projects drove down our CRE concentration ratio, which is a measure of CRE loans to total risk-based capital and reserves. That ratio declined to 322% and the ADC concentration ratio, which measures acquisitions, development and construction loans over the same denominator declined to 88% for the company as of year-end. From an earnings standpoint, pre-provision net revenue was $20.7 million. Included in that is $8.4 million in held for sale, mark-to-market expenses and the $6.3 million in disposition costs related to loan sales. Net interest income grew $144,000 to $68.3 million as the decline in deposit and borrowing costs outpaced a modest reduction in income on earning assets. NIM declined 5 basis points to 2.38% primarily driven by a mix shift between loans and cash partially offset by improved time deposit costs from reduced brokered time deposit usage. Noninterest income totaled $12.2 million compared to $2.5 million last quarter. The increase was primarily due to losses that did not reoccur in the fourth quarter and other income as a result of FDIC investments and the gain on the sale of OREO. Noninterest expense increased $17.9 million to $59.8 million due to the $6.3 million in costs associated with the disposition of certain held-for-sale loans, and $8.4 million in valuation adjustments on proposed transactions for the remaining held-for-sale loan portfolio. Our capital remains strong. Tangible common equity to tangible assets is 10.87% Tier 1 leverage ratio is 10.17% and CET1 is 13.83%. Tangible book value per share increased $0.59 to $37.59 as earnings added to capital. Continued deposit growth and a rising proportion of insured balances underscore the resilience of our funding base. With $4.7 billion in available liquidity, we maintained 2x coverage of uninsured deposits. During 2025, our teams have reduced brokered deposits by $602 million while increasing core deposits, $692 million, and we expect continued progress in 2026. The improvement reflects coordinated efforts among our C&I teams, branch network and digital platform. Finally, turning to 2026. We are optimistic about our ability to expand pre-provision net revenue, as outlined in our updated 2026 forecast on Slide 11 of our earnings deck. While we expect average deposits, loans and earning assets to decline on a year-over-year basis, this reflects deliberate balance sheet repositioning rather than operating pressure and reflects prioritization of shareholder returns and profitability. Loan balances entering 2026 begin from a lower level due to paydowns and resolutions that occurred throughout 2025, and the investment portfolio runoff in 2025 further reduces average earning assets. On the funding side, lower average deposits in 2026 primarily reflect the continued runoff of brokered funding as we prioritize building core deposit relationships. This shift in funding mix is expected to improve profitability. As a result, we're forecasting a meaningful expansion in net interest margin with NIM expected to range between 2.6% and 2.8% for the year. This improvement is driven largely by a reduction in higher-cost brokered deposits. Noninterest income is expected to increase by approximately 15% to 25% while noninterest expense is expected to decline between flat and 4%. Importantly, this reflects normalization following elevated expense levels in the fourth quarter of 2025, which was previously discussed and we do not expect to reoccur. Taken together, these trends support our confidence in expanding pre-provision net revenue in 2026 despite a smaller average balance sheet. I'll turn it back over to Susan for final comments ahead of the Q&A. Susan Riel: The fourth quarter tangibly demonstrates the progress we've made at Eagle Bank executing on our strategic plan. The actions we took throughout 2025 to address credit risk, reduce loan concentrations and improved balance sheet quality are now clearly reflected in our results. We exited the year with an improved risk profile, higher core deposits allowing for reduced use of wholesale funding and improved visibility into the sustainability and trend of our earnings. As we look ahead, our focus will transition from foundational initiatives to consistent performance. While we are not yet where we want to be in terms of bottom line performance, we're optimistic about the franchises direction. Before we conclude, I want to thank our employees for their continued dedication and professionalism. Their commitment has been instrumental in navigating a challenging period and positioning the company for the future. With that, we'll be happy to take any questions. Operator: [Operator Instructions] And our first question comes from Justin Crowley of Piper Sandler. Justin Crowley: Good morning, everyone. I wanted to start off on the asset dispositions, of course. Really encouraging progress, and it's obviously great to see not whole lot in additional loss through the sales that got done. I was wondering if you could talk just a little more on what's left in held for sale in terms of the expected timing. I know you mentioned some agreements in place, and you took the additional mark through the expense line. So maybe just the confidence level in the current carrying value, what's left there? Eric Newell: Justin, this is Eric. At year-end, we had $90.7 million of loans held for sale and they are carried at the lower of cost or fair value. We did have that mark that ran through noninterest expense at year-end to take into consideration fair value, which is informed by under contract or negotiating to a contract on disposition of approximately 2/3 of that portfolio. Right now, 2/3 of that portfolio is scheduled for resolution and disposition in the first quarter, but it's not done until it's done. So it could bleed into the second quarter. Justin Crowley: Okay. Got it. And then, of course, you have the wide-ranging third-party review, but what's the thinking or expectation on the potential, if there is any for any further moves into held for sale. Could this be it? Or is there a possibility that as we get through the year and credits with maturities a bit further out, perhaps get a closer look that you could see additional inflow into that bucket. What's kind of the thought there? Eric Newell: And looking at the total criticized and classified portfolio, which is $783 million at year-end, down from $960 million. There certainly could be situations, Justin, where we might decide that selling the loan is the best strategy to maximize value to the shareholders. So I don't want to say that we're done there. There certainly could be situations that arise, I don't suspect you're going to see that at the pace of what you saw in 2025. And it's a case-by-case assessment. Justin Crowley: Got it. And then I guess outside of office and maybe one for you, Ryan, but it's certainly good to see some what I thought was stabilization and actually some signs of improvement in multifamily. It looks like a handful of some of these larger watch-list loans, got some updated appraisals that show some breathing room. I was just wondering if you could talk a little bit about the trends you're seeing there. And at this point, we can maybe expect to see things continue to look better in that area? Ryan Riel: I think that we'll continue to be proactive in the problem on identification on -- and looking at the portfolio on a regular basis as we have been. So what's in there you've seen, to your point, Justin, there's been some migration positively and negatively in that criticized and classified population. Valuation, again, continues to be strong relative to the office market, where we saw significant losses, obviously, right? The multifamily market, the valuations have held up. Cap rates in our region are still sub-6% when compared to the national average of just over 6%. So where we feel good about that and where our exposure is we're monitoring the income performance. Some of these are in lease-up, recently delivered properties. So my prognostication is that you will continue to see stabilization and improvement within that multifamily portfolio. Justin Crowley: Okay. And then just for the total loan portfolio, just as far as where the reserves shook out this quarter with the movement a bit higher, including the increase in the office ACL. Just like bigger picture, how are you thinking about eventually seeing that number move lower and maybe using it to absorb just any further charge-offs without the provisioning to match it. Eric Newell: The office overlay or the portion of the ACL that's attributed to a performing office did increase, even though that's a qualitative aspect to the calculation, it's driven quantitatively by experience that we've incurred throughout the prior 12 months in office. And so when you quantitatively put that together, it's driving approximately 45% of reserves in our substandard loans about 50% of that in our special mention loans and 50% of that for launch. So when you put that all together, that's what comprises of the $73 million of reserves associated with the $577 million of performing office. So as we move forward and we have less loss content in our look back period, you'll see that ease off. Justin Crowley: Okay. So the idea would be lower from here if all goes according to plan as you see it today? Eric Newell: That is the way the calculation works. Justin Crowley: Okay. And then maybe just 1 last one. I know it's 1 quarter here and there's still some work to do. But obviously, a lot of positive signs. And so when you think about capital planning over maybe the more medium term, how do you think about the levels you're at with maybe a clearer picture on loss content? And I don't know if it's a bit premature, but when do you think you could start entertaining a more offensive stance on capital management when you think about things like buybacks or the dividends. Again, I know it's kind of early days here, but just thinking a little bit more medium or long term. Eric Newell: We are going to continue to be prudent and use caution in terms of capital management. I would point to the criticized and classified loan level and where we're at. We need to continue to see continued migration down. So a favorable trend. The 1 quarter is not a trend. So we need to see 2 or 3 more quarters. And we also need to see a more absolute level that's acceptable before management would consider talking further to our Board about additional changes in our capital management approach. By the way, Justin, you asked how we would characterize the level of capital, and I would say it's strong. Operator: And our next question comes from David Chiaverini of Jefferies. David Chiaverini: So I just wanted to follow up on credit quality. Clearly, a good update here. Can you talk about your confidence level that credit issues are behind you. Are you seeing any signs of lingering potential deterioration? Eric Newell: David, I mean again, I'd point back to the criticized, classified portfolio of $783 million. There's a lot of prudent credit management process that we're putting around that. Finance, credit, special assets teams are looking at that portfolio. We also spend time looking at the watch portfolio to understand any trends that could cause negative migration into the criticized classified so given the level of review on this portfolio every quarter as well as pass rated multifamily and office loans that are greater than $5 million. They're undergoing a quarterly review as well. We're not seeing any developing new trends based on what we see today. And what we know today. Susan Riel: I would just simply add to that. We have given problem loans and just loans in general, high attention that we're constantly looking at them. That will not change. We will not slow down on that. So we'll continue to focus on reviewing and monitoring our loans. Eric Newell: Our expectation, David, will be that the criticized classified loan portfolio continues to decline throughout the year. David Chiaverini: Great. And in terms of the dispositions, you mentioned 2/3 scheduled for the first quarter. It sounds like the level of buyer interest is high. Can you talk about what you're seeing in the secondary market? Are these private credit funds, are they other banks? And is that a fair characterization that the buyer interest is high for these loans? Ryan Riel: So David, this is Ryan Riel. The buyers are a range of types of folks. The 2/3 that you're referencing that Eric referenced in his comments, there's a range in that population, too. There's investors that are supporting local developers to convert to an alternate use, some of the historic office properties. There's existing ownership that is looking at their situation and evaluating the go-forward plan and in some cases, being willing to come in and purchase their own debt. In each and every case, we've said this for a number of quarters now. We are looking at every possible outcome in every possible path in determining on a case-by-case basis what the best path forward is to optimize the results for the bank and its shareholders. That continues to be the game plan in each and every case. David Chiaverini: Great. And then on the loan loss provision on a go-forward basis, Eric, you mentioned back in October that you're hopeful to get to a normalized level in early 2026, how should we think about it from here? Are we kind of at that point of getting to a normalized level? And how would you kind of define that normalized level? Are we talking kind of where we were in the second, third and fourth quarter of 2024 kind of in that $10 million range. Any comments there? Eric Newell: Yes, David, looking at the criticized classified portfolio level where it's at, I think that, that would inform a provision expense level that's a little bit greater than what you were indicating from 2024, just given that portfolio was smaller at that point. But we're not -- I'm going to speak to obvious here, but we're not going to see provision like levels that we saw in 2025. But I think that there could be some provisioning expenses that are more heightened than 2024, given the level of where criticized and classified, but it's also important to say what I said last quarter, that capital will continue to -- or credit is not going to cause further degradation of book value. Operator: And our next question comes from Catherine Mealor of Keefe, Bruyette, & Woods. Catherine Mealor: One follow-up on credit. Just 1 follow-up on the credit on the special mention. It was great to see that decline. I know it looked like you had maybe an upgrade from substandard and then a new credit, but then you had some come off. And so I was just curious if you could give us a bit more discussion on the credits that were upgraded or came out of special mention, just some stories or color around what those credits were, what caused them to move out and just so we can kind of understand some of the puts and takes within that category. Ryan Riel: Sure. So Catherine, this is Ryan. Big categories that help the positive migration there are improved performance at the property level. And then in certain cases, there are structural enhancements to that loan that may have been under considered, if you will, in the past with updated information and proof of the willingness and capability of those sponsors to stand behind their credits, we made some of those upgrade decisions as well. Catherine Mealor: Got it. Great. And then I guess I'm going to maybe drag in on the provisioning piece. I think that's -- that's the biggest question we all have is where do we put our provision expense for '26. And I guess that's the magic number. But as I look at the reserve, I mean, it should be fair that we should see the -- I guess the question is how much of current expectations of losses you think are in the reserve? And is it fair as you continue to work through this level of classified, which to your point, Eric, is still very high, right, still 10%. We still have a lot to work through, but your reserve is also very high over 2%. So as you kind of keep working through that, at what point should we see the reserves start to decline? And where do you -- where is the fair number or maybe a range of where that kind of trends to towards the end of the year? Eric Newell: Given our 1 quarter of improvement. I think it's prudent for management to be cautious about where we think the provision expense and telling you all what we think provision expenses, we certainly have our views on it given what we've worked on. And I can tell you that we do expect the ACL coverage to decline this year. We do expect that there is potentially lost content in that $783 million, some of which we've identified and have reserved for through specific reserves, so it is sitting in ACL. But we also have some unidentified migration, portfolio migration that are things that we don't know about yet. So I guess, Catherine, I probably I'm going to punt a little bit and try not to answer your questions with specificity until I think next quarter, if we have another continued trend, then I think we could be a little more focused in answering that question for you. Catherine Mealor: Yes, that makes sense. That makes sense. Fair enough. And then maybe my last question is just it was nice to see the inflows of new credits flow dramatically this quarter, which we would have expected just given the portfolio review we saw last quarter. But just there were a couple of -- like you had a couple of inflows, new credits that kind of came into special mention, for example, that $43 million multifamily credit. So for the new credits that came in this quarter, what happened this quarter that your loan review did not catch? And is there anything within that, that we should kind of be thinking about that would be a risk of new migration in the next couple of quarters? Eric Newell: Yes. So with specificity on that $43 million loan, Catherine, that's a newly built multifamily property in a particular submarket of Washington, D.C. that's an inflow or influx of supply. So while this property was nearing stabilization, there is a sort of hiccup in that stabilization process because of that inflow of supply, reintroducing concessions in that submarket. Reacting to that, we worked with the sponsor to put in place a go-forward plan that has cash flow sweeps and other mechanisms in it to protect the bank. The reality is that the supply -- the new supply under construction in our region is very, very small. It's less than half of what it's been historically. So with the passage of time, those units will be absorbed, those concessions will burn off and the stabilization will occur and we'll have enhanced credit structure on that particular loan through that stabilization period. So that's what happened in that quarter was just that, right? The information came through on the pickup in supply and the plateauing frankly, of that stabilization process. Operator: Our next question comes from James Abbott of Diligence Capital Management. James Abbott: I wanted to see if we could get some additional color on the C&I loan growth, it was about $120 million. That's about a 40% annualized rate. Could you provide a little context as to whether the loans are coming through SNCs? Are they bilaterals, maybe some yields, that kind of thing, just so that we can understand the color around those -- that type of production? And secondly, is it sustainable? Eric Newell: So the growth of our C&I platform is a sustainable expectation that we should all have. The growth levels seen in the fourth quarter at that enhanced growth level is probably not a sustainable figure. Speaking to the diversity question, James, the portfolio -- the C&I portfolio does not have great concentration really in any industry. There are some syndications and participations in that number. That is not an ongoing strategy that we're going to employ. Evelyn and her team have done an excellent job of bringing in relationships with debt and deposit balances on the other side of the balance sheet. So that's where you see it, and the numbers are reflective of that. You see actually greater in the fourth quarter deposit growth in the C&I book than you do loan growth. James Abbott: Sorry, Ryan, could you just give us some sort of sense for maybe the typical size of those deals that were coming in during the quarter? Are they typically $5 million and $10 million or more $20 million and $30 million sort of relationships? Ryan Riel: There's a range of it. I'd say the more on the higher end of the range that you just cited, probably 15 to 30. That's an off-the-cuff number. I'm not looking at the portfolio to justify it. But I'd say probably on average, it's in that $15 million to $30 million range. James Abbott: Okay. And then also I had a question probably for Eric. Could you maybe give us some context for the cash level that you're holding and then the broker deposit level? And I suspect it's probably a negative spread at this point and you're probably working to address that. But could you give us a sense for what the broker deposit level is today? And then how much you anticipate bringing that down? Can you use cash to pay that down, et cetera? Eric Newell: Yes. A couple of things. There was -- when you look at average cash in the fourth quarter, it was definitely higher than normal, and it was in anticipation of paying down a material level of broker deposits that were coming up for stated maturity. So we are holding that cash in anticipation of paying down those broker deposits. We have, on an average basis, we do have a third-party payment processor that does hold some deposits with us in the middle of the month that can cause the averages to increase at a high level, but it generally isn't a period and it doesn't impact period-end cash that much. In terms of brokered deposits at year-end, we have, excluding 2-way deposits, we have $1.56 billion with a weighted rate of 4%. And we're going to continue to work that down through 2026. James Abbott: And Eric, are there maturity dates on those that you could give us some sense for? Is it pretty spread out throughout the year? Is it -- and how much do you think you can attack? Do you think you can get rid of half of that in 2026? Or just any sort of context on that? Eric Newell: Yes. Of the $1.56 billion in brokered, $715 million of that is a brokered CD. So there's -- I would say it's probably spread throughout the year. And our goal is to reduce a lot of those CDs down to close to 0. Operator: And our next question comes from Christopher Marinac of Janney Research. Christopher Marinac: I think that Ryan addressed a little bit of this question in the last few callers, but I was curious about sort of the surprises on the -- for past loans going bad in the future. It would seem that you have smaller loans, if that indeed is the case. And I just want to sort of talk through sort of where would there be larger loans that could surprise us that are passed now, but that could surprise if they were downgraded in the future? Ryan Riel: The top 25 list shows where they are, shows the type of exposure there is. Again, these -- to Eric's earlier point, multifamily loans that are pass rated in size greater than $5 million, we're looking at on a quarterly basis. Office properties are there. There's not an asset -- there's some slight headwinds in the multifamily space, which is what we've talked about, again, with the back end valuation issue not there relative to what we've seen in office. The surprises coming into the substandard category, there was 1 particular land loan that we found out, had some characteristics in it that came to light during the last quarter, and they were material and impactful. That's still -- we're working through that situation and coming up with the determination of where it is. The other transaction that came in the mixed-use residential into the substandard category. That is a multifamily construction loan that we're a participant and a 50% participant in that had some challenges relative to the agency takeout that is committed to on that. The workout plan has already been addressed. And in fact, we anticipate a full payoff of that by the end of this month. So that's a material thing. It's also notable that 2 of the top 11 loans that are listed in the top 25 loan list in multifamily have been refinanced, and the aggregate balance there is about $130 million. So it's -- there's good and positive migration from a balance perspective, and we don't anticipate any fundamental issues like we've seen in office and therefore, the surprises should be limited with all the risk mitigation structures and processes we've put in place. Eric Newell: And just to build off what Ryan is saying. The theme here is that the proactive credit risk management characteristic or the behaviors that the management team with credit and align have deployed this year to reduce the amount of surprises that we may have seen in earlier years and periods and be very thoughtful about and having a high level of attention in identifying the primary source of repayment and if there's weaknesses or issues there, we will appropriately internal or risk rate that loan so we can monitor it and it allows us to intervene much earlier in the process which will maximize our options to maximize shareholder value in the event that there is some disposition that needs to occur. Christopher Marinac: Great. I appreciate the additional color. And then, Eric, I know that the guide for '26 is to have shrinkage of the balance sheet. And I'm just curious if there's a point where you may get to where it's stable and grow slightly before year-end? Or do you think you'll be shrinking for the entire calendar year? Eric Newell: I actually don't believe we're going to shrink for the entire calendar year. I suspect we'll see CRE that continue to decline in the first half of the year, and then there will be some stabilization in the back half of the year, which will then support growth, period end growth in the second half of 2026. Christopher Marinac: Great. And the last question on -- sorry, go ahead. Eric Newell: I was just going to add. The period end is a little different given that we're making money on the averages, and we're comparing the average -- the period end of 2026 compared to the average of last year. So that's why you're seeing that forecast in terms of declines on average earning assets. Christopher Marinac: Got it. Great. And then just a last question. I know the C&I balances grew quarter-on-quarter. Are you still hiring producers in that part of the operation? Susan Riel: We absolutely are still looking for strong producers in that area. Evelyn has her hand out there constantly reviewing and there are some candidates that we are exploring. Operator: I'm showing no further questions at this time. I'd like to turn it back to Susan Riel, President and CEO, for closing remarks. Susan Riel: Thank you very much for your participation and questions during the call, and we look forward to seeing you again next quarter. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.

107天前Insight Analytics约5分钟阅读

GURU.TO 2025 Q4 财报电话会议

Operator: Welcome to the GURU Organic Energy Fourth Quarter and Fiscal Year 2025 Results Conference Call and Webcast being recorded today, January 22, 2026 at 10:00 a.m. Eastern Time. [Operator Instructions] GURU's press release, MD&A and financial statements are available in the Investor section of its website and on SEDAR+. During the call, the company may refer to certain non-GAAP measures, Reconciliations are available in its MD&A. Also note that all financial figures are expressed in Canadian dollars unless otherwise indicated. I would also like to remind you that today's presentation may contain forward-looking statements about GURU's current and future plans, expectations and intentions, results, level of activity, performance, goals or achievements or other future events or developments. Please take a moment to read the disclaimer on forward-looking statements on Slide 2 of the presentation. I will now turn the call over to Carl Goyette, GURU's Chief Executive Officer. Carl Goyette: Thank you, operator. [ Foreign language ] Good morning, everyone, and welcome to GURU's Fiscal 2025 Fourth Quarter and Annual Results Conference Call. Joining me this morning is our CFO, Ingy Sarraf. Let's turn to Slide 5. Fiscal 2025 marks a defining turning point for GURU. It reflects successful execution and strengthens fundamentals across profitability margin and cash flow. We delivered record net revenue of $34.7 million, reduced net loss by 85% from $9.4 million to $1.4 million and drastically improved adjusted EBITDA loss to nearly breakeven. We also generated $3.3 million in operating cash flow, a major turnaround from the $9.3 million outflow in fiscal 2024. We ended the year with $28.5 million in cash, cash equivalents and short-term investments. as well as $10 million in unused credit facilities. Taken together, these outcomes demonstrate the strength of our repositioned commercial model and our ability to deliver disciplined, profitable growth. Turning to Slide 6. The second half of the year marked a clear inflection point for GURU. We delivered two consecutive profitable quarters for the first time as a public company, finishing the year near breakeven. Over the past few years, we made a clear commitment to return to profitability and executed with discipline, protecting margins, managing costs and continuing to grow. Alongside operational discipline, we applied a thoughtful approach to capital allocation, repurchasing approximately 2.4 million shares since 2022 under our NCIB at an average cost of $2.20 per share. This reduces our outstanding share count and enhances our per share financial metrics as we continue our path to profitable growth. Turning to Slide 7. In Q3, we delivered a record $10.4 million in net revenue and our first profitable quarter since going public with $1.3 million in net income and a 12.4% net margin. We kept that momentum going into Q4, delivering another record performance with $10.1 million in net revenue, up 41.5% and securing our second consecutive profitable quarter. Q4 also delivered several key commercial milestones. Record Amazon performance in Canada and in the U.S., driven by a solid momentum during October's Prime day and even stronger results during Black Friday. We expanded our nationwide presence at a leading wholesale club with 2 new 18-can variety packs, further strengthening our retail footprint in Canada and solid results from the launch of our innovations. Both quarters delivered industry-leading gross margins above 65%. Retail performance also strengthened across key accounts in Canada reflecting improved control over pricing, promotions and inventory. What gives us confidence is that this momentum is supported by strengthening underlying fundamentals across channels. Let me walk you through the key drivers. Turning to Slide 8. Our fiscal 2025 transformation was driven by 4 key elements: First, our successful transition back to a direct distribution in Canada, improving improved execution focus and deepened retailer relationships. Second, we delivered sustained revenue growth with net revenue increasing 14.9%. Third, we expanded structural margins with gross margins improving by 940 basis points to 64.7%. And fourth, disciplined cost management, reduced SG&A expenses as we continue to significantly improve our marketing efficiency. Together, these drivers brought us to near breakeven and position us well for fiscal 2026. We are encouraged by the progress and remain focused on maintaining the same discipline and execution going forward. Let me walk you through performance by geography, starting with Canada. Turning to Slide 9. Our Canadian distribution performed exceptionally well. Full year sales grew 16.9%, with Q4 up 45.1%. We launched 2 new 18-can variety packs in Costco. Innovation remains a key differentiator. GURU ranked as Quebec's #1 innovation performer for the fourth consecutive year, led by ZERO Wild Ice pop. Direct distribution fundamentally changed our business. We now control our destiny at retail through deeper partnerships, stronger activations, better inventory management and a direct line of sight to our consumer. Turning to Slide 10. The U.S. delivered consistent growth throughout fiscal 2025. Full year sales increased 8.6%, with momentum building into Q4 as sales rose 29.3%. In the natural retail channel and Whole Foods combined, consumer scanned dollar sales grew 22%, reflecting strong momentum across our U.S. retail footprint. On Amazon, we delivered record results during Black Friday. Earlier in the year, Prime day also contributed significantly to momentum, including GURU reaching the #2 brand position in Canada during the October event. Turning to Slide 11. Innovation continues to be a major growth engine for GURU. Our ZERO Sugar line, Wild Berry, Ruby Red, Ice Pop and Strawberry Watermelon expanded across both countries, meeting fast-growing demand for better-for-you zero sugar options. Island Breeze Punch launched in Q4 is showing strong early sell-through. And early in fiscal 2026, we introduced Dragon Fruit Cherry Sorbet with an additional ZERO Sugar innovations planned throughout the year. With that, I'll now turn the call over to Ingy for a deeper look at our financial performance. Ingy, over to you. Ingy Sarraf: Thank you, Carl, and good morning, everyone. Turning to Slide 13. Let me walk you through the key financial highlights. Fiscal 2025 net revenue was $34.7 million, up 14.9% or 20.4% excluding last year's U.S. wholesale club rotation. Q4 set a new record at $10.1 million, up 41.5%. Gross margin for the year expanded 940 basis points to 64.7%, with Q4 at 65.1%. This reflects benefits of our direct distribution transition improved pricing, disciplined promotions, efficiencies and the onetime adjustments disclosed in Q3. Our 65% gross margin gives us real runway. We can invest selectively in high-return growth initiatives without compromising our progress towards sustained profitability. It's no longer an either/or, we now have the flexibility to do both. SG&A expenses decreased 10% to $24.6 million in fiscal 2025, down from $27.3 million last year, reflecting continued improvement in marketing efficiency and operating discipline. In Q4 2025, total SG&A as a percentage of net revenue decreased to 65.9% from 94.4% a year ago. We expect to maintain disciplined SG&A allocation, prioritizing the highest return opportunities across markets. In fiscal 2025, we reduced our net loss by $8 million to $1.4 million and improved adjusted EBITDA loss by 97.2% to near breakeven. Q4 marked our second consecutive profitable quarter. Finally, we generated positive operating cash flow of $3.3 million versus $9.3 million outflow last year, strengthening our financial position to $28.5 million in cash and short-term investments, no debt and $10 million in our new credit facilities. Our strong financial position provides us with the flexibility to invest in high-return growth initiatives while maintaining disciplined financial management. Overall, we're really pleased with the progress we've made and confident in the levers we have in place to drive further efficiency and growth. With that, I'll turn the call back over to you, Carl, for closing remarks. Carl Goyette: Thanks, Ingy. Let's turn to Slide 15. As we enter fiscal 2026, GURU has real momentum, strong capabilities and a solid foundation to build on. We achieved profitability, we now operate with a structural margin profile built for sustained profitable growth. We have the financial strength to invest in growth, and we're seeing pure momentum across retail, wholesale club and e-commerce. Our priorities are clear: expand distribution across Canada and in the U.S., scale e-commerce and digital acquisition, advance our ZERO Sugar innovation pipeline, reinforce brand presence in health-oriented retail channels. The better-for-you energy drink category keeps growing and GURU is uniquely positioned to capture share through our organic plant-based energy platform and robust innovation pipeline. I want to thank our team for their exceptional execution throughout 2025, and our retail partners and customers whose commitment and energy made these results possible. This transformation is truly a team effort. [Foreign language] Thank you. We are proud of the progress made energized by the momentum we are carrying into fiscal 2026 and committed to executing with the same discipline and focus in the year ahead. Operator, we'll now open the call to questions. Operator: [Operator Instructions] Our first question comes from Martin Landry with Stifel. Martin Landry: Congrats on your great results. I would like to just dig in into the revenue growth on a year-over-year basis for Q4. Just trying to compare apples-to-apples. So I was wondering if maybe you can discuss your performance at retail in Canada. You gave in your MD&A, the scanned dollar sales for the last 52 weeks, I think you're up 22% year-over-year. Wondering if you could break the performance for Q4, that would be greatly helpful. Carl Goyette: Yes, absolutely, Martin. I'll start with the U.S. because the U.S. is -- I guess, the U.S. is easier because most of our business is tracked in the U.S., right? So I gave, in my remarks, I also spoke about it. In the U.S., when you look at spins, which is really tracked, and we add all foods to this, as we get to plus 22%, right? So when I combine spins, wholefoods and other untracked, they're really in the range of like 20% in the U.S. So that's kind of the growth we're seeing, the real growth we're seeing in the U.S. and Q4 would be around 20%. And for Canada, it's a little bit more complex because as we discussed, right, there's a lot of growth that's happening in untracked channel. We're seeing online, Costco, some discount, independents growing faster than some of the track, right? So we need to do a little bit more of a calculation to get to give you a good number on this, right, so we look -- so what we do is we look at track channels and then we add back the shipments for whatever is on track. And the number is exactly the same, right, in Q4, we're seeing also plus 20% in consumer offtake when combining tracked and untracked for Canada. So overall, growing at 20% in U.S. and Canada is the short answer. Martin Landry: Super clear, and it's easy to understand, and that's an apples-to-apples. So that's helpful. Okay. And then you do say in your opening remarks that you have momentum and you're entering fiscal '26, with momentum. Looking at Q1, it's almost done now. So any color you can give us on your performance at retail for Q1? Carl Goyette: Yes. As you know, Martin, we don't give formal guidance. I know it's almost done, but it's not done. I can tell you, the sales team is pushing as hard as they can. So there's always a little bit of timing which large orders are going to be delivered when and all this. I can't give you an exact number, but I can tell you -- the few things I'll give you to help you answer this question. The first is the industry is doing really, really well, right? The industry is growing healthy, both in Canada and in the U.S. at around 10%. And there are strong tailwinds for anything that's better for you, ZERO sugar and innovations. So obviously, we want to -- the discussion that we almost want to have with you is to look at, let's say, a longer-term horizon, let's say, Q1 and Q2 to say we expect to outgrow the industry significantly, right? So if the industry is growing at 10%, expect us to outgrow this and keep growing market share. That's one thing that I think is fair for us to tell you in terms of outlook without giving you an exact number. From a margin point of view, we also are very proud in our margins. Our margins are industry-leading, they've always been part of our recipe. These margins are key for us to be profitable. So we will protect and defend this. And there's obviously pressure in margins like everybody else, but this is something that we're proud of and we will defend, right? So don't expect big movements from a gross margin point of view, except from some pressures that are cost related, right? And then from a profitability point of view, which obviously everybody is interested in this as we gain scale, we've said for a number of years that we were going to get back to profitability. Not everybody believed us. I think we've just proved that we can be profitable two quarters in a row. That's the intent, right? So when we look at the future of this business, this business will be a profitable business. It doesn't mean we will be profitable every quarter, right? We want to be -- I think we've been clear last quarter. And I want to be clear again that we are still very much focused on growth, right? And we will attack some opportunities, and we will make investments if we think there's going to be a great return for our future. So some quarters, we may not be profitable. Some quarters, we may be more profitable. I think the one thing that I would want to commit with you, with Ingy as well, like we said last quarter, is that whenever there's a loss, we'll -- if there is a loss in the future, we'll point to exactly the investments we're making, obviously, as much as we can without disclosing our strategy. But we'll be able to tell you, "Hey, here's the -- an example of investments we're making this quarter. Here's why maybe we're seeing a small loss, but this is going to pay back in the future." right? And the beauty is we have $28 million in cash in the bank account, and we have money to invest, and we still really much believe in the potential of this brand and we will want to continue investing in this brand in the future. Martin Landry: Okay. That's helpful. Just a point of clarification, when you say you intend to be profitable, are you talking at the EBITDA line or at the net income line? Carl Goyette: The EBITDA, yes. Martin Landry: Positive EBITDA. Okay. Okay. I mean it does answer most of my questions, I just wanted to maybe have a little bit of a long-term picture. And I think you've answered it a little bit. I'm trying to grasp a little bit what's your growth algorithm from a revenue standpoint longer term. You talked about growing faster than the industry. Is that a little bit how we should think about your long-term growth algorithm? Carl Goyette: Yes, we'll give you a similar answer to the one that's given. Because the mindset is the same, right? Obviously, longer term, we obviously think that this brand and our organization can outgrow the industry. In fact, our mission is to transform and clean up this industry. We think that there is a place in this very large industry for a product that is much healthier that has a much cleaner list of ingredients that provide the same benefits. So obviously, we think that the product and a brand like GURU can outgrow the industry significantly, right? The protection of our margins still stands, right? There's no reason why we would complement on this. I think the big thing that changes over a longer term is with scale, profitability becomes much easier. We're still a fairly small company. If you look at our cost base, the cost of being public and there's some costs in there that are fixed costs that are part of our structure in SG&A that, over time with scale, are not as significant, right? So you can't -- in the future, you should start seeing much better EBITDA margins on a more consistent basis. Operator: And the next question comes from Sean McGowan with ROTH Capital Partners. Sean McGowan: A couple of questions specifically about the quarter, maybe this might be more for Ingy and then some bigger picture questions. At both the gross margin level and the operating expense level, the performance was kind of better than I had modeled. Was there anything in those numbers that was like an unusual benefit that would make us maybe not expect this kind of performance in the future? Can any -- unusual offsets to expenses? Ingy Sarraf: No. It was a very regular quarter. Of course, we're in the new structure, right, in the new business model. So no, it was very regular in terms of SG&A and even in terms of gross profit. Nothing that was one-off. Sean McGowan: Yes. Well it looks like you're generating more gross margin than you had even before the -- going back 5 years or so. So you're coming in at a higher margin level than you had even before Pepsi, right? Ingy Sarraf: Yes, we had a very good gross margin from a pricing standpoint. We had, of course, the benefit of the transition back to the new model. And we also have some continued impact from our pricing discipline and a tighter control over our promotional activities. Sean McGowan: Okay. That's helpful. And then looking at -- I hear that you're not going to get into the guidance business, at least not yet. But given the kind of some unusual things that happened over the course of the last fiscal year, can you give us some help on what we should expect in the cadence of growth in 2026, given the comparisons up against some unusual quarters last year? Carl Goyette: Yes. Well, obviously, the aspiration remains the same, the aspiration like as I said, I think this is a growth company, and we will do everything we can to be a high-growth company, outpace the industry, Q1 and Q2, we have more visibility on, obviously. We also -- so we have the benefit of the new model in Q1 and Q2. I think Q3 and Q4 will be comparing direct distribution quarters with direct distribution quarters. So we will not have that benefit. So most of the growth will come from the volume, right? Right now, we're benefiting from volume growth and from margin improvement, right? So as you model this down the road, then it's -- we will be focused on generating pure volume growth to generate revenue, right? Because we don't think there's not much pricing that we're going to take this year, right? So it's more of a volume growth just Q3 and Q4, but we have a very aggressive year in front of us with great innovations that are coming, momentum from a distribution point of view, momentum with a lot of retailers and e-commerce. So we're very confident for this year, obviously, in remaining a growth company. I'm not sure if that answers your question. I think I gave a lot of color on Q1 and 2. Beyond that is a little bit still far, but I think the momentum, there's no reason why momentum would stop, right? Unless something really -- that we don't control happens, right? Sean McGowan: Right. Okay. The working capital figures were also, I think, a positive surprise in terms of actually getting a source of cash in the fourth quarter. Not something you typically see with this kind of revenue growth. So given your aspirations for growth, should we expect the company will need to invest in working capital in 2026? So should we expect it to kind of revert to being a use of... Ingy Sarraf: Yes, I think it will be much more neutral in 2026 versus you saw the shift in receivables, the timing of receivables and payables in 2025. So I think it will be much more neutral like we saw in previous years of working capital because we're at the right levels of inventory, the right levels of investments there. Sean McGowan: Okay. That's helpful. And some bigger picture questions. You mentioned cost as a potential headwind. Is there anything specific that you can point to it? And the reason I ask is there's been some chatter on some of the other company conference calls about aluminum costs, are you seeing anything in input costs that give you any concern or that might offset some of your pricing? Ingy Sarraf: Yes, of course. Like the rest of the industry, we're feeling the pressure really aluminum related, and we see it, of course, to our co-packing costs, of course. For the rest, the other inputs whether freight or the raw materials where -- it's broadly stable within the normal CPI index increases. So it's really aluminum that's putting a pressure, of course. Sean McGowan: Okay. Maybe for Carl. Carl, are you seeing any new entrants into the category that you think are worthy to keep your eye on? I mean, some of the big guys are doing pretty well, but some new entrants also not doing so badly. Are there any companies that you would look at? Carl Goyette: Well, there is always a lot of action in this industry, and there's always been. Like we've been around 25 years, and there's not a year where there's not a ton of new entrants and I guess the industry doing so well, the industry having so much momentum consumers consumers' appetite for innovations, better-for-you, ZERO sugar. Obviously, it makes this space attractive for a lot of new entrants. So there's nothing specific I would point to in terms of -- I think, what we need to look at is, yes, this is an attractive industry. Yes, this is an extremely competitive industry, right? So we need to be very focused, very methodical about our strategy knowing exactly where our brand can play and what type of consumers we're going after. If we're trying to please everybody, we're not going to please anybody, but we know that there is a real consumer base for products that are like GURU, and we're very focused on that, not being distracted by all the other new entrants that come and go. The reality is a lot of people come, a lot of brands come and go. That's kind of the high level, what I would give you. We don't see that many new entrants, to be honest, in this exact same space, from an ingredients, clean ingredients list point of view with no sucralose, no aspartame, natural caffeine and the benefits we offer from a boost and focus point of view. We don't see that many new entrants. So in that sense, we're lucky and we're very well established in that positioning. So when we see -- when we look at all these new entrants, as much as we wish them good luck, we know that having -- being around since 1999 and being so established in the natural channel, in e-comm channels, on Amazon, having the relationships we have with retailers, is really a meaningful advantage over the new entrants that come in right? It doesn't mean that it's impossible for new entrants to be successful. We've seen some new entrants come in and be very successful. But we're not -- we don't get distracted by this. We're very much focused on our own strategy while obviously taking lessons from anybody who is successful in this industry is our way is something that we look at and say, "Hey, wow, these guys have done really well", especially if they're in the better-for-you space, right? Because we think Obviously, this is fundamental to our mission. We think that this industry needs -- I said this earlier, but this industry desperately needs a transformation for the better. It's really an industry that's full of chemicals, and we think that, that should not be the case. It should be an industry that's providing consumers with healthy products. Sean McGowan: Thank you. Then another competitive question. So Monster and Coke have had a relationship for a long time, Celsius and Pepsi have a relationship for a long time. KDP is jumping on some of these new entrants aggressively. Does this make it harder, you think, for new entrants? Because the core businesses of some of these bigger consumer products companies are not that strong, and carbonated soft drinks, not a growth category. Does it make it harder or easier for new companies to kind of get in, establish some share and then sell out? It seems to be the game plan for these guys. Carl Goyette: I don't know. It is always like you see -- I think what's important is to be innovative and to find your own way. And we spoke about channel shifts, the opportunities and on track. There are so many new channels. Consumers are not shopping in the same way. E-commerce levels, the playing field very much on brands, right? So there are so many other ways to grow than only in the traditional channels. Obviously, traditional retail channels play a big role. This is where the bulk of the industry is being sold. But this is a over $26 billion industry growing so fast. The reality is there's so many other ways to win in this industry without necessarily going into the massive systems, the large DSD players, right? When you get to $1 billion, I guess at some point like you have no choice. But at the size we are and we look at the opportunities or at the size of whenever a new entrant coming in, new entrants have plenty of opportunities to grow outside of these big distribution giants. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Carl Goyette for any closing remarks. Carl Goyette: I simply want to thank everybody for joining, and thanks for choosing Good Energy. Have a great day. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

107天前Insight Analytics约5分钟阅读

CATY 2025 Q4 财报电话会议

Operator: Good afternoon, ladies and gentlemen, and welcome to Cathay General Bancorp's Fourth Quarter and Full Year 2025 Earnings Conference Call. My name is Ashia, and I'll be your coordinator for today. [Operator Instructions] Today's call is being recorded and will be available for replay at www.cathaygeneralbancorp.com. Now I would like to turn the call over to Georgia Lo, Investor Relations of Cathay General Bancorp. Georgia Lo: Thank you, Ashia, and good afternoon. Here to discuss the financial results today are Mr. Chang Liu, our President and Chief Executive Officer; and Mr. Heng Chen, our Executive Vice President and Chief Financial Officer. Before we begin, we wish to remind you that the speakers on this call may make forward-looking statements within the meaning of the applicable provisions of the Private Securities Litigation Reform Act of 1995 concerning future results and events, and that these statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are further described in the company's annual report on Form 10-K for the year ended December 31, 2024, at Item 1A in particular, and in other reports and filings with the Securities and Exchange Commission from time to time. As such, we caution you not to place undue reliance on such forward-looking statements. Any forward-looking statements speak only as of the date on which it is made, and except as required by law, we undertake no obligation to update or review any forward-looking statements to reflect future circumstances, developments or events or the occurrence of unanticipated events. This afternoon, Cathay General Bancorp issued an earnings release outlining its fourth quarter and full year 2025 results. To obtain a copy of our earnings release as well as our earnings presentation, please visit our website at cathaygeneralbancorp.com. After comments by management today, we will open up this call for questions. I will now turn the call over to our President and Chief Executive Officer, Mr. Chang Liu. Chang Liu: Thank you, Georgia, and good afternoon. This afternoon, we reported a net income of $90.5 million for the fourth quarter of 2025, a 16.5% increase from $77.7 million in Q3. Diluted earnings per share increased by 18.3% to $1.33 in Q4, up from $1.13 in Q3. For the full year 2025, our net income was $315.1 million, a 10.1% increase from net income of $286 million in 2024. In Q4, we repurchased 1.1 million shares of common stock for $51.9 million at an average cost of $47.15 per share under our June 2025, $150 million stock buyback program. There is $12 million remaining under our June 2025, $150 million buyback program, which we expect to complete in early February. We plan to announce a new buyback program after approvals are received. Total gross loans grew by $42 million, driven primarily by increases of $18 million in CRE loans and $17 million in residential loans. We expect loan growth in 2026 to be between 3.5% and 4.5%. Slide 7 of our earnings presentation shows the percentage of loans in each major loan portfolio are either at a fixed rate or hybrid rate. Aggregate fixed rate and hybrid loans account for 60% of the portfolio, excluding fixed to float interest rate swaps, which represent 3.1% of total loans. Fixed rate loans make up 30% of total loans and hybrid in fixed rate period account for 30% of total loans. We expect these fixed rate loans to support our loan yields as market rates are expected to decline. We continue to monitor our CRE portfolio. Turning to Slide 9. The average loan-to-value of our CRE loans remained steady at 49%. Our retail property loan portfolio represents 24% of our total CRE loan portfolio or 12% of total loans. As shown on Slide 10 of the $2.5 billion in retail property loans, 90% are secured by retail store, neighborhood, mixed use or strip centers, only 9% are secured by shopping centers. Turning to Slide 11. Office private loans represent 13% of our total CRE loan portfolio or 7% of our total loans. Of the $1.4 billion in office loans, 30% secured by a pure office, only 3% are in central business districts. Another 42% are collateralized by office retail stores, office mixed use and medical office properties, with the remainder 28% secured by office condos. For Q4, we reported net charge-offs of $5.4 million as compared to $15.6 million in the prior quarter. Nonaccrual loans were 0.6% of total loans as of December 31, 2025, down $53.3 million to $112.4 million compared to the prior quarter. The decrease in nonaccrual loans during the fourth quarter of 2025 included the sale of a $15.8 million CRE loan at par and a $10.8 million CRE loan brought current and restored to accrual status. Turning to Slide 13. Classified loans decreased from $420 million to $391 million for Q4. Special mention loans increased from $455 million to $535 million in Q4. The bank downgraded 5 loan relationships totaling $92 million to a special mention that have not met certain debt covenants and have exhibited short-term financial issues for closer tracking. The bank believes that these credits will resolve within the next 12 months by either credit upgrades or partial or full payoff. We recorded $17.2 million in provisions for credit losses in Q4 compared to $28.7 million in Q3. The ALLL to gross loan ratio increased to 0.97% from 0.93%. And excluding our residential loan portfolio, the total reserve to loan ratio would be 1.22%. Total deposits increased by $373 million or 7.6% on a annualized basis during Q4, driven primarily by $366 million increases in core deposits and $7 million in time deposits. The growth in core deposits reflected seasonal factors in targeted marketing activities. For 2026, we expect deposit growth to range between 4% and 5%. As of December 31, 2025, total uninsured deposits were $9.3 billion, net of $0.9 billion in collateralized deposits, representing 44.6% of total deposits. The bank has $7.5 billion of unused borrowing capacity from Federal Home Loan Bank, $1.3 billion from Federal Reserve Bank and $1.6 billion in unpledged securities. Altogether, these available liquidity sources provide more than 100% of the uninsured and uncollateralized deposits as of December 31, 2025. I will now turn the floor over to our Executive Vice President and Chief Financial Officer, Mr. Heng Chen, to discuss the quarterly financial results in more detail. Heng Chen: Thank you, Chang, and good afternoon, everyone. For Q4 2025, net income increased $12.8 million or 16.5% to $90.5 million from $77.7 million for Q3, primarily due to $11.5 million lower in provision for credit losses, $5.4 million higher in net interest income and $6.8 million higher in noninterest income, partially offset by a $4 million increase in noninterest expenses and $6.8 million higher in provision for income taxes. The net interest margin increased to 3.36% in Q4 from 3.31% in the prior quarter. The increase in net interest income was driven by a lower cost of funds. We anticipate further benefits to the NIM from declining deposit costs supported by the fixed rate proportion of our loan portfolio. Based on the Fed fund futures, we project 2 rate cuts in 2026, one in June and a second cut in September and anticipate that the net interest margin for 2026 to range between 3.4% and 3.5%. In Q4, interest recoveries and prepayment penalties added 5 basis points to the net interest margin compared to adding 4 basis points to the net interest margin in Q3. Q4 noninterest income increased $6.8 million to $27.8 million compared to $21 million in Q3, mainly reflecting a $6.4 million change in mark-to-market unrealized gain on equity securities in Q4. Noninterest expense increased by $4.1 million from $88.1 million in Q3 to $92.2 million in Q4, primarily due to a $4.3 million higher bonus accrual in Q4 as a result of the above budget financial performance for 2025. We expect core noninterest expense, excluding tax credit and a core deposit intangible amortization to increase between 3.5% and 4.5% in 2026. The effective tax rate for Q4 2025 was 20.33% as compared to 17.18% for Q3. We expect effective tax rate between 20.5% and 21.5% for 2026. As of December 31, 2025, our Tier 1 leverage capital ratio increased slightly to 10.91% as compared to 10.88% in Q3. Our Tier 1 risk-based capital ratios increased to 13.27% from 13.15% in Q3 and our total risk-based capital ratio increased to 14.93% from 14.76% in Q3. Chang Liu: Thank you, Heng. We will now proceed to the question-and-answer portion of the call. Operator: [Operator Instructions] The first question comes from Kelly Motta with KBW. Kelly Motta: Maybe kicking it off on deposits. I appreciate the updated margin guidance -- or the new margin guidance for 2026. It looks like you did a pretty nice job lowering interest-bearing deposit costs here. Can you speak more in terms of what you're assuming for deposit betas embedded in that NIM outlook here? And just any market commentary as to the level of competitiveness now at this stage. Heng Chen: Yes. I think we're assuming deposit betas in the 60% range or so. And in terms of market competition, I think it's about the same. Yes, we haven't -- it's pretty rational in Q4. Chang Liu: So Kelly, kind of for me looking forward for 2026, I think the local L.A. and New York landscape is still pretty competitive. I mean we have about nearly $4 billion of maturing CDs in the first quarter with an average yield of about 3.8%. We'll run our -- the Lunar New Year campaign and likely if we can price somewhat below that, that's kind of the goal, but we're going to be sensitive about defending that base that we have, while we try to transition some of that into noninterest-bearing. Kelly Motta: Got it. That's helpful. And just a point of clarification on that beta hang that 60%, is that for interest-bearing or total deposits? Heng Chen: Interest bearing. Kelly Motta: Got it. And then maybe on -- it was nice to see the NPA improvement, and it seems like you had both a payoff and a resolution there. As we kind of look ahead, what are you seeing in terms of credit and any migration into criticized and overall trends? Chang Liu: So maybe some of that I can help with this is some of the migrations into special mention, we don't see any particular trends in particular, 3 of the 5 that we were talking about the top 3, they're different in their own nature. One, for example, is a project in New York. It's a mixed-use project. It's completed. It's fully occupied. The ownership is just waiting for a lower property tax status approval to get through. And once that status approval gets through, then they'll be back up to compliance with sort of the debt coverage with that one. Another one is a multifamily mixed use, primarily in the Pacific Northwest. They have a new commercial tenant coming in, not quite there yet. And so that's contributing to the -- not being able to meet the covenant requirement and as well as some of the more competition in the area. So it's -- they're finding some more challenges, but they're going to return that back to stabilization and it's got a great guarantor support and they're paying us as agreed. And then lastly, it's a bit of a C&I story, and it's a distributor of exercise equipment and their own warehouse and they got some quarterly -- not being able to meet the quarterly financial requirements. But overall, for the year, they're expecting a full year on a positive note. So once we get the CPA financials, we hope to be able to upgrade that if they can show a full year profit. Operator: [Operator Instructions] The next question comes from Andrew Terrell with Stephens. Andrew Terrell: Maybe just on the margin quickly. The loan yield performance this quarter was also a decent amount better than I kind of was expecting. Was there any level of interest recovery in the loan yields this quarter, just looking at some of the NPL reduction? Heng Chen: Yes. It was 5 basis points to the NIM versus 4 basis points in Q3. Andrew Terrell: Got it. Okay. So relatively close to the baseline amount? Heng Chen: Right, yes. Andrew Terrell: Okay. And I appreciate all the color on the deposit and kind of cost dynamics in the market right now. What about on the lending side? Have you seen an elevated level of competition for incremental loan growth? And just what's the kind of status of the market on the lending side? Chang Liu: Yes. So surprisingly, I looked at those numbers for 3 segments. On the residential mortgage, believe it or not, we had a pretty strong growth last year in '25 and the rates of the entire portfolio actually held up pretty nicely. As a matter of fact, I think improved by a couple of bps there. On the CRE side, I think there's still pretty strong competition for the right type of assets and loans. So that declined by, don't quote me on this, about 15, 20 bps on the entire portfolio there. I think the most amount of competition we saw probably was on the C&I side. I think the C&I side, we're still trying to push for growth and find some new lenders, new relationship kind of teams and those kind of things. But our existing portfolio on the C&I side, that we saw probably the most amount of competition there, and that rate declined steeper than the other 2 segments. Andrew Terrell: Got it. Okay. If I could just sneak one more in. Do you have the amount of the expected amortization in 2026? Heng Chen: For low income housing, it's probably $11 million a quarter, Andrew. Operator: Thank you for your participation. I will now turn the call back over to Cathay General Bancorp's management for closing remarks. Please go ahead. Chang Liu: I want to thank everyone for joining us on our call, and we look forward to speaking with you at our next quarterly earnings release call. Operator: Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.

107天前Insight Analytics约5分钟阅读

RMGGY 2025 Q4 财报电话会议

Operator: Good morning, ladies and gentlemen, and welcome to the Resolute Mining Fourth Quarter 2025 Activities and 2026 guidance. [Operator Instructions] I would like to remind all participants that this call is being recorded. I will now hand over to the Chief Executive Officer, Chris Eger, to open the presentation. Please go ahead. Christopher Eger: Good afternoon, and good morning to all. Welcome to Resolute Mining's Q4 2025 Activity Report in addition to providing some color on our 2025 annual results as well as our guidance for 2026. Today, I'm joined on our call by Gavin Harris, our Chief Operating Officer, who's actually sitting at our Syama operations in Mali as well as our CFO, Dave Jackson, in addition to our Head of Corporate Development and Investor Relations, Matty O'Toole-Howes. So let's dive into it. When looking at our Q4 performance across the business, I'm very proud to say that we achieved all of our targets and have very much stabilized the operations, setting up a very strong foundation for 2026. But when looking at the details, our gold produced was 66,000 ounces, an increase of 6,000 ounces over our Q3 results. A lot of this additional work came from our activities in both Senegal and Mali. Specifically in Mali, we have stabilized the supply chain issues that we talked about at the beginning of last year and throughout 2025, whereby now we've now stabilized our explosive situations and are hitting our targets through the end of the year and into 2026. Mako continues to perform extremely well, and we had a very strong quarter in the last quarter of the year. As a result of the good production across the business, our all-in sustaining costs came in at $1,877, again, a decrease versus our Q3 AISC of just about $2,200. So the difference between the 2 AISCs really results in the fact that we are really managing our costs across the business as extremely and efficiently as possible, but most importantly, with the increase in the production levels. Very also positively, we reduced our TRIFR to 1.87x versus 1.95x in the previous quarter. CapEx came in line at $18 million. But ultimately, what we're most proud of is the fact that we generated close to $86 million of operating cash flows in Q4 relative to $70 million in Q3. So what does this mean from a net cash position for the year is that we ended the year at $209 million of net cash, which is roughly $140 million increase in cash from the beginning of the year. But Q4 was also very exciting for us and the fact that we had some significant developments in Côte d'Ivoire. Specifically, on December 15, we provided an update of the Doropo DFS to the market, which shows the incredible robustness of this project, whereby the NP of the project at $4,000 is just about $2.5 billion. We'll go into more details on the specific activities for Doropo in the upcoming slides, but I'm very pleased to say that this project remains on track, on budget for construction in the first half of this year. In addition, we continue to progress across the portfolio in our exploration assets. And most notably, we introduced a Le Debo MRE at 643,000 ounces at 1.14 grams per tonne. In addition, we started really drilling at the ABC deposit in Western Côte d'Ivoire, achieving very strong exploration results, which I'll go into detail in the coming slides. Across the business, we also are continuing to execute our other strategic projects, most notably in Mali, we're very much on track and on budget with our SSCP project, again, which we'll talk about in the upcoming slides, and we continue to progress in Senegal on the life extension projects. 2025 was an incredibly pivotal year for Resolute as well as a very transformational year for the business. I'm very proud to say that we were able to achieve gold production in line with our guidance of 275,000 ounces to 285,000 ounces with final gold forward of 277,000 ounces. So very much on track to guidance, on production, also on all-in sustaining costs, whereby we ended the year at an all-in sustaining cost of $1,843, which is in line with our revised guidance. Additionally, CapEx came in on guidance at $118 million, and we achieved very strong operational and financial results with EBITDA coming in at $383 million. It is worth noting though that at the end of the year, we finished with quite a lot of gold bullion that we did not sell. So we roughly had 31,000 ounces of gold in inventory that we sold in January, which impacted the EBITDA profile for 2025. With regards to cash flow generation and as it relates to the previous slide, we ended the year with $209 million of net cash, but our overall available liquidity was just over $320 million between our gross cash and access to working capital facilities. So when looking at the business from a qualitative perspective, we're very pleased with all the activities that occurred in 2025 to position the business for continued success in 2026. Most notably, in 2025, we substantially augmented the skill sets of the executive team. We brought new people into the business, specifically a project team in Côte d'Ivoire for the construction of the Doropo project. We also restructured a lot of the principal activities in Mali as a result to some of the challenges that we encountered in 2024. We spent quite a bit of time with different government bodies across the business, and we've been augmenting the relationships that we have with the people in all the different jurisdictions that we operate. We also completed the acquisition of the Doropo and ABC projects in Côte d'Ivoire in May of 2025. This acquisition has set the business up for continued success by becoming a multi-producer West African gold company. We also made significant achievements in continuing the projects that we have in both Mali and Senegal as it relates to the SSCP and [indiscernible] programs, which we'll go into more detail. The other key activity for the business in 2025 was continued focus on exploration as I see this as a pivotal leg to creating shareholder value in the long term. But I'll spend a bit more time in the exploration section as it relates to some of the key activities that we see in 2026. Here's a recap of the organic growth profile for the next coming years. As you can see, in 2025, we achieved 277,000 ounces but as you look to the future, we'll be achieving between 250,000 to 275,000 ounces for the next couple of years as we continue our stockpile processing at Mako, where we start the construction of the Doropo project. So I'm very confident by 2028, we will be on a run rate to achieve 500,000 ounces for the foreseeable future across the business. And beyond that, with the work that we're doing on exploration, I'm very confident that we'll be able to grow the production profile organically through some of the success that we're seeing in the exploration side of the business. So as you can see on the page, we're guiding gold production from 250,000 to 275,000 ounces across the group. That's split between Syama and Mako of 195,000 to 210,000 ounces of gold production out of Syama and 55,000 to 65,000 ounces of gold production out of Mako. Mako is quite straightforward as we're continuing to process stockpiles all through '26 and into '27. However, at Syama, Syama is going to have an interesting year as we will be commissioning the SSCP program, whereby we are going to start processing the majority of the ores to be sulfides as opposed to in the past, a split between sulfides and oxides. But Gavin will go into very specific details about how this transition will occur in 2026. As a result of the high gold price environment, we are seeing our all-in sustaining costs increasing. And so we are guiding our all-in sustaining costs across the group between $2,000 to $2,200, but a significant reason for the increase from 2025 is due to the fact that the royalty expense at today's gold price environment at $4,000-plus is adding quite a bit of expense to our all-in sustaining costs. Capital expenditure for 2026 is substantially higher versus 2025. And as you can see on the page, is between $310 million to $360. Going through the different line items, we will provide some context to the increase in CapEx. So let's start with Syama. Syama is being guided between $110 million to $125 million. But of this number, approximately $40 million relates to the finalization of the SSCP program relative to 2025. In addition, waste stripping is also about $40 million, which is an increase versus 2025 of about $20 million. And that additional waste stripping capital is required in order to further develop the Syama North deposit in order to access higher-grade zones for the future. At Mako, we anticipate that the CapEx will be between $15 million to $20 million with the vast majority of that capital being spent on capital projects at the Tombo and Bantaco projects. Doropo is projected to be between $170 million to $190 million, subject to permitting an FID approval. And most of that CapEx is scheduled to be spent in the second half of the year. But again, we'll go into more detail how we see Doropo being built and expensed in the upcoming slides. And finally, we continue to spend quite a bit of money on exploration as this is a key value driver for the business. And so we expect to spend at least $15 million to $25 million on exploration, predominantly in Côte d'Ivoire, but we are looking to expand our activities in both Guinea and also in Senegal. So with that, let me turn it over to Gavin Harris to walk you through the specifics of each of our assets and our activities in 2026. Gavin Harris: Okay. Thanks, Chris, and good morning and good afternoon to everybody on the call. Starting in Ivory Coast. We've made major progress on Doropo and ABC projects, which we acquired in May last year from AngloGold Ashanti. Doropo is a transformational project for Resolute, one that I was already familiar with as it was originally developed during my time with Centamin. Throughout the second half of 2025, we built out the project team, appointing key positions; the Project Director, the Project Manager and the Project Services Manager. The Project Director, Rob Cicchini, leads this team, which has nearly 100 years of experience building projects in West Africa, Asia and Australia, predominantly with Lycopodium in the past. The long list of projects this team have worked on in West Africa include Ity, Agbaou and Sissingué in Côte d'Ivoire; Houndé, Bissa and Bouly in Burkina Faso; Fekola in Mali, Obotan and Nzema in Ghana and of course, our very Mako mine in Senegal. Moving on to key achievements for Doropo last year. These include the updated mineral resource estimate, which increased by 28%. The release of the updated definitive feasibility study, or DFS, that outlined a larger and longer life operation than the previous DFS by Centamin in 2024. The appointment of Lycopodium Engineering to complete the front-end engineering design or FEED and the issuance of the tender for engineering, procurement, construction management or EPCM, with site visits taking place next week. Progression of permitting saw increased governmental interactions, including multiple visits from the Resolute executive team and a meeting with the Prime Minister. We are waiting for approval for the mining permit. At the end of last year, the permitting process slowed due to elections. With these now over and ministers being appointed this week, we expect the last 2 stages of permitting to progress over the coming months. These stages are, firstly, approval in the Interministerial Commission followed by signature of the presidential decree. The updated DFS released on the 15th of December outlines a significantly larger project compared to the previous version of the DFS with a 55% increase in gold reserves and an extension of the mine life. An updated gold price of $1,950 per ounce has increased total life of mine gold production to 2.2 million ounces over 13 years. Current spot gold price is significantly higher than this, but to manage the time line and permitting, which was submitted using $2,000 pit shells, the updated DFS remains within these confines. Further gold production is anticipated at higher gold prices, which underpins the confidence that the Doropo life of mine could be extended beyond 13 years. We believe additional exploration targets between the main Souwa hub and Kilosegui could add even further mine life. [indiscernible] front capital costs have increased to an estimated $516 million, which reflects updated pricing with a significant inflationary aspect compared to the previous version completed during the first half of 2024. A 25% increase in processing capacity, future-proofing the project, which allows for further modular expansion, an 80% increase to the water storage capacity, a 55% increase in the capacity of the tailings storage facility to meet the additional process tonnages, increased land and livelihood restoration and resettlement costs and the inclusion of some previously admitted items. Financial highlights from the updated DFS at a base case gold price of $3,000 an ounce include all-in sustaining cash cost of $1,406 an ounce, a post-tax net present value of $1.46 billion at a 5% discount rate and internal rate of return of 49%. A payback period of 1.7 years, the payback drops to under a year of $4,000 gold price, and obviously, the gold price is much higher than that right now. Very strong free cash flows averaging over $260 million per year over the first 5 years of production. As I mentioned a moment ago, we see a lot of upside potential at Doropo, and I believe it's going to be one of those mines that simply keeps producing well beyond initial expectations. So the key work streams for Doropo in 2026, which are already underway are focused on maintaining project time lines whilst permitting and the final investment decision or FID takes place. FEED work undertaken by Lycopodium will mean equipment and construction tender packages can be prepared and issued in the first half of 2026. This work will enable procurement of key long lead items to start as soon as FID is approved. EPCM tenders have been issued with a site visit taking place next week. We initiated a competitive bid process with strong interest from world-class engineering firms with proven track records building gold mines in West Africa. The EPCM submission and adjudication will continue throughout the early part of the year, and we plan to award this towards the end of Q2. Site earthworks will start before the wet season to establish access roads and advance the early stages of the water storage and water harvesting tasks, which are key to retaining and providing water during the project construction phase. To facilitate the early work schedule, work will start on the construction of the camp and permanent village to provide messing and accommodation for the construction teams. If we assume that FID is completed by the end of Q1, the project time line has construction starting from midway through Q2 of 2026 with commissioning starting early 2028. The first gold pool is expected to be towards the end of the first half of 2028. Again, assuming the FID is reached by the end of Q1, capital expenditure on the project in 2026 is expected to be between $170 million to $190 million with approximately 75% or $135 million of expenditure during the second half of the year. Expenditure in the first half of the year will include land acquisition and crop compensation for the villages affected by the project. So now we'll move across over to Mali and the Syama operation. Syama delivered 47.2 kilo ounces during Q4, the momentum shift after 2 successive lower quarters, largely due to supply chain issues encountered from the end of Q1. The strong quarter resulted in Syama achieving the lower end of guidance with 176.3 kilo ounces of gold produced at $2,008 all-in sustaining cost, again, within the guidance range. Of note during Q4 was a new ore production record from the underground mine, achieving over 250,000 tonnes of ore in a single month. This underpinned the strong quarter as we use alternative explosive products and supplies to address issues encountered over the previous 9 months. On joining Resolute, I traveled to Mali on the evening of my first day with the company. During this visit, which lasted 3 weeks, it was clear the team on site needed strategic leadership to help with decision-making of the complex operation. We made great progress in this area, and we see further areas of improvement in 2026. Additionally, I spent considerable time reviewing contractor and supplier arrangements to make sure we're receiving the most competitive rates. To address some of the challenges, I carried out a restructuring of the management team in the second half of 2025. This started with the General Manager of the operation. While this restructure took place, I spent 3 months on site at Syama overseeing the operation and implementing a reset to remove historical inefficiencies, also whilst taking advantage of many opportunities that were immediately visible. The team at Syama were bolstered with experienced and seasoned professionals bringing first-hand experience of turning around distressed assets. We conducted an operational review starting during Q3, focused on optimization of the underground assets and cost reduction programs across the whole site. It resulted in a significant drop quarter-on-quarter as these benefits began to hit the bottom line in Q4. You can see this reflected in the all-in sustaining cost of $1,779 an ounce. This review continues today with the new leadership team and with even more opportunities under evaluation that are expected to deliver shareholder value throughout 2026 and into the future. These ongoing measures as a minimum are expected to assist in offsetting inflationary pressures. Full year capital expenditure was just below the guidance range, largely due to the Syama Sulphide Conversion Project or SSCP as we call it, deferring some $5 million of costs with the revised schedule for sulphide processing. This was while we were completing Tabakoroni oxide reserves in Q4. The key supply chain issues revolved around transport of products internally through Mali. The largest effects were on explosive products and fuel that needed government escorts. Currently, fuel levels are stable and to combat the explosive transportation issues we faced, we followed our in-country peers and will construct an explosive manufacturing plant at Syama in 2026. This is expected to increase operational stability and explosive availability across the operation. Whilst I've been on site as Syama stabilized in the operations. Chris, the CEO has been busy working to improve dialogue and build a relationship with the government leasing with the value in Prime Minister [indiscernible] during Q4. During Q4, we completed oxide mining at the Tabakoroni deposit, which lies about 40 kilometers southeast of the Syama processing plant. With nearly all economic high-grade oxide deposits local to Syama exhausted, open pit ore production will focus on the Syama North 821 district for fresh sulphide ore over the coming years. Syama today has a processing capacity of 4 million tonnes per annum. This is split between 2 processing plants. First of which is the 2.4 million tonne per annum sulphide plant which treats the underground sulphide ore. The second, the 1.6 million tonne per annum oxide plant processes open pit oxide ore. The Syama sulphide conversion project started in 2023 as key infrastructure to allow sulphide ore to be processed through the existing oxide plant. The project includes the installation of a secondary crusher after the primary crusher to reduce the harder sulphide which material and transitional or prior to feeding the existing SAG mill, a pebble crusher to deal with scats, which is the oversight of discharges from the existing SAG, a close circuit secondary ball mill to treat cyclone rejects and deliver the correct grind size of flotation. The column flotation cells to recover the sulphide material prior to roasting, 2 additional CIL tanks and a roaster upgrade with a new electrostatic precipitator or ESP, which will increase concentrate throughput by over 15%. All of this will allow for the plant to process sulphide feed whilst maintaining flexibility to still be able to process oxide ore. The SSCP is currently on time and on budget. Stage 1, the oversized pebble crusher and sulphide flotation plant scheduled to be commissioned in Q2 2026. The SSCP will then be able to run at 50% capacity, approximately 110 tonnes per hour during Stage 1. As we move to Stage 2, this focuses on the secondary crusher, ball mill construction and the roaster upgrade. This is scheduled to be commissioned and fully operational in Q3. Once fully commissioned, the throughput capacity is expected to increase to 215 tonnes per hour. Syama production will increase in 2026 compared to 2025, and will deliver between 195,000 to 210,000 ounces of gold at an all-in sustaining cost of between $1,950 to $2,150 per ounce. The gold production is weighted heavily towards the second half of the year, with H1 and H2 representing 42% and 58% of gold produced, respectively. This split is due to the ongoing review and optimization of open pit mining, which will conclude during Q1. As such, mining will be limited to the Syama North A21 waste stripping with the existing appointed contractor. During this time, existing oxide stockpiles will be processed and sulphide ore will be stockpiled ready for SSCP commissioning in Q2. The Syama North A21 open pit is expected to mine 1 million tonnes of sulphide ore averaging 2.3 grams per tonne. H1 will be focused on waste and low-grade oxide stripping before ramping into full-scale sulphide ore production in H2. The underground operation is expected to build on the optimization work completed in the second half of 2025 and deliver over 2.6 million tonnes of ore to the surface. The underground production includes 300,000 tonnes of development ore with total development increasing by 74% compared to 2025 and 8.2 kilometers of underground development plan. The highest grades from the underground will be processed, resulting in an average head grade of 2.4 grams per tonne. The lower grade material will be stockpiled, rebuilding the stockpiles that we've depleted during 2025. On completion of the open pit optimization review, oxide mining will take place during Q2 at the [indiscernible] open pit, completing the oxide high-grade reserves of this ore body ahead of the rainy season. This oxide will be stockpiled whilst SSCP Stage 1 commissioning takes place and will be processed later in the year. The second and third quarters focused solely on sulphide processing and the ramp-up of SSCP during Stage 2. By the middle of Q4, sulphide concentrate stocks will be sufficient to meet the process throughput. And as such, any further sulphide processing in the SSCP will defer ounces to be poured in 2027. As a result, there's an excess capacity on the SSCP to revert back to oxide and add additional ounces while stockpiled concentrate feeds the roaster. Hence, the heavy weighting of ounces in H2 with 12,000 ounces of oxide gold production expected during Q4. The current sulphide plant, which receives ore from the underground mine will process over 2.2 million tonnes in 2026, slightly down from 2025 as a 3-week essential maintenance work program takes place in the second quarter on the primary ball mills and the roaster. Once fully commissioned, the SSCP is expected to lift overall gold production by 5% to 10% from 2026 levels. As oxide resources deplete, oxide production is expected to decrease over the next 2 years with operations transitioning to 100% sulphide processing from 2028. CapEx at Syama this year is expected to be in the region of $120 million. And this is split into 3 main areas: approximately $40 million to complete the SSCP and roaster upgrades, another $40 million of waste stripping in Syama North A21 pit and the underground development and around $40 million comprising of equipment replacements and maintenance within the processing plant and the underground mine and additional tailings storage facility studies and construction. A full life of mine review commissioned in H2 2025 is progressing to increase production in subsequent years. We'll report on this in H2 of this year. So we move across to Senegal now on our Mako operations. The Mako operation in Senegal delivered an outstanding 2025, achieving an upward revised guidance target of 123 kilo ounces at a lower all-in sustaining cost of $1,270 per ounce. The fourth quarter gold production of 18,755 ounces was enhanced by higher than forecast stockpile grades. This strong performance was achieved despite open pit mining activities ending in H1 and transitioning to stockpile material in H2. Naturally, the cessation of mining and processing of stockpiles has seen the overall feed grade decrease over the second half of the year. Processing throughput of 604 kilo tonnes has improved year-on-year, but also quarter-on-quarter with continuous improvement. This means that recovery above 91% is maintained despite a reduction of feed grade to 1.04 grams per tonne and higher throughput rates. This has been achieved primarily by metallurgical testing on course grind sizes and optimization of the gravity gold circuit. All-in sustaining costs have increased in the second half of the year with Q4 all-in sustaining cost of $1,666 per ounce as overall gold production reduces with no higher grade run of mine ore to process, increased royalty payments and noncash stockpile movements of approximately $143 per ounce. Capital expenditure was limited to $0.3 million in the fourth quarter and a total of $2.9 million for the full year. As part of our ongoing commitment to build strong relationships with the governments of the countries in which we operate, Chris also met with the President of Senegal in Q4. The Mako Life Extension Project or MLEP, has the potential to extend the current Mako mine life up to 10 years. The MLEP encompasses 2 main areas, the Tomboronkoto and Bantaco deposits. The exciting discovery of the Tomboronkoto deposit, approximately 20,000 from the Mako mine has a current resource of 377 kilo ounces with average grade of 1.7 grams per tonne. The Tomboronkoto ESIA has been pre-validated by the Senegalese technical agencies and is pending ministerial approval. Importantly, this has been supported and approved by the Tomboronkoto village and surrounding communities. The resettlement action plan or RAP and the DFS is nearing completion and the cutoff date, the point at which no further compensation can be claimed, has passed. A full survey of the affected houses and livelihoods has been completed and is now crystallized for the purposes of this project. The overall process has been completed with detailed approach to stakeholder engagement, underscoring our commitment to regulatory compliance, transparent community consultation and responsible project execution. The application for the Tomboronkoto mining permit will follow the issuance of the environmental permit with all permitting anticipated to be received by the end of 2026, assuming no major revisions are required. When we receive the mining permit, we will have the authority we need to implement the RAP and initiate the village relocation work. We expect detailed engineering to start during Q2 with long lead items procured before the end of 2026. That means mining at Tomboronkoto is scheduled to start in the second quarter of 2028. Two additional deposits are currently being explored at Bantaco. The Bantaco South and Bantaco West deposits have recently published resources totaling 266,000 ounces at 1.1 gram per tonne. During 2025, infill drilling, technical studies and metallurgical analysis work streams were progressed with $4.1 million of capital expenditure on this part of the project. This included progressing the ESIA submission and community engagement activities, which are far less onerous than at Tomboronkoto. 2026 work streams for Bantaco are related to technical studies, additional infill drilling is required and progressing the permitting process. Subject to full economic analysis, Bantaco ore delivery is scheduled to commence in Q4 2027 to bridge the gap between the completion of Mako stockpile processing and the start of ore delivery from Tomboronkoto. Total capital expenditure on the MLEP is expected to be between $10 million to $15 million during 2026. Mako production will decrease compared to 2025 as stockpile material is processed in 2026 and deliver a guidance of between 55,000 and 65,000 ounces of gold at an all-in sustaining cost of between $1,600 to $1,800 per ounce. The all-in sustaining cost increase is a reflection of the lower stockpile grades processed within an inflationary environment, including higher royalties due to the higher average gold prices expected in 2026 and compared to H2 2025. Gold production is slightly weighted to the first half of the year with H1 and H2 representing 52% and 48% of gold production, respectively, although it's important to note that the potential variability when processing stockpiles. 2.2 million tonnes of ore to be processed at an average grade of 0.9 grams per tonne with gold recoveries above 90%. Mako currently has sufficient stockpile low-grade ore to continue processing to the end of 2027, albeit grades will decrease as processing moves through low grade to mineralized waste stockpile. And with that, I'll hand you back to Chris to talk through the exploration activities. Christopher Eger: Thank you, Gavin. And now let's move to talking about exploration. Exploration continues to be very important to the business strategic priorities moving forward. As you can see on Slide 21, in 2025, we spent just shy of $25 million on exploration activities with considerable success. Of that $25 million, roughly $15 million was spent in Senegal, $5 million in Côte d'Ivoire and $5 million in Mali. Some of the key achievements in 2025 was an initial MRE at Bantaco as well as continued exploration activities at La Debo and Doropo. But however, when we look at 2026, we will plan to continue to spend around the same amount of money but to focus more on Côte d'Ivoire versus Senegal as the bulk of the drilling in Senegal has been completed. We will continue, though, in Senegal to spend some money at Bantaco and Tombo with regards to infill exploration drilling, like I said, the bulk of the cash expenditures for this year is going to be focused at Côte d'Ivoire because we see real value at the ABC and La Debo projects. But I'll go to that in more detail in the upcoming slides. The other key area of focus for the business, which has been forgotten about is in Guinea. We do have a number of permits in Guinea, but we have been looking to apply for new permits, and I will be very proud to say that we did receive first reconnaissance authorizations for a number of permits in the Siguiri Basin, which we'll start spending time and effort in 2026. So when I look at the triangle on the right side of the page, this shows that we are developing a proper pipeline to developing the fourth asset within the Resolute business. So again, exploration is core to our success, and we are spending quite a bit of time and effort in developing additional projects within the portfolio. Moving to Page 22. I want to spend a bit more time on our ABC exploration project in the West side of Côte d'Ivoire. When you look at the map, ABC actually is comprised of 4 key deposits. There is a Farako-Nafana permit, which you can see in the very north part of the deposit; the Kona permit, the Windou permit and most recently, the Gbemanzo permit. The bulk of this initial resource is all situated on Kona. That's where you see the $2.2 million of inferred ounces at 0.9 grams per tonne. In Q4 of 2025, we started an excessive drill program across all 4 of those deposits, where we're seeing very exciting results. So the Farako-Nafana permit, which is in the north part, we've got some very exciting drill results support by we saw 1 hole at 31 meters at 2.4 grams per tonne from 13 meters from surface. We also started drilling in Kona to expand that deposits with very strong drill results and this year, the focus will be to drill at least 20,000 meters across the 4 different areas in order to expand this footprint. We are, though, looking to put economics on this project, and we've commissioned a scoping study which we hope will be released towards the end of H1 2026, but possibly to H2 of 2026. So once those numbers are completed, we'll release those to the market. Similar to the ABC project in Côte d'Ivoire, we're also very excited about the La Debo project in Côte d'Ivoire. This is a project that's about 400 kilometers into the northwest of Abidjan, which we acquired in 2024. So we spent quite a bit of time and effort in 2025 drilling out this deposit, and we had a very successful MRE of about 643,000 ounces at 1.14 grams per tonne that was issued in Q4, and that was after 16,000 meters of drilling completed in 2025. When you look at the map on the right side, the resource is focused on the Northeast area of the deposit in the G3S and in G3N zones. Those zones show gold that continue at depth and at strike. And so in 2026, we will start doing a bit more drilling to prove out the size of that deposit and continue to expand. We also see some interesting anomalies at the G1 area, which is kind of in the middle. And so we're going to be spending time drilling that deposit out as well. So the goal is to try and make us to at least 1 million ounces but also is very similar to ABC, we will be looking to implement a scoping study report towards the end of H1 2026, possibly into H2, which will demonstrate the economics of this asset. So look, in summary, I do believe that between Le Debo and ABC, we have been making for a fourth asset -- fourth producing asset, I should say, within the Resolute portfolio. So with that, I'll turn it over to Dave Jackson to go through the financial summary. Dave Jackson: Thanks, Chris. Today, I will walk you through the Q4 and full year headline financial results highlighted in the key performance metrics. Overall, we ended the year strong, and our Q4 metrics were in line with expectations. We continue to strengthen our balance sheet and build cash in the business. Looking at the financial highlights. Our year-to-date EBITDA was an impressive $383 million, which was a substantial increase from the $319 million reported in 2024. This performance was underpinned by revenue of $863 million generated from the sale of 259,000 ounces of gold at an average realized price of $3,338 per ounce. As previously noted, Resolute remains fully unhedged and continues to sell all of its gold at spot prices. At quarter end, net cash stood at $209 million, marking a $72 million increase from Q3. Included in the net cash figure is $135 million of unsold bullion, representing nearly 31,000 ounces of gold that were sold shortly after the quarter closed. We had $57 million drawn on overdraft facilities at quarter end. These facilities continue to be used locally to optimize working capital. Currently, the group has in-country overdraft facilities of approximately $113 million available as we continue to maintain financial flexibility for the group. The group all-in sustaining cost for Q4 was $1,877 per ounce, which represents a $328 per ounce decrease from Q3. This decrease was primarily driven by the expected increase in gold production at Syama. At Syama, specifically, the all-in sustaining cost was lower than Q3 due to higher production and lower sustaining capital expenditure. As already mentioned, we have successfully navigated the supply chain disruptions in Mali, which resulted in Q4 being Syama's second strongest production quarter in 2025. Let me now walk you through the key components of our cash flow summary that led to the net cash position of $209 million at the end of Q4 on our next slide. We generated a solid $86 million operating cash flow during the quarter and $314 million for the full year. This was a substantial increase from the comparable periods in 2024 and is mainly attributed to the increase in gold price throughout the year. CapEx totaled $118 million for year-to-date. This includes $24 million spent on exploration, $70 million in project capital across Syama and Mako and $24 million spent on the SSCP. Overall, CapEx and exploration spend were within guidance. As previously noted, we made the initial $25 million payment for the acquisition of the Doropo and ABC projects during Q2. These projects represent exciting growth opportunities for the company and are expected to deliver meaningful long-term value for our stakeholders. VAT outflows in 2025 totaled $66 million across Mali and Senegal. We are pleased to say we obtained $34 million of VAT mandates in Senegal in 2025, which were used to offset government payables However, VAT remains a source of cash leakage in Mali, and we continue to engage actively with the local government to recover these amounts. Our recent discussions have been positive, and we remain encouraged by the progress being made. Moving to working capital. We recorded a $29 million inflow for the year-to-date. This was driven by a $6 million reduction in consumable inventory across the group, a $10 million reduction in stockpile balances at both Syama and Mako and a $13 million change in supplier payments, which are settled in the normal course of business. Our ending cash in bullion was $266 million and marks a $165 million increase from the beginning of the year. This leaves us with ample available liquidity of over $322 million at the end of December. As noted on our last call, we have a stake in Loncor gold worth approximately $31 million, which is currently being sold. We expect to receive these funds in Q1 this year, and we expect no tax impact on the proceeds once received. Supported by a strong cash position and ample liquidity, the company is well placed to fully fund its 2026 capital expenditure requirements, including Doropo, through existing cash balances and the anticipated strong cash flows in 2026. We are currently in discussion with debt providers to secure additional capital for the Doropo project, which we are expecting to be finalized in 2026. The timing to secure any financing will not impact the Doropo time line as we expect to begin construction as soon as the permits and FID are obtained. In summary, we're in a very solid financial position and are excited about the growth potential of the business. With that, I'll hand it back to Chris. Christopher Eger: Thanks, Dave. And look, just a couple of more slides to wrap up the story. First, let's start on Page 28, which has qualitatively highlights some of the key milestones we're expecting in the next few years. Let me just focus on 2026. So going first and starting in Cote d'Ivoire, the most important is we expect to get the mining permits and FID for the Doropo projects in the coming months. And that will then obviously formalize and kick off the construction period for Doropo. But I think as provided by Gavin, we're not slowing this down, and we believe we have the financial resources to execute the construction of the project without missing a beat and initiating full construction and initial commissioning in the beginning of 2028. In addition, we're going to provide economic studies on both Doropo and at ABC. Moving to Mali, we will be commissioning the SSCP and transitioning to almost 100% sulfide production and completing an optimization study. And then when looking at Senegal, the key activities revolve around permitting of both Bantaco and Tombo projects. So we anticipate that we'll kick off those permitting applications in 2026, and we'll keep the market updated. So we have a lot on our place. We're very excited about what we're doing. We also see tremendous opportunities to continue to drive cost reductions across the business and continue to develop and build our relationships with the governments where we operate. So in summary, again, very proud of what the business achieved in 2025. We achieved our production guidance. We managed our costs across the business. We generate a substantial amount of cash flow in the business although with the support of the rising gold price environment. But most importantly, we executed our strategy of becoming a geographically diversified producer through the acquisition of the Doropo project in Cote d'Ivoire. We also made substantial improvements in exploration by focusing this as a key strategic priority for the business. I made a number of executive changes and augmented the skill set of people within the business, which is incredibly important to any mining operation. So with all the pieces that we put in place, I'm very confident that we'll have a very successful 2026. But most importantly, we're well on track to becoming a 0.5 million ounce producer from 2028. So with that, I will turn over to the operator for questions. Operator: [Operator Instructions] We'll take our first question from Justin Chan with SCP. Justin Chan: My first one is just maybe just clarifying the explosive situation in Mali. I read that you're planning to put it in an emulsion plant and that the explosives are no longer an issue. And I was just wondering, I mean, a bit more detail. Do you have a stockpile now? And then what's the timing on the plants? And can you just give us a bit more color on that situation and I guess, how it evolves through the year? Christopher Eger: Thanks for the question. Maybe just easier, I'll just turn over to Gavin, and he can probably give a bit more color than I would. Gavin Harris: Yes. Thanks for the question. So basically, our strategy at the moment is the explosives that are coming into site has to be escorted in by the Mali and government forces, obviously, given the security situation in Mali. What's been happening is the government have been in talks with our team in country to effectively set up a grade to support the mining operations. So we're seeing a lot -- we're getting a lot more exports into the site now. So currently, the stocks on site are good enough for us to continue production and obviously be a little bit more relaxed in terms of the issues that we have had previously. But further to that, we have been in discussion with different suppliers to effectively build their own plants on site to be able to produce the products we need going forward. So we have had a successful discussion with two suppliers on that, and we're waiting for final proposals to come in ahead of building these, but we expect these to be constructed within 2026. And obviously, bringing in raw materials that are precursors to explosives will not be subject to the scores from the government, which makes things a lot easier. So that really should solve that issue that we've had with explosives throughout 2025. Justin Chan: Got you. So perhaps to paraphrase, so the near-term issue is resolved because you have these convoys that are more frequent and the supply frequencies increased and then the emotion plant is more of a longer-term solution, but timing on that in 2026 is to be determined. Gavin Harris: Yes, exactly. That's a good summary. Justin Chan: Okay. Perfect. And then maybe just on Mali more broadly, I mean, there's been a couple of major developments, the Barrick coming to an agreement with the government on Loulo-Gounkoto. And then I mean, there was a lot of press on the fuel blockades, et cetera, around November last year. It seems like that situation has improved quite a lot. It sounds like. And I'm curious on the situation with Barrick coming to an agreement with the government. I think four companies are having a hard time implementing their already agreed terms just because the government was preoccupied. Maybe could you give us an update on what you're seeing in the country on both those fronts? Christopher Eger: Yes. So Justin, I think, look, what we see is similar to the others that the mood has changed dramatically versus 2024 and a lot more positive and constructive. We do believe the situation with Bayer coming to resolution is good for the industry and good for Mali. I think the government understands what has happened and why and are trying to work with the remaining operators to try and keep it more stabilized. There was obviously a bit more noise on security at the beginning of Q4 that we've seen kind of reverse. So it's -- unfortunately, it's a bit more of the same. We are continuing open dialogue and constructive dialogue with the government and trying to educate them on how we can work together for future investments. That's why we're doing the Phase II studies that we work with the government. Demonstrate that I know if we can work together, we think that there's growth in our business. But unfortunately, a bit similar to 2025, I'm still cautiously optimistic. We're still very cautious that we need to see a bit more signs of reversals. One of the key activities that we have not been receiving or VAT refunds back. And I think that's a key milestone that needs to be achieved for future investments. But generally, the mood is much more positive and continues to head in that direction, but it's still delicate. So look, I would say, just a summary, security is probably in good shape. And as fuel hasn't been an issue because we're working very closely again with the government to get the convoys and for our mines to be fed, which has been not impacted, but it's still delicate. Justin Chan: Got you. I appreciate that. That's really helpful color. And just one last one, I'll free up the line. Just clarifying with regards to the CapEx and exploration at Mako this year. So the $10 million to $15 million quoted in CapEx, that's for studies and that's independent of the exploration budget for Mako this year? Christopher Eger: That's correct. The bulk of that is study work. We will do, like I said, a bit more drilling on Bantaco, less on Tombo because we've pretty much completed that. And look, we'll spend more -- if we find more areas to explore and to expand on. But the key is to get the studies completed so that we can file for mining applications. And then depending on how we see our cash needs in '27 and '28, we may open up a bit. We're going to also look -- we have two other deposits in Senegal, Sangola and Laminia, and we're going to do some work there. But with the resources we have, we're going to focus more in Cote d'Ivoire. Justin Chan: Okay. Got you. And that will be primarily studies, it's not for, say, early site works or relocation. Christopher Eger: There is some capital towards the back end of this year, depending on the timing of -- if we receive the mining applications towards the end of the year, we'll start doing some, we'll call it, early site works and mostly it's around the wrap the relocation process at Tombo. So there's probably about $3 million to $4 million anticipated in Q4 assuming we get exploitation permits coming in as expected, but that may change and get pushed into '27. Operator: Our next question comes from the line of Casper [indiscernible] from Berenberg. Unknown Analyst: I just had two quick questions. At on the CapEx at Syama this year. I just wanted to ask how we should think about that CapEx going forward after this year's $170 million to $190 million spend? Christopher Eger: Yes. So it's a good question because I know it's higher this year because we have decided to put a bit more capital into effectively into the plant because look, the plan is 30-plus years, and obviously, we need to do a new TSF. So that's why there's additional, call it, $40 million of what we call capital projects that is probably more of a one-off. I would say next year, 2027 will be probably closer to $30 million. And then look, we have, like I said, more than $40 million this year on waste stripping with a lot of that, half of it being new stripping at the 21 Syama North Zone. So I'd say, look, moving forward, the run rate CapEx is closer to $30 million to $50 million. So probably a bit on the higher end for '27 and then it will start to stabilize in that $30 million to $40 million thereafter. Unknown Analyst: Okay. Great. And just as a follow-up, why -- I just wanted to ask why sales at Syama lagged production volumes in Q4? And did they get sold in early Q1? Christopher Eger: Again. So look, in summary, we had just about 30,000 ounces of gold volume, 31,000 to be specific at the end of the year. It has to do with the fact that the 31st of December was on Wednesday, and we tend to ship our gold on Fridays. And so we have built up stock around 2 weeks' worth of stock. So all of that gold was then shipped effectively in the first 10 days of January. So look, we'll have -- that was a key impact to the lower EBITDA versus overall guidance. It's just that some of those gold sales were pushed into January, which will impact the '26 numbers. Operator: Our next question comes from the line of William Jones with Canaccord Genuity. William Jones: And congratulations on a pretty good quarter. Most of my questions have been answered. But maybe just one on trying to understand the grades going through the plant at Syama post '26. So I know you quote sort of a 5% to 10% step-up. I gather that is grades are going to be impacted just by oxide feed. So just if you could provide some color on those -- the grade of those oxide stocks going into the plant over the 2 years and if that will step up towards the reserve grades once those stockpiles are used, probably firstly. And then secondly, just a bit of the strategy around utilizing those stockpiles. Christopher Eger: Thanks. Maybe, Gavin, over to you on that one. just obviously as we're reviewing the mine plans... Gavin Harris: Yes. Thanks for the questions. Look, on the Syama grades, obviously, the sulfides that we're seeing are reasonably good grades coming out of that Syama North A21 district, and we expect those to improve as we go forward. They're sitting around sort of 2.3 at the moment for this year. There will be ups and downs in that as we go through the mine life, but we think reasonably around 2 grams per tonne is acceptable for what we'd be looking at, at the moment. And then the underground, realistically, the grades will drop off towards the end of the mine life. But certainly, over the next few years, they're sitting around that sort of 2.4 gram per tonne as we go forward. William Jones: Okay. And then just interested on -- look, I appreciate how much you can say on this, but how you're thinking about the funding or capital stack for Doropo? And is there any target leverage perhaps that you're thinking of? Christopher Eger: No, it's a good question, and it's an evolving question, to be honest, because of the cash flow generation that we're generating in the business. So as you saw from Dave, we have today over $300 million of liquidity. At today's gold price environment, we're generating anywhere from $30 million to $50 million of fresh cash every quarter. So that puts us in a very strong position to actually fund the bulk of the CapEx with our own resources. But we think it's prudent to put in some debt and because we will need some cash in the future for the MLEP program. I would say we're looking at kind of a 50-50 target split between equity and debt, but it may be a bit more equity depending when I say equity or cash versus debt. It all comes down to the cost of capital net debt. But what's really important to us because of the cash flow generation of the business, and we're not a developer is that we put in a debt facility that's very flexible that allows us to pay that back quite quickly without too many penalties and costs. And look, we've been innovated with term sheets for funding of Doropo because of the attractiveness of the project and where it's located in the world. But again, similar to what Dave said, we're working through these. So we're not in a rush because we have quite a -- look, everything is going on track as we expected, and we'll probably look to put something in place towards the end of H1, maybe into early H2 because in any case, we'll be using our cash to fund the front end of the project. Operator: [Operator Instructions] Our next question comes from the line of Richard Knights with Barrenjoey. Richard Knights: Just one on ABC. It feels like it's a bit of a sleeper in the portfolio. You mentioned there's a scoping study that you're targeting to get out in H2. How quickly do you think you could turn that around into a DFS and ultimately an FID decision? Christopher Eger: Look, I think realistically, that would be towards the back end of '27. And look, and I agree with you, it is a bit of a sleeper in the group. It's a fantastic asset, and it's a very large footprint that we have. So look, depending on the economics of the scoping study, we can try and fast track it, but there is infill drilling that needs to be done. And because there's various deposits on the permit, we would need to think about where we would start and how we would kind of build that line because it's a good problem to have, but they are different -- the ore bodies are quite different in each of the different zones that we have. So we just need to understand that a bit better. But we see significant strategic value in ABC and how it's continuous with other deposits in the area. So there's definitely a mine at ABC that will be built at some point in time. Richard Knights: Yes. Okay. And maybe -- sorry, just one more on Doropo. The $170 million to $190 million of CapEx you're targeting for this year. I'm assuming all of that comes out of the $516 million total CapEx bill for the project? Christopher Eger: That's correct. Operator: At this time, we have no further questions. This concludes today's call. We would like to thank everyone for their participation. You may now disconnect your lines. Have a nice day.

107天前Insight Analytics约5分钟阅读

ESSITY-B.ST 2025 Q4 财报电话会议

Sandra Åberg: Good morning, and welcome to Essity's presentation of the Q4 and full year 2025 results. Here to take us through the highlights, we have our CEO, Ulrika Kolsrud; and our CFO, Fredrik Rystedt. After the presentation, we will open up for your questions. [Operator Instructions]. With that, let's get started. I'll leave over to our CEO, Ulrika. The floor is yours. Ulrika Kolsrud: Thank you, Sandra. And also from my side, welcome to this webcast. The final quarter of 2025 confirms that we are standing strong in a continued challenging market environment. We continue to grow in our strategic segments, such as Incontinence Care, Wound Care and premium products in Professional Hygiene, and we strengthened market shares across our different branded categories. We're also strengthening our profit margins. Actually, we are strengthening our profit margins in all 3 business areas in the quarter, and we delivered a stronger result than last year's same quarter. When it comes to volumes, sequentially, we have a stronger volume, so stronger volume in Q4 versus Q3. Looking at quarter over last year's quarter, however, there was a flat volume growth. And that, together with the fact that we are then lowering prices in order to compensate for lower input costs is resulting in that we are reporting a negative organic sales growth. And that underpins the importance of the initiatives that we took last quarter to accelerate profitable growth. We are now operating in the new organizational setup with decentralized decision-making with end-to-end accountability and with even sharper focus on our most attractive categories and segments. And we are starting to implement our cost-saving program. In the quarter, we also strengthened our position for profitable growth by acquiring the Edgewell Feminine Care business in North America. And now with the brands Carefree, Stayfree and Playtex in our bag, we are more than doubling our Personal Care sales in the U.S., in line with our focus on high-yielding categories in attractive geographies. Another key highlight of the quarter is that we again got recognized for our strong sustainability performance. So we were awarded for the EcoVadis Platinum Medal, recognizing our sustainability performance, placing us among the top 1% companies worldwide that they are assessing when it comes to sustainability performance. And also, we have been placed on the CDP prestigious A list. I would say sustainability performance is important in all of our business areas, but not the least in the health care sector. Many of our customers in the health care sectors have high ambitions when it comes to sustainability. One good example of that is one of our biggest customers, NHS, in the U.K. They continue to pursue ambitious sustainability agenda even if there is financial pressure, with increasing demand for health care and funding under pressure. And speaking about funding under pressure, we talked already last quarter about that we see in some selected markets that there are some cuts in funding, and we continue to see that, for example, in Indonesia. That does not, however, prevent us from growing. Quite the contrary, we have a positive organic sales growth in Health & Medical, and we grow volumes both in incontinence Care as well as in Medical Solutions. If we double-click on the Medical business, this is the 19th consecutive quarter that we grow the Medical business, and we grow in all 3 therapy areas. A critical success factor behind this good performance in Health & Medical is, of course, our strong and unique offers that we have. And we continue to strengthen those offers. In the quarter, we upgraded one of our flagship products in the TENA assortment, the belted TENA Flex product. This product is specifically easy and ergonomic for caregivers to use on bedridden patients. And in this quarter, then we upgraded it with an even better comfy stretch belt. The elasticity is better, so it adapts easier to different body types and thereby, you can use this product for more patients. Also in the quarter, we relaunched one of our unique offers in the Advanced Wound Care assortment, the Cutimed Siltec Sorbact product. And in connection with that, we kicked off a new brand campaign for Cutimed on the theme of imagine a world where wounds would heal faster. And in this campaign, we showcase how our unique offers are helping health care to improve patient outcomes and reduce health care costs, thereby improving health economic -- or bringing health economic benefits. And it's, of course, leveraging these unique advanced solutions that is helping us and contributing to our performance in Wound Care and allowing us to gradually strengthen our positions in this category. Strengthened positions is also the theme if we go to consumer goods. In the quarter, we strengthened our branded market shares in 65% -- more than 65% of our business. And this is not only attributed to one of the categories, but it's actually contributing from all different -- all 4 categories. Looking at Incontinence Care, there, we strengthened our market shares, and also it's a fast-growing category. So as a result of that, we saw very good growth in Incontinence Care. In Feminine Care, we were impacted by a one-off, but underlying, we continue to perform very nicely also in this category, and that is demonstrated through the market share development that we see. In fact, in feminine, we grew our market shares in 80% of our business. And we had also some good records that we saw in the quarter. One very exciting of those is that we now in Mexico have 62% market share in Feminine Care. And as you know, Mexico is one of our most important markets for Feminine. Another exciting development in the quarter in Feminine was that we now are back to growth in Knix washable absorbent underwear. And that is thanks to new retail listings, higher prices, as well as product launches. Then if we move to Baby Care and Consumer Tissue, here, we saw an organic net sales decline. And this is for the same reasons that we have talked about previous quarters. So in Baby, we are impacted by the lower birth rates and also the fierce competition that we see, and consumers being more price sensitive than what we have seen before. And in Consumer Tissue, it's the weak consumer sentiment that makes the growth happening mostly in the mid- and low-tier segments, and we also lost some private label contracts due to pricing. Then it's very encouraging to see that we are growing our branded business, both in Baby as well as in Consumer Tissue. And that's a testament to the effect of our launches and our marketing activities. They are really paying off. And we continue to have a very high activity level in Consumer Goods. As you can see here on the slide, there are many different launches to talk about in the quarter. But in the interest of time, I have to choose one of them. And I choose to talk about the upgrade of our thin assortment, our thin towels in feminine care in Latin America. So having thin feminine pads is, of course, more discrete and comfortable than using thick pads when you have menstruation. But even so, many women actually choose thick pads because they don't fully trust the leakage security of the thinner ones. Now with this upgrade, we are introducing a new core technology that we call SmartPROTECT that manage even sudden gushes and thereby increased leakage security. And for that benefit, we have 2 -- actually 2 benefits of that. One is, of course, that we strengthen our superiority even further in this ultra-thin segment in the market, but also that we move consumers from the thicker pads to the thinner pads, which is a benefit because we normally have higher profitability in this segment. Now the activity level was also very high in Professional Hygiene in the quarter. Here, market growth continues to be depressed following the weak consumer sentiment, and we see that as impacting our sales. But we are responding to that by continuing to have selective price adjustments, continuing to work with joint sales plans together with our distributors, and also adapting our assortment. In this situation, it's super important to be competitive in all different price tiers. And in the quarter, we launched some what we call volume fighter specifications to make sure that we are at the right price point for the customer. We expect this to pay off in the coming quarters, but what has already paid off is really our push in the premium segments. So we continue to see strong growth in our premium segments in Professional Hygiene like Tork skincare and Tork PeakServe. We also continue to develop these products even further. So in the quarter, we launched an automated sensor-based dispenser for PeakServe in addition to the manual one that we have already. And that will broaden the relevance of this premium solution in the market. We are also broadening the relevance of our center feed dispenser solutions. The center feed dispenser solution allows you to take one sheet at a time, which is more hygienic and it also controls consumption. So it's cost efficient for our customers. Now in some segments, it's more important with design than in others. A good example of that is in restaurants that have an open kitchen. Then, of course, you are very dependent on a good-looking dispenser. And if you see on this picture, the black stylish dispenser here is what we launched in the quarter, and that is really a very strong fit into these type of environments. I would even call it decoration. It's really nice. Also, we launched a new refill paper with natural color that also has a lower price point. And that is then an excellent choice for those customers who are either very price sensitive and/or want to work with their sustainability image. Now all of these innovations that I'm talking about, they have 2 purposes. I mean, one is to expand the relevance of the product, but also, of course, to drive product superiority. And with product superiority, we mean that it's the preferred choice by customers and consumers. And looking across categories in 2025, we reached a record level when it comes to product superiority. And that, of course, makes us very well equipped to continue on that positive market share growth that we have seen in the fourth quarter of 2025. And now after all of these talk about products and innovations, I'm sure you guys want to hear a bit about the figures behind this. So over to you, Fredrik. Fredrik Rystedt: Thank you, Ulrika, and I will put a few numbers to what you have been talking about here. And as you can see, and you've already mentioned it, we actually had, in terms of organic sales, a negative development during Q4. And this is basically driven by price decline and a slight volume decline. It's maybe worth noting or perhaps repeating what you said, Ulrika, we are taking market share. So this is very much a market issue. And if we actually look at the sequential development of volume, it's always a little bit of seasonality. But nevertheless, you can see that we actually grew our volume sequentially between Q3 and Q4 with just under 2%. So it's a good momentum despite the fact that we have a decline versus Q4 of 2024. I mean, some of you will actually remember that Q4 of '24 was very strong. So we also have a bit of difficult comparable. Now as before, the volume decline is very much driven by Baby, or same as in Q3, our Baby business, our Consumer Tissue business and also Professional Hygiene, and these all are leading to the group decline of volumes of minus 0.2%. So just really brief, Health & Medical, you've said it, Ulrika, we had a good volume development in Inco Health Care and Medical. And if you look at the Medical area, actually all therapy areas and especially Wound Care, so that story you will remember. And if you talk about price and mix, largely flat in Health & Medical. Consumer Goods, Inco really, really doing very well in terms of volume, Inco Retail. Feminine is as well. It's a little bit -- it's positive volumes, just under 1% of positive volumes. And that is actually despite a fairly weak market in Europe. So overall, you can say we are growing, but the European market is a bit challenging. Ulrika talked about a onetime issue in Feminine, and that is related to an adjustment that we have made of customer rebates in Latin America. So we've increased those, and that has actually impacted sales and the pricing components, and this is why you see a negative organic sales growth for Feminine. And this is temporary for the quarter. It will go back to normal in the next quarter. And if you actually adjust for that, we have stated that the underlying growth is good. And so what we mean by that is that growth would have been -- organic sales growth would have been low single digits, to give you a little bit of perspective. When it comes to Baby, again, we are gaining in our branded business in the Nordics, but we are continuing to lose in the rest of the retail branded business in Europe. And overall, volumes are down with approximately about 4%. That's also for the market as a whole. So it's not just us, but it is a very competitive market in Europe. And this is also why we are losing volumes. And finally, Consumer Tissue, we're struggling a bit with volume there, minus 2%. And this is all actually related to private label. We have talked about this before. So there is no news here. We have lost a few contracts on the back of pricing. And of course, we have always prioritized margin over volume. But of course, we don't want to lose volume. So we have selectively actually reduced prices in Consumer Tissue. And hopefully, that will pay off as we go forward. HoReCa, we've talked about Professional Hygiene, and this is, of course, still leading to a slight volume loss of about 0.5%. And there are signs here of at least stabilization of the HoReCa markets. So here, we're hoping for better conditions going forward, but there time will tell. And to summarize maybe for the group, minus 0.2% in terms of volume, minus 0.9% in terms of price and mix is actually flat. So that sums it up a bit. Then if I go to the margin, you can see that we've actually -- we've improved our margins, both if you compare between Q4 of '24 and Q4 of '25 and sequentially. And it's not only for the group, it's actually for all the business areas. Gross profit, as you can see, increasing by 180 basis points, and this is on the back of lower COGS as we flagged when we talked to you last or after Q3. So that actually happened. And we've maintained a very good price management in the quarter, all of that leading to that very good improvement of the gross profit margin. The COGS reduction is all about, I should say, raw material energy, but we actually -- and this is a little bit of -- we're proud of that. We managed under tough conditions to reach also our COGS savings of just above SEK 500 million. So you will know our target for the year was SEK 500 million to SEK 1 billion, and we said we were struggling to reach that range, but in the end, we actually managed to do that, and that contributed to that margin enhancement. As you can see, and we've said that, we want to fuel our growth. We want to fuel our innovations that we put on the market. So we are spending more in terms of A&P, and that's both percentage of sales-wise and as an absolute number. When it comes to SG&A here, you see that it's actually favorable. So we have reduced in terms of absolute. Also in constant currency, we have reduced our spending in terms of SG&A. And this is due to, of course, a tight cost control. That's not surprising to you. We've reduced our travel, as an example, with more than 30%. We have a bit of lower bonus accruals. And there is also a bit of onetime here that is positive. So it's not as good as you see here. There is a bit of onetime. But if you look at the overall group, there is also positive and negative onetime impacts in the result. So overall, all the onetime impacts are balancing off for the group as a whole. But all in all, we're quite proud of our SG&A performance. So let me then just talk a little bit about the SG&A program, the cost saving program that we have launched previously. And as you know, we're aiming for a run rate saving of SEK 1 billion towards the end of '26. Now we are actually aspiring to reach quite part of this saving already throughout this year, but that will be more towards the latter part. So you can expect more of the savings. So far, we have realized very, very little, and we've also put fairly little in terms of restructuring charges. We expect the cost of this program to be a bit over SEK 1 billion, so approximately SEK 1.1 billion in restructuring charges. Let me end this part with a little bit of guidance for Q1, as we normally do. We expect actually COGS to be slightly lower, partly from savings, but also a little bit from currency or positive currency impact in raw materials. So slightly lower COGS, that is what we expect. And we are expecting a slightly higher SG&A. And please remember, I'm now giving you guidance Q1 of '26 versus Q1 of '25. So we are expecting slightly higher SG&A, and this is primarily driven by higher A&P in line with our ambition to fuel growth. And customary, and you know that, we also give you a little bit of guidance for the full year, and we expect CapEx, to start with that, between SEK 8 billion to SEK 8.5 billion, a bit higher than we had in '25. And this is actually partly phasing and just ambitions to grow as we go forward. We expect other cost or the corporate cost, if you will, to be approximately SEK 1.3 billion, so very similar to this year -- or to 2025. The structural tax rate to be between 25% to 26%. And then finally, on the COGS savings, we remain with our estimated range of SEK 500 million to SEK 1 billion. So let me move on then to the cash flow side. We're quite pleased with the cash flow here in Q4. This is driven by obviously a good cash surplus. The margin was good. So this was a good operating cash surplus, but we also had good working capital management. So inventory days came down a little bit, continue to do that. And we had unchanged credit days, both in receivables and payables. So all fine in terms of working capital. And net cash flow was also quite strong. And this cash flow has driven a continued strengthening, of course, of our balance sheet. So net debt-to-EBITDA is approximately 1.0 here, as you can see at the end of the year. We've continued to repurchase shares in line with our program that we launched with SEK 3 billion. And so far, we have purchased 9.2 million shares or totally SEK 2.4 billion. So we are roughly about 80% through this year's program. So let me then finalize with a little bit of overview of 2025. In many aspects, this was a good year. We had an organic sales growth of 0.9%, and this is despite challenging market conditions. We actually had growth in all our business areas. We maintained our volumes and price management remained strong for the entire year. In terms of margin, we've already talked about that, but it was a very good year in terms of margin. In fact, if you look at that operating margin of 14.1%, it's the second highest we've ever had. It's second only to the artificially high margin during the pandemic that was caused by all the panic buying, for those of you who remember. So this is, from a historic perspective, a very attractive margin. And then turning a little bit to what does that imply? And some of you may have seen from the report that our EPS growth was, if you look at it, between 2024 and 2025 in nominal terms, roughly about 1% growth. Now of course, the Swedish krona has strengthened a lot. So if you actually look at the EPS growth in comparable currencies, you will see a growth of roughly about 8%. And this is quite consistent with the long-term growth of about 6% if we start with the birth of Essity as the first year. So continued good performance. And this is, of course, on the back of good margins, the growth we've had and of course, also a shrinking finance net as our net debt has reduced. Finally, then the Board has -- or will propose to the AGM a dividend increase of SEK 0.50 to SEK 8.75. This represents an increase of about 6%. And if you look at, once again, from the birth of Essity, you can say this is consistent with the growth that we've had, roughly about 6% or a total growth of 52%. So with those words, leaving over to you, Ulrika. Ulrika Kolsrud: Yes. Thank you, Fredrik. And with that, we are leaving a solid 2025 behind us. We finished the year with stronger market shares with continued growth in our strategic segments and not the least with strengthened profit margins. It's been, from an external perspective, a quite turbulent year with a lot of geopolitical uncertainty and the weak economy. And that has, of course, impacted also our industry. And we see that the resilience that we have shown during this is really a sign of strength. As Fredrik has shared, we have grown organically during the year. We have strengthened our profit margins, and we have now the strongest profit margin in 5 years, and we have delivered a solid result. So we are proud over this, but we're also determined to accelerate our profitable volume growth and to speed up our progress towards our financial targets. And therefore, the initiatives that we've launched earlier than in 2025, with the reorganization with the cost saving program and with the acquisition of the Edgewell Feminine Care business in North America. And we bring those initiatives with us together with then the very strong financial position we have into 2026, where we remain fully committed to our strategy to drive profitable volume growth. And we will do that by, first and foremost, making sure that we have the customer and consumer at the center in everything we do. We will also do that by continuing on the path to strengthen our market shares and our product superiority. We will, of course, integrate the Edgewell acquisition to strengthen our Personal Care position in North America. And we will implement our cost save programs, both the COGS cost save program that Fredrik was talking about as well as then the SG&A cost save program, where we have the ambition to reinvest the majority of that into fueling profitable growth. And also, we will fully leverage our new organizational setup with end-to-end accountability with more decentralized decision-making and also with even sharper focus on our most attractive parts of our business, so that we can unleash the full power of our fantastic Essity teams, and also to make the boat go faster. Speaking about our fantastic Essity teams, you have the opportunity to meet some of them if you join us in our Capital Market Day on the 7th of May. We will host that in our Mölndal office in Sweden, which is our largest office. And you don't want to miss the opportunity of hearing more about our strategy to drive profitable growth and to be able to see some of our R&D laboratories in this facility as well as production facility in the neighborhood. So I really hope to see all of you there. Sandra Åberg: Thank you, Ulrika, and thank you, Fredrik, for that walk through. Now we are ready to take your questions. [Operator Instructions]. Ulrika and Fredrik, are you ready to open up for questions? Ulrika Kolsrud: Yes. Sandra Åberg: Perfect. We have the first question from Niklas Ekman, DNB Carnegie. Niklas Ekman: Can I start asking about kind of your priorities for '26 here? Obviously, volumes have been weak now for some time. And now you have a couple of quarters with a pretty strong margin expansion. How do you view that now in '26? Are you willing to sacrifice some of that margin in order to restore volume growth? Or are you more optimistic maybe about the market now having had some kind of cyclical headwinds, that they might turn to some tailwinds in '26? Or you're thinking there on the mix between organic volume growth and margins and what your priorities are? Ulrika Kolsrud: Well, as we have talked about previous quarters as well as in this quarter, we are doing selective price adjustments in order to fuel volume growth. And also, we have the intention to increase our A&P investments. We have seen that the investments that we do in A&P is paying off very nicely, as you saw in the market share development. So that we will do. And then the volume growth will give us operating leverage and thereby also securing the profit margins. And since we talk about this and how to drive volume growth, I want to mention one thing that we're also very proud of in 2025 that will support volume growth in '26, and that is our innovation delivery in the year. We increased our share of sales that is generated through innovations and also the superiority record that I talked about earlier. That shows that we are strengthening our offers to consumers and customers, and that is the base for driving volume growth. And then, of course, we need to make sure we have the right price positioning and that we support those fantastic offers with A&P investments. Niklas Ekman: Very good. But do you see any risk of margins? Or are you looking at maybe sacrificing some of these strong margins now to accelerate growth? Or do you think that you can do both? Ulrika Kolsrud: Our ambition is to do both. I mean, in some areas, of course, when we have selected price adjustments, that will have an impact on margin short term. But in other areas, we have opportunities to go in the other direction. So that is a continuous work that we do to optimize this. Fredrik Rystedt: Maybe to add, if I may, Niklas, as you are aware of, and we communicated last quarter that the cost saving program will generate fairly significant savings. And of course, we are aiming to use those funds to actually do what Ulrika was talking about here in terms of fueling growth, both in terms of selective price decline, but also A&P spend. So this is a way to make sure that we can do both, just to emphasize. Sandra Åberg: Next up is Charles Eden from UBS. Charles Eden: You mentioned the lower volumes and prices in Consumer Tissue private label. Are you able to quantify the organic sales decline for that business in Q4? And can I ask whether the continued challenges of this unit makes you reconsider whether this asset is indeed core to Essity going forward as you concluded at the most recent strategic review of this asset? And then if I can sneak a clarification question, it's the usual one for me, Fredrik, on the group EBITA bridge. Of the SEK 749 million cost of goods sold tailwind in the quarter, can you help break that down between raw mats and energy distribution? I've got the SEK 190 million benefit from COGS savings in Q4 from the press release. Ulrika Kolsrud: If we start with the second question, maybe there with the reconsidering, I mean, we are continuously looking at our portfolio in evaluating and optimizing our portfolio. Then Fredrik, maybe you can help on the details of private label... Fredrik Rystedt: COGS... Ulrika Kolsrud: Yes, and the private label part. Fredrik Rystedt: Yes. Charles, we are not giving the details specifically as to the individual components. So I'm not going to say that. But of course, we already alluded to that the majority of the decline in volumes of the 2% or just under 2% is coming from there. But it's worth noting that the performance or actually EBITA is really, really good with Consumer Tissue private label. And we always have a bit of volume volatility in Consumer Tissue private label. So I don't think you can draw the conclusion that it's a bad business. In fact, it actually is generating quite a healthy margin and good profit. It's just that for the time being, volume is actually low. Should I answer also -- you were asking for the breakdown of COGS, right? Was that your question there? Charles Eden: Yes. Fredrik Rystedt: So the majority was related to raw materials. So that was about 2/3, give and take. And then we had energy, how should I say, more or less the rest. And then if you look at the other COGS, which was basically volume decline or less absorption plus new lines, et cetera, that was about the same as the cost saving program, so to give you a little bit of indication. Does that answer your question, Charles? Charles Eden: Yes, it does. Thanks, Fredrik. Sandra Åberg: Then let's move to the next question. Warren Ackerman from Barclays. Warren Ackerman: Warren Ackerman here at Barclays. Could you maybe sort of dive a little bit deeper on the A&P spend? You're talking about the increase to help drive the volume. I get it's going to be funded from the savings. But are you able to say -- I think it's around 5% of sales at the moment. But how much do you want to increase that by? And what is your current A&P mix in terms of online digital, and how do you measure the returns on that investment? What kind of tools do you have to sort of figure out where and how you allocate that spend? It sounds like it's going to be a big part of the story for this year. So just keen to understand a bit more on the details. Ulrika Kolsrud: And I can answer to some extent today, but I would also then invite you to the Capital Markets Day and talk more about this in detail. But of course, we are eager to measure the return of our marketing investments. So we do that on a regular basis. And it's by doing research on what we produce as well as following up that the activation is having the effect that we expect, both when it comes to purchase intent, when it comes to awareness and, at the end of the day, that it's generating the sales and the repurchase that we are expecting. So that we do on a continuous basis to make sure that we allocate the investments to where they do the best job for our brands. That was one question. The other question was more about how much we intend to increase A&P. Fredrik Rystedt: Yes, we haven't specified that. And of course, it's connected also to the innovation that we put on the market, because that always has an impact on the A&P spend. But generally speaking, we are, of course, convinced and, Ulrika, you gave a couple of examples here that A&P in general is fueling growth and is also profitable. You were asking there, Warren, about how we actually track profitability, return on market investments that we do. We believe we are reasonably good at it. Of course, as you always know, it's really very difficult to exactly have a scientific way of measuring. But we think we are pretty okay with measuring return of market investment. So to allocate where to put it, I think we are doing it reasonably okay. So we can't give you exact answers to your question as to how much or exactly how much the return is. It varies a lot. But generally speaking, we will increase, and we think we know where to increase. Warren Ackerman: And maybe just to clarify quickly, Fredrik. I guess I'm going to press you a little bit from a modeling point of view, I mean another way to ask it is, of that SEK 1 billion savings, how much of that will be sort of allocated to reinvestment? Or maybe another way to ask it is that 5%, how does that benchmark against peers? I mean, from a modeling point of view, do we stick in 6%? Or I mean, because it's sort of like it's quite a big swing factor. So any kind of help would be useful. Fredrik Rystedt: Yes. It's a great question. And of course, we got this question last quarter that is this going to impact in the end the EBIT margin or EBIT line. And we said, yes, it will, indirectly. So it's not so that we are putting the savings to our income statement or to the EBIT line immediately. We are investing it. And through that return on market investment, we believe that over time, we will both get operating leverage for growth and then, of course, margin enhancement. And it's not all about A&P, it is also about a combination of selective price increases that we partly have already done, but will do and A&P increases. So it's actually both. It's very difficult to give you specific details on exactly where, it's many different combinations. But over time, we think it will be profitable. Your final question as to how do we compare. Quite difficult to answer that. We are making a lot of benchmarking and trying to kind of adjust for the differences in structures and categories. But I think overall, there is an upside for us to do this. Sandra Åberg: Let's continue then with a question from Johannes Grunselius from SB1 Markets. Johannes Grunselius: I have a question on COGS again, if you can dive in a bit more there. Because Fredrik, you mentioned here, you will have slightly lower COGS year-over-year in Q1. In Q4, you obviously had a tailwind year-over-year of SEK 749 million. It's such a huge COGS base. So maybe you can provide a range or something on the year-over-year tailwind in Q1, that would be very appreciated, if you can give any indications, please. Fredrik Rystedt: Yes, we can. So thanks, Johannes, for the question. And we have chosen to guide only on COGS as a totality, because understanding all the ins and outs doesn't make things easier to actually grasp. So we are typically reasonably accurate when it comes to the estimate of the entire COGS number, and this is why we are giving it to you. But as I said, raw material is largely -- they're a bit in and out there, or positive and negative, but it's largely going to be a bit positive as energy as well, perhaps, if we compare then Q1 versus Q1. We're going to continue to have a little bit of unfavorable volume comparisons. We're going to have a bit of new -- or cost for new lines that we will have -- we're putting in place in Q1, and then we'll have a bit of cost savings. So all in all, this will give a slightly lower cost. The main driver actually still being raw material. And if you think about the main driver of raw material, it's actually mainly favorable FX actually. Johannes Grunselius: Okay. Okay. Can I put it the question in this way, if we look at COGS sequentially, are you thinking about more stable COGS? Or are COGS perhaps up a bit Q1 over Q4? Fredrik Rystedt: It's mainly stable. Mainly stable, you can say. Sandra Åberg: So let's move to the next question. Aron Adamski from Goldman Sachs. Aron Adamski: First, I had a follow-up on growth expectations for 2026. I mean, against the backdrop of lower input cost environment that you highlighted, would you expect price to be negative for the entirety of '26? And given that context, would you expect to achieve a better organic sales growth in '26 than you have done in '25? And then second, a quick follow-up on the A&P discussion. Can you please give us a sense of how the advertising step-up is going to be phased through 2026? Is it going to be more front-loaded? And therefore, could we expect the margin delivery to be relatively weaker in the first half of the year, given everything you said on volume, price adjustments and the cost savings delivery? Ulrika Kolsrud: I almost forgot the first question after the third question. What was the first question again? Sorry. Aron Adamski: Sorry, just on pricing expectations for '26. Ulrika Kolsrud: Yes, it was pricing and volume expectation, that's true. So I mean, we need to be agile and want to be agile when it comes to pricing because it's, of course, dependent on what happens in the market environment. So we are adapting to both, of course, what happens with input costs, but also what happens when it comes to demand and need to adapt to that situation as well as being fully equipped to capture the market growth when the wind is turning. So therefore, of course, there are scenario planning and so on, but to be agile is most important. When it comes to organic growth, yes, our ambition is clearly to move towards our financial target with 3% organic growth. So our ambition is to accelerate our growth. But again, we are in a volatile environment. So it's so important for us, and that's why it's so great to see that we are strengthening market shares in this quarter, because when the market is as volatile as it is, what we can focus on a lot is to win the relative game. And what we see in the quarter is that we're doing exactly that. And what's also important for us is that we win where it matters the most, and that is to drive our strategic segments. So that was an answer to say that we need to stay agile and see what happens in the market and then adapt to that. Sandra Åberg: Perfect. Aron, does that answer your question? Aron Adamski: Yes. Just on the second question on the phasing of margins, I suppose, for 2026, maybe if you could give us a bit more color on how the step-up in A&P is going to be phased and how is that going to impact the margin phasing through the year? Fredrik Rystedt: Maybe I can -- we don't give those kind of detailed guidance, as you've seen, Aron, but just maybe as a little bit of still a hint or 2, maybe even. First of all, you can see that Q4, as we have just reported, was higher than Q4 of '24. So that step-up has already actually happened. And if you remember, I mentioned -- maybe you weren't participating, but I actually mentioned that we do expect higher SG&A cost in Q1 on the back of higher A&P. So this gives you a little bit of hint. So we believe that the higher A&P cost will be there immediately -- actually already is there, higher, if you see the numbers. Sandra Åberg: Now let's move to Tom Sykes, Deutsche Bank. Tom Sykes: Would you be able to say how the A&P to sales for you differs by category? And just what are the categories which would have the greatest elasticity to increased A&P spend, please? And maybe just in addition is, what's happening to your trade retail spend? And how big is that in the COGS costs presumably? Ulrika Kolsrud: Well, if we look at A&P to sales, it's the categories that you find in Personal Care that has the consumer brands that has the biggest A&P spend in relation to sales, or I should say A&P investment rather in share of sales. Then if you look at a category like Wound Care, for example, you have a much lower A&P in relation to sales. There, it's much more about the sales force and equipping the sales force with the right products and support. And you find that fueling growth is through the sales force. And then we have everything in between there. Tom Sykes: Okay. And in terms of sort of the elasticity, where do you think the best place to allocate incremental A&P is? Was it just across the board? Ulrika Kolsrud: Yes. This is more about where we have our most attractive segments and categories. We want to invest the most where we have the highest potential for profitable growth and the strongest reason to win. So I think what you've seen here also now is that we have had good effect of investing, for example, in Feminine Care as well as in Incontinence Care. But we do want to fuel growth across our categories, but that should give you an indication. Fredrik Rystedt: And I guess, Tom, your question on trade spend, are you referring then to promotional activity there, I guess, right? Tom Sykes: Yes. I guess it's yes. That's spend with retailers. Fredrik Rystedt: Yes. And that is by far Consumer Tissue traditionally. So the promotional -- the percentage of all products sold under promotion is by far highest in Consumer Tissue. Tom Sykes: Okay. So that's just sitting in reduction of your revenues? Is it... Fredrik Rystedt: It's a pricing issue. It's a way -- you can say the pricing activity, they're strategic, so kind of headline pricing, and then you've got tactical pricing. And so promotion is a tactical -- it's what you do on a more temporary basis. So it's not list price adjustment. Tom Sykes: I get some of it. Sorry. Is there not spends that you would do on the websites of major retailers to get up the ladder of people searching for particular categories? I mean, that wouldn't -- or do you just include that in pricing? Ulrika Kolsrud: No, there is also brand communication and marketing that we do through the retailers or in connection with the retailers. So that is one element. But to Fredrik's point, when it comes to price campaigns, that you see in the sales. Tom Sykes: Okay. But just to clarify, does all your, if you like, A&P type spend, setting aside any promotion and price reductions, does all of that sit in the A&P line? Or does some of it sit also in the COGS line, because it's trade spend that goes on? Fredrik Rystedt: Not in COGS. It's not in COGS. It's either sales or A&P. So in this case, what you're referring to is A&P. So it's not COGS. I'm not sure how that could be possible. But we can talk about that offline, but it's not in COGS. Promotion is in sales and marketing in A&P. Sandra Åberg: Perfect. Next question comes from Karel Zoete from Kepler. Karel Zoete: I have 2 questions, if I may. The first one is in relation to M&A. You've done last year, one acquisition, but the market is difficult certainly in places such as Latin America. What's hindering you from doing more M&A? Or why haven't we seen more acquisitions over the last 18 months given the difficult markets? And then the second question is more in relation to Asia. I think there's still an agreement within that they can use some of your brands. What's the status of this? Is this going to be renegotiated in the coming year? Or do you have plans to build operations yourself selectively to capture some of the growth in the Asian market? Ulrika Kolsrud: If I start with the M&A question, maybe you can answer to Asia later. We continue to work actively with M&A, identifying potential targets and assessing potential targets. As you know, it's part of our strategy to grow both organically, but also inorganically. So we clearly have the ambition to do value-creating M&As. But we are, to that point, very disciplined to make sure that they are value creating. So that is, of course, always what we're doing in the screening to make sure that, that is the case, and always judging what is the most value creating, is it organic growth or inorganic growth. And you could argue, of course, when it comes to valuation, that in order to bridge the potential valuation gap, we need to find quite a lot of synergies then to secure that value creation. So the short answer is that we have the ambition to drive more M&As and are working on that actively. Fredrik Rystedt: So Karel, when it comes to Asia, the story isn't really different there. When we divested Vinda in 2024, there was a license agreement for these brands, and that expires in 2027. Now as we sold the company, we also granted an option for the buyer to continue licensing these brands also in the future against, of course, a license fee. And that option has not yet been translated into an agreement. And of course, we remain unsure of whether that will actually happen. So there are 2 possibilities here. One is that we continue with the license agreement subject to the buyer actually exercising on that option, or if they don't, then, of course, we get those brands back in Asia. So we cannot give you an answer at this point of time as we actually don't know. Sandra Åberg: Let's move then to Misha Omanadze, BNP Paribas. Mikheil Omanadze: I just wanted to zoom in a bit more on your end market dynamics where you already provided some helpful color. And overall, it seems that the markets remain challenging. If you were to look at your biggest category geography exposures, where would you say you saw the biggest sequential change from the previous quarter in both positive and negative direction in terms of end market trends and consumer environment? Ulrika Kolsrud: I wouldn't say that we've seen any big movements between quarter 4 and quarter 3. It's been quite stable when it comes to market environment. Sandra Åberg: Next question comes from Henrik Bartnes from ABG. Henrik Bartnes: One question for me, please. You have historically talked about seasonally lower volumes in Q1 compared to Q4. And if we look at Q1 sequentially, how should we think about volumes this year? Are there any indications that this year won't show any seasonally lower volumes? Fredrik Rystedt: I can maybe answer. First of all, we don't give volume estimates. We can only report what has historically been the case in terms of seasonality. So as you rightly say, seasonality would suggest that volumes in Q1 are lower than Q4. It's not actually one and the same for all our business areas or categories. Some don't have that. But in general, if you look at the group as a whole, clearly, volumes are typically, I should say, lower in Q1 versus Q4, but we are not giving an estimate for '26 specifically. Sandra Åberg: Let's now move on to Celine Pannuti from JPMorgan. Celine Pannuti: So my question is coming back on the Consumer Goods performance with price/mix negative. I think you mentioned that you had to roll back some pricing in order to keep some of your customers. I think it was in private label. Does that mean that going forward, we still have to annualize that, and so we'll have continuous negative pricing. I also said you mentioned there was a one-off impact from Latin America. So if you could give us a bit of an idea on that go forward. [indiscernible]. Sandra Åberg: Sorry, your sound is not working really. So we can't really hear your question. Maybe we can just start with the 2 questions you had now, because then we have to move on. Is that okay? Celine Pannuti: Perfect. Sandra Åberg: Good. Fredrik Rystedt: Yes. I think I got the question whether the price/mix -- the negative price/mix in consumer goods would flow into Q1 or Q2? Was that the question, Celine? Celine Pannuti: Yes. I mean, I would presume it annualizes if you have made some pricing concessions. And then the question, is there any other price negotiation that you are going through now in retail? Fredrik Rystedt: Yes, right. No, again, we can't comment on, obviously, price negotiations. That's more commercially related, I can't do that. But of course, as we have lower prices now in Q3 and Q4 and especially here in Q4. So there has been a price decline in Consumer Tissue. That will, of course, obviously continue into Q2. So in short, we'll see those price impacts coming or continuing in Q1 and Q2 potentially. Celine Pannuti: And just how material is the Latin America impact that you mentioned? Fredrik Rystedt: Yes, we are not actually giving you the exact number there, Celine, and this is for commercial reasons basically. But if you actually look at -- I gave you a little bit of guidance. It's always interesting when you say you're not going to give a number and then you almost do it anyway. But I'll do it because if you look at the minus 0.6% in terms of organic sales growth for Feminine in the quarter. And then we also stated that without that sales, organic sales growth would have been low single digit. That gives you a little bit of indication as to the size. So this is a bit -- of course, for the group, not a lot, but for Feminine, it is a bit, and it comes out as pricing. So that's temporary. That will not be there in the next quarter. Sandra Åberg: Perfect. Thanks for your question, Celine. Now we will move to our final question, and that question is from Oskar Lindstrom, Danske Bank. Oskar Lindström: Just a slightly different question from me. Following the Edgewell acquisition and an acquisition by another company, you're not going to be sharing, I understand, the brands Stayfree and Carefree between you. Who owns those brands? And who is paying royalties or fees to whom? Ulrika Kolsrud: Well, we own the brands in the geographies that we are operating the brands with. So in those geographies, it's our -- we can actually then do what we think is commercially right to do with those brands. Fredrik Rystedt: So in short, no royalties paid to anyone. Oskar Lindström: Wonderful. That's all the questions I had. Ulrika Kolsrud: That's what you wanted to know. Thank you for that interpretation. Sandra Åberg: Thank you, Oskar, for that question. And now it's time to wrap up. But before we end, I would like to hand over to you, Ulrika, again, for final remarks. Ulrika Kolsrud: Yes. Well, thank you, Sandra. Thank you for joining us today. We are leaving, as I said, a solid 2025 behind us, where I think our resilience has really been a critical success factor. And it's especially great to go into 2026 with this good market share momentum that we have talked about today. And finally, I look forward to see you all on the 7th of May in Mölndal, Sweden. Sandra Åberg: Yes. Thank you for that, Ulrika, and thanks to you for joining. If you have any further questions, just reach out. We will be road showing in Stockholm today virtually next week, and we will also be in London next week. So see you there. And take care, and have a good rest of the day. Bye for now.

107天前Insight Analytics约5分钟阅读

BKT.MC 2025 Q4 财报电话会议

Laurie Shepard Goodroe: Good morning, and thank you for joining our 2025 full year earnings call. Financial statements were posted with market authorities early this morning. All materials can also be found on our corporate website. Please refer to disclaimer in the presentation and note that this call is being recorded. And we welcome today our Chief Executive Officer, Gloria Ortiz, and Chief Financial Officer, Jacobo Diaz. Gloria, over to you, please. Gloria Portero: Thank you, Laurie, and thank you all for joining us in this 2025 full year results presentation. Since we are reporting the full year, I believe it's appropriate to start with a brief overview of the environment in which our business has operated to provide context for the figures that we are about to review. 2025 was the year of Donald Trump's return to the White House and even that has set the political tempo of the international calendar. Continuing the trend of previous years, the events in 2025 confirmed that the international landscape is moving towards an increasingly turbulent and fragmented scenario. Long-standing conflicts, such as Ukraine, remain unresolved despite failed attempts to reach an end to the war. In Gaza, the ceasefire came only after months of escalating violence. Meanwhile, the Franco-German Axis, the traditional engine of the European Union, has been weakened by deep domestic political crisis. Without a doubt, tariff has been the most repeated word of the year. The imposition of tariffs on international trade has become the main diplomatic pressure tool of the Trump administration. The European Union, which for years has been a strategic partner of the United States, ultimately considered in trade negotiations and accepted a 15% tariff to maintain access to the U.S. markets. Thus, the balance of 2025 confirms an international landscape that is increasingly fragmented and less predictable, where open conflicts tend to become chronic, and long-lasting political solutions are replaced by fragile truces or unbalanced agreements. And indeed, what we have been observing in these first weeks of 2026, for example, in Venezuela or in the U.S. stance on Greenland, amongst others, confirms that this year will again be marked by geopolitical volatility just as 2025 was. At the same time, technology, led by artificial intelligence, continues to advance at a blistering pace, transforming operating and business models. And the banking sector is undoubtedly no exception. These are global trends shaping the broader environment. But if we focus on the countries in which we operate, it is worth noting that the 3 economies, Spain, Portugal and Ireland, are among the most dynamic in the Eurozone and have become the new growth locomotives of the union. In fact, the Eurozone in 2020 -- in fact, in the Eurozone in 2025 inflation, which had surged sharply after the pandemic and the Ukraine war, moderated. And as a result, the ECB accelerated interest rate cuts, especially during the first half of the year. With inflation under control at the European Central Bank's target level, benchmark rates stabilized at 2%, and no further cuts are expected in the short term. As a result, in 2025, the ECB reference rate averaged 2.2%, that is 1.4 percentage points lower than in 2024, while the 12-month Euribor fell by an average of 1.05%. Turning to financial markets. It's notable that despite escalating conflicts and increased political polarization, market performance remained robust. The IBEX 35 achieved a record increase of 50%. German equities rose by 23%, and the NASDAQ advanced by 19%. In this environment of geopolitical uncertainty and significantly lower interest rates compared to the previous year, we have delivered in 2025, very strong results, once again, record breaking. These results are built on solid foundations and driven by recurring client commercial activity. Moreover, in 2025, we executed major strategic projects that will underpin the bank's future growth such as the integration of EVO Banco and Avant Money, which is now Bankinter Ireland, a branch of Bankinter just like Portugal. Of course, before moving on, I want to express my thanks to all Bankinter Group employees for their dedication, effort and commitment because they are the true architects of the results that we present today. The results we present today are very satisfactory, driven by intense commercial activity that brings us to report a net profit of EUR 1,090 million in 2025, representing 14% growth over the previous year. 2025 was marked by diversified growth, both geographically and by business line. Overall, we grew 9% in total business volume, 5% in lending, 6% in customer funds and delivered a strong double-digit growth, 19%, in off-balance sheet products. Despite the sharp decline in interest rates, we managed to limit the falling interest income to 1.8% in 2025. And on a year-over-year basis, the inflection point was reached in the first quarter. From that point onward, net interest income grew quarter after quarter, thanks to credit growth and margin management. Customer spreads averaged 2.68% for the year with the overall NIM at 1.78%. Fee income from services had an exceptional year, growing 11%, which in nominal terms, almost doubled the reduction in interest income. This allowed us to grow gross margin by 5%, and I think it is important to note that the strong performance in fee income is due to the significant growth in our balance sheet funds and not to any increases in customer fees. All this growth has been achieved while keeping our risk appetite unchanged, improving the asset quality of our balance sheet, reflected in a nonperforming loan ratio below 2%, specifically 1.94%. Another key element of our business model is efficiency at 36%, indeed the best efficiency level across the industry. These 3 pilots, the diversified growth, asset quality and efficiency, are the foundation of our business profitability, which reached ROTE of 20%. As I have been commenting in previous quarters, commercial activity with clients has been very strong. Total customer business volume stands at EUR 241 billion, EUR 20 billion more than in 2024, representing 9% growth in the year or a compound annual growth rate of 8%, an increase of EUR 80 billion since 2020. This volume breaks down into EUR 84 billion in lending, representing 5% growth versus 2024 at year-end. Customer funds reached EUR 88 billion, EUR 5 billion more than a year ago, and we now manage EUR 69 billion in assets under management, 19% more than at the end of 2024. We have more than doubled the balance recorded at the end of 2020 with a compound annual growth rate of 17%. All this growth is organic and diversified with every geography contributing and outperforming the market. Our diversified customer business volume growth is what enables us to consistently strengthen revenue streams. Core revenue fees and interest income reached EUR 3,032 billion, a compound annual growth rate of 12% and a record for the series, exceeding 2024 by 1% despite the headwind of lower interest rates. We achieved this by limiting the decline in interest income to 1.8% through volume and margin management and through the excellent performance of fee income, which with an 11% growth rate more than offset the reduction in net interest income. The drivers of fee income are the strong growth in off-balance sheet funds, the increasing activity of Bankinter investment across all its business lines and the positive performance of the economies in which we operate. Regarding interest income, I would like to highlight its upward trend throughout the year. It bottomed out in the first quarter of 2025. And from that point on, revenues increased quarter after quarter. By the fourth quarter, we already grew on a year-on-year basis by 4%. So the outlook continues to be more positive, especially with the forward rate current scenario for 2024 -- 2026. In summary, sustained growth, asset quality and efficiency are what allows us, once again, to deliver results that surpass our own records, exceeding EUR 1 billion and representing 14% growth versus 2024, tripling our results over a 5-year period. Our ROTE now at 20% is also the highest in the entire series. Before I hand over to Jacobo to review in further detail the financial results, I wanted to quickly showcase one commercial strategy that was quite successful in 2025. In 2025, the 100% digital new client acquisition is what I'm referring to. Since the EVO integration, we have improved our digital customer experience with the use of AI in commercial and marketing processes. Our deposit gathering capabilities are now stronger, more granular and flexible. We increased customer funds in this channel by 64% in the year, now reaching EUR 12 billion, close to 14% of our total customer deposit base. New customer acquisition trends have doubled since 2022, and the digital channel now represents more than half of the new client acquisition in 2025. From an industry perspective, our digital offering is -- not only allows us to compete effectively with new entrants, but gives us a clear competitive advantage. Customers benefit from a full multichannel ecosystem, digital branches, contact center and also private banking network, which enhances loyalty and broadens upsell opportunities. In the second half of 2025, the strong growth of this channel generated some short-term pressure on deposit cost. However, looking ahead, our digital strategy and strengthened deposit gathering capabilities create meaningful upside supported by lower acquisition and servicing costs. Overall, our digital franchise has become a scalable and cost-efficient acquisition engine that strengthens loyalty, supports margin resilience and accelerates fee growth, a competitive moat that becomes more powerful each quarter. Jacobo, now over to you. Jacobo Díaz: Thank you very much, Gloria, and good morning, everybody. 2025 marks yet another year of increased revenues and profitability. In operating income, we have grown by 5% with increased volumes, continued strong fee growth and effective margin management. Operating costs were more balanced this year over the quarters with annual cost growth growing below revenue growth to end the year within guidance, confirming positive operating jaws another year. Cost of risk and related provisions declined by more than 15%, reflecting a continued positive trend in risk management. And net profit increased by 14.4% to well surpass our initial goal of EUR 1 billion in 2025. Onto NII and customer margins on the next page. NII contributed to EUR 2,237 million this year, slightly below our initial target. Asset yields for the year averaged 365 basis points and remained quite stable this quarter at 3.48%, down only 1 basis points from the third quarter given the good volume growth, especially in corporate and uptick in short-term interest rate. This helps soften the impact of a slight increase of 3 bps in quarterly deposit costs due to the same uptick in short-term rates as well as a successful commercial strategy that Gloria just mentioned regarding digital account deposit gathering. Customer margins for the year averaged 268 basis points, very near to our 270 longer-term target. We believe Q4 '25 mark a low point, as the downward repricing of digital account deposit is underway in Q1 '26. Therefore, we expect customer margins to recover moving forward. NIM averaged 178 basis points for the year as the noncustomer interest income improved in the quarter, leading to an increase of NIM of 4 basis points in Q4. Regarding the ALCO portfolio, this has been achieved through increased ALCO balances that you can see on Page 13 as well as reduced wholesale funding costs. Moving on to fees. Fees continued to deliver sequential increases each year, reaching EUR 795 million, up 11% versus 24%, reaching a double-digit compound annual growth rate of 10%. This sustained growth momentum is mainly attributable to the strong growth volume or strong volume growth in asset management, custody and brokerage services. Moving on to Page 15. Equity method and trading dividend income lines also up with an impressive 21% on a year-on-year basis. The diversification of sources of revenue is well represented here as a result of our business investment in the past. For example, Bankinter investment that we will look later in the presentation, insurance JVs as well with our JV in Portugal with Sonae called Universo. We also confirm the banking tax will have no impact in 2025 and expect this to be the case for '26 and '27. Moving into the contribution of gross operating income, there's been a very strong contribution from each geography in gross operating income, demonstrating increased diversification with Portugal and Ireland, growing from an 11% contribution to gross income in '22 up to 16% in '25. Moving to the expenses on page 17. We have contained total operating cost growth to 4%, notably with flat general expenses due to the tangible impact we are achieving through our IT and AI initiatives as well as with the EVO integration. Efficiency ratio improved to 36.1% this year, demonstrating our commitment to delivering positive operating jaws now and in the future. On Page 18, PPP more than doubled over a 5-year period to reach EUR 1,947 million in '25. Moving on, we see improvement in credit and other provisions. Significant decrease in cost of risk down to 33 basis points from 39 basis points in '24 with loan loss provision volumes now below those even of the ones in '23. Other provisions also performing well, down to 8 basis points for the year with no signs of deterioration in the market of -- in our portfolio, and our disciplined approach to risk management, we remain optimistic to maintain current levels for the coming quarters with potentially some upside risk. Next page, net profit reached once again historical levels at EUR 1,090 million, an exceptional increase of 14.4% in the year, maintaining similar growth rates seen in '24 even with the headwinds faced in interest rate during the year. Moving into the credit and asset quality indicators, as you can see, they continue to improve. Risk quality measure in terms of the nonperforming loan ratio has improved significantly this year breaking below 2% to reach 1.94%. The coverage ratio remains very solid at 68%, substantially higher than in the 2020. By geographies, Spain, down to 2.1%; Portugal at 1.4%; and Ireland, stable, 0.3%, all well below sector average consistently over time. Moving into capital. Our CET1 ratio ended the year at 12.72% and well above the minimum requirements of 8.36%, leaving an ample capital buffer of 4.4% as well as adequate MREL and leverage ratios. Main movements in the year related to retained earnings contributing to a total of 111 basis points, capital consumption of 51 basis points in RWAs and 35 basis points in operational and market risk. The implementation of the countercyclical buffer in Spain has resulted in a 41 basis point increase in minimum requirements. Moving into Page 24. Commercial activity, volumes and profit trends remain not only strong, but with a greater diversification each year across geographies. Customer volumes up 8% in Spain, 15% in Portugal and 23% in Ireland. Each region contributed at increasing levels to the profit of the bank as well we see on the following slide. Within Spain, loan growth this year, up 3% with a strong performance in the business lending segment growing 6%. I consider this satisfactory growth rate, especially when considering the intense competitive margin dynamics in Spain as well as our reduced appetite for open market consumer lending in Spain in 2025. Retail deposits continued to demonstrate solid and balanced growth, increasing by 5%, fueled by the successful digital campaigns we mentioned a little bit earlier. Stellar performance in Wealth Management, reflected by an 18% increase in assets under management balances as well as a 19% increase in assets under custody. Profit before tax, up 14%, reflecting solid contribution from our core Spanish business. Moving into Portugal, a continued momentum in lending activity across both business segments, up 9% in total with a strong deposit gathering growing 8% as well as a substantial increase in wealth management and custody balances, rising 28% on a year-on-year basis. Cost-to-income ratio at a very efficient low level of 33% even with increased investment in IT. Profit before tax, up 7% to EUR 210 million or 14% of total contribution to the group. Moving into Ireland. 2025 marked the year for our Irish business to convert into a branch of Bankinter, allowing for increased upside risk in terms of volume potential and efficiencies. We launched deposit in Q4, albeit with volumes still at marginal levels, definitively more to come in this space during 2026, as we begin to scale up deposit campaigns this quarter. Asset market dynamics and our Bankinter style commercial differentiation supported a 27% growth rate in the mortgage book in '25, with improved trends seen in the second half of the year. Consumer finance also growing at 11%. Profit before tax contribution reaching EUR 46 million, up 13% this year with important improvements in the cost-to-income ratio down to 44% from 48% last year. Now moving into the corporate and SME banking business. Business lending continues to deliver a strong performance, up 6% this year, consistently increasing market share year after year. One key growth catalyst continues to be our international business segment that has doubled loan volumes over a 5-year period, now reaching EUR 11 billion, representing 30% of the business lending book currently. This segment is also a strong recurring contributor to fee income from services. We also see increased activity and upside risk from other growth catalysts like our new ESG client solution across loan and servicing income products. For example, the loan advances we provide for energy certificates, where we were the first to launch in the market in 2025. Additionally, we are expanding substantially our Bankinter investment business that I will detail more in the next couple of slides. Bankinter investment has doubled income contribution to the group over the past 5 years with currently 31 alternative investment vehicles and associated vintages well distributed over the year since 2017. More than 15,000 Iberian Bankinter customers now invest in real assets. This franchise has been a key source for the increased fee income to the group, reaching a 12% compound annual growth rate with upside risk potential for the future. On the next page, you can see the strong diversification of the different investment strategy for the vehicles across many sectors and countries with more than 360 different underlying assets in the portfolio. Moving on now to review the Retail Banking business. Retail banking asset and deposit trends remained strong with increased core salary account balances up by 7%. New mortgage origination, up 10% year-on-year, with solid market shares of new production across Spain, Portugal and Ireland. Our mortgage back book is growing steadily at 5% annually despite rising competition in 2025. The Wealth Management business, on Page 32, shows our high-quality affluent client base that continues to drive exceptional incremental wealth volumes, up EUR 21 billion this year, a 16% increase on a year-on-year basis, of which half of it is new money to the bank. When excluding the market effect, the net new money has reached the EUR 10 billion level milestone, well above our historical range between EUR 5 billion to EUR 7 billion. Off-balance sheet, volumes under management and custody on Page 33 ended the year at EUR 156 billion, up EUR 25 billion, or 19%, increasing significantly with the markets and net new inflows in all categories. With the exception of fixed income security, we have provided additional details regarding commercial activity and trends for those key fee income growth catalysts in the annex, no doubt a key driver of continued fee growth for the future. Now, let me just spend a couple of minutes sharing our ambitions and targets for 2026 before I hand back to Gloria. We expect -- the first one, we expect solid macro outlook for all the regions where we are operating. Therefore, we expect growth across all segments and geographies, focus on our targeted type of customer and insurance and ensuring a disciplined risk-return approach for asset origination. Volumes are expected to grow at similar levels than in '25 and previous years. This means that lending volumes at mid-single-digit growth with deposit volumes targeting to keep our liquidity ratio stable, that is above 100% in terms of deposit to loan or below 100% in terms of loan to deposit. All geographies and business segments are expected to grow at similar levels with Portugal and Ireland keeping their successful track record, and Spain, keeping strong volumes in the corporate and retail businesses. Regarding NII, with the current Euribor 12 months rate outlook in '26 stable around current levels or slightly increasing towards the end of the year and next -- and following years, we expect customer average margin to recover 270 bps, our initial target. And therefore, we target in 2026 overall similar levels of client margins and NIM that the ones we saw in 2025. With residual negative repricing for mortgages and a downward repricing of our digital accounts in Q1, we expect minimal margin compression in the first half '26 with an upside bias to possibly reach a stable asset yields by the end of Q1 and beginning of Q2. Given these dynamics, we would expect NII for the entire 2026 to increase in correlation with volume growth. For fee growth, we target high single digit for the year, supported by increasing volumes from assets under management and assets under custody as well as from increased transactionality from each of the geographies, which are strongly correlated with the economic growth of each of them. With our strict cost allocation and management, while keeping strong IT investment around 10% of our gross income, efficiency remains one of our pillar or our main pillars, and we are committed to delivering positive operating jaws, again, in 2026, reducing cost-to-income levels below 35% for the year. In terms of credit quality, we have a stable outlook for cost of risk for the year around current levels of 33 basis points, albeit with a positive bias. And ROTE is expected to stay above 20%, ensuring attractive shareholder value creation. In summary, we expect 2026 to be another year of consistent growth in volumes and profitability reaching new records in volumes, gross income, efficiency, net income, and of course, profitability. Gloria, back to you, please. Gloria Portero: Thank you, Jacobo. Thank you for sharing our financial ambitions. In terms of our management priorities, all of these are well-integrated and will contribute to our financial goals with high-quality volume growth, a greater diversification of income from servicing fees and geographies. We will continue to invest in technology to achieve tangible benefits from our AI initiatives, driving both competitive differentiation and operational efficiencies. The outcome will undoubtedly result in a strong profitability and sustained improvement in shareholder returns. The key driver for this success centers around our clients and our employees. 2025 is a pivotal year for artificial intelligence, and we are committed to embedding AI tools and culture throughout the group. I will oversee project selection to ensure we achieve tangible results. Our program called AI First is designed to enhance our competitive advantage by integrating AI into all our customer-facing acquisition and service applications. We are committed to deploying personal productivity tools company-wide aiming to achieve 5% improvement in productivity over the medium term. Regarding process efficiency, ongoing initiatives across back, middle and front office focused on integrating AI gen applications into our banking operations. Coupled with leveraging AI tools for software development, we anticipate a 10% increase in capacity equivalent to approximately 1 million hours over the next few years. However, AI for Bankinter is not just a plan, it is a reality with substantial progress achieved in 2025. On Page 37, you can see the measurable improvements in productivity and efficiency thanks to the bank's digital transformation and the pragmatic and effective use of artificial intelligence in operational and commercial processes. We remain committed to investing 10% of our gross income in technology. On the lower left-hand side of the page, we have highlighted several examples of our use of AI in 2025, which have contributed to enhanced employee productivity. With EUR 36 million managed per employee, we compare very favorably to our peers with EUR 21 million per employee. And if we measure efficiency in terms of operating cost per billion managed, we also stand out. We allocate EUR 4.6 million of expenses per EUR 1 billion managed for our clients while our competitors require EUR 6.5 million for the same volume. Naturally, this is reflected in the efficiency ratio, which has improved year after year and now stands at 36%. Finally, I would like to highlight that all these gains in efficiency and productivity are not being achieved at the expense of service quality. In fact, service quality, measured in NPS, has improved by nearly 10 points since 2020 and now stands at 51%. Turning to the financial page -- the final page of our presentation. We report a ROTE of 20%, 100 bps above 2024, together with continued value creation for shareholders through both dividends and growth in book value. We are presenting another year of historical results driven by recurring customer activity and the disciplined execution of a long-term strategy that preserves our risk appetite while strengthening the balance sheet as reflected in the ongoing improvement of our NPL ratio. We continue to invest in initiatives that support business growth while at the same time improving efficiency. The drivers behind our performance, diversified growth, disciplined pricing, strong fee income engines and best-in-class efficiency are structural and provide strong visibility into continued profitable growth. In conclusion, 2025 demonstrated the resilience and strength of our business model even in a year of declining rates, geopolitical volatility and intense competition. Bankinter expanded volumes, protected margins and delivered record profitability. It was not just a record year, but a clear demonstration of the strength of our franchise, the quality of our growth and our ability to generate attractive returns and create long-term value for our shareholders. Back to you, Laurie. Laurie Shepard Goodroe: Thank you, Gloria, and thank you, Jacobo. We'll now open up for questions. [Operator Instructions] Our first caller is Maks Mishyn from JB Capital. Maksym Mishyn: Two questions from my side. The first one is on the competitive environment in lending in Spain. Your retail book is growing below the sector, and my question is whether it is intentional, why and when can this change? And the second question is just a clarification on the cost of risk guidance. You mentioned upside risks. What has to happen for them to materialize? And what kind of upside risk are we talking about? Could you please quantify them a bit more? Gloria Portero: I will answer you the first question, regarding competitive environment in Spain. Listen, I actually -- I think I pointed it out last quarter. We are seeing some irrational behaviors, particularly in the mortgage business, although also in other segments, but mainly, I would say, in the mortgage business. And you will understand it very, very quickly. I mean, there are offers, and I'm not talking to private banking clients. I'm talking to very standard clients, where they can get a 30-year mortgage at 2.20% for 30 years fixed, I'm talking. And as you know, the swap curve for the 30-year is over 3%. So basically, it's like selling a mortgage with Euribor minus 80 or even more. That is absolutely rational because even if that rate has a positive margin this year, obviously, you are building a portfolio that is not sustainable. And in 30 years, rates can do many things. So we are not into that world. We are not going to sell mortgages at 2.20% because we want to build a sustainable portfolio in any environment -- well, probably not in any environment, but in most of the environments, and we are not going to enter in that war. So we are producing with our clients, and we are competing in those clients where we think they deserve better rates. But we are not going to enter in that war. Jacobo Díaz: Maks, this is Jacobo. I'm going to answer your second question, and maybe there's a misunderstanding. The cost of risk that we're expecting for 2016 is quite similar to the current levels that we've seen here at the end of the year, which is around 30 bps -- 33 basis points. I think the word upside risk means -- it's meant in a positive way. That means that it could be even a little bit lower, not a little bit higher. So it's the way we can interpret that word. I think we think that we are under a good macro outlook for Spain, Portugal and Ireland. As you know, we are reducing our exposure to the consumer finance business with non-Bankinter client. We are reinforcing of being more prudent in all our activity. So the sense of the sentence that I mentioned of the upside risk doesn't mean this might go up in terms of cost of risk. I was trying to say that it can be even better than the current levels of cost of risk. I hope that I have clarified my point, and I expect that this was your question. Laurie Shepard Goodroe: Our next question comes from Francisco Riquel in Alantra. Francisco, go ahead. Francisco Riquel Correa: Yes. So my first question is I wanted to ask about your guidance of mid-single-digit growth in loans, if you can, please share indications by country. It seems to me that your guidance could be conservative if just the sector in Spain grows 4%, 5% in '26, which is nominal GDP growth. So you have grown a bit less than the sector in Spain. You were commenting that. So I wonder if you are willing to continue losing market share, particularly in retail mortgages in '26 or if you -- we could have upside risk to your volume guidance overall? And then my second question is regarding the guidance for cost inflation. So you have given cost-to-income reducing 1 percentage points, which means 2 percentage points cost inflation below revenue growth, meaning also cost inflation lower than in '25, but you need to invest in Ireland to become a full universal bank, also in Portugal. So that probably means very little cost inflation in Spain. So if you can, please elaborate on the cost guidance, the longer-term ambitions that you have presented for 2030, how do you plan to leverage technology to achieve that? I see other banks are still investing in technology. So if you can please elaborate. Gloria Portero: Thank you, Paco, for your question. I will try to answer the last question and maybe give some indications about the first one, but Jacobo will complete what I say. Okay. With respect to costs, obviously, technology is going to help, but this is not -- it's not a miracle. So we are not going to attain obviously, all that efficiency only with technology. I remind you that last year, we integrated EVO Banco. This year, 2025, we only had synergies for the half of the year. Next year, we will have the synergies of this operation for the full year. On the other hand, we just announced, I think, in December that we were absorbing consumer finance -- Bankinter consumer finance into Bankinter. And obviously, this means a simplification of the corporate structure that also brings some synergies. So it's a question of the traditional cost management technology and also all the simplification that we are undergoing in the corporate structure. And with respect to lending growth, listen, if the competitive dynamics continue to be in the mortgages -- in retail mortgages, the ones that we have seen during 2025, we are happy to be prudent and not to grow at the same pace as the market grows. But I hope because it doesn't make any sense that the market reacts and that we come back to a logic dynamic in pricing. Another thing where we are also reducing our growth rates is in everything that has to do with consumer credit in the open market. This means outside Bankinter clients in Spain because we are seeing already, as you can -- you know, there have been many announcements with regards to -- with regard to the new law, and well, there are a lot of problems in this -- I would say, a lot of compliance risks in this business. Do you want to complement? No? Jacobo Díaz: Yes, yes. Paco, good morning. No, no, I think in addition to -- I mean, basically, what Gloria is trying to say is that we are sticking to the same type of client or target of client that we've been sticking in the past, even with this exclusion of the consumer finance business in the open market activity. So this is one of the reason. We are targeting selective origination of lending. And even though we are able to keep the similar level of growth even if the market might grow a little bit more. But we prefer and we prioritize a good return and risk combination instead of volumes. Ireland is going to grow, again, quite strongly, double digit. Portugal is going to grow again strongly, double digit. And Spain behavior is going to be very positive. But always, we are prioritizing the combination of risk and return. Laurie Shepard Goodroe: Our next question comes from Marta Sánchez from JPMorgan. Marta Sánchez Romero: The first one is a follow-up on cost. So you're mentioning a commitment to positive jaws every year. You're going to be below 35% cost-to-income. What do you think is the right level to run the bank? And do you see a 1% positive progress every year for the next 3 to 5 years? And the second question is on the customer spread. You are committed to that 270 basis points. This quarter, we are a bit far from that level, 261. How are you going to be rebuilding that margin? And what is the outlook for net inflows into your digital account for next year? Jacobo Díaz: Marta, I'm going to start answering your second question about the customer spread. So Gloria has already mentioned that we are updating the cost of the digital accounts. This is going to be a good behavior in the first quarter of this year, and this is going to instantly recover part of the client margin, again, targeting the 270 in average that we've mentioned for the entire year. So for the year -- I mean, the cost of deposits are the ones that we will expect more contribution to this building up the 270. Loan spread that have ended the year at 3.48% last quarter also is intended to recover across the year. We expect or there is expectation of a steepened yield curve that will provide more upside in the second half of the year than in the first one, especially with mortgages. So we do expect that the contribution of the asset yield might be a little bit lower in the -- to recover that position. So maybe a couple of bps in average. But definitely, the cost of deposit is the one that will drive the most -- the majority of the building up of this 270s across the year. And in terms of cost, yes, I think one -- always it's very difficult to tell if it's 1 or 1-point-something point every year. But definitely, the message of Gloria is that we have a strong ambition to reach very low levels of efficiency. We think that we should aim to reach 30% not too far ago. This is where we want to be in terms of efficiency ratio. And this is something that we want to build in the next 3, 4 years, maybe. Laurie Shepard Goodroe: Our next question comes from Ignacio Ulargui from BNP Paribas. Ignacio Ulargui: I have 2 questions. The first one is on fees, looking to insurance fees and distribution fees related to insurance products. I mean, I just wanted to see if there could be any acceleration of that into 2026, if there is chances to rethink about the JVs that you had in the non-life business. What could be the strategy on the insurance business? And the second question is on the capital front in the quarter, that has been like 19 basis points positive effect from intangibles and other adjustments, if you could elaborate a bit what was the driver of that? Gloria Portero: Ignacio, I will try to answer your first question. As you know, we have to -- well, we have a JV with Mapfre that's in life insurance, but also in non-life in all segments but auto and home insurance. In home insurance, we are growing very nicely, actually, and also, in life insurance. But where we think that we could grow more is in all the other segments that are outside life and home insurance. And yes, we are working. We are working with Mapfre to see how we can give a greater push to this business. But we have no plans for the moment to make any changes in the JVs that we have. But as I mentioned, we are working with Mapfre to see how to improve this 7% growth rate. Jacobo Díaz: Ignacio, I'll answer your questions. Yes, I mean, at the end of the year, we reduced the deduction of intangibles just because all the IT assets that have been developed come into production in this fourth quarter. Therefore, we reduced the deduction as intangible, and then, we start the amortization of these IT assets. Laurie Shepard Goodroe: Our next question comes from Pablo de la Torre from RBC. Pablo de la Torre Cuevas: I had a first question on the potential uses of the excess capital that you're expected to generate going forward. So beyond organic growth in existing markets, how do you envision to use this excess capital? And I know Gloria has already commented on this last quarter, but you continue to be linked to a potential transaction in Ireland. What is kind of your latest thinking there? And given the outlook more generally for the bank, have you discussed plans to change the ordinary payout going forward? Then, it's more of a -- my second question is a follow-up on the corporate structure simplification point in consumer finance that you have already discussed. But I wanted to invite you to comment on the revenue opportunity from this change. Payments and collection services is already a large contributor to fee income for the bank, but it seems that the revenue growth there has been decelerating a little bit over recent years. And so can you just please provide a bit more color on how this change can -- how the change you have announced can contribute to revenue growth going forward? Gloria Portero: Thank you, Pablo. With respect to Bankinter consumer finance, and you are talking more about the payments, the new payments area, I suppose, that we announced at the end of the year. We have done this -- well, first, payment income is not growing so strong because the regulation with regard to payments for instant payments, well, is such that has an activity that was fee-generating, what has become an activity where you charge no fees at all. So that has had an impact this year. It won't have an impact next year because, obviously, we are already comparing equal things. But with respect to payments, we have started a strategic thinking about this because this is an area that is really being transformed by technology with everything that has to do with stablecoins, digital euro with request to pay in the transactions between businesses. And we need to have a strategy and a value proposition. We need to understand what will be value-creating in the future, what is just a bluff, as we say, because there is a lot of noise, and we have to take the noise out of the room. I think payments can be -- there is a side of this strategy that is going to be protecting our business and the other one is going to be how can I make my business grow more. For the moment, I cannot tell you anything because we are working on the strategy, as I mentioned, but I'm sure that we will have some news in the next quarter or maybe in June. With respect to capital, well, we are not changing. We are not going to change our dividend policy just because we have 30 basis points more capital than our objective level. And we are not building up capital for any purchase in Ireland. I mean, I've mentioned already we have -- our strategy there is organic growth. We are building a bank from scratch, and that is what we are going to do. We are not looking at PTSB. And -- I don't know, I cannot be any clearer here. So I think I've answered Pablo. Laurie Shepard Goodroe: Our next question comes from Borja Ramirez from Citi. Borja Ramirez Segura: I have 2 questions. Firstly is on Ireland. I would like to ask if -- given the ongoing sale of PTSB, if this is an opportunity for you to gain market share organically in the country? And then my second question would be if you could kindly provide the average cost of your digital accounts, which I think was 1.6% in Q3 and also the average duration of this, please? Gloria Portero: Okay, Borja. I will answer you with regard to Ireland. Well, as I've mentioned, we are not interested in acquiring any operations in Ireland. But obviously, as I have always said, when there is a corporate transaction, there is noise, and this is always an opportunity for the other established banks in the country. We have seen that in the past in Spain. And I'm sure that, that will be the same in Ireland. So yes, this could be obviously an opportunity to acquire clients there. And I pass the second question to Jacobo. Jacobo Díaz: Borja, yes, there is -- the current price is -- the current average cost is 20 bps lower then I think you mentioned the 1.6%. So now we are at 1.4% more or less. Laurie Shepard Goodroe: Our next question comes from Carlos from Caixa, BPI. Carlos Peixoto: So the first one was actually -- first one would actually be on fees. You have -- in this quarter, in the other fees caption, you have a substantial increase quarter-on-quarter and year-on-year. I'm guessing that this relates to the roughly EUR 10 million success fee on a transaction that you had mentioned in the previous quarter. Just wondering whether you see scope for similar fees of this nature in 2026 and whether the high single-digit guidance that you conveyed is with -- on the reported fee income or adjusted for that specific item. Then on -- well, you mentioned you expect ROTE to be above 20%. What type of net profit income growth are you expecting for 2026? Should we think about double digit or below that? Gloria Portero: Carlos, regarding the guidance on fees that we mentioned, it includes -- I mean, we are not -- we are considering the total fees of 2025, and then, we are -- our guidance is on the top of it. So we are not excluding these one-off fees because the volume is not huge, it's not relevant for the entire year. So we are not considering -- I mean, it's like it was usual BAU. And regarding the net income, I think we've provided enough guidance to provide you an idea of this increase. I mean, the level of efficiency is going to improve. Cost of risk is going to stay or even can perform a little bit even better. So yes, as you can imagine, the net income is going to grow. And again, it's going to be a new record year. Laurie Shepard Goodroe: Our following question comes from Ignacio Cerezo from UBS. Ignacio Cerezo Olmos: One is a follow-up from Marta's question on the digital account growth. So how much of your mid-single-digit deposit growth is explained this year by digital accounts? And the second one, I think, Jacobo, you mentioned that you're not expecting any impact from the banking tax in '26 and '27. So is that comment constraint to those 2 years? And that means that '28 onwards, you're going to start booking the levy actually in the P&L or you just wanted to constrain the comments actually to the next 2 years? Gloria Portero: Ignacio, I will answer you the second one. Actually, the banking tax is a temporary tax. So it is not expected to go beyond '28. Obviously, that is what I can say today. I don't know if they will again extend this stack. So it is not -- it is temporary. And with the figures we have in hand, we think that it will be 0 or absolutely immaterial because we have a cash tax rate that is very high and that absorbs very comfortably the figure that comes out from the theoretical banking tax. And I'll pass back to Jacobo for the first question. Jacobo Díaz: Yes. Ignacio, I think the digital accounts have played a relevant role in 2025. But again, it's a combination of many things because the level of term deposit has gone down, which is very important. Treasury accounts has also had a very good behavior because our business or the growth in our corporate banking business has also been very, very positive. And of course, digital accounts had a quite relevance, but it's not the only catalyst of the growth of deposits during 2025. We've been able to attract the deposits. Then afterwards, we've been able to convert into 2 assets under management that have brought a lot of fees. Digital accounts are very important in our commercial strategy. That's what can I tell you, but it's not the only thing that we have. We have salary accounts that also have a very good behavior. So it's important, but it's not the only driver of growth in our deposit base. Laurie Shepard Goodroe: Our next question comes from Sofie Peterzens from Goldman Sachs. Sofie Caroline Peterzens: Sofie from Goldman Sachs. So just going back to the digital accounts, we have seen almost a tenfold increase in digital accounts. Like could you give us the split of the digital client acquisition by country? So how much is coming from Spain, how much from Portugal and how much is coming from Ireland? And then my second question would be on the fee income side. When we look at the fee growth in Q4, which was very strong, we see a lot of the increase actually came from other fees, I believe around EUR 17 million quarter-on-quarter, which is almost a doubling quarter-on-quarter of this fee line. Could you just elaborate what that other fee income line includes? Gloria Portero: Sofie, I will answer the first one. Almost 100% of the client acquisition with digital accounts is Spanish. It comes from Spanish clients. We have actually acquired digitally in Spain around 130,000 new clients, and we have attracted around EUR 5 billion of new money from these clients. This has allowed us to do something, which is actually not be -- not have -- we have made -- changed these deposits with corporate deposits that were even more expensive. So actually, we prefer to pay an acquisition cost to acquire clients where we can cross-sell and make more money than to our corporate clients for the treasury excesses. We won the operative accounts from our corporate clients, which are much lower cost. But just to give you an idea, we have already cross-sell to these clients. It's very, very, very early to say, but we have already cross-sell payroll accounts. We have cross-sell lending, and we have cross-sell investment products. We are at around a 7% cross-sell. But another thing that I want to -- well, to say is that around 10% to 15% of these clients that we have acquired are in the maximum level of the digital account, which is EUR 100,000. And this means they are probably more in the affluent segment or the private banking segment, and we are going to concentrate on those clients where we see potential to develop them. Actually, we are doing some tests to see in which area of the bank, whether it is the branch network, whether it is the telephonic managers or whether it is digitally that we can actually develop these clients. And for the moment, we are having quite good results. I will pass you through to Jacobo to answer you the fee income question. Jacobo Díaz: Good morning, Sofie. Yes, I mean the fee -- we have recorded the EUR 10 million of success fee of alternative investment funds in that line. That's why you see in the other fees that amount. I must say that the alternative investment funds activity is performing very well. You've seen also that in the line of the equity method, we have recorded very good results. And I believe this is something that is going to be sustainable over time. We have 31 vehicles. We have a good average fees. We have quite strong expectations in the future. And as we mentioned during the call, we have brought to the bank around EUR 10 billion of net new money, and some of them flies to the alternative investment fund. So this is a business that is quite relevant for us. It's going to be another priority in coming years. And you should expect more fees to come from this business and more equity method income from this business in the future. Thank you, Sofie. Laurie Shepard Goodroe: Our last question comes from Britta Schmidt from Autonomous Research. Britta Schmidt: I have a question on the digital account. How should we think about the adjustment on the pricing of the stock and versus the flow? So maybe you can give us some sort of indication as to what basis point reduction in deposit cost you expect from this initiative? And on the acquisition cost of these customers, I think given that you just explained that these are mainly affluent, it's probably clear why the acquisition cost will be lower than for other channels, but maybe you can give us some sort of quantification of how much lower these acquisition costs are? Gloria Portero: Well, I will give you, for instance, the campaign where we acquired most was more successful this summer, summer in September, which was also after the acquisition of EVO. So it's really the digital organization. The acquisition cost was EUR 20 per client. So really, the acquisition cost is more the cost of the actual account. What we want to do is -- I mean, as you have seen, we have already reduced by 50 basis points every single account in the digital organization. And we will go on with this trying -- doing trials and reducing the cost. Obviously, the front -- so the front, the new production, the new acquisition, will have to be higher, and we will be always in the order of the reference, ECB reference rate or somewhere around there, obviously, depending on how the competition is behaving. And the second question... Laurie Shepard Goodroe: Thank you very much all for attending today. That has ended our Q&A. And on behalf of the entire Bankinter team, we definitely thank you for your interest and participation. As a reminder, the Investor Relations team will be available after the webcast to answer any questions that you may have. Thank you, and have a wonderful day and start to the new year. Jacobo Díaz: Thank you very much. Goodbye.

107天前Insight Analytics约5分钟阅读

CXI.TO 2025 Q4 财报电话会议

Operator: Good morning, ladies and gentlemen, and welcome to the Currency Exchange International Q4 Year-end 2025 Financial Results. [Operator Instructions] Also note that this call is being recorded on Thursday, January 22, 2026. And I would like to turn the conference over to Bill Mitoulas, Investor Relations. Please go ahead, sir. Bill Mitoulas: Thank you, Sylvie. Good morning, everyone. Welcome to the Currency Exchange International conference call to discuss the financial results for the fourth quarter and 2025 fiscal year. Thanks for joining us. With us today are President and CEO, Randolph Pinna; and Group CFO, Gerhard Barnard. Gerhard will provide an overview of CXI's financial results, his latest perspective on the company's operations and Randolph will then provide his commentary on CXI's strategic initiatives, sales efforts and business activities, after which we'll open it up for your questions. Today's conference call is open to shareholders, prospective shareholders, members of the investment community, including the media. For those of you who may happen to leave the call before its conclusion, please be advised that this conference call will be recorded and then uploaded to CXI's Investor Relations website page, along with financial statements and the MD&A. Please note that this conference call will include forward-looking information, which is based on a number of assumptions, and actual results could differ materially. Please refer to our financial statements and MD&A reports for more information about the factors that could cause these different results and the assumptions that we have made. With that, I'll turn the call over to Gerhard. Gerhard, please go ahead. Gerhard Barnard: Good morning, Bill, and thank you, everyone, for joining today's call. My overview of the company's performance, CXI will also include the results of the discontinued operations of Exchange Bank of Canada, or EBC. These results are presented in U.S. dollars. As a reminder, on February 18, 2025, the group announced its decision to discontinue the operations of it's wholly owned subsidiary, Exchange Bank of Canada. Now EBC ceased operations as of October 31, 2025. And on December 19, EBC issued its year-end audited financial statements to its regulators. EBC has formally applied to OSFI to recommend approval from the Minister of Finance for the discontinuance from the Bank Act. Following final regulatory approval, management and the directors will liquidate the remaining assets and liabilities and distribute EBC's net assets to CXI, its sole shareholder. Management anticipates that all required regulatory approvals for discontinuance will be granted during the second quarter -- second fiscal quarter of 2026. Now starting the second quarter of 2025 and following the Board's decision to discontinue the bank's operations, the group updated its financial statements presentation to present continuing and discontinuing operations separately in accordance with IFRS accounting standards. Therefore, included in the group's financial statements are the results of the U.S. or United States operations, that's CXI, which is under continuing operations and the results of Exchange Bank of Canada, EBC under discontinued operations. Before we go into the detail of the various results, I'd like to note that the group measures and evaluates its performance using several financial metrics and measures, some of which do not have standardized meanings under general accepted accounting principles or GAAP and may not be comparable to other companies. We call these measures non-GAAP financial measures and/or adjusted results. Management believes that these measures are more reflective of its operating results and provide a better understanding of management's perspective on the performance of the company. These measures enhance the comparability of our financial performance for the current period with the corresponding period in 2024. Management included a full reconciliation of the key performance and non-GAAP financial measures in the MD&A. I think it's Page 24, 25. When we refer to reported results, we refer to results as reported in the financial statement based on IFRS, the audited results. Whether we refer to adjusted results such as adjusted net income, we refer to performance non-GAAP measures. Now the group reported net income of $10.3 million for the year ended October 31, 2025, an increase of $7.8 million or 317% over the prior year with yearly revenue growth of 5%. This 2025 reported net income reflected $14 million of net income from continuing operations at CXI and a net loss of roughly $3.7 million from discontinued operations, Exchange Bank of Canada. Reported unadjusted results for the continuing operations included nonrecurring items restructuring charges, roughly $300,000, $400,000 related to the closure of CXI's Miami vault and about $200,000 related to the discontinued operations in Canada. Now it is important to note that the reported results of the prior year 2024 included nonrecurring items related to the discontinued operations and represented impairment losses, regulatory compliance charges, other tax items, and that totaled $7.7 million. Now excluding restructuring and nonrecurring charges, adjusted net income from continuing operations increased to $14.5 million, a 10% increase, and the group's adjusted net income increased to $10.8 million, an increase of 6% -- the group's adjusted diluted earnings per share increased to $1.77 or $1.77, which is a 14% increase over the prior year. Now certain operating expenses and personnel costs previously shared with EDC were fully assumed by CXI during the year. The annualized estimate of these costs, we call the stranded costs, was initially approximately $3 million after tax. However, it is now expected that the actual figure will be closer to 90% of this original estimate once the full 12-month period has been completed. With that, here is a summary of our current fourth quarter's results compared to the same quarter in 2024. Revenue grew to $19.8 million, up by $1.4 million or 8%. Operating expenses increased to roughly $13 million, up by $743,000 or 6%. So revenue up 8%, expenses up 6%. Reported EBITDA grew to $6.4 million, roughly 4% and adjusted EBITDA grew to $6.8 million by close to $0.75 million or 10% over last year. Adjusted group net income grew to $3.3 million or by close to $0.5 million or 19% as a result of restructuring charges related to the closure of the Miami vault and charges related to EBC discontinued, which were partially offset by a recovery related to the judgment by the Federal Court of Canada, which reduced EBC's administrative monetary penalty by $1 million or CAD 1.4 million as agreed by both parties. Revenue growth was driven by 31% growth in the payments product line, 17% of CXI's total revenue is now from payments and a 4% growth -- in the banknotes revenue, 83% of CSI's total revenue is in the banknotes product line, primarily through direct-to-consumer channels. Now payments grew $800,000 or 31% of -- and it's roughly 17% of the total revenue. This growth was supported by a 40% increase in business trading volume and almost $2.1 billion due to the increased activity from existing financial institution customers and the onboarding of new customers. So that trading volume literally up 40% in this quarter. Wholesale banknotes revenue remained fairly flat year-over-year, presented roughly 40% of our revenue. Trading volumes declined slightly due to the impact of the U.S. federal government shutdown in October 2025, impacting several airports across the nation as well as a slowdown in inbound international travelers, especially from Canada. This slowdown of inbound international travelers has been substantially offset by an increase in outbound travel by U.S. citizens to Europe and Asia. Now let's look at direct-to-consumer banknotes revenue growth of roughly $600,000 or 8% and DTC represents 43% of our total revenue, with growth mainly in the online FX platform due to the increased demand for exotic foreign currencies. During the current quarter, CXI added South Carolina to the states in which CXI's online FX platform operates. Added more than 51 new non-airport agents in several locations and opened a new company-owned branch in New York. Now the following is a highlight of the operating expenses from continuing operations for the fourth quarter of 2025 compared to the prior year's fourth quarter. As I mentioned, CXI's operating expenses increased by roughly $0.75 million or 6%. Variable cost, postage shipping, bank charges, sales commission and incentive compensation totaled $3.4 million, an 8% increase, mostly attributable to shipping costs and bank service charges, partially offset by a decrease in variable compensation costs. Salaries and benefits remained fairly flat compared to the previous quarter, primarily due to general inflationary adjustments. This increase was partially offset by a reduction in headcount resulting from the closure of the Miami vault. Now bank service charges are related to processing payments and banknote transactions with the majority arising from the payments product line, where we realized 40% increase in volume. During the current quarter, CXI fully transitioned its check clearing and payment processing activities away from EBC, eliminating the use of EBC's correspondent bank for such transactions. As a result, 100% of CXI's bank fees for the current quarter were reported in continuing operations. Now in the same period last year, bank charges incurred through EBC's correspondent banking relations were reported under discontinued operations. So you can see a bit of a change there and where we reported it. This transition accounted for roughly $150,000 of the variance reported above, and you'll see the variance in the financial statements and the growth in that cost. The remaining difference was primarily attributed to the 40% significant increase in payment transaction volume and the associated processing costs compared to the prior year. Marketing and publicity efforts grew mainly, and there, we spend a lot of money on growing this marketing and publicity mainly because of CXI's strategic emphasis on target marketing initiatives, comprehensive campaigns, retail investments and the development of our customer referral programs. To align with our corporate objectives, partially supporting the growth of the direct-to-consumer business line. Online FX, DTC marketing campaigns were on Instagram, and social media, really making sure we get the word out. Restructuring impairment charges represented the closure of CXI's Miami vault, and that was roughly $400,000 and impairment charges of assets related to some of our company-owned branches of close to $270,000. Now interest revenue generated from excess cash holdings is noteworthy at the end of October 31, 2025. CXI maintained nearly $25 million in AAA-rated money market funds compared to 0 in the prior year. This was supplemented by interest earned on other investment-bearing bank accounts in the ordinary course of business. The increase in interest income reflects a substantial rise in available excess cash attributable to the decreased working capital requirements as a result of EBC's discontinuance and a well-executed exit plan. Income tax expense in the current quarter reflected an effective tax rate of roughly 18%, where the majority of the decrease below the statutory rate was reflected -- related to the tax benefit from a large amount of stock options exercised during the current quarter and accounted for roughly 9% of this effective tax rate. Now let's look at the year. Summarizing the results of the group for the year 12 months ended October 31, 2025, compared to 2024. Revenue grew to $72.5 million, up by about $3.5 million or 5% and expenses only grew by 3% or $1.2 million to a total of $48.5 million. That gave us net income from continuing operations that grew to $14 million or close to $1 million, $800,000 or 6%. Now reported EBITDA grew to $23.3 million, up $1.6million or 7% and adjusted EBITDA grew 10% to $24 million compared to the previous year, up by $2.2 million. Now it's important to note that adjusted reported group net income, as I said, grew to $10.8 million. That's an increase of $600,000 or 6% as CXI's restructuring charges related to the closure of Miami as well as some legal and advisory fees were adjusted as nonrecurring items. This is for the year now. Now looking at the group's results, EDC's adjusted adjustments almost netted out with recovery from the Canadian Federal Court's judgment reducing EDC's administrative monetary penalty, resulting in a benefit of USD 1 million, together with a net gain related to the lease terminations of roughly $360,000. These benefits were partially offset by severance costs, nonrecurring legal and advisory charges of $650,000 as reported in net discontinued operation results. Now let's look at continued operations consolidated performance for the year compared to the prior year. For the year, the revenue growth was driven by 19% growth in payments product line and a 3% growth in banknotes revenue, primarily through, as mentioned, for the quarter as well, the DTC channels that we have. Now payments revenue grew an impressive 19% or $2 million. As I mentioned, it's now 17% of our total revenue. The growth was supported on a yearly basis by a 31% increase in trading volumes. For the quarter, that was 40%. For the year, we're at 31% increase in trading volumes, primarily from new customers and a slight increase in volume from existing customers to almost $6.7 billion, up from $5.1 billion a year ago. Very proud of the team there. Wholesale banknotes revenue maintained relatively flat year-over-year, representing 42% of the total yearly revenue. Revenue growth came from both existing and new domestic financial institution customers with declining volume from monetary services businesses and international financial institutions. Our international travel levels were generally lower than last year, offset by an increase, as mentioned in the outbound U.S. travel to popular destinations in Europe, Asia and Mexico. Consumer demand for euros and Mexican pesos drove growth, while the Canadian dollar volumes remained lower. DTC direct-to-consumer banknotes revenue grew by $1.1 million or 4%, and that represents 41% of our yearly revenue with growth mainly from our online FX platform due to the increased demand for exotic currencies and the addition of 3 new states during the year. At October 31, 2025, CXI had 39 company-owned branch locations and operated in 50 airport agents, 3 more locations compared to last year, and we had 468 non-airport agent locations, almost 245 more locations than the prior year. The following is a highlight of our operating expenses for the continuing operations for the year. CXI operating expenses increased by $1.2 million or 3% year-over-year. Now that's an important number because variable costs posted shipping, bank charges, sales commission and incentive compensation totaled $11.8 million, only a 1% decrease due to a slight decline in variable compensation cost. The ratio comparing total operating expenses to revenue for the current year improved to 67% compared to 69% last year. Now stock-based compensation declined due to a 5% decline in share price throughout the year in comparison to last year where the share price grew roughly 25%, which in turn reflected the increase in debt expense last year. Foreign exchange gains for the current year were primarily driven by the U.S. dollars depreciation against major currencies during the second quarter and the first half of the third quarter. The euro and British pound strengthened notably against the dollar, while the Mexican peso recovered from early year weakness, contributing to the favorable revaluation of banknotes holdings. Gains on euro and a basket of unhedged currencies exceeded losses on Mexican peso inventory for the year. Foreign exchange losses in the same period in the prior year were largely driven by the weakening of the Mexican peso against the U.S. dollar compounded by higher overall hedging costs. Now let's look at discontinued operations related to Exchange Bank of Canada, where the bank had a net loss of $1.1 million in the fourth quarter of 2025 compared to a loss of roughly $6.1 million in the same period last year. For the year, the bank added a net loss -- the bank had a net loss of $3.7 million compared to a net loss of $10.7 million for the same period in the prior year. That's where all those adjustments and write-offs happens. Diluted loss per share from discontinued operations was a loss of $0.18 for the fourth quarter and a loss of $0.61 for the year compared to $0.97 and $1.70 for the same 3- and 12-month periods in the prior year. Once final regulatory approval has been obtained, the Board of Directors, as I said, plan to liquidate the remaining assets and liabilities of EBC and distribute those net assets to CXI, its sole shareholder. As of October 31, the net assets directly associated with the disposal group, EBC, were approximately USD 5 million. Now let's review the balance sheet at year-end. Due to the company's business being subjected to seasonality, CXI uses a 12-month trailing net income amount to calculate ROE, which has been relatively consistent at 13% over the last 12 months and includes the discontinued operations results. CXI had net working capital of $73 million and a total equity of $85 million and 100% available unused line of credit amounting to $40 million. As indicated on Page 22 of the year-end financial statements, CXI reported a cash balance of $95.5 million. Additionally, approximately $5 million, as I mentioned, is held in EBC, resulting in a total cash position slightly exceeding $100 million. Now it is important to note that cash serves as CXI's primary product. It is our widgets, primarily used for transactional activities within the banknote segment. CXI had $53.2 million cash held in the form of banknote inventory in transit in vaults, tolls and on consignment locations at year-end. CXI maintains cyclical banknote inventories with optimal levels ranging from $50 million to $70 million, depending on the travel season. Now cash deposited in bank accounts totaled $42.2 million. This total $42.2 million includes the $25 million of excess cash designated for investment purposes. So that's the $25 million that we had at the end of the year in AAA-rated money market funds. The remaining balance of this $42 million is comprised of minimum cash reserves maintained by CXI in bank accounts with select banking partners to support our banknote settlement operations as well as operating cash balances corresponding with customer holding accounts. Maximizing shareholder returns through share buybacks under the normal course issuer bid, NCIB or share buyback continues to be a primary objective. Over the past year, CXI acquired or acquired and canceled 312,300 common shares at prevailing market prices on the TSX totaling $4.75 million. On November 26, 2025, the TSX accepted CXI's notice of intention to make another NCIB and an automatic share purchase plan to purchase for cancellation, a maximum of 360,000 common shares, representing 10% of the company's public float as of November 18, 2025. As of yesterday, CXI purchased for cancellation approximately 170,000 common shares. Now at this time, I will turn the call over to Randolph Pinna, our CEO, to provide his perspective. Thank you, Randolph. Randolph Pinna: Thank you, Gerhard, for the detailed review. And thank you, everybody, for joining, especially those out West since I know it's quite early there. To give you guys time to ask questions, I'm going to try to keep this as short as possible, but I do want to highlight the main things from my perspective, please. So to begin with, as usual and top of mind is Exchange Bank of Canada's discontinuance. As you know, we executed on a discontinuance plan to the point where we are now, which is we have closed all operations last fiscal year. We took care of all the employees. So there -- most of them have all found new homes. All of our customers have been referred to the 2 referral relationships we have and the feedback has been good that the customers have switched and they are trading with those new providers. So therefore, in layman's term, I would say we're pretty much done. and we're just now waiting on the paperwork final process. But all dealings with regulators, employees, customers has all been satisfied, and it is just now in the final approval process for full discontinuance and our complete exit from Canada, which is expected in this second quarter that we're now just starting. Turning and my focus has been now 100% on CXI. And by the way, on Exchange Bank, I do want to just do a hats off to Katie Davis, our CFO of the bank and our Group Treasurer, who led the execution of that detailed discontinuance plan to a key. And I want to thank all of the parties, both regulators, employees, legal advisers, everyone involved for their contribution to sticking to the plan so that we can discontinue as expected. So back to CXI. The main business, as we all know, is banknotes. And I will address that at a high level after I just covered the consumer unit and the wholesale unit and what we're doing. The consumer unit is what has shown continued growth primarily because of our e-commerce channel. We now have the ability to deliver currency to homes or businesses in 46 states, representing over 93% of the entire U.S. population. We see tremendous growth in this. In fact, we've done a survey -- a qualified survey confirming that there is a huge upside potential to continue to be able to sell currencies across America, and this will remain a focus. We are also continuing to have brick-and-mortar stores. Some of our stores are very good, and we've identified new stores like in New York, Carolina and others to be announced. We will continue to invest in our direct-to-consumer business by adding agent locations. As you saw and Gerhard pointed out, we've grown our agents -- non-airport agents from 225 to 468, and we see a tremendous amount of opportunity going to existing retailers across the country and adding a significant value service like currency exchange to complement their current offerings. So we do see upside potential in all of the consumer area. While the wholesale banknote business was flat, this was primarily due to a reduction of a few customers and overall inbound travel being affected. We see upside potential in wholesale because our pipeline is full. We do have other financial institutions in the pipeline, both credit unions as well as banks, and we do have a renewed focus on banknote sales as a company. Before I go to payments, I do just want to talk about what some have called the melting iceberg. Reality is, if you look around the whole world, 5 of the major countries, America, Canada, Australia, Germany and England have all shown for the last 3 years that cash usage is slightly going up. Looking at cash providers such as the ATMs, Euronet, the largest operator of ATMs in the world continues to show growth in ATM output, cash output. So cash will be still king. Just as I'm looking at my notes on paper, people thought we would be paperless by now. Cash is here to stay. Central banks wanted to have digital currency. The U.S. abandoned its digital dollar project that was being led by the Federal Reserve and realized that cash is king. On a marketing front, I had verbal commitment from many of our customers as well as even competitors, banks, currency exchanges in Europe, Canada and America, including CXI, have already all verbally committed to putting marketing dollars towards educating younger consumers about cash as well as pushing for legal legislation to ban the stores that are going cashless. Not only are the currency exchanges and select banks willing to participate, there's been good support from the armored car companies who move this cash around the world as well as the manufacturers of note acceptance machines and cash processing machines. So there will be a unification soon of all of these -- a coalition, if you will, of all of these people that have a pro cash interest. And we feel that you will see an improvement in cash usage, and we will be a part of that trying to drive the cash is king movement because cash is freedom. So moving over to payments. We will continue to diversify our revenue sources in payments. You can see that our focus in the last few years in growing our payments business is compounding. We are continuing to see incredible demand for our payment offerings. While our investment with Jack Henry and Fiserv and the other core bank software providers is working well. We will continue to grow those relationships doing our service of international payments as well as U.S. dollar payments internationally and even potentially domestically. We will continue to invest into this business. We are now, as you know, EDC closed, so we gave up our Swift membership there. CXI is now fully a Swift member using the full services of Swift and that capabilities integrated with our technology has enhanced banks and credit unions' ability to offer international payments to their clients. We are also current with the new stablecoin movement. We have -- are in the final stages of onboarding with a major stablecoin operator to test a USDC capability for moving domestic dollars in America. So our focus is going to continue to invest into payments. And we are -- as I said, our pipeline is full, and we will continue to quickly grow this business as we focus our overall growth efforts for financial institutions credit unions and nonbank customers. Well, that turns us to the M&A area. We have a lot of cash. We are looking to do a strategic accretive type of transaction in the payment spaces, the prices are too high. We will not overpay for an asset, but that looking for strategic opportunities is a main focus of myself, the management team as well as the Board of Directors. Lastly, I just want to remind everyone in March is our Annual Shareholder Meeting since we're no longer really in Canada, even though we're on the TSX for now, we will be having our Annual Shareholder Meeting at our head office, our headquarters in Orlando. And so we really hope you can come in person. We are working on the technology capability so that you can video in should you not be able to physically attend, but I look forward to seeing you in person ideally in March. So I'll end it there and open it up for questions. Thank you. Operator: [Operator Instructions] And your first question will be from Robin Cornwell at Catalyst Research. Robin Cornwell: It's nice to see these results are perking up very well. My first question is with Gerhard. Gerhard, the $3 million expenses that we're talking about, are they now kind of fully reflected in the expenses? Gerhard Barnard: Robert, a lot of them are in there. Obviously, as we exited EBC, it moved from discontinued operations into continued operations. Bank charges are fully there in the fourth quarter, salaries and wages for the people that transferred are fully incorporated in the fourth quarter, not on the yearly numbers. As you know, we exited EBC during the 2025 financial year. But in our Q1 '26, it will be fully incorporated. Robin Cornwell: Okay. And Randolph, when you were looking for your future -- discussing your future growth, what about the software for as a service? I think I've asked this before, but where do you see that now because you've sort of got a new lease on life here going forward. And that's a very important part of your structure, your software. What are your thoughts on that? Randolph Pinna: We -- before we roll out nationally, we have done a pilot with 4 financial institutions in the U.S. utilizing our relationship with the Federal Reserve, part of what's called the Fed Direct program. And so we do have a direct connection to the Federal Reserve, and we are receiving monthly fee income for the usage of our software. Again, the domestic processing in America is not CXI actually touching the U.S. dollar moving from, let's say, a Florida bank to a California bank. We are actually using the connection, which is our software that is often in these 4 cases, we're already in the bank because they use us for either international wires and cash services. And they will -- it connects that bank to their own account at the Federal Reserve by using this one platform and us as the one provider. And so we do see that revenue from Software as a Service for this service will grow. At this point, it is not a material item to have a separate line item on it, but that is another way of growing our payments business. So we do, as I said, see that these growth rates in payments is sustainable this year and hopefully even larger based on the success of our previous investments and integrations that we've done. Does that answer your question, Robin? Robin Cornwell: Yes. Thank you. And the payments to grow that payments business, are you continually adding more people to drive that? Randolph Pinna: Well, we have been conservative on our hiring. We -- controlling our costs is critical, especially in this last year where there's been a lot of layoffs. We are, again, just using the existing integrations we have. So if you're familiar with how that works is the software providers that provide core banking systems have a whole variety of banks and credit unions using their software, and we have continued to grow that. So it's just a matter of working these lists, and we have a sales team of about 10, and we feel that's sufficient. We are adding one more person dedicated for banknote sales. But as far as payment sales, we are -- our pipeline is good, and we are executing on adding new clients every week doing new payments. And so therefore, I'm comfortable with the current team and our marketing to the existing customers we have that haven't switched to the wires to us yet or the new clients that are on these lists because of the integrations with these core software providers. Operator: [Operator Instructions] The next question will be from Jim Byrne at Acumen Capital. Jim Byrne: Randolph, maybe just on the online FX and direct-to-consumer, just thinking you're pretty much in all 50 states now. You mentioned some agency adds and some new stores as well. But I mean, when you go into a new state, can you talk about kind of the ramp-up of revenue and profitability on a new state versus something that's been operating for a couple of years? I mean is it -- you kind of see an immediate impact and then profitability grows after a certain level of revenue? Maybe just talk about that ramp up. Randolph Pinna: Yes. I'm not -- at least in my connection, your question was a bit faint. So hopefully, I got it. Basically, I think it is what do we expect when we go into a new state that we didn't have a license in. And so I've required that we have a business case to support why we're going to get a license in a certain state. For example, to take an extreme one, we don't have yet the business case to support having a license in Alaska. There are several states that we are still applying to because we do have a business case, and that is driven not just by the online home delivery service. So a business case that supports a new state license is usually a combination of the online home delivery, so the population of that state, but also the opportunity for agents. As you know, we are probably the primary provider to the largest automobile club in America, AAA. And they have what they call their AAA clubs in each of these states. And so that between the home delivery and the agent possibilities support us going in through the state. As far as the dollars and cents, each state is different, and Gerhard is probably closer to the numbers to answer it fuller if you need that. But basically, we do enter a state based on the projected expectation we see in a state, which will cover your administrative costs, the fees and all of that to do it. So did that answer your question, Jim? Jim Byrne: Yes. Sorry about that. I was kind of just thinking, as I said, you're kind of maxing out the number of states you're going to penetrate here. You still expect growth on the online platform as newer states kind of ramp up? Like have you got mature states that have kind of plateaued in terms of growth rates? Randolph Pinna: No. So that's -- okay. And one, I hear you much better now. Thank you. The online is where we see the most growth in the consumer unit. New stores will add growth as well. But the online, we spent a pretty penny doing a qualified survey of well over -- I think, over 1,000 proven international travelers -- and it shows that there's still about a 50% increase in capability of our home delivery, and we are refining our group marketing plan. The Cash and King campaign is a piece of that. But yes, we do see that there is still upside in every state we're in, and there's still 1 or 2 states that we are applying to now to have that. Eventually, we will probably be licensed in all 50 states. But again, I won't approve a new state approach until we have enough reason, financial incentive to do so. But I think overall, the consumer unit as well as the wholesale unit will show increased growth this year. And that's contrary to this perception of a melting iceberg. Gerhard Barnard: Nevada right now has allowed us an exemption. So we are operating in Nevada. Tennessee requires GAAP financial statements, which means we're reporting under IFRS. So that one will have to sit out until we get the approval to send them IFRS statements. And as Randolph said, Alaska and North Dakota, we are currently deferring just due to that, we call it that management case of determining what the return would be. And as Randolph mentioned, online FX is the scalability of that product is significant. If you think of we've doubled our marketing spend in the last year on driving that revenue growth. And in our planning, that is a very important product line, online FX payments. Jim Byrne: Okay. That's great. And then maybe just lastly, you mentioned the NCIB and the capital allocation priorities through M&A. You are sitting on quite a bit of cash and potentially more cash coming in the door here with the EBC closure. Any thoughts on maybe an SIB or a special distribution or anything like that? Randolph Pinna: Yes, that is a topic that has to be considered every quarter by the Board. Again, we have some -- our eyes set on 1 or 2 opportunities strategic, but because the owners of that business are incredibly large, that process is a very long and slow process. We've even got a focused team to help us try to carve out an asset. However, I can't say it's imminent. Nothing has been signed. As soon as it is, we would tell you, but we are continuing to look for the best use. And right now, the best use is to acquire our stock and retire it. There are restrictions. So an SIB is a next step of that. But as of this quarter, we have not chosen to do that. We do feel that cash -- capital allocation is critical and dividend or an SIB is definitely a good use of cash as well. However, the best use will be to continue to grow our payment and banknote business. But I do not have anything that I can announce today. Operator: The next question will be from Robin Cornwell at Catalyst Research. Robin Cornwell: I just have one quick follow-up. And have you considered changing your year-end back to December 31? Randolph Pinna: That's a good one, Robin. We have discussed that among the accounting team, we would really like to just finish this year-end at October. And then we'll revisit that because we've also, as you'll understand, just want to get through the discontinued operations, make sure we get our focus on the operating entity, CXI. And yes, that's a good point. I'm laughing because it came up in the last week in one of our discussions and say it would allow us to have a better Christmas than dealing with auditors. Operator: Next question will be from Peter Rabover of Artko Capital. Peter Rabover: Congratulations on a nice quarter. Randolph, I wouldn't be doing my job if I didn't ask you on the little thing that I caught when you were describing your listing on the Toronto Stock Exchange as for now. Any comment that you would like to share on your future listing plans? Randolph Pinna: We have been happy with the Toronto Stock Exchange and the Ontario Securities Commission. However, our exit from Canada does invite us to consider NASDAQ. Ironically, one of our employees that worked for me for several years is working there. So we have been in talks with them in sizing up that move. But as Gerhard just said, our focus right now is to really fully exit Canada, get -- which we are 100% focused on America and get some nice clean quarters going forward. But in like a '27, you could see a potential move of our listing from the TSX to NASDAQ. But as of right now, we are not -- just like the SIB, these are all topics that the Board do discuss each quarter, but we have not chosen to hurry up to do that. We don't think anything is on fire. And therefore, running our business as efficiently as we can, generating the highest return for our shareholders and having that cash in our business and growing the value of our business is our #1 priority. Peter Rabover: Great. I appreciate the color. And maybe my second follow-up is on the color for the payments business. I know you guys had a great quarter, 31% and I know it's now 17% of the business because you've exited Canada. Any I guess, how should we think about that 31% in terms of run rate? Is there -- I know you added a state and et cetera. But what do you think the natural growth rate of the market is and what your share is in that market? Maybe that's the way to ask that without asking for future growth guidance. Randolph Pinna: Thank you, Peter. And I do want to highlight which another shareholder told me that the foreign exchange market is probably one of the largest markets in the world because automotive, Toyota, there's a lot of foreign exchange, et cetera. So the payment business as well as cash the foreign exchange market is the largest market. And as I told you, our pipeline for the payments business is tremendous. And there was a good question from Jim saying, or Robin, whoever asked about, am I hiring more people? Right now, we have a sufficient team. We have improved our internal automation and onboarding. Our -- what we call our implementation team is geared up and ready to continue to add customers each week. And so while the new state helps us, it's really a matter of just getting through contract approval with the financial institution, training them, doing the testing and then going rollout, and that is underway. So that 31%, I'm confident to say is sustainable, if not even increasing because now that we're getting bigger, we have more reputation in the payment industry, and we can get even larger financial institutions than what we currently have. And so I feel that our payment business will continue to grow nicely each quarter. And our banknote business will continue -- will get back to growing like it used to do as we did just recently sign a very large financial institution for wholesale banknotes, which is going to be onboarded hopefully in this current quarter and start trading soon thereafter. So we are really doubling down on our sales and implementation of new clients across the United States. Peter Rabover: That's great. So maybe I'll sneak in one more. I know you mentioned Jack Henry and the Fiserv relationship. Any color out of that 31% or I guess maybe as part of your business. How big is that part of the distribution channel, I guess, or part of the growth and as part of the business? Randolph Pinna: So to broaden it than those 2, I named, we have about 5 or 6 integrations and the integrated relationship is well over the 50% mark for sure. So that is the significant component to our payments because, again, we do one provider, one product where we provide all the foreign exchange. And therefore, that allows a bank to use its platform that the tellers are already on and get all the benefits of our enhancements using the common denominator, their core banking system as we've integrated into it. So all the bells and whistles, the Swift lookup, the IBAN validation tool, all the functions that our -- the SWIFT gpi, all of the bells and whistles, if you want to use that term, are available to banks that are already using a core from a Jack Henry or Fiserv as an example. And therefore, that's where that pipeline is and the list of banks that say, yes, I'm already using them. And luckily, a lot of our -- some of these banks are using us for currency. So they're already familiar with us. So yes, that will continue to drive our payment growth. And then as Robin brought up that we soon will be having new opportunities with domestic payments as well, enabling the bank to use our software to do their own wires with the Fed. So we don't have the compliance cost of moving and touching the actual dollars. They will just use it and pay for the service by each login that they have, and that will generate new fee income to the business that's not dependent on international. And so that is an exciting expansion of our payment business this year. Peter Rabover: That's great. And then maybe -- sorry, I'll keep on. So what percent of the business -- or sorry, of your, I guess, distributor business, what you call the Jack Henry and the Fiserv relationships, what percent of that is penetrated relative to what's available? Randolph Pinna: What's available, every bank uses a core. So the entire market upside is there. We are still a very small provider. As you know, there's several large fintechs that have been acquiring other payment businesses and so forth. And so they're there. But the natural competitor are the 3 or 4 mega money banks up in New York example type that are correspondents for the smaller banks, and we are trying to pick those off because those banks are using a software like Jack Henry, and we are needing to convince them to switch to us as a boutique provider as opposed to being just using 1 of the 3 or 4 top largest banks in the country. So there's tremendous upside. And yes, to reiterate, it is because of that integration into these core software providers. Peter Rabover: Okay. Great. And I just want to say thanks for providing the really good color on the excess cash and the return on capital really good to see that as a shareholder. And have a great day. Gerhard Barnard: Thank you for always asking us to do a better job of that. As you see, we listen to our shareholders. Peter Rabover: Not unnoticed. Operator: Thank you. And at this time, gentlemen, it appears we have no other questions registered. Please proceed. Randolph Pinna: Okay. Thank you again for your support, for all the questions. We feel this year we just closed is a successful year. We're continuing to be strongly profitable as a business, all while executing on our strategic vision to focus on America and grow our core of banknotes as well as our payments business. So thank you for your support, and I look forward to hopefully seeing you at our Annual Shareholder Meeting in March. Operator: Thank you, sir. Ladies and gentlemen, this does conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.

107天前Insight Analytics约5分钟阅读

CSX 2025 Q4 财报电话会议

Matthew Korn: Hello? And welcome to the CSX Corporation Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the conference over to Matthew Korn, Head of Investor Relations. Please go ahead. Thank you, Sarah. Good afternoon, everyone. We are very pleased to have you join our fourth quarter earnings call. Joining me from the CSX leadership team are Steve Angel, President and Chief Executive Officer, Mike Cory, EVP and Chief Operating Officer, Kevin Boone, EVP and Chief Financial Officer, and Mary Claire Kenny, SVP and Chief Commercial Officer. In the presentation that accompanies this call, which is available on our website, you will find slides with our forward-looking and non-GAAP disclosures. We encourage you to review them. And with that, I am very happy to turn the call over to Mr. Steve Angel. Steve Angel: Good afternoon. And thank you for joining our fourth quarter call. This has been a challenging year for CSX Corporation and for our industry overall, with subdued demand and limited growth opportunities persisting across many of our key markets. Against this backdrop, our service levels remain positive in the fourth quarter, and we delivered modest total volume growth. However, reported operating income, operating margin, and earnings per share were all lower year over year. As noted in our press release, these results included approximately $50 million in expenses related to important actions we have taken to adjust our cost structure, deliver better financial results, and position the railroad to succeed. We are committed to delivering stronger performance into 2026 as we build on our key accomplishments. We have renewed the leadership team, putting the best people into the best positions to drive value. And we are aligned in driving greater fiscal responsibility and disciplined execution across the company. We have stabilized service on our network at high levels, delivering consistency and reliability for our customers while realizing clear productivity gains. We have capitalized on the strength of our service to win business, and we will be ready and able to respond when demand increases. As we move forward, you will continue to see us take thoughtful actions to drive greater profitability and cash flow and build momentum into the year ahead. And now I will turn it over to Mike. Mike Cory: Thank you, Steve. So let's take a quick look at our safety and operational metrics on Slide five. Our operations team is improving safety performance through focused execution of our safety plan. The left portion of this slide highlights meaningful full-year declines in both FRA injury and accident rates, with the fourth quarter posting the year's best metrics. We know that an outstanding safety record is a clear indicator of effective management at every level. And we are taking solid steps towards our goal of reaching best-in-class performance for the industry. The right portion of the slide shows strong year-end fluidity and customer service performance. Velocity, CarsOnline, Dwell, and Tripland compliance all showed substantial improvement from Q1 to Q4. These are encouraging trends as we enter 2026. Running a cost-effective, efficient network while delivering consistent, reliable service is essential to our success. We are maintaining this balance and preserving our operational momentum while ensuring CSX Corporation has the capacity available when the industrial cycle turns. Kevin will now review our quarterly results in more detail. Kevin Boone: Thank you, Mike, and good afternoon. I am excited to be back in the CFO role and have an opportunity to work with this team. As Steve mentioned, over the last couple of months, we have taken steps to align our cost structure to the current business environment. The team is fully engaged, and I am encouraged by the momentum we are building with opportunities to drive efficiencies in nearly every part of our business as we enter 2026. Now let's move to the fourth quarter results. Volume increased 1% with revenue down 1% driven by business mix headwinds in coal pricing. Fourth quarter operating income and earnings per share fell by 97%, respectively, against adjusted prior year figures. These results included approximately $50 million or $0.02 of charges for actions taken during the fourth quarter to optimize our workforce and technology portfolio. Now let's turn to the next slide for a closer look at the expense line. Fourth quarter expenses increased by $73 million or 3% excluding the 2024 goodwill impairment. As mentioned, the quarter included approximately $50 million of charges comprised of $31 million of separation costs in the labor line and $21 million of technology impairments in PS and O. We continue to see opportunities to drive efficiency in our labor costs as we prioritize safety, customer service, and profitable growth. Ending real headcount finished the quarter down over 3% as we continue to align to the current business environment. Additionally, overtime remains a focus for Mike's team as we look for ways to provide better visibility and tools to manage these costs. We have identified meaningful opportunities to reduce non-labor spending with well over 100 diverse savings initiatives across the company, including cutting outside and professional service spend, improving asset utilization, and maintenance efficiencies, as well as enhancing controls around all sources of discretionary spend. Twenty twenty-six expenses will see year-over-year benefit from cycling network disruption costs, third and fourth quarter separation costs, and fourth quarter technology impairments. Depreciation expense will be relatively stable year over year as normal increases to the asset base are offset by favorable results from an equipment life study, asset retirements, and targeted reductions to technology and aviation assets. We are encouraged by the cost improvements identified as we move through the quarter. Similar to our focus on cost, capital spend and driving free cash flow remains a significant area of opportunity. Working with Mike and his team, we are developing improved oversight to ensure every dollar of capital is spent efficiently and aligns to our strategic priorities, including safety, customer service, and driving profitable growth. With that, I will turn it over to Mary Claire to review our revenue results. Mary Claire Kenny: Thank you, Kevin. I am happy to be here and excited to have the opportunity to lead the commercial organization. The railroad is running well, and we have many opportunities ahead. That said, as you have heard from Steve, we continue to navigate the challenges of a mixed industrial demand environment. The strength of our relationships is critical when uncertainty is elevated, and our voice of the customer surveys show that our team has been doing an excellent job at staying close to our customers and being responsive as conditions change. Turning to slide 10. Let's cover fourth quarter volume and revenue performance. Overall, total volume was up 1% in the quarter, but revenue was down 1%. As negative mix and weaker export coal prices led to a 2% decline in total revenue per unit. Our merchandise franchise, where volume and revenue were both down 2%, continues to face market-driven headwinds. Revenue per unit was modestly higher and was also affected by mix, as growth was strongest in low RPU areas such as minerals and fertilizers. We continue to see softness in chemicals and forest products, where volume was down 6% and 11%, respectively. The industrial chemicals market remains weak, and many of our customers are carefully controlling freight spend as they manage through inflation and tariff pressures. In forest products, we continue to see the effects of plant closures, particularly with pulp and container board, that occurred up until the start of the fourth quarter. Despite these headwinds, our team has had success at winning incremental business and we anticipate benefits from new facilities ramping up in 2026. Automotive volume was down 5% year over year. While we saw some manufacturers gain momentum through the quarter, supply constraints with chips and metals limited output at other facilities. That said, we have been encouraged by the continued strength in fertilizers and mineral shipments. Fertilizer volume was up 7%, on improved phosphate rock production, and business wins in the nitrogen market. Minerals volume remains supported by demand for aggregates and cement for infrastructure projects. Our intermodal franchise really drove our growth this quarter, with revenue up 7% year over year, on a 5% increase in volume. We have been winning new domestic and international business as we brought faster transit times and more connectivity to our customers. Finally, our coal business grew modestly in the quarter, with volume up 1% year over year. Domestic tonnage increased by 6% driven by a substantial increase in domestic utility volume supported by growing power demand and higher natural gas prices. Export tonnage declined 3% in the quarter, with the derailment in late October impacting shipments for a short time. Revenue was down 5% on a 6% decline in RPU, primarily due to a decline in met coal benchmark pricing. Notably, the discount for East Coast met coal indices widened versus Australian pricing this quarter, which impacted our yield. Now let's turn to Slide 11 and talk about the key components of our market expectations in 2026. Starting with merchandise, we are positioned to benefit from consistent strength in infrastructure project activity in key regions served by CSX Corporation that's driving demand for materials such as cement, aggregate, plate, and scrap metal. More uncertain are conditions in the housing and automotive markets, which affect many commodity markets. Consensus forecasts call for modest decline in housing starts this next year, and affordability and overall demand levels continue to impact the prospects for North American light vehicle production. Our merchandise volumes will also reflect cycling of facility closures, largely in the forest products and metals areas, that occurred through 2025. We have been encouraged by the success we have had in intermodal, where the team won new business in 2025 as we expanded our network reach through new operational agreements and our strong service has allowed us to provide a faster service product. At Howard Street, the first of two bridges being raised to support double stack capability is now complete, and our customers are excited about the opportunities coming later this spring. They are bidding on business now for volume to start moving double stack through the tunnel in Q2. Still, the markets reflect the reality of a still soft trucking market, where we are watching the supply-driven increase in truck rates carefully. We also need to be aware of the risk of a slowdown in imports after the pull forward of activity that occurred through 2025. For coal, we are pleased to have two important mines on our network back open after extended outages. These mines provide good quality met coal for the export market, so global steel markets and benchmark prices remain subdued. Domestically, many utilities continue to buy more thermal coal given increasing power demand. We do have coal plants on our network scheduled to retire this year, but we have seen some closures get delayed. Overall, we see good potential in 2026, but we expect the best results will come from our own specific initiatives. Our visibility is limited, but from what we can see and hear from our customers today, there is no short-term catalyst on the horizon to lift the major industrial market. Our team will work hard to make the most of every profitable opportunity and we will be ready to respond when macro conditions improve. Now I will hand it back to Steve to talk through our outlook. Steve Angel: Thank you, Mary Claire. Now we will review our guidance for 2026 on Slide 13. We have a well-running railroad and a good pipeline of growth initiatives. However, as Mary Claire discussed, the near-term outlook across many key markets remains soft. As we plan for 2026, we do not anticipate any meaningful improvement in macroeconomic conditions. So we are assuming low single-digit revenue growth for the year, based on flat industrial production, modest GDP growth, and fuel and benchmark coal prices consistent with current levels. We expect to deliver year-over-year operating margin expansion in the range of 200 to 300 basis points. This is from a combination of workforce optimization, tighter management of discretionary expenses, our drive for efficiency, and the benefits of a more stable fluid railroad. With our Blue Ridge project complete and focused efforts on capital discipline in place, we plan for 2026 CapEx below $2.4 billion, a substantial reduction from last year. Our CapEx priorities are unchanged: invest in our infrastructure for safety and reliability, and invest in growth and productivity projects that pass our financial criteria. For free cash flow, higher earnings, a more normalized cash tax rate, and lower capital outlays should drive growth of at least 50% compared to 2025. Finally, let me address the multiyear targets that were offered at the company's 2024 Investor Day. The opportunities ahead for CSX Corporation are strong. When we execute on the core fundamentals of service, cost discipline, operating efficiency, and prudent capital deployment, we will create shareholder value over the long term. That said, the macroeconomic environment and the industry dynamics were meaningfully different than compared to today. I am replacing our 2025-2027 targets with the guidance we have given for 2026 only. I will continue to evaluate our outlook as we make progress toward our goal to be the best performing railroad in North America. With that, Matthew, we will open it up for questions. Matthew Korn: Thank you, Steve. We will now proceed with the question and answer session. Now to ensure that we maximize everyone's opportunity to participate, we ask that you please limit yourselves to only one question. Sarah, with that, we are ready to begin. Operator: Thank you. If you would like to withdraw your question, simply press star 1 again. Please ensure that your phone is not on mute when called upon. Thank you. Your first question comes from Tom Wadewitz with UBS. Your line is open. Tom Wadewitz: Great. Good afternoon. Just I guess, one fine point on the OR improvement, if you could tell us what the base OR is in 2025, kind of just like what's included. But I guess the real question, if you will, how do you think about pricing and price cost spread? I think, Steve, focus on price and productivity kind of two hallmarks of your approach. How do you think about the opportunity to Steve Angel: Yeah. On Tom, the on the base the starting point for 2025 is obviously excluding the charge that we took on goodwill. So that's the starting point that we have in the adjusted number, that we disclosed. And on your questions on price and productivity, so, you know, as we think about price, I mean, certainly, you would like to be able to cover you know, the cost of inflation in any given year and actually do better than that. In terms of kinda where we are in the pricing initiatives, Mary Claire is taking the ball on that and has already put some new structures in place that I think are definitely gonna help in terms of our price yield. As we look at you know, what we have in the plan for 2026 versus 2025, price yield will be in 2026 over 2025 than it was in 2025 over 2024. So we are making progress I think, on the pricing front. It will be a bit slow going, but I think we will continue to make progress as we work harder on the whole price management equation. And in terms of know, these contracts have they roll off in certain time frames. It would probably take until about this time next year before we had a chance to touch every contract and stress test, if you will, in terms of what the right price is versus the value we are bringing to that customer. Operator: The next question comes from Brian Ossenbeck with JPMorgan. Your line is open. Brian Ossenbeck: Hey. Good afternoon. Thanks for taking the question. So maybe one for Kevin. In the 200 to 300 basis point guidance for improvement, can you give us some qualification how much of that you think is already baked in based on some of the the onetime items or the things you know are rolling off? And sort of what do you expect for inflation within that guide? Because if you look at the ALIF index, for example, and that's starting to pick up a bit here. So it didn't give us a little bit more color in terms of the building block there and sort of what's already spoken for and what are the assumptions underlying the rest of it? Thanks. Kevin Boone: Yeah. No. When you look at some of the unique charges, that occurred in 2025, between the severance, the technology write-off that we disclosed as well as you know, some of the costs related to the Blue Ridge and the Howard Street Tunnel, you know, you can roughly assume those are about $150 million. What we are doing, what our guidance implies, is a much greater initiative around productivity and a big focus across the organization to drive that. And so you will see our productivity numbers if you do the back if you do the math, have a fairly significant increase in step up. When we think about what's happening on the inflation side, on our labor side, that's pretty self-explanatory on the union side. You know, the industry has obviously embedded labor inflation. Next year, you will see another wage increase in the 3.75% range. We are also experiencing a little bit of more health care inflation going into '26 versus '25. So I would say on the labor side, that's pretty consistent with what we saw last year, maybe a little bit higher than last year. And then on the non-labor side, a lot of efforts by the procurement team and others to drive that a little bit lower. So expect a little bit lower inflation on the non-labor side. So, overall, you know, I would look at inflation probably being in that three to three and a half percent range. Operator: The next question comes from Scott Group with Wolfe Research. Your line is open. Scott Group: Hey. Thanks. Afternoon. The low single-digit revenue growth for the year any just sort of rough thoughts on volume versus yield in that? And then maybe, Steve, just bigger picture, like the guide this year I guess, implies, like, a 64 to 65 OR. Now that you have been here a few months, do you have a feel for, like, what you think the longer-term operating ratio should be? Do you should this be a sub 60 OR railroad in the next few years? Or not is that a I don't know. How do you how should we think about that? Thank you. Mary Claire Kenny: Hi, Scott. This is Mary Claire. I'll take the first part. So I think as we think about next year, we are looking at modest volume growth going into the year. I covered some of the macro environment that we are seeing out there, and you know, while we are optimistic about certain areas and we see growth opportunities in places intermodal, places where you see infrastructure investment, like our minerals markets, and I think, you know, there's some potential on the domestic utility side when you think about the need for power generation as well as natural gas prices are. Those are kind of more positives for us. But then as I talked about when you look at more of the industrial economy, we still see a lot of headwinds out there. So at this point, we would say really modest volume growth next year. Steve Angel: Yeah. And on the I'll just talk in terms of operating margin percent. You know, look. We want to expand it every year. And if we are doing the right things on price management and productivity, we will be able to do that. And you know, I have confidence in this team. I have confidence in our ability to build solid productivity programs to be able to grow operating margin in certain percent every year. And I could give you a number now, but I think I'll wait and talk about that later. But, you know, the objective is best-in-class performance. And you know, you know what that is with respect to operating margin. I know what that is. I have confidence we can get there. The question is, you know, over what time frame. We will make progress every year. What I would like to do I mean, we have a very solid plan as Kevin described, and we put a ton of time into building this plan for the environment, that we are facing and to make sure we could deliver an outcome that we would be proud of. So that's where we are. But what I would like to see over the course of time is how well we can execute to those plans. You know, I have confidence we can. But I'd like to you know, experience that a few quarters, if you will. Just so I can get grounded and confident in our ability to build I'll call it, sustainable productivity over time. And I think we can do that, but, you know, give me a little time to get more confident in our ability to do that. Operator: The next question comes from Ari Rosa with Citigroup. Your line is open. Ariel Luis Rosa: Hi. Thanks for taking the question, and good afternoon. So we are looking at I apologize because this is a little bit short term. But, we are looking at potentially a pretty nasty storm coming up. You know, not too long ago, we saw CSX Corporation's network face a pretty big setback given some storms. I'm curious, maybe Mike is the best one to answer this question. Just how are you preparing for the storm? And how do we get confidence? Maybe it's an opportunity to talk about kind of how you are running the network differently now versus, say, twelve to eighteen months ago. But what are the risks that these types of events could present setbacks, and how do we get comfortable that this isn't going to be a big obstacle in Q1? Mike Cory: Sure. Thanks for the question, Ari. As we've said, like, the network is going into this in much better condition than we than last year when we started facing storms. So just to give you, you know, just a view of what we see, we are gonna see ice on our southern portion of our network basically going, you know, from Nashville right across, through Alabama, through Georgia. And then in the middle section of our network, we are gonna experience or we see right now from the weather report we are gonna experience heavy snow right from Indiana through Kentucky, right across PA, Western Maryland, Virginia, all the way up the I-95. In terms of precautions, you know, here's some real detail. I mean, we are gonna have senior coverage right around the clock in all of our key areas, including our network center. We've gone over from snow clearing to tree clearing, generators, everything that we need in each location, each facility that we see the storm coming through. We've modified our operating plan, working with our customers, notifying them because they are gonna have the same conditions that really assets for us right now are gonna be most crucial thing that we protect. We at the same time, you know, we expect to see power outages, highway closures. We are gonna see cold right after that. So I do not see us coming out of this probably for a few days. If we get it Sunday, you know, we are looking at midweek to recover, but I'm very confident, especially with the condition that we are going in. That we will come through this with no issues. This is not gonna lead us into four months of trouble like it did the year before. Even if there is some consecutiveness to it, we have everything in place. And what we learned last year, we are putting into effect, throughout the beginning and right through this storm. Operator: The next question comes from Brandon Oglenski with Barclays. Brandon Oglenski: Hey, everyone. Thanks for taking the question. And I guess, Mike, it's not shocking that it snows in January. So I'd ask maybe more importantly, like, how are you approaching the operations differently this year especially, you know, with, like, new leadership concepts at the company. How do you get back to those best-in-class metrics that the railroad had, you know, three or four years ago? Mike Cory: Yeah. No. Thanks for the question. I think you can see by the metrics we have now, we are running as good as we have three or four years ago. But, really, I mean, it's a focus on asset utilization, it's a focus on oversight and, you know, to the key measures that we look at every day. Really, that's what we've done. What we learned through that exercise was to make sure that we take action as soon as we can on the issues that are preventing us from being fluid. And that's, you know, from making sure that we don't bring equipment in when we shouldn't. It's making sure we have our excess equipment in places to be able to respond to issues we have. That's generally what we did to come out of the second quarter issue first and second quarter issues we've had. But I don't see I don't see us really, you know, failing on this storm coming up. I appreciate your concern, but we are ready for it. And I again, I see us coming through it very well. Operator: The next question comes from Ken Hoexter with Bank of America. Your line is open. Kenneth Scott Hoexter: Hey, great. Good afternoon. So Kevin, sounds like a lot of programs. I think you mentioned 100 different ones. Just so we don't get lost in kind of minutiae, can you maybe talk dollar amounts for buckets so we can, I don't know, track something? Is there workforce optimization or a headcount target? Anything from Mike Cory on the op savings? And Kevin, you mentioned non-labor spending. Maybe you could just maybe parse that out a little bit. So because if we've got very low volume growth, very low pricing growth, you know, how do we get that 200 to 300 margin basis points? I guess, you take out maybe one basis points or so from the $100 million that you spent this year. If you can bucketize some of that stuff to help us walk through and what to expect. Kevin Boone: Yeah. You know, when you look at the majority of you know, the productivity, that you obviously can solve for after the $150 million that I pointed out that that naturally just comes out. That won't repeat in 2026. It's very, very highly focused on the labor line and the PS and O line. And so a lot of activity in those two areas. I would say, largely equally divided. You'll probably see on an absolute basis absolute dollar basis, more come out of the PS and O line because you are gonna have less inflation core inflation in that line versus the labor, which I talked about a little bit earlier given, obviously, our union labor contracts and what we are seeing on the medical side, on that area. But those are the areas, we are certainly focused on driving cost improvement across the line items. Depreciation, more or less, will be in the flat range. As we pointed out. And then know, certainly some areas of improvement. I you know, Mike will always tell you the fuel side, we are looking for every opportunity to continue to get more fuel efficient. And then on the rent side, there's some opportunity as we run better. Certainly, from a car hire and other areas that we expect to drive. Improvement there, too. So the good news is that diversified portfolio of opportunities. I guess the bad news on that side is we've got, you know, we've gotta stay very, very focused across all these areas to make sure that we are capitalizing on those. And my full expectation as we move into, later into this month in February, we are gonna come up with an additional list, that'll obviously hopefully, drive further improvement in the back half of the year and then, create some opportunities as we move into 2027. Operator: The next question comes from Stephanie Moore with Jefferies. Your line is open. Stephanie Moore: Great. Good afternoon. Thank you. You know, I think I would be a bit remiss not to ask at least about the major merger that is underway for this industry. If you could you know, maybe talk about how you are positioning the company in the wake of what could be a, you know, a pretty transformational deal. So, you know, in the near term, while it's under review, what are the opportunities that all can take advantage of? And then, of course, I'm sure you are also having to somewhat scenario analyze what would be like if the deal is approved. And in that way, you know, what is strategy for CSX Corporation as kind of the full East Coast merger? East Coast Rail. Steve Angel: And and made a call it took three years before the final restriction was lifted. So for three years, we were kinda in deal purgatory. And what you have to do is make sure that, you know, you are running the business to best your every day, and that that's kind of the key in this process. You know, I don't know what conditions are gonna be required for approval. That remains to be seen. I think this is a long process, and we'll find out you know, what that is. And then when you get to the end of that, you know, the if the merger is approved, you know, you still have to execute. So I think it's a long process, as I said. You know, there are gonna be, you know, opportunities we can take advantage of. We see some today that we are taking advantage of. Whatever risks are out there, we'll certainly manage those. We'll mitigate those. We'll have plans for those. As the time comes forward for us to you know, make our case to the appropriate authorities, we'll certainly be prepared to do that. And then the focus is just making sure that we can be as competitive as we can be. You know? But at the end of the day, you know, we can create value by running CSX Corporation better every day. So you can set the merger aside, we are gonna manage that. We are gonna work through that. We are gonna have many, many quarters to talk about that probably. But what we know we can do now is run this company better every day, and we feel really good about our ability to do that. Operator: The next question comes from Jonathan Chappell with Evercore ISI. Your line is open. Jonathan Chappell: Thank you. Good afternoon. Kevin, maybe Mary Claire, can you just help us a little bit with coal RPU? Feels like the way that we are calculating it now is a little bit different than the last several years. And, you know, what are you thinking about as baked into that revenue growth? Do we see and then this is from both a 1Q and a full year perspective. Is it kind of stabilized from this 4Q exit rate? Or is there some improvement baked into what's very important yield line item? Mary Claire Kenny: Yeah. So it's very clear. I'd say as we think about RPU going forward, there's always a mix element that comes into our business. And so I think about going into 2026, talked about some of the markets that we feel a little bit better about as well as ones that, you know, we see more risk. And so intermodal, we feel good about. When you think about some of our merchandise side of the business, we see some impacts there of probably stronger growth in some of our lower RPU business, like minerals and fertilizers. And more softness in some of our higher RPU business when you think about our forest products business or our chemicals business. Talk a little bit more about next year. We've got overlap. That we saw closures in over the course of 2025. Quite a few of that in our forest products line of business. We see auto down next year from a North American like vehicle production perspective. And we also have a large plant on our network that will be down over the course of next year. So that will certainly impact where we see volume growth versus decline, and comes into play. I would tell you, Steve, you spoke earlier about how we are thinking about pricing. We've had a lot of conversations there. We've looked at our processes and controls, and you know, Mike's delivering a really good service product right now, and customers value that. And so we are gonna take that into account as we think about going forward. And you also know there's, you know, there's a portion of our business that we can touch every year. So that'll impact from a timing perspective. Kevin Boone: Yeah. I'll just add on on the coal on the coal RPU just as a headline. We went through a year where we are lapping some pretty difficult comps, and that'll be largely we'll be through that by the first quarter. On that side. So, you know, we'll see a lot more stable, maybe slightly down, but, again, that to Mary Claire's point, it's a lot about mix. And, obviously, with a stronger southern utility demand, that's that is helpful as well. Given the length of haul. Operator: The next question comes from Chris Wetherbee with Wells Fargo. Your line is open. Christian F. Wetherbee: Yeah. Hey. Thanks. Good afternoon, guys. Maybe wanted to come back to a question I was asked earlier in the call and maybe think about a little bit differently. I guess, Steve, you talked about best in class. And when you think about it from a margin perspective, we kinda know where the benchmarks are. CSX Corporation was there probably five or six years ago for a few years, and I know things are different, makes it different. You know, there are some other dynamics in the market relative to them. But I guess as you've been there for three plus months now and had a chance to kind of think about the business, is there anything meaningful that you see that would sort of prevent the ability to get back to those levels whether you think about sort of the different customer mix, how things are changing, if there's any kind of a perspective we should be thinking about? I get the productivity, and you have to kind of get some reps in before you feel comfortable with how that can be sustainable. But anything sort of, you know, maybe insurmountable that you see right off the get off the bat? Steve Angel: I mean, in an answer, no. I don't see anything insurmountable in and it's not like I'm sitting here, you know, thinking, that we are gonna go back to the heydays of coal, and that's how we are gonna accomplish it. That's not what I'm thinking. I'm thinking about, you know, basically take the mix we got, and you know, through some of the strong initiatives that Mary Claire talked about earlier, you know, finding some growth through our own actions, obviously, anytime you get a little help from the economy, that would certainly help a great deal towards, you know, moving those operating margins up faster. But I really don't sit here and think, you know, I need to have a lot of help from the economy. I think our own growth initiatives do a better job on price management. And working the productivity equation very hard. And both Mike and Kevin have talked about certain actions that they've taken. But, you know, I can lay out something that says, you know, we should be able to get there? But, again, I want to see the kind of proof in the pudding and I think that'll happen. But, you know, that's kinda how I think about it. Operator: The next question comes from Jason Seidl with TD Cowen. Your line is open. Jason H. Seidl: Thank you, Arthur, Steve and team. Hello. Mary Claire, I guess this is gonna be one for you. It we are gonna go back to the coal side, but I want a clarification first. I think you said it was you know, you were calling for muted growth, and then you said next year. I'm assuming you were talking '26 and not '27. Mary Claire Kenny: Yes. '26. Sorry. Jason H. Seidl: Oh, okay. No. Not a problem. I've done that a bunch of times already this year. Wanted to just ask a question, you know, given this storm and some of the impacts that we've seen at least over the last two days with natural gas futures. Just how long do natural gas prices have to stay elevated until we see a flow through on the volume side? And what's sort of the best way to monitor that? Mary Claire Kenny: Yeah. Thanks, Jason. I would say, as I think about the coal side, you know, both with greater power demand that we are seeing here and the increase in the natural gas prices, certainly, supported recently about this upcoming storm. We feel good about the volume demand on the domestic utility side. I would say, you know, one of the things that we are watching here, though, is there were some plan closures that were supposed to start happening this year. We expect those will get delayed, but how long, that's a little bit uncertain. I think there's gonna be more demand. And more opportunity for us think the piece we'll have to watch is, you know, how much can actually be supported by the producers going forward. Operator: The next question comes from Ravi Shanker with Morgan Stanley. Your line is open. Ravi Shanker: Steve, it's understandable that you pulled the long-term guidance given our macros done the last couple of years. But is that still the right template to think about earnings growth in the long term when macro is normal? Do you think something has changed with the business where it could be better or worse than that initial guidance? Steve Angel: No. I don't think anything's changed in the business where you know, we can't come back and lay out a longer-term, you know, guidance, or a longer-term algorithm. You know, I don't see anything that's fundamentally changed the business that would prevent us from doing that. It's just, you know, caution on my part that I want to make sure that we can you know, that we can execute the plans in front of us before we start talking about a longer-term picture. But I'm not sitting here thinking that you know, we need to get away from that any kind of longer-term guidance because there's something fundamentally wrong in the business. I don't see that. Operator: The next question comes from Jordan Alliger with Goldman Sachs. Your line is open. Jordan Alliger: Yeah. Hi. Just sort of curious, can you maybe talk a little bit more about the double stack opportunity, perhaps sort of update if anything on the sizing? And I know you said people are putting bids out for the second quarter. Any additional sense for how we should think about the timing of how that could ramp into your business in order of magnitude? Thanks. Mary Claire Kenny: Yeah. Thank you. So I tell you, we are really excited about Howard Street Tunnel. I've been here fourteen years and excited to see it come to fruition. And, you know, there's a couple opportunities there. One, we are adding new Conic from the Southeast up into the Northeast, and so we've announced new lanes of service. But it's also gonna improve our service product from Chicago to and from Baltimore. It's also enabled us to allow efficient double stack service from the West Coast all the way through to Baltimore, versus having to do a rubber tire crosstown in Chicago. So we are excited about the opportunities that are there. We are talking to our customers today, both channel partners and shippers. But what I would tell you is based on past experience, it typically takes a couple of bid cycles to really customers to kind of see the opportunity and convert more business. So we expect to see growth this year and going into the future. I would say, both on our domestic and in the future on the international side of the business as well. Operator: The next question comes from Walter Spracklin with RBC Capital. Your line is open. Walter Noel Spracklin: Yeah. Thanks very much, operator. Good afternoon, everyone. I wanted to come back to the revenue growth profile of low single digit. I know whenever I know, I think about pricing in the rail industry, I kinda consider it in the three and a half percent area, and then you do assume some volume growth it would seem. So just curious, is there a mix effect at play here where we should we should build in some negative mix? Or are we seeing that core pricing number that's typically north of three, below three, I know, Mary Claire, you you you flagged truck pricing. Don't know if that's I mean, truck pricing is catching a bit here. So I'm just curious as to how the how the decompose the revenue growth versus what you would have seen typically in the past? Mary Claire Kenny: Yeah. What I would say is, you know, mix is always gonna play a role. Right? And so as I talked about this year and what we are seeing, we expect some of the stronger growth to be in our lower RPU segments. And so that is gonna absolutely have an impact on us. You know, on the intermodal side, that's lower RPU. Minerals and fertilizer is a little bit lower RPU for us. We are when you think about chemicals, when you think about forest products, when you think about automotive, there's headwinds out there. I mean, we are gonna go after opportunities that we see and make sure they are accretive to the business, but mix is certainly gonna impact where we see the growth come in 2026, and that will have an overall impact on the business. You know, Kevin touched a little bit on the coal side earlier. I just you know, mentioned on that. I do think that not only is there, you know, domestic utility opportunity, this year, provided these closures that are scheduled get pushed back, but I would also say on the export side, last year, we saw the numbers, the benchmarks come down pretty significantly over the course of the year. Think what we've seen is some pretty recent stabilization there. I guess I would call out that, you know, PLV has jumped up a bit. But I think it's important to note that when you think about our business, we are more heavily indexed to high vol. And I would say that's been more stable as opposed to seeing any significant increase at this point. Operator: The next question comes from Bascome Majors with Susquehanna. Your line is open. Bascome Majors: Steve, last quarter, you gave us some thoughts early on in your tenure about your compensation philosophy and how it kind of applied to the rail model. You know, now that you've gotten through a few more months, you're in planning. Can you talk a little bit more tactically about how you and the board have talked about changing the incentives for senior management, both on an annual basis and a go-forward long-term basis? You know, how are they different today than they were, you know, the last few years? Thank you. Steve Angel: Well, you know, we are basically in the process of rolling out the new metric you know, kinda as we speak. But if you to your point about what I discussed last time about most important, and it's really inherent in our guidance. Right? I talked about operating margins as being very important in terms of you know, demonstrating that we can continue to improve the quality of the business. And so that's an obvious metric. You know, operating income dollars that's what translates into you know, net income and earnings per share. So that's obvious that will always be an important metric. Safety will always be part of the mix. And if I had to pick three metrics that are most important to us sitting here at this time, it'd be those three, including safety. That's really on a year-to-year basis. And as you look into you know, the longer term, you know, which we call, you know, kinda three years. So you've heard me say, and those of you who've heard me say, this for many years, some of you, you know, return on capital, I think, is the truth serum you know, for any capital-intensive business. So return on capital is very important. And, you know, it's total shareholder return. You know? How well are we doing compared to the S&P 500 industrials? I think that's you know, important to all of us. So you know, kind of in a nutshell, those are the metrics that are most important. You know? And I you know, I've always liked to focus the organization on a handful of really important metrics as opposed to having you know, eight, 10, 12 as I've seen other companies do over time. And I think that's know, if you want to motivate the organization, if you want to incent the you need to have metrics that are that are very meaningful and reinforce that every day. Operator: The next question comes from David Vernon with Bernstein. Your line is open. David Scott Vernon: So Steve, if you could maybe kind of the cadence of OR improvement we are expected as we get through this year. Should we expect in kind of year over year across the board? Or is it going to be a little bit more back or front-end weighted? And then if you could put a hard number around what the benefit, the run rate benefit you are expecting from the cost actions you've taken to date I think that would help us kind of better understand the bridge for kind of what's organic or volume dependent and what's already kind of in the bag. Thank you. Kevin Boone: Yeah. When you know, certainly, are comparisons, when you think about what occurred in, 2025. And, you know, I would obviously, highlight first quarter given some of the storm activity and other things that occurred to us as a quarter where we should have good year-over-year performance probably above the average for the year. This is the continual process. As we move through the year, we continue to expect to get better and drive more cost out of the business. And we'll see if the what the revenue story is. We are obviously not assuming a whole lot, but there's a lot of activity around that as well. You know, the framework that I would use, from a margin perspective is the $150 million that I certainly highlighted as, not gonna reoccur, next year. I highlighted, three to three and a half percent inflation, in our business, and you will see that more pronounced, on the labor side versus the non-labor side. And I think you can effectively back into know, what we are assuming from a productivity standpoint from there. Operator: The next question comes from Diane McKinney with Deutsche Bank. Your line is open. Diane McKinney: There. This is Megan. Thanks for taking my question. Kind of sticking with the OR progression, I think it was really encouraging to hear about the over 100 diverse savings initiatives that the team identified, but it also sounds like there's potential for more. But as it relates to the full-year outlook, of the 200 to 300 basis points of the OR improvement, can you help us bridge from 2025? Like, are these cost savings considered? How much is dependent on the market versus what's within CSX Corporation's control? Any color there would be really helpful. Kevin Boone: We are not depending on the market. This is a plan that based on the things that we can control, which is encouraging for us in the at this team, we are gonna focus on those items. And you know, we haven't talked about, you know, the potential for some of these markets to improve, but what we are really focused on is you know, creating the operating leverage when the markets improve. To, quite frankly, deliver higher incremental margins than what we've done in the past. And I'm fully confident given all of the things that we are doing that every incremental dollar of revenue that Mary Claire and her team are able to deliver that will come in at a very, very high, incremental margin. Given all the cost things that we are focused on. You know, going back to the 100, you know, different opportunities, that's really across everything, from vehicle spend to overtime, you know, focused on rental equipment, travel. Mike and his team Doug, Casey, Terry, all of them, have brought ideas to the table. And now it's building the process, the on a monthly basis to hold our teams accountable to delivering it. I'm very confident that we can do that and providing better tools, quite frankly, to the operating team and every team across this organization so they have visibility to where the costs are. And I'm feeling better and better about that every day. I know Mike and I collaborate on that every day. I'm sure there's things that we don't know about today that we'll continue to identify. And so our goal is to you know, build the momentum through the year. And, when that volume comes back, we are gonna have a network that can handle the volume most importantly and really deliver the incremental margins. Operator: This concludes the question and answer session. And will conclude today's conference call. We thank you for joining. You may now disconnect.

107天前Insight Analytics约5分钟阅读

PG 2026 Q2 财报电话会议

Operator: Morning, and welcome to The Procter & Gamble Company's Quarter End Conference Call. Today's event is being recorded for replay. This discussion will include a number of forward-looking statements. If you will refer to The Procter & Gamble Company's most recent 10-K, 10-Q, and 8-K reports, you will see a discussion of factors that could cause the company's actual results to differ materially from these projections. As required by Regulation G, The Procter & Gamble Company needs to make you aware that during the discussion, the company will make a number of references to non-GAAP and other financial measures. The Procter & Gamble Company believes these measures provide investors with useful perspective on underlying business trends and has posted on its investor relations website www.pginvestor.com a full reconciliation of non-GAAP financial measures. Now I will turn the call over to The Procter & Gamble Company's Chief Financial Officer, Andre Schulten. Andre Schulten: Good morning, everyone. Joining me on the call today is Shailesh Jejurikar, Chief Executive Officer, and John Chevalier, Senior Vice President, Investor Relations. I will start with an overview of results for 2026, and Shailesh will discuss strategy, innovation, and focus areas as we start calendar year 2026. I'll close with guidance for fiscal '26, and then we'll take your questions. As we expected, second-quarter top-line results heavily reflect underlying market trends and impacts from base period dynamics. As a reminder, the base period included trade and consumer pantry loading, driven by port strikes and hurricanes in early October, and the fear of additional port strikes in late December. The biggest impacts were on the baby, feminine and family care sector, the fabric and home care sector. These base period impacts were concentrated in the US market. The balance of the company grew organic sales nearly 3% with almost all regions outside the US growing or accelerating in the quarter. Bottom-line results followed the top line. We continue to prioritize full investment in the business. We anticipated this would be the softest quarter of the fiscal year and we remain confident in stronger growth in the back half. So moving to the details. Organic sales were in line with the prior year. Volume was down one point, pricing up a point, and mix was flat for the quarter. Seven of 10 product categories held or grew organic sales. Hair Care grew mid-single digits, Skin and personal care, personal health care, home care, and oral care, were each up low single digits. Grooming and Fabric Care were each in line with a year ago, Baby care and feminine care were each down low singles, and family care was down approximately 10%, primarily due to the base period dynamics we described. As a side note, organic sales excluding Family Care were up 1% for the quarter. Seven of 10 regions grew organic sales, Focus markets were down 1%. Organic sales in North America were down 2%. Volume was down three points, including a roughly two-point headwind. From the base period trade inventory impacts I mentioned. Pricemix added a point of growth. European focused market organic sales were up 1%, Strong growth in France, Spain, and Italy largely offset by a softer period in Germany. Greater China organic sales grew 3% another quarter of growth in what remains a challenging consumer environment, Pampers and SK-II led the growth, each up mid-teens or more. Enterprise markets grew mid-single digits for the quarter, Latin America organic sales were up 8%, with solid growth across Mexico, Brazil, and the balance of smaller markets. In the region. Organic sales in the Europe enterprise market region were up 6% versus prior year, and the Asia Pacific, Middle East, Africa enterprise region grew 2%. Global Exhibit market share was down 20 basis points. 25 of our top 50 category country combinations held or grew share for the quarter. On the bottom line, core earnings per share were $1.88 in line with the prior year. On a currency-neutral basis, core EPS was 1.85 Core gross margin was down 50 basis points and operating margin was down 70 basis points versus prior year, Strong productivity improvement of 270 basis points with healthy reinvestment in innovation, and demand creation. Currency-neutral core operating margin was down 80 basis points. Adjusted free cash flow productivity was 88%, and we returned $4.8 billion of cash to shareholders this quarter, $2.5 billion in dividends and $2.3 billion in share repurchases. In summary, we've now completed what we fully expected will be the softest quarter of the fiscal year, We have strong innovation and productivity plans for the back half of the year, We continue to invest in creating superior propositions for our consumers and retail partners. With relevant innovation, powerful brand campaigns, across every touchpoint and continuously improving in-market execution across all channels and platforms. We are fully activated, It's working. So we move with confidence into half two of the fiscal year And with that, I'll turn it over to Shailesh. Shailesh Jejurikar: Thanks, Andre. Good morning, everyone. I want to start by underscoring the point Andre just made. We are confident the interventions and investments we are making now will improve our near-term performance. Strong innovation supported by sharper, consumer communication and retail execution. We are already seeing strong results in parts of the business that have made these near-term interventions. Greater China Baby Care was one of the first categories to make step change and continues to lead growth of the premium and super-premium segments of the market behind consumer insight-driven innovation, and brand communication. Chinese parents want only the best for their baby. Softness and comfort in addition to dryness. The China team created a product that delivers on this insight from first seeing and touching the packaging to feeling the diaper on their baby. They leveraged the Chinese history with silk, The shiny, soft yet strong, luxurious material has been a status symbol for more than two thousand years. Pampers Prestige is the only leading diaper brand that has real silky ingredients in the product. Delivering the ultimate experience of skin comfort and protection. The shiny soft feel package conveys superiority at first touch. Reframing our superior premium line has driven Greater China Baby Care double-digit organic sales growth over the past eighteen months, and increased share nearly three points. More recently, our fabric enhancers team has disrupted a sleepy category through deep consumer understanding. Mexican consumers describe the gold standard smell of clean as rich, tasty, fruity, and floral. Like the scents from shampoos. Downy Intense leverages our internal perfume innovation expertise to create the new high-intensity perfume. The packaging highlights the intensity of fragrance blooming on the bottle like a flower, Brand communication drives awareness of an experience of twenty-four seven smelling, like freshly washed hair. In-store execution of impactful displays with stopping power is increasing trial. These deep consumer insights driving innovation and executed with shopper brand communication and retail execution as spurred Mexico fabric enhancer category growth, and led Downey to double-digit organic sales growth and over two points for value share growth. Other examples where we've accelerated results include the Brazil hair care business, U. S. Old Spice and US liquid laundry detergents businesses. Most of these interventions are starting now in The US The biggest most impactful part of the business. We'll go deeper on these at the CAGNY conference next month. While we work to improve our near-term results, we've also begun a longer-term reinvention of The Procter & Gamble Company. Think of this as the next important phase of constructive disruption that will create and extend our competitive advantages in each element of our strategy. We remain fully committed to the integrated growth strategy that has enabled us to deliver significant growth and value creation over the better part of the past decade and it will in the future. A portfolio of daily use products in categories where performance drives brand choice. In these categories, The Procter & Gamble Company is uniquely positioned to deliver irresistible superiority across product, package, communication, retail execution, and value. We will do this to drive market growth and create value for The Procter & Gamble Company and our retail partners. We will double down on productivity with multiyear visibility to fund capabilities, innovation, and demand creation and to mitigate cost headwinds while delivering financial results at the levels you and we expect. Constructive disruption to stay ahead of and to create emerging trends and opportunities in our fast-changing industry, We will disrupt ourselves. At the core of it all is our organization. Fully engaged, enabled, and excited to serve consumers and win in the marketplace. These strategies, taken alone, are just words that any company could say. The words alone have become a point of parity. The Procter & Gamble Company's point of difference, our competitive advantage, comes from outstanding integrated execution of these strategies across all activity systems in the company and from anticipating what is needed next. We've executed the strategy well for many years. Now we see the landscape around us changing faster than it's ever been in recent memory. Neither we nor our industry in aggregate have adapted as fast as needed. This shows in the growth trends of our categories. Consumer media preferences and information collection are increasingly fragmented with new media platforms, including social media and retail media. Inflation across food, energy, health care, and many other areas of spending has taken a toll on consumers, and how they assess value. This will continue to evolve. The retail landscape is changing. More concentration, but also brand proliferation. Retailers are becoming media platforms. And media platforms are becoming retailers. In summary, the consumer path to purchase is changing every day, is nonlinear, and littered with millions of possible distractions. We expect an even more intense pace of change in the next three to five years. We will adjust to and leap ahead of these disruptions to invent CPG company of the future. The way to break through consistently is to build the strongest brands in the industry. The Procter & Gamble Company has the capabilities and unique opportunity to redefine the brand-building framework to deliver consumer-relevant superiority every day every week, every month, putting the consumer at the center of everything we do. Leading the consumer-relevant brand building and superiority at this space can and will only be delivered by leveraging superior data, superior technology, and superior capabilities to create and extend competitive advantage with consumers, and with retail partners. We define our strengths and opportunity here across three areas. First, we know how to build brands rooted in deep connections with consumers and our industry-leading innovation capability. We have an enormous wealth of consumer data and understanding and we receive a continuous flow of new data every day. Our teams connect with consumers across more touchpoints than anyone in our industry. Product research, shopper research, connected homes, ratings and reviews, social media posts, brand fan websites, and many more. We mine for insights that lead to new product innovation, brand ideas, performance claims, marketing campaigns. Now we are building the consumer connectivity the integrated data platforms, and the technologies that will enhance our team's ability to do this work better faster, and even more consumer-centric than ever before. We have a unique set of innovation capabilities in our industry. Substrate technologies, formulaic chemistry, devices, and now biology. We have years of experience integrating these capabilities to launch new platform technologies and innovations and we see many more ways to bring combinations of these technologies to life in new consumer products. Tide e Tide Evo is just one current example. Technologies, like AI-enabled molecular discovery will enable faster, and more powerful integration of innovation capabilities for faster growth. The second and related opportunity is to create a deeper, holistic connection with consumers to build brand relationships with them in the new media reality. Media fragmentation and emergence of new platforms creates an opportunity for brand builders who can best integrate across touchpoints. AI and Gen AI capability help our teams discover consumer-relevant insights at every step of the consumer path to purchase, grounded in a unifying brand idea. We are creating the individual touchpoint experiences for each consumer at a time. These ideas are activated in claims, demonstrations, visuals that communicate the performance and value of the brand across connected and broadcast TV, online video, social media, e-commerce sites, and in stores. Deep insights translated into a compelling brand idea repeated wherever consumers engage, making the brand easy to remember, reinforcing superior performance, that is worth it for the price paid. The third opportunity is integration with retail partners across the full supply chain and merchandising activity system. Again, the consumer understanding and brand-building capabilities we have from initial brand impulse to purchase transaction to in-home consumption are valuable assets. Integrating these with each retailer's category strategy and business model will enable our brands to create value across all retail formats. This includes activation of our brands in retail media, to convey our superiority and value messages close to the point of consumer purchase decision. Our supply chain capability is already a leader in the industry. Supply Chain 3.0 has driven a more complete system connection from purchase signal back through inventory systems to our production planning and material ordering to ensure consumers find the product they want each time they shop. We are well on our way in this journey across capabilities, data, and technology. We are freeing up capacity and capabilities with the organization redesign we announced, as part of the restructuring in June. We have built a structured data lake stock with petabytes of relevant data. We have built data platforms, AI capabilities, programmatic shelf tools, and media creation and evaluation systems. We have supply chain platforms that can run autonomously reacting to retail demand signals, consumer innovation needs, or productivity opportunities faster than ever before. The next step is to connect the dots. To integrate the pieces from identifying consumer friction point to product idea, to product design, to supply, the creative concept, to purchase transaction, to usage in-home, to post-use evaluation. We will close the loop, and we believe this will create a different s curve for our future growth and value creation centered around our consumer. We are doing many things right in how we are innovating, operating, and building brands today. And I'm confident in the near-term progress we are seeing. We know the opportunities ahead of us are even bigger and we will capture them with conviction and discipline. It took years to build the underlying platforms and capabilities and it will take some time to fully integrate and activate these assets across the company. We know what we need to do and we are excited by the opportunities ahead. In summary, we are confident in the short-term delivery and excited about the mid to long term as we leverage our strengths and unique capabilities to set us apart from the industry. We are inventing the CPG company of the future. We'll expand on these thoughts with some examples at CAGNY, and even more as we get to Investor Day later this year. With that, I'll hand it over to Andre to cover the guidance update. Andre Schulten: Thank you, Shailesh. It's been a challenging start to the fiscal year. With softer consumer markets, aggressive competition a dynamic geopolitical landscape. We expect stronger results in the second half which enables us to maintain fiscal year 2026 guidance ranges across organic sales core EPS and adjusted free cash flow productivity. The growth rates embedded in our near-term guidance should return us to the lower half of our long-term growth algorithm as we exit fiscal twenty-six. And head into fiscal 'twenty-seven. For fiscal 'twenty-six, we continue to expect organic sales growth of in line to plus 4%. Global market growth for our portfolio footprint is around 2%, on a value basis, at the center of our guidance range. We're seeing progress in most regions, and we expect stronger growth in The U. S. As interventions take hold. As a reminder, this guidance includes 30 to 50 basis points of headwind from product and market exits, that are part of our restructuring work. Our bottom line outlook is for core EPS growth of in line to plus 4% versus prior year. This equates to a range of €6.83 to $7.09 per share. This guidance includes commodity costs roughly in line with the prior year. And a foreign exchange tailwind of approximately $200 million after tax, Taken together, no change versus prior guidance. Our fiscal 'twenty-six outlook continues to expect approximately $500 million before tax and higher costs from tariffs. Below the operating line, we continue to expect modestly higher interest expense versus last fiscal year. And a core effective tax rate in the range of 20% to 21%, for fiscal 'twenty-six, combined a $250 million after-tax headwind to earnings growth. We continue to forecast adjusted free cash flow productivity in the range of 85% to 90% for the year, and this includes an increase in capital spending as we add capacity in several categories that we incur the cash costs from the restructuring work. Expect to pay around $10 billion in dividends and to repurchase approximately $5 billion in common stock. Combined a plan to return roughly $15 billion of cash to shareholders in fiscal 'twenty-six, This outlook is based on current market growth rate estimates, commodity prices and foreign exchange rates, significant additional currency weakness, commodity or other cost increases, geopolitical disruption, major supply chain disruptions or store closures are not anticipated within the guidance ranges. With that, I'll hand it back to Shailesh for a few closing thoughts. Shailesh Jejurikar: We continue to believe the best path to sustainable, balanced growth is to double down on the strategy. Stronger integrated execution, to delight consumers with superior products at a superior value. Challenging markets like the ones we compete in today are an opportunity for The Procter & Gamble Company to step out from the back and lead. We're focused on leveraging the industry's best insights assets, capabilities, and people and you expect. to return to the levels of growth and market leadership that we, With that, we'll be happy to take your questions. Operator: If your question has been answered or you would like to withdraw your question, press star followed by 2. Your first question comes from the line of Lauren Lieberman of Barclays. Please go ahead. Lauren Lieberman: Great. Thanks so much. Good morning. So two kind of clear themes in the remarks that I wanted to ask about. So Andre, first, kind of what gives you confidence in the near-term acceleration that you mentioned a couple of times? And to what degree is that about kind of comparisons and base period dynamic versus, like, you know, real fundamental improvement and acceleration. And then, Shailesh, I know we'll get a lot more from you. At CAGNY. But what gets you excited about this longer-term, quote, reinvention of The Procter & Gamble Company? It was a notable choice of words. In the press release and then also in the prepared remarks. Thanks. Andre Schulten: Good morning, Lauren. Thanks for the questions. So let me start with half two acceleration. I think the first positive element of quarter two results is the strength of the business outside of The U. S. If you look at Latin America, 8% growth Europe in aggregate growing 3%. China growing 3% on top of 5% growth last quarter Asia, Middle East, Africa is up 2%. And if you exclude the restructuring exits, it'll be up 4%. So there's real underlying acceleration in the business outside of The US, that is grounded in interventions that we've made in terms of innovation, in terms of commercial strategies, and in terms of doubling down on the precision and quality of execution in those markets. With Latin America really being ahead of the game here. And that's proof for us that the core strategies we're implementing, I think, are the results that we want to see. The US, underlying results, we believe will improve because we don't have the base period headwinds that we saw in quarter two. As you point out, I think that's part of the acceleration we expect in half two versus quarter two, not having inventory headwinds to the degree that we saw in quarter two. But the main element here, I think, is the fundamental execution of the same interventions we made outside of The US earlier. If you recall, The US slowdown was really a little bit delayed versus the balance of the markets. So we started in the rest of the world earlier with the innovation, commercial interventions, and execution. That same playbook is being executed in The US. Early indications where we have done this, for example, the Tide boosted launch, that is now in full distribution as of December, We're seeing results that are giving us confidence The innovation we're launching on Olay, just now on the jars with a new campaign and the launch of treatments at the same time with a new architecture, gives us confidence. The innovation we have on baby care first wave executed now, second wave coming later, TideEVO Coming In The Back Half Of The Year, So There's A Wealth Of Innovation We're Launching. We've Clearly Identified With Our North America leadership the opportunity in sharper execution, across all retail channels, And the team is committed and is turning that into execution changes And then the simple opportunity to leverage the strength of our brands by staying fully invested across the second half in media with even better execution. So all of those elements that we executed outside The U. S. That are showing progress, we feel will work in The US and if we don't see any one-timers anymore in terms of base period headwinds, that will translate into stronger growth. And our objective clearly is to leave the year with share growth in The U. S. Felix, you take the second Yes, I will. Thanks, Lauren. So first, what excites me is plenty of growth opportunities. We see that everywhere. But it's not gonna happen on its own. It will require us to create our own tailwinds Be it playing in a growth segment and driving it like personal care or playing in a segment which wasn't growing like best with Zevo and then having that category grow high singles. We see growth or you take China baby care, another example, where you take an put the odds of growth with the lowest birth rates and all of that and we find a way to grow there. So that's one thing that excites me. The second one is a unique once-in-a-generation opportunity to leverage the shifts in the landscape and our unique strengths and capabilities to set ourselves apart. The media landscape is changing. The retailer landscape is changing. There is a tremendous amount of technology both from a point of what is applicable using AI enabling a lot of other things, but even fundamentally our own product and packaging technologies. And then consumer preference and demographics which are evolving. Then you take those and take our strengths and capabilities brands with large consumer base, If you have a large user base and you're really delivering amazing products you probably have the biggest fan club already right off. The bat. Consumer understanding and consumer data. We have so much data that we have put in. Can get an answer even before getting started. And that flow just continues, and we are further strengthening that. Take the media spend leverage and take the different places we could be using it. That is another huge opportunity. Our R&D spending and capability across multiple areas of technology from formulaic chemistry, sub devices, biology, That just enables us to innovate much more broadly. Shailesh Jejurikar: Product. Another thing to be able to communicate it to consumer. Bring it into packaging, bring it to life with user-generated content. So it's the ability to bring all of that together And the technology platforms and applications we've been building and Andre talked a bit about this, we are I would say we have been building a lot and I would say the future is here. It's just a little uneven. So our job is to integrate and bring it all together. Operator: Your next question will come from the line of Steve Powers with Deutsche Bank. Please go ahead. Steve Powers: Great. Thank you very much, and good morning. I'm gonna ask a question that kinda follows the same structure as Lauren's question. So the first one, on the second half, improvements, if we think about things by category segment versus by geography, I guess, maybe a little bit more detail on where you expect progress and sequential acceleration to manifest most clearly. It sounds like laundry and baby and perhaps skincare what you said, Andre, but maybe just you could elaborate a bit more from that perspective. And then Shailesh, you know, Andre Schulten: You take the China Baby Care. It's one thing to get the insight. Another thing to find a way to put silk in the Steve Powers: If you think about all those different pieces of operational enhancement and reinvention initiatives, How do you think about the path and timeline from here for the company to put all of them together and create those own tailwinds and win in the marketplace you know, across the portfolio consistency? How long does that take in your mind? Morning, Steve. If I look across the businesses, the innovation interventions, the commercial interventions, the execution focus is consistently applied across every part of the portfolio. I would tell you the base period effects are probably a strong help when you look at family care baby care, and even fem care, They were most heavily impacted in the first half of the year. So Family Care, for example, will see strong growth in January, even turning into share growth now. And we expect similar dynamics to happen across Baby and Fem. Baby at a global level is actually growing share, so has returned to share growth in the most recent reading. So the momentum is there. We continue to work on the mid-tier proposition You recall we had innovated on the top tier. That continues to work well. Swaddlers, cruisers three sixty. We've made the innovation interventions on Luvs a year ago. That's working. On Baby Dry, we have a two-phased approach. Phase one is executed. Phase two is coming later, So that's still work to be done. On laundry, fabric enhancers, we have very strong innovation, tight boost that I mentioned before, the biggest laundry liquid upgrade in twenty years. For consumers, and that is taking hold and working. And we're preparing for the TideEVO launch. We have strong innovation across fabric enhancers as well. And as you know, that's still a huge opportunity in terms of household penetration So communication effectiveness and copy quality is improving. In beauty in aggregate, beauty is growing 4%. And we have an opportunity to strengthen growth in skincare in The US. Making strong progress on SK-II, outside of The US, on Olay Outside Of The US, And I think the new launch of Olay that is just coming out with strong retailer support, I think, will accelerate that business. Personal Care has momentum and will continue momentum in The U. S. And globally. So I can continue to go down the list, but think I've given you enough depth to say this is really across the portfolio. It's the same idea, double down on the consumer. Double down on the execution. A double down on the quality of the brand campaign, And I think that's where, you know, Shailesh is putting his focus, if I can speak for him. He's really doubling down in every review on the quality of the brand campaign, the quality of the architecture thinking. And it's stimulating thought. It's stimulating quality of execution. And I think that gives us confidence from a geographic standpoint as we talked earlier to Lauren's question, but also from a category standpoint. Shailesh Jejurikar: Well, thanks, Andre. And I'll just bridge Steve from what Andre said what I'm gonna say. But some of it will be sequential just simply because in US, also, when we make the interventions, we are extremely deliberate about making sure those interventions also drive category growth. So that's also why some of this has to happen with big innovations. But switching to your question. So I think a lot of the way to think about the future is we have, in many cases, already built platforms. Take the core data lake. That I talked about earlier. I mean, that did not happen overnight, cannot happen overnight, requires data capabilities, requires partnerships, but also importantly requires internal cultural change. For people to work the data and systems in a certain way is not a change that you can just do overnight. Even if you have the technology solution, very often the culture chain needs to go along with it. And so a lot of that work has happened or is happening. The timeline, if you asked as you specifically did ask, is I think by the time we really get the future evenly distributed, I think we're talking twelve to eighteen months. But it is not one which is a line of demarcation. So you will see parts of the business and certain businesses better equipped to take on all aspects of the transformation So some businesses may be ahead of others. Some regions may get ahead of others. But the simple answer to your question is really, I think, to get the future evenly distributed will be twelve to eighteen months. Operator: The next question will come from the line of Chris Carey with Wells Fargo. Please go ahead. Chris Carey: Hi, everyone. I wanted to ask about investment levels. The Procter & Gamble Company has recently announced a restructuring program and you're going through some initiatives today, new media platforms. Supply chain integration with an evolving retail landscape, Obviously, there's an expectation for improvement. In sales growth, rebalancing of this I guess, top line and move toward algorithm over time. Can you give us a sense of the sort of cost of this progress, I suppose? And kind of the balance between the restructuring and some of the savings that that's going to allow for you relative to what you feel like is going to be needed You know, potentially, you know, especially if you don't, you know, see that that acceleration that you're gonna be looking for you know, in the coming months. If you if you really wanna stimulate top line for this business over the next twelve to eighteen months? Thanks so much. Andre Schulten: Hey, Chris. Let me take a crack at this. The first part of the answer is many of the investments have been made over the last decade. If you think about the amount of money it takes to build a consistent global ERP platform, the data lake, the data governance structure, data engineering. All of that has been done. So that was part of the results that we that we delivered over the past, I would say, five to ten years. The investment to activate the technology specifically around the innovation capabilities, the media capabilities, won't be significant. It's an investment in scaling, but the underlying technology, the underlying data, that heavy investment is already done. So in that sense, I don't expect major capital or expense investments. On the supply chain side, you see us build capacity. And as we build capacity, that capacity is built in a way that it leverages automation. Digitization, both on the manufacturing side and on the warehouse side, So the elevated investment level in terms of capital is really related to building capacity building capacity in a different way, but not fundamentally more expensive So I don't expect, again, on the capital side, a significant shift. The restructuring we have announced in June, the two-year program, I think, will take us through the majority of the org changes and portfolio changes that we need to make. From there on out, if this works the way we want to, it will basically allow us to grow without incremental investments in organization or people. If you think about it, the objective is to grow productivity sales per head disproportionately once these capabilities are implemented. But we don't think it requires another wave of significant restructuring beyond what we typically have as part of our core earnings. So I wouldn't look at a cliff of investment that comes with this. The second part of your question on return to algorithm, I would say let us get through the next two quarters. And focus on acceleration. And then we'll talk about where we see the next year and how close algorithm we come once we have that reality under our belt. Operator: The next question will come from Dara Mohsenian of Morgan Stanley. Please go ahead. Dara Mohsenian: Hey. Good morning. So, Shailesh, I just want to dial down a bit more into The US market. There's always an opportunity under a new CEO to refocus the organization and tweak areas of emphasis Obviously, there's broad changes in the retail environment, as you mentioned, AI technology, consumer landscape, etcetera, etcetera. And, also, we're coming off a very difficult category growth environment in The US in calendar '25. So just as you look going forward, what are the most important priorities for the organization in terms of driving better execution, reaccelerating that organic sales growth? And specifically The Procter & Gamble Company's part of driving category growth. And part of the question is I'd like to better understand what's changing in terms of areas of emphasis to the strategy plans versus more where you're doubling down on execution and existing plans? Shailesh Jejurikar: Sure. Thanks, Dara. Few areas. So I think as I said, I think if we get the elements of a plan right, I think there is an opportunity to grow the market. So I think that is doable. What are some of the changes, as Andre talked about, the interventions short to midterm that we're looking at and which also bleed into the long term. So it isn't just one separate short and long-term intervention. One is the media landscape has changed very dramatically over the last few years. I think, probably driven somewhat by COVID habits, a bunch of other things. The way people consume media and content has changed dramatically. Adjusting our brand-building plans to fully reflect that change and leverage it is the first. Big intervention we are focused on as we review plans including in The US. The second one linked to the retail landscape, there are a couple. But the first one is linked to when you see which channels are growing where the growth is coming, We need to adjust the kind of innovation we do. The way we are calling it is stronger core, bigger more. Because by definition, what we are finding is just given how challenging it is to get awareness, how important it is for the big items to be there, For instance, even on e-commerce where you can list everything. It's really the first screen or two that matters. And so having the item which has the velocity is extremely important. And so the way to think about it is a stronger core, for example, is the Tide Liquid relaunch. You have an amazing user base You give them a delightful product. They continue using it, use more of it. Attract other people to come use it as well. The bigger more, a good example is the launch of something like TideEVO, which is transformational. So you are going to get consumer attention and engagement. So we're changing the innovation to reflect that both from a point of view of how the media is being consumed, but also how the retail landscape is playing out. The third area of change is, of course, very deliberate on consumer value. Particularly in a market like the US, a lot of it is about strengthening our proposition Again, Tide is a great example of it, but we are gonna have that pretty much across every category where we significantly improve the value by significantly improving the product performance. So that the consumer notices it and feeds the value. So one of the areas that we're looking at across categories is significant strengthening of the propositions and in many of these cases, that do not come with the change in price. So we will be significantly strengthening value. So if I were to just summarize what I just said, it would be adjust to the new media landscape with how we do our brand campaigns. Adjust how we innovate with much more emphasis on a strong core and a bigger mold, And then ensure we're delivering really good consumer value. Operator: The next question will come from Robert Ottenstein of Evercore ISI. Please go ahead. Robert Ottenstein: Great. Thank you very much. And I think you've kinda hinted at this. But let's just talk about The US. And Amazon. You know, our data is showing that it's driving a disproportionate amount of the growth in your categories depending on category anywhere from 60 to 80% or so. You know, how specifically is that impacting your media efficiency and competitive dynamics against smaller brands what do you need to do differently? And perhaps you know, do you have any particular learnings from China that are relevant here? Thank you. Andre Schulten: Yeah. Can I do one? Yeah. I can start. Hey, Robert. A couple of points that I think Shailesh hinted towards I think having the core brand as strong as possible by improving the performance, improving the claims, the e-content, all of that, I think, is the best and most urgent thing to do across the entire portfolio. So when it shows up on the landing page, it shows up as strong as possible. I think that's number one. I think there's an opportunity, specifically if you look at online businesses, The willingness of consumers to go into higher-priced items is still very, very strongly developed. You think about categories like hair care, if you think about categories like skincare, where small brands tend to play is in the upper end of the spectrum from a price per usage component, I think that's an opportunity for us to innovate. Which is you know, stronger core, and a bigger more. And the more, especially online, I think can be premium priced that's where you see innovation. Innovation happening. And in general, the last thing I'll leave you with is taking smaller brands and looking at some of the ideas that these creators are bringing, I think, is good inspiration. So looking at some of these brands and saying, that could be an interesting idea maybe on some of our core business, or it could be an interesting idea to replicate as a line extension There's nothing unique if you think about the ability that the ecosystem of small brands can bring. Not technology-wise, certainly not from a marketing scale perspective, certainly not from a supply chain perspective, but the creative stage is something interesting for us to look at. Shailesh Jejurikar: I'll just add a couple of points, Andre, on this. To what you said, which is firstly, at a broad strategic priority level, we are very, very deliberate about ensuring we win in the fast-growing segments, which may be channels or segments of a market. What is exciting to the point you made, Robert, about the e-commerce growth at a variety of retailers and variety of countries is very often if we can channel that right, it can dramatically grow the market size and category. And if you want to take a stark example and move away from The US for a second, we go to India where our portfolio is slightly different and has been evolving differently. E-commerce is growing probably at 10 times the pace almost of offline. And our share is about 1.8 x. Of our offline business. So we are very deliberate about that, whether it's The US or India or any other market to make sure that happens. The drivers, as Andrew pointed out, of winning there need certain things, which we are making sure we have across the board, which includes content, which includes the item specificity, and making sure those are strong. And growing. And playing with the right portfolio. So those all become very critical elements, whether it's Amazon in US or any other ecom player in The US or outside Operator: The next question will come from the line of Peter Galbo with Bank of America. Please go ahead. Peter Galbo: Hey, guys. Good morning. Thanks for taking the question. And I'm now happy to be contributing very much to the baby care comps in the Galbo household. So I wanted to ask just regarding, Andre, your comments around you know, returning to kinda the lower half of algorithm in the back half on the near term, maybe a bit of clarification there. I think one point in the prepared remarks, talked about your category is growing at maybe two Then there was another comment about if we if we took out, you know, the the the lap, you would have seen organic sales a breeze. So just maybe you can help clarify a bit on what you were trying to say with that comment as I've I've gotten some inbound from folks. On that. Andre Schulten: Hey, Peter. Glad to welcome you to the 2% in terms of terms of value. Enterprise markets are growing at about mid-single digits. China is still negative by about one point. Europe, flat in volume about 1% in value. And the most recent reading in The US, all outlet read, so our data, would indicate about 2% one to 2% of value growth. If you look specifically at the O And D Quarter, They Are There Might Be A Point Of There Is A Point Of Inventory Within Those Numbers. So You Want To Be Optimistic, You Could Say The US structurally could be growing at two to three points. But we have to see where that goes. From our point of view is the actual results, we've delivered 3% growth outside of The US. So that's roughly in line with market growth outside of The US. And we have delivered minus 2% in The US, which is below the market, And a good part of that is the inventory effects. There is a component of reduced share. So I don't wanna gloss over the fact that we have work to do to recover share, Partially, that's already in progress. I talked about family care. We're making progress on laundry. But the recovery in the second half will include both the base period effects moving out of the market and us recovering share So our objective is really to leave the fiscal year with share momentum out in The U. S. And at a global level. Operator: The next question will come from Kevin Grundy of BNP Paribas. Please go ahead. Kevin Grundy: Great. Thanks. Good morning, everyone. Shailesh, I wanted to take a step back and ask for your assessment overall. On the portfolio from a strategy perspective. So it's been over a decade since The Procter & Gamble Company completed its portfolio review. Success as you know the income right away, but ultimately did. And set the company on a very strong path for growth. Now as we talked about on this call, the company finds itself in more of a transitional sort of phase of a reinvention, if you will, as growth has slowed. With that as context, I'd like your view here on whether you are generally pleased with the current portfolio Is The Procter & Gamble Company still in the right segments with in big total addressable markets? Attractive returns on capital and stronger growth? Or do you see it possible certain businesses may make less sense today in The Procter & Gamble Company's portfolio than they may have in years past. So, your thoughts there would be appreciated. Thank you. Shailesh Jejurikar: Thanks, Evan. I split it into a few parts. So first is, I think we are clear that we play in daily use categories where performance matters. So I think we feel very good about that choice. We feel very good about that choice because it's extremely well integrated with the total strategy That's where superiority becomes critical. Whole model works well when we are in categories where daily use categories where performance matters. So I think that is one part of it. Second part of it is what we call the day one loop. We were starting our company today, we would look at our portfolio and say, okay. Are we in the right places? That has been really the genesis or driver of the restructuring that we talked about about six months back. Where we said we need to get out of certain parts of the business because simply them being a drag or we're not where we saw future growth. So there's another part of it, which is just disciplined look, continuous review of which are the right segments, and are we playing adequately in higher growth segments or not. There's a third element of it, which is when we look at categories, are we playing in the right segments? And something Andre just talked about, which is if you look at ecom, you see which category, what segments are growing, and are we present enough in some of those. If you look at social commerce, in some categories and see are we well represented in all segments, And we actually find a lot of opportunity at some of the higher price points in some of the categories in things like social commerce. So that's another aspect of the portfolio that we continue to strengthen. And the final point I would make is we continue to look at where we can build greater strength, and we've always talked about the fact that health and beauty are two areas where we find we have still opportunity to build a stronger presence, and we continue to look at opportunities which come our way there. Operator: The next question will come from the line of Peter Grom with UBS. Please go ahead. Peter Grom: Yes. Thank you, operator, and good morning, everyone. So I guess I just wanted to follow-up on The U. S. And I guess it sounds you sound confident in your ability to see performance improve But I I guess I was trying to just pin down what you're expecting in terms of category growth for the back half of the year. And I wasn't sure in your response to Peter's question around 1% to 2% growth, whether that's kind of the right runway we should expect moving forward or whether the guidance expects to get back to that 2% to 3%. So maybe if you could just elaborate on that, that would be helpful. And then I guess just related, you know, at CAGNY last year, know, there's a lot of discussion around inventory destocking. So just any thoughts or comments on what investors should expect as we anniversary those impacts? Thanks. Andre Schulten: Hey, Peter. Yeah. Thanks for the push on clarifying US category growth. Our base expectation is 2% category growth in the back half. That's what we know. And that's what we're planning on. From an inventory standpoint, hard to predict The only thing I'll leave you with is I would not expect any significant inventory built. In the second half. That's not part of our plan. We expect some level of inventory efficiency to be driven across retailers like they always do. Some of our retail partners are finishing up supply chain interventions, and that will probably lead to some efficiency in terms of inventory levels. So I'm I would tell you a slight headwind from inventory is probably adequate to assume. On a market base that has about 2% of value growth. Operator: The next question will come from Filippo Falorni of Citi. Please go ahead. Filippo Falorni: Hi. Good morning, everyone. I wanted shift maybe to margins. For the second half of the year, is it the right expectation to think that we should see an improving margin trajectory as well considering the assumed improvement that you're embedded in The US market, your highest margin business. And given the commodity outlook looks a little bit more favorable in your guidance, And then below the gross margin line, Shailesh, you mentioned a lot about the interventions that you planning, including The US business. Can you help us quantify where the sizing of those intervention, where would they show up, whether it's with more advertising, more R&D, more promotional investment. Any help, like, sizing and quantifying those impacts will be helpful. Thank you. Good morning, Filippo. Let me start Andre Schulten: At the risk of disappointing you I will not give you margin guidance for the back half. I think the margin will be an outcome and we will have to tactically maneuver to see where we want to invest for the strongest possible growth We focus on top line and we focus on EPS. And as you will have noticed, our guidance ranges on both are relatively wide. And they are wide because the outcomes will vary. There's still a lot of variability. And the most important variability to the margin line will be our conviction and need to invest. And so it's hard for me to give you a good indication of where that's gonna land because it's gonna be entirely driven by our ability and conviction to continue to invest in brands. Where that investment comes, I can start, Shailesh, and you jump in? Think it's mostly in the range of again, the innovation we're launching, and Shailesh talked about improving value by driving significant performance improvements on the core propositions, That will be an investment we're making. That's baked into our assumptions. And the second component is to communicate those investments effectively and consistently across the balance of the year. So the media side is an important part. I wouldn't expect a significant increase year over year. But consistent media spend across the second half. And the third one is trade-related spending to drive trial. Create display visibility, secondary placement in-store, Again, our path chosen is not heavy investment in promotion depth and price. We don't believe that's market constructive. But it will be to drive trial of those superior propositions So that's the third bucket. So product, media and communication, and in-store visibility and trial. Shailesh Jejurikar: No. I think you covered it. Only thing I would say is the ratios of that vary based on the category. So the mix of which one needs a little more on product, which one needs a little more on advertising or visibility will vary. So that's the only point I would add to what you said, Andrew. Operator: Our next question today will come from Bonnie Herzog of Goldman Sachs. Please go ahead. Bonnie Herzog: All right. Thank you. Good morning, everyone. Guess I had a question on your Grooming segment. Organic sales were flat in the quarter, which was a pretty big deceleration versus last quarter with volumes inflecting negative and then margins contracting nearly 300 bps. So could you provide a little more color I guess, on what drove the weakness on volumes? And if there are any other factors behind the margin contraction outside of volume deleverage And then maybe lastly, how should we think about this segment for the second in terms of whether it's innovation and whether the business can accelerate? Thank you. Andre Schulten: Good morning, Bonnie. Think you answered the first part of the question. I think the margin component and the bottom line component is an outcome of the top line. It's obviously a high-margin business. And so if the volume's slowing, that translates into the bottom line slowing, specifically since we don't curtail the investment in the business. Superiority investment across grooming is very important. The timing of the grooming business is heavily related to initiative timing. So year over year, the phasing of Braun initiative, female grooming, and male grooming initiatives is a driver in the quarterly profile that you see. On the second half, like other business, we expect modest acceleration in grooming. Related mostly to The US, And I think the biggest opportunity for our grooming business has continued activation of the portfolio in The U. S. And quality of execution in US stores, and that's what the team is entirely focused on. Shailesh Jejurikar: Just to add maybe a couple of points, Bonnie, to that. One is we see within grooming, a huge opportunity in continuing to drive Venus. That has upside in pretty much every region In many regions, that's growing in the tens and twenties percent growth. So we see a lot of upside on the female grooming side. We see a lot more on appliances as well. And then we are working on innovation, which will have which comes in the in calendar '26, which hope which should further drive category growth. And probably the last point I would make is in US, we are also looking at changing the way our shelves are in many of the retailers and significantly improving how grooming comes across as a shopping experience. Operator: Our next question will come from the line of Kaumil Gajrawala of Jefferies. Please go ahead. Kaumil Gajrawala: Hey, guys. Good morning. If we could talk a bit about usage and volumes, there's so many puts and takes on your quarter. But, know, to the extent that you're able to calculate what actual usage is in the households, has that sort of trended off as we got into the front half of this fiscal year? Is it about the same in the rest sort of within it is just noise? Andre Schulten: I think, Kaumil, it's that is still a huge opportunity in our categories. Usage volume growth is slow. To honestly flat if you look at the front half of the year. Even in the last quarter, both in The U. S. And in Europe. So reacceleration household penetration, reaccelerating user growth is a big part of what we're focusing on. And if you think about it, a lot of the growth in the past few years has been price-driven, right, as we came through the inflationary cycle, the supply chain crisis, all of our categories, And so I think the opportunity for us now is exactly what Shailesh described, It is to improve the value proposition for consumers by diligently constructing propositions that have a perfectly matching performance profile well communicated and executed, without raising the price so we can make the proposition attractive to more households, more consumers, more consistently. So the volume component will have to be a part of how we grow markets. As we talked about the second half, we believe this will take time. So we don't think this is an easy fix nor will it come quickly. So our growth trajectory that I just highlighted, the 2% value growth in The US, which is the assumption for half two, largely assumes that the volume component remains slow. Shailesh Jejurikar: Just add one point reinforcing, Andrew, what you said But as we get on the journey of growth, I think user growth will be one which we place a lot of emphasis on. As Andre said, between user, usage and price mix, I think last five years probably had a due to inflation, a bigger component of price mix. We think the future is gonna be a lot more about user growth as the foundation, and then that typically we get that, we also get the usage growth. Operator: The next question will come from the line of Andrea Teixeira with JPMorgan. Please go ahead. Andrea Teixeira: Thank you. Good morning, everyone. So I was hoping if you have a clear clarification and one question. On the clarification you just mentioned, Shailesh, and Andre, like you're assuming that your 2%, you know, category growth, but are you thinking you can stabilize or even perhaps have share gains with the interventions you were making? And within that, are still seeing some trade down within your branch from, let's say, parts to liquid? Or if that has stabilized. And my real question is on the productivity reinvestment. As you had a very strong productivity in the quarter. So are you thinking of like as you go in terms of reinvestments and all the media initiatives, innovation you've made, and perhaps by spec architecture for affordability. Should we expect that to be canceled out? Or perhaps, as you see this environment and the opportunity to lean into more of a value proposition? How are you thinking of, like, the balance between top line and bottom line? Andre Schulten: Thanks, Andrea. From a share perspective, it certainly is our objective to leave the year with share growth. Both in The US and in the rest of the world. But we also acknowledge that that is an outcome of how well we execute, the competitive environment, other in terms of geopolitical dimensions, consumer health, So that's why we still maintain the range And within the range, you know, if we end up in the mid to higher section, that will probably have an element of share growth If we end up in the lower section, it won't. But be assured, our team's energy is exactly that. We need to grow share, by growing more users, growing more households, and that's where all the innovation and the investment is focused. On the balance between productivity flow through top line and bottom line, I'll go back to what I said earlier, It depends on what we see happening. We will certainly on the side of more investment to drive more user growth drive household penetration in the short term, If we are convinced that we have the right innovation, if we are convinced that we have the right marketing program, the right commercial program, We will double down but we would be diligent in that assessment. So if we feel we've got the right program, we absolutely will continue to reinvest productivity. Operator: The next question will come from Olivia Tong of Raymond James. Please go ahead. Olivia Tong: Great. Thanks. Good morning. I want to talk a little bit about the margin with productivity savings about 70 basis points this quarter. You reinvested two twenty of that which I think highlights your you know, pricing productivity and reinvestment even as demand remains lower. So could you drill into that a little bit more in terms of what limitations there could be over the balance of the year on the price and productivity lever levers, particularly on price. Your implied second-half guidance assumes some fairly strong margin leverage but I want to understand those moving parts. And then in terms of the guidance range, you mentioned to in answer to another question that you can grow even without additional headcount, leveraging sales per employee. What's the risk that you might need to adjust those investment levels you know, as you think about delivering on EPS? Thanks. Andre Schulten: I'll give it a shot, Olivia, but you can certainly follow-up with the IR team to get you more detail. I think the margin productivity side, I feel very good about We will continue to deliver in the range that we've delivered on. Have visibility to the productivity components for the next two to three years. So I think and we have the effect of the restructuring program kicking in. So I feel good about our ability to continue to drive productivity. At the level we need to deliver investment and a reasonable EPS outcome. Again, I won't get into guidance for next year, but it's certainly our objective to make progress towards algorithm. Over the next few quarters. The extent of that progress will not depend on our ability to deliver productivity. I feel very confident about that. It will entirely deliver depend on our ability to stimulate top-line growth, in the market conditions we're facing. And the level of confidence and conviction we have to invest behind that growth in the market. So I'll leave it there. For the longer term, I'll tell you I am fairly convinced that Shailesh will jump in here. That with the restructuring program, the way we're approaching the organization design the way we're integrating technology into the way we work, and the way we want to decrease functional barriers we think that's a powerful path forward to continue to drive organizational effectiveness and honestly free up a ton of capacity of our teams from internal work to focus on what really matters, which is the consumer innovation and execution. Shailesh Jejurikar: I agree with everything, Andre. I would just add a couple of points. To frame what we are trying to do, which is productivity as fuel for growth. Growth as a fuel for EPS. So we really think productivity enables us to do what we need to to get the growth, which gives us balanced top and bottom line growth. So that is really the effort. So as you think of that, and that's really what Andrew was also saying is we're doing the productivity. We're very confident, by the way, in the productivity. But that finally is going success on that is getting us a growing top and bottom line. Operator: The next question will come from the line of Robert Moskow of TD Cowen. Please go ahead. Robert Moskow: You know, The Procter & Gamble Company probably does more than any CPG company to grow categories through innovation and improving performance That that's always been your mantra. But know, when you look at the data, as in terms of, like, the past twelve weeks or even the past year, the percent of products sold on promotion at The Procter & Gamble Company is substantially higher by about 200, 300 basis points. So I'm wondering, do you think this data, like, accurately represents what's what your approach is in market? Or because it would indicate that there is more need to move volume And or or is it inaccurately? Depicting what you're what you're trying to do to improve the volume? Thanks. Andre Schulten: Hey, Robert. I'll give you a two-part answer here. Good question. I think I've repeatedly said that I don't see a reason why the categories will not move back to pre-COVID levels of promotion, which are around 30%. That will happen. It's just a competitive dynamic, a retailer dynamic, a consumer dynamic. And it's happening sequentially over time. The promotion read you're getting is not wrong, but it only captures part of what the market reality is. It doesn't capture forward gift cards. It doesn't capture layered couponing. Which is a significant part of competitive promotion that we're seeing. You're right. Our promotion volume is increasing and probably will increase in the second half, as we execute the innovation part of creating trial for those innovations is to deliver promotion visibility. Not all of those promotions come with deep price discounting. In many cases, they don't. But they show up in the promotion line. So what I'll tell you is our objective is to grow categories. Have we done this consistently over the past twelve months? No. That's our when Shailesh talks about we need to grow users and we need to grow usage, That is the part of category growth that we're striving to drive. And part of that has to be to generate trial because if you don't have new users try superior propositions, you don't get repeat, and you don't get the growth. Shailesh Jejurikar: Thanks. I'll just add one thing to this, which is that as we strengthen our propositions it should strengthen our promotion elasticities as well. Which means we will be less impacted as our propositions get stronger. So that is always something we look for. So there's a balance between ensuring are building a future business, which is less dependent on promotions, but making sure we are not completely losing the plot on competitiveness. Operator: The next question will come from the line of Edward Lewis of Rothschild and Co. Redburn. Please go ahead. Edward Lewis: Yes. Thanks very much. I just Shailesh, wanted to touch on the regional mix of the business. Clearly, your elevated presence in The U. S. Has served you well of late. But as The U. S. Growth slows back to sort of, I guess, more normalized levels, we see continued growth in emerging markets, for example, what you're seeing in Latin America. Do you think about the regional mix of the business? And the advantages that you see the business as having are those regionally agnostic or can they be applied globally? Shailesh Jejurikar: Great question. Let me take a crack at it. So I would say our task always given our business size, and other things is first and foremost to get US growing faster. And I believe it is doable and we have plans to try and do it. That is really part of what we talk about when we say we want to create the future. But we don't we think there are tremendous opportunities on the outside The US, which we are very focused on. And what we have tried to do is get very deliberate about which markets have that potential and then really double down and making sure we are playing to the future there. So a lot of the portfolio choices we have made over the past six to nine months have really been to put us in a position that we are playing in winning segments. Even if I take Latin America, we made the choice to change our business model in Argentina A large part of that enabled us to much better focus on Mexico and Brazil, and we changed the organization structure in the rest of Latin America. Which then enabled us to get much more consumer focused And now we are seeing, as Andrew mentioned earlier, 9% growth in Brazil, That's not the pace the market is growing at. Double digit in Mexico, that's definitely not the pace the market is growing at. So talked about India. A bit earlier in a different context. But, again, playing to the future growth there, which is heavily e-com, mean, having spent a lot of my life there, it's staggering to see the pace of change over the last five years in that space. So very deliberate on the big markets outside The US on how we're going to get the growth. Of course, China still remains a big one. Has a slightly different profile of where it coming from, but still a lot of future opportunities. So we do believe many of these large markets, we are well positioned to play to where the future is going. Andre Schulten: And I would just say it's an end. We need to get The US growing, and we need to grow outside. And I think the good news is, maybe only one point to add, is the margin structure that John and then Shailesh have built in enterprise markets allows consistent investment because we have we can cover the cost of capacity, the cost of capital, So it's not dilutive. It funds itself, and that's the core idea behind expansion and growth in enterprise markets. Operator: Your final question will come from the line of Michael Lavery of Piper Sandler. Please go ahead. Michael Lavery: Good morning, and thanks for the question. Just wanted to come back to some of the share opportunities and how to think about it relative to value for the consumer You've you've talked about the importance of that, but also it sounds like no real price changes are under consideration. You've pointed out some of the premiumization some smaller brands are doing effectively and maybe delivering better benefits and value in that way. But you've also had, of course, some private label strength and share pressure. I guess how do we reconcile all of it? And maybe is it as simple as just a waiting game for the consumer health to improve, or is there more to do to move the needle on how the consumer sees value other than just sort of, you know, trading them up? Shailesh Jejurikar: Yeah. I no. Great question. I would say it's not one thing because a very critical part of delivering value is also having a portfolio. So Luvs plays an important role in baby care in that sense. Similarly, on laundry, we have a portfolio with Gain and Tide Simply, So across markets, we do build that portfolio to ensure we are playing at a variety of price points. And making our products accessible. But if I were to look at the largest opportunities to address growth through value, I would say bulk of them are really in strengthening propositions. And if I look at probably one of our largest core items, which would be tied Liquid, which is a huge, huge business. We're seeing real momentum as we've just significantly improved the product performance. So it's a combination to answer your question. And k. With that, it looks like we have no further So just thank you for joining us this morning, and look forward to seeing you at CAGNY next month. Have a great day. Andre Schulten: Thanks, everyone. Operator: That concludes today's conference. Thank you for your participation. You may now disconnect and have a great day.

107天前Insight Analytics约5分钟阅读

FBK 2025 Q4 财报电话会议

Operator: Good morning, everyone, and welcome to the FB Financial Fourth Quarter 2025 Earnings Call. Please note, today's event is being recorded. At this time, I'd like to turn the conference call over to Mike Orcutt, with FB Financial. Please go ahead. Good morning, welcome to FB Financial Corporation's Fourth Quarter 2025 Earnings Conference Call. Mike Orcutt: Hosting the call today from FB Financial are Christopher T. Holmes, President and Chief Executive Officer, and Michael M. Mettee, Chief Operating and Financial Officer. Please note, FB Financial's earnings release and supplemental financial information, and this morning's presentation are available on the Investor Relations page of the company's website at www.firstbankonline.com and on the SEC's website at www.sec.gov. Today's call is being recorded and will be available for replay on FB Financial's website approximately an hour after the conclusion of the call. At this time, all participants have been placed in a listen-only mode. The call will be open for questions after the presentation. During this presentation, FB Financial may make comments which constitute forward-looking statements under the federal securities laws. Forward-looking statements are based on management's current expectations and assumptions and are subject to risks, uncertainties, and other factors that may cause actual results and performance or achievements of FB Financial to differ materially from any results expressed or implied by such forward-looking statements. Many of such factors are beyond FB Financial's ability to control or predict, and listeners are cautioned not to put undue reliance on such forward-looking statements. A more detailed description of these and other risks that may cause actual results to materially differ from expectations is contained in FB Financial's periodic and current reports filed with the SEC, including FB Financial's most recent Form 10-K. Except as required by law, FB Financial disclaims any obligation to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events, or otherwise. In addition, these remarks may include certain non-GAAP financial measures as defined by SEC rules. A presentation of the most directly comparable GAAP financial measure and a reconciliation of non-GAAP measures to comparable GAAP measures is available in FB Financial's earnings release, supplemental financial information, and this morning's presentation, which are available on the Investor Relations page of the company's website at www.firstbankonline.com and on the SEC's website at www.sec.gov. I would like to now turn the presentation over to Mr. Christopher T. Holmes, FB Financial's President and CEO. Christopher T. Holmes: Alright. Thank you very much, Mike. Thank you to everyone for joining us on the call this morning and for your interest in FB Financial. For the quarter, we reported EPS of $1.07 and adjusted EPS of $1.16. We've grown our tangible book value excluding the impact of AOCI at a compound annual growth rate of 11.6% since we became a public company with our IPO. This quarter, our pretax, pre-provision net revenue was $71.1 million, or $77.1 million on an adjusted basis. Earnings were led by net interest income of $150.6 million, a net interest margin of 3.98%, and low credit costs in the quarter. Adjusted returns were solid, reporting a return on average assets of 1.4% or 1.51% on an adjusted basis, and a return on average tangible common equity of 14.4% or 15.9% on an adjusted basis. For the year, we reported EPS of $2.45 and an adjusted EPS of $3.99. Our balance sheet grew through the acquisition of Southern States Bank and was complemented by organic growth in our key businesses and geographies. All in, loans held for investment grew 29% and deposits were up 25% year over year. As I reflect back on 2025, and think forward into 2026, there are two key themes that stand out to me. The first of those is growth, both in our financial assets, but also in our capabilities. This comes in the form of talented new teammates. During the past year, we executed on an acquisition in record time. We grew our talent base by adding new associates across the company, and we reorganized leadership responsibilities in various areas to optimize our organization. We expect to see these actions pay off in 2026 and beyond through enhanced customer experience, contributions to our strong and inviting company culture, and ultimately continuing our history of outstanding growth. The second area is we're generating earnings and financial returns that meet my expectations as the CEO of the company and as a shareholder with high expectations. This year and particularly this quarter, our bottom line results were where they need to be with adjusted returns of about 1.5% on assets and approximately 16% on tangible common equity, and that's with a TCE ratio of almost 10%. These profitability results are within the range of expectations we set for ourselves. Our results for organic growth in loans and deposits were the only real notable area of underperformance in 2025, which comes from a combination of economic conditions, some distractions from the acquisition, and some related organizational changes. As we look into 2026, we're very excited about the prospect for strong growth opportunities, both organically and otherwise. We did accomplish a lot during the year, which reinforces the strength and determination of our team and franchise. I'm pleased with our results, proud of the team, and I'm very bullish on the year ahead. So while I could use some additional time today to give you my perspective on a multitude of other topics like the regulatory environment, views on M&A, and our myriad of metrics and goals that we set for ourselves in 2026, I'm simply going to reiterate our top priority for the year ahead, which is to cement our focus on the customer. Through this simple action, we'll deepen relationships, we'll provide better products and service, and we'll acquire more new associates and customers. It's that focus that's going to allow us to grow the business. Very simply, that's going to be our winning formula in 2026. So with that, I'd like to turn the call over to our Chief Financial and Operating Officer, Michael M. Mettee. Michael? Michael M. Mettee: Thank you, Chris, and good morning, everyone. I'll pick up right where Chris left off. Over the past year, we've laid a solid foundation that positions us to accelerate into a period of significant opportunity. We've acquired and converted Southern States, which added approximately 20% to our size. We've seen market disruption in our geographies, which has created opportunity in our markets. And we've added talent in key areas of our company. So as we move into 2026, we really couldn't be more excited about the year ahead. Turning to our results for the quarter and for the full year, net income on a reported basis for the quarter was $57 million or $61.5 million on an adjusted basis. For the year, we delivered net income of $122.6 million and adjusted net income of just over $200 million. Our net interest margin for the quarter came in at 3.98%, which is a three basis point expansion over the third quarter. Even with the Fed rate cuts and lower loan yields, we were able to manage our liability side of the balance sheet to expand margin, namely through deposit repricing and benefits realized on our third quarter sub-debt and trust preferred payoff. Non-interest income improved in the quarter as we saw stronger swap fees in investment services revenue along with benefits from non-recurring items which we've detailed in our supplement. On the expense side, fourth quarter non-interest expense came in at $107.6 million or $100.4 million on an adjusted basis. Included in the reported results is roughly $4.6 million in merger and integration expenses which should largely conclude by the end of the first quarter of 2026. In our adjusted non-interest expense, we had an additional $3 million in performance-based incentive expense, and roughly $1.2 million in higher franchise tax expense. We also had higher than expected year-end increases related to the share repurchase transaction, which I'll detail in a bit, technology costs, and other professional services totaling about $1.5 million that are not run-rate expenses. All in, our banking core non-interest expense totaled $88 million for the quarter, and $298 million for the full year. Looking at credit, our reported provision expense was lighter this quarter at $1.2 million due to low charge-offs and minimal changes in modeled reserves. Non-performing assets ticked up slightly this quarter with higher past dues in some of our consumer portfolios and our optional Ginnie Mae repurchase portfolio, but loss content remains low as annualized net charge-offs totaled only five basis points in the quarter. Overall, our credit outlook remains stable for our portfolios and geographies. All in, our allowance for loan losses settled at $186 million or 1.5% of our loans held for investment. Looking at the balance sheet, you'll see loan growth of $86 million for the quarter and total deposit growth of $97 million, both roughly 3% on an annualized basis. In the fourth quarter, we experienced a pickup in late quarter payoff activity, which reduced our loan growth by about half. This activity was spread across several loan categories, but was mostly pronounced in our C&I and CRE buckets. As Chris mentioned earlier, these organic growth levels for the quarter are below what we expect and what we've historically delivered. However, when I look at average balances for the quarter, we show annualized 6% loan growth and 7% deposit growth. And for the year, we're pleased to have grown the company 29% on loans and approximately 25% on deposits. New production trends remain competitive, both on rate and structure with new loan yields priced around 6.75% for the quarter and new deposit costs around 3% for the quarter. Even with softer organic growth during the fourth quarter, we believe the wind is at our backs and our sails are up. The company has significant opportunity to grow market share organically as we continue to bring new relationships to the bank. With that, you should expect us to return to our normal high single-digit growth rate in 2026. As it pertains to capital, I want to highlight the large stock repurchase transaction that we executed in the quarter. In total, we repurchased just over 1.7 million shares, representing about 3% of the company. The transaction was with our largest shareholder, the estate of the late Mr. Jim Ayers, which allowed the estate to diversify its holdings and gain some liquidity while also allowing the company to deploy excess capital in a beneficial way. We are proud to participate in this transaction with other large institutional investors, and this investment in ourselves demonstrates our belief in our franchise and our growing business. As we move into 2026, we expect our net interest margin exclusive of loan accretion to land between 3.78% and 3.83% in the first quarter and on a full-year basis consistent with where we are today, and that assumes a rate cut baked into our forecast for 2026. We would then expect the benefit from loan accretion to add an additional 15 basis points or so, and that's exclusive of any accelerated accretion that might pull through. In banking, we're expecting to see fee income grow in the upper single-digit range as we continue to grow our customer base, add product offerings, and deepen relationships with our current customers. On expenses, I'll reiterate the full-year guide that we gave last quarter as we expect banking expense to land between $325 million and $335 million, which puts our efficiency ratio in the low 50s for the full year and at 50% by year-end 2026. This guide is run-rate only and would not include any investments made in revenue producers or market expansion. From a balance sheet standpoint, we're sticking with a mid to high single-digit loan growth in core customer deposit growth in that same mid to high single digits that we've spoken about for the full year 2026. So as I conclude, I want to thank the team for their work this year and I look forward to a prosperous 2026. With that, I'll turn the call back over to Chris. Christopher T. Holmes: Alright. Thanks for the color, Michael, and thanks again to everybody for joining us on the call this morning and your interest in FB Financial. And operator, at this time, we'll open the line for questions. Operator: Once again, that is star and then one. Our first question today comes from Brett Rabatin from Hobby Group. Please go ahead with your question. Anya Palsh: This is Anya Palsh. I'm asking questions on behalf of Brett. So he was wondering if management anticipates any additional share repurchases from the Ayers estate. Christopher T. Holmes: Yeah. That is a good question. And we do not actually anticipate that. And so, the conversation we've had is that we do not anticipate that. That does not mean just like any of us that folks will change their mind, but all the conversations we've had, we do not anticipate that. Anya Palsh: Okay. Thank you. And another question that I have is, do you guys think mortgage banking is on the right path, or does the platform need any additional tweaking? Michael M. Mettee: Hey, Anya. Good morning. This is Michael. Yeah. Actually, mortgage had a really good year. And if you think about where we were two years ago in the mortgage environment, versus today, '26 versus 2025 versus '23, we originated the same amount of volume, but the contribution went from a negative to a nice positive number. So they're definitely on the right track. You know, tweaks to the platform, I would say, just like on the banking side, we are open for business, looking for revenue producers that can continue to expand our relationships and bring core customers to the bank. So, we're pleased with mortgage and expect big things from them. Christopher T. Holmes: Yeah. And I would just add in terms of tweaks, let's say we're always tweaking. Whether that's more as Michael said, we're tweaking things every day. But in terms of the basic structure and the elements of what we have in that business, we're actually quite pleased with it. And when we look at '26, that is a potential for it's a very positive potential for overperformance, I would say. As Mike said, this year it actually went from a negative to a positive. And depending on what happens in the world and what happens in the market, that's an area that could be a bright spot for us based on what we have put in our expectations for this year. Anya Palsh: Okay. Thank you. And, you know, what do you guys, what does management think about the current M&A climate? And is there any optimism on additional deals? Christopher T. Holmes: So climate-wise, I would say, climate-wise, a lot of conversations going on out there. I think at every level, that's just an industry comment, it's not specific to us, but I'd say there's a lot of things happening out there. People evaluating strategically what the future holds for them. When we think about us, specifically, we'll continue to evaluate our opportunities. In prepared remarks, one of the things I talked about is really our customer focus. We have to maintain that and we have to make sure that that's at the top of our priority list and for our objectives for the year. But as we get opportunities, which we do, we have conversations and we get opportunities, we'll continue to evaluate those. And if the right one comes along, certainly, we would be in a position to act on it. The Southern States combination that we did in 2025 was very positive. We feel like all the way around, they always do cause some distraction from your normal operating environment. And so we weigh that anytime we're considering a transaction. And so when it's worth it, then we're going to be in a place to take advantage of it. Anya Palsh: Sounds good. Thank you. Appreciate the answers. Christopher T. Holmes: Sure. Thank you. Give Brett our best. Operator: Our next question comes from Russell Gunther from Stephens. Please go ahead with your question. Russell Gunther: Hey, good morning, guys. Christopher T. Holmes: Hey, Russell. Russell Gunther: Morning, Chris. Morning, Michael. On the loan growth front, so you called out the elevated pay downs and how they impacted this quarter. Would be helpful just to quick level set where those levels compared to last quarter. And then as a follow-up, you guys tend to position yourselves as a high single-digit to low double-digit grower. It sounds like you're guiding to high single digits for this year. Maybe if you could just kind of walk us through the asset class and geographic loan leaders and just whether or not that assumes that level of growth can happen with the players on the field today versus incremental hires. Michael M. Mettee: Yeah. So I would say, Russell, in the fourth quarter, payoffs were a bit elevated, especially at the latter part of the quarter. Chris would let us all go home on December 24. We probably would be having a different point-to-point conversation. But you work full year, so that last week of the year is where we saw a lot of the payoffs come. You know, every company has ebbs and flows. Right? Every company faces payoffs. So that's just part of business. That's just something you have to do. But on a percentage basis, it was elevated in the fourth quarter. That being said, we're going to pay off in the first quarter this year and second quarter this year. And so expect to grow through it as a company. Our growth forecast is not predicated on hiring new people. It's the team we have in place with the relationship managers and bankers that we have. We would expect those to grow that high single-digit range without adding another person. And where can I come from? Yeah. We came into Asheville, North Carolina last year. They're off to a good start. You know, Tuscaloosa, Alabama, smaller market, but had a really strong year. But every market, especially in our metro areas, have a lot of in-migration and growth opportunities. And then in our more community markets, expect to continue to grow market share on both sides of the balance sheet. And we're focused on growing deposits and loans, not just the loan side. Then asset class, look, we pride ourselves on being a community bank. So that means we serve all asset classes. And so we're not saying, hey. You can only grow one or the other. But we want to be full service to our clients. So I'd expect that to be broad-based. Christopher T. Holmes: Yeah. So Russell, okay. If I can just make a couple of comments and I want to reiterate two things. Two or three things Michael said or amplify them. He is right. If we were to stop the world in motion there and not have the last week of the quarter, we'd have been north of 5% in terms of loan growth, actually six-ish, and if you compare average to average, you would see that in our numbers. Point to point was one thing, but we don't get obsessive over that because we feel pretty good about the run rate right where it is. You asked about can it happen with current players? I think that's an important part of kind of how we project ourselves for the future and how we budget. We budget current players, and we budget very normal activity. We don't budget things like, we certainly don't budget acquisitions. We do not budget bringing over big teams. And so it's current player activity. And Michael, he also made a statement in his prepared remarks, our expense side is the same. Our expense side is also current players with a very, I'll say, normal measured growth rate versus having the big moves in there on either the revenue or expense side. So I think that's important. And then on geographies, there's one other thing I would say is Nashville approaches half of our loans in deposit base. And so that becomes an important part of that picture for 2026 and beyond. That's either, you know, so that becomes probably the biggest part of that. And as you know, we've had some changes there. We continue to be actually really bullish headed into '26 on that part of our geography. Russell Gunther: That's really helpful. Thank you both. And then, my last question would be on the expense front. So, it would be helpful to get a sense for how the 4Q run rate shapes up. Michael, I think you called out 1.5 million of non-run-rate expenses. But please, correct me if I misheard that. And then as a follow-up, last quarter, you mentioned the willingness to kind of toss that expense guide out the window if you think you can hire commercial lenders the way you'd like. So I was just curious if any of that, you know, materialized in this fourth quarter result. And have any changes been made to the comp structure in order to be able to kind of help attract the type of talent you'd like to get or that might shake loose? Michael M. Mettee: Yes. Thanks, Russell. Just to clarify on the expense base, there was $3 million that was performance-based related to long-term and incentive, which is equity, which is really a peer comp analysis. So that resulted in, you know, Chris mentioned our returns. It's a return-based compensation model, and as we saw our returns continue to perform at a higher level, that's what drove that. So that's not necessarily reoccurring because we should be in line with where we expect our performance shares to pay out on a go-forward. And then franchise tax, which was another thing I called out, $1.2 million, we should that shouldn't be reoccurring as well. And then the other piece, we did the share repurchase transaction and had some professional services fees in there, which I said was non-run-rate. So if I looked at $88 million on the banking side outside of merger and integration costs, and I'd say, you know, $5 or $6 million of that was not what I would call run-rate, but it was expense. It hit in the fourth quarter, and that's really why we reiterated our guide for '26 is that we gave last quarter. We don't see those as continuous. Although, would love to have yes, it was we outperform on a return basis if our performance shares go up, then actually a good problem for everybody, I think. So the other piece you mentioned throwing out the expense guide out the window. I like how you put that. I don't know that that's how I said it. But, you know, I think about it in two buckets, really. We have our normal course of business, as Chris mentioned, or you said, players and seats. And that goes for the entire company. Yeah. We've got to maintain discipline and create operating leverage. And so we'll continue to do that. We do recognize that as opportunities come, there's an expense outlay that occurs, and so, yeah, we're certainly willing to do that for the right people, the right teams. We don't hire just to hire. Also recognize that it's a very fluid environment, and all of our people get recruited as well. And so we play offense and defense. I'm a college football guy, so it's a little bit like, you know, the transfer portal. You gotta make sure you got your team recruiting all the time, internal and external. And so we actively do that. And then ads, yeah, we added a couple of key people during the quarter. We're really excited about those. And we expect that to continue for the long term. But really, all that's just heating up, and it's, yeah, it's a full-time responsibility to make sure that we're recruiting the right people for FB Financial. Christopher T. Holmes: Yep. I think excellently put all the way around, Michael. I want to add two things. There's a lot of disruption in a lot of places, not just our markets, all around the country. And I think what that creates, you know, even if you look at comments made on earnings calls so far this cycle, you've seen banks get pretty bold and say, hey. I'm coming after you. To some of the regional banks. You've seen others talk about their hiring goals and that kind of thing. So I would, and so you have to realize we have a lot of people coming into our markets in Middle Tennessee, East Tennessee, Georgia, Alabama, and so that what that does is, you know, they're just recruiting anybody and everybody. And so your people are getting calls, and our people are getting calls. And we say this internally, and I'm certainly saying it on this call. We don't want any of our people underpaid, and so we will make sure that they're all fairly compensated. And if they're not, we want to correct that. And so, as Mike said, that's part of us just making sure we're taking care of our folks. And then when it comes to those A players that may be available out in the market, we will not miss the opportunity because of comp. Okay? We can compete with anybody from the largest bank on the planet to the smallest community bank that we can compete with. And so, we feel very strong about our position there. So if you and if that's the case and you take that off the table, it really comes down to culture, where the company is headed, and how they feel that they can take care of their customers and compete. And that's where we think we, over the long term, we're gonna win. So that's how we do it. Russell Gunther: That's great, guys. Thank you for all the help and for taking my question. Operator: Our next question comes from Will Jones from KBW. Please go ahead with your question. Will Jones: Yes. Hey, great. Good morning, guys. Punching for Catherine here. Maybe I just wanted to stick along the same lines. Like a lot has been made about some of the M&A that is out there and what that could mean for the talent acquisition front as well as the client acquisition front. But I wanted to ask you guys, you know, we're talking about how big this opportunity is, but you guys are seeing it and living it every day on the ground. Is that opportunity, you know, is it out there, you know, right now? Is it, you know, is the, are you actively seeing, you know, this big opportunity we're talking about in hiring in terms of just your boots on the ground there? Christopher T. Holmes: Yeah. Good morning, Will. It's Chris. You know, I think these things, and I don't want to point to anything specific, so I'll point I'll look in the mirror. Okay. Remember, we did a transaction in 2025, and again, it just creates a lot of disruption for your own company, but also for others, and it creates a lot of activity. And I think all that depends on a lot of things. You know, how quickly the transaction closes, what the communication is during all that period, when conversion actually takes place, conversions become a big deal. But actually, the most important part of a transaction is integration. Because that's, and sometimes folks confuse conversion and integration. Integration starts from the second, actually, it starts before you make the announcement. Because, you know, teams are working together and you see how that goes. You then make an announcement, and you then go through all this period of, frankly, changes to how people do business. And, you know, all of us approach that a little differently, I would tell you. Some folks, especially if they're the lead acquirer, they say, yeah. Let me tell you how you do business now. And some folks don't like that and they'll go somewhere else. Our approach tends to be a best approach. We evaluate how both companies do business and we end up adopting some of both. And we also end up adopting, we take an approach of what we call a best athlete approach, and we take folks from both companies depending on what works best for the whole. And so again, I'm telling you all that to tell you, it is not, there is, it's so much more art than science. All of that's going on in a lot of places right now. And so it evolves over time. Sometimes there's an immediate exodus of people because they just go, this is not gonna work. Okay? Or it's not gonna work for me. Other times, there's never an exodus of people, and I'd say most commonly, there's a slow drip. And so all of those are going on with multiple transactions. And we're out there playing in that sandbox. But again, our approach is, hey. Make sure we have the right culture, make sure that people know our long-term plan and that this is a great place to be. And make sure that they can take care of their clients. That's, that is the most, I'd say, important thing. And so I wish I could give you a little something a little more formulaic that could work its way into an EPS model, but all of that's going on, and depending on who you're talking about, you know, I would say there's a couple of big transactions going on in our market. And I think that the two different bigger transactions are taking different approaches. Michael M. Mettee: Yeah. And, Will, this is Michael. You know, to your point on disruption, and Chris mentioned some other calls. You know, one of the markets that's been called out, and some of it's Huntsville, Alabama. And if you look at Huntsville, bankers, there hasn't been necessarily M&A that's driven, but banker disruption has been on fire for six months. And, you know, we look up in the fourth quarter and we're really excited about the team we have in Huntsville right now. Yeah. And so, but there's, and amongst banks, I mean, I don't, you know, write this in stone, but there's, we have 50 or 60 bankers that moved between banks in the past six months. And we look at our team and we see the opportunity there. We're super excited about them. Relatively new, but very experienced market bankers. So not even M&A related. It's just opportunity related. And so that's, it's happening in and all around us. And we think we're poised to, are well-positioned to be successful with that. Will Jones: That's great. Thank you both. That's all very helpful content. I think we're all just trying to contextualize what we're talking euphorically about this hiring opportunity that exists and just wanted to see if maybe there's an immediacy to it or from your lens that it might take a little time to get there. So I appreciate that context. Michael M. Mettee: And, Michael, maybe for you, I will just, sorry. Not to interrupt you, but I think the answer to that is both. There is immediacy, but we're not just thinking about the next two weeks. Right? Yeah. This is a three, five, seven-year kind of opportunity with all this going on. And so, you know, these things take a little bit of time. So to answer both, it's probably not what you're looking for. Christopher T. Holmes: But Michael, I was gonna say exactly the same thing. They enter both, and I would say this, is what folks, what tends to be what helps FBK is folks view us as having a very long runway. And they view us as being able to, they view us as having a really bright path forward. And so that helps us and we play the long game there. So we're much more interested in, hey, we're gonna be here. We're gonna play the long game, and we think that's gonna be a winning formula. So it is both. Will Jones: Okay. That's very helpful. I appreciate you guys contextualizing that for us. Michael, maybe one for you on the margin. It's great to see the higher NIM this quarter. You guys seem to consistently outperform where you guys expect the margin to be. And then we have a little bit of higher guide and it's really just been a large function of you guys, you know, good managers of deposit costs. But as we enter kind of a '26 period where we expect growth to pick up even from where we are today, what do you think just incremental deposit betas will look like? And what kind of leverage do you feel like you still have to manage deposit costs over the course of next year? Michael M. Mettee: Yeah. Well, that's a really good question. Yeah. We feel good about the margin guide and the growth opportunity. I will say that mid to high single-digit growth at a 3.80 kind of core margin. However, as you mentioned, you know, as people come in entrance, you know, sometimes, when you hire people or not sometimes, a lot of times, to bring over relationships, you gotta start with bringing over a customer and it's probably paying above market for deposit costs and then you earn their business every time and we fully expect that our bankers can do that and will do it. So, and of course, I'm sure our competitors do as well. So, more people coming into our markets, you know, paying higher costs. I personally get flyers from a lot of large banks, you know, twice a week or mail offering things that are pretty exorbitant. So we do realize it's out there. Really comes down to the customer experience and relationship long term. And earning that business, and that's what we're focused on. So you could see both on the loan and deposit side, some margin compression if things get really, really, kind of dicey or competitive out there. But I think so far, everybody's pretty focused on everybody meeting competitive wise as well. You know, kind of lowering cost as rates go down. I will say this too, though, Will, because this is counterintuitive to maybe a lot of other institutions. Yeah. We want to be a fair value proposition to our customers. We want to earn, Chris mentioned the long game. We're thinking, yeah, years and decades. And so we're not trying to get everybody to zero cost deposit. We want to be fair. We want them to have their money here. We want it to be their entire family, their business, everybody. And so, we expect that on both sides of the balance sheet. We have fair loan yield. We won't be the lowest loan pricing either. But we want to take care of our customers. And so, you know, our deposit cost does run a little bit higher than some others. And our loan yields run a little bit higher. And so, we think that's the fair thing for the customer and for the company and for the shareholders. So that's kind of a different approach probably. Will Jones: Yes. Just maybe expectations on what incremental deposit betas will look like in this kind of competitive market you're describing? Michael M. Mettee: Yes. I mean, think if you're still looking at that 55%, 60% range, which is where it's been. I think on interest-bearing, but we'll see how, you know, treasuries are up. Right? A lot of external noise to the banking system that could put pressure on money moving back into some of those US treasury money market funds, which could impact that. But we've been pretty consistently able to move down deposit cost with rate cuts. That being said, we only think there's gonna be one or so where we sit today. Will Jones: Yeah. Okay. Good stuff. Maybe just lastly for me, Chris, we talked a little bit about just the appetite for what incremental M&A will look like and you mentioned for the right opportunity. You guys would keep your eyes and ears open. What could you just frame what that opportunity would look like maybe as you think about the right size, the right geography, just what you would look for in an M&A transaction today? Christopher T. Holmes: Yeah. So geographically, we're gonna be looking around the Southeast and the Carolinas even into Virginia, which is a contiguous state for us from where we are today. And not far at all geographically. So Carolinas, Virginia, Georgia, Alabama, some things that could even get down into the northern part of Florida would all be the types of places we would be looking. We would prefer, okay, not necessarily have to be contiguous to some of our existing geography. And here's an example of what I mean by that. I mentioned Virginia. Hampton Roads, Virginia is actually quite a long way from us and so that would be less interesting for us than, let's say, Western Virginia, they are the places like, I don't know, I'm hesitant to name the towns. So I'm a little hesitant to get too specific. But you can understand what I mean by, you know, jumping over big parts of geography is generally not what we're looking for. We like for it to be a little closer to our existing but in all of those locations. So I would think of more kind of Western Virginia, but, you know, the Carolinas certainly of interest. Georgia, Alabama, all of our existing Southeastern, let's say, geography. And then, you know, we like banks that we generally aren't looking for things that we have to fix in a significant way. We like companies that perform well. Asset-wise or size of the institution. We love things that are, call it anywhere from a couple of billion in assets all the way up to, you know, 6 or 7 even billion in assets. So we would, we love, that's a description of what we target. There are some cases where we may go smaller than that on the asset side. If it's a market that we're particularly interested in and we like what they do in that market, so there are cases where we go small in that. Asset-wise. Will Jones: Okay. That's great color, Chris. I appreciate it, guys. Thanks for the questions and congrats on a great year. Christopher T. Holmes: Thanks, Will. Thank you so much, Will. Operator: Our next question comes from Steve Moss from Raymond James. Please go ahead with your question. Thomas: Hey, guys. This is Thomas on for Steve. Could you just talk maybe about the loan pipeline and client sentiment broadly? How is client confidence these days? And what is their appetite for investment? Michael M. Mettee: Yeah, Tom. Good morning. It's Michael. Yes. Actually, the pipeline is pretty strong. I think we've been saying that we've been seeing strong pipelines. There's some deals that pushed into '26 from '25. And so I'd reiterate that they've been strong. Clients, I think a lot of the noise that happened maybe early last year that limited some of that early growth is past all the noise is still out there. I think that they're just operating in a way that, hey. It's kind of new norm, and we're excited about the future and investments occurring. We're seeing a lot of existing clients start new projects or deals, and a lot of times, they're able to take their older stuff to the permanent market if it's multifamily or real estate-based. And C&I activities picking up. So, really actually pretty positive operating environment business-wise. Thomas: Okay, great. Appreciate that color. And just one more for me. Last quarter, I know you guys indicated that loan growth would largely be governed by core deposit growth. And it looks like maybe core deposit growth was a little challenged in the fourth quarter. I saw you took on some brokered. Can you maybe talk about your core deposit growth outlook for 2026 and maybe the strategy that's gonna get you there? Michael M. Mettee: Yeah. With core deposit growth always a focus for us, you know, we've got a lot of funding capabilities that you, that we would exercise in kind of the shorter term if need be. I'd say actually when I think about core, it goes back to a comment I made a little bit earlier that sometimes you bring over customers and the intent is to turn them into relationships, is another word for core. And a lot of times, you know, if that didn't materialize ever, you know, some period of time, you know, and they're higher cost, we'll just go ahead and say, hey, maybe we're not the place for you. And so, that's where you can see deposit movement in and out of the balance sheet and that's a continuous process. Brokered small number for us, you know, 4% or so, balances. We do make sure that we have funding in place if need be. And I think from a perspective of how we're gonna do it in '26, I do think it gets back to what Chris said in his comments is, you know, the focus on the customer, customer experience, making sure we have the right treasury management, platform and products, as we go, I'll call more upstream a little bit opportunities, you know, that kind of middle market commercial client, a lot of opportunity there. But even, you know, half our business is consumer as well. And so, retail network, we've got to reignite the focus on our client there. And we're in the process of that and just really adding and activating relationships. So it's broad-based. You can't point to just a single thing. Because we're in a lot of these different businesses and so a lot of opportunity in our geographies. Thomas: Okay. Got it. Thanks for taking my questions and congrats on a good year. Michael M. Mettee: Thanks, Tom. I appreciate it, Tom. Bye. Operator: And at this time, we'll be ending today's question and answer session. I'd like to turn the floor back over to Christopher T. Holmes for any closing remarks. Christopher T. Holmes: Alright. Thank you so much again. We appreciate everybody joining us on the call. And we're glad to have had a good year. We're looking forward to 2026. And so thank you all and reach out directly if we need to give you more information. Operator: And ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.

107天前Insight Analytics约5分钟阅读

PNFP 2025 Q4 财报电话会议

Operator: Good morning, and welcome to the Pinnacle Financial Partners fourth quarter 2025 earnings call. All participants will be in a listen-only mode. Should you need assistance, signal a conference specialist by pressing 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. We'd like to limit this call to approximately one hour. I'll now turn the call over to Jennifer Demba, senior director, investor relations. Please go ahead. Jennifer Demba: Thank you, and good morning. During today's call, we will reference the presentation and press release that are available within the Investor Relations section of our website pnfp.com. President and Chief Executive Officer Kevin Blair will discuss our newly combined company's future and outline our 2026 financial outlook. Chief Financial Officer, Jamie Gregory will review Pinnacle and Synovus' standalone fourth quarter 2025 results. Finally, Chairman Terry Turner will make some closing remarks. And then our team will be available to answer your questions. Our comments include forward-looking statements. These statements are subject to risks and uncertainties. And the actual results could vary materially. We list these factors that might cause results to differ materially in our press release and in our SEC filings, which are available on our website. We do not assume any obligation to update any forward-looking statements because of new information, early developments, otherwise. Except as may be required by law. During the call, we will reference non-GAAP financial measures related to the company's performance. You may see the reconciliation of these measures in the appendix to our presentation. And now, President and CEO Kevin Blair will open the call. Kevin Blair: Thank you, Jennifer. Good morning, and welcome to our fourth quarter 2025 earnings call. As Pinnacle Financial Partners enters its next chapter, we do so with the belief that true success comes from staying grounded in who we are, inspired by where we're headed, and united by a relentless commitment to outperformance. As we do so, we reaffirm our commitment to the investment community with renewed energy clarity, and confidence in the path ahead. Pinnacle's focus is producing strong above-peer revenue earnings per share, and tangible book value growth. Our strategies and plans for execution are clear. Are committed to delivering exceptional client service and industry-leading loyalty as verified by external sources such as Crystal Coalition Greenwich, and J. D. Power. At the same time, we aim to be the employer of choice in regional by fostering a uniquely collaborative empowered, and rewarding culture. These priorities enable us to attract and retain revenue producers at an outsized pace, fueling our continued growth. By pursuing these goals with passion and purpose across the entire franchise, we strive to continue to create exceptional value for our shareholders, and set the standard for growth and profitability in the industry. Our strong performance in 2025 demonstrates the focus of our teams during more volatile economic times in the midst of a pending merger. Legacy Pinnacle grew adjusted diluted earnings per share by 22% in 2025, while Legacy Synovus grew adjusted diluted earnings per share by 28%. The commitment and focus of both firms on creating a differentiated client experience resulted in Legacy Pinnacle's number one Net Promoter Score ranking in its footprint and Legacy Synovus' number three Net Promoter Score ranking in its footprint amongst top market share banks. These results underscore that our team is fully engaged, focused on our clients, and delivering meaningful value for our shareholders. We are a competitive team committed to sustaining top quartile growth profitability. The merger between Pinnacle and Synovus was completed on January 1, just one hundred and sixty days after announcement, demonstrating the strengths of both companies and our resolve to swift and effective integration. Over the past two quarters, both organizations have successfully completed key milestones. These achievements highlight our strategic focus and reinforce a solid foundation for continued growth and operational excellence. The team has hit the ground running in January, already executing across all elements of the proven Pinnacle operating model. For example, the firm has brought legacy Synovus team members into the money morning sales and service meeting series, an anchor of the pinnacle operating rhythm, led by chief banking officer Rob McCabe. This long-standing practice helps teams align around core priorities promotes cross-team collaboration, and establishes shared ambitions and goals around growth hiring, pipeline activities, and service expectations. We are thoughtfully combining the strengths of Synovus and Pinnacle building on similar legacies and shared values, and remaining true to what really sets us apart. Pinnacle's exceptional operating model is our foundation and the engine of our growth guiding us through every opportunity and challenge. We're not just building another big bank, We're scaling with a soul. And now, Jamie will review both Pinnacle and Synovus' standalone fourth quarter 2025 financial results. Jamie? Thank you, Kevin. Jamie Gregory: Even in the midst of a merger integration, both Pinnacle and Synovus continued to demonstrate strong financial performance over the past two quarters. Pinnacle reported fourth quarter adjusted EPS of $2.24 which was stable quarter over quarter and up 18% from the prior year. Net interest income increased 3% from the third quarter and 12% year over year. Balance sheet growth remained well above peers. Period end loans grew at a strong 3% from the prior quarter and 10% year over year, driven by recruiting. Particularly in our expansion geographic markets. Core deposit growth was also quite healthy at 3% quarter over quarter, and 10% year over year. The net interest margin increased one basis point to 3.27%. Meanwhile, adjusted noninterest revenue declined 6% from the third quarter but jumped 25% year over year. Year over year growth was largely as a result of higher service charges, wealth management revenue and income from BHG. As expected, BHG contributed $31,000,000 in fee revenue to Pinnacle. Adjusted noninterest expense was stable quarter over quarter, and up 13% year over year. Pinnacle's fourth quarter credit metrics remained healthy, and capital levels continue to build. Net charge offs were contained $27,000,000 or 28 basis points. 63% of which was from a single non-owner occupied CRE loan. The CET1 ratio ended the quarter at 10.88%. Meanwhile, Synovus reported strong fourth quarter adjusted diluted EPS of $1.45 which was stable quarter over quarter and increased 16% year over year. Results were highlighted by healthy loan core deposit, and noninterest revenue growth. Net interest income increased 2% quarter over quarter and 7% year over year. Period end loan growth was a healthy $872,000,000 or 2% from the prior quarter and 5% from the previous year. Driven by broad-based C and I lending. Core deposits grew a solid 895,000,000 or up 2% quarter over quarter. The net interest margin continued to expand, up four basis points sequentially to 3.45%. NIM was supported by various factors, including continued fixed rate asset repricing the funding cost benefits of the core deposit growth. Synovus also continued to generate healthy, consistent growth in adjusted non-interest revenue. Which grew 6% from the prior quarter and 16% year over year $144,000,000 The drivers were broad-based, and I would highlight $16,000,000 in capital markets fees, up 30% year over year. This performance highlights the team's focus on delivering for our clients while also focusing on the merger integration. Adjusted noninterest expense increased 2% from the third quarter and was up 5% year over year. The linked quarter increase included higher incentive payments and charitable donations. Credit metrics remained healthy. Net charge offs were $24,000,000 or 22 basis points in the fourth quarter. Our common equity Tier one ratio ended the year at an all-time high of 11.28% as we prepared for the merger closing. Also, we retired $200,000,000 of subordinated tier two notes in October before issuing $500,000,000 in December. Both Pinnacle and Synovus continue to be successful in hiring new team members in the fourth quarter, with 41 new revenue producers. This brings the total to $2.17 for both firms together and twenty twenty five. We continue our work to finalize the valuation marks on the Synovus book. Which we expect to be completed later in the first quarter. Our current estimated mark on the balance sheet is generally in line with the original merger expectations. We expect this valuation impact as well as other considerations to result in a CET1 ratio of approximately 10% at the end of the first quarter. Estimate includes the realization of $225,000,000 to $250,000,000 of first quarter merger related expense and excludes legacy Pinnacle equity acceleration costs, which are capital neutral. Since the transaction closed, we have undertaken a meaningful repositioning within the legacy Sonova securities portfolio. As part of that effort, we sold approximately $4,400,000,000 and purchased roughly $4,400,000,000 of new securities with an average yield of 4.7% and estimated duration of four point two five years. These transactions helped us support our level one HQLA position, reduce risk weighted assets, and also serve to eliminate approximately 98% of the PAA associated with the securities portfolio. I will now hand it back to Kevin to review our 2026 financial outlook. Kevin Blair: Thank you, Jamie. Pinnacle's proven revenue producer hiring model allows our balance sheet growth to be more resilient and sustainable regardless of economic growth, interest rate levels, and the like. Loan and core deposit growth in 2026 should be supported by revenue producers who have not yet completed the consolidation of their portfolio to us. We also expect to continue hiring revenue producers at an accelerated pace this year, especially as the former Synovus team embraces the rigors of the Pinnacle hiring process. Our goal is to 250 total revenue producers in 2026. As we look to our first year as a combined company, we expect our period end loans to grow to $91,000,000,000 to 93,000,000,000 or up 9% to 11% versus our combined loans at year end 2025. We expect 35% of this growth to come financial advisers who have been hired in the past three years as they build their book Another 35% to come from specialty verticals and the remainder to come from the legacy market growth. Our loan growth assumptions do not assume any change in line utilization rates or recent pay down or pay off levels. On the funding front, we expect total deposits to grow to $106,500,000,000 to $108,500,000,000 or up eight to 10% this year, driven by the previously mentioned recruiting, core commercial client growth, and momentum from our specialty deposit verticals that support our markets. Our adjusted revenue outlook is $5,000,000,000 to 05/2026, The net interest margin is estimated in the three forty five to three fifty five range, which assumes the immediate benefit of purchase accounting balance sheet marks and more near to medium term fixed rate asset repricing of the legacy Pinnacle loan portfolio. Those benefits are somewhat offset by an increase in balance sheet liquidity over the next several quarters and marginal headwinds from two twenty five basis point interest rate cuts as implied by the recent market expectations. We expect our initial balance sheet profile to be modestly asset sensitive, split between short rate and long rate exposures. We anticipate adjusted noninterest revenue of approximately $1,100,000,000 this year. Growth should be primarily attributable to continued execution in areas such as treasury management, capital markets, and wealth management, as well as a 125 to $135,000,000 in BHG investment income. Adjusted noninterest expense is expected to be 2,700,000,000.0 to $2,800,000,000 in 2026. We expect to realize 40% or $100,000,000 of our annualized merger related expense savings in 2026. Underlying expense growth should be driven by revenue producer hiring from the 2025 and continued hiring in 2026. Also, real estate expansion to support market growth as well as normal inflationary expenses. Excluding legacy Pinnacle equity acceleration costs, an estimated 450 to $500,000,000 of the $720,000,000 in nonrecurring merger related and LFI expense should be incurred this year versus $64,000,000 recognized in 2025. We continue to operate in a constructive credit environment We estimate that net charge offs should be in the range of 20 to 25 basis points for the year which is consistent with 2025 performance for the combined company. Moving to capital, we will target a common equity tier one ratio of 10.25 to 10.75%. Beginning in the first quarter, our quarterly common equity dividend will be $0.50 per share. Our priority on capital deployment remains client loan growth, The board recently authorized a $400,000,000 common share repurchase program that gives us flexibility to manage capital in multiple growth scenarios. Finally, we anticipate the tax rate should be approximately 20% to 21% in 2026. It is a privilege to lead this team at such a defining moment, with our above peer revenue trajectory and the growing benefits of merger related efficiencies, we expect strong earnings performance in 2026. I am more excited than ever about the road ahead. Together, we lay the foundation to build the best financial services firm in the country. We fully recognize that 2026 will bring its own challenges, especially as we prepare for conversion in the 2027. But we are more than ready for the task. Our momentum, unity, and shared ambition give me tremendous confidence in what we will achieve. And now I will turn it over to Terry for some closing remarks before we open the call for questions. Terry? Thanks, guys. Terry Turner: Me start here. As you listen to Kevin and Jamie, I hope you can see why I'm so fired up about what we've created with this merger. Next month will be twenty six years since we put our original founder group together to form a bank specifically to take advantage of the rapidly declining service levels at the large banks that dominated the Southeast at that time. All we had were some deeply held convictions about how you produce long term sustainable shareholder value. First of all, we intended to differentiate ourselves from the competitors based on distinctive service and effective advice. Of course, distinctive service and effective advice sounded like blah blah blah back then, and still does to many even today. I know as an investors, you've never had anybody say they intended to give poor service and bad advice, but truthfully, many do. According to Greenwich, with an 84% net promoter score, we've created the single best client engagement, not just in the Southeast, but in the country. And their data also suggest we've amassed the best relationship managers, the best treasury management capabilities, and the best credit processes in the Southeast. And that talent attraction model, which is proven to be the best in the Southeast, based both on the quantity of talent we've been able to attract and the quality of talent we've been able to attract goes forward in the combined firm under Kevin's leadership led by long term friend and partner Rob McCabe as the chief banking officer. Those proven credit processes that have provided best in class service from our client's perspective and such strong asset quality over decades, continue forward in the combined firm under Kevin's leadership led by Carissa Summerlin as chief credit officer going forward who was the chief credit officer for Legacy Pinnacle. Secondly, we intended not only to attract the best talent, but to excite and engage them in such a way so as to get their best effort. Their discretionary effort, which will always be better than the stereotypical scorecard management approach used by all of our peers. As a matter of employee engagement, Fortune Magazine ranks us as the third best financial services firm to work for in the country. Behind only American Express and Synchrony. Things like granting equity to every single employee so they feel like owners, and including every salary based employee in the annual cash incentive plan are critical to the reliability of our outsized growth that we produced for twenty five years. And, of course, all of that goes forward the combined firm under Kevin's leadership. Thirdly, one of our most important principles was alignment. Aligning shareholders with management and employees. I believe there's overwhelming evidence that shareholder returns are primarily correlated to only three metrics, revenue per share growth, earnings per share growth, and tangible book value accretion. And so at Legacy Pinnacle, all annual management and employee incentives were linked to revenue per share growth and earnings per share growth. Think about that. All 3,500 employees incented to grow revenue and earnings. Over our first twenty five years, we were the fastest revenue grower among banks greater than 10,000,000,000 in assets and the second compounder of earnings per share in the country. And of course, that same incentive methodology now aligns our almost 9,000 employees under Kevin's leadership. All around revenue and earnings growth going forward. And finally, we've always relied on the principle that expectations shape behavior. It wasn't just that we incented all our employees based on revenue and EPS growth rates. We always set our targets for revenue and EPS growth rates to be at least top quartile performance. Think about that. To have targeted top quartile revenue and EPS growth for twenty five years in a row, led to this extraordinary compounding of the metrics that matter most in terms of shareholder return, which again explains the fact that over our twenty five year history, we had the second highest total shareholder return of all the publicly traded banks in the country. And that same target setting methodology is continuing forward in the combined firm under Kevin's leadership. Frankly, we both have been asked if Kevin can run the Pinnacle model. I wanna make sure you understand that I know he can. He is my handpicked successor, and it's my expectation that executing this now proven model with his proven leadership capabilities will propel this firm to levels we would never have achieved on our own. Operator, we'll stop there and take questions. Operator: Certainly. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. In the interest of time, please limit yourself to one question and one follow-up. Your first question is coming from Ebrahim Poonawala from Bank of America. Your line is live. Ebrahim Poonawala: Hey. Good morning. Good morning. Guess maybe just starting at the top, Kevin and Terry, around with the module conversion systems conversion next year, Just talk to us two things. One, what can the combined bank not do today that it will be able to do a year from now post conversion? And secondly, as we think about the new banker hiring, new sort of client onboarding, how are you handling that in terms of are they coming on the new systems, old systems? Just color around all of that would be helpful. Thank you. Kevin Blair: Yeah. Ibrahim, this is Kevin. Obviously, as we move to conversion in '27, both companies will be operating on their existing legacy platforms. And so that doesn't encumber our ability to originate new business. It doesn't encumber our ability to be able to expand the share of wallet. We have been successful in both companies being able to use our existing system So there's nothing that's missing. What will change is that we'll move to an end state platform that takes the best best of both organizations. And so there will be capabilities that arise on both sides. When we move to the new platform, there'll be new capabilities, new functionality, new products that we'll be able to offer. So there's revenue synergies that come with that. In the interim, when we bring on, we we know which systems we are moving to when we have a client that's a more complex client, and we onboard them in '26, we're gonna onboard that client onto the end state platform and start to service that, relationship there. Versus having to do another conversion in '27. So the real challenge is you're just having to manage a workforce, a Salesforce that has two sets of products and two systems but it's not stopping our ability to grow the business. As it relates to hiring, again, same situation. As we bring on new team members, if it's in the legacy Pinnacle market, they would be onboarded onto the Pinnacle platform. If it's on a legacy Synovus market, they would, start to sell these Synovus products and use those systems. But again, we have lots of workarounds that we can leverage that it's not gonna create a bad client experience when we go to that, migration. The other thing I would just mention, Terry mentioned it in prepared remarks, the number one thing we're focused on is the Net Promoter Scores. And ensuring that our clients continue to receive that distinctive service and effective advice. And that all comes down to the people. So we can talk about the products and the technology, but the people are staying the same. And that's what builds the strong relationships. Ebrahim Poonawala: Got it. And I guess maybe just another follow-up on I think you mentioned the board approved a $400,000,000 buyback authorization. Give us a sense of when you think you would actually initiate buybacks? Is it more to do with if there's a pullback in the stock, you step in? Or should we expect some level of buybacks to resume starting as early as this quarter? Jamie Gregory: Ibrahim, it's Jamie. Great question. You know, first, first thing I would say is you know, we would love to be buying back stock at these prices. We think we think it's pretty attractive, but you know, as we look at capital ratios and look at, you know, our expectation is that we close the deal. And at 03:31, our CET one ratio is 10%. If you include AOCI, it's 9.8%. Looking at that ratio, we are fine with regards to internal stress tests. We're fine with how we expect CCAR or SCB or any of that to play out. We feel like we do have excess capital. From a headline number, we would screen low relative to category four peers. If you include AOCI at 9.8, we would screen higher than median compared to category four peers. But I kinda give that background as just the fundamental how we think about it. We do not want to screen, the lowest of of a peer group. We don't wanna be at the low end. So it's likely that we will accrete capital, for a time period. And just allow earnings to drop, to to our capital ratios as we go through early twenty twenty six. And then reassess. That's why we put that range of ten twenty five to ten seventy five out there. The one thing I will note is in the first quarter, you can see the capital waterfall The earnings impact of merger expenses, etcetera, will lead to you know, not a lot of capital accretion this quarter. So you should not expect to see share repurchases this quarter It's unlikely you would see them you know, in the second quarter. But then we will reassess as we get into later into the year. Ebrahim Poonawala: Helpful. Thank you both. Operator: Thank you. Your next question is coming from John Pancari from Evercore. Your line is live. John Pancari: Morning. I'm done. On the loan growth front, the loan growth projection implies a a nine or eleven percent range on a pro form a basis. Can you just kind of walk us through your degree of confidence in achieving this given the know, we're hearing the backdrop is getting a bit more competitive. There's a little bit of uncertainty around CapEx related demand. So I guess from a demand perspective as well as from a, underlying organic and the hiring perspective, can you help us just kinda walk through your confidence in achieving that target? Kevin Blair: You know, John, I it starts with, you know, not just talking qualitatively, but when you look at the fourth quarter for the pro form a company, we generated 10% loan growth already. And so to your point, our growth as we shared in the slide deck is gonna come from existing team members that are already in the market. The recent hires that we made in the last three years is well as our specialty growth businesses. And for me, you asked the question about just general client sentiment. We we do a quarterly survey in Legacy Synovus. The clients continue to remain relatively constructive. The backdrop, continues to have some uncertainty. It's no it's not lost on anyone that tariffs still play a risk factor for our clients, but we've seen the economic growth pick up. And when we queried those clients, they expect their business activity to pick up over the next twelve months. So part of that is being in the Southeast. We know we're in a great footprint. So I think our client sentiment is positive. There's still headwinds, but there's been this appetite for capital that I think was delayed resulting from the uncertainty that happened in '25 that we expect to get. But look, said this in the prepared remarks. Unlike other banks, we're not waiting for the economy to grow to be able to generate growth. past year, Jamie mentioned 217 new revenue producers. And although that number needs to go to two fifty on the Sunnova side, I was pleased that our our growth, picked up about 20% year over year. And as Terry said, the real opportunity is for Synovus to start hiring at the same pace that Legacy Pinnacle was hiring. Hiring. And that will generate some growth this year, but the real growth has come from the people that we've hired over the last three years. And and the embedded growth that will come from those individuals continue to build out their book. So I think it's a constructive environment. It will come from being able to hire folks. You've seen this I think we have all the tools, and resources to be able to generate the growth. As we've talked about in the past, the biggest headwinds have been unexpected payoff activities. And we've kind of built that into our forecast this year. Fourth quarter was no exception to that. We saw elevated pay down activities. But the first time, we actually saw a little bit of line utilization, help to offset that. So our production goals are not predicated based on economic growth. It's based on going from a bottoms up forecasting perspective, looking at what each individual can can bring to the table. And that gives us great confidence in being able to deliver that 9% to 11%. John Pancari: Got it. All right. Thanks, Kevin. That's helpful. And then separately on expenses, I know in December, I think, a conference disclosure, you you pushed back your timing of your cost save recognition from 50% in '26 to 40% Can you just remind us what that related to? Is there a risk of future delay in the recognition of the cost saves as you work through the integration. Jamie Gregory: Hey, John. It's Jamie. As we work through this merger, our prioritization first was let's get to close. And we were very successful having a Jan one close on on the deal. And when you, you know, because that moved as quickly as it did, it it basically pushed back some of the systems because they weren't as fast as the close. And so that delay in there pushed back a little bit of the call synergies. I would also say that we've been leaning in on some of the benefits associated with with the deal and and how we've, decided to take best in class benefits on both sides. But those two things really drove the 50% down to 40% on the year one cost saves. But you will note that we didn't change year two. We didn't change the total phase. So it's really a timing, difference. We feel really good about all of the merger math from there. I feel good about our ability to achieve those synergies. But it's really in year one. We just dropped it from the 50 to the 40. John Pancari: Got it. Alright. Thanks, Jamie. Appreciate it. Operator: Thank you. Your next question is coming from Jared Shaw from Barclays Capital. Your line is live. Jared Shaw: Thanks. Good morning, guys. Looking at the the fee income side, you know, what's what's embedded in the fee income guidance for the capital markets business And maybe just some color on how long you think it takes to integrate some of those so those fee income lines? Jamie Gregory: Yeah. Jared, it's it's a great question. I mean, I love that you're focusing in on capital markets because we view that as a big area of opportunity for us. Just in general, both Pinnacle and Synovus have had great success in growing fee revenue. If you look at 2025 and you combine the companies, you have over 10% growth in account analysis fees. You have over 10% growth in overall core banking fees. You have over 10% growth in wealth management fees. But in capital markets that you mentioned, that's been a great success. And and, you know, we've had over 15% growth in swaps, swap fees. But the capital markets platforms are a great area to show what are the opportunities for revenue synergies because we have, you know, the effectiveness of the, swap delivery We also have lead arranger fees and syndications that we can actually grow on both sides But then on the Pinnacle side, they're bringing to the table the ability, for m and a advisory, and that's something that's new to the Sunnova side. So we see strong growth in capital market fees in twenty twenty twenty six, consistent with kinda what you've seen in the past. Double digit growth. Jared Shaw: Okay. Thanks. I guess maybe shifting to the to the loan growth side or back to the loan growth side, you called out the ability to hold higher balances as a result of the bigger balance sheet. How quickly do those higher hold limits flow through? And if we look sort of the slide 25 drivers of loan growth, do you think of that as more part of the contribution from the existing legacy markets? Kevin Blair: That's correct. Yeah. So, Jared, you know, when you it it can happen immediately. I mean, we have new hold limits today. But as you can imagine, not every client needs additional capital above where they are today. But what we've done with our bankers is cross tabulate the current hold limits versus where our appetite is, and it shows where we have the ability to give more capacity to our clients, and we're gonna communicate that so that we're, we'll we'll be able to to generate incremental loan growth as a result of that. Starting this quarter and moving into the future. And I consider that we we included that in the bucket for revenue synergies along with just hiring because I think that's just blocking and tackling. That's allowing us to fully use the capacity of our balance sheet to meet our clients' needs. We're still gonna be, as Jamie said, in the lean arranger business. We're gonna be syndicating deals but there will be some incremental growth there that will allow us to grow loans. But you know, it's not big enough to call out an individual number. I think between hold limits and and utilization, which we would expect, although we didn't build it into our forecast given lower interest rates, we would think both of those areas would just serve as tailwinds to growth for '26 and beyond. Jared Shaw: Thanks. Operator: Thank you. Your next question is coming from Ben Gurlinger from Citi. Your line is live. Ben Gurlinger: Hi. Good morning. Good morning, Ben. Pretty clear that you guys are are are now clearly focused on the the Outlook, and you have a pretty high degree of confidence in the continued legacy Pinnacle hiring trends When you look at kind of what you see today in the market, disrupt disruption, it's not necessarily the legacy footprint of either one of you two, or is is there opportunity to kind of expand hires or even LPOs or is it or is is it something that's still in footprint only focused? I'm just trying to figure out where the the additional or incremental revenue producer might come from. Geographically? Well, look. You we've said we try not to highlight specific markets. It kinda let your competition know where you're coming to play. But I think you should think about any metro market in any of our nine state footprint provides us with an opportunity. And it's I would tell you that disruption is our friend. But the biggest opportunity we have is what Terry said earlier. Is continuing to make this a great place to work. And when, bankers evaluate opportunities to hone their craft, they wanna work for an institution that removes bureaucracy. They wanna work for an institution that allows them to do what they do best, which is serve their clients. And so the best tool we have is continuing to create a team member base that is actively engaged and becomes our biggest recruiters. Because when they join our company, everyone hears from, their peers. And and when they say what a great company it is, it just gives us the opportunity to continue to hire. So we'll hire across the nine state footprint. The biggest opportunity as you've seen on the slides, Pinnacle has been adding at an outsized pace and doing a wonderful job. Rob McCabe and his team have worked with our Synovus geographic leaders to install that hiring model. Which is not an overnight model. As Terry said in the past, we're not hiring headhunters. We're not taking, applications on LinkedIn. Identifying who the best bankers are in each market and continuing to call on those bankers. And, in really emboldening ourselves and showing why this is the best platform for them. So I don't think there's a big risk in generating 250 new hires this year. I don't think there's a big risk in generating 275 the year after that. I think there's adequate opportunity across the market. And that doesn't include where we could continue to expand some of our specialty offerings. Where you could bring on new teams and continue to add more errors to our quiver to support that geographic banking, model. So I'm very confident. And and what I've been impressed with told Terry this, the rigors of their model and the success factor is not by happen chance. It is because they are very good at what they do in identifying those prospects and continuing to follow-up and ensuring that they bring them onto the platform. Ben Gurlinger: Gotcha. That's that's helpful. So it's it's I mean, pretty confidence in in in the net loan growth. Outlook. Via those hires over the next two or three or four years, So I was I was kinda curious. In in terms of just kind of growth, generally, lead with a credit, and you get the whole relationship quickly thereafter. Jamie, if we're thinking about like, if loan growth starts to get overly accelerated, is there an area or avenue that you might gravitate towards rate dependent on kind of backfilling the funding side of that? Before the deposits arrive. Jamie Gregory: Well, you know, if if loan growth happens before deposit growth, which actually is somewhat consistent with the forecast because deposit growth is more back end loaded yes. We would use some higher cost sources to fund that growth. But all of that is embedded in our Everything that we're saying about our margin outlook, etcetera, include seasonality of deposit growth relative to loan growth and our expectations of these bankers that we've hired over years bringing their books over. So you know, it all holds together when you see the loan forecast deposit forecast, and then the underlying quarterly impacts. But, yes, you know, if if loans come in before deposits, yes, we will use, you know, wholesale funding to bridge the gap. Terry Turner: Know, I might just jump in and add, for clarity. I think on the hiring hiring, is what gives us confidence in the long term sustainability of the growth And if you look at the pace at which we're accelerating the growth in hiring, it's a really modest increase in 2026 and not a I wouldn't say a huge increase in 2027. So those are pretty reasonable targets. And what that has to do with is the long term sustainability of the balance sheet growth and, therefore, the earnings of the company. What gives us confidence in the short term ability to grow loans is the people that we have onboarded over the last three or four years. Those people are in the process of consolidating their books of business from where they used to work to us. And we're not looking for anything special. We're simply looking for those people to produce at average rates they have produced for twenty five years. And so, again, the confidence on the loan growth comes from the people that we have already on board. Ben Gurlinger: Gotcha. Thank you. Operator: Thank you. Your next question is coming from Bernard Von Jaszczyki from Deutsche Bank. Your line is live. Bernard Von Jaszczyki: Hey, guys. Good morning. Just just on the NIM, in your '26 outlook, you assume a range of three forty five to three fifty five. Inclusive of the purchase accounting accretion. I know back in mid December, you laid out in size the contributions from from the accretion, from the fixed rate asset repricing. And you know, offset by some of the the the debt and the adding securities, the liquidity measures you're doing. Given the changes you laid out, could you just provide updates there? Jamie Gregory: Yeah. As you look at the margin, the way I would think about it is clearly, the fourth quarter, had Pinnacle had a three twenty seven tax equivalent. Margin. For the Sunnova side, when you mark the book, when you mark all of our assets, you should expect to get to a margin in the three seventy five three eighty area. When you combine those two, you get to, you know, three fifty, low three fifties. And so that's generally how we think about these coming together. The yields on the Synovus book are a little bit lower than they we originally modeled, with the merger because interest rates have declined a little bit when you look at the belly of the curve. And so that's generally the math. That's why the CET one ratio at close will be a little bit higher than we we originally modeled It's why the PAA will be a little bit lower than we originally modeled. Bernard Von Jaszczyki: And then, just on the, the revenue synergies, on Slide 28, the 100,000,000 to 130,000,000 I know it's supposed to be realized over the next two to three years. Does that start you know, in 2027 post the completion of the integration process? Any color you can share? Kevin Blair: It it starts today. I mean, we're we're already working it. So our guidance that we provided for '26 would incorporate some of those revenue synergies as they materialize. Things like we talked about earlier, like hold limits being able to hire new folks, There are certain capabilities on the capital market side that we don't have to be on the same platform. Platforms. Syndication fees, FX. Those, those are being cross pollinated across our organization. And then when you add on some of these specialty verticals I've mentioned in the past, like equipment finance, The the Pinnacle legacy team is already calling in the legacy Synovus footprint. So instead of trying to give you a line item, reconciliation of all those, we'll start to incorporate those into our annual guidance. And we sit here today, I think we're as excited about the 100 to $130,000,000, and and we think we can exceed that target over the next three years. But, yes, the '26 guidance would incorporate the benefits that we see in these early stages. Bernard Von Jaszczyki: Okay. Great. Thanks for taking my questions. Operator: Thank you. Your next question is coming from Michael Rose from Raymond James. Your line is live. Michael Rose: Hey, good morning, guys. Thanks for taking my questions. Maybe just going back to the to the comment in the slide deck just around higher hold limits. I assume that just a step function of a larger balance sheet if you can kind of expand upon that, I mean, do you plan to kind of move upstream? Or is this just hey, we're going to do the same types of loans that we've always done on both sides? And then maybe just syndicate out, you know, less. Just trying to get some better color around that. And then secondarily, if you can just comment on outlook for some of the specialty businesses. I know that's been a big focus, at least Legacy Synovus over the past couple of years. What does that look like as we kind of move through this integration? Thanks. Yeah, Michael. I I think it's the latter of your question. I I don't think that it allowing us to pursue new opportunities up market. We've both companies have been moving up market with middle market banking some of our corporate banking initiatives that we've had in some of the specialty areas. What it really does is just increase that ability to have slightly larger hold limits on those clients. And so as I said earlier, we're not talking about major step functions. It's not doubling the size of the hold limit, but it gives us a little more capacity. And so what you should see from that is slightly, higher, loan size that we would keep on balance sheet. But again, we built a strong syndicated platform to be able to manage our risk overall. And so we'll continue to out some of the larger loans, but it just gives us a little extra capacity. As it relates to the specialty units, you know, as I've said in the past, both sides bring some unique businesses to the table. I get really excited about the equipment finance area, the auto dealer, business that Pinnacle has been building. On the Sunnova side, we have things like asset based lending, structured lending. We have a family office on the wealth management side. Those organizations are working across the broader organization to make sure that their capabilities are well known. And when we have an opportunity to introduce client, we're gonna make those introductions. And so we haven't gone through and shared what the individual growth of each of those businesses will be. But I can tell you, a large portion, as you saw in the pie chart, of our loan growth will come from those specialty businesses. And it's just from the introduction to the other side's footprint and a client base that we haven't called on in the So again, excited about it. We've been having sales meetings on Mondays. Where those individuals have been working to share their products and capabilities, and there's already been joint calling efforts. So we're well underway there, and again, it's gonna generate a large percentage of our growth as we look both on the loan side as well as the deposit side, we have some deposit verticals that we've been focused on that we'll be able to introduce to the to, the other legacy, bankers. Very helpful. And then maybe just as a a follow-up. I know there's some debate about if the asset thresholds get lifted here at some point. I know you guys have some onetime costs built in for that. But you know, those rules do get changed, I assume you'll still use some of that, but I assume some of it that you probably wouldn't or you could slow that pace What would you do with those extra dollars? Would it be kind of further acceleration on the hiring front? Is there other projects or systems that you'd you'd like? I know we're not talking a huge number, but certainly would be helpful for any color. Jamie Gregory: Yes, Michael. Those costs, as we look at it, if a 100,000,000,000 was raised and it was not in our near term horizon with strong organic growth, we would still do the data work we're doing now, which is a large portion of that expense. And so you know, we will still incur a good bit of that expense that we've modeled out even if if that's increased. We would surely save on some headcount in our back office functions. But but we would still continue the work on the on the data side But when you think about what will we do with those expense dollars I I guess I would just reframe that and say that we will spend for good hires with or without those savings from, you know, LFI changing. And so we're gonna lean in to hiring the right talent because we see the, the value to long term sustainable growth, long term sustainable growth in assets and tangible book value. And that's our strategy. So I just would disassociate the savings from LFI or really anything else with the hiring because you know, we are leaning into that really in all scenarios. Michael Rose: Okay. Great. Thanks for taking my questions. Kevin Blair: You, Michael. Operator: Thank you. Your next question is coming from Catherine Mealor from KBW. Your line is live. Catherine Mealor: Thanks. Good morning. Jamie, talked in your prepared remarks about some restructuring that you've already done to the bond portfolio. Can you talk to us a little bit about what you're expecting in terms of the timing for further build in liquidity as we move through '26? Just trying to frame you give us loan growth expectations, but trying to think about what the size of the bond book could look like over the course of the year and how average earning asset growth will build through the year. Thanks. Jamie Gregory: Yep. It's a great question, Catherine. And first, I'll give a little bit of color on the trade. So I mentioned it on the call, but we did a $4,400,000,000 swap in the securities portfolio The way I would think about the securities portfolio from legacy Synovus is our book yield was about three fifty coming, you know, at the end of the year. When you marked it to market you got to about a four forty yield on the securities portfolio. And then we did the repositioning. And the repositioning did multiple things. First, we shortened duration. Second, an improved, liquidity, high you know, HQLA improved. Third, it reduced risk weighted assets Fourth, it eliminated 98% of the PAA associated with securities portfolio. So it achieved a lot of objectives to us. I mean, we're trying to reduce AOCI volatility. We're trying to reduce, PAA. All those things played out with this repositioning. So we're very pleased with how that happened. Those trades, because we did shorten duration, reduced the legacy Synovus security yield to about four thirty five. So when you bring those together, you get a securities portfolio that has a nominal yield of around 4%, a tax equivalent yield of around four fifteen. And so that's kind of where we are in the securities portfolio. As we proceed, through 2026, we do have debt issuances in the forecast. You know, we're contemplating a couple debt ish ones that could be a billion dollars this calendar year. Likely two different issuances. One in the first half, one in the second half of the year. And that's embedded in there. Now consistent with the prior conversations, the impact to average earning assets just depends on the growth of loans and deposits and how all that plays out. But that's at a high level how we're thinking about 2026. Catherine Mealor: Right. Because you still put that $1,000,000,000 of debt in into the '26 number. Feels like. That's right. Jamie Gregory: That's right. Okay. Great. Okay. Catherine Mealor: That help that that's really helpful. And then maybe within that on on deposits, they both on a legacy basis, Pinnacle and Synovus, had a had a nice reduction in deposit cost. Those came in on to better than I was expecting, so that was was great to see. And so maybe can you help us think about as you see this accelerated growth into next year, and I know rates are moving, but let's just kind of on a static basis, where are kind of new deposit costs coming in today, and where should we expect maybe on a pro form a basis deposit cost to kinda settle in outside of any kind of move big move in rates on a pro form a basis. Kevin Blair: So we look at just like the going on rates this quarter, Catherine, on the Sunnova side, it around $3.14, a little higher on the on the, Pinnacle side. But yeah, we expect those to continue to come down. Obviously, we built into rate cuts Just quarter on quarter, our rate paid was off about 30 basis points. So it's still a rational pricing market where, you know, where where you're seeing continued competitive tension is when you're going after high rate CDs. And I think both sides have really rationalized our demand for those. But as we go forward, as Jamie said earlier, part of our growth story is relying on these bankers to bring over their relationships when when when they get the loan. So we're not having to go out and rely on promotional deposits to have to generate the $8,000,000,000 in deposit growth this year. So think you would continue to see those going on rates come down as rates come down. And we'll be very thoughtful. As we've said in the past, can grow deposits as much as we would like. It's just at what rate. And and we're trying to grow them at a marginal rate I always like to give you this from a Sunnova standpoint. When you look at loan rates, for the quarter, we are at $6.23. Deposits, as I said, at $3.14. So you're still getting almost a three ten basis point spread on your new production which, again, we monitor that just to make sure that we're balanced in how we think about the going on yields for loans and what we're having to pay for deposits. Catherine Mealor: Great. Very helpful. Thank you. Jamie Gregory: Thank you. Operator: Your next question is coming from Casey Haire from Autonomous. Your line is live. Casey Haire: Great. Thanks. Good morning, everyone. I wanted to circle back on on the recruiting strategy. So the I think you guys mentioned 41 hires in the fourth quarter. Just wondering what the the success rate was on that. I think it was 90% historically. And then just looking forward, you know, what is the pipe looking like as you guys target two fifty this year? You know, how many offers do you have outstanding? Thanks. Terry Turner: Yeah. I would say on the, success rates or the kill rates for hiring, it remained roughly the same as it has, as it was all year. You know, the average number hired resembled the average for the year. The kill rate was similar for the year. I wouldn't detect any particular difference in our success at closing the recruitment cycle and turning them into hires. I think as we go forward, you heard, what Kevin said, This methodology is just it's just that. It's a routine methodology that we have run for an extended period of time, and it feels like it will produce I would say at least what we've committed, in in our guidance there. Again, if you look at the relative increase for 2026 over 2025, it's pretty modest increase with at least for me, I don't feel like we've hung ourselves out on on some big, big lift here. But, anyway, that that's my thought. Kevin Blair: I don't care if you wanna spot on. And and, look, again, you you don't have to go to the legacy Pinnacle leaders and ask them about their pipelines. They they work them three times a week. What's changing is, you know, our legacy Synovus team is starting to exercise that same process. And they're building their pipeline. So it won't that's why we said over time, that Synovus and twenty six would still lag the hiring that happens at Pinnacle. But by '27, we expect both sides to be adding a similar rate just based on that that building of the pipelines. And I've had the opportunity to be on a lot of, recruiting calls in the the last thirty days, and I can tell you that that they're not slowing down. People wanna be part of this company And ultimately, they have validation from the people that have already joined that this is a great place to work. I I joke with Terry all the time when I talk with the folks at Pinnacle. That have just joined. I said, how's it going? They said, I wish I had joined ten years ago. That's the number one answer I get from those folks. Casey Haire: Okay. Great. And then just so you guys restructured the the Synovus bond book. Just anything else that that you guys are kinda entertaining as you look at the pro form a balance sheet and maybe some updated thoughts on the BHG liquidity event given what's a pretty favorable backdrop for them? Jamie Gregory: You know, we we have a lot different things that we are working on the background on the balance sheet, but it's really too early to to think about you know, whether or not they're they're viable or you know, attractive to us. None of which are are that material to to their earnings outlook. And so we will continue to to look at options to either improve liquidity of the securities portfolio or, you know, reduce risk weighted assets or any anything similar to what we've what we've done in the past. With regards to BHG, you know, those that the team down there just continues to deliver. You can see that. With their performance in 2025. You can see it with the outlook we have in 2026. If you look at the fourth quarter of fee revenue, from BHG, we we had 30,000,000 in in the fourth quarter. Including a true up of $5,000,000 from the third quarter BHG earnings. And so to use the baseline $25,000,000 in the fourth quarter, that's really strong growth as you play it out through 2026. I mean we're talking 25% to 35% growth for for the company. So they continue to perform. And I I go through all that because it just shows that they are focused on their core business. They're focused on growing it, adding value. I think, you know, you know, what whatever they do with liquidity event or how they approach that, all I would just say is that they are positioning themselves well for you know, choosing their own destiny with regards to that. Casey Haire: Great. Thank you. Operator: Thank you. Your next question is coming from Anthony Elian from JPMorgan. Your line is live. Anthony Elian: Hi, everyone. Jamie, on slide 20 through 23, could you provide us with the updated assumptions specifically on the loan marks for 2026? You have a comment in the footnote that says you shifted the mark to longer duration loans, but I'm curious if you could give us some sensitivities to NII if you shift the loan mark back to a shorter duration. Jamie Gregory: Yeah. You know, as we look at our current expectation for the loan marks, we believe that approximately two thirds of the PAA is going to come from residential mortgages, which are clearly long long duration. And so that's the shift that we're referring to there. I would not expect these marks to move materially between products between now and finalization, but that's something that the team continues to work on. And that's that's what basically reduces that PAA benefit, that plus the rate decline in 2026. Anthony Elian: Okay. And then my follow-up I'm curious, could you give us updated thoughts on deposit beta going forward for combined company, assuming the forward curve plays out this year? Thank you. Jamie Gregory: Yes. If you look at the blended deposit beta, in this easing cycle, to now. For both companies combined. You get to about a 48% deposit beta. And when we look forward at the next two cuts, which is our current expectation, we think that a 45% to 50% deposit beta is appropriate for the rest of this year. And clearly, there's a lot of uncertainties that go into that with deposit mix and and pricing and you know, what the Fed actually does. But we think that that's a reasonable assumption, and that's what we're working towards in '20 Thank you. Operator: Thank you. Your next question is coming from John McDonald from Truist Securities. Your line is live. John McDonald: Hi. Good morning. Thanks. Lots of good thoughts on the '26 outlook. Thank you. As we pull up a bit and think about the long term promise of the merger and the case for the stock, could you share some thoughts on the long term earnings power of the company? At announcement, you showed an illustrative EPS of 11.63 using consensus 27. As a base. So maybe just any updated thoughts on that or broadly any puts takes against that or we might think about the The most profitable regional bank, the most efficient regional bank, and the bank that has the highest level of client service that's what gets me excited. Kevin, it feels sustainable over time to me, which is an important idea. I talked about it a minute ago, but the fact that we've already hired people that produce the growth that's immediately in front of us is important. The fact that we can continue to hire people sustains the growth over an extended period of time. And when you put that on top of the footprint, which is the most advantaged footprint in The United States, and then look at the market share vulnerability chart, it just hard to keep me from being excited about what the long term earnings opportunity are for this company. John, you're you're we're passionate about that that that question. John McDonald: Thank you. That's really helpful. Makes sense. Maybe one follow-up just to clean up some credit that have come in. Jamie, just in the world where there's no CECL double count, how does the mark kind of affect, you know, provisioning going forward? Does does taking that mark you know, pre provide for some losses and let you provide a little less and maybe just where the loan loss ratio is starting and how should we think about provision relative to charge offs going through '26? Yeah. John, you know, just think it as you would normally think about it where you know, the the allowance we have today, we we expect to kinda stay in this same area. Given our outlook of of allowance to loan ratio. The only you know, areas where I would say it it kinda prefunds charge off is if it if it's for something that we see in the near term. If you have a specific reserve on on a loan, And so I would just think of it as normal going through 2026. Okay. And then flattish charge offs in the first quarter, you you both had, some in individual kind of one offs in the fourth quarter. Are there still some cleanups that happened in the first quarter? Or maybe just comment on Yes. I mean, look, I think if you step back and look at this quarter, noted a couple of items, not because they're discrete, but we just wanted to provide some attribution for what drove the charge off levels. I think it's important to note if you look at pro form a charge offs, it would have been roughly 25% or 25 basis points for the combined company. And as you saw, our full year guidance is still 20% to 25 But, you know, we're we're working through a couple credits to your point. That we've already reserved for and and likely taking charge offs in the first quarter. So we just expect the levels to stay stable versus where they were this quarter. But we are not seeing anything that's indicative of any systemic change, any asset classes. It's really kind of a status quo for for charge offs. But the first quarter will will kind of be stable with where we're working for. John McDonald: That's clear. Thank you. Operator: Thank you. Your next question is coming from David Chiaverini from Jefferies. Your line is live. David Chiaverini: Hi. Thanks for taking the question. So you mentioned that loan growth should accelerate through the year. Is it reasonable to think kind of mid to high single digit in the first half of the year? And kind of high single to low double digit in the second half of the year? Any any color there would be helpful. Jamie Gregory: Yes. I think that's reasonable. And it's reasonable just based on, as Terry said earlier, as the portfolios continue to be moved over from new hires, it will build throughout the year and and it will accelerate. So I think mid single digit to high single digit in the first half and then accelerating to double digit in the second half. David Chiaverini: Helpful. Thanks. And then in terms of loan pricing, can you talk about any changes in spreads that you've observed in recent months? Jamie Gregory: You know, this quarter, we saw about a 10 basis point decline in spreads versus our internal transfer pricing. So just think about a one and ninety spread on production. That compares to about a 200 basis point spread that we had seen for the first three quarters. So some of that has to do with mix. And the size of we moved up market with our production this quarter. I think maybe that's what's lost and and hopefully I can highlight that now is our production for the combined companies was up 63% versus the same quarter last year. So back to hitting on all cylinders, the team's producing. Some of those loans were in in, kind of our upper market businesses that generally carry lower spreads. But about a 10 basis point decline I you know, we've we've said that that's been a trend that we've been monitoring. I think it's with our expectations, and our guidance for next year would include spreads in that general range. David Chiaverini: Helpful. Thank you. Operator: Thank you. Our next question comes from Christopher Marinac from Janney Montgomery Scott. Your line is live. Christopher Marinac: Hey. Good morning. Just real quick on deposit incentives. Are these any different for the combined company as it would have been separate at Pinnacle and Synovus? Just curious on how deposit incentives are compared across the new company. Kevin Blair: It's what Terry said earlier. Chris, our company is going to be everyone will be incented on the same measurements, which is revenue growth and EPS growth And it's our job as the leadership team to ensure that deposit growth is a key component of that and being able to manage our margin. So everyone's incented on the company making its top of house goals. There are no individual incentives for production any longer, and people won't be focused on filling buckets or meeting a scorecard. It's all gonna be based on top of house. And it's our job to make sure, as I said earlier, that 8 to $9,000,000,000 in deposit growth And support our path forward. For both of you, truly, a job exceptionally well done. With that operator, I'd like to conclude today's call. Thank you for joining us today. That concludes the Pinnacle Financial Partners fourth quarter 2025 earnings call. Have a good day.

107天前Insight Analytics约5分钟阅读

COLB 2025 Q4 财报电话会议

Operator: Hello, and thank you for standing by. Welcome to Columbia Banking System, Inc. Fourth Quarter 2025 Earnings Conference Call. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. At this time, I would like to introduce Jacquelynne Bohlen, Director of Investor Relations, to begin the conference call. You may begin. Jacquelynne Bohlen: Thank you, Towanda. Good afternoon, everyone. Thank you for joining us as we review our fourth quarter results. The earnings release and corresponding presentation are available on our website at columbiabankingsystem.com. During today's call, we will make forward-looking statements, which are subject to risks and uncertainties and are intended to be covered by the Safe Harbor provisions of federal securities law. For a list of factors that may cause actual results to differ materially from expectations, please refer to the disclosures contained within our SEC filings. We will also reference non-GAAP financial measures and I encourage you to review the non-GAAP reconciliations provided in our earnings materials. I will now hand the call over to Columbia's Chair, CEO, and President, Clint Stein. Clint Stein: Thank you, Jackie. Good afternoon, everyone. The fourth quarter marked a strong end to a tremendous year for Columbia Banking System, Inc. We continued to advance our strategic priorities while delivering solid operating performance and consistent, repeatable financial results. During 2025, we announced and closed our strategic acquisition of Pacific Premier. As I have stated many times, PAC Premier was the missing puzzle piece to complete our Western footprint. The acquisition bolstered our position as the preeminent regional bank in the Northwest and improved our competitive position in other key Western markets, most notably Southern California, where we now hold a top 10 deposit market share position. We remain on track for another seamless systems conversion this quarter, supported by our highly experienced team of associates, meticulous planning, and successful integration activity to date. I am very pleased with the cultural integration I have witnessed over the past several months as well. Our new team members from PAC Premier continue to impress with their unrelenting focus on taking care of customers while adapting to Columbia's products, policies, and processes. We also contributed to our operational momentum through de novo growth, opening new locations in Arizona, Colorado, California, and Oregon during 2025. These investments reflect our commitment to expanding our presence throughout our entire footprint. We have planned for continued targeted de novo activity in 2026, investments funded by resources set aside from our 2024 expense initiative and other efficiency opportunities. Turning to the fourth quarter, Columbia's operating results were once again consistent and repeatable, underscoring our focus on operational enhancement and top quartile and in some cases, decile performance. Fourth quarter operating PPNR was up 27% from the third quarter, as our focus on profitability and balance sheet optimization was enhanced by the full quarter run rate of PAC Premier. We are already seeing that momentum carry into 2026 with the continued realization of deal-related cost savings and healthy customer pipelines across each of our business units and geographies. Our teams remain focused on the activities that drive business with new and existing customers. Our ongoing balance sheet management strategies are enhancing the quality of our earnings and driving strong internal capital generation. Our disciplined approach to balance sheet management encompasses our prudent credit underwriting and proactive portfolio monitoring. Our fourth quarter metrics highlight our strong credit profile, which remains stable throughout 2025 as we were untouched by external events that negatively impacted some of our peer banks. Looking forward to 2026 and beyond, we will continue to prioritize profitability over growth just for the sake of growth. Our priorities have not changed. We remain focused on optimizing performance, driving new business growth, supporting the evolving needs of existing customers, and consistently delivering superior financial results for our shareholders. Our bankers have worked tirelessly to generate consistent, repeatable earnings for eight consecutive quarters. Consistency has long been a historical trend for Columbia, and we expect that trend to continue as we go forward. I want to thank our associates for another incredible year. Your dedication and passion to be the best drive our success. I could not be more excited about the opportunities ahead. Together, we are building a stronger, more dynamic Columbia, one that delivers lasting value for our customers, communities, and shareholders. We will now turn the call over to Ivan. Ivan Seda: Thank you, Clint, and good afternoon, everyone. As Clint highlighted, the fourth quarter completed a strong year for Columbia Banking System, Inc. On an operating basis, which excludes merger expense and other items detailed in our non-GAAP disclosure, fourth quarter pre-provision net revenue and operating net income increased 27% and 19% respectively compared to the prior quarter, while full-year 2025 results rose 23% compared to 2024. These improvements reflect four months of operating as a combined company following our acquisition of PAC Premier, as well as our continued emphasis on balance sheet optimization and disciplined expense management. Focusing on the fourth quarter, we reported EPS of $0.72 and operating EPS of $0.82, increases of 6% and 15%, respectively, from the prior year's fourth quarter. Net interest margin expansion and the corresponding increase in net interest income was a key driver of earnings performance. Net interest margin was 4.06% for the fourth quarter, up from 3.84% for the third quarter and 3.64% for 2024. Slide 19 of our earnings presentation outlines the contributors to the 22 basis points sequential quarter expansion, with improved funding performance serving as a primary factor alongside continued earning asset optimization. Having reduced wholesale funding by nearly $2 billion during the third quarter, the fourth quarter results reflect the full benefit of these actions alongside two additional months of operating as a combined company. Net interest income during the fourth quarter also benefited from $12 million in premium amortization related to acquired time deposits, which we anticipated and highlighted last quarter, and $5 million from an accelerated loan repayment, contributing a combined 11 basis points to the margin. The premium on time deposits was fully amortized as of year-end, and it will not repeat in 2026. Noninterest income was very strong in Q4, with $90 million on a GAAP basis and $88 million on an operating basis as detailed on Slide 21. Of the $16 million sequential quarter increase in operating noninterest income, $13 million reflects two additional months of PAC Premier, and the remaining $3 million was driven by higher customer fee income, most notably in swap and syndication banking revenue, representing a high watermark for those revenue streams. Slide 22 outlines noninterest expense, which was $373 million on an operating basis. Of the $66 million sequential quarter increase, $62 million relates to PAC Premier inclusive of cost savings. As of year-end, we achieved $63 million in annualized deal-related cost savings, or approximately 50% of the targeted $127 million. Although these savings were not fully run-rated in the fourth quarter's result, excluding CDI amortization expense of $42 million, operating noninterest expense of $331 million was at the lower end of our $330 million to $340 million range that we signaled in our last call. Certain investments fell back into 2026 from a timing perspective. Flipping back to slides 16 and 17, provision expense was $23 million for the fourth quarter, reflecting low portfolio loan portfolio runoff, credit migration trends, and changes in the economic forecast used in our credit models. Our credit metrics remain stable and healthy, and our allowance for credit losses was 1.02% of loans at quarter-end and 1.32% of loan balances when the credit discount on acquired loans is factored in. Continuing with the balance sheet, our investment securities portfolio is outlined on slide 11. The portfolio increased by approximately $100 million during the fourth quarter. We purchased $246 million of securities at a weighted average base yield of 4.52%, partially offset by paydowns. Gross loans and leases were $47.8 billion as of December 31, down from $48.5 billion as of September 30, as we continue to allow below-market rate transactional loan balances to decline alongside declines in our CRE construction and development portfolio. Chris will discuss loan portfolio trends in greater detail shortly. Total deposits were $54.2 billion as of December 31, compared to $55.8 billion as of September 30. During the fourth quarter, we intentionally reduced brokered and select public deposits, which collectively declined by over $650 million as alternative funding sources offered more attractive rates. Seasonal customer outflows, which Chris will discuss, also contributed to the decline. To supplement funding, term debt increased to $3.2 billion as of December 31. Slides 20 and 25 review funding flows, our balance sheet sensitivity to interest rate changes, and maturity and repricing schedules. Turning to capital, slide 18 highlights our expanding ratios supported by net capital generation and balance sheet optimization. During the fourth quarter, we increased our common dividend to $0.37 per share from $0.36 per share and repurchased 3.7 million common shares at an average price point of $27.07. Even with the execution of our buyback activity, we saw CET1 and total risk-based capital ratios increase to 11.8% and 13.6%, respectively, as of December 31. Tangible book value increased to $19.11 as of December 31, up 3% from the prior quarter and 11% from the prior year. Looking forward, we expect net interest margin in the first quarter to land in a range from 3.9% to 3.95%, consistent with what we indicated on our last call. This change reflects the absence of the 11 basis point benefit in the fourth quarter from acquired CD premium amortization and the accelerated loan repayment activity that I discussed earlier, as well as higher wholesale balances added to the balance sheet in the latter part of December resulting from seasonal deposit flows. After bottoming out in the first quarter, we expect net interest margin to trend higher each quarter throughout 2026 as customer deposit balances rebound and balance sheet optimization actions continue to improve profitability, ultimately surpassing 4% net interest margin in the second or third quarter of the year. As we saw this past quarter, our continued balance sheet optimization activity may lead to earning asset contraction during the first quarter. We have maintained a conservative level of excess liquidity following the Pacific Premier acquisition, and we may reduce excess cash to further optimize our funding structure by repaying wholesale sources. Following these actions, we expect the balance sheet size to remain relatively stable, with commercial loan growth offsetting contraction in the transactional portfolio. Excluding CDI amortization, we expect noninterest expense to remain in the $335 to $345 million range in the first and second quarters, before declining modestly in the third quarter as we realize all cost savings related to Pacific Premier by the end of Q2. CDI amortization will average around $40 million per quarter. We expect to increase share repurchase activity to a range of $150 million to $200 million per quarter in 2026. $600 million remains authorized under our current plan. We ended the year with over $600 million in excess capital on our most constrained measure. Overall, we are very pleased with the financial results for the fourth quarter, driving over 1.4% ROAA and over 17% return on tangible common equity, and we feel very well positioned to continue to drive strong profitability as we move into 2026. I will now hand the call over to Chris. Christopher McGratty: Thank you, Ivan. Our teams had another strong quarter of business generation. New loan origination volume of $1.4 billion was up 23% from the year-ago quarter, while full-year 2025 volume was up 22% from the previous 2024. As a result of this activity, Columbia's commercial loan portfolio increased 6% on an annualized basis, although the growth was offset by a decline in transactional loan balances and construction and development loans. We also sold $45 million in acquired loans risk-rated special mention as we continually prune our loan portfolio. Slide 24 in our earnings presentation provides additional balance and repricing details related to transactional loans. We continue to expect this portfolio to amortize down until loans reach their repricing date, limiting our net loan portfolio growth but improving our profitability. Turning to customer deposits, the strong growth momentum from the third quarter carried into October, bolstered by our successful small business and retail deposit campaign, which ran from September through mid-November and added $473 million in low-cost deposits. Inclusive of the two campaigns completed earlier in 2025, Columbia generated $1.3 billion in new customer deposits through three successful campaigns. Returning to the fourth quarter, customer deposit balances contracted due to seasonal decreases in customer accounts, driven by company distributions, tax payments, and other typical year-end payouts. We expect modest additional deposit contraction during the first quarter and into April given anticipated customer tax payments, with net growth resuming in the spring as business activity accelerates and seasonal payments end. As Ivan discussed, customer fee income increased for the fourth quarter. This was driven by the addition of PAC Premier and our continued efforts to expand the contribution of core fee income to total revenue. On an operating basis, noninterest income increased 26% in 2025 over the previous year, with exceptional growth in treasury management, international banking, financial services, and trust revenue, along with strength across other core fee businesses. PAC Premier's custodial trust business has been a powerful complement to our existing wealth management platform, and we expect continued fee income momentum as we deepen customer relationships with legacy PAC Premier customers. Our loan, deposit, and core fee income pipelines are healthy, and we remain outwardly focused on generating business in a disciplined manner. I will now hand the call back to Clint. Clint Stein: Thanks, Chris. The past several years have brought significant change to Columbia Banking System, Inc. 2023 was a year of widespread integration following the closing of the Umpqua acquisition, which impacted every associate at each legacy organization. We collectively managed through industry liquidity events that occurred in tandem with the deal's elongated closing and our scheduled systems conversion. 2024 was a year of efficiency initiatives. Our full-scale review resulted in consolidated positions, simplified organizational structures, and an improved profitability outlook. In 2025, we added the missing piece to our Western footprint with the PAC Premier acquisition. We continue to invest a portion of 2024's cost savings into de novo locations in targeted markets. In addition, we added new talent throughout the company, launched new products, and implemented new technology, all with an eye towards improving operational efficiencies and growing revenue. We also made significant progress optimizing our balance sheet as we increased capital return to our shareholders by repurchasing shares. As we look to 2026, we have set the stage for an exciting future. We are now positioned to deliver on the full capabilities of our company with the resources, talent, and vision to excel in every market we serve in the pursuit of long-term shareholder value creation. We expect to continue to generate meaningful excess capital and fully intend to return that excess to our shareholders. This concludes our prepared comments. Chris, Tore, Ivan, and Frank are with me, and we are happy to take your questions. Towanda, please open the call for Q&A. Operator: Thank you. Then wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jon Arfstrom with RBC Capital Markets. Your line is open. Jon Arfstrom: Thanks. Good afternoon, everyone. Hi, Jon. Hey. Congrats on the Chairman role, Clint. First of all. Clint Stein: Thank you. Jon Arfstrom: Yep. I guess, maybe to start this, can you talk a little bit more about PAC Premier? You referenced it in your prepared comments, but it you know, it's showing up everywhere in the P&L and you talked about it as a missing puzzle piece. Can you talk about how it's going so far and what kind of contributions you've seen so far in terms of growth? Clint Stein: Yeah. I'll kick it off and then ask Tory and Chris both to offer their insight as well. You know, I've said on previous calls and in various discussions from the very first week that we announced this, how this one was different and how the folks at PAC Premier showed a level of excitement that typically you don't see initially, or at least not widespread, like what we experienced in the days and weeks following the announcement. And then typically, it's an emotional time for people as change can be hard. And so there can be a little bit of ebb and flow in terms of emotions, and we've seen none of that. Nothing but excitement, embracing the ability to do more with their long-standing and very deep customer relationships. Excitement of being part of this broader company that has a footprint and reach throughout the Western US. So you know, we work really hard at it. We have some great leaders that joined us from PAC Premier that we're working hard every single day to make sure they're taking care of their people, care of their customers, and managing through the change. And, you know, the last hurdle that we have is the systems integration. And you know, we have a very seasoned team as well as PAC Premier. Has had a very seasoned team, both Columbia and PAC Premier. I think on a combined basis over the last fifteen years have done 20 plus systems conversions and integrations. And so that talent has been hard at work, completing mock conversions and all kinds of other detailed work that goes beyond the scope of my knowledge. But I can tell you that the two co-leaders of the integration management office, we were on a call on Tuesday, and they look very calm, rested, and confident in their ability to execute on the task that's at hand. So I'm gonna step back and ask Tory to provide a little more detail on what he's seen as he's been throughout the market and in front of customers more recently than I have. Torran Nixon: Great. Thanks, Clint. And Jon, just to give a slightly a little bit more color, Clint said, I mean, enthusiasm and excitement from the PAC Premier folks has just been amazing. I mean, it's been centered in kind of three different areas. One is the ability to grow with their existing base. So as those customers get bigger, they get to do more stuff with them. Second would be to call on larger customers, I think, than they historically have on the commercial side of the house. They're continuing to do what they've always done, but they're kind of slightly going up market, which has been fun for them and great for the bank. And I think the third is just providing more products and services for the customers based on the capabilities that we have as a new company. I'll give you a couple of examples because we look at these often and they're kind of fun to see. I mean, they have a law firm that they brought into the bank with $22 million in credit and $20 million in deposits. They brought in an environmental remediation company, about $200 million in revenue, much bigger than they would historically call on, with a $10 million credit facility and $10 million in deposits. Got a surgery center, again, something bigger than they would normally call on, with $40 million in deposits and $15 million in credit. And then lastly, they had a construction contractor that they banked for a while that expanded their credit facility and they added $20 million and got up to a $60 million credit facility. So just some great examples I think of the PAC Premier folks embracing our new company and seeing the opportunity in front of them and seizing on it. It's been really fun to be a part of. Christopher McGratty: Hey, Jon. This is Chris. I'll add well, I'll echo the excitement. That has not waned one bit. You know, the quarter was full of training on our relationship strategy and getting people ready. And we've talked previously about the number of referrals that were coming in across all different business lines. Tory gave you some really nice, larger ones there, but it's very granular as well. And I think another piece is we really started digging in and seeing how the deposit portfolio, which we said was similar to ours, has really held up and the customers are behaving in that manner. And so that's a real good indication that everything we thought in that space is playing itself out. And I'll close you with the training's there, getting ready to go. And later this quarter, we'll launch another retail campaign, and I can't wait to see the results of that. So it's pretty exciting. Jon Arfstrom: Okay. Good. Thank you for that. And then, just a small one. Ivan, thanks for the guidance, by the way. What is a modest step down in earning assets mean? Can you help us frame that? Ivan Seda: Yep. Certainly can. So we ended the quarter with earning assets at around $61.3 billion. And as we look out into Q1, our expectation at this point is that HFI loans stay roughly flat to modestly down relative to our ending balance. We just published at $12.31. I mentioned it earlier, we will likely see some modest decline in our cash balance levels as well relative to where we finished up the year. Just in that, we've been holding an excess there for the last few months following the PPBI close. So that will impact earning assets. Obviously, it won't impact net interest income in regard to that. So I would signal a range probably in the $60.5 to $61 billion range for the first quarter of this year. Jon Arfstrom: Okay. Good. Thanks for your help, and good luck for the whole good weekend. Operator: Thank you. Our next question comes from the line of David Feaster with Raymond James. Your line is open. David Feaster: Hi. Good afternoon, everybody. Torran Nixon: Hey, David. David Feaster: I wanted to maybe kind of follow-up kind of on that growth side. I mean, obviously, we had a lot of payoffs and paydowns this quarter. I'm curious maybe how much of that was intentional runoff versus, like, normal payoffs and paydowns just being elevated and then just you know, as you look at those transactional relationships, I mean, we got $2.8 billion. How much of that do you think you can retain, or would you expect a majority of that to exit the bank? Ivan Seda: David. Ivan here. I'll start, and then I'll hand over to Tory for maybe more of the color commentary. When you think about that loan decline at $680 million quarter on quarter, I really break it down into two major buckets. First is what you referenced earlier, which is that transactional portfolio decline. Just under $300 million. And then the second really being very concentrated within the commercial real estate construction and development portfolio. And Tory will speak a little bit more to that aspect of it. Within the transactional book, so far, we're seeing CPRs at kind of an 11, 12, 13% type level. As we've been tracking it over the last quarter. We do believe that'll move a bit quarter on quarter depending on what's coming up for repricing. We've got $4 billion of that book that will be maturing or repricing here over the next twenty-four months. As we've talked about in the past, some of that stuff is likely to reprice and stay on our balance sheet. But if it exits, that's also an opportunity for us to drive strong accretive value from a revenue growth perspective. Whether that's in the form of backfilling with core relationship lending, in the six and a half plus type range is what we're seeing. So a 200 basis point yield improvement on that. Or through elevating our pay downs on the wholesale side of the equation. That's kind of how we're thinking of it at this point, fairly similar to where we were. So, as I look at it quarter on quarter, kind of validation of what we were thinking would likely occur. And what we talked about three months ago. Hand over to Tory just to give more color commentary as well. Torran Nixon: Thanks, Ivan. David, this is Tory. I'll break it down into two different pieces. The first would be the transactional multifamily division, lending that we've talked about a lot. And Ivan mentioned that and I would say this that, roughly 70 or 80% of it today that coming up from, you know, kind of this fixed to floating, period is just rolling into the bank at a six and a half to seven coupon. And then the balance of that just is exiting the balance sheet and going either being paid off or going someplace else. Being financed somewhere else. But we're retaining right now somewhere between 75-80% of it. I don't know if that changes much over the course of this year, but that's kind of what we're seeing today. On the construction side, I mean, essentially, we've got a lot of projects that have gotten to a point where they are seasoned and stable and they're just rolling from the construction facility into permanent financing. And roughly 85% of that that's exiting the bank is being permanently financed by Fannie or Freddie. And the balance is either being done a little bit by us or other banks. Or life companies. So the majority of it's going to the agencies. And just, you know, a little bit of it's kind of rolling into either life money or commercial banks. So that's kind of where we are on those two big asset classes for us. David Feaster: Okay. That's great. And then maybe just following up on Jon's question a little bit on PAC Premier. I know we've got the conversion upcoming. Was hoping we could maybe get a sense of the timeline for the integration of, like, all the systems. And, you know, you got a slide in here that talks about, you know, some of the rollout of all their technologies, in addition to some of the key businesses that you're focused on cross-selling or leveraging. Chris, you mentioned the custodial trust business. I know they're gonna be included in this next small business campaign. Just kind of curious again, the process and the timeline to roll out some of their technologies and then the fee income lines to cross-sell post-conversion. Clint Stein: David, you never disappoint. You packed a lot into that follow-up question. You know, I'll just start by saying, you know, kind of a general guide in terms of the systems component of it is, in Ivan's prepared remarks, he noted that we expect to have the full realization of the cost saves by the end of the second quarter. So that kind of gives you a good sense of, you know, the ancillary systems and shutting down, you know, surplus servers and getting, you know, all of those other things aside from just the core system integrated. I don't think we will ever be done in terms of when we look at technology implementation utilization because it's a moving target. And that's just as an organization. We're always going to be in some form of investing and optimizing the tech stack. You know, in terms of timing of some of the technology that we were excited about, from a proprietary standpoint that PAC Premier brought along. The first mandate was to make sure that the folks from PAC Premier don't lose any of the functionality or the customers lose any of the that they've had for many years. So we don't want anybody going backwards, and we want to use it as a way to springboard the legacy Columbia customer base and employee base forward. So you had a lot in that question, and so I'm gonna step back and let Ivan, Chris, and Tory offer their insights. Christopher McGratty: Go ahead. Hey, David. You mentioned the custodial trust piece of it. I tell you that's an example of where there's a real win from the standpoint of the technology that they use for the core business is something that we're actually looking to adopt into our fiduciary trust business and bring them even closer in line together. They have a deposit portfolio that'll go through the banking conversion HOA goes through that. The rest of the bank goes through it as well. As Clint said in his remarks, we're very comfortable with where we're at. That's upcoming. And, you know, from there, I think you'll see it's pretty stable, and we'll really look at these opportunities where we're taking advantage, not just the things that we bring to the table, but the things that PAC Premier brings to the table. And that custodial trust one has already paid dividends in winning new business because we have that capability now. Or the combined capabilities. Torran Nixon: I'll just add, David, this is Tory, that we're full steam ahead. And they're doing I think they're doing a great job. Chris mentioned earlier, in prepared remarks of a 20, I think, 23% origination growth quarter over quarter. Like, a big chunk of that is Pacific Premier. And, you know, what excites me about that growth is all the growth from Q3 to Q4 is C&I growth. And they're just they're fully locked in on that. Our pipeline for core fee income, you know, TM, commercial card, international banking, and merchant, is up nicely. We're about roughly $10 million pipeline, which is really strong. Big chunk of that is Pacific Premier. So they're out there providing the products and capabilities that we brought to them and doing a great job executing it. David Feaster: That's great. Thanks, everybody. Clint Stein: Yeah, David. And, you know, I'll just add, like, another example of one of the things that we were excited about was, you know, PAC Premier's, you know, they called it their API marketplace and that connectivity to customer systems and everything. And you know, we're not super creative as bankers and so, you know, that is now the Columbia Bank API marketplace and it's been fully implemented and is operational and being utilized across the combined company today. As we sit here. So, you know, every component of what we can do and I'll kind of lean into some of my prepared comments about, you know, how do we get more efficient? How do we get better every day as an organization? And then what kind of activities can we do or what kind of talent can we bring in to drive additional revenue sources and value for all of our stakeholders. And so it's just a what I'll call, a relentless pursuit of those types of activities. David Feaster: Alright. That's awesome. Thanks. Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Jeff Rulis with D. A. Davidson. Your line is open. Jeff Rulis: Ivan, I appreciate the earning asset discussion on for Q1. I wanted to try to get the sense for the full year on the loan balance. Looks like $2.8 billion set to reprice or run off within a year, and that table on '24. Just wanted to see what the offset is on organic growth. So what do you expect the loan portfolio on net for the balance of the year? Ivan Seda: Pretty flat is our current outlook. So we saw a bit of that step down here as you saw during Q4. We are currently, as Tore mentioned earlier, seeing some of that transactional portfolio roll into relationships we've been able to retain. So currently, the outlook for total loans is relatively flat to year-end. That will ebb and flow quarter on quarter. So you'll probably see some plus or minus to that each quarter. But generally, the goal is to offset any of that transactional runoff with core relationship-based lending activities. Jeff Rulis: Alright. Appreciate that. And then the second question on capital. It sounds like on the buyback, I guess, first part of that is you know, your I think your stock's 10% higher than it was on average when you bought back in the fourth quarter. So won a nice trade, but does that diminish your appetite at all? And then the second piece is the alternative use of capital. Beyond buyback and organic growth, if you focus on talent lift-outs a special dividend or M&A? Thanks. Clint Stein: So, Jeff, taking a you're taking a cue from David Feaster and packing a lot of threads into that. And so there's parts of it that probably makes sense for Ivan to respond to and then, obviously, I have some thoughts. And so I'll try to try to hit on between Ivan and myself, we'll try to hit on all your points. But if we miss one, just redirect us. You know, I still think as a company that we're undervalued. The lift in our share price has been nice, but it doesn't change our view on reducing the share count and repurchasing stock. I said on the last quarter's call that I believe that the best investment we can make is in our own company. I still firmly believe that. And so really no interest in M&A. You know, with our increase in our share price, still buybacks make sense for us, from my point of view. You know, we fully expect at some point we may get to a position where the market got us valued appropriately and buybacks may not make sense. And special dividends are tools that we've used in the past when we've been in that position. And, you know, obviously, would take a lot of discussion with our board. And as we approached that, we would signal that to investors and make sure that folks fully understood why we're making that pivot. There are some things that we can do in terms of cleaning up the capital stack and things of that nature, and that's where I'll step back and ask Ivan to give you his thoughts. Ivan Seda: Yeah. No. It's a great question and something we spent a lot of time on. You know, when we talk about capital priorities, really there's four of them, right? Ensuring that we've got the capital necessary to lend to our core clients. Right? So supporting core loan growth opportunities there. Two, obviously, the dividend you saw us take that up 3% quarter on quarter. And we announced that last quarter as well. Number three, we are making investments in the business. Clint referenced some of them earlier in terms of market expansion opportunities. We've heard Chris and Tore talk kind of in the past quarter as well about some of the teams that we're building out and bankers that we're adding in certain markets, which is very exciting. And then fourth, to the extent to which we still have excess capital, we will continue to execute our share buyback program. And we do see that as a programmatic approach to it, likely a multiyear approach. Given the level of excess that we're currently looking at. So that's kind of how we've thought about the capital opportunity there. Jeff Rulis: Appreciate it. Thanks. Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Jared Shaw with Barclays. Your line is open. Jared Shaw: Hey, good afternoon. Torran Nixon: Hey, Jared. Jared Shaw: Maybe starting with the loan sales that you broke out, the $45 million were those considered or were those PCD? And I guess, where did they, where did that sale come through in terms of where they were carried or marked? Is that what that $1 million gain is on gain on sale loans? Christopher McGratty: Those were all PAC Premier adversely rated loans. I will call that. And we had a kind of a unique opportunity to offload some loans with certain accounting, and that's what we did. So there's about a $1 million hit, I believe, to goodwill associated with that loan sale. So it's really a win-win. Jared Shaw: Okay. So, otherwise, so it was basically sold at carrying value. There wasn't a gain or loss associated with that? Torran Nixon: Correct. Jared Shaw: What's the appetite for additional loan sales from here? Or was that I mean, I guess it sounds like that was a little bit of a unique situation. But could we think that there's additional sale opportunities out there? Ivan Seda: You know, we've looked at and every single quarter, we look at component parts of that transactional portfolio in particular. The piece that Frank just talked about was kind of a cleanup execution from the PPBI acquired portfolio. I would not expect anything big from a transaction portfolio, you know, that we would still take a significant capital hit if we were to do a kind of a bulk sale on some of those assets. We will continue to evaluate for kind of more surgical opportunities as we go throughout the year. Jared Shaw: Okay. And then you're shifting to deposits and deposit costs. You know, you thanks for giving us the spot right there $2.06 at 12:31. How should we think about deposit pricing and deposit costs as we sort of move through the first half of the year with some of the moving parts the deposit categories. Ivan Seda: Yeah. And we try to be careful. I'll start and then maybe I'll hand it over to Chris. So quarter over quarter, like you mentioned, we saw interest-bearing deposits flow from about a $2.43 last quarter down to $2.20 when you exclude the CD premium impact. And as you quoted kind of that $2.06 in the closing days of the year, you know, with the rate cuts happening throughout the course of Q4, the full effect of that wasn't reflected within the quarter. We've seen I think since Q2, a beta over 50%. We continue to believe that 50% is a good estimate from a through-the-cycle perspective. On the interest-bearing deposit beta. And really that comes down to execution. And I think we talked in prior quarters around the rates down deposit playbook, and we've now done that three times in the last several months and to great effect. Hand over to Chris to give kind of some business commentary as well. Christopher McGratty: Thanks, Ivan. And Jared, you know, the pricing aspect of it really becomes market-driven. And so we're analyzing that and following our competitors all the time. And when we see opportunities where we can bring it down five basis points, we will. When we see the, when we see renewal rates are maybe a little higher than what we typically anticipate, we might see that there's opportunities to bring down CD rates and things of that nature. And so it's a pretty fluid process throughout the quarter. And looking at those opportunities. And then further, we're really starting to look at because of our footprint now, we're really looking at some regional types of pricing, which may give us the opportunities to be able to recognize markets that aren't quite as competitive versus those that are and keep that more in balance in check. But it's really an active ongoing process. Tory and I have conversations with bankers all the time about the exception portfolio and what we can do in there. And it's really not waiting for just a Fed action to make things happen, although deposit playbook has been fantastic, we're always looking for opportunities to trim there if we can. Jared Shaw: Okay. Thank you. Operator: Please stand by for our next question. Our next question comes from the line of Chris McGratty with KBW. Your line is open. Chris McGratty: Great. How are you doing? For the question. Ivan, on the expense guide, just want to make sure I'm clear. So Q1 $335 to $345, and then add 40. From there. If I'm doing the math on kind of your run rate, half of the run rate expenses are in, I presume Q1 is your seasonally high watermark, and then I guess I'm trying to get after the exit rate once you get all the synergies. Any fourth quarter exit rate would be helpful. Thanks. Ivan Seda: Yep. I think you nailed it. Full year somewhere in the ballpark of $1.5 billion with more of that in the first half than the second half. Second, you know, exit velocity should be south of three seventy all in. And probably in the range of about a three thirty. Excluding the CDI impact. Chris McGratty: Okay. So one that's super helpful. The one five, is that a fully loaded, or is that a that's a fully loaded number. Right? Ivan Seda: Yep. That includes the CDI accretion impact. Chris McGratty: Okay. And then if we think about like, expensive investments in technology have been a big theme this quarter. Once you get to that you know, stripped out number in the fourth quarter, can you just speak about the need to invest, the balancing act between operating leverage as you go into next year? Torran Nixon: This is Tory. I may just I'll just jump in on the investment side quickly. I would tell you that Chris and I are continuously looking for opportunity to bring people into the company. So there's been a you know, over the past probably quarter and a half, we've added five commercial RMs in Utah, a team in Northern Idaho, a team in Eastern Washington, franchise finance team, couple RMs in Phoenix, three new TM I mean, we're continuously looking at and finding really good talent that we're investing in bringing the company. And we watch very closely the de novo locations that we that we've created and every one of them is profitable within twelve months. Most of them a lot earlier than that. They're just really good solid bankers coming in. Bringing customers with them and kind of just off to the races right out of the gate. I think Chris, don't if you have anyone to add to that. But No. I'd just echo it. Christopher McGratty: Same markets. We're finding talent in health care space. They've hit the ground running extremely quickly. We're finding talent in the wealth space. That typically takes a little longer because of the fee-based type of business that they run. But with the we do it at twelve-month look back, and we're very pleased with the folks we brought in last year, and we're continuing to build out that business as well. I think maybe part of your question, Chris, was around the other technology and the things of investing in the bank. That's just always been part of our run rate. I don't know that, you see anything different unless we come across something that's gonna be a real game changer for us. That's really built into a way of life for us. Chris McGratty: Perfect. And then, Ivan, on the tax rate, any thoughts? Right now, we're modeling 25% effective tax rate for 2026. Ivan Seda: Great. Thank you. Operator: Thank you. Please standby for our next question. Our next question comes from the line of Matthew Clark with Piper Sandler. Your line is open. Matthew Clark: Hey. Good afternoon, everyone. Just circling back to the deposit discussion. Can you remind us what your comfort zone is from a loan to deposit ratio? Perspective? Ivan Seda: Yeah. Right now, we're in a very spot. I think we finished the quarter at 88%. Comfortable into kind of the low 90s, certainly 90%, 94%, 90 maybe 95, we'd start to kind of look at other options there. But we've got excess liquidity to work with in regard to that. Matthew Clark: That's great. And then yep. Yep. Then the other one for me, just on with the sale of the special mentioned loans that were acquired from Pacific Premier don't think I saw it in the deck or the release, but can you give us a sense for where your criticized loans or classified loans stood at the end of year relative to last quarter? Ivan Seda: Special mention loans were lower. Substandard loans were a little bit higher. About roughly about a $130 million swing each direction. So basically resulting in some special mention those special mention loans migrating down into substandard. And, you know, not necessarily due to degrading performance, but more of an elongated term of down an elongated downturn, let's call it. Don't really expect anything more negative to come out of that, but we're just reflecting the risk profile at this point. Matthew Clark: Okay. Okay. So net net, relatively flat. Is that what I'm hearing? Or Ivan Seda: Right. Matthew Clark: Yep. Okay. Exactly. Okay. Got it. Thank you. Ivan Seda: Yep. Thank you. Please stand by for our next question. Operator: Our next question comes from the line of Anthony Elian with JPMorgan. Your line is open. Anthony Elian: Hi, everyone. Ivan, appreciate the color you gave us on NIM for this quarter. How are you thinking about NII in 1Q just considering the impact day count, and the absence of the time deposit premium? Ivan Seda: Yeah. I think when you look at so first of all, we put up a obviously, a very banner strong finish to the year. We talked about in Q4 some of the elements including the $12 million impact of the CD accretion side. I'd back that out you know, with earning asset outlook that I talked about earlier. Along with the three ninety, three ninety-five net interest margin for Q1. Would expect NII to dip down just below kind of the $600 million range in the first quarter. Before, yo-yoing back up. Above that in Q2. Anthony Elian: And above that in the second half as well. Correct? Ivan Seda: Yes. Yeah. It should continue to trend up throughout the course of the year. Operator: Ladies and gentlemen, as a reminder to ask a question, please press 11. Please stand by for our next question. Our next question comes from the line of Janet Lee with TD Securities. Your line is open. Janet Lee: Good afternoon. If I were to put together the comments that were provided on earning assets, $60.5 billion and $61 billion for the first quarter, And then NIM surpassing the 4% mark in either second or third quarter. So is it am I fair to describe earning assets staying in that $60.5 billion to $61 billion or modestly trending down throughout 2026, while NIM stays in that 4% in range in the back half of 2026. Is that a fair way to describe the baseline expectations? Ivan Seda: Yes. On the first part regarding earning assets, On the second part regarding NIM, I expect is that we'll dip down to a of three ninety to $3.95 in Q1. And then we'll grow back up each quarter sequentially a net interest margin perspective surpassing 4%. At some point in Q2 or Q3. And we'll continue upward from there. Janet Lee: Oh, continue going upwards. Above that 4%. Each quarter. Got it. Sorry if this was asked already. Do we did you talk about the fee income growth expectations for 2026? Obviously, fourth quarter was a very solid quarter, it appears. How should we think about the growth in fee income? Ivan Seda: Yeah. From a core perspective, I would model core fee income in the low to mid-eighties type range. Q4 was an absolute banner finish to the year. And we talked a bit about swaps, syndications, and some of those items that are we don't have a lot of kind of chunkier fee income elements within our core operating noninterest revenue base, but those elements were high watermarks for the quarter. So modeling somewhere in the low to mid-eighties would be appropriate. Janet Lee: Got it. Thank you. Ivan Seda: Thank you. Please stand by for our next question. Operator: We have a follow-up question from the line of Anthony Elian with JPMorgan. Your line is open. Anthony Elian: Hey, thanks for the follow-up. Clint, for you, just from a strategic perspective, does anything change with you now adding the role of chair? Thank you. Clint Stein: Short answer is no. This is something that from a board perspective, we've anticipated would occur around this time and we began actively discussing and working towards it from a full board perspective and kind of the back half of 2024. You know? And I'll say that one area that has been a focus of conversation and over that time period and will remain a focus for the board and specifically for me with the expanded role is to continue to work with Maria and Louie on what's the right size for our board? What does refreshment look like? So I guess the way to sum it up is our roles are changing but our priorities as a board are not. And, you know, we added three directors from PAC Premier. That was also a component of refreshment as we had three directors that rotated out in 2025. And I think we've quickly seen the impact that fresh thinking and new perspective brings. It's been very healthy. A lot of great dialogue with the board, and so that's just the kind of work that we're gonna be focused on in 2026. Operator: Thank you. Anthony Elian: Thank you. Operator: Ladies and gentlemen, I am showing no further questions in the queue. I would now like to turn the call back over to Jacquelynne Bohlen for closing remarks. Jacquelynne Bohlen: Thank you, Towanda. Thank you for joining this afternoon's call. Please contact me if you have any questions or would like to schedule a follow-up discussion with a member of management. Have a good rest of the day. Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

107天前Insight Analytics约5分钟阅读

HBAN 2025 Q4 财报电话会议

Operator: Greetings, and welcome to the Huntington Bancshares Fourth Quarter 2025 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Eric Wasserstrom, Director of Investor Relations. Eric, please go ahead. Eric Wasserstrom: Thank you. Good morning, and welcome, everyone, to our fourth quarter call. Our presenters today are Stephen Steinour, Chairman, President, and CEO; Brantley Standridge, our President of Consumer and Regional Banking; and Zachary Wasserman, Chief Financial Officer. Brendan Lawlor, Chief Credit Officer, will join us for the Q&A. Earnings documents, which include our forward-looking statements disclaimer and non-GAAP information, and copies of the slides we'll be reviewing today are available on the Investor Relations section of our website, which is www.ir.huntington.com. As a reminder, this call is being recorded, and a replay will be available starting about one hour after the close of the call. With that, let me now turn it over to Steve. Stephen Steinour: Thanks, Eric. Good morning, and thank you for joining us. Beginning on slide three, as we enter 2026, the year of Huntington's 160th anniversary, it's a moment of pride, but even more a moment of anticipation. Our heritage and deeply rooted values continue to guide us, yet it's the opportunity ahead that energizes us. We're focused on becoming the country's leading people-first, customer-centered bank, and that ambition is taking shape across the franchise. Nearly every part of Huntington is performing at a high level, creating powerful momentum as we look to the future. We've developed a differentiated operating model. Beginning next month, our consumer and regional bank franchise will have a presence in 21 states, many of the fastest-growing in the country. Our local delivery of national capabilities is a franchise-defining competitive advantage. We also have a leading national commercial bank, which includes the fifth-largest equipment finance lender in the nation, 15 unique specialty finance verticals, as well as an expanding set of capital markets capabilities. These functions make us a premier provider to companies ranging from small and middle-market businesses to large corporate entities. Our approach is entirely customer-centric. Our business lines lead with advice and guidance, deliver award-winning customer service, and are supported by top-tier digital capabilities. And we adhere to our aggregate moderate to low-risk profile. In summary, our vision and values guide how our colleagues support our customers. These attributes, combined with our scalable business model and recent positioning in the most attractive states, will enable growth far into the future. Slide four illustrates the core components of our model and how they drove excellent full-year results for 2025. We have activated a flywheel of value creation in which our operating model drives sustainable high growth, enabling us to accelerate reinvestment and strengthen our competitive advantage. In '25, this model delivered truly outstanding results: 11% revenue growth, 16% adjusted EPS growth, 290 basis points of positive operating leverage, and strong credit performance. All of this drove powerful capital generation. Slide five summarizes our key messages. First, our focused execution is generating significant organic growth. Second, we have proven expertise in integrating new partner banks. And third, we're delivering exceptional profitability and value creation to our shareholders. We are driving outstanding revenue, earnings, tangible book value growth, and returns while investing for growth in the years ahead. As shown on slide six, our organic growth engine remains exceptionally strong. We delivered another year of significant above-peer cumulative organic loan and deposit growth. And as Zach will talk to in a moment, our value-added fee services are showing a similar trend. These outcomes reflect how our teams are executing with discipline across all of our customer segments. This quarter, we delivered strong growth in primary bank relationships, up 4% year over year in consumer banking and 7% in business banking. We are focused on deepening customer relationships and expanding wallet share while maintaining diversified portfolios. Slide seven highlights some of the strategic investments we made in 2025 that accelerate our flywheel and enhance our long-term growth trajectory. We continued our branch build-out in North and South Carolina and expanded our middle-market banking in Texas. We added new commercial verticals, and the Veritex and Cadence partnerships augment our scale and density in states that are projected to grow roughly 30% faster than the national average. We also added to our platform and capabilities. With the addition of TM Capital and Janney Capital Markets, we expanded the breadth of our financial advisory, as well as increased our categories of fixed income trading. Additionally, we added functionalities and services within our commercial payments platform. We executed several integrated partnerships to deliver new fintech solutions for our consumer and small business customers, and we continued our investment in industry-leading digital capabilities. These initiatives expand the breadth of customers we serve, deepen our relationships, and help accelerate our fee revenue growth. In summary, 2025 was an extraordinary year for Huntington. Our outstanding financial results reflect the substantial investments we've made in our capabilities over the past several years, and we intend to continue investing across all elements of our franchise going forward. These investments and our recent partnerships position us to sustain strong growth well into the future. With that, let me turn it over to Brant to share some updates on the partnership integrations. Brantley Standridge: Alright. Thank you, Steve. Starting on slide eight, I want to share our differentiated and proven approach to partnerships. Our approach is collaborative and transparent, designed to align around our common objectives, creating a strong foundation for long-term value creation. We're able to quickly identify and engage the leaders and make thoughtful decisions around the talent of the combined organization. Our objective is to create a welcoming environment for our new colleagues. We work with rigor and speed, mobilizing dedicated teams to migrate our partners' entire organization to Huntington platforms. We thoughtfully sequence the activities to minimize disruption and operational risk. We've found that this approach creates an experience that is as frictionless as possible for both colleagues and customers. We are also intentional about approaching key customer product migrations with a people-first, white-glove process. We actually like to call it the green glove process. We quickly deploy the full suite of Huntington capabilities, including products, balance sheet capacity, value-added services, and digital capabilities. This approach for our new customer-facing colleagues enables them to stay engaged with their customers throughout the entire process, expanding their existing relationships and growing new ones. For their customers, it ensures continuity of service while gaining exposure to the expanded set of capabilities we can offer. This approach drives economic value by empowering and engaging our partners, being thoughtful and focused in our talent management and retention efforts, deploying the full breadth of our capabilities, developing deeper lending relationships and value-added services, and moving quickly to migrate systems. We're able to realize substantial cost and revenue synergies. Turning to Slide nine, let me give you an update on how we've applied this approach to our partnerships with Veritex and Cadence. We've spent extensive time in the market with our new colleagues, aligning the local leadership structure and demonstrating our culture. For example, with Cadence, we undertook a 22-city tour right after the announcement to get to know our new colleagues and learn about their customers and the markets they serve. We undertook similar meetings with Veritex and have frequent senior leader connectivity and end-market engagement. We could not be more excited to welcome these new colleagues to Huntington. Engagement with the leadership and colleagues of our partners is fundamental to our ability to execute integration activities quickly, effectively, and get to the critical focus of value creation. We have undertaken a thoughtful approach to our combined organization's talent decisioning with a lot of input from the Cadence management team and completed this work well in advance of closing. This creates certainty for our new colleagues and provides immediate line of sight to a large percentage of our cost synergies. We've made significant progress on systems integration. With Veritex, we substantially completed this process last weekend. This concludes what has been an extremely efficient and well-executed conversion. It's only taken 187 days since the announcement. We can say with confidence that Veritex is now integrated into Huntington. For Cadence, we're already advanced in our product and data mapping and expect systems migration to occur midyear. This would also represent a highly expedited time frame. Because of these actions, we are already realizing our targeted cost synergies from Veritex, which we expect to be fully included in our run rate by the second quarter. For Cadence, we expect to begin realizing the identified cost benefits immediately upon closing and reach the full run rate in the fourth quarter of this year. As we deploy the full Huntington franchise in our new markets, we expect to begin benefiting from revenue synergies. This is already the case at Veritex, and we expect this to accelerate now that we are operating on the Huntington platform and our new colleagues have access to the full array of our product platform and capabilities. We would expect a similar pattern in Cadence. Some revenue synergies achieved early after close and acceleration in the second half of the year and in 2027 following the systems migration. We are excited about how these two partnerships will springboard our growth in Texas across a number of new markets for us. We see extensive opportunities in these areas and across the breadth of our expanded footprint. And we intend to invest to drive market growth, density, and share of customers' wallet. With that, let me turn it over to Zach to discuss the quarter's financial results in detail. Zachary Wasserman: Thank you, Brant, and good morning, everyone. Beginning on slide 11, I'll cover our financial performance. We delivered exceptional profitability in the fourth quarter and for the full year of 2025, supported by strong organic loan and deposit growth, expanding fee revenues, improving margins, positive operating leverage, and excellent credit. For the quarter, earnings per common share was $0.30. On an adjusted basis, excluding acquisition-related expenses and other notable items, EPS was $0.37, up 9% year over year. I'll review the drivers of this performance in detail on the next several pages. Turning to Slide 11, average loans grew 14.4% year over year, excluding the addition of the Veritex portfolio. Average loans grew $10.9 billion or 8.6% year over year. This growth was well balanced between core and new initiatives. New initiatives account for $1.8 billion in the period and contributed nearly half of the total organic loan growth for the year. Key contributors included our organic expansion into Texas and North and South Carolina, as well as strong performance in our funds finance and financial institutions group commercial verticals. Of the remaining $1.4 billion in loan growth in the fourth quarter, from the core we delivered $500 million from corporate and specialty banking, $400 million from regional banking, $400 million from auto, $400 million from floor plan businesses, and $200 million from commercial real estate. These gains were partially offset by a $200 million decline in equipment leasing, a $200 million decline in residential real estate balances, and a seasonal decline of $100 million in RV marine loans. All told, in 2025, we generated organic loan growth of $10.1 billion, which exceeded the $9.5 billion of loans added through our Veritex partnership. This performance underscores the exceptional execution by our colleagues across the company. The businesses are firing on all cylinders, and our teams continue to deliver outstanding organic growth. Turning to deposits on slide 12, average deposits increased 5.1% quarter over quarter and 8.6% year over year. On an end-of-period basis, excluding Veritex, core deposits grew $5.5 billion year over year or 3.4%. We continue to drive strong volume growth while maintaining disciplined pricing throughout the rate cycle, resulting in a 35% cycle-to-date down beta. This performance is enabled by our sustained focus on growing primary banking relationships across both the consumer and commercial segments. Veritex deposits contributed meaningfully to this quarter's growth while we optimized select acquired funding categories as planned. Together, these dynamics underscore the depth and quality of our relationship-oriented deposit-gathering capabilities and the effectiveness of our funding strategy. We continue to execute well on our down beta plan. Similar to the third quarter, we quickly implemented actions after the Fed rate reduction in December to achieve a 40% down beta in the last two weeks of the fourth quarter. The deposit environment remains competitive. However, our approach to optimizing volume growth and pricing is working. Our goal remains to maximize revenue growth and ensure robust core funding for our continued strong organic loan growth. We will continue to manage our asset yields and funding costs to optimize this outcome. On to slide 13, our NII dollar growth and margin expansion continue to demonstrate powerful momentum. During the quarter, we drove $86 million or 5.6% sequential growth in net interest income. This represents over 14% growth on a year-over-year basis. Net interest margin was 3.15% for the fourth quarter, up two basis points from the prior quarter and aligned to our outlook. This is largely driven by contributions from Veritex core NIM. Expanding on that for a moment, as we've noted, Veritex closed in October, and the final rate marks and detailed loan level accretion schedule was updated at that time. This update resulted in a modest reduction in expected PAA and modest accretion to tangible book value excluding one-time costs. The updated schedule is noted in the appendix of the presentation for your reference. Moving to fee income on slide 14, our fee businesses were strong across virtually every area. Year over year, payments grew 5%. Commercial payment revenues continue to be the primary engine of this growth, up 8% year over year. Wealth management grew 10%. Adjusted for the sale of a portion of our corporate institutional custody and trust business last quarter, it grew 16%. This was powered by continued household acquisition and assets under management net inflows. Capital markets performed well, delivering its second strongest revenue quarter of all time, trailing only 2024. Some advisory deals did push from the fourth quarter to close early in 2026, and so our first quarter is off to a very good start. Loan and deposit fees are up over 20%, driven by strong loan commitment fees. Based on our solid commercial lending pipelines, we expect this trend to continue over the next several quarters. Clearly, momentum in the fee businesses remains strong, and we anticipate broad-based growth going forward. On the next slide, I'll step back for just a moment to reflect on the multiyear of these businesses. Turning to slide 15, on a full-year basis, our fee income businesses have been growing at a steady high single-digit CAGR since 2023. And we see this CAGR as sustainable over our long-term planning horizon. As we've highlighted many times, we view three businesses, payments, wealth management, and capital markets, as having long-term strategic growth opportunities. The financial performance of these businesses validates our strategy, which has focused on expanding where we believe we can offer these value-added services to our customers in a manner that enhances our relationship and meets their needs. Moving to expenses on slide 16, on a core basis, excluding one-time costs and the impact of absorbing Veritex's expense base, Huntington's operating expenses were up just $7 million sequentially, or just about one-half of 1%. This reflects our cost discipline and focus on continuous expense reengineering, essential elements of our value creation flywheel. We set out in early 2025 to deliver positive operating leverage for the year, and we delivered results well above that budget. Coming into the year, our plan assumed approximately 100 basis points of positive operating leverage. It was a solid, achievable planning target given our growth agenda and the level of strategic investment we intended to sustain. As we drove significant outperformance on revenues over the course of the year, we delivered a much wider 290 basis points of adjusted operating leverage while accelerating investments across our enterprise. This outcome is an expression of the model we've been building toward and will drive substantial value creation. Slide 17 recaps our capital position. Over the last year, we drove adjusted CET1 higher. Our capital management strategy remains focused on our top priority of funding high-return loan growth, then supporting our strong dividend yield, and finally, capital return and all other uses. As we have noted, we intend to continue driving adjusted CET1 toward the midpoint of our 9% to 10% operating range. Given our projections for strong capital generation, we expect to have the capacity to add approximately $50 million per quarter of repurchases to the mix of distribution in 2026 following the close of our partnership with Cadence. Slide 18 gives an overview of how the flywheel of our operating and economic model is generating powerful return and driving shareholder value. In 2025, we grew adjusted ROTCE by 40 basis points through robust PPNR expansion while simultaneously increasing our capital base. We have grown tangible book value 19% year over year while returning 40% of earnings through dividends. And as noted, we intend to initiate programmatic share repurchases in the near term. Turning to slide 19, credit quality continues to perform very well, with net charge-offs of 24 basis points. Forward-looking credit metrics remain stable. The criticized asset ratio rose to 4.2%, primarily due to Veritex commercial real estate loans that we identified during diligence, and remains within our historical range. The nonperforming asset ratio was 63 basis points and has trended within our expected range for several quarters. Let's turn to slide 20 for our outlook for 2026. We're providing guidance for Huntington on a stand-alone basis, but given that we're only a few days away from closing our partnership with Cadence, we thought it would be helpful to give an initial view of how this might contribute to our 2026 results. Naturally, we will refine this outlook after the close. Starting with net interest income, we expect growth on a stand-alone basis between 10% to 13%, supported by 11% to 12% growth in loans and 8% to 9% growth in deposits. We anticipate further net interest margin expansion this year, driven primarily by lower hedge drag and fixed asset repricing. We expect the NII contribution from Cadence this year to be approximately between $1.85 to $1 billion, including PAA. We will update this outlook inclusive of PAA later in the first quarter after we've had the opportunity to do the analysis post-closing. In terms of earning assets, our cash plus securities portfolio is currently about 25% of total assets, and we expect to remain approximately at this level post-closing. On the topic of quarterly expectations for deposit and loan growth, we're expecting to see loans grow faster than deposits in the first quarter as we continue to optimize the funding we have received from Veritex and begin the integration of Cadence. After that, in Q2, Q3, and Q4, we expect to see deposits growing at a level consistent with loan growth as our normal organic process of core funding loans continues. We expect to exit 2026 with our deposit growth in dollar terms equaling our asset growth, giving us strong funding momentum heading into 2027. Moving to noninterest income, we expect fee revenues to grow between 13% to 16%. This represents the continued strong contributions from our three core value-added services, further growth in our loan commitment fees, and the contribution from the new capital markets teams at TM Capital and Janney we added at the year-end 2025. We expect Cadence to add approximately $300 million in fee revenue. We plan to provide an update on our expected revenue synergies later in the first quarter. We anticipate core expenses will grow 10% to 11%, and we expect to deliver a baseline of 150 to 200 basis points of operating leverage. This outlook includes the expected cost synergies we've targeted from Veritex, which we expect to be fully in the run rate of our cost base by the second quarter. We estimate Cadence will increase our expense base by $1.1 billion. Similar to Veritex, we expect to begin realizing cost synergies almost immediately after closing, with the full benefits run rating into expenses in the fourth quarter. We expect net charge-offs for the year to be 25 to 35 basis points. Given our current starting point, we think losses will likely be at the lower end and normalize closer to the midpoint of that range over time. The combination with Cadence doesn't change this view. The effective tax rate for the year is expected to be between 19% to 20%. The fully diluted average share count for the year, inclusive of Cadence-related issuance, is expected to be approximately 2.02 billion shares. For the first quarter, we expect the weighted average share count to be approximately 1.9 billion. Cadence's anticipated February 1 close will result in a partial quarter impact to several income statement and balance sheet items. Also, with the addition of Cadence, we have a new class of preferred shares, which we have addressed in the footnote in the updated appendix slide. Pulling back, let me conclude our guidance discussion with a few observations. First, our current 2026 forecast for Huntington's stand-alone growth in NII, in assets, deposits, and fees generally exceeds the growth we've experienced in these categories in 2025, while our expected operating leverage is at the top end of our typical range. This underscores our focus on delivering strong organic growth even as we move through our integration with Cadence. Second, we are executing against our integration plans. As noted, we expect to realize the cost synergies from Veritex in the second quarter and from Cadence in the fourth quarter. In terms of the revenue synergies, we have already begun to benefit from incremental lending and capital markets activity with former Veritex customers. And Cadence bankers are already actively engaged with their customers to educate them about the broader product platform and capabilities that we will be able to offer. We believe this will contribute to incremental revenue growth in 2026 and into 2027. Turning to Slide 21, we remain confident in our long-term trajectory. Our operating model and the momentum across the franchise give us conviction in the sustainability of our targets for the medium and longer term. The investments we're making position Huntington for continued outperformance. Concluding on slide 23, our flywheel of value creation is working and poised to accelerate. Our differentiated business model drives strong growth and profitability. As our profitability expands and we generate efficiency through cost reengineering, we increase our capacity to invest. As we drive robust investment back into our business, we grow our competitive advantage. That competitive advantage drives further market differentiation and customer expansion, driving revenue growth and sustainable share gains in a virtuous cycle. Looking ahead to 2026, we believe the benefits of our strong organic growth and recent partnerships will enable further expansion of our investment capacity over the next several years. This will increasingly distinguish us from our peer set and drive substantial shareholder value. With that, we'll conclude our prepared remarks and move to Q&A. Eric Wasserstrom: Thank you, Zach. We will now take questions. We ask that as a courtesy to your peers, each person ask only one question and one related follow-up question. If you have additional questions, please return to the queue. Thank you. Operator: We will now be conducting a question and answer session. Our first question today is coming from Erika Najarian from UBS. Your line is now live. Erika Najarian: Hi, good morning. Thank you for taking my questions. First question is just a clarifying question on the expense trajectory, both the baseline and the Cadence addition and how we layer on the cost savings. So given that you gave the guidance on standalone, I'm guessing the baseline for core expenses would be $4.82 billion, which excludes two months of Veritex. And then we layer on the standalone growth. I guess the other part of the question is that $1.1 billion is equal to eleven months of Cadence based on consensus 26. And so I'm wondering, as I think about Brant's comments, if we then layer on the cost saves, and then I just have a follow-up. Zachary Wasserman: Sure. I'm not sure exactly what your question was there, Erika, but I'll take it and sort of just unpack where the expense guidance is. Fundamentally, what we see at this point is underlying Huntington expense growth in mid-single digits, aligned to generate one and a half to two points of operating leverage. And then with Veritex, bringing in the entirety of the Veritex cost base, and also, I would note the two small capital markets businesses that we added on January 1. Those add about one point of total Huntington expense growth, obviously, more revenues as well. But that piece comes in. And so the totality of all of that together is the 10% to 11% year-on-year growth, which generates really positive operating leverage, 150 basis points to 200 basis points, you know, clearly on top of the 300 basis points of operating leverage we generated in '25. And then Cadence is the $1.1 billion added on, as you noted, eleven months of expenses. It represents the full complete of the cost synergy program for both Veritex and Cadence, by Q2 and Q4 respectively. And aligned to the previous guidance we've given about 75% of three-quarters of the Cadence cost synergies accruing in 2026. You know, I think what is also in there clearly, I tried to highlight this in some of my prepared remarks, is continued investment back into the business. And we think that that is a terrific model not only to drive the kind of revenue performance we're achieving in '26, but even more importantly, over the longer term and continue to drive the competitive and share gains that we've got. So all of that is embedded in that, and we think it's the right model and right posture at this point. Erika Najarian: Got it. That's clear. So that addition includes both cost saves and investments back into the business. And the second follow-up question I had, maybe at the is more for Steve and Brant. I thought it was notable that when you talk about Veritex and Cadence, you say the word partnership very intentionally. You know, maybe talk about how your approach has been generating more goodwill in order to perhaps create revenue synergies and cost synergies. And perhaps a better timeline than other traditional acquisitions that are perhaps not treated as partnerships. Stephen Steinour: Erika, great question. And I'm going to let Brant answer this for the most part because he's been on point driving this. Literally from the outset. But the format of the partnership has been incredibly beneficial to us. And we have great partners in both Malcolm Holland and Dan Rollins and their teams. And because we've been able to work together very tightly, and Brant will expand on this significantly, we are in a much better position with confidence on both the expense and the revenue synergy side. So, Brant, over to you. Brantley Standridge: Well, Erika, thank you for the question. One of the things that partnership has allowed us to do is to really move with greater speed and rigor on some of the key decisions. And as it relates to board decisions, management decisions, all of our colleague decisions, organizational structure decisions, all of those have been decided and communicated. And that creates a high level of certainty for the colleagues of both Veritex and Cadence. It creates a lot of familiarity for them and, frankly, gives us a lot of confidence in our ability to deliver on the value creation given that we've created so much certainty for them so quickly. The other component, as you know, a large percentage of the cost synergies revolve around people. And so moving quickly to decide on our make all that key people decisions in the case of Cadence gives us a line of sight to the majority of our cost synergies there. So that partnership approach clearly gives us some advantage or a lot of advantages when we think about both cost and revenue synergies. Stephen Steinour: And the teams have just been outstanding. The collaboration here, phenomenal. We are very impressed with the quality of the teams. And both these banks are well run. So these are not sort of fixer-up turnarounds. This is bringing our capabilities, products, etcetera, to terrific teams, which, as Zach pointed out, we will be further investing in to drive the revenue growth in the years ahead. Operator: Thank you. Our next question today is coming from Jon Arfstrom from RBC Capital Markets. Your line is now live. Jon Arfstrom: Thanks. Good morning, guys. Zach, I think you're gonna get a workout this morning, but on expenses. But anything you can do to give us a little tighter range on expected first-quarter expenses or early '26 expenses just to help set this up? Zachary Wasserman: I'll Demir, I'll give you a quarterly guidance. I do appreciate it. Look, if I take a step back, for us, what's important is driving for positive operating leverage. And as we've noted sort of a number of times, even in the prepared remarks highlighted this for 2025, we come into the year thinking somewhere between one hundred and two hundred basis points of operating leverage as a really good level supports the long-term earnings growth rate that we want to achieve. It also is the right balance for us as we execute that flywheel model. Driving reengineering into baseline costs, reinvesting deeply back into the business. To really power continued long-term revenue growth. And so I think that's the approach that we're taking in it, and we think it's the right one, as I noted before. You know, I will also highlight if you look at that guidance slide, just stare at that plus cadence column, the marginal profitability that we're as we bring cadence into the business is really significant. It's a 50% marginal efficiency ratio, and that's even before the full cost synergy. So all of this for us adds up to an earnings growth trajectory that continues to meet our objectives. And generate ultimately the long-term financial commitments that we've set, importantly, including that 18% to 19% return on capital. Jon Arfstrom: Okay. Alright. Just another question here just for clarification. On Slide 20, you talk about the revenue-producing initiatives that are embedded in the expense guide. How material are those? And then what revenue synergies, if any, from Veritex and Cadence is included in the guide? Thanks. Zachary Wasserman: Yes. Good question again. And the answer is very little of the revenue synergies are baked into the guidance at this point. This continues to be aligned to the longer-term objectives that we've said and we discussed at the Cadence partnership announcement call. I guess Brant highlighted in his prepared remarks, our expectation is to share a deep dive around where we expect the revenue synergies to be later this quarter in a further conference and then to layer that on and provide the right guidance around that. So a lot more to come there. Very excited about it. You know, the thing about the investments up into the business, you know, we've been growing investments back into the company at about a 20% clip for five years in a row. Our expectation is to continue the same. And the focus areas for those investments really continue to be digital technology development and capabilities across all areas of our business. Marketing to acquire new customers. There's gonna be a terrific opportunity to deploy digital acquisition across the new partner acquired footprints. And then, you know, people to build out the businesses that we've been growing, and we'll continue to do that. Operator: Thank you. Next question is coming from Ken Usdin from Autonomous Research. Your line is now live. Ken Usdin: Thanks. Hey, Zach. Can you just back to Slide 20, do you have the starting point FY 'twenty-five baseline for core expenses that the 10%, 11% is built on? Zachary Wasserman: Sure. It's $4.871 billion. Yes. Exactly. Ken Usdin: Okay, great. Thanks. And then the second question is I guess there's a little back and forth today about the cost base still being a little bit higher. But I wanted to ask if I look back at the October deck when you talked about $2 of pro forma EPS in seven. I just want to make sure that there might be some timing differences in terms of how much you're reinvesting and how much things all come together. So we're still tracking towards that $2 pro forma EPS that you guys had suggested back in October in the merger deck? Zachary Wasserman: Yes. It's a terrific question, Ken. It's a I love that question because it kinda comes back to ultimately the value creation model that we're trying to drive here is what is where our focus is and the answer is yes. We continue to be on track for the fundamental drivers of that earnings power. If you think about it, the way I think about it is first of all, three major drivers of value creation from the partnership: seamless integration, and retention of talent and kind of continuing with the momentum of the underlying businesses. I will note that both Veritex in the period after close before conversion performing exceptionally well, driving above expectations loan and deposit and revenue growth. And Cadence, likewise, we haven't even closed. We're expecting that just a week from now. They just reported their results this morning and those likewise. Expectations continue to show very strong underlying growth in SAAR. Partnership model would just enable that to continue. Secondly, it's the cost synergies. We have full line of sight to achieve or beat them. And then lastly, it's these revenue synergies, which are not in this guidance yet, but really will be powerful as we add those on. We continue to finalize the plans to go and achieve them. And so those are kind of the fundamental building blocks. As I think about the EPS, you know, look, we've generated 16% earnings per share growth in twenty-five. The guidance I've given here on page 20 applies somewhere in the kind of mid to high teens for underlying organic EPS in '26. You should expect the same kind of growth in earnings power as we go into 'twenty-seven. And on top of that, you'll get the full run rate of the cost synergies that's probably something on the order of a dime. And then revenue synergies and of course the PAA will be what it is. Ultimately, and we'll give guidance on that once it's finalized. Operator: Thank you. Our next question today is coming from Matthew O'Connor from Deutsche Bank. Your line is now live. Matthew O'Connor: Good morning. You gave the expense impact from the capital market deals? You said it added about 1% to the expense base. How about on the fee side? What's your rough estimate on the fee contribution from the corporate market deals? Zachary Wasserman: Yeah. It's coming in sort of $80 million and $90 million of expense above revenues. Matthew O'Connor: Okay. Then I guess maybe talk about some of the other drivers of the fees because obviously, my model could have been wrong, but the fee guide seemed better than I had even adjusting for like, $80 to $90 million. So maybe some details in terms of what are the key drivers of that growth? Zachary Wasserman: Totally. Fundamentally, if you think about fees, this year in 2020 well, last year, twenty twenty-five, we generated 7% growth in core fees and it was 8% in those three major fee-driving categories we talk a lot about payments, cap markets, and wealth management. As we go into 2026, our expectation was to see acceleration of all of that all of those categories, something on the order of one to 2% acceleration, and we've got strong line of sight to delivering that. As we've noted, it's been a locus of a lot of investment over time. So we're seeing that come through now in terms of acceleration of revenue growth. And then on top of that, you will add the $80 to $90 of revenues from the two new small capital markets divisions that are joining us plus Veritex. And so that's really the kind of the ingredients that could get us to this guide. And have strong line of sight and confidence to deliver. Operator: Thank you. Our next question today is coming from Ebrahim Poonawala from Bank of America. Your line is now live. Eric: Hey, good morning. This is Eric on for Ebrahim. Just maybe another one on the expense side. I was curious if you can talk about the level of investments that you guys have embedded into that underlying Huntington expense growth that you've mentioned at the mid-single digit. Anything new there, any new investments or acceleration in spend that's kind of embedded? Zachary Wasserman: Yeah. Good question, Eric. Thanks for the follow-up. I'll highlight that we expect to grow investments at around 20% back into the business as we go into this upcoming year. And again, as noted before, the kind of the focus of that is always threefold. Digital and technology capabilities across the business, secondly, marketing and last, people to build out their business. So I think about the kind of the initiatives that will power, you know, we're still early days in a lot of the major new growth initiatives we've been talking about the last couple of years. New commercial specialty verticals, both lending and deposit-oriented new geographies that we've been growing into organically, North and South Carolina, Texas, all of those will be focused for continued investment. We've talked about in the Carolina, for example, the expectation in 2026 is to open a new branch there almost every two weeks. And so, of course, that'll be an area that we're investing in. And then, you know, I think Brant highlighted earlier, one of the biggest areas that we see opportunity to really capture revenue synergies in the combined franchise is in digital acquisition and customer acquisition across the footprint. And so there's funding in the investment plan to go after that. Eric: Got it. That's helpful. And then I think just to quick follow-up to clarify. I know you said you'll provide more details post the close, but was curious what level of PAA is embedded into the NII guide? Thanks. Zachary Wasserman: Yep. Because it's somewhere between seven and ten basis points of NIM of, you know, aligned to the prior expectations we had. Again, think we've highlighted that in the Cadence earnings call or Cadence deal announcement call, and we'll update that as we get through the close here in the next month. Operator: Thank you. Next question is coming from Manan Gosalia from Morgan Stanley. Your line is now live. Manan Gosalia: Hey. Good morning. Hi, Manan. Hey. Good morning. Zach, in your comments on the investment spend, just now, you didn't mention AI. Is there any AI-related investment spend in there? And I guess the broader question there is, given that there's a lot going on this year with the acquisitions, that's probably driving a lot of your investment spend. Would you say that 2026 is a high point for investment spend that you plan to make? Zachary Wasserman: Thanks, Manan. Great questions both. And to answer the second one first, the answer is no. Investments are not a high point here. In fact, investing into the business is the flywheel of value creation that we just talked about. We will always want to grow investments at a fast clip and just think about the model going on for a second. Look back at the last six years. Revenue growth CAGR 10%, investment growth CAGR just about 20%, earnings growth in the teens. And so that model is a sustainable long-term model and we will keep driving it. And it's powered by, you know, not only earnings growth, but also disciplined reengineering of our cost base, something on the order of 1% per year. And so that's the model we expect to sustain perpetuity, and that's what's driving our competitive success. You know, if you just move to AI, absolutely there's significant investment happening in AI. I wouldn't characterize the nature of the driver of our investment growth as because of AI certainly, is growing along with those other investments as well. And we're seeing use cases across the organization really exponentially increase at this point. Driving cost savings, driving productivity, driving a better customer experience in lots of different ways, and of course more efficient technology engineering. Stephen Steinour: And then on what Zach referenced, digital and technology, the AI was included in that. Operator: Thank you. Our next question is coming from Steven Truback from Wolfe Research. Your line is now live. Eric: Hey, this is actually Eric. Hey. Derek: Derek, this is Derek. Thanks for taking the question. Our first question we had was on credit guidance. And it looks like, like, the year-on-year increase, like, our assumption is a lot of that is, like, kind of the seasoning of the loans you've put on the last year. But just curious if that's right. Just sort of what would cause you to fall on like one end of the guidance range or the other. Eric: Derek, you're yeah. I think you're talking a little light too. You have you repeat it? I think you referenced seasoning as the reason for the guide. Derek: Yes, I'm sorry. Yes, that's right. Just Eric: Yeah. That's that was the case, let me just say that yes, there's a little bit of that in there. But I mean, the reality is the performance this year was just exceptional. And as you look back over the history, we've been trending between that 25 to 35 basis points range for some time. And that's really the basis of our guide. And as Zach said in his prepared remarks that we would be really in the lower end of that range. And so that's really the expectation for 26. Derek: Sure. That's Eric: And then just a follow-up question on the deposit beta. You mentioned the 40% beta in the last two of the quarter. Just curious as we're thinking about two more rate cuts, if that's also the right level to be thinking about with incremental cuts on the way down? Thank you. Zachary Wasserman: Yeah. Yeah. That's also a terrific question. It's an area of a lot of focus as you know. And, you know, our expectation is to continue to get a solid down beta, something in the high 30s to 40%, aligned with the guidance we've given. You know, I'll tell you that, you know, beta in and of itself is not our objective function. Our objective function is core funding loan growth really powering the ability to continue to drive peer-leading both loan growth and revenue growth with a great marginal return on capital. And that model is working exceptionally well, and you see no. It's, of course, a competitive environment, but you know, the ability of the teams to execute on both volume growth and disciplined pricing continues to be very strong. Operator: Thank you. Our next question is coming from Chris McGratty from KBW. Your line is now live. Chris McGratty: Great. Good morning. Hey, Zach. Going back to the tech conversation for a second, this quarter, a lot of focus you know, tech wallet, growth rate, percent of revenues. Any I heard you on the, you know, of the three things that you're really investing in. But do you have dollars around what you're putting into tech and the rate of growth? Zachary Wasserman: Yes. Great question, Ken. We're smiling here because Chris, I'm sorry. Because we're our expectation is in some of the conferences later this year later this quarter, truly double click into the investments just to share with you more guys on it. So I won't steal that thunder and give you a number today, but certainly, it's a powerful growth, and we've seen you know, in our view, we're investing in technology in exactly the right places. It's all about customer-facing capabilities, driving both our value-added services, but also acquisition, digital marketing, you know, the question that we just got a second ago in terms of beta, you know, the amount of MarTech capability that we've built over the last several years is really what's enabling us to achieve these dual results of great deposit volume and pricing. So, you know, those are the kind of things that we put our in the technology investments against. I'll come back to you with more details here in short order as we go to these conferences. Chris McGratty: Understood. Yep. We'll wait for that. And then on kind of the balance sheet, a lot of times, you do acquisitions companies. Have certain portfolios that know, maybe don't fit strategically. As you kind of evaluate both portfolios, is there any tweaking that you presume, might happen in the next, you know, quarters as you get to another company a little bit better? Stephen Steinour: Chris, as we looked at both partnerships and combined with the that would do for the portfolios, like it on the whole. And there's not, say, an exit portfolio. There's a little more commercial real estate construction than we would prefer, and we'll manage that in due course. Nothing special. With that. And we've got some great growth areas that we're looking for that will offset anything we end up doing on the construction side. Operator: Our next question is coming from Brian Foran from Truist. Brian Foran: Hey, I'm going to apologize in advance. I'm still on the struggle bus with the guidance. So on expenses, I guess the way I'm trying to think about it is, if I understand the math right, you plan on reporting something like $6.5 billion of expenses this year, maybe $6.46 billion to $6.5 if I take the guide literally. And then as I think about the exit from the year, pushing that up would be the twelfth month of cadence. Pushing that down would be the cost saves. But then maybe pushing that back up is how much of the cost saves are reinvested over the course of the year? So is there any way to relate because people have really different takeaways. Some people are like, gonna exit the year with, $6.6 billion. Some people are we're gonna exit the year at $6.2 billion. Like, is there any way to talk to exit run rate of dollars of annualized expenses for the whole thing pro forma? Zachary Wasserman: I don't have that right in front of me to be honest with you, Brian. My guide that you would see like, I think we're gonna on a full year, see an efficiency ratio of around 55%. And we'll continue to see that improve as we go into '27. The growth rate of expenses relative to revenue should be very attractive as we get through Q4. And also kind of goes back to that question we talked before. Are we on track for earnings power in 2027? And the answer is yes. Brian Foran: Okay. Maybe I have to try the same question on loan growth because I'm tying myself in the same set of knots. Like, we get to the back half of the year, you know, everything's integrated. We're not talking about the year over year. We're talking about quarter over quarter annualized. So Veritex and Cadence aren't in there. Like I don't know if the Cadence number for loans is just where they are today or some assumption in it. But, like, you kinda put this all together. Would you expect to be like, still at 9% annualized loan growth exiting the year like where you are today before the acquisitions? Would you expect it to be slower as you do the integrations, faster as you recognize revenue synergies like any any kind of you know, again, I understand the difficulty of doing a guide on what you're gonna report when things are partial year impacts. But once we get through that, any way to talk to like what you expect the core loan growth rate to look like in the back half of 'twenty-six? Again, linked quarter annualized, not year over year. Zachary Wasserman: Yeah. Yeah. Good question for sure. Look, the way I think about it is our underlying loan momentum has been in the 8% to 9% range in 2025. As we thought about Huntington standalone in 2026, our expectation was around the same amount. And in our long-range plan when I say long-range plan, I typically mean so the next few years after that three years, was of a similar growth rate. You know, one of the strategic themes and rationales for us entering the partnership with Cadence and also with Veritex was that they would expose Huntington to even faster organic growth opportunities over the course of time and create new to invest and build the business from there as well. And so that 8% to 9% to me is a minimum. We would expect to see revenue synergies, growth synergies lift that particularly in the near term. Of course, not giving 27 guidance this morning, but I think that kind of fundamental growth power is at or better as we get into the latter part of '26 and beyond. Operator: Thank you. Our next question is a follow-up from the line of Ebrahim Poonawala from Bank of America. Your line is now live. Vikram: Hello? Stephen Steinour: Hello? Hello? Vikram: Hey. Hey, Graham. This is Vikram. Hey, Steve. Just a big picture question. Beyond all the guidance-related questions. It feels like there's a lot going on at the bank. In terms of banker hiring, a couple of deal integrations. As we look forward, just talk to us in terms of how you feel about just the integration of all this over the next six to twelve months. And I think there's an expectation that Huntington could still be on the lookout for additional deals, how should shareholders think about the potential for more M&A over the next maybe six months? Stephen Steinour: Ebrahim, thank you for the question. We sort of thought that one would come even a little earlier. Initially. But we let's start with we've got two partners. And they are performing exceptionally well with us. The teams are doing great work together. Brant, Dan Rollins, Malcolm Holland, and their teams and our team have come together in a very fundamentally sound and strong fashion. We're off to a great start. We've just completed we are completing the Veritex conversion as we speak. Started over the weekend. We will close with Cadence in two weeks. As you heard from Brant, the org management and personnel decisions are made and communicated. We're moving very quickly. With that. At the same time, the core of the company is performing well, and that's our primary focus, drive the core results. So we're completing these integrations. They don't end at a conversion, but we're completing these conversions over the course of this year, maybe this year a little bit more in terms of culture. But rapidly so we can get at the revenue opportunities that we've talked about. And we've used this term springboard on purpose. We think we have great growth potential in these markets. They're much better on average than the markets we've been operating in. And Texas is very unique, and we come together with a number five share. So we've never been in these markets or markets like these before. So very optimistic, we're very focused on driving organic growth and executing these integrations extraordinarily well. And the partnerships are facilitating that and we're aligned at creating shareholder value. As to other M&A, maybe someday, we've been clear. I think it was the Goldman conference. We're not gonna do an MOE. We're not gonna go to auctions. They have to be strategic in nature where they're adding value and revenue growth. For us. And they have to meet financial and risk metrics. And, you know, if someone approaches us with something of that nature, then we would take a look at it. But we're very focused on driving the organic growth of the business. And that's priority one, two, and three for us. We like the position we're coming into '26 with. And the momentum we have, and we're ecstatic about the quality of the partners. These are two really good banks, great people, coming into Huntington. I think we've got a terrific back half of this decade. Just with these combinations. Vikram: Got it. And while I have you, maybe, Zach, just clarifying the 55% efficiency ratio you believe for full year 2020? Zachary Wasserman: Your voice cut out a little bit there, maybe at the end. I think you said am I confident we'll hit 55% efficiency ratio? Is that right? Vikram: Yep. Yep. 55 for '26. Yeah. Zachary Wasserman: Yep. Very, very confident. Operator: Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments. Stephen Steinour: Thank you all for joining us today. We didn't mean to confuse you and I hope we've sorted some of that out in the discussion. We're performing very well. We're coming off an extraordinary year. We've got a lot of momentum. And very clear objectives as we move into '26. We've never been better positioned for the future and we're excited about that. And our 20,000 colleagues and soon to be 25,000 are gonna do everything we can to create shareholder value and build the franchise for years and years to come. We look forward to welcoming these 5,000 new colleagues coming to us from Cadence in the next couple of weeks. Thanks for your interest. We'll be back to you mid-quarter for more details on the models, and appreciate again your support. Have a great day. Operator: Thank you. That does conclude today's teleconference and webcast. You may now disconnect your line at this time and have a wonderful day. We thank you for your participation today.

107天前Insight Analytics约5分钟阅读

ABT 2025 Q4 财报电话会议

Operator: Good morning, and thank you for standing by. Welcome to Abbott Laboratories' Fourth Quarter 2025 Earnings Conference Call. All participants will be able to listen only until the question and answer portion of this call. During the question and answer session, you will be able to ask your question by pressing the star one one keys on your touch tone phone. This call is being recorded by Abbott Laboratories. With the exception of any participants' questions asked during the question and answer session, the entire call including the question and answer session, is material copyrighted by Abbott Laboratories. It cannot be recorded or rebroadcast without Abbott Laboratories' express written permission. I would now like to introduce Mr. Mike Comilla, Vice President, Investor Relations. Good morning, and thank you for joining us. Mike Comilla: With me today are Robert Ford, Chairman and Chief Executive Officer, and Philip Boudreau, Executive Vice President, Finance and Chief Financial Officer. Robert and Philip will provide opening remarks. Following their comments, we will take your questions. Before we get started, some statements made today may be forward-looking for purposes of the Private Securities Litigation Reform Act of 1995, including the expected results for 2026. Abbott Laboratories cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological, and other factors that may affect Abbott Laboratories' operations are discussed in item one a Risk Factors, to our annual report on Form 10-Ks for the year ended 12/31/2024. Abbott Laboratories undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments except as required by law. On today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand Abbott Laboratories' ongoing business performance. These non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings news release and regulatory filings from today, which are available on our website at abbott.com. Note that Abbott Laboratories has not provided the related GAAP financial measures on a forward-looking basis for the non-GAAP financial measures for which it is providing guidance because the company is unable to predict with reasonable certainty and without unreasonable effort the timing and impact of certain items, which could significantly impact Abbott Laboratories' results in accordance with GAAP. Unless otherwise noted, our commentary on sales growth refers to organic sales growth, which is defined in the press release issued earlier today. With that, I will now turn the call over to Robert. Robert Ford: Thanks, Mike. Good morning, everyone, and thank you for joining us. Before discussing our fourth quarter results, I want to take a moment to reflect on 2025, a year that demonstrated Abbott Laboratories' leadership and innovation, disciplined execution, and strategic actions taken to position the company for sustainable long-term growth. Innovation continues to be the foundation of our success. In 2025, we achieved several important milestones that strengthen our position for the future, including regulatory approvals for our Volt and Tactiflex Duo PFA products, a new indication for Navitor TAVR valve, CMS national coverage for Triclip and CardioMEMS, completing enrollment in our pivotal trial to bring a new LAA device to market, filing for FDA approval for our dual glucose ketone sensor, initiating the pivotal trial of our coronary IVL device, starting the launch sequence in EPD to bring biosimilars to emerging markets, and recently starting the launch sequence in nutrition to bring new products to market that meet evolving consumer preferences. 2025 was also a year of disciplined execution. We delivered top-tier margin expansion and achieved our original target of double-digit earnings growth in earnings per share despite the implementation of new tariffs and heightened market challenges in China. Finally, in 2025, we made important strategic moves to shape Abbott Laboratories' future. Our announced acquisition of Exact Sciences will allow Abbott Laboratories to enter and lead in the fast-growing cancer diagnostics market and add a new high-growth business with an attractive pipeline to the Abbott Laboratories portfolio. We expect 2026 to be another year powered by innovation, operational excellence, and strategic execution. As we announced this morning, we forecast the midpoint of our 2026 organic sales growth range to be 7% and the midpoint of our adjusted earnings per share range to reflect 10% growth. I'll now summarize the fourth quarter results in more detail. I'll start with nutrition, where sales declined in the quarter. Abbott Laboratories has been in the nutrition business for more than sixty years. With that history comes experience, not just in times of growth, but in times that require navigating challenges. As I mentioned last quarter, the US pediatric business is seeing an impact from market share loss partly due to the loss of a large WIC contract last year. But our results this quarter underscore a broader challenge, which is the need to reignite volume growth, a challenge many consumer goods businesses face today. Over the last several years, we've seen manufacturing costs in nutrition rise, in part due to a post-pandemic driven surge in commodity costs that remains in our cost base today. We've increased prices to help mitigate the impact of higher manufacturing costs, but those price increases in the current economic environment have become a factor in constraining volume growth. Many consumer goods businesses are facing this dynamic. Higher manufacturing costs led to higher prices, which in turn are suppressing demand as consumers become increasingly more price-sensitive. This path is not sustainable long-term, so we began to make changes in the fourth quarter. Our goal is to transition our business back to one with a more balanced growth profile, with volume growth playing a greater role going forward. In the fourth quarter, we began implementing price and promotion initiatives to help start the process of reigniting volume growth. To further drive volume growth, we are increasing our focus on innovation, which is an area that was deprioritized the last few years given the necessary heavy focus on production and supply chain management in this business. Following the launch of two new versions of Ensure late last year, we expect to launch at least eight new products over the course of the next twelve months. We expect performance in nutrition to remain challenged in the first half of the year with a return to growth in the second half. While this transition back to a more sustainable volume-driven business has consequences on our near-term results, these are the right steps to take to better position the business for longer-term success. Moving to diagnostics, sales increased 3.5% due to the anticipated year-over-year decline in COVID testing sales. Core Lab Diagnostics grew 3.5%, achieving a third consecutive quarter of accelerating growth and building steady momentum as we enter 2026. For the full year, excluding China, growth in Core Lab Diagnostics was 7%, reflecting durable demand in markets around the world. In point-of-care diagnostics, sales grew 7% in the quarter driven by adoption of our high-sensitivity troponin test, which allows for earlier and more accurate detection of heart attacks. Turning to EPD, where sales increased 7% in the quarter. Growth was well-balanced across the markets and therapeutic areas that we participate in, including double-digit growth in India and several countries across Latin America and The Middle East. By focusing on high-demand therapies and faster-growing markets, EPD delivered its fifth consecutive year of sales growth exceeding 7%. And I'll wrap up with medical devices. Sales grew 10.5%. Philip Boudreau: In diabetes care, sales of continuous glucose monitors grew 12% in the fourth quarter and 17% for the year. With sales in 2025 exceeding $7.5 billion, this marks the third consecutive year that our CGM sales have grown by more than a billion dollars. Our success in CGM continues to be driven by strong underlying market fundamentals, a leading position in cost and scale, and an unwavering commitment to market-leading innovation. These factors have led to a continued increase in adoption across all of the various use groups. Robert Ford: In electrophysiology, sales grew double digits in The US and internationally. In December, we announced FDA approval of our BOLT PFA catheter, which represents our first PFA product offering in The United States. And earlier this week, we announced that we obtained CE Mark for our new Tactiflex Duo ablation catheter, which offers both RF and PFA energy to treat patients battling AFib. In structural heart, growth was driven by double-digit growth in Navitor, double-digit growth in Triclip, and double-digit growth in MitraClip. In the coming weeks, we'll achieve an important milestone completing enrollment in our CATALYST trial. This trial is evaluating the performance of the amulet left atrial appendage device compared to oral anticoagulants in patients with AFib. This trial is designed to generate the evidence to demonstrate the clinical benefits of the amulet, which could lead to broader adoption and expansion of the addressable market. In heart failure, growth of 12% was driven by growth across our market-leading portfolio of ventricular assist devices, which offer treatment for chronic and temporary conditions, and growth in CardioMEMS, our implantable sensor used for the early detection of heart failure. Our investment strategy in medical devices is based upon a true two-pronged approach. Invest to sustain strong performance in high-growth segments like diabetes, structural heart, electrophysiology, and heart failure. And we invest to increase the growth outlook in more foundational segments like rhythm management and vascular. While the investments in traditionally high-growth segments tend to get more attention, the investments we've made in our foundational businesses are generating very impressive returns. In Rhythm Management, growth of 12% was led by continued strong uptake of our leadless pacemaker, Aveir. For the full year, growth of 10% in Rhythm Management represents the third consecutive year of significantly outperforming the market. With Aveir and the investments we're making in conduction system pacing and other novel technologies, we see the $10 billion rhythm management market as a great opportunity to capture market share and drive sustainable growth for years to come. In vascular, growth of 6.5% was led by double-digit growth in vessel closure products and growth from ESPRIT, our below-the-knee resorbable stent. For the full year, vascular sales grew 5%, making this the second consecutive year vascular has delivered mid-single-digit growth. With the expected approval of our coronary IVL device next year, we expect growth in vascular to follow a similar pattern of acceleration that we've seen in rhythm management. And lastly, in neuromodulation, growth of 5.5% was led by strong international growth. We turned our rechargeable spinal cord stimulation device. So in summary, despite facing some challenges in '25, we achieved our original target of double-digit earnings per share growth. Our new product pipeline continues to be highly productive. And combined with the strategic steps we took to shape the company for the future, we're well-positioned for accelerating growth in 2026. I'll turn over the call to Philip. Thanks, Robert. Philip Boudreau: As Mike mentioned earlier, please note that all references to sales growth rates, unless otherwise noted, are on an organic basis. Turning to our fourth quarter results, sales increased 3.8% when excluding COVID testing sales. Adjusted earnings per share of $1.50 reflects growth of 12% compared to the prior year. Foreign exchange had a favorable year-over-year impact of 1.4% on fourth quarter sales, which was in line with our expectations at the time of our earnings call in October. Regarding other aspects of the P&L, the adjusted gross margin profile was 57.1% of sales, which despite the impact of tariffs, increased 20 basis points compared to the prior year. Adjusted R&D was 6.2% of sales and adjusted SG&A was 25.1% of sales. Adjusted operating margin was 25.8% of sales, which reflects an increase of 150 basis points compared to the prior year. Turning to our outlook for 2026, today, we issued guidance for full-year adjusted earnings per share of $5.55 to $5.80. This reflects 10% growth at the midpoint of the range and contemplates an adjusted earnings per share forecast of $1.12 to $1.18 for the first quarter. For the year, we forecast organic sales growth to be in the range of 6.5% to 7.5%. Based on current rates, we expect exchange to have a favorable impact of around 1% on full-year reported sales, which includes an expected favorable impact of around 3% on first-quarter reported sales. And we forecast our adjusted tax rate to be in the range of 15 to 16%. With that, we'll now open the call for questions. Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone. You will then hear an automated advising you that your hand is raised. To withdraw your question, please press 11 again. For optimal sound quality, we kindly ask that you please use your handset instead of your speakerphone when asking your question. Our first question will come from Larry Biegelsen from Wells Fargo. Your line is open. Larry Biegelsen: Good morning. Thanks for taking the question. So, Robert, on the last call, you seemed comfortable with consensus revenue growth, but you're guiding a little bit lower today. I assume that's related to nutrition. Can you talk about what's changed since the last call? And how you're thinking about the year playing out from a cadence standpoint? I assume, you know, you would expect growth to accelerate through the year given your comments on nutrition and some of the launches. I'll leave it at that. Thanks for taking the question. Robert Ford: Thanks, Larry. I think if I remember, you're the one who asked that question back in October. And you know, when I answered that question, I think consensus was 7.5% top line. EPS was 10%. So today, we guided the midpoint at 7% on the top line, 10% on the bottom. So the midpoint here is half a percent lower than what was consensus. But other than that, nothing's really changed. The EPS is in line with consensus, expecting healthy margin expansions. I'm sure we're going to talk a lot about the pipeline, which is either on target or ahead of schedule in certain products. The balance sheet's in great shape. I feel good about us closing Exact Sciences. So the half-point change on the top line is, as you pointed out, really the change in the near-term outlook, I'd say, of our nutrition business. You saw in our quarter, in our Q4, we had a negative quarter. And as I said in my comments, you know, there's a component of this business. It's a healthcare-driven product portfolio, but there's a component of it, a dynamic of it that is very much aligned with consumer packaged goods. And I'd say the challenges that CPG businesses have been facing are pretty well known following the pandemic. Pretty significant surge in costs between 2022 and '24 to offset that. I think we all went ahead and tried to mitigate it with price increases that obviously drove the top line, but more importantly, I would say, improved or didn't allow the economics and the profitability of the businesses to deteriorate. If you look at our profitability in that business, 2024, 2025, where it was back in 2022, it had that impact. But the higher prices have resulted now in what I see as kind of suppressing demand and lowering the volume growth. And the pressure in the volume growth accelerated, I'd say, as we moved throughout Q4 and consumers became increasingly more price-sensitive. So as I said in my comment, it's not a sustainable path. You'll get down into the spiral if you keep increasing prices. You'll keep on driving volume down. So you know, we could have gone a couple more quarters, maybe nine more months doing this, but it would not be sustainable. And at some point, something fundamentally has to change here. And I just felt that the longer we took to make this change, the more painful it would be. If I look at the strength of the portfolio right now and the growth, all the growth prospects we have, the ability to add a whole new growth vertical, I just thought that the timing was right to do this and do this as quickly as possible to get through it. So we began implementing price promotion initiatives that are going to help invigorate growth. I think early signs right now, Larry, are encouraging. Obviously, we're going to have to keep monitoring that. And then we're also launching a lot of new products to be able to kind of support that volume growth. We haven't had to reallocate R&D resources to be able to do that. You know, this is a business that operates around 2, 2.2% of R&D, so we just reallocated within that budget to focus on new product development. So we'll have a couple of quarters here where growth in nutrition is going to be challenged. And then in the second half, we'll return to positive growth. And I got confidence in the team that's in place today that we can transition back to more of a volume-driven growth business. If you look at what we did back in 2022 when we had supply disruption, it took us about nine to twelve months to get our share back. I don't think it's going to take that long, so I think it's about a six-month process here of reshifting that. And that's really what's creating, I would say, or part of it, what's creating a little bit of this first half, second half dynamic in our growth forecast. But outside of that, Larry, where we were in October, nothing has really changed. In fact, I'd say a significant majority of the company here is either maintaining high single-digit top-line growth or low teens growth or they're accelerating their growth versus 2025, whether it's our cardiovascular franchise or diabetes products, EPD, our pharma business, we're going to be lapping the core diagnostic headwinds that we faced last year. If you remember, we had about a billion dollars of headwind that we faced last year in our diagnostic business, whether it was COVID and the China challenges. That's mostly going to be behind us. We're going to be adding another high-growth vertical with Exact Sciences. So I think there's a lot to like here. I think there's a lot of growth here. And while we know we've got some work to do in nutrition, I can guarantee you that we're not distracted by that from all the great opportunities that we have here. So like I said, I think we've got a good setup for 2026. A lot of accelerating growth as we progress through the year. Larry Biegelsen: Alright. Thank you very much. Robert Ford: Thank you. Operator: Our next question will come from David Roman from Goldman Sachs. Your line is open. David Roman: Thank you. Good morning, everyone. I did want to start, Robert, on the pipeline and then maybe just ask a follow-up question, if we have time, on the guidance and the outlook. You did talk about some of the approvals in the EP business. And most specifically, can you help us sort of frame the Abbott Laboratories portfolio in EP maybe looking back six months, where we are today, where you are then six to twelve months from now, and contextualize kind of the portfolio relative to competition and where you see the biggest opportunities to accelerate growth there with Volt, Tactiflex Duo, Tactiflex VT, I think even NextGen Agilis, InsightX, etcetera. Robert Ford: Sure. I mean, I think that I do have to put that into context. I mean, if you go back three years, David, there was a lot of concern about our franchise, you know, that was growing double digits that was going to, you know, be flat or even negative because we didn't have a PFA catheter. You know, we developed a strategy. The team put together a strategy. We presented it to our board three years ago in terms of what we were going to do. And over the last couple of years, even without PFA products, we've been able to actually sustain our double-digit growth rates, you know, twenty-four and twenty-twenty-five without a PFA catheter. So, the strategy that you're now referencing about our PFA products, that's just part of our strategy that we presented, you know, three years ago. And laid out here. So we began launching the PFA product line in a much larger installed base of capital and mapping systems. The launch of Volt in Europe has gone very well. I'd say when we talked about developing Volt, we said let's look at where the shortcomings of our first-generation products are and can we build those into Volt. And, you know, the feedback that I can see from the European market and, quite frankly, through the last couple of weeks as we've begun our limited market release here in The US is two things keep jumping out pretty continuously. One, the elegance, the ease, and the smoothness and the predictability of the mapping integrated with the catheter, the visualization, all of that that we spent a lot of time putting together, I continue to hear very positive feedback on that. And then, you know, the ability to potentially do these procedures with sedation versus general anesthesia, that is a recurring theme that I keep on hearing here. So, I'd say the Volt launch has gone very much aligned to what we expected as we were putting the program together. This year, we'll have the launch of Volt here in The US and Tactiflex Duo internationally. I think it comes down to we always wanted to make sure that we had a toolbox approach here for the physicians so they can have choice and they can have greater flexibility about how they use these products. I'm sure that there'll be cases and types of patients and patient profiles that will lend itself more to a balloon and bask type design, and there are going to be types of patients in situations where Tactiflex Duo with its dual energy source will be preferred. And, ultimately, it's going to be up to the physician to make those decisions. But I like the fact that, you know, the team, as they put the strategy together, that we would have both these products. I think you raised this point very well, which is I don't think that there is a company right now that's better positioned in terms of completeness of the portfolio than what we have. You know, whether it's technology or the scale and the infrastructure, starting with, you know, the capital placements that we've got. The incredibly competent clinical specialists that we have out in the field that have shown their value to our customers right now. We've got both RF and PFA products. We've got all the elements, whether it's catheters, patches, etcetera. Introducer sheets, all of that you reference. And on top of that, we've got an LAA device, which is I would say is becoming pretty clear that if you want to be a leader in this space, you can't just look at having a PFA catheter. You've got to have the full portfolio including this device. Right now, it seems like 25% of LAA procedures are done concomitantly. So I think if you put all of that together, the portfolio that we've assembled combined with the resilience of what this team has done and how they've executed, I've got high expectations for this business this year. The team knows that. I expect that we should grow at least in line with the market, David, which I expect I think it seems like the forecast here is mid to high teens. So I think we're in a really good position and I'm excited to see the second part of the strategy that we put together three years ago. And we're really excited to kind of, you know, put that second part of that phase into action now. David Roman: Very helpful. Maybe just a follow-up on the guidance. I think we all know that you don't solve your guidance to meet short-term consensus. And you are committed to achieving your commitments. But as you've thought about putting together the outlook for 2026, considering some of the different variables that you faced over the past couple of quarters, like how did you think about risk adjusting the outlook? And maybe just help us think about the considerations in the guidance and maybe just your philosophy as you kind of put the outlook together here. Robert Ford: Well, I mean, listen. I think if you look at our growth for 2026, I mean, we've always targeted high single digits and double-digit, high single-digit top line, double-digit bottom line. That's our investment identity, and we've kind of followed through with that. If you look at our 2026, I think the way you need to kind of look at it is you've got a very big portion of the company that is going to, you know, that we're sustaining that growth. In some cases, it'll be accelerating, but you know, a large portion of the company sustaining the high single-digit growth, whether it's in cardiovascular, whether in diabetes. We've got a bunch of new products launching to be able to support, you know, those kind of growth profiles in the business. EPD, supporting, you know, with the biosimilar launch, you know, that high single-digit kind of growth rate. So you've got a lot of large portions and even some geographies that, you know, we can sustain that growth and we feel that we're supporting it with product launches and investment to sustain what I consider a pretty differentiated growth rate. Then you've got the second bucket, which is, I'd say, an acceleration in our diagnostics. And all that really is is we've been doing very well taking share in our Core Lab business across the world. And what we had a challenge with last year is with, you know, COVID coming down, 2024, I think it was, like, $750 million coming down to $250 million. So you had half a billion dollars headwind there, and then you had another, you know, $400 million, $500 million headwind in China VBP. Right? Our forecast for COVID is, you know, around that same number, around $200 million. So I'm not expecting, you know, any significant growth or decline. And, you know, a lot of the VBP, you know, they come in waves. The vast majority of our sales in China have gone through the VBP in 2025. So we really felt that impact in 2025. There's going to be more VBPs in China, but the shares that we have in those waves are very, very small compared to what we have. So you've got this whole lapping of our diagnostic business. And as long as we keep on doing what we're doing in the United States, Europe, in Latin America, and other parts in Asia, which we have been doing, you're going to see a nice acceleration in our diagnostic business. And you started to see that throughout the year as the VBP impact started to dissipate a little bit as the year progressed. You've got then, obviously, you know, as I spoke quite at length here about, you know, this transition with nutrition, you've got, you know, probably one or two quarters here where growth is going to be challenged. But I am confident that what we're going to be able to do here is reignite volume growth, and you'll see that business get back to growth. So those elements there, Dave, really look at it and say, okay, you've got continued momentum in a large portion of the business. You've got some lapping that's going to be happening. And then we've got this transition, which I consider to be pretty short-term here, but a couple of quarters, to be able to get to this guide on the nutrition side. And then I'm sure we'll talk about Exact Sciences, but that's another factor here to be able to add on, you know, $3 billion plus business growing 15% a lot of growth opportunities for us. So that's kind of how we looked at it, at least from a top line. And then having that flow through down to the bottom line, making investments in the areas that we need to, and nice gross margin and op margin profile expansion too. David Roman: Great. Thanks so much. Appreciate all the perspective. Robert Ford: Thank you. Operator: Our next question will come from Robbie Marcus from JPMorgan. Your line is open. Robbie Marcus: Great. Thanks for taking the questions. Two for me. Robert, last week, when we were talking, you said you expect CGM to continue to track higher at about $1 billion a year. That would put 2026 somewhere in the low to mid-teens. Is that the right way to think about CGM growth next year? And maybe if you just want to give your updated thoughts on market growth and Abbott Laboratories' position there. Then I have a follow-up. Thanks a lot. Robert Ford: Sure. But you said next year, you mean 2026. Right? Robbie Marcus: Yes. Thank you. Robert Ford: Got it. Yeah. Yeah. I mean, I think yeah. There's all this debate that I read about that the market's slowing, and I get if you're just looking at percentages and that's how you base yourself off it, then I guess if it's that myopic, then I think okay. I understand the conclusion. But I don't consider growing a billion dollars every single year and doing it four years in a row to be slowing down here, Robbie. I think the math will work out to what you just kind of highlighted there. In the kind of low teens. But I think there's still a lot of opportunity for penetration in this both from a market perspective, but then also from our opportunity, you know, our ability to drive market share in and market expansion. I think that if you look at across all three, all three patient groups, whether it's the intensive insulin user, you know, the basal insulin user, and the non-insulin user, all of those areas still there's so much penetration to be able to have here. And you can see across the world, not just in The United States but across the world, you know, a lot of movement whether it's patient groups, healthcare systems that are, you know, looking to expand the use and the adoption of the technology into all these patient segments. You know, The US gets a lot of attention and it's an important market and, you know, there's a lot of great opportunities for us there in terms of the non-insulin user reimbursement opportunity. I continue to see nice progress in this process. Seems to be a lot of support to do this. And the data that we've shown, like we've published three studies already that show that this patient segment also benefits with lower A1c, greater time and range, all the things that have driven kind of reimbursement in the other segments. I think that this is a very strong opportunity for us here in The US. And we'll see how it plays out. I think we'll see some language in the first half and then how it all plays out with comment periods. You know this Robbie, comment periods. There's all of this. So I'm not baking that into my guidance. But, you know, I can tell you we will be 150% ready to execute whether it's having manufacturing capacity and having scale and the position in the primary care side, which is where that'll probably play out more. We'll be ready. So that provides an opportunity to, you know, to outperform, you know, that consensus forecast. I think on the intensive insulin user side, still think there's penetration to be had and adoption to be had, especially in international markets. I think it's only about 50% penetrated. So I think there's still a lot of opportunity to do the work that we're doing there. Obviously, scale and cost matter in the international markets, and I think we've got that position set. And then, you know, as you look at what I think is more specific to us, the opportunity to bring in a very product to look at market share, shift in a segment that I'd say we're probably a little bit underrepresented from a market share perspective, which is on the pumper side with the launch of our GKS sensor. I think that's going to provide us a great opportunity. I'm not going to try and pinpoint the exact quarter here, Robbie. When we get approval, we'll issue the press release, and we'll be out. But we've been working hard already concomitantly with the regulatory process, you know, with KOLs, with, you know, with physician groups, with payers, and I think there was an article that came out in The Lancet in January talking about the beginning of this year talking about, you know, the importance of measuring continuously ketones as DKA is still a major care gap here for people with diabetes. I think you've got a big opportunity here with this product for market share conversion. I think one of the surprising things for me in this as we started to really double click on these patient segments is, you know, we talked about the SGLT2 population. We did some analysis in The US. You got about 6 million SGLT2 users in The US. And if you cross-reference their usage of CGM through, you know, through all the databases, only about a million of those six are on CGMs. So I think there's going to be an opportunity here also to kind of create market expansion with this product. So not just share capture, but also market expansion. So this market is still very robust. It's becoming larger, so I get the large law of big numbers kind of lowers those percentages, but you just look at it from a penetration perspective, Robbie, there's still so much to do in all these segments and different geographies that, you know, we're still very excited and making big investments whether it's in sales and marketing, clinical, R&D, and manufacturing, because we still think that we're this is still I'm not going to say it's the first or second inning, but we're far away from being from the seventh inning on this one. So I think there's still a lot of opportunity here. We're in a good position. Robbie Marcus: Great. Maybe just a quick follow-up. It's great to see you're still able to do double-digit EPS growth in 2026. I would imagine that's coming through the top line and margin expansion. Should we think about the magnitude of margin expansion and the drivers of it? Philip Boudreau: Thank you. Yes. I'll let Bill take that. Philip Boudreau: Yeah. Thanks, Robbie. You know, I couldn't be more proud of what the team accomplished in 2025 as Robert outlined. You know, overcoming uncertainties, volatilities, and whatnot still drive margin expansion. And that commitment to the execution and excellence there maintains in 2026. Expect to do more of the same, focus on the things that are strategically aligned and adhere to where we continue to look at a 50 to 70 basis point improvement in operating margins every year, and that's kind of what we've got built into this and fully expect we'll do that through both gross margin expansion as we've done, but continue to gain leverage in the P&L where appropriate. So that's kind of how we've constructed that double-digit earnings. Appreciate it. Thank you very much. Thank you. Operator: Next question will come from Vijay Kumar from Evercore ISI. Vijay Kumar: Hi, Robert. Good morning, and thanks for taking my question. My first one on maybe on the product side. Aveir, like you mentioned, another double-digit quarter. Just curious on where are we from a penetration standpoint, what innings are we in? And you know, how durable is this double-digit growth in a category that's, you know, a pacemaker, low single-digit growth category, and you guys are doing double digits? Robert Ford: Sure. Well, I made some comments about, you know, we look at this rhythm management $10 billion market as actually an opportunity to grow. So we have been making our investments. Aveir, obviously, is a big driver of that, but we're making investments in other areas of the portfolio to kind of be able to support our ability to take market share and grow at a differentiated rate here. To your question on penetration, listen, the global low voltage or pacing segment market is around $5 billion. Whatever, $4.8 to $5.2, depending on what you're looking at, but let's just call it $5 billion. I'd say Aveir is about 10% of that right now. So, you know, early innings here for us for sure. And as I said previously, when we began this process, I wasn't interested in just getting a flash in the pan sales growth for, like, a year or six quarters. So we really worked hard, and the team did an incredible job to really establish a new standard of care, and get physicians trained. It's a different type of implant. So what we're seeing here is really nice growth in places that, you know, a year, year and a half ago we began the training process and really seeing really strong penetration there. If you look at just single chamber, I think right now The U.S., single chamber pacing, which is about 15% of the total market, that's about 50% penetrated. So there's still a long opportunity here in The U.S. and quite frankly, globally too. So I think the team has done an incredible job here where we've launched new products. We'll continue to launch new products in this space, and we think that this is the next standard CRM is these devices that are communicating with each other, that can be implanted transfemorally and don't use leads. The clinical evidence in terms of what they're able to deliver is pretty impressive right now. So I think we've got a lot of investment here that will support this type of differentiated growth rate. Vijay Kumar: Yeah, that's helpful, Robert. And my follow-up on, or I guess the second question is on cap allocation. Any updated thoughts on Exact Sciences deal close timing, you know, dilution? I think you mentioned 20¢. You know? And when you think about that, your leverage levels, it's still, you know, post-deal, it'll still be pretty modest. You still have capacity. I'm curious when you think about M&A versus divestitures or spin-offs, you know, MedTech right now seems to be spin-off seems to be the flavor of the season. I'm curious how you're thinking about those decisions. Robert Ford: Well, you put a lot into that one there, Vijay. Let me see if I can unpack that. I think from a capital allocation perspective, you know, I've always been pretty consistent with our approach. I don't have a formula that x percent goes here, y percent goes there. We are committed to a growing dividend, and we did that again for 2026 when we announced our dividend back in December. So we're growing our dividend. But outside of that, you know, we'll allocate our capital in terms of what we believe is the best balance between short-term and long-term for our shareholders where we can create value. Regarding M&A, listen, my focus right now is integration, closing Exact Sciences integration. That's going to be my primary focus. I think post-close, our gross debt to EBITDA ratio will be around 2.7 times. So to your point, we still have plenty of capacity. But I think in the near term, I'd say focus on integrating Exact Sciences. And if there's opportunities for us to add, there'll probably be more tuck-in type size deals to take advantage of. Regarding the status right now of Exact Sciences, I think we're making great progress towards closing. They've submitted, we've submitted all of our required clearances over here. There's a shareholder vote on February 20. So right now, I'm not changing any assumption regarding timing of close or kind of EPS impact. And, you know, as we integrate and as we put the, you know, as we integrate the business, then we'll go updating it as we go along. But right now, there's no change in terms of timing and in terms of dilution. So I read your note last night, Vijay. I thought that you would have been asking a question about multicancer early detection and the opportunity that exists. I largely agree with your report. I think this is going to be another great opportunity for us. And it's one that as we looked at the deal, says, okay, greater reimbursement of this type of test will really make this a very, very large segment. I think the way I see this is, you know, the same way that we have our lipid panel test every year, the same way that we do a cardiometabolic panel or a white and red blood count panel every year. You know, after a certain age, I believe that if the product is right, performs right, and it's priced the right way, I just envision this being that type of test. So I think that if that becomes the case, I think your forecast is way under cold even on the upper side. Vijay Kumar: That's helpful comments, Robert. Thank you. Robert Ford: Thank you. Operator: Our next question will come from Danielle Antalffy from UBS. Your line is open. Danielle Antalffy: Hey, good morning, everyone. Thanks so much for taking the question. And Robert, just two questions for you on nutrition. Appreciate all that you're saying about the strategy there going forward. But I guess the first part of the question is, what gives you confidence that these are the right prices that you're landing at today to drive that volume increase? Like, did you guys do I appreciate it's global. So imagine it differs by market. And then the second question is now and tell me if I'm wrong here, but presumably nutrition has a different profitability profile and maybe talk about whether, how it changes your view about how this fits into the entire Abbott Laboratories portfolio. Thank you so much. Robert Ford: Sure. Regarding the pricing, so we did some pricing work just before Thanksgiving in time for, you know, what usually is a pretty busy kind of retail activity. And so we did different testing here in The United States. We did different testing internationally also. We got the results back on The US side pretty quickly. You get to see the impact pretty quickly. And like I said in the comments, I think the early signs are encouraging. But I also said, hey. We gotta keep monitoring this. You gotta keep monitoring it for the consumer. You gotta keep monitoring it for competitive activities. But I think right now, based on what we have, I think we've kind of called it right. And, you know, regarding, you know, kind of allocating expenses, listen. We don't have a cookie-cutter approach across all the businesses. You know, it always depends on, you know, momentum, opportunity, the balance of the short and the long term, and so we take a very kind of detailed view in terms of how we're allocating. Yeah. The profitability has improved in this business. I'd say it's probably from a profile perspective going to be in line with what it was in 2025. We've obviously got some adjustments in our spend level and learned how to spend a little bit better, and we did that also in Q4, shifting some of the focus from kind of, you know, marketing and brand to a little bit more kind of price and promotion. At least for these next six months. And that way, we're able to at least kind of maintain a kind of steady profile over here. Danielle Antalffy: Thank you. Robert Ford: Thank you. Operator: Our next question will come from Matt Taylor from Jefferies. Your line is open. Matt Taylor: Sorry. Good morning. Thanks for taking the question. I wanted to start with diagnostics and see if you could unpack the dynamics there a little bit more. You touched on the China headwinds, in VBP and mentioned some smaller programs or categories there. What's the outlook like for diagnostics in China? It does seem like the rest of the world's doing fairly well. But what do you foresee for China growth this year and next in diagnostics? Robert Ford: Well, specifically in diagnostics, like I said, I think we've gone through what I would consider the bulk of our VBP based on the different, you know, the strength and the market share we have and the different aspects. The way they're going about this is they're just looking at categories of assays and then kind of implementing it in the first two were the ones that we had, you know, over 40, 45 market share in those markets. So we kind of felt that pretty significantly. I think the next big area of VBP is going to be on your regular kind of core lab oncology testing, and, you know, we have very little market share over there. So listen. We put a new management team in place there. Put our most experienced commercial person that is driving that business. We've done a lot of work there between working with our distributors, segmenting the market, looking at our product portfolio, looking at different types of product offerings, you know, new product offering versus, you know, legacy product offering. So I think the teams have done a really good job there. And my expectation with that business going forward is, listen, I'm not expecting, you know, I'm not expecting big growth out of it. All I need for it is to be pretty stable. And it being stable, I get to have the other parts of the portfolio that are accelerating. Our US business is actually done better than what it's done in the past, so we're capturing market share over there. Our Latin America business is doing better than what it's done in the past, capturing share there. Our European business is continuing to grow and got a good position over there. So I'd say the outlook of that business is we will be, I'd say, single-digit growth this year versus kind of where we were in 2025. And if you remove China, again, this is a full-year view. If you remove China, then you're in those you're in that kind of 7 to 8% kind of range. So I don't like doing that, Matt, because, you know, China is part of our business. But you'll see an acceleration even with China just because it's a little bit more stable versus where it was last year. Matt Taylor: Great. Thanks. And maybe I could just ask a follow-up on diabetes. You talked about some optimism for the outlook for the market and specifically around the non-insulin type two coverage. We've seen the guidelines change, and so I definitely see a potential for that coverage to expand significantly. You mentioned you've seen some progress in the process. And I guess I was wondering how you think that could play out in the first half of the year, what forms the new coverage could take, or any other thoughts that you had on that? Robert Ford: I don't want to get ahead of myself. What I can tell you is, listen, there's definitely support. There's support from the ADA. There's support from other physician groups. Okay? And their support because the clinical data is backing that support up. Right? I mentioned that we've got three studies that we did with that patient segment and it shows this improved A1c and this better time and range. So I think the support is backed up by clinical evidence and you've got a US HHS and CMS that sees the value of this type of technology, sees the value of being proactive in managing your health even if you're not taking medications or you're not taking insulin, bringing this type of technology improves outcomes. So you have a receptive CMS. Let's call it like that. Like I said, I think you're going to see some sort of language, Matt, in the first half. Okay? But I know how these things go. We've gone through them so many different times at different parts of the product. Language will come out, then there'll be a ninety-day comment period. Then there'll be a sixty-day period to be able to evaluate it. And right now, could that be a different process? There could be a different process. It could be a much shorter comment period. It could be a much shorter implementation timeline. Because there is this support and desire to bring this to more people. But like I said, I'm not going to bake that in. I'm not going to bake that in just yet, but I am being prepared. That means the team is prepared. I mean, if it happened next week, I'd tell you they'd be prepared. So we're doing a lot of work there. I think the key aspect as you think about that expansion is that it's going to happen predominantly in primary care. So how well are you set up? How well is your sales force deployed? How well is your integration into the healthcare systems with Epic and other another. So that's going to be an important part. And outside of that, I think we should just be, think, very enthused I mean, very enthusiastic that this will happen. Whether it happens in the second quarter, the third quarter, for me, like, I'm thinking about this. This is going to be a huge opportunity for this market, not just in The US, but globally for years and years to come. So let's just get it right. Matt Taylor: Great. Thanks so much. Thank you. Operator: Thank you. Our next question will come from Travis Steed from BofA Securities. Your line is open. Travis Steed: Hey, thanks for taking the question. Maybe to spend some time talking about in MedTech kind of the macro procedure environment given some of the worries on APA subsidies. And then I'll just go ahead and my second question out. When you think about for total Abbott Laboratories and growth over 2026, we think about more Q1 first half being more in line with kind of the Q4 growth and then improve from there over the second half? Robert Ford: Yeah. So, yeah, I think that's probably I think that's probably good. I mean, think you know, sometimes these puts and takes, you know, it kind of just masks, you know, sometimes it feels like you're better than what you are because you're lapping something, you know, So I tend to look at it also on a two-year stack basis. So if you look at it at a two-year stack basis, it looks pretty, you know, there's some acceleration. In Q3 and Q4, but not to the extent, you know, without, you know, just on a one-year, one-year basis. But I think that's the right way to look at it. You know, obviously, we're always striving to do better, but I think that's a good it's a good starting point. What was your other question on med tech volumes? Yeah. Listen. I think I read some report that there were some concerns about med tech volumes in Q4. You know, we just reported our Q4. You're going to have a bunch of med tech companies that will report over the next couple of weeks. I would be extremely surprised if you hear that volumes were short in Q4. Our volumes were really good in Q4 across all of our categories. Even what is considered what we call, you know, more foundational or traditionally more slower growth kind of segment. So I think the evidence on our print and our guide is not suggesting that the med tech volumes are slowing, and I think there continues to be given the innovation that's happening in the space, given the clinical evidence that's being generated with that innovation, I still see this as a very attractive segment, not just for, you know, this year or next quarter, but for many, many years to come. Travis Steed: Great. Thanks a lot. Robert Ford: Yep. Operator: Thank you. Our next question will come from Joanne Wuensch from Citi. Your line is open. Good morning and thank you for taking the question. And I think I'm allowed to still say happy New Year. Two questions. I'll put them right Thank you. I'll put them right up front. EPD is sort of held up there in high single digits pretty consistently, but the macro landscape getting a little bit more complicated as we sit still here. I'd be curious if you see anything that we need to sort of be aware of over the next twelve, maybe twelve to eighteen months. And then my second question has to do with structural heart. Looks like you've multiple products, we'll call them multiple shots, and goal is keeping that growth rate going nicely. Anything you want to call out in particular or anything we should be looking at for the upcoming medical meetings? Thanks. Robert Ford: Sure. Regarding EPD, I mean, I think this team is incredibly resilient and I get that there's some concern about geopolitics going forward, but let's face it, Joanne. I mean, there's been macro challenges at least since I've been in this role for the last five years. And so yes. We gotta pay attention to them. Yes. We gotta navigate. But I'm going to rely heavily on a team that has shown that they can actually do that and do that in pretty difficult circumstances already. And continue to be able to drive the business in that, you know, seven, eight, 9% range here. So yeah, it's we gotta be mindful of it, but this is a team that on at least in these markets, have proved to be very resilient, have deep connections in the market, deep relationships, you know, clinical, distribution wise. So, and now that we're bringing our biosimilar portfolio into these markets, biosimilars are now the fastest growing generic kind segment. I feel good about this business. I think, you know, the idea of bringing this differentiated portfolio in a team that has done extremely well in navigating all of this. I think we've got, you know, also strong aspirations for this business. So, yeah, we'll keep an eye on out, but I don't think that, you know, it's something completely new for us or this business. We operate in 160 countries. We're truly a global company. So we will have to figure it out. So and then I think your question on structural heart, yeah, I mean, this is an area that we've invested heavily over the last couple of years. We've developed what I would consider best-in-class portfolio across all three valves. And I think we've got a lot of upcoming, you know, upcoming growth catalysts that will move its way through. I think we've got great new products with Navitor, Triclip, Amulet. Most of these on the early are, I believe, still in their early cycle. Yep. You guys always ask would ask me about, like, when will MitraClip grow or get back to growth. I just clearly say we did double-digit growth in MitraClip. I think that's a result of some of the guideline changes that we're seeing and kind of reigniting some of the growth here in The US. But you got a lot of we got a lot of things going on in this business. We had label expansion in Navitor and MitraClip. Got a next-generation repair technology coming out with both MitraClip and TriClip, fifth generation. I mentioned guideline changes to MitraClip and Triclip. That's having an impact. We just got approval or got approval for Triclip in Japan. That's a whole new market for us that we see a huge opportunity, a big opportunity for us, and we're launching that as we speak in Q1. We've done some bolt-on M&A in this business. I think I mentioned this last time. We acquired a company called Lara Lab, which is an AI-powered imaging interventional cardiology company that's we're integrating that into our product offerings now for pre-procedure planning. So I think that's going to help also since imaging is such an important part in these procedures. And then the pipeline looks really good too. We've got our next-generation amulet. Expect to be launching that beginning of next year. We're going to go into trial, into our IDE trial with our balloon TAVR in the second half of this year. So, again, as I'm thinking about I know what's going to launch in 2027, and I know the impact that those launches are going to have in terms of our growth rate, and we're building our pipeline to be able to ensure that we can sustain that growth in 2028. And I look at this Balloon TAVR program as really being important to do that. And then we're also going to start our IDE trial for our trans-mitral valve replacement program too, which I think is going to be best-in-class. So I think this team has got not only an incredible pipeline to work with, but we've also been making the investments on the clinical side, clinical teams, sales reps, across the world. So I think we're well-positioned in our structural heart business. Crystal, we'll take one more question, please. Operator: Thank you. And our last question will come from Josh Jennings from TD Cowen. Your line is open. Josh Jennings: Just keep it to one on capital allocation, starting to circle back. But I think the focus for your team, Robert, has been to kind of look at inorganic ads for the devices and diagnostics franchise that played out with the Exact Sciences acquisition. I mean, should we be thinking that that remains the focus? Or is the nutrition recovery can you can that business get back to mid-single-digit growth without any business of external business development initiatives? Thanks for taking the questions. Robert Ford: Sure. Yeah. Listen, I'd say the capital allocation regarding M&A and kind of our focus is, you know, it's going to be in those two areas. Right? Med tech and diagnostics is where we see an opportunity. I don't consider a need for inorganic in, you know, in our nutrition business to execute the strategy that I just described, which is to more emphasis on volume growth. I think we've got the right products, the right brands, and the right teams in place to be able to kind of do that. We know, I think the biggest investment that we're making is, you know, we're seeing the impact of that now. Which is, you know, addressing kind of, you know, price points and doing it comprehensively across the world so that we, you know, we can get everything kind of reignited back to volume growth. So I'd say that's the focus is med tech and diagnostics. So I don't think anything changes there. So I'll close here with a few comments. Listen, we've got I think we delivered a pretty strong year in 2025. Obviously, there were challenges. There'll always be challenges. We delivered on our original EPS target of double-digit, healthy margin expansion. I think I've spent some time on this call talking about our high and how we think about our pipeline and ensuring that we have a nice cadence of pipeline going forward. Not just what we're launching this year, but what we're investing in this year so that we can be ready to launch in '27 and '28. So I think the pipeline has been very productive and we took a very important strategic step to shape Abbott Laboratories for the future, with the announcement of the Exact Sciences acquisition. I think that's going to add a whole new growth vertical for Abbott Laboratories. And I think that cancer diagnostics is going to be a very important clinical and medical need for society, for global society. So I think we're going to be well-positioned there and I feel good about the timing and everything that we put in place there. So as we transition to 2026, yeah, I think I highlighted here, we've got a lot of businesses that are going to sustain what I would consider pretty differentiated growth rates high single digits, teens, and we can support those with the investments we made and the product launches that we've got. And then we've got some large businesses that are going to have some inflection points and acceleration, whether it's Core Lab or even our electrophysiology business here. So I feel good about what we've got put in what we've laid out here in terms of our plan. Obviously, we strive to do better than that, and there's opportunities to do better than that. But I think as I sit here in January, this is a good starting point. And, with that, I'll wrap up, and thank you for joining us. Thank you all for your questions. This now concludes Abbott Laboratories' conference call. Mike Comilla: Webcast replay of this call will be available after eleven a.m. Central Time today on our website abbott.com. Thank you for joining us today. Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a wonderful day.

107天前Insight Analytics约5分钟阅读