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Date

Wednesday, Jan. 21, 2026, at 9 a.m. ET

Call participants

  • Chairman, President, and Chief Executive Officer — Rajinder P. Singh
  • Chief Operating Officer — Thomas M. Cornish
  • Chief Financial Officer — Jim Mackie

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Takeaways

  • Net Income -- $69.3 million for the quarter, or $0.90 per share; adjusting for a one-time software write-down, earnings per share would have been $0.94.
  • Pre-Provision Net Revenue (PPNR) -- $115 million, compared to $109.5 million in the previous quarter and $104 million in the prior-year period, indicating 14% year-over-year growth.
  • Net Interest Margin (NIM) -- 3.06%, up 6 basis points from last quarter's 3.00% and up 22 basis points over the prior year.
  • Loan Growth -- Core loans increased by $769 million, specifically $474 million in Commercial & Industrial (C&I) and $276 million in Commercial Real Estate (CRE), while residential loans (RESI) declined by $148 million; franchise equipment and municipal finance decreased by $50 million in total.
  • Deposit Growth -- Total deposits grew by $735 million for the quarter and $1.5 billion for the year; average non-interest-bearing deposit accounts (NIDDA) increased $505 million in the quarter, and $844 million for the year.
  • NIDDA Mix -- Non-interest-bearing deposits represent 31% of total deposits, up from 30% last quarter, with a 34% target matching the pandemic-era peak.
  • Deposit Costs -- Spot cost of deposits declined by 21 basis points to 2.10% at period end; compared to December last year, spot cost is down 53 basis points.
  • Brokered Deposits -- Represent 16.6% of total deposits in the quarter, reflecting increased usage due to higher-than-expected deposit growth.
  • CRE Portfolio Metrics -- Commercial real estate loans totaled $6.8 billion, constituting 28% of total loans; CRE grew 9% for the year, with office exposure declining $98 million (6%) quarter over quarter and criticized/classified CRE loans falling by $36 million.
  • Credit Quality -- Criticized/classified loans decreased by $27 million; non-performing loans (NPLs) declined by $7 million; net charge-offs were just under $25 million, affected by a $10 million C&I fraud write-off; allowance for credit losses stayed roughly flat at $220 million.
  • Capital and Book Value -- CET1 ratio at 12.3%, or 11.6% including AOCI on a pro forma basis; tangible common equity to tangible assets was 8.5%; tangible book value per share reached $40.14, representing 10% year-over-year growth.
  • Shareholder Returns -- Board authorized an additional $200 million for share buybacks; approximately $50 million remains from a prior $100 million authorization, raising total available repurchase capacity to roughly $250 million; quarterly dividend was increased by $0.02 per share.
  • Guidance for Next Year -- Anticipates core loan growth of 6% and total loan growth between 2%-3%; expects NIDDA to grow at 12%, total deposit growth (excluding brokered) at roughly 6%, and revenue growth of 8% consistent with last year's performance. Margin is projected to improve slightly from 3.06% to 3.20%, while fee income is expected to be slightly lower and expenses are expected to remain controlled.
  • Deposits Growth Source -- Every business line contributed to deposit growth except the title segment, which declined due to expected seasonality; approximately two-thirds of new deposit growth came from new client relationships, with one-third from expanded existing relationships.
  • CRE Asset Allocation Strategy -- No concentration constraints in CRE; target to keep individual asset classes below 25% of the CRE book, with mid-single-digit overall CRE growth projected for 2026 amid increased competition from banks and private credit.
  • Geographic Expansion -- Newer markets such as Atlanta, Texas, and North Carolina played important roles in loan growth; ongoing expansion in Tampa with new office investment was announced, while Florida remains the largest region for the bank.
  • Expense Outlook -- Non-interest expense increased $6.6 million over the prior quarter, primarily due to the software write-down and equity-based compensation; full-year non-interest expense rose 3%, largely due to additional revenue-producing hires and tech investments offset by lower FDIC premiums and leasing costs.
  • Spreads and Loan Origination Yields -- New C&I originations yielded 6.17%; new CRE originations yielded 5.70%; management described a 15-20 basis point compression in new production spreads in the quarter, with further tightening likely in 2026.

Summary

BankUnited(BKU +8.70%) management reported year-end financials marked by margin expansion, double-digit NIDDA growth, and sustained improvements in both deposit and loan growth across multiple business lines. The quarter saw a notable step-up in share repurchase authorization and a dividend increase, reflecting confidence in current capital levels. An isolated $10 million fraud-related C&I loan charge contributed to temporarily higher credit costs, though the allowance and overall non-performing assets remained stable. Loan growth was supported by recent geographic investments and a broad-based CRE strategy, while the expense discipline enabled continued investments in talent and technology. Non-interest income grew 28% for the year when excluding leasing, driven by capital markets growth and despite sectoral headwinds.

  • Board action increased share buyback capacity to $250 million, with management indicating opportunistic execution based on market volatility and capital targets.
  • Deposit mix improved as non-interest-bearing deposits reached 31% of total, closing in on the management's 34% target in line with pandemic-era peak levels.
  • Loan production benefited from investments in new and expanding markets, notably in Atlanta, Texas, and Tampa, alongside core Florida operations.
  • CRE portfolio is well-diversified geographically and by asset type, and management expects to balance future growth by keeping concentration in any asset class below 25%.
  • Guidance indicates continued margin expansion, controlled expense growth, and largely recurring provisioning, all under steady macroeconomic assumptions with minimal impact projected from anticipated Fed rate moves.
  • CFO Jim Mackie noted, "with our existing cost base, we're always looking to, you know, keep within inflation and generate operating leverage."
  • Rajinder P. Singh confirmed, "broker was up this quarter a little bit because we were, ourselves, not expecting this level of deposit growth."

Industry glossary

  • NIDDA: Non-interest-bearing demand deposit accounts, a key funding source for banks offering deposits without paying interest.
  • PPNR: Pre-Provision Net Revenue, a profitability metric calculated before provision expense for loan losses.
  • CET1: Common Equity Tier 1 ratio, a regulatory capital measure indicating the core equity capital compared against total risk-weighted assets.
  • AOCI: Accumulated Other Comprehensive Income, a component of equity including unrealized gains or losses not reflected in net income.
  • CRE: Commercial Real Estate, loans secured by income-producing property such as offices, retail, industrial, and multifamily units.
  • NPLs: Non-performing loans, loans on which the borrower is not making interest payments or repaying any principal.

Full Conference Call Transcript

Operator: Rajinder P. Singh, Chairman, President, and CEO; Jim Mackie, Chief Financial Officer; and Thomas M. Cornish, Chief Operating Officer. Before we start, I'd like to remind everyone that this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect the company's current views with respect to, among other things, future events and financial performance. Any forward-looking statements made during this call are based on the historical performance of the company and its subsidiaries or on the company's current plans, estimates, and expectations.

The inclusion of this forward-looking information should not be regarded as a representation by the company that the future plans, estimates, or expectations contemplated by the company will be achieved. Such forward-looking statements are subject to various risks, uncertainties, and assumptions, including those relating to the company's operations, financial results, financial condition, business prospects, growth strategy, and liquidity, including as impacted by external circumstances outside the company's direct control, such as adverse events impacting the financial services industry. The company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise.

A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. These factors should not be construed as exhaustive. Information on these factors can be found in the company's annual report on Form 10-K for the year ended December 31, 2024, and any subsequent quarterly report on Form 10-Q or current report on Form 8-K, which are available at the SEC's website. With that, I'd like to turn the call over to Mr. Rajinder P. Singh.

Rajinder P. Singh: Thank you, Jackie. Good morning, everyone, and welcome to our earnings call. Before I walked in here, I was looking at, I think, CNN or CNBC and realized that we're competing with President Trump's speech at Davos. So for those of you who are listening in, special thank you because I know we have stiff competition this morning for your attention. Honestly, if it is up to me, I'd probably be listening to this speech as well more than our earnings call. But nevertheless, thank you, and I'm going to walk quickly through the earnings for the quarter. But before we get into the quarter, just a couple of minutes on how the year turned out to be.

I'll talk about the year, talk about the quarter, give you some guidance for next year. And then I'll turn it over to Tom, who will then turn it over to Jim. By the way, Leslie sends regards from the beach. I believe she's on the call listening in. But coming back to our 2025, this was a great year for us. I mean, there is no other way to describe it. If I was to summarize everything in one sentence, I would say, double-digit EPS growth came from double-digit earnings growth, which came from double-digit PPNR growth, which came from double-digit NIDDA growth, which caused margin to expand by, like, 22 basis points.

I mean, there's a lot more nuance to it. There's fee income, this, that, and the other. But if I had to summarize it in twenty seconds, that's how I would. We pretty much hit everything we were trying to hit, and it just turned out to be an awesome year. Turning to the fourth quarter, again, this is a very strong quarter for us on just about every metric. Earnings came in at $69.3 million, $0.90 a share. There were some one-times, which Jim will walk you through. Some software write-downs that we took at the end of the year. But adjusted for that, I think our EPS would have been $0.94.

I think consensus I checked last week was $0.89. PPNR for the quarter was $115 million compared to $109.5 million last quarter. I think it was $104 million in the fourth quarter of last year. Margin, you know, continued to expand, which has been a story with us. Last quarter, we were at 3%. Now we're at 3.06%. If you compare it to the fourth quarter of last year, we're up 22 basis points. Annualized ROA came in at 78 basis points. But if you adjust for that software write-down, it was about 81 basis points. Deposits and loans, this is, like, a really strong quarter on both sides of the balance sheet.

NIDDA grew on a spot basis by $485 million, and for the year, it was up $1.5 billion. But to be honest, the right way to look at our balance, especially deposits, is always on an average basis because there's a lot of noise that comes seasonality. There's a lot of noise that comes in from just the last couple of days of the quarter. Our average NIDDA for the quarter was up about $500 million, about $505 million. And for the year, average NIDDA was up $844 million. Those are pretty solid numbers, and we're very proud of it. Now this quarter, we had guided to you that this is a seasonally slow quarter for us.

And you know, your question might be, so did the seasonality not show up? The answer is no. The seasonality very much showed up. NTS, which is our title business, was down as it always is in December. So that happened. What really made up for that and then some was all the other business lines came in very strong on deposit growth, especially on NIDDA growth. And we ended up where we did. So very happy with that performance. NIDDA now stands at 31% of total deposits. Last quarter, we were at 30%. And we want to recapture that peak that we hit during COVID years of 34%, and we are more and more confident of getting there soon.

There was obviously a Fed rate move this quarter. Spot cost of deposits came down. Spot cost of deposits declined by 21 basis points to 2.10% at the end of the year, which was 2.31% at the September. So just, you know, compared to December, spot cost of deposits is down 53 basis points. Quickly turning to loans. The last couple of quarters, we've been seeing a lot of payoffs and some expected, some unexpected. But this quarter, we've made up a lot on the loan growth side. Core loans grew by $769 million. By core, I mean commercial and CRE and small business and all that stuff, excluding residential and, you know, that we've been running off.

So the core loans growing $759 million. This is a very big quarter for us. We were very busy all through the end of the year. We're very happy about that, and Tom will talk a little more in detail about where that growth came from. Quickly turning to credit. Criticized classified loans were down a little bit by $27 million. NPLs were down a little by $7 million. We did see slightly elevated provision and charge-offs. We are in a lumpy business when these, you know, credit hit costs hit us. They do come in, you know, in large chunks.

As an example, of the $25 million, one loan, which was a fraud that we got hit by in the fourth quarter, was $10 million. It's very hard to predict these things. It's very hard to protect yourself against fraud, but it did happen. And we had a complete write-off on a $10 million loan, and that's in the numbers. So but, overall, we're feeling good about credit and expect NPLs to continue to decline into the year. Capital CET1 was a little lower at 12.3%. Partly because of growth, partially because of a little bit of buyback that we did in the fourth quarter. And on a pro forma basis, including AOCI, CET1 is 11.6%.

Tangible common equity to tangible assets got to 8.5%. And tangible book value per share is now over $40 at $40.14. I think that's a 10% growth year over year. So the board met just yesterday, looked at our plan, looked at our numbers, and authorized us for an additional $200 million share buyback. Of the $100 million that they had authorized a few months ago, we've already used up about half that. So we will have about, you know, $50 million left over roughly from the previously announced buyback authorization and another $200 million to it. So we'll have $250 million or so of dry powder. Also, they increased dividends by 2¢ as they often do at this time.

In terms of philosophy on buybacks, you know, I think you heard me say that in the past. We, you know, we want to stay in the middle of the pack of our peers. We think our middle of the pack is somewhere in the mid-elevenths. And that's what we're shooting for. Now that you know, where the herd moves, only time will tell. That number could go lower, and we will address it if it does. But right now, it feels like mid-elevenths is the middle of the pack. And we'll, you know, end of mid to low twelves and we're at the top of the end of that range. And the buyback will bring us in line.

So before I hand it over to Tom, let me quickly talk about guidance. And you know, we put a deck out so you can look at it at your leisure. But I would just for guidance, I would ask you to look at page 14 and then page 15. Page 14 is sort of a look back of what guidance we gave last year. And what were we able to deliver in actual results. We gave you guidance about deposits and NIDDA and loans and expenses and net interest margin and so on. We pretty much got there on everything and did better. On most things, NIM was up 8%.

Margin, you know, we got it to ending the year at 3%. We ended at 3.06%. Deposits, we said mid-single digits. We did mid-single digits. NIDDA, we said low double digits. We did, you know, period end, we did 20%. On the average, we did about 12%. The only one that we missed was core loan growth. We thought we would be in high single digits, but we ended up at 5%. And expenses, we said, they'll be controlled or be mid-single digits, and we ended up at 3%. So very happy with what the guidance last year worked out to be.

So with that in, you know, keeping that in perspective, our guidance for next year is on page 15. It might look like, you know, almost, you know, we were being too lazy or this is a little, you know, it's almost the same guidance that we gave you last year. You know? It's so boring that we think loan growth, deposit growth, the, you know, between NIDDA and total revenue growth, everything will be very similar to last year. The loan should grow, core loan should grow about 6%. Resi and others will shrink at about 8%. Total loan growth will be in the 2-3% range.

Deposits NIDDA will continue to grow at the 12% rate that it has been growing at. Total deposits, excluding broker, will be at about six. Revenue, which grew last year at 8%, should grow again at 8%. Margin slightly more, fee income slightly less simply because there's lease financing income and fee income that is coming down, which has dragged it down a little bit. And expenses will stay controlled. For provision, we're using an assumption that the provision will be similar to last year. Though it's a little hard to, you know, all to pinpoint that. But our best assumption is it will be the same.

The difference this year is we're announcing capital actions, which we did not announce last year, like I just mentioned, the $200 million additional buyback, that's different this year. And all of our assumptions that everything was built on, you know, the economic environment staying pretty much what it is. And spreads are tight. And tightening. So we did take that into account, which is why you see margin improvement only going from 3.06 to 3.20. It's largely because we're seeing much tighter spreads this time than we did twelve months ago. And two Fed rate cuts, but, you know, our numbers aren't very sensitive whether it's one cut or two cuts or three cuts.

The balance sheet is fairly hedged. So with that, did I miss anything? Sure. Turn it over. Alright. Let's turn it over to Tom. Great. Thank you, Raj.

Thomas M. Cornish: Just to follow-up on Raj's earlier comments on deposit growth. Total deposits increased by $735 million during the quarter. $1.5 billion for the year and NIDDA was up this quarter by $485 million and $1.5 billion for the year. As Raj mentioned, despite the normal seasonality, we have numerous business lines that contributed to strong growth in the fourth quarter, which was really good to see.

Now I would also say if you look at the lending business that we did in the quarter, which was also up strong, the treasury pipeline, operating account pipeline going into the early part of the year, is very good because you tend to fund loans first, and then you tend to migrate the deposits afterwards. So given the strength that we had in the lending teams, at the end of Q4 or during Q4, we'll see some lag time in the development of those operating account businesses. So we remain really optimistic about that. And as Raj said, core loans grew by net $769 million for the quarter. If you break that down, CRE was up by $276 million.

The C&I segments were up by $474 million, and mortgage warehouse was up by $19 million. We talked in the last few quarters about the fact that production throughout the year remained relatively strong, but we did have, you know, these headwinds of, you know, strategic exits and payoffs and sales of companies and whatnot. One of you asked me on the last call, you know, what inning we were in of the exit process. And I said we were kind of in the bottom of the ninth inning. I think if you look at the walk-through that Jim did on page nine of the deck, you know, you'll see that the production was very strong.

And the level of exits was, you know, fairly minor compared to what it had been in previous quarters. So as we move into this year, you know, while there certainly will be, you know, one or two things we exit from for various reasons, overall, I think we're in a year where production will continue to be strong, and we've kind of finished the game of looking at things that we want to get out of. Overall, RESI was down by $148 million. While franchise equipment and municipal finance were down a combined $50 million. In aggregate, that gets you to your $571 million of total growth. The loan to deposit ratio finished the quarter at 2.7%.

A few comments on the commercial real estate portfolio. It was a good year for CRE. We grew by 9%. On the team. Overall exposure totaled $6.8 billion or 28% of total loans. And as you can see from the supplemental deck, pretty well diversified across all major asset classes. Again, consistent with last quarter, at December 31, the weighted average LTV of the CRE portfolio was 55%. And the weighted average debt service coverage ratio was 1.82. So both very strong metrics. 48% of the portfolio was in Florida. 22% in New York, and, obviously, the remainder in other areas where we've emphasized growth in the Southeast and Texas over the last couple of years.

Our exposure to CRE office was down $98 million or about 6% from the prior quarter end. Criticized and classified CRE loans declined by $36 million in the fourth quarter primarily as a result of payoffs and paydowns. I think at this point, we continue to see generally positive trends in the overall office book. Obviously, it's down significantly over the last few years. I think this will be a year where we see a lot of rent abatement improvements. And in most of the markets that we're in, when we kind of break it down submarket by submarket, we're seeing continued improvement in each of the submarkets.

Page eight of the investor deck provides greater detail on the CRE portfolio. So with that, I'll turn it over to Jim.

Jim Mackie: Thanks, Tom. Gonna tick through a couple of things for the quarter, try not to repeat too much what Raj and Tom mentioned, but I do want to highlight a few things. So as reported, $69 million, a little north of $69 million of net income for the quarter, $0.90 a share. We did call out for you a one-time write-down of previously capitalized software as we were going through our tech stack during our strategic planning. Determined to go in a different direction, so we took that charge during the quarter. If we adjust that net income, it would be $72 million or $0.94 a share. So that's roughly consistent with the prior quarter.

Up about $3 million from a year ago. And importantly, we're seeing PPNR grow about 14% year over year. On NII and NIM, you know, where NII is up 3% from the prior quarter, 7% from a year ago. The NIM expansion story that Raj mentioned, six basis points up to 3.06%. It's really a pretty simple story. It's our cost of deposits is declining by more than our loan yields are declining. You know, we talked about the NIDDA growth of average balances of $505 million during the quarter. Interest-bearing deposits were down. Average bearing deposits were down about $347 million. So that brings our NIDDA mix up to about 31%.

We were successful as we've been all year long passing along rate cuts timely. So that certainly helped margin. And our loan growth, timing of the loan growth during the quarter was helping us as loans were put on throughout the quarter. And then we're also helped by the RESI loans that paid down. We did see a favorable mix in the lower coupons, maturing. So all of that combined for the six basis point improvement. Just a reminder, NIM was up 22 basis points for the full year. NIDDA up $1.5 billion. So our mix is, you know, up from 27% to 31% at the end of the year. Couple comments on credit provision and reserving.

So our charge-offs were just shy of $25 million or 30 basis points for the quarter, slightly elevated from where we'd like to see it. You know, we sort of underwrite to about a 25 basis point charge-off rate over time. So a little elevated. You know, we remind you constantly, we are a little bit episodic. Raj talked about a couple of items during the quarter. Provision was $25.6 million for the quarter. Again, a little bit elevated, but it was really a function of the specific reserves that we booked and to a lesser extent, the previously reserved charge-offs. We provide a walk for you in the deck. Allowance for credit losses, roughly flat. Right around $220 million.

The coverage ratio is slightly down, but it's really just a bunch of model noise and rounding. So it's, you know, I'm gonna call the coverage ratio flat as well. Again, on page 10, we lay out all the moving parts in a walk. As Raj mentioned, non-performing loans are down and criticizing classified loans are also down. On non-interest income and expenses, again, non-interest income is a very positive story for us. You know, we're up $30 million. I mean, we're up to $34 million growth quarter over quarter and over year. And, you know, that is despite our leasing income falling. Capital markets related revenue is continuing to steadily improve over time.

So if we exclude that $13 million of leasing income that we saw in 2025, we had full-year non-interest income grew by about 28%. So while the numbers are still small, it's definitely a positive growth area for us that'll continue to help us moving into the next year. On the non-interest expense side, we were up $6.6 million from the prior quarter. The majority of that was two things. One was the capitalized software charge that I mentioned earlier. And an employee compensation expense, the impact of the stock price movements, that impact on equity-based compensation. Makes up the other portion. For the full year, non-interest expense was up 3%.

It's largely comp and bennies up as we've been hiring revenue-producing people, technology expenses as we continue to invest and grow our business. We also had a credit in '24 just to remind you of that didn't repeat. Deposit costs are growing as we grow our deposit base. And that's being offset by lower FDIC premiums and lower leasing costs. So, sorry. Before I turn it back to Raj for some concluding remarks, I just want to make a quick comment on '26 guidance in addition to what Raj mentioned. Again, all that guidance is on page 15. It's a full-year view. Just want to remind you that we do have some seasonality in our results during the year.

For example, loan volume is typically seasonally low for us early in the year. And our non-interest-bearing deposit balances are typically highest in the second and third quarter. You know, while we do think provision is gonna be flat year over year, you know, the timing of which in what and where, you know, will be determined as everything is a little bit episodic. That, I'll turn it back to Raj.

Rajinder P. Singh: Yeah. You know, the one part that I usually talk about, and I forgot this time, is generally, you know, how's the economy and how's the stuff that we don't control. Right? So that's economy, that's rates, and the sort of the regulatory environment. So the regulatory environment is constructive. There's no surprising news over there. In terms of the economy, it feels very good. But at the same time, you know, if you watch the news too much, it can scare you a little bit. That's what has been the case for the entirety of 2025. You know? A lot happened, but it didn't really impact the economy. In fact, the economy is doing reasonably well.

And we're gonna stay optimistic until proven otherwise. But it feels really good both in New York and over here. Business in New York also is doing very well. And it's not just Florida. So the economy is doing well. And as far as we can see it, it will continue to. Despite, you know, heightened geopolitical risk and noise. And rates, again, you know, the monetary policy looks pretty straightforward what'll happen this year. But you know, it's hard to predict too far out in the future what will happen with rates. We think two rate cuts might be one, might be two, might be three.

Nobody's predicting, you know, eight rate cuts or anything crazy like that or for that matter, the rate start to go the other direction. We have hedged ourselves as best as we can and we're not worried about, you know, rate cuts being a little bit more, a little bit less. But if there's something crazy, if there are, you know, if it's let's go back to zero or something like that. That'll impact our earnings and everyone's earnings. But outside of that, you know, the environment feels fairly straightforward. And we're running the business with those assumptions in mind. So with that, let me turn it over and take some questions.

Operator: Thank you. 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 are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble the roster. And the first question will come from Wood Neblett Lay with KBW. Please go ahead.

Wood Neblett Lay: Good morning. Wanted to start on the fourth quarter non-interest-bearing deposit growth. As you mentioned, in your comments, you know, it's pretty remarkable to see the growth when you also saw the downward seasonality in the title business. I was just wondering if there were any specifics on what drove that growth and, you know, and what you would attribute it to.

Rajinder P. Singh: So first, I will say, actually, just before this call, we might get this question. Tom and I were discussing this. I look at business line by business line, you know, where the growth came from. And to see if there were any outliers. Happy to report there are no outliers. Every business line contributed. It's pretty even. Small business, middle market, corporate, even CRE, everything brought in deposits. HOA, every, you know, the only one with the negative number was title, which we knew. Right? This is a seasonal time when NTS slows down, and then they pick back up, you know, in late first quarter. So it's not concentrated in any one place.

However, we do see from time to time like, you know, last day of the quarter, some deposits may come in, which may leave, then a couple of weeks later. And I wouldn't call that core growth, which is why, you know, $1.5 billion of NIDDA growth for the year is probably not the way to look at it. I think the right way, the honest way to look at it is what happened to our average NIDDA. Our average NIDDA was up $844 million for the year. And our average for the quarter was $505 million. I'm very happy. Like, listen. I'm very happy that, you know, we ended the year where we did.

But, average is the right way to look at this, not period end.

Wood Neblett Lay: I would also add that when we look at this, we tend to think of dividing the world into two segments. One, I would call new wallets and one, I would call expanded wallets. So if we look at the quarter from a, you know, core operating account growth, I would probably say just roughly about two-thirds of the growth were new wallets, meaning new relationships. And about a third were expanded wallets in terms of deeper cross-selling across relationships that we're already in. So we thought that was a pretty healthy mix.

Wood Neblett Lay: Got it. That's helpful color. And then embedded in the NII guide, could you just walk through some of the loan and deposit beta assumptions y'all are assuming there?

Rajinder P. Singh: The beta assumptions for deposits are the same that betas that we've realized so far. It's about 80%. So the two rate cuts that we have baked in here we will achieve 80% just like we have been achieving. On loans, it's really the matter of which business line you're talking about. You know, we do a lot of fixed-rate, sorry, floating-rate loans. So we're more of a floating-rate job than a fixed-rate job. Even our CRE business has become predominantly floating rate. So, you know, it depends on if the floating rate, the beta is 100%. And if it's fixed, it's zero. So you'll be able to find in our disclosure the mix of floating and fixed.

Jim Mackie: Yeah. You know, it's not until you see a significant number of rate cuts before you really start to see betas materially drop before repricing. You know, we talked about this before. We're modestly asset sensitive. So, you know, if you, you know, a few rate cuts up or down really doesn't move the needle for NII. And you know, I know there's a lot of talk now of, you know, is there gonna be less Fed rate cuts than what the Ford's are. And so, again, we're pretty neutral, so we be slightly benefited, but not much at all.

Rajinder P. Singh: And always remember, a positively sloping yield curve is good for bank earnings, especially our bank earnings. Which is where we find ourselves today, and we have been over the last few, you know, few months. So we're happy about an upward sloping curve.

Wood Neblett Lay: Got it. And then last for me, you know, it's positive to see the buybacks in the fourth quarter. You upped the authorization at, you know, I would expect the stock to react pretty well to the quarter. How do you balance sort of price sensitivity of the buybacks with wanting to get capital levels down to more peer-like numbers?

Rajinder P. Singh: Yeah. I think there is still, we're still living in pretty volatile times. Stock prices can move for nothing that you do. Though something might happen in the market and prices can move a lot. I mean, I remember the day the administration said they were gonna cap credit card interest rates by 10% or to 10%. And our stock took it on the chin even though we're not even a credit card company. So on days like that, when you see, you know, overreaction, we'll lean in a little bit more. Other days, we'll lean in a little less. So we'll stay opportunistic like that.

I do expect volatility to continue because this twenty-four-hour news cycle, you know, just stuff comes at you and then it distorts prices for a period of time, and then it gets better after a couple of days. People forget about it, life goes on. But it'll create those opportunities, which we will take advantage of.

Wood Neblett Lay: Alright. That's all for me. Thanks for taking my questions, and congrats on the good quarter.

Jim Mackie: Yep. Thank you. Thank you.

Operator: The next question will come from Jared Shaw with Barclays. Please go ahead.

Jared Shaw: Hey, guys. Good morning.

Rajinder P. Singh: Morning. Morning.

Jared Shaw: Hey, just following up on the deposit side, with the 80% beta. It's great that you think that you can maintain that. Can you just walk us through what percentage of the non-DDA are indexed or brokered and how, you know, I guess, how you feel that you can still keep that 80% beta?

Rajinder P. Singh: I think the broker, we will have in our disclosures probably around 15% of our deposit. I don't have that number in front of me exactly. But in terms of index, I don't think we have disclosed that, and it's actually very hard to disclose because some of the indexing might be just contractual, but a lot of it is just handshakes. So I'm not sure we could actually give you an exact number. It does come down to, you know, pushing our salespeople who then push our clients. And sometimes it's just, you know, client to client sort of how much you can push. Overall, we feel we can get to 80%. We have been getting there.

Without much trouble, and over the next couple of cuts, we'll do the same. Like Jim said, if, you know, if it's, you know, eight cuts, then this is a very different story. And while nobody's expecting that, we do run sensitivities along that as well. And while margin, you know, in an extreme scenario like that will be hurt, it's not like, crazy. We can manage even some pretty dramatic cuts if it comes to that.

Jim Mackie: 16.6% for the fourth quarter.

Rajinder P. Singh: Yeah. Broker to 16.6%. Actually, broker was up this quarter a little bit because we were, ourselves, not expecting this level of deposit growth. So we had expected deposits to be not as good, and we had bought some brokered. Which, you know, December turned out to be better than we expected.

Jared Shaw: Then maybe shifting to CRE. You know, good to see, you know, that CRE growth, and you've spoken in the past about having a lot of capacity under the capital concentration. How should we think about CRE growth as a percentage of overall growth? Where you'd like to bring that? And maybe just comment a little bit about the competitive market on the CRE side.

Rajinder P. Singh: I don't think we're constrained in CRE by, you know, room in the bucket. There's lots of room to grow. What we're constrained by is our assessment of, you know, the kind of business we want to do. We're still not doing much in office or any in office. We're contracting that. We're not doing much any in hospitality. But we are focused on, you know, we have room on the other asset classes, which is where the growth is coming from. So, Tom, you want to add to that?

Thomas M. Cornish: Yeah. I would say if you look at the breakdowns in the supplemental package, you can see that virtually all of our asset classes today are kind of in the low 20% range. And I would get there by if you take the multifamily number at 14%, and add in the construction book. The construction book is almost entirely multifamily. You know, we kind of like to look at the major asset class as being under 25%.

It's important for us from a risk perspective to keep the portfolio, a, to keep CRE, well balanced within the context of the total portfolio and risk-based capital and b, to keep the individual asset segmentation within the book, you know, at relatively reasonable and equal proportions. So you'll see their office or retail or industrial or multifamily, including construction, are all kind of in the low twenties. So, you know, we think we'll grow CRE mid-single digits in 2026, and it will be balanced, you know, across all asset classes to make sure we kind of stay any individual asset class is not above 25%. We do expect a more competitive market.

Some of our folks from the CRE teams recently attended the Big CRE conference that was in Miami Beach last week, and we saw some of the notes from that. It's clear more banks are back involved in CRE. Some that may have been sitting on the sidelines due to asset concentrations and whatnot, you know, are back, and there will be probably more competition on the private credit side as well. So look. Every, you know, I was Raj and I talk about this all the time. We're always in search of a great market that's not competitive, and we can never find one.

So there will be competition in every market, but I think we, you know, we have the balance sheet to be able to continue to work in the CRE space. I think we have the expertise and the teams to execute, and we're in a well-balanced position that allows us to be a consistent lender in the marketplace.

Jared Shaw: Okay. And if I could just ask one more, just the final one on credit. You called out a fraud. Can you just give any, you know, what category of C&I, I guess, that was in? And as we look at the provision guidance, does that assume reduction in the ALL ratio as we move through the year? Or is that more a reflection of the growth in the portfolio?

Rajinder P. Singh: No. I would expect ACL to stay, you know, fairly consistent. To give you any more color on that one loan, it was in New York. It was a contractor. And, you know, literally, the place shuttered, fired all those employees, and is out of business in a matter of days. You know? And there is no collateral to go after. So it was a complete write-off.

Jim Mackie: As with most of the trends in non-performing and whatnot, I mean, we're just not seeing any, you know, broad systemic risk that, you know, everything is uncorrelated, unrelated industries, unrelated geographies.

Rajinder P. Singh: Yeah. The only correlation is office, and which is getting better.

Jared Shaw: Thank you. Again, if you have a question, please press 1. And the next question will come from Michael Rose with Raymond James. Please go ahead.

Michael Rose: Hey, good morning, guys. Thanks for taking my questions. Good morning. Maybe we could just start on the deposit growth. I think you guys had previously talked about getting the DDA mix up to 34%. You're expecting pretty good average growth this year. It seems like a lot of the story is coming together here. Is that something that you think you can hit this year? Or is it kind of a multiyear trajectory? And then kind of what needs to, in your mind, happen to kind of get to that 34% level?

Rajinder P. Singh: I think there's a good chance we'll get there this year. I mean, we're expecting, again, double-digit NIDDA growth. So if you just do the math, we're not expecting deposits, total deposits to grow that much. So the ratio should get there.

Jim Mackie: 33-ish percent. Yeah. Maybe 33% is sort of our looking at our budget here in detail. So we're getting close to it. I mean, what's more important is that we keep driving NIDDA growth. Which we feel fairly good about.

Michael Rose: Okay. Perfect. And then maybe just one follow-up. Clearly good core loan growth expected as we move through the year. How much of that is coming from some of the newer markets that you've more recently expanded into, and then it looks like you did have a bump up in NDFI exposure of about $200 million this quarter. How should we think about that growth as we contemplate the core growth guidance?

Thomas M. Cornish: Yes. I would say if you look at growth across the franchise, a good portion of it came from the new markets we're in. I mean, we're continuing to invest more in the Atlanta market. We're investing more in the Texas market. We're investing in the North Carolina market. So we saw good growth across all of those markets. It was an important part of the growth of the portfolio, you know, for the year. So I think that's an integral portion of how we're going to continue to grow. Florida will continue to grow as well. We've also just completed a major investment in the Tampa market.

We're actually opening up our new office in Tampa next Monday in the downtown area and hiring more producers in that market. So it played, you know, a key role overall.

Rajinder P. Singh: Just mathematically speaking, new markets always tend to show more growth because there's not much runoff. Right? Mature markets where you've been in for a long time, there's always runoff that is happening. So just mathematically, they'll contribute a little bit more. But we're very happy with the investments we've made and how they're paying off. So we want to invest more. We want to hire more people in Texas. We're expanding our office space there. In Atlanta, we actually already have doubled our capacity there in terms of our physical footprint. So we're happy with how these new expansions have worked out.

We don't have any new market on the horizon because we think we can really double, triple the bets that we've already made. That's probably the best thing to do over the next couple of years.

Thomas M. Cornish: Yeah. Michael, in response to your question about the finance and insurance category, probably the largest segment of that would be what we would call investment-grade subscription-type credit facilities. We, you know, we are opportunistic in that. You know, it's a good space to be in. But the quality and rate kind of has to be right. And when it is, we'll move a little bit more into it. When it's not, we tend to move away from it. There's also a fair amount of, there's a kind of a convergence between what is insurance and what is healthcare. We have a lot of, you know, reasonably large credit relationships that are healthcare insurance-related.

That fills up a little bit of that bucket as well. Those would probably be, you know, kind of the two larger segments within it.

Jim Mackie: I think there was a $200 million increase quarter over quarter, hundred-ish was the subscription lines that Tom referred to. And to be honest, the other 100 is just refining the methodology. You know, that last quarter was the first time we pulled this information together for you, and so it's just cleaning up data and getting it organized. But the 100 being an increase in the subscription amount is a big change.

Thomas M. Cornish: Yeah. We're not very active. It's kind of the often talk about lending to debt funds world. That's really a small piece of the overall finance and insurance bucket for us.

Jim Mackie: I do want to reiterate a comment Raj just made related to our investments. You know, we're leaning into the markets that we previously announced, not, you know, in our projections for next year. It's not new markets. It's not new things. It's our existing footprint.

Rajinder P. Singh: Yep.

Michael Rose: Yep. Totally got it. If I could squeeze in just one last one, is there any reason to think that you wouldn't use most of, if not all, of the remaining buyback authorization this year just given where the stock is and earned back on the buyback?

Rajinder P. Singh: Not really. I'm a PC. Okay. Some massive opportunity for growth that we're not thinking about today, you know, we always want to use capital for growth first if we can deliver it safely. But based on the numbers we put in front of you, you know, that's what we end up doing. There is room for buyback and to fund that growth. But you know, I wish we'd be lucky enough to come back to you and say, oh, the growth is twice as much as we thought, and we needed capital. That would be a very happy problem to have. We, you know, we have a philosophy.

We want to be sort of middle of the pack in capital ratio CET1 ratios with the peer group. And we're, you know, generally targeting 11.5% CET1. And so we'll hit that through buybacks, dividends, and growth opportunities.

Operator: Perfect. Appreciate you guys taking my questions. The next question will come from David Bishop with Hovde Group. Please go ahead.

David Bishop: Hey. Good morning. Tom, quick question circling back to the loan waterfall. Just curious in terms of payoffs this quarter versus last. Were these sort of in line with last quarter? And just curious if you have a lot of sight, maybe what could be looming maybe into the first or second quarter of this year?

Thomas M. Cornish: You know, that's always tough to say early, David. Because right now, a lot of the payoff activity that we are expecting would be unexpected. I'll say it that way. In terms of, you know, companies selling, is predominantly what I would expect to see if I look at 2026. I think I would say, you know, companies selling would be probably the number one exposure that we have to payoffs. I think number two would likely be relationships that may be exiting the standard commercial banking world and opting into the private credit world because terms and conditions are different. And then lastly would be what I would call strategic exit.

So in 2025, kind of the order of that would have been reversed. We had more strategic exits and things from a pricing, deposit perspective, or, you know, type of lending that we exited. Those were easier to plan because you kind of knew what they were. You knew when the facilities matured, or you knew when they were gonna redial, you know, based upon the timing of the line of credit. So they were a bit easier to predict. This year, that number will be substantially reduced as you saw in the fourth quarter. It was a lot less than it was the previous three quarters.

I would say strategic exits were probably triple what it was in the last quarter each of the three previous quarters. So I would expect that number will probably be around what it was in the fourth quarter, the $80 million type number, maybe a little bit less. A bit harder to predict what's gonna happen in the M&A and refinance market. But when I put all of those together, our kind of base forecast is we'll still see continued quality production across all of the lines of business that we have.

Rajinder P. Singh: And we will see less payoffs within the upper part of the C&I market.

David Bishop: Got it. Appreciate that color. And then I don't know if it's Tom or Raj who said the preamble sounds like spreads are tightening. Just curious maybe what you saw in terms of average origination yields this quarter? Thanks.

Jim Mackie: Do we have that, Tim?

Rajinder P. Singh: Yeah. Give us a sec.

David Bishop: That's fine. I can...

Thomas M. Cornish: Yeah. In the interest of time, we'll follow up with you after. It'll be somewhere in our disclosure, but it's not popping up too early.

Rajinder P. Singh: It was right now. I could certainly tell you from looking at volume that spreads did tighten in Q4. If we looked at it, it didn't necessarily impact the total book greatly. If we looked at spreads in the total book for the entire year, it remained fairly stable. We did see more pressure kind of late third quarter, early fourth quarter across the lines of business. I will give you the exact number, but...

Jim Mackie: Yeah. Or Jim will give me the exact number. Was this C&I was 617? And CRE was 570.

Rajinder P. Singh: So that's new.

Thomas M. Cornish: That's new on production coming online. I would ballpark to probably say we saw 15 to 20 basis point compression in new production in Q4. It's different for different types of deals, but a bit more in Q4, and we'll probably see that going into the year.

Jim Mackie: As we built our plans next year, we certainly assumed it would continue to tighten throughout the year.

David Bishop: Got it. Thank you.

Operator: The next question will come from Jon Glenn Arfstrom with RBC Capital Markets. Please go ahead.

Jon Glenn Arfstrom: Thanks. Good morning.

Jim Mackie: Good morning.

Jon Glenn Arfstrom: Jim, maybe a question for you. Most of my questions have been asked, but just puts and takes on the expense outlook. You guys are flagging some investments in '26, but also talking about limiting growth. Just, you know, where are you spending? Where are you trimming?

Jim Mackie: Yeah. I mean, honestly, the way we set our plan is I kind of think about it as sort of run the bank, grow the bank. You know, with our existing cost base, we're always looking to, you know, keep within inflation and generate operating leverage. And then we want to use that expense discipline to invest in the things that we want to invest in. The types of things that we're investing in are continuing to hire revenue-producing staff and the various support staff to support that growth. We also are focusing on technology modernization, you know, especially, you know, our payment systems and, you know, AI workflows.

You know, all the things that continue to help us improve and grow our business. And as Raj mentioned, you know, in our existing footprint, you know, we are looking to expand in, you know, in Dallas, Tampa here, and in Florida, etcetera. So that's really, you know, really bread and butter using operational discipline to pay for, you know, as much of the expand and growth areas that we can.

Jon Glenn Arfstrom: Raj, a bigger picture question for you. Can you touch a little bit more on your New York comments? I think, you know, it sounds like it's doing fine and it's, you know, maybe similar size to Florida in terms of C&I, a little smaller in CRE, but, you know, I think the narrative is New York is difficult and Florida's on fire and sounds like maybe you wouldn't agree with that.

Rajinder P. Singh: Our Florida business is bigger than New York. So let me start by just saying that. Having said that, I just look at production numbers by geography, by division, and at least this quarter, sort of our lower-end middle market business, they had the best quarter ever in New York. Almost to the tune of that, look at the numbers, and my first reaction was I think there's a typo here. And they came back and said to me, no. That's not a typo. That is actually what we did this quarter. So but that's a quarter. Every, you know, over time, but they had a great year also.

But our business is still very much Florida is the center of gravity. And New York is a, you know, a nice hedge, a nice sort of risk mitigation geography for us. But this notion that, you know, New York is just in a downward spiral and as an economy, and that's not true. New York is doing fine. New York CRE is doing more than fine. New York C&I, you know, there's business to be done in New York. So we're optimistic, and more than optimistic about both geographies that we're in. And then Dallas and Atlanta, they're, you know, you know those markets doing really well. So we're not pulling back on any geography.

But having said all that, you know, the center of gravity of the company is and will remain South Florida.

Thomas M. Cornish: Yeah. I would add we've invested in a new team in New Jersey. We're, you know, we have invested in resources in the Long Island market both on the C&I and on the CRE side. And although people, you know, sometimes when they talk about New York Point or the Tri-State area, you know, point to differences in growth rates, that's true, but you're also starting from a $2 trillion base. You know? It is a very, very large economy, and we're, you know, we're not the market share leader there. So regardless of really whether it's up 2% or down 2%, there's still a lot of great opportunities in the Greater New York area.

It is, it separately would be one of the largest economies in the world if it were a separate country. So you can't walk away from that. There's still a tremendous amount of opportunities for us to grow in a market where our model of high-quality service personalized business stands out among the competition in that market. So we have growth plans for that market as well.

Rajinder P. Singh: Yep.

Jon Glenn Arfstrom: Okay. Thank you very much. Appreciate it.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Mr. Rajinder P. Singh for any closing remarks.

Rajinder P. Singh: I almost thought Leslie would ask a question. But now listen, guys. Thank you so much for dialing in and listening to our story. And, you know, we'll talk to you again in ninety days. And before that, we'll probably see some of you on the road. Thank you so much.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.