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DATE

Wednesday, January 21, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — James M. Brogdon
  • Chief Financial Officer — Charles Daniel Hobbs
  • Chief Operating Officer — Christopher J. Steenberg
  • Executive Vice President, Investor and Corporate Strategy — Edward J. Bilek

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TAKEAWAYS

  • Loan Growth -- Total loan growth annualized well in excess of 7%, with management stating fourth-quarter production reached a multiyear peak despite continued elevated paydowns.
  • Loan Pipeline -- Approved and ready-to-close loan pipeline reached a multi-quarter high, supporting expectations for early-year 2026 funded growth; overall pipeline ranged "between $1 billion and $2 billion," which management described as typical for the company.
  • Net Interest Margin (NIM) -- NIM was 3.81%, with a sequential increase of 31 basis points, mainly driven by 19-20 basis points from partial-quarter balance sheet restructuring and 11 basis points from core expansion.
  • Net Interest Income (NII) Outlook -- Management guided for NII growth of 9%-11% with confidence in achieving this without significant loan portfolio expansion due to back book repricing and deposit beta trends.
  • Deposit Beta -- The cumulative deposit beta was 64%; management expects incremental beta for future rate cuts to approximate 50%, settling in the high-50% range by end of 2026.
  • Expense Management -- Noninterest expenses in 2025 were below the fourth-quarter 2022 run rate, achieved despite "three years of inflation, merit increases, investing in the business," and the expense guide projects a year-over-year increase of 2%-3% in 2026.
  • Asset Quality Actions -- Two problem credits were resolved during the quarter with less impact than expected, and the sale of the equipment finance business further cleaned up legacy NPAs; management stated, "credit is very stable right now."
  • Return on Tangible Common Equity (ROTCE) -- ROTCE approached 16% for the fourth quarter with management reiterating their long-term target remains in the mid-teens.
  • Business Mix and Loan Competition -- Management cited pressure on loan pricing, particularly in CRE, describing current yields as "irrational" and emphasizing a focus on C&I opportunities for higher risk-adjusted returns.
  • Deposit Franchise Strategy -- Strategic efforts are underway to grow low-cost and noninterest-bearing deposits, with emphasis on consumer, private banking, and small business segments as key future opportunities.
  • Facilities Footprint -- Total square footage reduced by 6% during the year, with about 60% from retail locations and 40% from corporate, which management noted as contributing to both direct and prospective cost savings.
  • Balance Sheet Flexibility -- Significant reduction in wholesale funding following balance sheet repositioning has improved operational flexibility and indirectly supported increased lending activity.
  • Dividend and Capital Management -- The primary capital priorities remain funding organic growth and sustaining the dividend; share repurchases are not currently included in the outlook but are retained as a potential option.
  • Noninterest Income Highlights -- Fourth-quarter fee income exceeded the top end of management expectations due in part to over $3 million in BOLI gains, which were characterized as nonrepeatable in future quarters.

SUMMARY

The executive team at Simmons First National Corporation (SFNC 2.03%) reported that total revenue for the fourth quarter grew approximately 20%, and pre-provision net revenue increased 60% compared to the previous year. Management emphasized acceleration on multiple strategic initiatives, including talent acquisition, core deposit gathering, operational efficiency projects, and technology investments tied to the "Better Bank Initiative." Explicit commentary indicated the loan-to-deposit ratio remains in the mid-80% range, with balance sheet cash flows identified as the funding source if loan growth outpaces deposit acquisition. Management clarified that noninterest expenses were held flat to below 2022 levels despite multi-year inflation and salary pressures, and projected a disciplined 2%-3% expense increase for 2026 to fund ongoing investments. The outlook for net interest margin is for stability through 2026, buoyed by over $2.5 billion in loans expected to reprice above 4% within two years, and management cited the company's improved flexibility following significant reductions in wholesale funding. Strategic goals in private banking and small business deposit growth were described as essential levers for future performance and incremental returns beyond the current guide.

  • Management reported a "jumping off point at the beginning of 2026 is several basis points higher" than prior targets for both ROA and ROTCE, a development not anticipated following the balance sheet repositioning.
  • The "rate forecast that is embedded in our guide is a rate cut in May and one in August," providing context for base NIM and NII projections.
  • Facilities footprint optimization will yield future cost containment beyond direct rent savings, as reductions moderate maintenance outlays for non-core properties.
  • The quarter's high fee income was specifically impacted by BOLI gains, which management does not expect to recur, and historical outperformance was flagged as unsustainable at current run rates.

INDUSTRY GLOSSARY

  • CRE (Commercial Real Estate): Loans collateralized by income-producing commercial properties, often a major lending category for regional banks and subject to heightened pricing and competitive dynamics.
  • BOLI (Bank-Owned Life Insurance): Life insurance policies purchased by banks as an investment and for employee benefit funding, producing income recognized as noninterest revenue.
  • NPAs (Non-Performing Assets): Loans or assets for which principal or interest payments are late or in default, requiring careful resolution or disposal.
  • Beta (Deposit Beta): The degree to which deposit costs respond to changes in benchmark interest rates, directly affecting net interest margin.
  • ROTCE (Return on Tangible Common Equity): A profitability metric dividing net income by average tangible common equity, reflecting return to common shareholders.
  • NIM (Net Interest Margin): The spread between interest income generated by loans and securities and the interest paid on deposits and borrowings, expressed as a percentage of average earning assets.
  • NII (Net Interest Income): The difference between total interest income earned on assets and total interest paid on liabilities, a core revenue component for banks.

Full Conference Call Transcript

Edward J. Bilek: Good morning, and welcome to the Simmons First National Corporation Fourth Quarter 2025 Earnings Call. Joining me today are several members of our executive management team, including President and CEO, James M. Brogdon; CFO, Charles Daniel Hobbs; and Chief Operating Officer, Christopher J. Steenberg. Today's call will be in a Q&A format. Before we begin, I would like to remind you that our fourth quarter earnings materials, including the earnings release and presentation deck, are available on our website at simmonsbank.com under the Investor Relations tab.

During today's call, we will make forward-looking statements about our future plans, goals, expectations, estimates, projections and outlook including, among others, our outlook regarding future economic conditions, interest rates, lending and deposit activity, credit quality, liquidity and net interest margin. These statements involve risks and uncertainties, and you should therefore not place undue reliance on any forward-looking statements as actual results could differ materially from those expressed in or implied by the forward-looking statements due to a variety of factors.

Additional information concerning some of these factors is contained in our earnings release and investor presentation furnished with our Form 8-K yesterday as well as our Form 10-K for the year ended December 31, 2024 and Form 10-Q for the quarter ended September 30, 2025, including the risk factors contained in those filings. These forward-looking statements speak only as of the date they are made, and Simmons First National Corporation assumes no obligation to update or revise any forward-looking statements or other information. Finally, in this presentation, we will discuss certain non-GAAP financial metrics we believe provide useful information to investors.

Additional disclosures regarding non-GAAP metrics, including the reconciliation of those non-GAAP metrics to GAAP, are contained in our earnings release and investor presentation, which are furnished as exhibits to the Form 8-K we filed yesterday with the SEC and are also available on the Investor Relations page of our website, simmonsbank.com. Operator, we are ready to begin the Q&A.

Operator: [Operator Instructions] We will now open the call for questions. Our first question today comes from Matt Olney at Stephens.

Matt Olney: I want to start on the loan growth front, loan growth took a nice step forward in the fourth quarter. Any more color on the drivers? And then the second part, I just want to understand the pipeline discussion disclosures. It looks like the approved and ready-to-close pipeline moved up nicely, but the overall pipeline was still flattish. So just trying to appreciate maybe the various components of that pipeline and then what that means for growth in 2026?

James M. Brogdon: Yes. Thanks, Matt. So I would say a few things to comment first on the quarter, and then we can talk about pipelines in 2026. We were certainly pleased with the pace of growth for loans in the fourth quarter. The quarter really had the highest level of production, I think, that we have seen in at least a couple of years. At the same time, we still had elevated paydowns in the quarter, but the level of production was more than enough to offset that level of paydowns and drive some meaningful growth.

I would also call out for the fourth quarter, in case it is not obvious to you, there are arguably some seasonable adjustments to the fourth quarter. Fourth quarter growth for us tends to be slower on the agri side and agri loans were down. Mortgage warehouse loans were down. We obviously divested some loans and had some charge-offs in the quarter. And so really, when you think about fourth quarter underlying growth rate, it was well in excess of the 7% annualized that we disclosed on a total loan basis. So again, I think it demonstrates the ability for us to really move the needle from a loan growth perspective.

At the same time, your question on pipeline and kind of 2026 outlook, our guide is not to have sort of sustained that level of growth. We just had some good timing of some things and pipelines coming out of Q3 and early Q4 that pulled through and led to some really nice funded commitments throughout the quarter. Rate ready-to-close, as you commented on, that is a very, very firm high likelihood area of our pipeline, and it is also at a multi-quarter high. So I think that points to probably some good production and funded growth as well in the early part of the year.

And then as I think about the rest of the pipeline, our pipeline ranging in that mid kind of between $1 billion and $2 billion, $1.5 billion to $2 billion, is a pretty normal pipeline for us. We are certainly active in seeing a tremendous amount of opportunities all across our footprint. And so we feel very, very confident when we put all those things together in our outlook for something that is probably a little more optimistic in loan growth than what we have had over the last couple of years.

But we are still going to be very, very cautious around the credit and underwriting environment, and then also just from a pricing and profitability perspective, the competitive environment in there. And all that kind of balances out to what you saw us guide for 2026 as kind of low to mid-single-digit growth.

Matt Olney: Okay. Perfect. Appreciate the details there, Jay. And then pivoting over curious about your thoughts on the margin from here in the fourth quarter, I think it was at 3.81% margin. Just trying to appreciate how clean that number is. Anything you would call out as unusual in the fourth quarter. And then I think the deck mentions the back book should provide some nice tailwinds for the margin in 2026. Would you expect that to support margin expansion from here? Just trying to appreciate maybe the puts and takes on the margin from here.

Charles Daniel Hobbs: Yes. Matt, this is Daniel. I will comment on that. The linked quarter margin growth of 31 basis points, I will break that down for you, give you an appreciation for that. Of that 31 basis points, about 19, call it, 19 to 20 of that is from the partial quarter impact of the balance sheet restructure that we did last quarter. But then the rest of that is really from core NIM expansion from business practices, so 11 basis points from that. And of that 11 basis points, about 3 basis points is related to loan growth and 8 basis points is related to rate and mix.

A couple of things to understand from that is we had the 3 rate cuts in the back half of the year, September, October and December. Post balance sheet restructure, we did move from liability sensitive to asset sensitive. But a nuance to that is as you think about our sensitivity along the curve, we are still a little bit liability sensitive on the short end of that curve. So, call it, day 1 to 3 months, we are a little bit liability sensitive. So we got some benefit from those rate cuts in the fourth quarter. We will shift to asset sensitive once you get past 3 months and towards the long end of the curve.

As you think about the guide and specifically Q1, we would expect Q1 to be relatively stable to the 3.81%. There might be a basis point or two of benefit there. And then as you think about the full year, we are probably pretty stable, maybe a couple of basis points to get to the mid-3.80s by fourth quarter. Your comment on the back book repricing: yes, that is still a benefit for us, and we expect that to be a benefit for us as we move on. That benefit lessens a little bit as we get rate cuts.

We have talked historically about a 200 basis point pickup before the 3 rate cuts that we got in the back half of the year. So that will come down a little bit. But we still have, Matt, over $2.5 billion of loans that will reprice over the next 2 years that have a rate less than 4%. So that tailwind will continue to exist. Maybe a couple of points about the guide. Our rate forecast that is embedded in our guide is a rate cut in May and one in August. And so as you think about loan yields repricing, when you look at the fourth quarter, loan yields were down 8 basis points.

Even if you go back to second quarter, we are only down about 3 basis points. So that back book repricing is offsetting some of the impact from the rate cuts that we have had. If you flip to the deposit side, you think about the beta there. Our beta cumulatively is 64%. We do expect that beta to moderate some into 2025 primarily because a couple of things. Number one is our deposit book is different than it was pre-balance sheet restructure. We have about $1.4 billion less brokered deposits, which have a 100% beta. So that is embedded in that 64% cumulative beta today.

What we think is the incremental beta for future rate cuts is probably around 50%. And so by the end of 2026, we think the cumulative beta kind of settles in that high-50 range. So still some opportunity there, but we do expect the beta to moderate a little bit. And then just maybe connecting the NIM discussion with your question on loan growth, we still believe and feel like that we can grow NII without significant growth in the loan portfolio just because of the things that I just talked about. So our 9% to 11% guide on NII, we feel pretty good about it.

James M. Brogdon: Matt, I will just chime in. I would echo everything Daniel said there. Bottom line for me is I think my outlook for NIM for 2026 is relatively stable, as Daniel said. I think the back book reprice on loans as well as the deposit beta and our ability to continue to do things we have been doing from administered rates, et cetera, those are all tailwinds that will offset any additional rate cuts to the extent they come through and allow for that more stable NIM.

I think the opportunity in excess of what we have guided — our outlook is what our outlook is — the opportunity though, and what we are focused on strategically, is really on the remix on the deposit side. Our biggest opportunity to even further exceed the guide is really built around our ability to organically grow some low-cost deposits, and we are very, very focused on that and think that, to the extent we are successful there, we have already got, I think, very strong growth embedded in the guide, but that would be the area that would provide upside to the guide.

Matt Olney: Okay. That is great commentary. I appreciate all the details there. And maybe just one more follow-up with this discussion. Any commentary about what you are seeing in markets around deposit competition, loan pricing competition. I think last quarter, you flagged the loan side was getting more competitive. Just in general, updated thoughts on both sides there.

James M. Brogdon: Yes, Matt, really a continuation of that same theme. On the deposit side, honestly, I would say I think we feel pretty — see there is pretty good behavior around the rate cuts in the industry. Betas are relatively high in my mind and lags are short around the more recent rate cuts. So that feels good. Where we see irrational competition for the most part today on the deposit side is from smaller banks. The good news is in a lot of those markets where we are competing with the smaller banks, we have a very, very dominant market share and we can kind of flex around that. And so that area is still very competitive.

But to me, it is nowhere near as competitive of a pressure as what we are seeing on the loan pricing side. You have heard us talk about that. A lot of our loan growth in the fourth quarter was in a CRE bend. We are very focused, as you and others know, on C&I. We have good C&I opportunities in our pipeline. We have had great opportunities. We have had some good production on C&I.

But returns on a risk-adjusted basis have been so much stronger in recent months from a CRE perspective because of what we believe is very, very irrational pricing and really pricing away the profitability, even in relationship-based situations where deposits and treasury management are coming with it. The yields on the loans really make no sense and particularly make no sense on a risk-adjusted basis. We would like to see some improvement in that competitive dynamic. It does not discourage us as it relates to our overall growth outlook. But that is the biggest competitive factor that we are seeing today.

Operator: And our next question comes from David Feaster at Raymond James.

David Feaster: I wanted to maybe shift gears to asset quality. Nice to see the resolution of those 2 problem credits and with less impact than initially expected, also saw the sale of the equipment finance business, and you guys did the deep dive into the NPAs. I am just curious maybe whether there is anything else that you are considering divesting. And as you did that deep dive, whether you found anything else of note that maybe has shifted underwriting at all. Or just kind of curious what you are thinking on asset quality and anything that has come out of this whole process?

James M. Brogdon: Yes, David, I will jump in on this one. You did a great job summarizing the actions that we took in the quarter. We feel very, very good that our reserve levels and what we had done on a specific reserve basis was more than adequate for the actions that we are taking, particularly on the larger credits and the equipment finance portfolio. Really, as I think kind of read through credit and the results of the deep dive, again, I feel credit is very stable right now. Those situations were very unique, each of them. They have been around for a while, particularly with the equipment finance portfolio, which has been in runoff for a long period of time.

We had not originated a loan there in several years; that came from a historical acquisition. The credit read for us as we did the deep dive was really cleaning up some of those legacy-type nonperformers that have been in there. We were able to identify the loss content, got the full resolution on several of those credits and moved on and took the charge-off in other instances, still working toward very rigorous resolution processes in a couple of those instances. However, we had done enough work to know what the loss content was and went ahead and moved on those.

So really underlying, I think it is just a continued stable outlook, and all of our early indicators or predictive indicators around credit would fall into that characterization of just in the stable category.

David Feaster: Okay. And obviously, there has been a lot of disruption across your footprint in the market broadly. Just wanted to get your thoughts on where you see the most opportunity and how you are positioning to capitalize on that. And then just specifically on the hiring side, it looks like you did add some talent this quarter. Just curious your appetite for hires, where you are hiring and maybe what segments or markets you are focused on?

James M. Brogdon: Yes. I do not want to be overly generic in the answer, but it is a somewhat generic answer in that we are seeing great opportunities all across the footprint. Southwest part of our footprint, the Midwest, the Southeast parts — really just footprint-wide — we are very active. Pipelines from a talent perspective are very strong. I would suspect that you will see us being successful in continuing to upgrade talent and add talent, and it is across all areas of our business, again, not trying to be overly generic. It is somewhat heavily focused in our revenue areas where we are adding talent, but it is not just there.

A lot of our support areas where we can bring in strong talent to help us innovate, automate and drive some of our efficiency and scale initiatives forward, we are seeing some really good talent come out of some of the disruption in those areas as well. So we are very, very excited. That is probably one of the most exciting things going on in our business right now, the prospects that we are talking to from a talent perspective and the success that I think we are going to have in that regard.

David Feaster: That is great. Maybe just last one, Jay. One of the things that we have discussed pretty in depth previously has been, as a part of the Better Bank Initiative, the focus on improving processes and procedures, and there is still kind of in the middle innings of that maybe a quarter or two ago. I am just kind of curious if you could give an update on where we are there on improving again the processes and procedures in some of the business lines. And kind of maybe what you are most focused on near term?

James M. Brogdon: I think from a noninterest expense and just overall efficiency and scale point of view, I really think it is still fair to characterize us as in the middle innings of that journey. I also think that the latter innings are much harder to get than those early innings were because we attacked the lower-hanging fruit first. There is a slide on this in the presentation. I want to remind everyone, our expenses in 2025 were below our run rate for expenses in the fourth quarter of 2022. So three years of inflation, merit increases, investing in the business, et cetera, and we have been very, very disciplined in our ability to keep expenses down throughout all of that.

That is a function of us demonstrating success in executing these efficiency initiatives. We have brought a tremendous amount of automation to processes and continue to do that. We have centralized and standardized around best practices in a lot of areas of the bank. You might think of a decade of acquisitions and really taking the time over the last few years to fully integrate and digest all across the footprint. I think there are still, David, some very meaningful opportunities for us there.

As I think about the expense outlook, maybe a little more tactically, not exactly embedded in your question, but if I think about an expense outlook, I will tie it back to your question around talent opportunities. We continue to try to fund our investments. A lot of the work that we are doing in these middle and later innings on the efficiency side is geared around freeing up the investment to bring in talent, to invest and improve in the technology stack and better innovate around the bank. I think you saw our expense guide is up 2% to 3% year-over-year.

That is really reflective of a balanced view of success in these initiatives paired against the opportunities we see, maybe even on an accelerated basis, to invest in our business.

Charles Daniel Hobbs: Yes, David, I would add a couple of things to what Jay said. I think when you look across our business from the back office, the middle office and the front office, we have adopted a continuous improvement mindset in that we are inspecting everything that we do. In many of those processes, we need to tweak some things, and then some of them, we need to completely blow it up and rebuild it. We recently visited a customer that made a comment to us that says, if it is not broke, break it. We have adopted that in some places. There is still a lot of opportunity for us there. Just a couple points for you.

We have talked about our vendor spend and our procurement group that we stood up about two years ago, and we have got some significant success out of that. We still see opportunity in that over the next 12 to 24 months to gain some ground. When you just look across our footprint, our facilities, the square footage that we have, we reduced our square footage this year by 6%. Some of that is direct savings to the bottom line and some of that is savings on future spend of maintenance that we might have to do that we are now no longer going to have to do.

That is split about 60% between retail and about 40% from corporate locations. So it is not all coming from branches, which is a good thing. Those are examples of things that we are looking at across our entire business to Jay’s comment earlier about how we can self-fund the investments that we are trying to make to grow our businesses.

Operator: And our next question today comes from Wood Neblett Lay at KBW.

Wood Neblett Lay: I wanted to start on your comment on the loan production, and you noted it was the highest level over the past couple of years. I just wanted to get your opinion, is that more a reflection of you all being more aggressive on growth now that the balance sheet restructure is behind you and you have more flexibility? Or is that a reflection of customers being more optimistic? Or is that a combo of both?

James M. Brogdon: I think it is fair to describe it as a combo, Woody. I think it is probably more of the latter than the former. We have not just lowered rates aggressively or started to sacrifice our standards around profitability. That said, with the significant reduction in wholesale funding as a result of the balance sheet repositioning and just improving the nimbleness, the flexibility around the balance sheet overall, it has certainly — in an indirect way — helped us to accelerate the loan growth. But the more fundamental answer is we have just seen more robust opportunities. The pipelines were improving all throughout the year last year.

The quality of the pipeline is not just an aggregate number; you have to really look into the pipeline and think about quality of opportunity. Quality of pipeline was improving all throughout the year. We just saw a pinnacle in that activity late Q3, early Q4 and were successful in some pull-throughs there and continue to see success. I mentioned the rate ready-to-close area of the pipeline that even as we turn into January, we are seeing exactly what you would expect with that kind of year-end quality of pipeline. So I think it is probably more the latter of your two things, but there is certainly an element of both.

Wood Neblett Lay: Got it. That is helpful. And then maybe circling back on the NIM. I believe last earnings call, you all gave a sort of a longer-term NIM range of 3.50% to 3.75%, and you are now above that. And it feels like, as you mentioned, the loan repricing over the next 2 years is very real. So has that longer-term target shifted upwards a little bit?

Charles Daniel Hobbs: Yes. Woody, the context of that 3.50% to 3.75% was that we would like to manage it within that range, no matter the interest rate environment. Rates are still relatively high. We have moved to asset sensitive. I would say probably that top end of the range of the 3.75% has moved up a little bit. But if rates were to go down — significantly go down — we are trying to stay at that 3.50% and above in that scenario. So I think it is a fair comment to say that the top end of that range has probably shifted up a bit.

James M. Brogdon: Yes. And I think the forward curve has shifted as well. That range was really embedded on an outlook that had a lot more rate cuts in it than what we are expecting today. All of that is very fair, Woody. The good news is rates higher for longer is, I think, better for us and better for the industry right now and gives us upward bias on how we think about the NIM range.

Wood Neblett Lay: All right. And then just last for me. In terms of capital, I mean, you just printed a quarter of a ROTCE of almost 16%. You are going to be building capital over the next year. How do you think about where excess capital stands and opportunities to deploy it?

James M. Brogdon: I think our priorities continue to really be around organic growth. Investing in the business to grow sustainably and profitably is clear priority one. Priority two would be our very long-standing dividend. From there, Woody, we will have to think about share buyback increasingly throughout the year this year. We do not have any share buyback activity embedded in our budgets or forecast right now. We will keep that tool in the toolkit. We will be opportunistic in how we see the growth environment evolving and, candidly, in how we see the valuation of the stock evolving. Where it makes very good sense economically for us to get active, we would do so.

But as of now, it really centers on priorities one and two that I outlined there.

Operator: And our next question today comes from Brian Wilczynski with Morgan Stanley.

Brian Wilczynski: Maybe going back to the ROTCE for a moment. Clearly, a very strong quarter, 16% ROTCE. If we zoom out a bit, how do you think about the trajectory of ROTCE as we move forward? And how much of it will depend on the environment versus some of the other strategic levers that you talked about earlier?

James M. Brogdon: I will start on that, Brian. Daniel, I am sure, is going to want to layer in some comments as well. If you think about — whether you are thinking ROA or ROTCE — there are a couple of things about the fourth quarter to first quarter and outlook that are important to denote. One is there is always, as we go into the first quarter of any year, some seasonality in expenses that we have to chew through from payroll taxes to merit increases, et cetera. So the early part of the year has a seasonal element in it that you do not see in the fourth quarter.

In the fee income area from a noninterest revenue point of view, we very much exceeded the top end of our range of what we normally see. Some of that was just very strong results in some of those fee businesses. A little over $3 million of that was BOLI gains. We are not going to repeat that every quarter, obviously. So I think you have to run rate that just a little bit. Another big item I would call out is the effective tax rate. Our balance sheet changed a lot given the repositioning back in Q3.

The fourth quarter tax rate is below what our tax rate would be in 2026, which is probably, as we called out in the guide, much closer to around 20%. I think of that as — I will do it in ROA, not ROTCE because that number is more readily available in my mind. We had a 1.29% ROA for the quarter. I think ROA on a more run-rate basis is at least mid-1 teens. That is more of what I think is the sustainable run rate as we turn the quarter into 2026 with all of the tailwinds that we have been describing on this call and opportunities to continue to grow and expand that from there.

Charles Daniel Hobbs: Yes. And Brian, the only thing I would add to all that Jay said in terms of the seasonality when you think about Q1, the additional one there is that there are two fewer days. So the NII raw dollar amount is impacted by that by about $3.5 million. So when you think about the fourth quarter returns relative to the first quarter, there will be a downward shift. But then over the long term, we think about ROTCE somewhere that needs to be mid-teens, which is where we would like to be. We have talked about an ROA of 1.25% and above, and we feel like we have a really good path to get there.

To Jay's point, our maybe normalized rate is in the high-1 teens right now, but we feel like we have got a really good path to get there throughout the year and towards the end of 2026.

James M. Brogdon: Last comment I would make on this, Brian, is when we did the balance sheet repositioning, we thought some of those targets for ROA and ROTCE were probably more achievable in 2027 on a run-rate basis. Our jumping off point at the beginning of 2026 is several basis points higher than where we thought it would be, and all of that indicates — similar to Woody's question earlier on NIM — maybe a bit of a parallel shift up in what those run rates should be or in accelerating the achievability of those targets.

Brian Wilczynski: That is really helpful. And maybe one follow-up on the funding base. That has clearly been a big area of improvement over the past 12 months. As we look forward, can you just elaborate a bit more on the strategy to grow customer deposits over the course of 2026 and beyond?

James M. Brogdon: I will jump in there and others may want to comment, too, Brian. I will speak to it in a line of business thought process. We have a lot of activities and efforts going on — some of them in the category of first ever in the bank, not first ever in the industry, but adopting industry best practices for the first time — particularly on the consumer side of our bank, and that spans across all demographics and customer profiles. We are seeing some success, some early success there, experienced that success throughout 2025, and are creating better discipline and muscle memory around those activities in the consumer bank.

That has been an area of focus from a talent perspective. I think that would fall into something that we are focused on strategically on the deposit side in the consumer category. The other thing I would mention from a consumer perspective is private banking, which is a product we really rolled out sometime in 2024, if memory serves, but we really expanded our efforts around private banking in 2025. That is another area where we are seeing very good early signs, and we have a lot of built-in opportunities that we can synergize across our business through more competitive products there.

Having developed those products, bringing in private bankers, incentivizing around that, that is another area that we are very, very optimistic in. The last piece that comes to mind for me is on the commercial side of our business. We have been very focused on building out business and middle market C&I capabilities — tools, processes, people, everything. That has been a multiyear investment. We are pretty deep in that journey. We started in the back side of our business, really retooled and reprocessed, continue to have some very important initiatives in those areas, and then have brought some very good talent into the bank over the last year or two on the sales side as well.

That continues to be an area where I think you will see heavy investment from us in terms of building out and expanding on the commercial TM side of the business. I put all that together and say, one simple way I look at this is our noninterest-bearing deposits as a percentage of total deposits is below peer and below where it ought to be. That circles back to an early comment to a question. I believe that is perhaps the biggest opportunity to accelerate even beyond our guide this year and into the future — our ability to demonstrate some success in growth in those strategies.

Christopher J. Steenberg: Brian, it is Chris. I will add to that. I think Jay referenced some of the things that are not necessarily new to the industry but new to us. As we demonstrate to ourselves that we are effective at those, our focus pivots from experimentation and piloting to accelerating and scaling. As we find those successes — or even things we did not like — we are learning from those quickly, and we are shortening our cycle every time so that we can get from concept to execution and into results on a much shorter cycle, and we are taking those learnings.

One spot that Jay did not mention is another one of small business where we have a significant opportunity in our footprint, both embedded in our existing relationships, but also prospect opportunities where we can attract really deposit-rich customers that have limited credit needs but absolutely have significant needs around deposits and transactions. Our ability to meet that, we already have demonstrated, and we continue to focus on that area, and that is going to continue to be an area of emphasis for us.

Operator: And our next question today comes from Gary Peter Tenner at D.A. Davidson.

Gary Peter Tenner: I just had one follow-up question. Just as I am looking at the interplay between growth on both sides of the balance sheet based on the guide. I guess two questions come to mind. One, is there any kind of anchor on the loan-to-deposit ratio to think about now that you are up in the mid-80s there the last couple of quarters? And then the second, to the degree that loan growth outstrips deposit growth over the course of the year, is that funded with runoff from the securities portfolio? Or what are the broad thoughts around that?

James M. Brogdon: I think you nailed it, Gary. Our constraining factor in our business from a growth perspective today is certainly not loans. It is on the deposit side, the core customer deposit side, hence all of the commentary that we have had around that being such a key element of our strategic focus going forward. To the extent you see loan growth outstripping or outpacing deposit growth, we do have cash flows from the balance sheet. That would be investment priority one. The other funding elements that could be in there are we could get more aggressive on the customer side in things like promotional CD rates, et cetera, to help fund some of that.

And then your last stop would be on the wholesale side of any category.

Operator: And that concludes the question-and-answer session. I would like to turn the conference back over to James M. Brogdon, President and CEO, for any closing remarks.

James M. Brogdon: Thanks. I would like to end today with a few closing remarks. First of all, it is hard for me not to look back to one year ago. A year ago, we were announcing fourth quarter 2024 results and net interest margin had a 2 handle on it and was up linked quarter but was still a 2 handle. ROA was barely creeping above 70 basis points. Our efficiency ratio was in the mid-60s. I flash forward to today and I think about, of course, the results from the balance sheet repositioning, but also just the ongoing commitment to sound and profitable growth and the decisions we are making and the discipline that we are demonstrating as we do that.

We find ourselves in a much stronger position. Net interest margin was up 94 basis points compared to a year ago. Our expenses are down, as we talked about on the call, and they are down on a multiyear basis. All of that has led to revenue in the fourth quarter of this past year compared to a year ago up almost 20%. Pre-provision net revenue is up 60%. I think about all the things that are now in the rearview mirror for us as we turn the corner into 2026, and we have a great deal of momentum behind us.

The thing I want everybody to hear me say is that we are nowhere near satisfied with where we are right now. In fact, as we have talked about on this call, we continue to design and execute a number of strategic initiatives. We think all of these initiatives are going to bolster that already strong momentum. Our pipelines for adding talent, as we have discussed, are as strong as they have ever been. As we move through 2026 and beyond, we very much look forward to continuing to demonstrate our progress, and we remain steadfast in our commitment to delivering value for our customers, for our associates who make all of this happen and, of course, for our shareholders.

With that, I will just thank everyone for the support, and you guys have a great day.

Operator: Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.