Financial Data and Key Metrics Changes - The company reported record net income of $224.1 million for the full year, with diluted earnings per share of $3.88, reflecting a 13.8% increase from the previous year [3] - Fourth quarter net income was $56.6 million, or $0.99 per share, with an annual return on assets of 1.21% and a return on tangible common equity of 14.08% [3] - The efficiency ratio for the year was 54.5%, indicating significant operating leverage with revenues growing almost five times faster than expenses [3] Business Line Data and Key Metrics Changes - Commercial loan growth was robust, with $153 million in growth for the quarter (6% annualized) and $852 million year-to-date (nearly 7% growth for 2025) [7] - The consumer segment also contributed to growth, with $44 million in loan growth for the quarter and $87 million for the year [7] - Total revenues in Q4 included a $5.4 million increase in net interest income and a $0.6 million increase in non-interest income, leading to pre-tax pre-provision earnings of $72.4 million [11] Market Data and Key Metrics Changes - The company operates 111 banking centers across Indiana, Ohio, and Michigan, with total assets reaching $19 billion, total loans at $13.8 billion, and total deposits at $15.3 billion [2] - The fourth quarter was the strongest for deposit growth, driven by the consumer segment, which saw a $155 million increase in total consumer deposits [8] Company Strategy and Development Direction - The company aims to build on its Midwestern strength and grow organically through deeper relationships and smarter use of technology [6] - The acquisition of First Savings Group, adding approximately $2.4 billion in assets, is expected to enhance the company's presence in Southern Indiana and the Louisville MSA [3][4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic and financial benefits of the merger with First Savings Group, which is set to close on February 1, 2026 [4] - The company anticipates maintaining loan growth into the first quarter of 2026, with expectations of mid-single-digit growth for the year [32] Other Important Information - The allowance for credit losses at quarter-end was $195.6 million, with a coverage ratio of 1.42% [14] - The company repurchased 272,000 shares for $10.4 million in the quarter, totaling over 1.2 million shares for $46.9 million in 2025 [16] Q&A Session Summary Question: Update on balance sheet optimization - Management is evaluating modest balance sheet repositioning, including selling the entire First Savings bond portfolio of about $250 million [28][29] Question: Expectations for loan growth in 2026 - Management expects mid to high single-digit loan growth for 2026, with balanced growth across segments and geographies [32][33] Question: Guidance on core expense base - Non-interest expense is expected to increase by 3%-5% due to talent additions and the integration of First Savings Group [44] Question: Outlook on fee income growth - Management anticipates double-digit growth in non-interest income for 2026, driven by wealth management and treasury management [55][58] Question: Impact of M&A on loan pipeline - Management sees opportunities arising from M&A disruptions among competitors, particularly in Michigan [60][61] Question: Buyback strategy - Management intends to be aggressive with buybacks if the stock continues to trade below average valuation levels [62]

Financial Data and Key Metrics Changes - Year-to-date net income totaled $167.5 million, an increase of $31.9 million or 23.5% from the nine months ended February 2024 [6] - Earnings per share totaled $2.90, an increase of $0.59 or 25.5% during the same period [6] - Return on assets (ROA) was 1.22%, consistent with year-to-date performance [4] - Efficiency ratio was 55%, reflecting high performance [4] - Total revenues in Q3 showed meaningful growth with net interest income increasing by $700,000 and non-interest income increasing by $1.2 million [16] Business Line Data and Key Metrics Changes - Commercial loan growth for the quarter was $268 million, over 10% annualized, with year-to-date growth of $699 million, over 9% annualized [10] - Consumer segment contributed $21 million in loan growth for the quarter, driven by residential mortgage, HELOC, and private banking relationships [11] - Total loan portfolio yield increased to 6.4%, driven by loan originations and refinances at an average yield of 6.84% [19] Market Data and Key Metrics Changes - Total deposits increased by $96 million during the quarter, with non-maturity categories growing at nearly 5% annualized [11] - Maturity deposit balances decreased by $198 million year-to-date, while non-maturity deposit balances increased by $178 million [12] Company Strategy and Development Direction - The company announced the acquisition of First Savings Financial Group, adding approximately $2.4 billion in assets and expanding into Southern Indiana [4] - The strategy remains focused on commercial lending across Indiana, Michigan, and Ohio, with an emphasis on enhancing fee income through SBA loans and other products [9] - The company aims to build on the acquired deposit franchise to create a community bank model similar to previous successful acquisitions [4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining loan growth and increasing market share activities into the fourth quarter [10] - The company anticipates a mid-first quarter closing for the acquisition and a mid-second quarter integration [5] - Management noted that the Midwest economies continue to expand, contributing to positive business outlooks [10] Other Important Information - The tangible common equity ratio increased to 9.18%, providing meaningful capital flexibility [6] - The company repurchased 162,474 shares totaling $6.5 million during the quarter, with total share repurchases year-to-date reaching $36.5 million [23] Q&A Session Summary Question: Expense outlook for Q4 and 2026 - Management expects Q4 core expenses to be in line with Q3, with no meaningful increase anticipated [33][34] Question: Impact of potential rate cuts on margins - Management predicts a few basis points of margin compression if rate cuts occur, but they are actively managing deposit rates to mitigate this [35][36] Question: Deposit cost increase during the quarter - The increase was primarily due to competitive pressures requiring higher rates on specials [38] Question: Future M&A ambitions - Management indicated that while they are busy with the current acquisition, they are not prioritizing additional M&A at this time [51] Question: Sustainability of loan growth - Management believes the current loan growth is sustainable, driven by normal business activity and strong pipelines [59][62] Question: Capital generation and uses of excess capital - Management plans to continue using capital for asset generation, dividends, and share buybacks, while optimizing the balance sheet [106][108] Question: Asset quality and reserve levels - Management maintains a conservative approach to reserves, reflecting a higher coverage ratio compared to peers [109] Question: Progression of net interest income (NII) - Management is confident in the ability to grow NII dollars even with anticipated rate cuts, due to effective management of deposit costs [113]

Core Viewpoint - The Company has successfully redeemed $20.0 million of high-cost subordinated notes, which is expected to enhance its net interest margin and create opportunities for future share repurchases [1][2]. Financial Summary - The subordinated notes were originally issued on September 20, 2018, with a fixed-to-floating rate of 5.95%, and prior to redemption, they yielded 7.66% [1]. - The Bank funded the redemption through a $19.0 million dividend, supported by short-term wholesale borrowings at a rate of 4.48% [1]. - As of March 31, 2025, the Bank maintained leverage and total risk-based capital ratios above 9.0% and 12.0%, respectively, which continued post-redemption as of April 30, 2025 [1]. Strategic Initiatives - The redemption of the subordinated notes is part of the Company's strategic initiatives aimed at reducing high-cost debt and potentially repurchasing common shares in the future [2]. - The Company anticipates building excess capital, which would support the share repurchase strategy if deemed accretive to earnings per share [2]. Company Overview - The Bank operates as a community bank in Jeffersonville, Indiana, with fifteen depository branches in Southern Indiana and two national lending programs [2]. - The Bank is recognized for its lending programs and aims to be the best community bank, contributing to its success [2].