Financial Data and Key Metrics Changes - Hilltop reported net income of approximately $42 million for Q4 2025, equating to $0.69 per diluted share, with a return on average assets of 1.1% and return on average equity of 7.6% [7] - For the full year 2025, consolidated income attributable to common stockholders was $165.6 million, representing a 46% increase compared to the prior year [15] - Total revenues for 2025 increased by 8% to approximately $1.3 billion, while expenses grew by only 2%, resulting in positive operating leverage of 6% [15] Business Line Data and Key Metrics Changes - PlainsCapital Bank experienced an expansion in net interest margin, increasing by 12 basis points year-over-year, and generated $43.5 million in pre-tax income [4][7] - PrimeLending reported a pre-tax loss of $5 million in Q4 2025, with origination volume of $2.4 billion, indicating a seasonal rebound despite ongoing industry challenges [9][10] - Hilltop Securities achieved a pre-tax margin of 18% on net revenues of $138 million, with public finance services seeing a 20% year-over-year increase in net revenues [10][11] Market Data and Key Metrics Changes - The average total deposits for Q4 2025 were approximately $10.7 billion, a decline of $233 million compared to Q4 2024, driven by the return of sweep deposits [19] - The interest-bearing deposit cost decreased to 269 basis points, down 44 basis points from the prior year [20] - Mortgage-related income and fees increased by $2.5 million compared to Q4 2024, driven by improvements in lock and originated volumes [20] Company Strategy and Development Direction - Hilltop aims to be a full solution provider to clients, focusing on executing strategic initiatives while maintaining solid capital levels with a Common Equity Tier 1 capital ratio of 19.7% [12] - The company is actively evaluating acquisition opportunities while also focusing on organic growth amidst a competitive market environment [47][48] - Management emphasized the importance of operational cost reductions and efficiency improvements to navigate the challenging mortgage industry landscape [10][25] Management Comments on Operating Environment and Future Outlook - Management noted a positive interest rate environment supporting expanded net interest margins, despite increasing competition [8] - The outlook for 2026 anticipates average bank loan growth of 4%-6%, excluding the impact of loans retained from PrimeLending [26] - There is uncertainty regarding interest rates and inflation, but management remains optimistic about the company's positioning for long-term success [28] Other Important Information - Hilltop returned $229 million to stockholders through share repurchases and dividends in 2025 [6] - The allowance for credit losses decreased by $3.6 million to $91.5 million, with net charge-offs of $11.5 million recorded in Q4 2025 [15][17] Q&A Session Summary Question: Expectations for broker-dealer fees and pre-tax margin for 2026 - Management expressed confidence in the stability of broker-dealer fees and indicated that a pre-tax margin of 13.5% is a reasonable baseline for 2026 [33][38] Question: Sensitivity of NII to potential Fed rate cuts - Management noted that every 25 basis points reduction in rates could impact NII by approximately $4.5 million, with broker fee income being more variable [39][41] Question: Discussion on capital priorities and M&A opportunities - Management highlighted the increase in dividends and standard share repurchase authorization, while also evaluating acquisition opportunities amidst a competitive landscape [46][48] Question: Loan growth pipeline and pricing competition - The loan pipeline entering 2026 is approximately $2.6 billion, with management noting increased competition in loan pricing due to the current rate environment [58] Question: Expectations for gain on sale margins in the mortgage sector - Management expects stable revenue from gain on sale margins and mortgage origination fees, with a projected range of 350-360 basis points [59][60]

Financial Data and Key Metrics Changes - Hilltop reported a net income of approximately $42 million for Q4 2025, equating to $0.69 per diluted share, with a return on average assets of 1.1% and return on average equity of 7.6% [7] - For the full year 2025, consolidated income attributable to common stockholders was $165.6 million, representing a 46% increase compared to the prior year [15] - Total revenues for 2025 increased by 8% to approximately $1.3 billion, while expenses grew by only 2%, resulting in positive operating leverage of 6% [15] Business Line Data and Key Metrics Changes - PlainsCapital Bank experienced an expansion in net interest margin, increasing by 12 basis points year-over-year, and generated $43.5 million in pre-tax income [4][7] - PrimeLending reported a pre-tax loss of $5 million in Q4 2025, with origination volume of $2.4 billion, indicating a seasonal rebound despite ongoing profitability challenges [9] - Hilltop Securities achieved a pre-tax margin of 18% on net revenues of $138 million, with Public Finance Services seeing a 20% year-over-year increase in net revenues [10][11] Market Data and Key Metrics Changes - The average total deposits for Q4 2025 were approximately $10.7 billion, a decline of $233 million compared to Q4 2024, driven by the return of sweep deposits [19] - Mortgage-related income and fees increased by $2.5 million year-over-year, with purchase mortgage volumes stable at $1.9 billion and refinance volumes up by 49% [20][22] - The allowance for credit losses decreased by $3.6 million to $91.5 million, yielding an allowance to total loans ratio of 1.1% [15][27] Company Strategy and Development Direction - Hilltop aims to be a full solution provider to clients, focusing on strategic initiatives to enhance service offerings [12] - The company is actively evaluating acquisition opportunities while also prioritizing organic growth amidst a competitive market [46] - Management expressed optimism about the performance of key business lines, particularly Public Finance and Wealth Management, while acknowledging challenges in Fixed Income Services [34][35] Management's Comments on Operating Environment and Future Outlook - Management noted a positive interest rate environment supporting expanded net interest margins, despite increasing competition [8] - The outlook for 2026 anticipates average bank loan growth of 4%-6%, with expectations of continued challenges in the mortgage market [26] - Management highlighted the uncertainty in the market regarding interest rates and inflation but remains confident in the company's positioning for long-term success [28] Other Important Information - Hilltop returned $229 million to stockholders through share repurchases and dividends in 2025 [6] - The company maintains a Common Equity Tier One capital ratio of 19.7% and a Tangible Book Value per share of $31.83, reflecting solid capital levels [12] Q&A Session Summary Question: Insights on broker-dealer fees and expectations for 2026 - Management expressed confidence in the stability of broker-dealer fees and indicated that the pre-tax margin of 13.5% is a reasonable baseline for 2026 [33][38] Question: Discussion on capital priorities and M&A opportunities - Management confirmed an 11% increase in dividends and a share repurchase authorization of $125 million, while continuing to evaluate acquisition opportunities [46] Question: Expectations for loan growth and pricing competition - The loan pipeline entering 2026 is robust at $2.6 billion, with management optimistic about organic growth despite pricing competition [57] Question: Gain on sale margins outlook - Management expects total revenue from gain on sale margins and mortgage origination fees to remain stable, with a projected range of 350-360 basis points [59]

Financial Data and Key Metrics Changes - Hilltop reported net income of approximately $42 million or $0.69 per diluted share for Q4 2025, with a return on average assets of 1.1% and return on average equity of 7.6% [6] - For the full year 2025, consolidated income attributable to common stockholders was $165.6 million, equating to $2.64 per diluted share, representing a growth of 46% [13] - Net interest income grew by 7% year-over-year, while non-interest income increased by 11%, contributing to a 26% improvement in diluted EPS [12] Business Line Data and Key Metrics Changes - PlainsCapital Bank saw an expansion in net interest margin, with a pre-tax income of $43.5 million and a return on average assets of 1.05% [6] - PrimeLending reported a pre-tax loss of $5 million in Q4 2025, despite a seasonally healthy origination volume of $2.4 billion [8] - Hilltop Securities generated pre-tax income of $26 million on net revenues of $138 million, achieving a pre-tax margin of 18% [10] Market Data and Key Metrics Changes - The average total deposits for Q4 2025 were approximately $10.7 billion, declining by $233 million compared to Q4 2024 [18] - Mortgage-related income and fees increased by $2.5 million year-over-year, driven by improvements in lock and originated volumes [20] - Public Finance, Wealth Management, and Structured Finance business lines within Hilltop Securities all generated higher fee income compared to the prior year [21] Company Strategy and Development Direction - Hilltop aims to be a full solution provider to clients, focusing on executing strategic initiatives [11] - The company is actively evaluating acquisition opportunities while also focusing on organic growth [44] - Management expressed optimism about the performance of Public Finance and Wealth Management, expecting continued improvement in these areas [32] Management's Comments on Operating Environment and Future Outlook - Management noted uncertainty in the market regarding interest rates, inflation, and overall economic health, but remains optimistic about the company's positioning for long-term success [14][27] - The company expects full-year average bank loan growth of 4%-6% for 2026, excluding the impact of loans retained from PrimeLending [25] - Management anticipates that interest-bearing deposit costs will decrease somewhat over the coming quarters [19] Other Important Information - Hilltop returned $229 million to stockholders through share repurchases and common dividends in 2025 [5] - The allowance for credit losses decreased by $3.6 million to $91.5 million during the quarter [14] Q&A Session Summary Question: Expectations for broker-dealer fees and pre-tax margin for 2026 - Management expressed confidence in the stability of broker-dealer fees and indicated that a pre-tax margin of 13.5% is a reasonable baseline for 2026 [31][36] Question: Sensitivity of NII and broker-dealer fees to Fed cuts - Management noted that every 25 basis points reduction in rates could impact NII by about $4.5 million annually, with broker fee income being more variable [38] Question: Capital priorities and M&A opportunities - Management highlighted the increase in dividends and the standard share repurchase authorization, while also evaluating acquisition opportunities in a competitive market [44][45] Question: Loan growth and pricing competition - The loan pipeline entering 2026 is approximately $2.6 billion, with management feeling optimistic about organic loan growth despite pricing competition [55] Question: Gain on sale margins expectations - Management expects total revenue from gain on sale margins and mortgage origination fees to remain stable, with a projected range of 350-360 basis points [57]

Core Insights - Freedom Financial Holdings reported a net loss of $3,567,973 or $0.50 per diluted share for Q4 2025, a significant decline from a net income of $1,122,930 or $0.16 per diluted share in Q3 2025 and $1,156,906 or $0.16 per diluted share in Q4 2024 [1][6] - For the full year 2025, the company achieved a net income of $374,197 or $0.05 per diluted share, down from $4,710,286 or $0.64 per diluted share in 2024 [1][6] Financial Performance - The bank's pre-provision, pre-tax income (PPNR) for Q4 2025 was $2.2 million, an increase of 84.4% from Q4 2024 and 22.6% from Q3 2025 [2] - Total revenue for the full year 2025 increased by 9.51% compared to 2024, primarily due to net interest margin expansion related to lower funding costs [9] Net Interest Income - Net interest income for Q4 2025 was $6.70 million, a decrease of 0.77% from Q3 2025 but an increase of 4.3% from Q4 2024 [4] - The net interest margin for Q4 2025 was 2.70%, up 4 basis points from Q3 2025 and 26 basis points from Q4 2024 [4] Asset Quality - Non-accrual loans increased to $26,767,487 or 3.51% of loans held-for-investment, up from 2.30% in the previous quarter, primarily due to one large syndicated loan [12] - The ratio of the allowance for credit losses to loans held-for-investment was 1.82% as of December 31, 2025, compared to 0.85% in the prior year [13] Deposits and Borrowings - Total deposits increased by $59.2 million or 6.93% in Q4 2025, with non-interest-bearing demand deposits rising to 16.3% of total deposits [14] - Borrowings decreased by $25 million during the quarter, reflecting a shift towards core deposits [20] Capital and Equity - The bank's Total Risk Based Capital ratio increased to 15.08% at year-end 2025, compared to 14.35% at the end of 2024 [2][16] - Stockholders' equity as of December 31, 2025, was $84.34 million, a decrease from $87.19 million at the end of Q3 2025 [15] Share Buyback Program - The company repurchased 29,400 shares in Q4 2025 and a total of 207,092 shares for the full year at an average price of $10.51 per share [17]

Financial Data and Key Metrics Changes - The company reported net income for Q4 2025 of $12.3 million, or $0.61 per diluted share, a 24% increase from Q4 2024 [3] - For the full year, net income was $46.2 million, or $2.64 per diluted share, compared to $31.7 million, or $2.01 per diluted share for 2024 [4] - The return on assets (ROA) for Q4 was 1.14%, improving to 1.42% when excluding one-time expenses [5] Business Line Data and Key Metrics Changes - Net interest income for Q4 totaled $36.5 million, a 5.5% increase from the linked quarter and a 16% increase from Q4 2024 [6] - The loan and lease portfolio grew by $68.7 million, representing an annualized growth rate of 8.7% during Q4, excluding newly acquired loans [7] - Non-interest income increased by $251,000, or 2.6%, from the linked quarter and by $869,000, or 9.6%, from Q4 2024 [8] Market Data and Key Metrics Changes - The company added $236 million in low-cost deposits from the acquisition of Farmers Savings Bank [14] - The loan-to-deposit ratio was 94.3%, slightly down from the linked quarter, with expectations to maintain it within the targeted range of 90%-95% [16] - The security portfolio totaled $685 million, representing 15.8% of the balance sheet, with unrealized losses declining to $45 million [17] Company Strategy and Development Direction - The company aims to focus on increasing tangible common equity and reducing reliance on wholesale funding, with a goal of mid-single-digit loan growth in 2026 [7][14] - Investments in technology and digital banking solutions are expected to enhance deposit growth and support loan growth [28][40] - The company plans to continue evaluating share repurchase opportunities as part of its capital management strategy [67] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate strong earnings despite mixed economic conditions across the country [18] - Credit quality remains solid, with low delinquencies and a slight decrease in net charge-offs compared to the previous year [19] - The company anticipates a stable economic environment in Ohio and Southeastern Indiana, with no systemic signs of deterioration [18] Other Important Information - The company announced an increase in its quarterly dividend to $0.18 per share, reflecting confidence in its financial performance [8][18] - The efficiency ratio improved to 57.7% for the quarter, compared to 61.4% for the linked quarter [11] Q&A Session Summary Question: Loan growth outlook and composition - Management expects commercial loans to lead growth in 2026, with a focus on C&I and commercial real estate [26][27] Question: Digital channel growth potential - Management anticipates accelerated growth through digital channels but remains cautious about margin impacts [30][32] Question: Margin trends and rate cuts - The company expects a slight margin expansion in Q1 and further increases if rate cuts occur [36][37] Question: Expense run rate post-acquisition - First quarter expenses are expected to be in the range of $29 million, with some reductions anticipated after the Farmers conversion [39] Question: Credit quality and non-performing loans - An increase in non-performing loans was attributed to one isolated credit situation, with overall credit quality remaining stable [46][48] Question: Leasing revenue outlook - Leasing revenue is expected to be lumpy, with guidance for total non-interest income in Q1 around $7.8 million to $8.2 million [70]

Financial Data and Key Metrics Changes - The company reported net income for Q4 2025 of $12.3 million, or $0.61 per diluted share, a 24% increase from Q4 2024 [3] - For the full year, net income was $46.2 million, or $2.64 per diluted share, compared to $31.7 million, or $2.01 per diluted share for 2024 [4] - The return on assets (ROA) for Q4 was 1.14%, improving to 1.42% when excluding one-time expenses [5] - The efficiency ratio improved to 57.7% for the quarter, compared to 61.4% for the linked quarter and 68.3% for the prior year [10] Business Line Data and Key Metrics Changes - Net interest income for Q4 totaled $36.5 million, a 5.5% increase over the linked quarter and a 16% increase over Q4 2024 [5] - Non-interest income increased by $251,000, or 2.6%, from the linked quarter, but decreased by $3.8 million, or 10%, for the year compared to 2024 [8][9] - The loan and lease portfolio grew by $68.7 million, representing an annualized growth rate of 8.7% during Q4 [6] Market Data and Key Metrics Changes - The company added $106 million in loans and $236 million in low-cost deposits from the acquisition of Farmers Savings Bank [5] - The loan-to-deposit ratio was 94.3%, slightly down from the linked quarter, with a target range of 90%-95% [15] - The security portfolio totaled $685 million, representing 15.8% of the balance sheet, with 100% classified as available for sale [16] Company Strategy and Development Direction - The company aims to maintain a strong capital position to support organic growth and invest in technology and infrastructure [17] - There is a focus on reducing reliance on wholesale funding, with a successful reduction in brokered deposits for four consecutive quarters [7] - The company plans to leverage the excess deposits from Farmers Savings Bank to support future loan growth [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic conditions across Ohio and Southeastern Indiana, noting no systemic signs of deterioration [17] - The company anticipates mid-single-digit loan growth in 2026, with a focus on commercial and industrial lending [6][22] - Credit quality remains solid, with low delinquencies and a stable allowance for credit losses [18] Other Important Information - The company announced an increase in its quarterly dividend to $0.18 per share, representing a 3.2% annualized yield [7] - The tangible common equity ratio increased from 9.21% at September 30 to 9.54% at year-end [17] - The company is investing in technology and personnel to enhance its operations and growth potential [28] Q&A Session Summary Question: Loan growth outlook and composition - Management expects commercial lending to lead growth in 2026, with a focus on C&I and commercial real estate [22][23] Question: Margin trends and interest rate assumptions - The company anticipates a slight margin expansion in Q1 and further increases in subsequent quarters, assuming rate cuts [26][27] Question: Credit quality and non-performing loans - The increase in non-performing loans was attributed to one specific credit issue, with overall credit quality remaining stable [30][31] Question: Capital optimization and share repurchase plans - The company has a $13.5 million share repurchase authorization and will consider repurchases if they see value [39] Question: Leasing revenue expectations - Leasing revenue is expected to be lumpy, with a potential drop in the first quarter but an increase in subsequent quarters [40]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported net income of $21 million, an increase of $16.1 million or 327.2% compared to the previous quarter [9] - Diluted earnings per share for Q4 were $0.70, an increase of $0.54 per share linked quarter [9] - For the full year 2025, net income was $69.2 million, a decrease of $19.3 million or 21.8% compared to 2024 [10] - The net interest margin expanded to 2.98%, up 4 basis points from the previous quarter [15] - Non-interest income, excluding the net loss on the sale of AFS securities, increased by $494,000 or 4% for the linked quarter [16] Business Line Data and Key Metrics Changes - New loan production in Q4 totaled approximately $327 million, down from $500 million in Q3 [5] - Loans as of December 31 were $4.18 billion, a linked-quarter increase of $52.7 million or 1.1% [10] - The average rate of loans funded during Q4 was approximately 6.6% [10] - Non-performing assets increased by $2.6 million but remained low at 0.45% of total assets [7][11] Market Data and Key Metrics Changes - The Texas economy is anticipated to grow at a faster pace than the overall projected U.S. growth rate [8] - The loan pipeline rebounded to just over $2 billion after dipping to $1.5 billion mid-quarter [6] Company Strategy and Development Direction - The company is focused on restructuring its available-for-sale securities to enhance future net interest income and provide balance sheet flexibility [4] - There is an ongoing initiative to move core systems to OutLink and build a data platform to improve operational efficiency [22][23] - The company remains open to strategic acquisitions, particularly in targeted areas like Dallas and Houston [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2026, anticipating a good year for loan growth despite some headwinds from payoffs [43] - The company is actively monitoring market conditions for potential opportunities arising from M&A activity in Texas [51] Other Important Information - The company plans to redeem $93 million of subordinated notes on February 15, 2026, which is expected to positively impact net interest margin [14] - The efficiency ratio improved to 52.28% as of December 31, down from 52.99% [18] Q&A Session Summary Question: Details on 2026 expense growth and software projects - Management indicated a 7% increase in expenses for 2026, with a portion related to software initiatives aimed at improving efficiency [21][22] Question: Expectations for first quarter margin - Management expects a positive margin in Q1, though muted, with improvements anticipated as the year progresses [35][40] Question: Loan growth expectations - Management is optimistic about exceeding loan production targets, despite potential payoffs impacting growth [41][43] Question: Buyback strategy - The company will continue to be opportunistic with stock buybacks, balancing this with potential acquisitions [45] Question: Fee income outlook - An increase of approximately $1.5 million in fee income is budgeted for 2026, driven by trust income and brokerage services [48][49] Question: M&A activity and target asset size - The company is looking for opportunities in the lower asset size range, with a focus on strategic acquisitions that could help cross the $10 billion threshold [56]

Financial Data and Key Metrics Changes - The company reported net income of $108.8 million or $1.08 per diluted share in Q4 2025, compared to $71.4 million or $0.69 per diluted share in Q3 2025 [15] - Net interest income decreased by $0.4 million or 0.2% to $206.4 million compared to the prior quarter, and decreased by $7.9 million or 3.7% compared to Q4 2024 [15][16] - Non-interest income was $106.6 million, an increase of $62.9 million from the prior quarter, driven by a gain on sale of $62.7 million associated with divestitures [17] - Non-interest expense was $166.7 million for Q4 2025, an increase of $8.8 million from the prior quarter [17] Business Line Data and Key Metrics Changes - Loans decreased by $632.8 million in Q4 2025, including $62.8 million from the indirect portfolio and $72.5 million in loans moving to held for sale due to branch sales [19] - Total deposits decreased by $516.7 million to $22.1 billion as of December 31, 2025, primarily driven by the sale of $641.6 million of deposits in the Arizona and Kansas transaction [19] Market Data and Key Metrics Changes - The ratio of loans held for investment to deposits was 68.8% at the end of Q4 2025, down from 70.1% at the end of Q3 2025 [20] - The company maintained a proactive approach to credit, with criticized loans decreasing by $112.3 million or 9.6% in Q4 2025 [9] Company Strategy and Development Direction - The company is refocusing capital investment and optimizing its balance sheet by exiting markets with lower growth potential and enhancing its presence in high-potential areas [6][10] - A new, flatter organizational structure is being implemented to improve decision-making and support organic growth [12] - The company plans to continue share repurchases as a priority for capital allocation, with an increased authorization of $300 million [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for organic growth in 2026, driven by a redesigned banking organization and improved credit culture [32][54] - The company anticipates a slight decline in total loans for 2026, with expectations for modest growth in the latter half of the year [24][25] - Management highlighted the importance of maintaining disciplined credit practices to enhance long-term shareholder value [56] Other Important Information - The company declared a dividend of $0.47 per common share, equating to a 5.7% annualized yield based on the average closing price during Q4 2025 [22] - The Common Equity Tier 1 capital ratio ended Q4 2025 at 14.38%, an increase of 48 basis points from the prior quarter [22] Q&A Session Summary Question: Loan balances and production outlook - Management noted that a significant portion of the decline in loan balances was due to payoffs of criticized loans, which is viewed positively [31] - There is confidence in improved loan production due to a reorganization of the banking structure and increased focus on organic growth [32] Question: Margin expectations - Management expects net interest margin to improve sequentially, with a target of north of 3.5% by the end of 2026 [34] Question: Credit quality and criticized loans - Management indicated that criticized loans have stabilized and are expected to continue trending down, although variability is inherent in credit [41][52] Question: Expense guidance - Management anticipates flat to slightly lower expenses in 2026, with a focus on maintaining discipline across controllable expenses [26][45] Question: Market expansion and hiring - The company is confident in its current footprint and plans to continue hiring in growth markets like Colorado [61][62]

Financial Data and Key Metrics Changes - In Q4 2025, the company reported earnings per share of $0.95 and net income of $29.5 million, achieving a run rate on average assets of 1.19%, exceeding the targeted 1% [11][12] - Net interest income (NII) increased by 10.2%, while revenue, excluding notable items, rose by 8.8% [5][11] - Non-interest expense, excluding notable items, decreased by 0.7% [5][14] - The annualized pre-tax, pre-provision return on assets (ROA) increased to 1.7% from 1.63% [11] Business Line Data and Key Metrics Changes - Loan origination increased by approximately $500 million, or 37% year-over-year, with loan and swap fees rising by 57% [6][12] - Total loans grew by 1.8% sequentially and 1.1% when excluding mortgage warehouse [12] - Non-interest income reported was $16.7 million in Q4, with a decline to $16.3 million when excluding notable items [14] Market Data and Key Metrics Changes - The company achieved 20% ownership of Argent Financial and consolidated banking centers [5] - The company added more than 10 production bankers in Houston and Dallas-Fort Worth, indicating a strategic focus on market disruption [7] Company Strategy and Development Direction - The company is focused on "Optimize Origin," which aims to enhance performance and accountability while simplifying operations [3][6] - The strategy includes investing approximately $10 million in new bankers and banking teams throughout 2026 to capitalize on market opportunities [7][8] - The company anticipates loan and deposit growth in the mid to high single digits for the year, with a focus on M&A-driven disruption [12][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing significant momentum and a strong earnings profile as the company enters 2026 [17] - The current environment is viewed as an unprecedented opportunity for growth, with a focus on disciplined growth and profitability [8][52] - Management highlighted the importance of maintaining a balance between growth and expense management to achieve ROA targets [41][42] Other Important Information - The tangible book value grew sequentially to $35.04, marking the 13th consecutive quarter of growth [15] - The company redeemed approximately $145 million in subordinated debt and repurchased about $16 million worth of common stock while maintaining strong capital ratios [16] Q&A Session Summary Question: What is the target for new producer hires this year? - Management indicated that the $10 million budget allows for hiring additional producers beyond the 10 already added, with ongoing strategic conversations in various markets [20][21] Question: How does the company view competition in the current market? - Management noted that competition remains intense but rational, with opportunities to grow margins and ROA [51][52] Question: What is the expected impact of new hires on loan growth? - Most new hires are expected to impact loan growth in the latter half of the year, with a focus on disciplined pricing and relationship building [27][39] Question: How does the company plan to manage expenses with new hires? - Management emphasized ongoing expense management efforts to offset the costs of new hires, aiming for a neutral impact on overall expenses [41][42] Question: What is the outlook for net interest margin? - Management anticipates slight margin compression in Q1 due to timing differences but expects net interest margin to stabilize in the 3.70%-3.80% range by Q4 [13][33]

Financial Data and Key Metrics Changes - The company reported a net income increase of $675,000 in the fourth quarter, driven by the TC Federal acquisition and improved margins [3][15] - Operating pre-provision net revenue improved significantly compared to the fourth quarter of 2024 [15] - Net interest income increased by approximately $3.2 million compared to the prior quarter, with net interest margin rising 15 basis points to 3.32% [15][16] - The tangible common equity (TCE) ratio at the end of the quarter was 8.30%, up from 8% in the prior quarter [25] Business Line Data and Key Metrics Changes - Core loan growth for 2025 was reported at 10.5%, with expectations for 2026 to be closer to the lower end of the 8%-12% target [5][23] - Operating non-interest income for the fourth quarter was $11.1 million, reflecting strong performance in mortgage and SBSL [17] - The company executed a portfolio mortgage pool sale of around $10 million, generating a gain of over $100,000 [7] Market Data and Key Metrics Changes - Deposits increased for the quarter and were organically flat year-over-year, excluding the TC Federal acquisition [6][24] - The company noted increased competition in lending across its footprint, impacting loan growth expectations [5][36] Company Strategy and Development Direction - The company is focused on integrating the TC Federal acquisition and expects to realize cost savings post-systems conversion in the second quarter of 2026 [8][26] - There is an ongoing strategy to enhance performance through disciplined execution and improvement, with a focus on M&A opportunities [12][13] - The company aims to maintain a disciplined approach to pricing and credit while growing core customer relationships [5] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic environment in the Southeast and the potential for M&A activity to drive growth [39][48] - The company anticipates a modest increase in net interest margin throughout 2026, supported by loan repricing and deposit growth [24][45] - Management acknowledged the competitive landscape and the need to balance growth with margin improvement [36][40] Other Important Information - The board declared an increase in the quarterly dividend to $0.12 per share, marking another consecutive year of dividend increases [11] - The company was recognized as one of American Banker's 2025 Best Banks to Work For, highlighting its commitment to culture and team members [12] Q&A Session Summary Question: Concerns about small business lending and charge-offs - Management acknowledged that small business lending is high-risk but can offer better returns, and they expect it to improve from current levels [28][29] Question: M&A competition and strategy - Management hopes for negotiated transactions rather than competitive bidding, focusing on partnerships that align with their goals [31][33] Question: Organic growth and competitive environment - Management noted increased competition but emphasized a disciplined approach to pricing and maintaining margins [36][38] Question: Deposit growth and funding loan growth - Management is optimistic about organic deposit growth and plans to leverage non-interest-bearing accounts to fund loans [42][44] Question: Future M&A targets and geographic expansion - Management is open to pursuing larger targets and expanding into contiguous states, while also considering the competitive landscape [46][48] Question: Effective tax rate and expense management - Management expects the effective tax rate to remain around 21% and aims to reduce net operating expenses to historical averages later in the year [50]