Financial Data and Key Metrics Changes - The company finished the year strong with robust loan and core deposit growth, net interest margin expansion, and higher fee income [4] - Net interest margin expanded by 12 basis points to 2.75%, with net interest income increasing by 5% during the quarter [6][11] - Core deposits grew by 9% in the fourth quarter and 8% for the full year, while loans grew at an 11% pace [7] - Tangible book value per share grew 16.5% annualized and was up 15.3% year-over-year [7] Business Line Data and Key Metrics Changes - The company saw strong revenue growth from both spread and fee perspectives, with non-interest income bouncing back due to increases in swap fees and letter of credit fees [16] - Core deposit growth was driven by strong non-interest-bearing deposit growth, which increased by $100 million during the fourth quarter [18] - Loan balances were up 8.9% annualized in the fourth quarter and 11.4% for the year, with construction being the largest driver of growth [20][22] Market Data and Key Metrics Changes - The company is now the second-largest locally led bank in the Twin Cities, positioning itself well to capture market share amid M&A disruptions [9] - The multifamily portfolio continues to perform well, with only $62,000 in net charge-offs recorded since the bank's founding [23] - Non-performing assets increased modestly to 0.41% of assets, driven by isolated issues [24] Company Strategy and Development Direction - The company aims to optimize profitable growth while aligning loan growth with core deposit growth and expanding net interest margin [30] - There is a focus on gaining market share in the Twin Cities and expanding the affordable housing vertical both locally and nationally [31] - The company plans to leverage technology investments to support growth and organizational efficiencies, including a strategy around AI [31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ability to continue driving net interest income growth and achieving a 3% net interest margin by the end of 2026 [12][29] - The company is monitoring the impact of recent events in the Twin Cities on team members and clients, emphasizing support for the community [9] - Management remains confident in the strength of the asset quality profile despite a modest uptick in non-performing assets and net charge-offs [7][24] Other Important Information - The company closed one of the two branches added through the First Minnetonka City Bank acquisition due to proximity to other branches, with minimal deposit attrition post-merger [8] - The company has a strong capital position, with a CET1 ratio increasing slightly from 9.08% to 9.17% [27] Q&A Session Summary Question: Can you unpack some of the deposit growth in the quarter? - Management noted that Q4 tends to be a seasonally high watermark for deposit growth, with a strong deposit pipeline overall [36][39] Question: Can you discuss the cadence of loan repricing? - Management indicated that loan repricing is well laid out and not concentrated in any one quarter, supporting the margin target [40][41] Question: What are the expectations for expenses in 2026? - Management expects expenses to grow in the high single digits, aligning with asset growth [42] Question: What is the company's appetite for potential acquisitions? - Management continues to engage in conversations with local bank owners and remains optimistic about future acquisition opportunities [55] Question: How does the company view the affordable housing vertical's growth potential? - Management expressed confidence in the affordable housing space, indicating it currently represents about 15% of the loan book and is expected to grow [59][60]