Financial Data and Key Metrics Changes - Net income for Q4 2025 was $7.4 million, compared to $9.3 million in Q3 2025 and $7.1 million in Q4 2024, while net income for the full year 2025 was $32.6 million, up from $24.1 million in 2024, representing a 35% increase year-over-year [14][15] - The company executed a securities loss trade, selling $64 million of securities available for sale, resulting in a pre-tax net loss of $4 million, which was aimed at improving the balance sheet flexibility [15] - Net interest income improved, with the net interest margin increasing by 11 basis points from Q3 and 49 basis points from Q4 last year [16] Business Line Data and Key Metrics Changes - Loan outstandings were slightly down at just under $3 billion due to larger payoffs from asset sales and refinancing activity, but new quality assets were added at better interest rates [9] - Deposit balances increased by over $162 million during the quarter, with growth in core, commercial, and retail deposits [9][16] - Core deposit balances, excluding brokered funds, increased approximately $212 million in Q4 and $223 million for the year [16] Market Data and Key Metrics Changes - The watch list for loans increased but remains low at 1.7% of total loans, with 70% of the watch list related to the trucking industry, which is currently facing challenges [7] - The commercial real estate portfolio continues to perform well, supported by strong underwriting practices [8] Company Strategy and Development Direction - The company is focused on building strong customer relationships and leveraging community leaders to grow its business, particularly in the Minnesota market [12] - There is an emphasis on attracting new business opportunities following recent M&A activity in the market [13] - The company aims to maintain a disciplined approach to loan opportunities while continuing to grow deposits [9][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position for growth in 2026, anticipating an increase in loan growth as economic expansion begins [4] - The outlook for deposits is uncertain due to potential volatility from public funds, but retail and commercial growth is expected to continue [27] - Management believes that the continuous improvement in core earnings positions the company well for a strong 2026 [16] Other Important Information - The company declared a $0.25 dividend payable on February 25th to shareholders of record as of February 11th [4] Q&A Session Summary Question: Loan growth dynamics in the quarter - Management noted elevated payoffs, including a specific customer selling medical office buildings for over $50 million, and expects continued activity in the first quarter [22] Question: Update on loans repricing - The fixed rate portfolio that reprices in 2026 is just under $400 million, with a potential yield pickup of around 1.5%-2% [26] Question: Deposit growth and seasonality - The outlook on deposits is uncertain due to public funds volatility, but mid-single digit growth in loans and deposits is anticipated [27] Question: Future securities portfolio repositionings - Management regularly evaluates the securities portfolio and does not have set goals for 2026 but will continue to assess opportunities [29] Question: Margin starting point for the first quarter - The current margin is around 2.5%, with expectations for improvement throughout the year [31]