LeMaitre Vascular (NasdaqGM:LMAT) Q4 2025 Earnings call February 25, 2026 05:00 PM ET Company ParticipantsDanny Stauder - Director of Equity ResearchDave Roberts - PresidentDorian LeBlanc - CFOGeorge LeMaitre - CEORick Wise - Managing DirectorConference Call ParticipantsBrett Fishbin - VP and Senior Equity Research AnalystJim Sidoti - AnalystKyle Bauser - Managing Director and Senior Research AnalystMichael Petusky - Managing Director and Senior Investment AnalystMichael Sarcone - Equity AnalystNone - Analy ...

Financial Data and Key Metrics Changes - For Q4 2025, the company reported GAAP net income of $18.3 million, or $0.13 per share, compared to a GAAP loss of $9.5 million, or $0.08 per share in Q3 2025 [21] - Book value per common share was $7.36 at December 31, 2025, slightly up from $7.35 at September 30, 2025 [22] - Economic return on book value was 2.6% for the quarter, including $0.04 of accretion from share repurchases and a $0.18 per share common dividend [22] - Non-GAAP consolidated earnings available for distribution (EAD) increased from $0.01 in Q3 to $0.20 in Q4, exceeding the common dividend [22] Business Line Data and Key Metrics Changes - The Sequoia platform locked $5.3 billion of loans in Q4 2025, a 5% increase from Q3 and up 130% from Q4 2024 [11] - Aspire locked a record $1.5 billion of loans during Q4 2025, a 20% sequential increase, contributing to a total of over $3 billion for the year [16] - CoreVest closed out 2025 with full-year volumes up 13% versus 2024, with nearly 40% of Q4 production coming from residential transition loans [17] Market Data and Key Metrics Changes - The company estimates that between $200 billion and $300 billion of jumbo mortgages could become refinanceable as mortgage rates hover just above 6% [7] - The company’s full-year 2025 jumbo market share was approximately 7%, significantly up from prior years [12] - Institutional participation in housing has drawn renewed focus, with proposals intended to limit ownership of single-family homes by large institutional investors [8] Company Strategy and Development Direction - The company is shifting towards increasing capital to mortgage banking platforms, with over 80% now invested in core operating activities at year-end 2025, up from 57% in 2024 [5] - The company plans to leverage AI to enhance risk management, accelerate capital deployment, and extract further gains in operating leverage [9] - The company is winding down its legacy investment portfolio to free up capital for redeployment into higher return mortgage banking platforms [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for volume growth in 2026, supported by a broader base of third-party capital partners and a simpler balance sheet [9] - The company expects core operating performance to drive consolidated earnings above the common dividend in 2026, enabling earnings retention and reinvestment [10] - Management noted that the refinance market could significantly expand volume expectations, particularly for the Sequoia business [15] Other Important Information - The company reported a 44% year-over-year reduction in operating costs per loan, attributed to technology enablement and operational efficiencies [19] - The legacy bridge portfolio's principal balance was reduced by nearly 40% in Q4, with 90-day plus delinquencies declining to $82 million, down over 65% from earlier in the year [18] Q&A Session Summary Question: Impact of recent mortgage rate movements on business volume - Management reported January volume at $3.6 billion, indicating continued acceleration from Q4 [29] Question: Opportunities in the Aspire non-QM platform and potential GSE reform impacts - Management highlighted strong momentum in non-QM products and expected continued growth, with GSE reform unlikely to impact the non-QM market significantly [31][34] Question: Future of third-party capital providers - Management noted strong demand for production and ongoing discussions with capital partners to support growth in Aspire and Sequoia [39] Question: Current margins in the non-QM channel compared to jumbo - Management indicated targeting margins in the non-QM channel similar to Sequoia, with the potential for increased efficiency through securitization [45] Question: Competitive landscape in the non-QM market - Management acknowledged increased competition but expressed confidence in their ability to grow market share due to operational advantages [48] Question: CoreVest originations and first-quarter volume expectations - Management projected higher volumes in Q1, with consistent margins expected [72]

Financial Performance - Adjusted EBITDA for the first quarter was $70 million, showing improvement from the low point in fiscal Q4 2025 [4] - Revenue for the first quarter was $663.4 million, a decline of $20.4 million or 3% compared to the first quarter of fiscal 2025 [12] - Adjusted EBITDA margin was 10.6%, compared to 11.9% in the prior year, but improved by 150 basis points from fiscal Q4 2025 [16] Business Line Performance - Rental revenue declined by $17.9 million, and direct sales decreased by $2.7 million, with a slight positive impact from foreign exchange [12] - Processed 2% less in uniforms but increased linen volume by 7%, indicating a shift in product mix towards more costly items [13] - Revenue per pound declined by $0.04 or 3%, equating to a $20 million decrease in total revenue [14] Market Data - Total volume processed was flat year-over-year when measured by pounds, but the product mix has shifted, impacting revenue quality [12][14] - The company continues to focus on key verticals with no significant changes in macro demand observed [33] Company Strategy and Development Direction - The company is focused on operational excellence, commercial excellence, and network and asset optimization as part of its transformation framework [4][9] - Plans to improve revenue quality through better product mix and strategic pricing initiatives [14][21] - Actively marketing non-core properties for sale to optimize asset footprint and repay debt [9][21] Management Comments on Operating Environment and Future Outlook - Management emphasized that the transformation is still in early stages, with ongoing efforts to improve operational consistency and create value [10][37] - The company expects revenue for fiscal 2026 to be flat to down 2% compared to fiscal 2025, with adjusted EBITDA guidance of $285 million to $315 million [21] Other Important Information - First quarter capital investments were $9.4 million, below the target due to longer lead times for equipment [18] - The company generated $38 million in operating cash flow and $28 million in free cash flow, with significant improvements in working capital management [17][19] Q&A Session Summary Question: Revenue per pound decline and its trend for the year - Management confirmed that revenue per pound is expected to remain flat to down 2% for the full year, with a focus on improving mix and pricing [24][25] Question: Sequential EBITDA growth assumptions - Management guided for 5% sequential adjusted EBITDA growth for each remaining quarter, with specific operational and commercial assumptions underpinning this progression [27][28] Question: General macro and customer demand - Management noted no significant changes in macro demand, with consistent volume on a pound basis year-over-year [33] Question: Progress on transformation - Management indicated that they are in the early stages of transformation, with ongoing improvements in cost and service levels [37][39] Question: Cost savings realization and cadence - Management clarified that the $75 million in cost savings is a full-year target, with $40 million expected to be realized in FY 2026 [53][54] Question: Traction in the unvended market - Management reported a consistent split between programmers and non-programmers, with ongoing efforts to penetrate the unvended market [59][60]

Financial Performance - Adjusted EBITDA for the first quarter was $70 million, showing improvement from the low point in fiscal Q4 2025, reflecting progress in cost management and utilization [4][16] - Revenue for the first quarter was $663.4 million, a decline of $20.4 million or 3% compared to the first quarter of fiscal 2025, with rental revenue down $17.9 million and direct sales down $2.7 million [11][12] - Cost of service decreased by $3 million year-over-year, while SG&A expenses were down approximately $0.9 million, but were impacted by $7.8 million in third-party support costs and $5.5 million in severance [15][16] - First quarter adjusted EBITDA margin was 10.6%, compared to 11.9% in the prior year, but improved by 150 basis points from fiscal Q4 2025 [16] Business Line Performance - Volume processed was flat year-over-year, but the product mix shifted, with a 2% decrease in uniforms processed and a 7% increase in linen volume [12][13] - The shift in product mix negatively impacted revenue per pound by $0.04 or 3%, equating to a $20 million decline in revenue [12][14] Market Data - The company reported no significant changes in macro demand, maintaining consistent volume on a pound basis year-over-year [32][33] - The focus remains on improving revenue quality and product mix through strategic pricing and enhanced customer engagement [14][58] Company Strategy and Industry Competition - The company is focused on a business transformation framework centered on operational excellence, commercial excellence, and network optimization [4][8] - Plans include marketing non-core properties for sale to repay debt and improve the balance sheet [20][19] Management Commentary on Operating Environment and Future Outlook - Management emphasized that the transformation is still in early stages, with expectations for continued improvement in operational metrics and financial performance [9][35] - The company reaffirmed its full-year revenue guidance, expecting revenue to be flat to down 2% compared to fiscal 2025 [21][20] Other Important Information - The first quarter capital investments were $9.4 million, below the target of $15 million due to longer lead times for equipment [18] - The company generated $38 million in operating cash flow and $28 million in free cash flow, with a strong liquidity position [17][19] Q&A Session Summary Question: Revenue per pound decline and future trends - Management confirmed that revenue per pound is expected to trend flat to down 2% for the year, with a focus on improving mix and pricing strategies [24][25] Question: Sequential EBITDA growth assumptions - Management guided for 5% sequential Adjusted EBITDA growth for each remaining quarter, with specific operational and commercial assumptions underpinning this progression [27][28] Question: General macro and customer demand - Management indicated no significant changes in macro demand, with consistent volume year-over-year, but acknowledged shifts in product mix affecting revenue [32][33] Question: Progress on transformation - Management described the transformation as being in the early stages, with ongoing improvements in cost and revenue metrics expected [35][38] Question: Cost savings realization - Management clarified that the $75 million in cost savings is a full-year target, with $40 million expected to be realized in FY26, and detailed the expected cadence of these savings [51][52] Question: Traction in the unvended market - Management reported a consistent split between programmers and non-programmers in new business, with ongoing efforts to penetrate the unvended market [56][58]

Financial Data and Key Metrics Changes - In Q4 2025, the company reported revenue of $672.9 million, an increase of 5.7% year-over-year, or 4.5% excluding fuel price and foreign exchange impacts [8][22] - Adjusted Net Income per diluted share was $4.11, up 15.1% year-over-year, with a 12.1% increase when excluding fuel price and foreign exchange impacts [9][22] - For the full year 2025, total revenue reached $2.66 billion, a 1.2% increase year-over-year, with adjusted net income per share at $16.10, up 5.4% [9][22] Business Line Data and Key Metrics Changes - Mobility segment revenue was $345.1 million, flat year-over-year, with a slight positive impact from fuel prices and foreign exchange [23] - Benefits segment revenue increased by 9.6% to $204.9 million, with SaaS account growth of 6% [23] - Corporate Payments segment revenue rose by 17.8% to $122.9 million, with purchase volume increasing by 16.9% [24] Market Data and Key Metrics Changes - The over-the-road trucking market remains in a cyclical down cycle, with muted freight demand impacting transaction volumes [14][15] - Travel-related revenue in Corporate Payments grew over 30% in Q4, supported by high existing customer activity [18] Company Strategy and Development Direction - The company focuses on three strategic pillars: amplifying core capabilities, expanding reach, and accelerating innovation [8] - Investments in technology and product development are aimed at increasing operational efficiency and customer satisfaction [10][11] - The company plans to shift from an investment phase to a scaling phase in 2026, expecting to drive meaningful margin expansion [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in building upon recent progress, anticipating strong new sales in 2026 based on current pipeline and improving sales productivity [21] - The company expects to maintain strong free cash flow generation while navigating macroeconomic challenges [21][22] Other Important Information - The company announced a governance update, with a new Vice Chair and Lead Independent Director set to take effect at the 2026 annual meeting [19][20] - The leverage ratio at the end of Q4 was 3.1 times, down from 3.25 times at the end of Q3, with a target to reduce it below 3 times in 2026 [26] Q&A Session Summary Question: Corporate business cadence through 2026 - Management noted strong growth in Q4 due to favorable comps and expects more normalized growth moving forward, with yield rates expected to remain flat to slightly down [36][39] Question: Mobility organic growth assumptions - Management highlighted strong retention and acquisition rates, with expectations for continued sales acceleration despite current market softness [42][46] Question: Benefits segment impact from political changes - Management indicated potential tailwinds from legislative changes but did not factor these into guidance, noting a strong open enrollment season [57][59] Question: Elevated credit losses in Q1 - Management explained that elevated credit losses are due to the timing of receivables and previous market offers, but overall portfolio quality remains strong [60][61] Question: Direct payables business growth - Management expects double-digit growth in 2026, attributing recent deceleration to customer spending timing rather than underlying demand [64][65]

Financial Data and Key Metrics Changes - EZCORP achieved record first-quarter revenue of $374.5 million, up 17% year-over-year, with adjusted EBITDA rising 36% to $70.3 million and diluted EPS improving 34% to $0.55 [9][10] - Net income and EBITDA grew by more than 35%, reflecting strong operational execution and leverage [4][5] - The company ended the quarter with net earning assets of $554 million, a 17% increase, and maintained a healthy PLO to inventory ratio of 1.2 times [5] Business Line Data and Key Metrics Changes - Pawn Loan Outstanding (PLO) increased 12% to $307.3 million, marking an all-time Q1 high, driven by sustained consumer demand and higher average loan sizes [9][10] - Pawn Service Charge (PSC) revenue rose 11% to $129.6 million, in line with PLO growth [10] - Merchandise sales climbed 10% to $205.2 million, with same-store sales up 7% and merchandise margin expanding 230 basis points to 37% [10] Market Data and Key Metrics Changes - In the US segment, total revenues increased 16% to $269.8 million, with PLO expanding 9% to $239.9 million [11] - In Latin America, total revenues rose 19% to $104.7 million, with PLO expanding 23% to $67.4 million [13][14] - Jewelry now represents 68% of US PLO, up 310 basis points, while in Latin America, it accounts for 47%, up 650 basis points [11][13] Company Strategy and Development Direction - The company aims to build scale in the pawn industry through disciplined capital deployment and strategic acquisitions, having recently closed two significant acquisitions [5][6][18] - The focus remains on integrating acquired businesses to maximize profitability and returns while maintaining a fiscally conservative balance sheet [5][18] - The company is actively pursuing additional M&A opportunities, particularly in Latin America, while also enhancing operational best practices across all geographies [16][25] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer credit conditions remain challenging, particularly for lower and middle-income households, which supports pawn as a trusted solution for immediate cash needs [4] - The company expects favorable momentum to continue into Q2, driven by tax refund season and elevated gold prices supporting scrap contributions [16][27] - Management emphasized the importance of operational execution and customer service in driving growth, independent of macroeconomic factors [76][78] Other Important Information - The company has a robust position of $465.9 million in unrestricted cash, enabling it to fund organic expansion and pursue acquisition opportunities [14] - Management highlighted the importance of training and development programs to retain staff and improve operational performance [78] Q&A Session Summary Question: Why was now the right time to take a controlling stake in SMG? - Management indicated that operational performance and favorable deal terms made the timing right for the acquisition [23][24] Question: How does the M&A pipeline look after recent acquisitions? - Management confirmed that the M&A pipeline remains strong, particularly in Latin America, and emphasized a disciplined approach to capital allocation [25][26] Question: What are the expectations for loan demand during tax refund season? - Management noted that while they prepare for potential increases in loan paydowns, they do not expect monumental changes in customer behavior [27][28] Question: How does the company manage scrap inventory? - Management explained that scrapping is based on inventory age and sellability rather than gold prices, ensuring effective inventory management [80][81] Question: What is the outlook for growth in new geographies from the SMG acquisition? - Management highlighted Puerto Rico as a significant opportunity and emphasized the team's expertise in opening new stores [37][39] Question: How does the company view the impact of gold prices on margins? - Management stated that while gold prices influence scrap margins, the company focuses on long-term trends rather than short-term fluctuations [32][33]

Financial Data and Key Metrics Changes - Fourth quarter revenue reached $704 million, representing a high single-digit increase year-over-year, with earnings per share (EPS) of $0.71, exceeding prior guidance [5][11] - For the fiscal year 2025, total revenue was $2.66 billion, flat compared to the previous year, with non-GAAP EPS increasing by 5% to $2.40 [7][12] - Gross margin for Q4 was 10.6%, up 50 basis points sequentially and 20 basis points year-over-year, while full-year gross margin was 10.2% [11][12] Business Line Data and Key Metrics Changes - Semi-cap revenue decreased by 8% quarter-over-quarter and 14% year-over-year, but full-year revenue grew by 2% [12][13] - Aerospace and Defense (A&D) revenue increased by 7% sequentially and 17% year-over-year, with full-year growth at 19% [13] - Medical sector revenue grew by 14% quarter-over-quarter and 23% year-over-year, leading to a 7% increase for the full year [13] - AC&C revenue rebounded in Q4, up 22% sequentially and 27% year-over-year, with expectations for continued growth [14] Market Data and Key Metrics Changes - The semi-cap market experienced a cyclical downturn, but new bookings and capacity expansion are expected to position the company well for recovery [21] - Industrial revenue was flat for the full year but showed improvement in the second half, driven by demand in transportation and HVAC [22] - The medical sector is expected to see double-digit growth in 2026, supported by strong bookings momentum [24] Company Strategy and Development Direction - The company targets five core high-value markets, focusing on complex, high-mix opportunities while avoiding commoditized markets [8] - Continued investment in global precision technology and production equipment aligns with new business wins, particularly in space, MedTech, and enterprise AI [9][10] - The company aims to maintain a disciplined approach to operating expenses while driving improvements in working capital efficiency [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum of bookings and improving end-market conditions, particularly in medical and semi-cap sectors [25][26] - The company anticipates mid-single-digit growth for 2026, with potential for further strengthening as visibility from customers improves [26] - Management highlighted the importance of operational execution and customer satisfaction in driving revenue growth [20][21] Other Important Information - The company generated $85 million in free cash flow for fiscal year 2025 and maintained a net cash positive position of $111 million [15][16] - An $11.1 million non-cash impairment was recorded on certain assets due to program end-of-life, with no impact on previously reported financials [18] - The cash conversion cycle improved to 67 days, with significant improvements in inventory management [17][70] Q&A Session Summary Question: Areas of increased confidence beyond Semi-Cap - Management indicated that medical and AC&C sectors have shown improved momentum, with expectations for continued growth [31][32] Question: Thoughts on gross margins and operating leverage - Management noted that while gross margins are stable, operating margins are expected to leverage as revenue accelerates [33][34] Question: Expansion of Total Addressable Market (TAM) in industrial - Management highlighted opportunities in various subsectors such as HVAC, transportation, and agriculture, indicating a broad TAM [41][43] Question: Insights on space bookings and future growth - Management expressed optimism about bookings momentum in space applications, contributing positively to A&D sector growth [44][45] Question: Timeline for Semi-Cap recovery - Management indicated that customer orders could be responded to within one to three months, with expectations for a significant recovery in 2026 [59][60]

Financial Data and Key Metrics Changes - LPL Financial reported record adjusted earnings per share (EPS) of $20.09 for the year, with a fourth quarter EPS of $5.23, representing a 23% increase year-over-year [6][12] - Total assets reached a record $2.4 trillion, up 2% from the previous quarter, driven by organic growth and higher equity markets [12][19] - Organic net new assets for Q4 were $23 billion, reflecting a 4% annualized growth rate, while total organic net new assets for the year were $147 billion, or approximately 8% growth [6][12] Business Line Data and Key Metrics Changes - Recruited assets in Q4 amounted to $14 billion, bringing the total for the year to $104 billion [7] - The company maintained a high asset retention rate of 97% for Q4 and over the last 12 months, indicating strong advisor experience and service improvements [8] - Commission advisory fees net of payout were $453 million in Q4, up $27 million from Q3, while client cash revenue was $456 million, up $14 million from Q3 [12][13] Market Data and Key Metrics Changes - The company added approximately $13 billion in assets during Q4 in traditional markets, maintaining industry-leading capture rates of advisors in motion [8] - The overall market environment remains competitive, with elevated advisor movement and retention challenges due to the Commonwealth acquisition [44][66] Company Strategy and Development Direction - LPL Financial aims to be the best firm in wealth management, focusing on client centricity, empowering employees, and improving operating leverage [7] - The integration of Commonwealth Financial Network is a key strategic priority, with expectations of onboarding in Q4 and a target operating model being developed [9][60] - The company is investing in technology and capabilities to enhance advisor experience and operational efficiency [11][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 90% retention rate for Commonwealth assets, citing the quality of advisors committed to stay [25][29] - The recruiting environment is expected to normalize, with pipelines near record levels, although the timing of conversions may vary based on advisor decision-making processes [42][78] - Management remains optimistic about sustaining mid- to high single-digit growth over the long term, supported by improved advisor capture rates and brand awareness [32][66] Other Important Information - Core G&A expenses for Q4 were $536 million, with full-year Core G&A at $1.852 billion, reflecting efficiency improvements [16] - The company ended Q4 with corporate cash of $470 million and a leverage ratio of 1.95x, indicating a strong capital management position [19] - Share repurchases were paused following the Commonwealth acquisition announcement, with plans to revisit after onboarding [19][99] Q&A Session Summary Question: Commonwealth retention and recruiting outlook - Management reaffirmed confidence in achieving the 90% asset retention target for Commonwealth, highlighting that advisors committed to stay are larger and higher producers [25][29] - The recruiting pipeline is expected to improve as focus shifts back to organic recruiting efforts post-Commonwealth onboarding [31][42] Question: EBITDA contribution and asset growth - Management explained that the estimated run rate EBITDA of $425 million post-integration considers various factors, including interest rate impacts and asset growth [36][37] Question: Growth outlook and recruiting dynamics - Management noted that advisor movement remains tempered compared to historical levels, with the Commonwealth acquisition influencing current recruiting dynamics [41][44] Question: Integration progress with Prudential - Management reported positive growth in advisor headcount and net new assets from Prudential, indicating strong partnership potential for future insurance channel growth [84][86]

Financial Data and Key Metrics Changes - The return on equity for 2025 was 13.2%, exceeding initial guidance [5] - Total sustainable volume mobilized reached EUR 166 billion, a 28% year-on-year increase [5] - Commercial net interest income (NII) remained strong at EUR 15.3 billion despite lower interest rates [5][6] - Total income reached a record level for the third consecutive year [6] Business Line Data and Key Metrics Changes - The loan book grew by 8.3% in 2025, primarily driven by residential mortgages [4] - The deposit book increased by 5.5%, mainly in retail banking from private individuals [4] - Fee income grew by 15% year-on-year, with investment products seeing a 21% increase in fee income [5][6] Market Data and Key Metrics Changes - Customer deposit growth was 4.5% in 2025, supported by customer acquisition and promotional campaigns [19] - The company maintained its number one position in five out of ten markets in retail banking [7] Company Strategy and Development Direction - The company aims for continued volume growth, projecting total income to reach around EUR 24 billion in 2026 [9] - A focus on cost discipline and operational efficiency is emphasized, with operating expenses projected to be around EUR 12.6 billion to EUR 12.8 billion [9] - The company plans to issue between EUR 6 billion and EUR 8 billion of Holdco Senior in 2026 [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength and quality of the loan book despite a slight increase in the Stage Three ratio [11] - The company anticipates a 5%-10% increase in fee income for 2026, building on strong performance in 2025 [10] - Management highlighted the importance of being self-sufficient and not relying on central bank operations, although they remain open to utilizing MROs or LTROs if necessary [25] Other Important Information - The CET1 ratio decreased to 13.1% due to an additional distribution of EUR 1.6 billion [14] - The company has a stable liquidity profile, with over two-thirds of the balance sheet funded by customer deposits [19] Q&A Session Summary Question: Plans for tapping the ECB, MROs, and LTROs - Management stated that they prefer to be self-sufficient but may consider drawing on MROs or LTROs if necessary, particularly for economic reasons [25][26]

Financial Data and Key Metrics Changes - The tangible book value increased to $26.85 per share, representing over 13% annualized growth quarter over quarter and 17% for the year [5] - Operating earnings for the quarter were $13.7 million or $0.81 per diluted share, with record earnings exceeding $51 million for the year [5] - Total operating revenue for the quarter was $53.3 million, with pre-provision net revenue growing from $14.5 million in Q4 2024 to a record $20.9 million in Q4 2025, a 44% year-over-year increase [7][8] Business Line Data and Key Metrics Changes - Loan growth was 13% annualized quarter over quarter, with an average portfolio yield of 6.08% [9] - Deposits increased by 8% annualized, with core deposit balances growing by $626 million or 14% for the year, excluding brokered CD activity [9] - Operating non-interest income reached $8.2 million, driven by elevated mortgage banking revenue and customer swap fees [15] Market Data and Key Metrics Changes - Non-brokered deposits grew by $214 million, nearly 18% annualized, with interest-bearing deposit costs declining to 2.79% [11] - The loan-to-deposit ratio at quarter-end was 85%, indicating a strong liquidity position [12] - Non-performing assets comprised only 0.22% of total assets, reflecting strong asset quality [14] Company Strategy and Development Direction - The company plans to expand into the Columbus, Georgia market, leveraging existing relationships and local banking expertise [10][11] - The focus remains on organic growth, with a target of high single-digit growth rates for loans and deposits in 2026 [19][25] - The company aims to achieve a $4 EPS run rate by the end of 2026, emphasizing disciplined expense management and operational efficiency [22][63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong growth and profitability, with expectations for continued positive operating leverage [18][21] - The company anticipates stable net interest margins and a gradual increase in the allowance for credit losses as they transition to a new allowance model [15][17] - Management highlighted the importance of recruiting talent that aligns with the company culture to support growth initiatives [25][46] Other Important Information - The operating efficiency ratio improved to 60%, down from 64% in the previous quarter, due to margin improvement and expense management [16] - The company remains well-capitalized, with a total consolidated risk-based capital ratio of 12.67% [17] Q&A Session Summary Question: Sustainability of Loan Growth - Management indicated that while double-digit growth was achieved in 2025, they expect to target high single-digit growth rates in 2026 as the balance sheet expands [24][25] Question: Expense Growth Rate - The company expects overall expense growth to be around 5% year over year, targeting a range of $34.5-$35 million [27][29] Question: Net Expansion and Loan Repricing - Management believes that as long as rates remain stable, net expansion can continue, with expectations for net interest margin to stabilize around 3.40%-3.45% [34][36] Question: Hiring Plans in Columbus - The initial hiring in Columbus will depend on finding the right talent, with no significant impact on expense growth anticipated [45][48] Question: M&A Strategy - Management stated that they are focused on organic growth and would only consider M&A if a unique opportunity arises [49][50]