Financial Data and Key Metrics Changes - The company reported a net loss of $39.5 million in Q4, translating to $2.49 per share, primarily due to a $69 million loss from securities portfolio repositioning [9] - On a non-GAAP basis, net income was $9.4 million or $0.59 per share, with non-GAAP pre-tax, pre-provision net income increasing by 31% quarter-over-quarter and 51% year-over-year [9] - Net interest income rose to $31.2 million, driven by balance sheet growth, higher investment security yields, and reduced deposit costs [9] Business Line Data and Key Metrics Changes - Total loan originations for the quarter were $141 million, with $106 million funded, marking one of the strongest quarters in the past decade [4] - For the full year, the company originated $374 million in new loans, including $274 million funded, which was 79% higher than the previous year [4] - Total deposits increased in Q4 due to higher balances from existing clients and new relationships, with a reduction in deposit costs by 10 basis points [6] Market Data and Key Metrics Changes - The company experienced a 35% decline in classified loans quarter-over-quarter, reducing to 1.5% of total loans from 2.4% in the prior quarter [7] - Non-accrual loans improved, decreasing by 14% to 1.3% of total loans compared to 1.5% in the prior quarter [7] Company Strategy and Development Direction - The company executed a balance sheet restructuring that improved net interest margin and net interest income while maintaining strong capital levels [3][8] - The focus remains on attracting new client relationships and expanding existing ones, particularly in growth markets like Greater Sacramento [5][6] - The company aims to continue loan growth in 2026 while managing seasonal outflows typically experienced in the first half of the year [12] Management's Comments on Operating Environment and Future Outlook - Management noted healthy economic conditions in their markets and an expectation for solid loan growth in 2026 [12] - The company is prepared for potential Fed funds rate cuts in 2026, which may allow for targeted deposit cost reductions contributing to margin expansion [10] - Management expressed confidence in the continued improvement of credit quality trends and proactive credit management [7][12] Other Important Information - The allowance for credit losses remains strong at 1.42% of total loans, with only a minor provision for credit losses in Q4 [11] - The board declared a cash dividend of $0.25 per share, marking the 83rd consecutive quarterly dividend [11] Q&A Session Summary Question: Loan production and recent hires - Management indicated that a significant portion of loan production came from recent hires, contributing to a diverse pipeline [16] Question: Deposit cost trends - The average deposit cost was reported at 2.08% in December, with expectations for further reductions in January [17][19] Question: Increase in special mention loans - The increase was attributed to a downgrade in a wine industry credit and upgrades from substandard loans [20][22] Question: Opportunities for new hires - Management sees opportunities across the footprint and plans to continue hiring in various regions [28][31] Question: Client receptivity to deposit rate reductions - Clients have been somewhat receptive, with attrition mainly from rate shoppers seeking higher returns elsewhere [36][37] Question: Margin expansion expectations - Management expects continued margin expansion, supported by targeted deposit cost reductions and back book repricing [39][42] Question: Credit trends and special mention loans - Positive trends in credit quality were noted, with improvements in real estate markets contributing to upgrades [60][62] Question: Expense run rate and capital deployment - Management anticipates a slight increase in expenses due to investments in growth initiatives, while capital levels are deemed adequate [71][73]

Financial Data and Key Metrics Changes - The company reported a net loss of $39.5 million in Q4 2025, or $2.49 per share, primarily due to a $69 million loss from securities portfolio repositioning [9] - On a non-GAAP basis, net income was $9.4 million, or $0.59 per share, with a 31% increase in non-GAAP pre-tax, pre-provision net income quarter-over-quarter and a 51% increase year-over-year [9] - Net interest income rose to $31.2 million, driven by balance sheet growth, higher investment security yields, and reduced deposit costs [9] Business Line Data and Key Metrics Changes - Total loan originations for the quarter were $141 million, with $106 million funded, marking one of the strongest quarters in the past decade [4] - For the full year, the company originated $374 million in new loans, including $274 million funded, which was 79% higher than the previous year [4] - Total deposits increased in Q4 due to higher balances from long-term clients and new relationships, with a 10 basis point reduction in the cost of deposits [5] Market Data and Key Metrics Changes - The company experienced a 35% quarter-over-quarter decline in classified loans, reducing them to 1.5% of total loans from 2.4% in the prior quarter [6] - Non-accrual loans improved, declining 14% to 1.3% of total loans compared to 1.5% in the prior quarter [6] - The overall economic conditions in the company's markets remain relatively healthy, contributing to improved credit quality [12] Company Strategy and Development Direction - The company successfully executed a balance sheet restructuring that improved net interest margin and net interest income while maintaining strong capital levels [3][8] - The focus remains on attracting new client relationships and expanding existing ones, particularly in growth markets like Greater Sacramento [5] - The company aims to continue growing deposits and loan origination while managing seasonal outflows typically experienced in the first half of the year [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about solid loan growth in 2026, supported by a strong loan pipeline and healthy demand [12] - The company anticipates continued margin expansion due to targeted deposit cost reductions and favorable market conditions [10][41] - Management noted that proactive credit management has led to improved asset quality trends, with expectations for continued improvement in credit quality [11][60] Other Important Information - The board declared a cash dividend of $0.25 per share, marking the 83rd consecutive quarterly dividend [11] - The company is exploring options for capital deployment, including share repurchase and potential M&A opportunities, while maintaining adequate capital ratios [72] Q&A Session Summary Question: Loan production and recent hires - Management indicated that a significant portion of loan production came from recent hires, contributing to a more diverse pipeline [16] Question: Deposit cost trends - The average deposit cost was reported at 2.08% in December, with expectations for further reductions in January [18][19] Question: Special mention increase - The increase in special mention loans was attributed to a downgrade in the wine industry and upgrades from substandard loans [20][22] Question: Loan growth expectations - Management targets consistent mid-single-digit net loan growth for the year, with potential for higher figures depending on payoffs [56] Question: Credit trends - Management noted ongoing recovery in the real estate market, contributing to improved credit quality, while specific industries like wine are facing challenges [60][61] Question: Expense run rate - The company anticipates a 4.5% expense growth in 2025, with additional investments planned to drive revenue growth [70] Question: Capital levels and deployment - Current capital levels are deemed adequate, with no immediate plans for additional capital raising, but options for share repurchase and M&A are being considered [72]

Core Viewpoint - Fifth Third Bancorp reported strong fourth-quarter earnings, surpassing analyst expectations due to improved credit performance and ongoing business momentum [1] Financial Performance - Net income available to common shareholders increased by 20% year over year to $699 million, equating to $1.04 per diluted share, despite a net negative impact of $0.04 per share from certain items [1] - Revenue reached $2.34 billion, aligning with consensus estimates, while net interest income rose by 6% year over year to $1.53 billion [1] Credit Quality - Credit quality showed improvement, with net charge-offs decreasing to 40 basis points from 46 basis points in the prior-year quarter [2] - Commercial net charge-offs were reported at 27 basis points [2] - The Common Equity Tier 1 capital ratio increased by 20 basis points to 10.77% [2] Loan and Asset Growth - Total loans grew by 5% compared to the fourth quarter of 2024, driven by a 7% increase in middle-market lending [3] - Consumer household growth reached 2.5%, with a notable 7% growth in Southeast markets [3] - Assets under management rose by 16% year over year to $80 billion [3] Deposit Trends - Solid deposit trends were reported, with demand deposits increasing by 4% year over year [3] - The loan-to-core deposit ratio stood at 72% [3] - Tangible book value per share increased by 21% from the prior year [3]

Core Viewpoint - Security Federal Corporation (SFDL) reported strong year-over-year earnings and revenue growth for the second quarter of 2025, despite a slight decline in stock performance compared to the broader market [1][12] Financial Performance - For the quarter ended June 30, 2025, net income available to common shareholders was $2.4 million, or 75 cents per share, reflecting a 10.9% increase in net income and a 13.6% increase in EPS compared to the same quarter in 2024 [2] - Total revenues increased, with net interest income rising 11.1% to $11.3 million and non-interest income increasing 5.7% to $2.6 million [2] Business Drivers & Income Sources - The improvement in net interest income was driven by a 3.3% increase in total interest income to $19.4 million and a 5.8% reduction in total interest expenses to $8.1 million [3] - Non-interest income growth was supported by a $106,000 increase in rental income and a $62,000 gain on the sale of land [4] Operating Expenses & Profitability - Non-interest expenses rose by $692,000, or 7.2%, to $10.4 million, primarily due to higher salaries, occupancy expenses, and cloud services [5] - Income before taxes increased 27.1% to $3.5 million, while net income available to common shareholders rose 11.6% to $2.4 million after accounting for a 33.8% rise in income tax provision [6] Credit Quality - Non-performing assets decreased to $5.95 million, down from $7.12 million a year earlier, indicating improved credit quality [7] - The allowance for credit losses increased to $14.0 million, or 2.00% of gross loans, up from 1.95% a year ago [7] Balance Sheet & Capital Position - Total assets as of June 30, 2025, were $1.63 billion, a 5.3% year-over-year increase, with deposits growing 11.9% to $1.38 billion [8] - Common equity book value per share increased to $34.02 from $29.08 a year earlier, with strong capital ratios [9] Management Insights - Management attributed earnings growth to effective balance sheet management and investments in future growth, including the acquisition of a multi-tenant property for branch expansion [10] - The acquisition reflects the company's strategy to enhance its regional presence [11]