Financial Data and Key Metrics Changes - The company reported net income of $22.7 million or $0.79 per share for Q4 2025, a 21.5% increase compared to Q4 2024, resulting in record earnings per share for the year of $3.13 [3] - Loan outstandings grew by $129.3 million during Q4 2025, with solid loan growth as early payoffs and paydowns eased back to normal levels [3][4] - The reported net interest margin (NIM) decreased by 7 basis points to 3.10% compared to Q3 2025, while core NIM increased by 4 basis points to 3.37% [5] Business Line Data and Key Metrics Changes - Loans grew by $129.3 million during Q4 2025, or 7.6% annualized, while total loans for the full year increased by $88.2 million, or 1.3% [5][6] - Non-interest expense increased by $2.1 million, or 4.1% compared to Q4 2024, with full-year expenses rising by $5 million, or 2.5% [7] Market Data and Key Metrics Changes - Deposits decreased by $130.8 million in Q4 2025, primarily due to a $198.8 million decrease in public funds, partially offset by an $84 million increase in consumer balances [6] - Total deposits grew by $328.1 million, or 4.9%, for the full year of 2025 [6] Company Strategy and Development Direction - The company plans to target repurchases of $10 million-$12 million per quarter in 2026, with 2.3 million shares available for repurchase under the plan [8][9] - For 2026, the company expects loan growth of approximately 2%-3% and modest NIM expansion, resulting in net interest income growth of approximately 4%-6% [9][10] Management Comments on Operating Environment and Future Outlook - Management noted that the provision for credit losses is expected to be in the range of $11 million-$13 million for 2026, driven by changes in economic forecasts and credit performance [10] - The effective tax rate is expected to be in the range of 20%-21% based on current statutory rates [10] Other Important Information - The company repurchased approximately 400,000 shares of common stock at an average cost of $32.17 per share during Q4 2025 [7][8] - The company recorded a provision for credit losses of $3.1 million in Q4 2025, with a coverage ratio of 1.28% [6] Q&A Session Summary Question: What is the seasonality for deposits in Q1? - Management expects $100 million-$150 million per quarter in public funds to flow out in Q1 and Q2, with a significant portion of excess liquidity deployed during that time [15][16] Question: How should we think about the NIM trajectory over the course of the year? - Management expects NIM to be relatively in line to slightly up by the end of 2026 compared to Q4 2025, with overall expansion anticipated [18][19] Question: What are you seeing in terms of deposit competition? - Competition remains, with some slight increases noted. The company has been successful in CD retention and is working to change the mix of deposits [21][22] Question: Can you review your ag farmland portfolio? - The ag book consists of smaller family farms diversified across various sectors, with a conservative underwriting approach and a diversified business underlying the loans [23] Question: Can you discuss the margin and incremental loan yields? - Management noted some compression on the commercial side, with new loan rates down by 40-50 basis points, but no true spread compression observed [28][29] Question: What is the expected provision level for next year? - The provision is expected to normalize in the 12-13 basis point range, with guidance provided for the year [40] Question: Can you talk about the deposit pipeline and initiatives? - The company is making progress with various initiatives aimed at capturing deposits from small businesses and other targeted programs [42][44]

Financial Data and Key Metrics Changes - Fourth quarter net income totaled $10.2 million, or $0.59 per share, stable from the third quarter but more than double the earnings from the same quarter a year ago [3][7] - Return on Assets (ROA) and Net Interest Margin (NIM) were stable from the third quarter while increasing sharply from a year ago [3] - For the year, net interest income increased by 13% to $112 million due to loan growth and a decline in funding costs [8] Business Line Data and Key Metrics Changes - Loans grew at a solid 8.6% for the year, with fourth quarter originations at $145 million, 32% higher than in 2024 [4][11] - Non-performing loans decreased by 45% and non-performing assets decreased by 34% since the end of the previous year [6][12] - Fourth quarter non-interest income declined by $486,000 from the third quarter, but all categories of non-interest income increased compared to the fourth quarter of 2024, except for other income [9] Market Data and Key Metrics Changes - Total deposits increased by 8.6% compared to the fourth quarter a year ago, with strong growth in interest-bearing non-maturity deposits [5] - Average demand deposits remained stable in 2025, comprising 16% of total deposits [5] - The average interest-bearing deposit rate declined by 55 basis points from the fourth quarter of 2024 [6] Company Strategy and Development Direction - The company aims to return to historic performance levels, focusing on resolving remaining non-performing assets [3] - There is an expectation of high single-digit growth in 2026, supported by a healthy loan pipeline [4] - The company is looking to rightsize its subordinated debt and may become more active in share buybacks after addressing this [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that credit performance will continue to improve in future quarters, having turned a corner on credit issues [3] - The competitive landscape for deposits remains intense, but the company is optimistic about maintaining deposit growth [5][16] - Management anticipates that future annual credit costs will be much lower now that credit has stabilized [12] Other Important Information - Tangible book value per share increased by 7.8% during 2025, ending the year at $26.42 [14] - The effective tax rate in 2026 is expected to be between 27% and 28% [10] Q&A Session Summary Question: What is the outlook for deposit beta going forward? - Management indicated that the deposit beta is expected to continue increasing due to a large portion of the funding base maturing over the next year [16] Question: Any updates on subordinated debt refreshes? - The company plans to rightsize its $120 million subordinated debt eligible for redemption in April, looking for more attractive market opportunities [17] Question: How should we think about the buyback this year? - Management suggested that after addressing subordinated debt, there will be opportunities to be more active in buybacks [18] Question: What is the outlook for net interest margin (NIM)? - Management believes there is potential for NIM expansion as deposit costs may decrease with upcoming maturities [26] Question: What is the competition like for commercial real estate loans? - The company is facing competition but remains strategic in its lending relationships, maintaining yields above competitors [52][55]

Financial Data and Key Metrics Changes - Fourth quarter net income totaled $10.2 million, or $0.59 per share, stable from the third quarter but more than double the earnings from the same quarter a year ago [3][7] - Return on Assets (ROA) and Net Interest Margin (NIM) were stable from the third quarter while increasing sharply from a year ago [3] - For the year, loans grew at a solid 8.6%, with loan originations for the year being 32% higher than in 2024 [4][12] - Non-performing loans decreased by 45% and non-performing assets decreased by 34% since the end of last year [6][13] Business Line Data and Key Metrics Changes - Fourth quarter loan originations were $145 million, with a healthy pipeline expected to support high single-digit growth in 2026 [4] - Net interest income increased by 13% to $112 million for the year, driven by loan growth and a decline in funding costs [9] - Non-interest income categories increased except for other income, with a decline in non-interest expenses due to year-end accruals [10][11] Market Data and Key Metrics Changes - Total deposits increased by 8.6% compared to the fourth quarter a year ago, with strong growth in interest-bearing non-maturity deposits [5] - Average demand deposits remained stable in 2025, comprising 16% of total deposits [5] - The average rate on interest-bearing deposits declined by 55 basis points from the fourth quarter of 2024 [6] Company Strategy and Development Direction - The company aims to return to its historic performance levels, focusing on resolving remaining non-performing assets [3] - There is a commitment to maintaining pricing and structuring discipline in loan originations [4] - The company plans to be more active in buyback programs after addressing sub-debt [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in having turned a corner on credit, expecting continued improvement in performance [3] - The competitive landscape for deposits remains intense, impacting deposit costs [6][16] - Management anticipates that credit costs will be much lower now that credit has stabilized [13] Other Important Information - Tangible book value per share increased by 7.8% during 2025, ending the year at $26.42 [14] - The effective tax rate in 2026 is expected to be between 27% and 28% [11] Q&A Session Summary Question: What is the outlook for deposit beta going forward? - Management indicated that the deposit beta is expected to continue increasing due to a large portion of the funding base maturing over the next year [16] Question: Any updates on sub-debt refreshes in April? - Management is looking at opportunities to rightsize the sub-debt for the balance sheet and capital stack [17] Question: How should we think about the buyback this year? - Management expects to be more active in buyback programs after addressing sub-debt [18] Question: Can you discuss the margin outlook for 2026? - Management believes there is an opportunity for deposit costs to continue to come down, which could lead to margin expansion [25][27] Question: What are the expectations for credit metrics in the next 12 months? - Management is optimistic about resolving non-performing loans and expects continued improvement in credit metrics [29][31] Question: What is the current competition like for commercial real estate loans? - Management noted that competition remains intense, but they are strategically focused on relationship-driven lending [54][56]

Financial Data and Key Metrics Changes - The net interest margin (NIM) increased by 94 basis points compared to the previous year, reaching 381 basis points in Q4 2025, with a linked quarter growth of 31 basis points [12][65]. - The return on average tangible common equity (ROTCE) was reported at 16% for the quarter, indicating strong performance [46][65]. - Pre-provision net revenue increased by 60% year-over-year, reflecting significant revenue growth [65]. Business Line Data and Key Metrics Changes - Loan growth in Q4 2025 was robust, with a reported annualized growth rate exceeding 7%, driven by strong production despite elevated paydowns [7][10]. - The pipeline for loans ready to close reached a multi-quarter high, indicating positive momentum for future growth [10]. - The company experienced a decline in agricultural loans and mortgage warehouse loans, which were impacted by seasonal adjustments and divestitures [8]. Market Data and Key Metrics Changes - The competitive environment for loans has intensified, particularly in commercial real estate (CRE), where irrational pricing has affected profitability [22]. - The deposit competition remains strong, especially from smaller banks, but the company maintains a dominant market share in many areas [21]. Company Strategy and Development Direction - The company is focused on organic growth and investing in business capabilities, particularly in low-cost deposits and private banking [52][54]. - There is an emphasis on improving operational efficiency through automation and process standardization, with a goal to enhance profitability [32][35]. - The strategic focus includes expanding capabilities in commercial and middle-market C&I, with significant investments in talent and processes [53]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth prospects for 2026, citing a strong pipeline and improved quality of opportunities [39]. - The company anticipates stable NIM moving forward, with expectations of continued benefits from backbook repricing [18][19]. - The overall credit quality remains stable, with no significant concerns identified during recent assessments [27]. Other Important Information - The company has reduced its square footage by 6%, contributing to cost savings and operational efficiency [35]. - The effective tax rate for Q4 was lower than expected for 2026, which may impact future profitability metrics [48]. Q&A Session Summary Question: What are the drivers behind loan growth in Q4? - Management noted that loan growth was driven by a combination of improved pipeline quality and favorable timing, rather than aggressive rate cuts or lowered profitability standards [38]. Question: How clean is the reported NIM number? - The NIM growth was attributed to a balance sheet restructure and core NIM expansion, with expectations for stability in the near term [12][13]. Question: What is the outlook for asset quality? - Management indicated that asset quality remains stable, with no significant issues identified during recent evaluations [27]. Question: What are the strategies for growing customer deposits? - The company is focusing on enhancing consumer banking practices and expanding private banking services to attract more deposits [52][54]. Question: How does the company view the competitive landscape for loans and deposits? - Management acknowledged increased competition in loan pricing, particularly in CRE, while noting strong market positions in deposit competition [21][22].

Financial Data and Key Metrics Changes - The company reported a net income of $12.4 million or $1.59 per share, which is an increase of $0.14 per share from the previous quarter and $0.41 from a year ago [3][9] - The net interest margin (NIM) expanded for the sixth consecutive quarter to 4.1%, and return on assets increased by 10 basis points to 1.41% [3][4] - The efficiency ratio improved and is now below 60%, with revenues growing twice as fast as expenses [4][9] Business Line Data and Key Metrics Changes - Loans decreased by $58 million in the third quarter due to higher payoffs and paydowns, primarily from long-term customers selling their businesses or properties [4][5] - Deposits increased by 9% annualized in the third quarter, with a total increase of 17% over the last nine quarters [6][9] - Nonperforming loans increased in 2025, but charge-offs remain low, averaging about six basis points over the last six years [7][11] Market Data and Key Metrics Changes - The company expects loan growth to be more moderate at 1% to 2% in 2025, down from an earlier expectation of 4% to 6% [5][6] - The loan-to-deposit ratio is now 91%, positioning the company well for future loan growth [6][31] Company Strategy and Development Direction - The company maintains loan structure discipline and prioritizes risk-adjusted returns over growth [5][6] - There is a focus on building franchise value and leveraging acquisition experience as M&A activity accelerates nationwide [7][9] - The company has increased dividends per share by 36% and repurchased 17% of its shares outstanding while maintaining robust capital ratios [15] Management's Comments on Operating Environment and Future Outlook - Management noted that customers are waiting for lower rates before proceeding with financing projects, impacting near-term growth [5][6] - The company is optimistic about maintaining or slightly increasing NIM despite potential Fed rate cuts [20][21] - Management expressed confidence in the company's future and ability to meet high standards, citing a strong senior leadership team with extensive experience [8][9] Other Important Information - Noninterest income for the third quarter was $3.7 million, in line with expectations, and is projected to remain stable in the coming quarters [14][15] - Noninterest expenses increased to $22.5 million, also in line with expectations, and are expected to remain stable [15] Q&A Session Summary Question: NIM trajectory and peak expectations - Management indicated that increased asset sensitivity is due to cash on hand, and they expect to keep NIM flat or grow a couple of basis points [20][21] Question: Loan growth guidance and pipeline comparison - Management noted a decline in new loan originations in Q3 but anticipates a healthier portfolio in Q4, with hopes for a strong first quarter if rate cuts occur [23][24] Question: Deposit competition and betas - Management stated that deposit betas are expected to be less than peers, and competition has eased compared to previous quarters, allowing for better retention of customers [29][30]