Financial Data and Key Metrics Changes - Fourth quarter net income was $11.4 million, or $1.46 per share, an 8% decrease from the prior quarter but a 21% increase year-over-year [6][2] - Full year 2025 net income reached $46 million, or $5.87 per share, a record for the company and 29% higher than 2024 earnings per share [2] - Fourth quarter net interest margin (NIM) was 4.06%, up 32 basis points year-over-year, while return on assets (ROA) increased to 1.29% [3][6] - Loans grew by $38 million in the fourth quarter, or 6% annualized, while deposits increased by 7%, or $192 million [3][9] Business Line Data and Key Metrics Changes - The Texas franchise has seen loans grow at a 15% annual rate since entering the market, now representing 20% of the loan portfolio [5] - Non-performing loans increased in 2025, but charge-offs remained low, averaging about 6 basis points over the last six years [5][8] - Noninterest income was $4 million, slightly above expectations, with projections for future quarters to be between $3.8 million and $4 million [10] Market Data and Key Metrics Changes - Average non-interest bearing deposits increased by $3 million in the fourth quarter and $40 million in 2025, representing 27% of total deposits [9] - The cost of interest-bearing deposits decreased by 6 basis points in the fourth quarter and 15 basis points since the fourth quarter of 2024 [10] Company Strategy and Development Direction - The company intends to focus on deposit growth to build franchise value and increase profitability when loan growth returns to historical rates [4] - Plans to open a new full-service branch in Houston and close a loan production office, indicating a commitment to expanding the Texas market [4] - The company is optimistic about M&A opportunities in 2026, with a focus on smaller deals that could be paid for in cash [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet high standards in various economic climates, despite some challenges in the credit environment [5] - There are no negative comments from customers in any markets, with a generally positive outlook as interest rates decrease [24] - Loan growth is expected to be in the mid-single digits for 2026, contingent on lower interest rates [45] Other Important Information - The company reduced its loan-to-deposit ratio to 92% from 98% a year ago, reflecting successful deposit attraction [4] - Noninterest expenses increased to $23 million, in line with expectations, with projections for further increases due to annual raises and new projects [11] Q&A Session Summary Question: Credit side and Class 5 NPAs trajectory - Management noted that some credits in Louisiana and Mississippi are taking longer to resolve, but they expect to see improvements in NPAs as properties are sold or refinanced [16][17] Question: Loan pipeline and portfolio shifts - Management indicated that while there were payoffs in 2025, they expect less of that in 2026, which could support loan growth [20][22] Question: SBA business growth potential - Management anticipates that the SBA business will improve with lower interest rates, although it may not see significant growth immediately [31] Question: M&A as a capital deployment priority - Management is optimistic about pursuing M&A opportunities in 2026, particularly for smaller banks, as their stock price improves [33] Question: Trajectory of NIM and rate sensitivity - Management expects NIM to potentially increase to 4.1%-4.15% throughout the year, despite some competitive pressures on deposit rates [48][50]