Financial Data and Key Metrics Changes - The company reported net income of $4.9 million, a decrease of $16.9 million or 77.5% compared to the previous quarter [10] - Diluted earnings per share were $0.16, down from $0.72 per share linked quarter [10] - Net interest income increased by $1.45 million or 2.7% compared to the linked quarter [15] - The tax equivalent net interest margin decreased by one basis point to 2.94% [15] Business Line Data and Key Metrics Changes - Total loans as of September 30 were $4.77 billion, an increase of $163.4 million or 3.5% linked quarter [10] - Commercial real estate loans increased by $82.6 million, commercial loans by $49.3 million, and construction loans by $49.1 million [10] - Non-performing assets increased to approximately $2.7 million, representing 0.42% of total assets [9][11] Market Data and Key Metrics Changes - The company’s securities portfolio was $2.56 billion, a decrease of $174.2 million or 6.4% from the previous quarter [11] - Deposits increased by $329.6 million or 5% on a linked quarter basis [14] - Loans with oil and gas industry exposure increased to $70.6 million, or 1.5% of total loans [11] Company Strategy and Development Direction - The company is focusing on repositioning its available-for-sale securities portfolio to enhance future net interest income and provide balance sheet flexibility [3] - There is an ongoing interest in potential acquisitions and hiring due to market disruptions caused by larger banks acquiring smaller institutions [25] - The company anticipates continued growth in trust fees and is exploring opportunities in metro markets for wealth management [41][42] Management's Comments on Operating Environment and Future Outlook - Management expects net interest margin to improve slightly in the fourth quarter, driven by loan growth and the restructuring of the securities portfolio [20][21] - The Texas economy is anticipated to grow at a faster pace than the overall U.S. growth rate [5] - Management is optimistic about the loan pipeline, which has rebounded to $1.8 billion, indicating strong future loan production [31] Other Important Information - The company repurchased 26,692 shares of common stock at an average price of $30.24 during the third quarter [15] - The effective tax rate for the third quarter was 3.7%, a decrease from 17.8% in the prior quarter [17] Q&A Session Summary Question: What is the expected net interest margin for the fourth quarter? - Management expects the net interest margin to be up slightly due to the impact of subordinated notes and the restructuring of securities [20][21] Question: Any updates on potential acquisitions or hiring? - Management is looking at a few institutions for potential acquisition and has made some new hires in light of market disruptions [25] Question: How is the loan pipeline looking entering the fourth quarter? - The loan pipeline is strong at $1.8 billion, with a good pull-through rate expected [31][32] Question: What is the outlook for trust fees and wealth management? - Management anticipates double-digit revenue growth in trust fees and is exploring metro market opportunities for wealth management [41][42] Question: How many rate cuts are anticipated through year-end and into 2026? - Management anticipates at least two rate cuts next year, depending on inflation and employment conditions [43]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported net income of $4.9 million, a decrease of $16.9 million or 77.5% compared to the previous quarter [12] - Diluted earnings per share were $0.16, down from $0.72 in the linked quarter [12] - Net interest income increased by $1.45 million or 2.7% compared to the linked quarter [16] - The tax equivalent net interest margin decreased by one basis point to 2.94% [16] Business Line Data and Key Metrics Changes - Loans increased to $4.77 billion, a linked quarter increase of $163.4 million or 3.5% [12] - The average rate of loans funded during the quarter was approximately 6.7% [12] - Non-interest income, excluding the net loss on the sales of available-for-sale (AFS) securities, increased by $260,000 or 2.1% [17] Market Data and Key Metrics Changes - The company’s securities portfolio was $2.56 billion, a decrease of $174.2 million or 6.4% from the previous quarter [13] - Deposits increased by $329.6 million or 5% on a linked quarter basis [15] - Non-performing assets increased to approximately $2.7 million, but remained low at 0.42% of total assets [10][13] Company Strategy and Development Direction - The company is focusing on repositioning its available-for-sale (AFS) securities portfolio to enhance future net interest income and provide balance sheet flexibility [4] - The company anticipates continued growth in the Texas economy, which is expected to outpace the overall U.S. growth rate [6] - The company is exploring potential acquisitions and hiring opportunities due to market disruptions caused by larger banks [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about net interest income growth due to favorable market conditions and loan growth [5][21] - The company expects net interest margin to improve slightly in Q4 2025, driven by loan growth and securities restructuring [21] - Management noted that competition in the market remains intense, particularly in commercial real estate and C&I lending [30] Other Important Information - The company issued $150 million of subordinated notes at a 7% fixed to floating rate in mid-August [15] - The company repurchased 26,692 shares of common stock at an average price of $30.24 during the third quarter [16] - The effective tax rate for Q3 was 3.7%, a decrease from 17.8% in the prior quarter [18] Q&A Session Summary Question: What is the expected net interest margin for Q4? - Management expects the net interest margin to be up slightly due to the impact of subordinated notes and loan growth [21] Question: Any updates on potential acquisitions? - Management indicated interest in a few institutions that might be for sale and mentioned ongoing hiring efforts due to market disruptions [24] Question: How is the loan pipeline looking entering Q4? - The loan pipeline rebounded to $1.8 billion, indicating strong future growth potential despite a dip mid-quarter [28] Question: What is the outlook for trust fees? - Management anticipates double-digit revenue growth in trust fees due to a strong team and increasing client base [37] Question: How many rate cuts are anticipated through year-end and into 2026? - Management anticipates at least two rate cuts next year, depending on inflation and employment conditions [39]