Financial Data and Key Metrics Changes - The company reported net income of $22.8 million, or $1.40 per diluted share, for Q4 2025, compared to $19.6 million, or $1.22 per diluted share, for Q4 2024, reflecting a year-over-year increase [10] - For the full year 2025, net income totaled $88.8 million, or $5.47 per diluted share, compared to $79.6 million, or $4.93 per diluted share, for 2024, indicating growth driven by increased net interest income and non-interest income [10] - The return on average assets was 1.4% and return on average equity was 14.1% for 2025, with an 11% year-over-year growth in EPS [9] Business Line Data and Key Metrics Changes - The loan-to-deposit ratio improved to 91% from 98% in 2024 and 110% in 2023, indicating better liquidity management [5] - The compounded annual growth rate for deposits over the last five years was 9.2%, while total loans grew at 8.6% [7] - Service charges on accounts increased by 19% in 2025, driven by growth in commercial deposit relationships [8] Market Data and Key Metrics Changes - The company maintained a strong asset quality with past due loans at 11 basis points of total loans and non-performing loans averaging 12 basis points over the last six years [5] - The allowance for credit losses stood at 1.21% of total loans as of December 31, 2025, providing strong coverage relative to past due and non-performing loans [5] Company Strategy and Development Direction - The acquisition of Eastern Michigan Bank was completed on December 31, 2025, aligning with the company's strategic objectives for deposit and loan growth [4] - The company aims to maintain a stable net interest margin through effective balance sheet management and match-funding practices [16] - Future loan growth is projected to be in the mid-single digits, with a strong commercial loan pipeline expected to support this growth [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges and uncertainties in the financial sector, highlighting a strong capital position with a total risk-based capital ratio of 13.8% [23] - The company anticipates a stable net interest margin in 2026, despite potential fluctuations in the interest rate environment [24] - Management noted that the integration of Eastern Michigan Bank is progressing well, with positive cultural alignment observed [9] Other Important Information - Non-interest expenses increased by $2.9 million and $10.2 million in Q4 and all of 2025, primarily due to higher salary and benefit costs [20] - The company did not repurchase shares in 2025 but has $6.8 million available in its current repurchase plan [24] Q&A Session Summary Question: Margin guidance and purchase accounting impact - Management confirmed that the December rate cut is included in margin guidance, with purchase accounting contributing approximately $125,000 net per quarter [34] Question: Loan growth expectations - Management expects loan growth to remain in the 5%-7% range, with commercial loans projected to grow at 6%-7% [38] Question: Impact of Eastern Michigan Bank on liquidity and margin - Management indicated that not all excess liquidity from Eastern will be utilized immediately, but it will contribute positively to the loan-to-deposit ratio over time [44] Question: Capital management and buyback appetite - Management expressed a stronger appetite for buybacks moving forward, contingent on stock price and market conditions [66] Question: Cost savings from Eastern acquisition - Management stated that significant cost savings from the Eastern acquisition are expected to materialize in 2027, with current investments focused on growth [52]

Financial Data and Key Metrics Changes - The company reported net income of $22.8 million, or $1.40 per diluted share, for Q4 2025, compared to $19.6 million, or $1.22 per diluted share, for Q4 2024, reflecting a year-over-year increase [9] - For the full year 2025, net income totaled $88.8 million, or $5.47 per diluted share, compared to $79.6 million, or $4.93 per diluted share, for 2024, indicating growth driven by increased net interest income and non-interest income [9] - The return on average assets was 1.4% and return on average equity was 14.1% for 2025, with an 11% increase in tangible book value per share over the last four quarters [8] Business Line Data and Key Metrics Changes - The loan-to-deposit ratio improved to 91% from 98% in Q4 2024 and 110% in Q4 2023, supported by a deposit mix that includes 25% non-interest-bearing deposits [5] - Service charges on accounts increased by 19% in 2025, driven by growth in commercial deposit relationships [7] - Mortgage banking income grew by 6% compared to 2024, reflecting market share gains and a high portion of saleable loans [7] Market Data and Key Metrics Changes - Average loans totaled $4.63 billion in Q4 2025, an increase of $62 million from Q4 2024, while average deposits grew by $302 million to $4.83 billion during the same period [10][11] - The company expects loan growth in 2026 to fall within the range of mid-single digits, with a strong commercial loan pipeline [22] Company Strategy and Development Direction - The acquisition of Eastern Michigan Bank was completed on December 31, 2025, aligning with the company's strategic objectives for deposit and loan growth [4] - The company aims to maintain a stable net interest margin through effective balance sheet management and match-funding practices [15] - There is a focus on expanding operations in Southeast Michigan, with plans to add more lending teams to capitalize on market opportunities [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges and uncertainties in the financial sector, highlighting a strong capital position with a total risk-based capital ratio of 13.8% [21] - The company anticipates a stable net interest margin in 2026, projecting loan growth of 5%-7% annually, supported by a robust commercial loan pipeline [22][23] - Management noted that the integration of Eastern Michigan Bank is progressing well, with positive cultural alignment observed [8] Other Important Information - The company recorded a negative provision expense of $0.7 million in Q4 2025, reflecting an improved economic forecast and changes in loan mix [17] - Federal income tax expense was reduced by $0.4 million in Q4 2025, largely due to the acquisition of transferable energy tax credits [20] Q&A Session Summary Question: Margin guidance clarification - Management confirmed that the December rate cut is included in the margin guidance, with expectations for a stable margin going into 2026 [25][26] Question: Loan growth outlook - Management expressed optimism for 5%-7% loan growth in 2026, citing a historically high backlog and expectations for payoffs to stabilize [40] Question: Capital management and buyback appetite - Management indicated a stronger appetite for buybacks moving forward, contingent on stock price and market conditions [42] Question: Impact of Eastern Michigan Bank on liquidity and margin - Management noted that not all excess liquidity from Eastern will be utilized immediately, with a gradual increase in the loan-to-deposit ratio expected [30] Question: Cost savings from Eastern acquisition - Management stated that significant cost savings from the Eastern acquisition are anticipated to materialize in 2027, with current investments focused on personnel and market expansion [33][46]