Financial Data and Key Metrics Changes - The net interest margin (NIM) for Q4 2025 was 3.74%, an increase of 20 basis points from Q4 2024, while the full-year NIM was 3.69% compared to 3.57% in 2024 [4] - Return on average assets for Q4 2025 was 1.21%, up from 1.10% in Q4 2024, and return on tangible common equity improved to 12.58% from 11.82% [4] - Net income for Q4 2025 was $12.3 million, or 49 cents per diluted share, with total loans declining by $81 million from the end of Q3 2025 [11] Business Line Data and Key Metrics Changes - Small business loan performance was disappointing, with delinquency and charge-off levels exceeding acceptable limits, prompting changes in credit parameters [5] - Non-interest income increased by almost $2 million year-over-year, with gains from SBA loan sales higher in 2025, although residential mortgage sales remained muted [5][6] - The non-interest expense to average asset ratio improved to 1.97% for 2025 from 2.01% in 2024, reflecting effective expense management [6] Market Data and Key Metrics Changes - Deposit balances decreased by $21 million in Q4 2025, primarily due to a $27.1 million decline in broker deposits, but new customer acquisition was strong [11] - The bank's focus on relationship-based customers helped grow interest-bearing demand deposits by $47 million, or 33% annualized, compared to September 30 [19] - The lending pipeline at year-end stood at $284 million, with C&I loans making up 61% of the pipeline [27] Company Strategy and Development Direction - The company aims to close the gap with peers in cost of funds, increase non-interest income generation, and reduce non-interest expense to average asset ratio [10] - The strategy includes optimizing the deposit portfolio by lowering costs while deepening high-quality relationships [22] - The company is evolving into a middle-market commercial bank, focusing on profitability rather than growth for its own sake [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, expecting to achieve a $200 million net loan growth goal, driven by growth in asset-based lending and community banking [9] - The company anticipates stabilization of credit costs in the small business portfolio due to implemented changes [7] - Management noted that while there were challenges, overall credit quality in core CRE and community banking divisions remained strong [7] Other Important Information - The efficiency ratio improved to 49.46%, remaining below 60% for the 26th consecutive quarter, and tangible book value per share grew more than 12% annualized to $15.81 [17] - The company announced a 50% increase in its quarterly cash dividend, reflecting strong capital ratios [17] - A new share repurchase plan was approved for up to 1.2 million shares, totaling $20 million, although no buybacks were executed in Q4 [48] Q&A Session Summary Question: Discussion on loan growth outlook - Management acknowledged the unpredictability of payoffs but noted that high payoff activity was not indicative of broader macro conditions, expecting a return to strong growth [34][35] Question: Details on downgraded C&I credit - The downgraded loan was from a multi-location consumer-based business facing performance declines, with management closely monitoring the situation [41] Question: Thoughts on expense run rate - Management indicated a focus on keeping expense growth limited while driving revenue growth to improve efficiency ratios [42][45] Question: Status of share buyback plan - A new share buyback plan was approved, but no activity occurred in Q4 due to timing issues with regulatory approvals [46][48]

Financial Data and Key Metrics Changes - Operating net income increased by $252,000 from the prior quarter, attributed to higher net interest income and operating non-interest income, offset by increased provision and operating non-interest expenses [14] - Net interest income rose by $314,000 compared to the prior quarter, driven by continued asset repricing and loan growth [14] - Net interest margin increased by five basis points from the prior quarter, with expectations for further growth due to the Fed rate cuts [15][14] - Tangible book value per share increased to $14.20 from $12.76 a year ago, reflecting consistent growth in tangible capital [23] Business Line Data and Key Metrics Changes - Non-interest income increased over $1 million from the prior quarter, with significant contributions from service charge and fee income, as well as interchange income [6][16] - Mortgage and government-guaranteed lending (SBSL) activity slowed, with mortgage production down slightly compared to the second quarter [23] - Pre-tax income for both merchant services and Colony Wealth Advisors increased significantly from the prior quarter, indicating strong performance in these business lines [24] Market Data and Key Metrics Changes - Loan growth for the quarter was around 9% annualized, lower than the first and second quarters, but still around a 14% annualized growth rate for the year [5] - Total deposits increased by $28.1 million during the quarter, reflecting strategic use of brokered funding [21] Company Strategy and Development Direction - The company is focused on strategic investments for future growth while maintaining margin improvement [5] - The pending merger with TC Bancshares, Inc. and TC Federal Bank is progressing as planned, with expectations for closure in the fourth quarter [9][10] - The company is optimistic about future M&A opportunities and is actively seeking strategic fits [10][11] Management's Comments on Operating Environment and Future Outlook - Management does not foresee a material impact from the government shutdown on the business or credit quality, although they are monitoring the situation closely [8][28] - The company expects loan growth to moderate but remain within the long-term target of 8% to 12% annually [5][6] - Management expressed confidence in balancing cost control with strategic investments for long-term growth [17] Other Important Information - Operating expenses increased by $624,000 quarter over quarter due to investments in talent and growth initiatives [16] - A wire fraud incident resulted in a recognized loss of $1.25 million related to disputed insurance coverage [18] Q&A Session Summary Question: Given the disruption in D.C., are there any impacts on borrowers and the local economy? - Management does not see a significant impact at this time and has provided resources to customers to mitigate potential issues [28] Question: What is the average roll-on versus roll-rate this quarter, and how does the NIM outlook look? - The roll-off yields were in the 5% range, with a new and renewed rate of 7.83% for the quarter, indicating potential for net interest margin growth [29][30] Question: Is there any NDFI loan exposure? - Management confirmed there is no meaningful exposure to NDFI loans, focusing instead on relationship-based lending [31]