Financial Data and Key Metrics Changes - Orrstown achieved a record annual net income of $80.9 million, or $4.18 per diluted share, with a return on average equity of 14.76% and return on average assets of 1.49% [3] - For the fourth quarter, net income was $21.5 million, or $1.11 per diluted share, with a net interest margin of 4.00%, down from 4.11% in the previous quarter [10][11] - Fee income for the fourth quarter was $14.4 million, contributing to 22% of total revenues, marking the third consecutive quarter above 20% [5][12] Business Line Data and Key Metrics Changes - Loan growth was steady at 4% during the fourth quarter, with a balanced mix across commercial and real estate lending [7][16] - Non-interest income increased to $14.4 million in the fourth quarter from $13.4 million in the third quarter, driven by growth in wealth management and treasury management services [12][14] - The bank recorded minimal provision expense of $0.1 million and net charge-offs of $0.5 million, with classified loans decreasing by $5.7 million from the prior quarter [8][15] Market Data and Key Metrics Changes - Deposits were relatively flat, declining slightly by $5 million, with a loan-to-deposit ratio of 89% [17] - The cost of deposits was 1.98% for the fourth quarter, with expectations for reductions in funding costs starting in the first quarter of 2026 [11][17] Company Strategy and Development Direction - The company is focused on enhancing non-interest income and investing in talent to drive future growth, including the recent hiring of a Chief Wealth Officer [6][20] - There is a strong emphasis on building a middle-market commercial lending platform and expanding wealth management services in growth markets [40][43] - The company remains committed to organic growth rather than pursuing mergers and acquisitions, although capital build presents optionality for future opportunities [43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong profitability and expects to continue building shareholder value through strong earnings and an attractive dividend [9][20] - The company anticipates a net interest margin in the range of 3.90%-4% for 2026, with a focus on managing funding costs and maintaining loan growth [11][32] - Management remains optimistic about the future, citing a robust loan pipeline and the ability to responsibly grow the loan portfolio [8][20] Other Important Information - The board approved a quarterly dividend increase from $0.27 to $0.30 per share, marking the fourth increase in 18 months [9] - The investment portfolio yield decreased to 4.58% due to declining rates, but the portfolio is positioned well for earnings growth [18] Q&A Session Summary Question: Increase in guidance for non-interest income and expenses - Management clarified that the increase reflects ongoing strategy to invest in talent to drive future earnings, not a change in strategy [24][25] Question: NIM trajectory for the year - Management indicated that core NIM is expected to increase in Q1, with a decline in purchase accounting accretion impacting future margins [28][31] Question: Wealth management AUM and customer retention - Total AUM was over $3 billion, with no significant decline in customer portfolios from Codorus Valley [37][38] Question: Focus areas for hiring - The company is focusing on building out the middle-market commercial lending platform and enhancing wealth management services [40] Question: Share buybacks and capital allocation - Management is monitoring share buyback opportunities but has not found the stock price favorable for repurchases [48] Question: Yields on recent securities purchases - The average yield on recent purchases was 4.92%, with expectations for continued benefits from the investment portfolio [50]