Financial Data and Key Metrics Changes - For Q4 2025, the company reported net income of $21 million, an increase of $16.1 million or 327.2% compared to the previous quarter [9] - Diluted earnings per share for Q4 were $0.70, an increase of $0.54 per share linked quarter [9] - For the full year 2025, net income was $69.2 million, a decrease of $19.3 million or 21.8% compared to 2024 [10] - The net interest margin expanded to 2.98%, up 4 basis points from the previous quarter [15] - Non-interest income, excluding the net loss on the sale of AFS securities, increased by $494,000 or 4% for the linked quarter [16] Business Line Data and Key Metrics Changes - New loan production in Q4 totaled approximately $327 million, down from $500 million in Q3 [5] - Loans as of December 31 were $4.18 billion, a linked-quarter increase of $52.7 million or 1.1% [10] - The average rate of loans funded during Q4 was approximately 6.6% [10] - Non-performing assets increased by $2.6 million but remained low at 0.45% of total assets [7][11] Market Data and Key Metrics Changes - The Texas economy is anticipated to grow at a faster pace than the overall projected U.S. growth rate [8] - The loan pipeline rebounded to just over $2 billion after dipping to $1.5 billion mid-quarter [6] Company Strategy and Development Direction - The company is focused on restructuring its available-for-sale securities to enhance future net interest income and provide balance sheet flexibility [4] - There is an ongoing initiative to move core systems to OutLink and build a data platform to improve operational efficiency [22][23] - The company remains open to strategic acquisitions, particularly in targeted areas like Dallas and Houston [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2026, anticipating a good year for loan growth despite some headwinds from payoffs [43] - The company is actively monitoring market conditions for potential opportunities arising from M&A activity in Texas [51] Other Important Information - The company plans to redeem $93 million of subordinated notes on February 15, 2026, which is expected to positively impact net interest margin [14] - The efficiency ratio improved to 52.28% as of December 31, down from 52.99% [18] Q&A Session Summary Question: Details on 2026 expense growth and software projects - Management indicated a 7% increase in expenses for 2026, with a portion related to software initiatives aimed at improving efficiency [21][22] Question: Expectations for first quarter margin - Management expects a positive margin in Q1, though muted, with improvements anticipated as the year progresses [35][40] Question: Loan growth expectations - Management is optimistic about exceeding loan production targets, despite potential payoffs impacting growth [41][43] Question: Buyback strategy - The company will continue to be opportunistic with stock buybacks, balancing this with potential acquisitions [45] Question: Fee income outlook - An increase of approximately $1.5 million in fee income is budgeted for 2026, driven by trust income and brokerage services [48][49] Question: M&A activity and target asset size - The company is looking for opportunities in the lower asset size range, with a focus on strategic acquisitions that could help cross the $10 billion threshold [56]