Operator: Good morning. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Orrstown Financial Services, Inc. Fourth Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during the Q&A session, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I will now turn the call over to Tom Quinn, President and Chief Executive Officer of Orrstown Financial Services, Inc. and Orrstown Bank, who will begin the conference. Mr. Quinn, please go ahead.
Operator: Good morning. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Orrstown Financial Services, Inc. Fourth Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during the Q&A session, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I will now turn the call over to Tom Quinn, President and Chief Executive Officer of Orrstown Financial Services, Inc. and Orrstown Bank, who will begin the conference. Mr. Quinn, please go ahead.
Speaker #1: My you. name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Orrstown Financial Services Inc., fourth quarter 2025 earnings conference call.
Speaker #1: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during the Q&A session, simply press star, followed by the number one on your telephone keypad.
Speaker #1: If you would like to withdraw your question, press star one again. I will now turn the call over to Tom Quinn, President and Chief Executive Officer of Orrstown Financial Services, Inc. and Orrstown Bank, who will begin the conference.
Speaker #1: Mr. Quinn, please go ahead.
Speaker #2: Thank you, Operator, and good morning. I'd like to thank everyone for participating in Orrstown fourth quarter 2025 earnings conference call. Both by telephone and through the webcast.
Tom Quinn: Thank you, operator, and good morning. I'd like to thank everyone for participating in Orrstown Q4 2025 earnings conference call, both by telephone and through the webcast. If you have not read the earnings release we issued yesterday afternoon, you may access it, along with the financial tables and schedules, by going to our website, www.orstown.com. Once there, you can click on the Investor Relations link and then the Events and Presentations link. Also, before we start, I would like to mention that today's presentation may contain forward-looking information. Cautionary statements about the information are included in the earnings release, the investor presentation, and our SEC filings. The earnings release and investor presentations also include non-GAAP financial measures. The appropriate reconciliations to GAAP are included in those documents.
Thomas Quinn: Thank you, operator, and good morning. I'd like to thank everyone for participating in Orrstown Q4 2025 earnings conference call, both by telephone and through the webcast. If you have not read the earnings release we issued yesterday afternoon, you may access it, along with the financial tables and schedules, by going to our website, www.orstown.com. Once there, you can click on the Investor Relations link and then the Events and Presentations link. Also, before we start, I would like to mention that today's presentation may contain forward-looking information. Cautionary statements about the information are included in the earnings release, the investor presentation, and our SEC filings. The earnings release and investor presentations also include non-GAAP financial measures. The appropriate reconciliations to GAAP are included in those documents.
Speaker #2: If you have not read the earnings release we issued yesterday afternoon, you may access it along with the financial tables and schedules by going to our website, www.orrstown.com.
Speaker #2: Once there, you can click on the investor relations link and then the events and presentations link. Also, before we start, I would like to mention that today's presentation may contain forward-looking information.
Speaker #2: Cautionary statements about the information are included in the earnings release, the investor presentation, and our SEC filings. The earnings release and investor presentations also include non-GAAP financial measures.
Speaker #2: The appropriate reconciliations to GAAP are included in those documents. Joining me on the call this morning are Orrstown's Senior Executive Vice President and Chief Operating Officer, Adam Metz, as well as our Executive Vice President and Chief Financial Officer, Neelesh Kalani.
Tom Quinn: Joining me on the call this morning are Orrstown's Senior Executive Vice President and Chief Operating Officer, Adam Metz, as well as our Executive Vice President and Chief Financial Officer, Neelesh Kalani. Our Chief Revenue Officer, Zachary Khuri, Chief Risk Officer, Bob Coradi, and our Chief Credit Officer, Dave Chajkowski, will also participate in the call. Our financial highlights. Orrstown achieved the highest reported annual net income in the company's history of 106 years. Net income was $80.9 million, or $4.18 per diluted share. Our return on average equity was 14.76. Return on average assets was 1.49%. Net interest margin came in at 4.04, and fee income of $52.3 million contributed to 21% of the total operating income.
Joining me on the call this morning are Orrstown's Senior Executive Vice President and Chief Operating Officer, Adam Metz, as well as our Executive Vice President and Chief Financial Officer, Neelesh Kalani. Our Chief Revenue Officer, Zachary Khuri, Chief Risk Officer, Bob Coradi, and our Chief Credit Officer, Dave Chajkowski, will also participate in the call. Our financial highlights. Orrstown achieved the highest reported annual net income in the company's history of 106 years. Net income was $80.9 million, or $4.18 per diluted share. Our return on average equity was 14.76. Return on average assets was 1.49%. Net interest margin came in at 4.04, and fee income of $52.3 million contributed to 21% of the total operating income.
Speaker #2: Our Chief Revenue Officer, Zach Quarry, Chief Risk Officer, Bob Karati, and our Chief Credit Officer, Dave Chukowski, will also participate in the call. Our financial highlights: Orrstown achieved the highest reported annual net income in the company's history of $106 years.
Speaker #2: Net income was $80.9 million, or $4.18 per diluted share. Our return on average equity was 14.76%. Return on average assets was 1.49%. Net interest margin came in at 4.04%, and fee income of $52.3 million contributed to 21% of the total operating income.
Speaker #2: We demonstrated our ability to maintain net interest margin near top-of-peers enhanced fee income and created efficiencies all while maintaining our focus on leading Regularly with risk.
Tom Quinn: We demonstrated our ability to maintain net interest margin near top of peers, enhanced fee income, and created efficiencies, all while maintaining our focus on leading with risk. Regularly investing in the future remains a key strategy for the bank. We brought in several talented team members in 2026 and will continue to do so. With that has come a strong loan pipeline and enhanced growth opportunities going forward. Overall, it was a highly successful year for Orrstown, particularly with the numerous challenges presented to us along the way. We are proud that we have consistently demonstrated the ability to maintain strong profitability in any environment and expect that to continue going forward. I will now turn the call over to Adam Metz, who will speak about our quarterly results. Adam?
We demonstrated our ability to maintain net interest margin near top of peers, enhanced fee income, and created efficiencies, all while maintaining our focus on leading with risk. Regularly investing in the future remains a key strategy for the bank. We brought in several talented team members in 2026 and will continue to do so. With that has come a strong loan pipeline and enhanced growth opportunities going forward. Overall, it was a highly successful year for Orrstown, particularly with the numerous challenges presented to us along the way. We are proud that we have consistently demonstrated the ability to maintain strong profitability in any environment and expect that to continue going forward. I will now turn the call over to Adam Metz, who will speak about our quarterly results. Adam?
Speaker #2: Investing in the future remains a key strategy for the bank. We brought in several talented team members in 2026 and will continue to do so.
Speaker #2: With that has come a strong loan pipeline and enhanced growth opportunities going forward. Overall, it was a highly successful year for Orrstown, particularly with the numerous challenges presented to us along the way.
Speaker #2: We are proud that we have consistently demonstrated the ability to maintain strong profitability in any environment and expect that to continue going forward. I will now turn the call over to Adam Metz, who will speak about our quarterly results.
Speaker #2: Adam.
Speaker #3: Thank you, Tom, and good morning, everyone. Our quarterly financial highlights are summarized on slide three of our deck. As was the case with quarter earnings were our annual results, our fourth impressive.
Adam Metz: Thank you, Tom, and good morning, everyone. Our quarterly financial highlights are summarized on slide three of our deck. As was the case with our annual results, our fourth quarter earnings were impressive. Net income was $21.5 million or $1.11 per diluted share. We maintained a strong net interest margin, which, coupled with non-interest income growth, drove our continued earnings and capital generation in the fourth quarter. Non-interest income as a percentage of operating revenue was 22% in the fourth quarter. That's the third consecutive quarter where this ratio exceeded 20%. As Tom said, enhancing non-interest income and investing in the future remain key strategic priorities for the bank. We recently announced the hiring of Matt Alpert as our Chief Wealth Officer.
Adam Metz: Thank you, Tom, and good morning, everyone. Our quarterly financial highlights are summarized on slide three of our deck. As was the case with our annual results, our fourth quarter earnings were impressive. Net income was $21.5 million or $1.11 per diluted share. We maintained a strong net interest margin, which, coupled with non-interest income growth, drove our continued earnings and capital generation in the fourth quarter. Non-interest income as a percentage of operating revenue was 22% in the fourth quarter. That's the third consecutive quarter where this ratio exceeded 20%. As Tom said, enhancing non-interest income and investing in the future remain key strategic priorities for the bank. We recently announced the hiring of Matt Alpert as our Chief Wealth Officer.
Speaker #3: Net income was $21.5 million, or $1.11 per diluted share. We maintained a strong net interest margin, which, coupled with non-interest income growth, drove our continued earnings and capital generation in the fourth quarter.
Speaker #3: Non-interest income as a percentage of operating revenue was 22% in the fourth quarter; that's the third consecutive quarter where this ratio exceeded 20%. As Tom said, enhancing non-interest income and investing in the future remained key strategic priorities for the bank.
Speaker #3: We recently announced the hiring of Matt Alpert as our Chief Wealth Officer. Matt's proven track record and team leadership and his client-first approach align perfectly with our mission to deliver personalized, high-quality financial advice and trust services.
Adam Metz: Matt's proven track record in team leadership and his client-first approach align perfectly with our mission to deliver personalized, high-quality financial advice and trust services. Over time, we will look to Matt to bring additional talent to the organization. Our proven philosophy remains that investing in the right people today will lead to continued growth in the future. We are also looking for newer sources of fee income, such as our recently increased presence in the merchant services space. Loan growth was steady during Q4, coming in at 4%. Loan growth was tempered by some projected closings being pushed into Q1 of 2026. Growth has been balanced across our footprint and our product set, a nice mix of C&I and CRE, and we have also seen the benefit of our investment in the middle market team.
Matt's proven track record in team leadership and his client-first approach align perfectly with our mission to deliver personalized, high-quality financial advice and trust services. Over time, we will look to Matt to bring additional talent to the organization. Our proven philosophy remains that investing in the right people today will lead to continued growth in the future. We are also looking for newer sources of fee income, such as our recently increased presence in the merchant services space. Loan growth was steady during Q4, coming in at 4%. Loan growth was tempered by some projected closings being pushed into Q1 of 2026. Growth has been balanced across our footprint and our product set, a nice mix of C&I and CRE, and we have also seen the benefit of our investment in the middle market team.
Speaker #3: Over time, we will look to Matt to bring additional talent to the organization. Our proven philosophy remains that investing in the right people today will lead to continued growth in the future.
Speaker #3: We are also looking for newer sources of fee income, such as our recently increased presence in the merchant services space. Loan growth was steady during the fourth quarter, coming in at 4%.
Speaker #3: Loan growth was tempered by some projected closings being pushed into the first quarter of 2026. Growth has been balanced across our footprint and our product set, a nice mix of C&I and CRE.
Speaker #3: And we have also seen the benefit of our investment in the middle market team. We remain confident in our pipelines, which remain strong, and the ability of our experienced relationship bankers to continue to responsibly grow the loan portfolio.
Adam Metz: We remain confident in our pipelines, which remain strong, and the ability of our experienced relationship bankers to continue to responsibly grow the loan portfolio. Credit quality remains strong, highlighted by minimal provision expense, a reduction in classified loans, and a healthy reserve coverage ratio. The bank recorded provision expense of $0.1 million and net charge-offs of $0.5 million during the quarter. Classified loans decreased by $5.7 million from the prior quarter. The allowance for credit losses on loans as a percentage of total loans ended the quarter at 1.19%, compared to 1.21% at the end of the prior quarter. We believe the allowance coverage properly aligns with the makeup of the loan portfolio. While delinquencies have increased, we do not believe it is indicative of a broader trend.
We remain confident in our pipelines, which remain strong, and the ability of our experienced relationship bankers to continue to responsibly grow the loan portfolio. Credit quality remains strong, highlighted by minimal provision expense, a reduction in classified loans, and a healthy reserve coverage ratio. The bank recorded provision expense of $0.1 million and net charge-offs of $0.5 million during the quarter. Classified loans decreased by $5.7 million from the prior quarter. The allowance for credit losses on loans as a percentage of total loans ended the quarter at 1.19%, compared to 1.21% at the end of the prior quarter. We believe the allowance coverage properly aligns with the makeup of the loan portfolio. While delinquencies have increased, we do not believe it is indicative of a broader trend.
Speaker #3: Credit quality remains strong. Highlighted by minimal provision expense, a reduction in classified loans, and a healthy reserve coverage ratio. The bank recorded provision expense of 0.1 million and net charge-offs of 0.5 million during the quarter.
Speaker #3: Classified loans decreased by $5.7 million from the prior quarter. The allowance for credit losses on loans, as a percentage of total loans, ended the quarter at 1.19%, compared to 1.21% at the end of the prior quarter.
Speaker #3: We believe the allowance coverage properly aligns with the makeup of the loan portfolio. While delinquencies have increased, we do not believe it is indicative of a broader trend.
Speaker #3: We continue to build capital, which will create flexibility for us in the future. Capital ratios increased across the board quarter to quarter. We remain well-capitalized by all measures.
Adam Metz: We continue to build capital, which will create flexibility for us in the future. Capital ratios increased across the board quarter to quarter. We remain well capitalized by all measures. Our shareholders remain our top priority. We remain focused on building shareholder value through strong earnings and an attractive dividend. As a result of our strong earnings performance, the board voted to increase our quarterly dividend by 3 cents per share from $0.27 to $0.30 per share.... This is the fourth dividend increase in the past 18 months, and our dividend has increased 50% since the merger date. Neelesh Kalani, our CFO, will now discuss our Q4 results in more detail. Neelesh?
We continue to build capital, which will create flexibility for us in the future. Capital ratios increased across the board quarter to quarter. We remain well capitalized by all measures. Our shareholders remain our top priority. We remain focused on building shareholder value through strong earnings and an attractive dividend. As a result of our strong earnings performance, the board voted to increase our quarterly dividend by 3 cents per share from $0.27 to $0.30 per share.... This is the fourth dividend increase in the past 18 months, and our dividend has increased 50% since the merger date. Neelesh Kalani, our CFO, will now discuss our Q4 results in more detail. Neelesh?
Speaker #3: Our shareholders remain our top priority. We remain focused on building shareholder value through strong earnings and an attractive dividend. As a result of our strong earnings performance, the board voted to increase our quarterly dividend by $0.03 per share, from $0.27 to $0.30 per share.
Speaker #3: This is the fourth dividend increase in the past 18 months, and our dividend has increased 50% since the merger date. Neele Kalani, our CFO, will now discuss our fourth quarter results in more detail.
Speaker #2: Thank you, Adam.
Neelesh Kalani: Thank you, Adam. Good morning, everyone. As Adam noticed, noted, we finished 25 strong with $21.5 million in net income, or $1.11 in earnings per diluted share. ROA was 1.55% for the quarter, and ROE was 14.7%. Then I'll start on slide 4 of the earnings deck with my discussion. The net interest margin was 4.00% in Q4, down from 4.11% in Q3. There are a couple factors that played into this. First, purchase accounting accretion impact to the margin was about 6 basis points lower in Q4. Also, the Fed rate cuts in September and October resulted in reduced interest income on our variable rate loans. Continued market pressure has lengthened the lag in deposit rate reductions.
Neelesh Kalani: Thank you, Adam. Good morning, everyone. As Adam noticed, noted, we finished 25 strong with $21.5 million in net income, or $1.11 in earnings per diluted share. ROA was 1.55% for the quarter, and ROE was 14.7%. Then I'll start on slide 4 of the earnings deck with my discussion. The net interest margin was 4.00% in Q4, down from 4.11% in Q3. There are a couple factors that played into this. First, purchase accounting accretion impact to the margin was about 6 basis points lower in Q4. Also, the Fed rate cuts in September and October resulted in reduced interest income on our variable rate loans. Continued market pressure has lengthened the lag in deposit rate reductions.
Speaker #2: Good morning, everyone. As Adam noted, we finished '25 strong with $21.5 million in net income, or $1.11 in earnings per diluted share. ROA was 1.55 for the quarter.
Speaker #2: And ROE was 14.7%. And then I'll start on slide four of the earnings deck with my discussion. The net interest margin was 4.00% in the fourth quarter, down from 4.11% in the third quarter.
Speaker #2: There were a couple of factors that played into this. First, purchase account increase in impact to the margin was about six basis points lower in the fourth quarter.
Speaker #2: Also, the Fed rate cuts in September and October resulted in reduced interest income on our variable rate loans. Continued market pressure has lengthened the lag in deposit rate reductions.
Speaker #2: We expect funding costs to come down starting in the first quarter of '26, and I'm projecting a net interest margin in the range of 3.90% to 4.00% for 2026.
Neelesh Kalani: We expect funding costs to come down starting in Q1 2026, and I'm projecting a net interest margin in the range of 3.90 to 4% for 2026. As I've stated in previous earnings calls, we have anticipated some compression due to the asset-sensitive balance sheet, coupled with the lag in deposit pricing. So the Q4 margin compression was expected, and we'll be focused on maintaining it around current levels. If there were no rate cuts in 2026, the margin, I do expect, would come in a little higher. The margin, excluding purchase accounting impact, was 3.53 in Q4, as compared to 3.59 in Q3, primarily because of the deposit rate lag. Purchase accounting accretion impact, excluding any unanticipated acceleration, should continue to decline modestly going forward.
We expect funding costs to come down starting in Q1 2026, and I'm projecting a net interest margin in the range of 3.90 to 4% for 2026. As I've stated in previous earnings calls, we have anticipated some compression due to the asset-sensitive balance sheet, coupled with the lag in deposit pricing. So the Q4 margin compression was expected, and we'll be focused on maintaining it around current levels. If there were no rate cuts in 2026, the margin, I do expect, would come in a little higher. The margin, excluding purchase accounting impact, was 3.53 in Q4, as compared to 3.59 in Q3, primarily because of the deposit rate lag. Purchase accounting accretion impact, excluding any unanticipated acceleration, should continue to decline modestly going forward.
Speaker #2: As I've stated in previous earnings calls, we have anticipated some compression due to the asset-sensitive balance sheet, coupled with the lag in deposit pricing.
Speaker #2: So the fourth quarter margin compression was expected, and it will be focused on maintaining it around current levels. If there were no rate cuts in 2026, the margin I do expect would come in a little higher.
Speaker #2: margin excluding purchase accounting impact The was 353 in the fourth quarter. As compared to 359 in the third quarter, primarily because of the deposit rate lag.
Speaker #2: Purchase accounting increase in impact, excluding any unanticipated acceleration, should continue to decline modestly going forward. The core margin, I believe, will increase in the first quarter and stabilize from there.
Neelesh Kalani: The core margin, I believe, will increase in Q1 and stabilize from there. We also maintain our focus on replacing the accretion income from the acquired loan portfolio as it runs off, and we remain on pace to do so. Slide 5 covers fee income, which increased to $14.4 million in Q4 from $13.4 million in Q3. Non-interest income for Q4 was more than 22% of total revenues. Wealth management income was $5.7 million, and swap fees were $1.1 million in the quarter. As Adam noted, we're excited about the opportunities ahead of us in the wealth space and expect to continue to make investments to grow that business.
The core margin, I believe, will increase in Q1 and stabilize from there. We also maintain our focus on replacing the accretion income from the acquired loan portfolio as it runs off, and we remain on pace to do so. Slide 5 covers fee income, which increased to $14.4 million in Q4 from $13.4 million in Q3. Non-interest income for Q4 was more than 22% of total revenues. Wealth management income was $5.7 million, and swap fees were $1.1 million in the quarter. As Adam noted, we're excited about the opportunities ahead of us in the wealth space and expect to continue to make investments to grow that business.
Speaker #2: We also maintain our focus on replacing the accretion income from the acquired loan portfolio as it runs off, and we remain on pace to do so.
Speaker #2: Slide five covers fee income, which increased to $14.4 million in the fourth quarter from $13.4 million in the third quarter. Non-interest income for the fourth quarter was more than 22% of total revenues.
Speaker #2: Wealth management income was $5.7 million, and swap fees were $1.1 million in the quarter. As Adam noted, we're excited about the opportunities ahead of us in the wealth space and expect to continue to make investments to grow that business.
Speaker #2: Service charges are up from the prior quarter as we grow our treasury management business, including merchant services, which has grown substantially since the prior year, and represents 17% of treasury management revenue.
Neelesh Kalani: Service charges are up from the prior quarter as we grow our treasury management business, including merchant services, which has grown substantially since the prior year and represents 17% of treasury management revenue. Mortgage activity has been stable for several quarters, and due to the volatility in some of the components, I'm projecting a quarterly run rate for non-interest income to be in the range of $13 to 14 million in 2026. Now I'll cover non-interest expenses on slide 6. Expenses are elevated a little bit this quarter at $37.4 million, up $1.1 million from Q3. Salaries and benefits were higher, with increased healthcare costs and some additional items on the professional services line, which were a little elevated, that drove the overall non-interest expense number up.
Service charges are up from the prior quarter as we grow our treasury management business, including merchant services, which has grown substantially since the prior year and represents 17% of treasury management revenue. Mortgage activity has been stable for several quarters, and due to the volatility in some of the components, I'm projecting a quarterly run rate for non-interest income to be in the range of $13 to 14 million in 2026. Now I'll cover non-interest expenses on slide 6. Expenses are elevated a little bit this quarter at $37.4 million, up $1.1 million from Q3. Salaries and benefits were higher, with increased healthcare costs and some additional items on the professional services line, which were a little elevated, that drove the overall non-interest expense number up.
Speaker #2: Mortgage activity has been stable for several quarters. And due to the volatility in some of the components, I'm projecting a quarterly run rate for non-interest income to be in the range of 13 to 14 million in 2026.
Speaker #2: Now I'll cover non-interest expenses on slide six. Expenses are elevated a little bit this quarter at $37.4 million, up $1.1 million from the third quarter.
Speaker #2: Salaries and benefits were higher, with increased healthcare costs, and some additional items that on the professional services line, which were a little elevated, that drove the overall non-interest expense number up.
Speaker #2: recently communicated and planned future With investments in wealth management and other sales teams, I expect expenses to run at a rate around on a quarterly rate of around 37 million, going forward.
Neelesh Kalani: With recently communicated and planned future investments in wealth management and other sales teams, I expect expenses to run at a rate of around $37 million on a quarterly basis going forward. However, we do regularly seek opportunities to invest in talent that will drive future growth. Slide 7 covers credit quality. Provision expense was just $75,000 for the quarter. We had approximately $500,000 in net charge-offs, which were mostly offset by the impact of favorable economic factors in the allowance calculation. Our allowance coverage ratio was 1.19% at December 31, 2025, which was a slight decline from September 30, 2025, but we believe it is more than adequately aligned with the risk profile of our loan portfolio. Classified loans are down, mainly due to pay downs.
With recently communicated and planned future investments in wealth management and other sales teams, I expect expenses to run at a rate of around $37 million on a quarterly basis going forward. However, we do regularly seek opportunities to invest in talent that will drive future growth. Slide 7 covers credit quality. Provision expense was just $75,000 for the quarter. We had approximately $500,000 in net charge-offs, which were mostly offset by the impact of favorable economic factors in the allowance calculation. Our allowance coverage ratio was 1.19% at December 31, 2025, which was a slight decline from September 30, 2025, but we believe it is more than adequately aligned with the risk profile of our loan portfolio. Classified loans are down, mainly due to pay downs.
Speaker #2: However, we do regularly seek opportunities to invest in talent that will drive future credit quality and provision growth. Slide seven covers expenses, which were just $75,000 for the quarter.
Speaker #2: We had approximately 500,000 in net charge-offs, which were mostly offset by the impact of favorable economic factors in the allowance calculation. Our allowance coverage ratio was 1.19% at December 31st.
Speaker #2: 25, which was a slight decline from September 30th. But we believe it is more than adequately aligned with the risk profile of our loan portfolio.
Speaker #2: Classified loans are down, mainly due to paydowns. Non-accruals are up from the prior quarter, primarily due to one relationship and not indicative of any broader trends.
Neelesh Kalani: Non-accruals are up from the prior quarter, primarily due to one relationship and not indicative of any broader trends. Non-performing assets remain very low as a percentage of total assets. Our earnings and performance metrics are shown on slide 8. All metrics remain strong. TC is now at 9%, and tangible book value per share continues to build at a rapid pace. Our loan portfolio is discussed on slide 9. Loans grew by 4% in the quarter, with some anticipated closings pushing into January. Loan yields did decline during the quarter due to impact of lower rates on the variable rate loan portfolio. We had $207 million of loan production during the fourth quarter and continue to have a robust pipeline. We feel good about achieving loan growth of 5% or better in 2026.
Neelesh Kalani: Non-accruals are up from the prior quarter, primarily due to one relationship and not indicative of any broader trends. Non-performing assets remain very low as a percentage of total assets. Our earnings and performance metrics are shown on slide 8. All metrics remain strong. TC is now at 9%, and tangible book value per share continues to build at a rapid pace. Our loan portfolio is discussed on slide 9. Loans grew by 4% in the quarter, with some anticipated closings pushing into January. Loan yields did decline during the quarter due to impact of lower rates on the variable rate loan portfolio. We had $207 million of loan production during the fourth quarter and continue to have a robust pipeline. We feel good about achieving loan growth of 5% or better in 2026.
Speaker #2: Non-performing assets remain very low as a percentage of total assets. Our earnings and performance metrics are shown on slide eight. All metrics remain strong.
Speaker #2: TC is now at 9%. Intangible book value per share continues to build at a rapid pace. Our loan portfolio is discussed on slide nine.
Speaker #2: Loans grew by 4% in the quarter, with some anticipated closings pushing into January. Loan yields did decline during the quarter, due to the impact of lower rates on the variable-rate loan portfolio.
Speaker #2: We had $207 million of loan production during the fourth quarter and continue to have a robust pipeline. We feel good about achieving loan growth of 5% or better in 2026.
Speaker #2: On slide 10, deposits were relatively flat, declining slightly by 5 million. The loan-to-deposit ratio remains at a comfortable level at 89%. The cost of deposits was 1.98% for the fourth quarter.
Neelesh Kalani: On slide 10, deposits were relatively flat, declining slightly by $5 million. The loan-to-deposit ratio remains at a comfortable level of 89%. The cost of deposits was 1.98% for Q4. Due to the deposit pricing lag, I would expect deposit cost reductions to be more clearly reflected in Q1 2026. Lowering the overall funding cost is a regular discussion item for management, as well as expanding wallet share and an emphasis on bringing in operating accounts. The investment portfolio is covered on slide 11. We've gradually repositioned the portfolio over time, taking opportunities as they present themselves in the market. During Q4, market dynamics led us to making a bigger shift. We purchased $125 million of agency MBS and CMOs and sold about $42 million of securities.
On slide 10, deposits were relatively flat, declining slightly by $5 million. The loan-to-deposit ratio remains at a comfortable level of 89%. The cost of deposits was 1.98% for Q4. Due to the deposit pricing lag, I would expect deposit cost reductions to be more clearly reflected in Q1 2026. Lowering the overall funding cost is a regular discussion item for management, as well as expanding wallet share and an emphasis on bringing in operating accounts. The investment portfolio is covered on slide 11. We've gradually repositioned the portfolio over time, taking opportunities as they present themselves in the market. During Q4, market dynamics led us to making a bigger shift. We purchased $125 million of agency MBS and CMOs and sold about $42 million of securities.
Speaker #2: Due to the deposit pricing lag, I would expect deposit cost reductions to be more clearly reflected in the first quarter of 2026. Lowering overall funding cost is a regular discussion item for management, as well as expanding wallet share and an emphasis on bringing in operating accounts.
Speaker #2: The investment portfolio is covered on slide 11. We've gradually repositioned the portfolio over time, taking opportunities as I present themselves. In the market, during the fourth quarter, market dynamics led us to making a bigger shift.
Speaker #2: We purchased $125 million of agency MBS and CMOs, and sold about $42 million of securities. This was a strategic decision to help address the asset sensitivity on the balance sheet.
Neelesh Kalani: This was a strategic decision to help address the asset sensitivity on the balance sheet. The sales did result in a small gain, and the majority of the purchased securities are at a fixed rate, which will benefit us as rates decline. The investment yield, portfolio yield of 4.58% reflects a decrease from the prior quarter of 4.67% due to the impact of declining rates on the floating rate investments. With the still excellent yield and declining unrealized losses, we believe the investment portfolio is positioned well to be a driver of earnings growth as well as proper balance sheet alignment. Our regulatory capital ratios are covered on slide 12. After the redemption of subordinated debt on 30 September, the total risk-based capital ratio has returned to where it was at 30 June.
This was a strategic decision to help address the asset sensitivity on the balance sheet. The sales did result in a small gain, and the majority of the purchased securities are at a fixed rate, which will benefit us as rates decline. The investment yield, portfolio yield of 4.58% reflects a decrease from the prior quarter of 4.67% due to the impact of declining rates on the floating rate investments. With the still excellent yield and declining unrealized losses, we believe the investment portfolio is positioned well to be a driver of earnings growth as well as proper balance sheet alignment. Our regulatory capital ratios are covered on slide 12. After the redemption of subordinated debt on 30 September, the total risk-based capital ratio has returned to where it was at 30 June.
Speaker #2: The sales did result in a small gain, and the majority of the purchased securities are at a fixed rate, which will benefit us as rates decline.
Speaker #2: The investment yield portfolio yield of 4.58% reflects a decrease from the prior quarter of 4.67% due to the impact of declining rates on the floating rate investments.
Speaker #2: With the still excellent yield and declining unrealized losses, we believe the investment portfolio is positioned well to be a driver of earnings growth, as well as proper balance sheet alignment.
Speaker #2: Our regulatory capital ratios are covered on slide 12. After the redemption of subordinated debt on September 30th, the total risk-based capital ratio has returned to where it was on June 30th.
Speaker #2: Capital generation is expected to be strong going forward, based on projected earnings, and we believe we are positioned to take advantage of various capital allocation options.
Neelesh Kalani: Capital generation is expected to be strong going forward based on projected earnings, and we believe we're positioned to take advantage of various capital allocation options. Finally, the guidance that was presented in the deck presents a conservative look at what we know we can achieve, and we remain confident that we can meet or exceed current analyst consensus. I'd like to now turn the call back over to Adam Metz for some closing remarks. Adam?
Capital generation is expected to be strong going forward based on projected earnings, and we believe we're positioned to take advantage of various capital allocation options. Finally, the guidance that was presented in the deck presents a conservative look at what we know we can achieve, and we remain confident that we can meet or exceed current analyst consensus. I'd like to now turn the call back over to Adam Metz for some closing remarks. Adam?
Speaker #2: Finally, the guidance that was presented in the deck presents a conservative look at what we know we can achieve, and we remain confident that we can either meet or exceed current analyst consensus.
Speaker #2: I'd like to now turn the call back over to Adam Metz for some closing remarks. Adam. Thank you, Neil. As Tom said, we are proud that we have consistently demonstrated the ability to maintain strong profitability in any environment.
Adam Metz: Thank you, Neil. As Tom said, we are proud that we have consistently demonstrated the ability to maintain strong profitability in any environment. We intentionally guided to assumptions we're confident we can deliver against. When you put these pieces together, unchanged loan growth, higher fee income, disciplined investment, the earnings profile for 2026 remains intact and, in our view, more reliable. We are optimistic about the future, both in the short and long term. We would now like to open the call to questions. Before we get started, the operator will briefly review the instructions with you.
Adam Metz: Thank you, Neil. As Tom said, we are proud that we have consistently demonstrated the ability to maintain strong profitability in any environment. We intentionally guided to assumptions we're confident we can deliver against. When you put these pieces together, unchanged loan growth, higher fee income, disciplined investment, the earnings profile for 2026 remains intact and, in our view, more reliable. We are optimistic about the future, both in the short and long term. We would now like to open the call to questions. Before we get started, the operator will briefly review the instructions with you.
Speaker #2: We intentionally guided to assumptions we're confident we can deliver against. When you put these pieces together, unchanged loan growth, higher fee income, disciplined investment, the earnings profile for 2026 remains intact.
Speaker #2: about the future, both in the short and And in our view, more reliable. We are optimistic long term. We would now questions. Before we get started, the like to open the call to operator will briefly review the instructions with you.
Speaker #3: Thank you. At this time, I would like to remind everyone that in order to ask a question, please press star, then the number one, on your telephone keypad.
Operator: Thank you. At this time, I would like to remind everyone, in order to ask a question, press star and then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from Tim Switzer with KBW. Your line is open.
Operator: Thank you. At this time, I would like to remind everyone, in order to ask a question, press star and then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from Tim Switzer with KBW. Your line is open.
Speaker #3: We will pause for just a moment to compile the Q&A roster. Your first question comes from Tim Switzer with KBW. Your line is open.
Speaker #4: Hey, good morning, guys. Thank you for taking the
Tim Switzer: Hey, good morning, guys. Thanks for taking the questions.
Timothy Switzer: Hey, good morning, guys. Thanks for taking the questions.
Speaker #4: questions.
Speaker #5: Morning,
Adam Metz: Morning, Tim.
Adam Metz: Morning, Tim.
Tim Switzer: So you covered this briefly on the call a little bit, but I want to ask about the increase to the guidance on both the non-interest income and expenses. You know, what was the primary driver for both of those? And does it reflect, like, any change in strategy or the business or, you know, anything from relative to last quarter?
Speaker #4: So you covered this briefly, Tim, on the call a little bit, but I want to ask about the increase to the guidance on both the non-interest income and expenses.
Timothy Switzer: So you covered this briefly on the call a little bit, but I want to ask about the increase to the guidance on both the non-interest income and expenses. You know, what was the primary driver for both of those? And does it reflect, like, any change in strategy or the business or, you know, anything from relative to last quarter?
Speaker #4: What was the primary driver for both of those? And does it reflect any change in strategy or the business or anything from relative to the last quarter?
Speaker #5: So a couple of things. It doesn't reflect necessarily a change in strategies to start continuing strategy of finding talent. To drive future earnings. So we've talked about in the past how we've constantly and how we've been successful is by investing in talent.
Neelesh Kalani: So a couple things. It doesn't reflect necessarily a change in strategy. It's just our continuing strategy of finding talent to drive future earnings. So we've talked about in the past that we've constantly, and how we've been successful is by investing in talent. So part of starting with the expense side, which has translated to the income side and will translate further, we have taken some actions, or we have brought in some talent on the lending side. We announced the new individual, Matt Alpert, on the head of wealth to help drive us forward. There will be some investments in addition to that on the OFA side to help drive that business forward.
Neelesh Kalani: So a couple things. It doesn't reflect necessarily a change in strategy. It's just our continuing strategy of finding talent to drive future earnings. So we've talked about in the past that we've constantly, and how we've been successful is by investing in talent. So part of starting with the expense side, which has translated to the income side and will translate further, we have taken some actions, or we have brought in some talent on the lending side. We announced the new individual, Matt Alpert, on the head of wealth to help drive us forward. There will be some investments in addition to that on the OFA side to help drive that business forward.
Speaker #5: So part of starting with the expense side, which has translated to the income side, and will translate further, we have taken some actions or we have brought in some talent on the lending side.
Speaker #5: We announced a new individual in Matt Alpert as the head of Wealth to help drive us forward. There will be some investments in addition to that on the OFA side.
Speaker #5: To help drive that business forward. So when we see opportunities to help us going forward, we will make those investments in strong talent to drive us forward.
Neelesh Kalani: So when we see opportunities to help us going forward, we will make those investments in strong talent to drive us forward. So I would say that is modeled in the expense guidance right now. Depending on opportunities with whether it's team lifts on the lending side or whatever it might be, we could kind of go further in that range. But currently, based on where we stand, we're on the – I do project being on the lower side of that range, but I do want to allow for some opportunity to invest in talent, as I said, to drive not only net interest income higher on the loan side, but fee income higher.
So when we see opportunities to help us going forward, we will make those investments in strong talent to drive us forward. So I would say that is modeled in the expense guidance right now. Depending on opportunities with whether it's team lifts on the lending side or whatever it might be, we could kind of go further in that range. But currently, based on where we stand, we're on the – I do project being on the lower side of that range, but I do want to allow for some opportunity to invest in talent, as I said, to drive not only net interest income higher on the loan side, but fee income higher.
Speaker #5: So, I would say that is modeled in the expense guidance right now. Depending on opportunities with whether it's team lifts on the lending side or whatever it might be, we could kind of go further in that range.
Speaker #5: But currently, based on where we stand, we're on the I do project being on the lower side of that range, but I do want to allow for some opportunity to invest in talent as I said to drive not only that interest income higher on the loan side, but fee income higher.
Speaker #5: So the flip side of that discussion is a non-interest income line where we have had a couple of quarters where we've consistently been at a higher run rate than we were in the past.
Neelesh Kalani: So the flip side of that discussion is a non-interest income line, where we have had a couple of quarters where we've consistently been at a higher, higher run rate than we were in the past. We broke $14 million. It was our highest quarter from a non-interest income standpoint that we've had historically. I'm not going to sit here and say that that $14.4 million run rate is going to be something going forward because we can't, as I've talked about, swap fees can change from quarter to quarter. It's a very strong quarter from that standpoint.
So the flip side of that discussion is a non-interest income line, where we have had a couple of quarters where we've consistently been at a higher, higher run rate than we were in the past. We broke $14 million. It was our highest quarter from a non-interest income standpoint that we've had historically. I'm not going to sit here and say that that $14.4 million run rate is going to be something going forward because we can't, as I've talked about, swap fees can change from quarter to quarter. It's a very strong quarter from that standpoint.
Speaker #5: We broke 14 million as our highest quarter from a non-interest income standpoint that we've had historically. Not going to sit here and say that that 14.4 million run rate is going to be something going forward because we can't, as I've talked about, swap fees can change from quarter to quarter.
Speaker #5: It's a very strong quarter from that standpoint. And the wealth revenue is driven by market, so I'm comfortable that we can kind of increase that guidance, and that is driven by talent that we have brought on board, and talent that we've already seen the benefit from, and that we will see the benefit from going forward in the future from bringing in new people.
Neelesh Kalani: There's the wealth revenue is driven by market, so we can, I'm comfortable that we can kind of increase that guidance, and that is driven by talent that we have brought on board and talent that we've already seen the benefit from, and that we will see the benefit from going forward in the future from bringing in new people.
There's the wealth revenue is driven by market, so we can, I'm comfortable that we can kind of increase that guidance, and that is driven by talent that we have brought on board and talent that we've already seen the benefit from, and that we will see the benefit from going forward in the future from bringing in new people.
Speaker #4: Got it. Okay, that was very helpful. And then, if you could help clarify a little bit the NIM trajectory over the course of the year.
Tim Switzer: Got it. Okay, that was very helpful. And then if you could help clarify a little bit the NIM trajectory over the course of the year. So it sounds like the core NIM should go up in Q1, and you're already at the top end of your guide going into the year. So I would assume that reflects some moderating Purchase Accounting Accretion over the rest of the year that brings you down, which you mentioned. Are you able to maybe quantify, like, the pace of Purchase Accounting Accretion how that go down over time?
Timothy Switzer: Got it. Okay, that was very helpful. And then if you could help clarify a little bit the NIM trajectory over the course of the year. So it sounds like the core NIM should go up in Q1, and you're already at the top end of your guide going into the year. So I would assume that reflects some moderating Purchase Accounting Accretion over the rest of the year that brings you down, which you mentioned. Are you able to maybe quantify, like, the pace of Purchase Accounting Accretion how that go down over time?
Speaker #4: So it sounds like the core NIM should go up in Q1, and you're already at the top end of your guide going into the year.
Speaker #4: So I would assume that reflects some moderating purchase accounting accretion over the rest of the year that brings you down. What you mentioned, are you able to maybe quantify the pace of purchase accounting on how that should go down over time?
Speaker #5: Yeah, so on a quarterly basis, it's kind of two to — excluding acceleration, which we don't really predict — it's generally two to three basis points each quarter that it'll decline.
Neelesh Kalani: Yeah. So on a quarterly basis, it's kind of 2 to 3 excluding acceleration, which we can't, we don't really predict. It's generally 2 to 3 basis points each quarter that it'll decline. But with the loan production that we're putting on, that's essentially replacing the impact, but it's obviously at a little lower rates that will drive the margin down a little lower. So it's about 2 to 3 basis points on that side. But our projections do assume 75 basis points, three 25 basis points cuts in 2026. So if that doesn't materialize, as I indicated in my comments, so we would expect it to come in higher than that, high end of the range. But again, just trying to account for what we're anticipating happening in the market.
Neelesh Kalani: Yeah. So on a quarterly basis, it's kind of 2 to 3 excluding acceleration, which we can't, we don't really predict. It's generally 2 to 3 basis points each quarter that it'll decline. But with the loan production that we're putting on, that's essentially replacing the impact, but it's obviously at a little lower rates that will drive the margin down a little lower. So it's about 2 to 3 basis points on that side. But our projections do assume 75 basis points, three 25 basis points cuts in 2026. So if that doesn't materialize, as I indicated in my comments, so we would expect it to come in higher than that, high end of the range. But again, just trying to account for what we're anticipating happening in the market.
Speaker #5: But with the loan production that we're putting on, that's essentially replacing the impact, but it's obviously at a little lower rates that will drive the margin down a little lower.
Speaker #5: But so, it's about two to three basis points on that side. But I do—our projections do assume 75 basis points—three 25 basis point cuts in 2026.
Speaker #5: So, if that doesn't materialize, as I indicated in my comments, then we would expect to come in higher than that high end of the range.
Speaker #5: But again, just trying to account for what we're anticipating happening in the market, but there's potential certainly to do better than that. And we are we do remain focused on the funding cost side of the equation, but all in all, we feel very good about the margin.
Neelesh Kalani: But there's potential certainly to do better than that. We do remain focused on the funding cost side of the equation. But all in all, we feel very good about the margin. We'll continue to manage it and hope to keep it at or near that 4% level. But there are some factors that can take it lower, potentially.
Neelesh Kalani: But there's potential certainly to do better than that. We do remain focused on the funding cost side of the equation. But all in all, we feel very good about the margin. We'll continue to manage it and hope to keep it at or near that 4% level. But there are some factors that can take it lower, potentially.
Speaker #5: We're continuing to manage it and hope to keep it at or near that 4% level that there are some factors that can take a lower
Speaker #3: The next question comes from Gregory Zingone with Piper Sandler. Your line is open.
Operator: The next question comes from Gregory Zingone with Piper Sandler. Your line is open.
Operator: The next question comes from Gregory Zingone with Piper Sandler. Your line is open.
Speaker #3: open. Good morning, guys.
Gregory Zingone: Good morning, guys. How are you?
Gregory Zingone: Good morning, guys. How are you?
Speaker #6: How are you?
Speaker #5: Good morning.
Adam Metz: Morning, good.
Adam Metz: Morning, good.
Speaker #6: Good.
Gregory Zingone: Just pivoting to the wealth management side for a second. Would you be able to tell me what AUM or AUA was at quarter end? And then also, if you have any numbers on how successful you've been in bringing some of the Codorus Valley customers on your platform.
Speaker #4: Just pivoting to the wealth management side for a second. Would you be able to tell me what AUM or AUA was at quarter-end?
Gregory Zingone: Just pivoting to the wealth management side for a second. Would you be able to tell me what AUM or AUA was at quarter end? And then also, if you have any numbers on how successful you've been in bringing some of the Codorus Valley customers on your platform.
Speaker #4: And then also, if you have any numbers on how successful you've been in bringing some of the Cadoris Valley customers onto your platform?
Neelesh Kalani: It's total AUM, total AUM was a little over $3 billion. Did you want to address them?
Neelesh Kalani: It's total AUM, total AUM was a little over $3 billion. Did you want to address them?
Speaker #5: Totally AUM was a little over 3 billion. Did you want to address
Speaker #5: that? I'm sorry.
Adam Metz: I'm sorry. I'm sorry, Gregory. What was the second half of your question?
Adam Metz: I'm sorry. I'm sorry, Gregory. What was the second half of your question?
Speaker #4: I'm sorry, Gregory. What was the second half of your question?
Speaker #6: I was just curious if you had any numbers on how successful you've been in bringing some of the Cadoris Valley customers onto your wealth management.
Gregory Zingone: I was just curious if you had any numbers on how successful you've been in bringing some of the Codorus Valley customers onto your wealth management platform?
Gregory Zingone: I was just curious if you had any numbers on how successful you've been in bringing some of the Codorus Valley customers onto your wealth management platform?
Speaker #6: platform.
Speaker #5: Yeah. I don't
Adam Metz: Yeah, I don't know that I'm sitting here with an exact statistic, but we've seen no significant decline in the portfolio, either from the wealth side or from the depository side or the commercial side. So as you saw in the fourth quarter of last year, fourth quarter of 2024 and the first quarter of 2025, we did take a proactive approach from a commercial loan portfolio perspective, where we identified certain loans that didn't necessarily meet our sort of credit box, and we proactively moved them out. And you saw that. But from a client retention standpoint on the wealth side or on the depository side, we've seen pretty good stickiness.
Adam Metz: Yeah, I don't know that I'm sitting here with an exact statistic, but we've seen no significant decline in the portfolio, either from the wealth side or from the depository side or the commercial side. So as you saw in the fourth quarter of last year, fourth quarter of 2024 and the first quarter of 2025, we did take a proactive approach from a commercial loan portfolio perspective, where we identified certain loans that didn't necessarily meet our sort of credit box, and we proactively moved them out. And you saw that. But from a client retention standpoint on the wealth side or on the depository side, we've seen pretty good stickiness.
Speaker #5: know that I I'm sitting here with an exact statistic, but we've seen no significant decline in the portfolio, either from the wealth side or from the depository side from the or the commercial side.
Speaker #5: As you saw in the fourth quarter of last year, the fourth quarter of 2024, and the first quarter of 2025, we did take a proactive approach from a commercial loan portfolio perspective, where we identified certain loans that didn't necessarily meet our sort of credit box.
Speaker #5: And we proactively moved them out, and you saw that. But from a client retention standpoint on the wealth side, or on the depository side, we've seen pretty good stickiness.
Speaker #4: Awesome. And then you guys had mentioned a little bit about the hiring aspect, and you guys are not too scared to hire new people, new teams, and you see fit.
Gregory Zingone: Awesome. And then you guys had mentioned a little bit about the hiring aspect, and you guys are not too scared to hire new people, new teams, and you see fit. Is there an area of the focus for the company this year, whether it is on the lending side, wealth technology, or other back-of-the-house functions?
Gregory Zingone: Awesome. And then you guys had mentioned a little bit about the hiring aspect, and you guys are not too scared to hire new people, new teams, and you see fit. Is there an area of the focus for the company this year, whether it is on the lending side, wealth technology, or other back-of-the-house functions?
Speaker #4: Is there an area of focus for the company this year, whether it is on the lending side, wealth, technology, or other back-of-the-house?
Speaker #4: functions? Yeah.
Adam Metz: Yeah, I, I can answer that. I, I would tell you that, in mid-2025, we made a move to build out a middle market, commercial lending platform, and that has already generated significant results, in our investment. So we, we feel very good about that, and we feel like there's additional opportunity there. On the wealth management side, as, as I think we've, we shared with several of you, is that we feel like there's additional opportunity in our growth markets, Maryland, Lancaster, Harrisburg. We feel like, we're just scratching the surface there, and I think Matt and his experience, and certainly around recruitment and team building, will benefit us greatly there. And from a technology side, we're always looking at that stack.
Adam Metz: Yeah, I, I can answer that. I, I would tell you that, in mid-2025, we made a move to build out a middle market, commercial lending platform, and that has already generated significant results, in our investment. So we, we feel very good about that, and we feel like there's additional opportunity there. On the wealth management side, as, as I think we've, we shared with several of you, is that we feel like there's additional opportunity in our growth markets, Maryland, Lancaster, Harrisburg. We feel like, we're just scratching the surface there, and I think Matt and his experience, and certainly around recruitment and team building, will benefit us greatly there. And from a technology side, we're always looking at that stack.
Speaker #5: I can answer that. I would tell you that in mid-2025, we made a move to build out a middle market commercial lending platform. And that has already generated significant results in our investment.
Speaker #5: So we feel very good about that, and we feel like there's additional opportunity there. On the wealth management side, as I think we shared with several of you, we feel like there's additional opportunity in our growth markets.
Speaker #5: Maryland, Lancaster, Harrisburg—we feel like we're just scratching the surface there. And I think Matt and his experience, and certainly his skills around recruitment and team building, will benefit us greatly there.
Speaker #5: And from a technology side, we're always looking at that stack. And I think in this quarter and going forward, we're making investments to make sure we have the state-of-the-art CRM platform and training the teams to appropriately identify the full breadth and scope of the client relationship so that we make sure that we're bringing all the products and services to the
Adam Metz: And I think, in this quarter and going forward, we're making investments to make sure we have the state-of-the-art CRM platform and training the teams to appropriately identify the full breadth and scope of the client relationship, so that we make sure that we're bringing all the products and services to the client.
And I think, in this quarter and going forward, we're making investments to make sure we have the state-of-the-art CRM platform and training the teams to appropriately identify the full breadth and scope of the client relationship, so that we make sure that we're bringing all the products and services to the client.
Speaker #5: client. Awesome.
Gregory Zingone: Awesome. And just one more from me. Seeing that your capital is building at such a nice pace, I'm curious where M&A ranks as a priority for capital deployment. Thanks.
Gregory Zingone: Awesome. And just one more from me. Seeing that your capital is building at such a nice pace, I'm curious where M&A ranks as a priority for capital deployment. Thanks.
Speaker #4: And just one more from me. Seeing that your capital is building at such a nice pace, I'm curious where M&A ranks as a priority for capital deployment.
Speaker #4: Thanks.
Speaker #5: Yeah.
Adam Metz: Yeah, I appreciate the question. You know, I think we have a very strong organic growth model, and frankly, that's what we're focused on. We feel like, as we-- I just shared, we have a lot of opportunities in the business lines, not only that we have today, but enhancing those. And so that's sort of where we're focused on. You know, our capital build does present optionality. And so, you know, we'll certainly-- we've done 3 in 106 years, and so we're pretty picky about the partners and we'll sort of go from there.
Adam Metz: Yeah, I appreciate the question. You know, I think we have a very strong organic growth model, and frankly, that's what we're focused on. We feel like, as we-- I just shared, we have a lot of opportunities in the business lines, not only that we have today, but enhancing those. And so that's sort of where we're focused on. You know, our capital build does present optionality. And so, you know, we'll certainly-- we've done 3 in 106 years, and so we're pretty picky about the partners and we'll sort of go from there.
Speaker #5: I think we have a very strong organic growth model, and frankly, that's what we're focused on. We feel like, as I just shared, we have a lot of opportunities in the business lines—not only the ones that we have today, but also in enhancing those—and so that's sort of where we're focused.
Speaker #5: Our capital build does present optionality. And so we'll certainly— we've done three in the 106 years. And so we're pretty picky about the partners, and we'll sort of go from there.
Speaker #5: there. Thank
Speaker #5: there. Thank
Gregory Zingone: Thank you.
Gregory Zingone: Thank you.
Speaker #3: The next question comes you. from Kyle Geerman with HubDay Group. Your line is open.
Operator: The next question comes from Kyle Gierman with Hovde Group. Your line is open.
Operator: The next question comes from Kyle Gierman with Hovde Group. Your line is open.
Speaker #4: Hey, guys. Good morning. I'm on for Dave
[Analyst] (Hovde Group): Hey, guys. Good morning. I'm on for David Bishop.
[Analyst] (Hovde Group): Hey, guys. Good morning. I'm on for David Bishop.
Speaker #6: Morning. Bishop.
Adam Metz: Morning.
Adam Metz: Morning.
Speaker #5: Morning.
Speaker #4: Kind of on that same question, could you provide an update on the company's current thinking around share buybacks? And kind of what is the near-term outlook for repurchases?
[Analyst] (Hovde Group): Kind of on that same question, could you provide an update on the company's current thinking around share buybacks and kind of what is like the near-term outlook for repurchases?
[Analyst] (Hovde Group): Kind of on that same question, could you provide an update on the company's current thinking around share buybacks and kind of what is like the near-term outlook for repurchases?
Neelesh Kalani: We're always looking closely at that opportunity. Our valuation, first, tangible book is a big factor in that. We're gonna take steps as needed to where the stock price has been recently hasn't put us in that position, but it's. We're certainly monitoring it and we'll, we still have the shares available to purchase. So we continue to be open to kind of all allocation, capital allocation methods based on where our position is.
Speaker #5: We're always looking closely at that opportunity. Trying to keep our evaluation versus tangible book is a big factor in that. We're going to take steps as needed.
Neelesh Kalani: We're always looking closely at that opportunity. Our valuation, first, tangible book is a big factor in that. We're gonna take steps as needed to where the stock price has been recently hasn't put us in that position, but it's. We're certainly monitoring it and we'll, we still have the shares available to purchase. So we continue to be open to kind of all allocation, capital allocation methods based on where our position is.
Speaker #5: We're the stock price has been recently hasn't put us in that position, but we're certainly monitoring it and we'll we still have the shares available to purchase.
Speaker #5: To be open to... So, we continue kind of all allocation—capital allocation—methods based on where our position is.
Speaker #4: Great, thank you. And then regarding the recent security purchases of the CMOs and MBS, could you share the yield achieved on those purchases, and maybe the overall goals of the portfolio going forward?
[Analyst] (Hovde Group): Great. Thank you. And then regarding the recent security purchases of the CMOs and MBS, could you share, like, the yields achieved on those purchases and maybe the overall goals of the portfolio going forward?
[Analyst] (Hovde Group): Great. Thank you. And then regarding the recent security purchases of the CMOs and MBS, could you share, like, the yields achieved on those purchases and maybe the overall goals of the portfolio going forward?
Speaker #4: forward? Yeah.
Speaker #5: The yield on the average yield on the purchases of 4.92%. So we do we have always and we'll continue to view that not just as the investment portfolio, not just as a liquidity source and liquidity management tool.
Neelesh Kalani: Yeah, the average yield on the purchases was 4.92%. So we do... We have always, and we'll continue to view that, not just as the investment portfolio, not just as a liquidity source and liquidity management tool. It's also a strong generator of earnings, and obviously cheap capital utilization as well. So we will continue to be active with the portfolio as kind of the situations arise. We do, just from a guidance perspective, we do kind of expect the Q4 doesn't fully reflect everything on an average basis, so we do expect some benefit going forward in addition to what we saw in the Q4 from the investment portfolio.
Neelesh Kalani: Yeah, the average yield on the purchases was 4.92%. So we do... We have always, and we'll continue to view that, not just as the investment portfolio, not just as a liquidity source and liquidity management tool. It's also a strong generator of earnings, and obviously cheap capital utilization as well. So we will continue to be active with the portfolio as kind of the situations arise. We do, just from a guidance perspective, we do kind of expect the Q4 doesn't fully reflect everything on an average basis, so we do expect some benefit going forward in addition to what we saw in the Q4 from the investment portfolio.
Speaker #5: It's also a strong generator of earnings, and obviously, cheap capital utilization as well. So, we will continue to be active with the portfolio as the situations arise.
Speaker #5: We do, just from a guidance perspective, we do kind of expect the fourth quarter doesn't fully reflect everything on an average basis. So we do expect the some benefit going forward in addition to what we saw in the fourth quarter from the investment portfolio.
Speaker #5: But we expect it to kind of sit around the levels where it's at
Neelesh Kalani: But, we expect it to kind of sit around the levels where it's at now.
Neelesh Kalani: But, we expect it to kind of sit around the levels where it's at now.
Speaker #5: now.
Speaker #4: Awesome. Thank you for taking my
[Analyst] (Hovde Group): Awesome. Thank you for taking my questions. I'll step back.
[Analyst] (Hovde Group): Awesome. Thank you for taking my questions. I'll step back.
Speaker #4: questions. I'll step back.
Neelesh Kalani: Yep.
Neelesh Kalani: Yep.
Speaker #3: That concludes the Q&A portion Yep. of the presentation. Mr. Quinn, I turn the call back over to you for concluding remarks.
Operator: That concludes the Q&A portion of the presentation. Mr. Quinn, I turn the call back over to you for concluding remarks.
Operator: That concludes the Q&A portion of the presentation. Mr. Quinn, I turn the call back over to you for concluding remarks.
Speaker #5: Thank you, Operator. As always, if we can clarify any of the items discussed this morning, on this call, or in the earnings release, please feel free to give us a call.
Tom Quinn: Thank you, operator. As always, if we can clarify any of the items discussed this morning, on this call or on the earnings release, please feel free to give us a call. Wishing you a wonderful day. Thank you very much.
Thomas Quinn: Thank you, operator. As always, if we can clarify any of the items discussed this morning, on this call or on the earnings release, please feel free to give us a call. Wishing you a wonderful day. Thank you very much.
Speaker #5: Wishing you a wonderful day. Thank you very much.
Speaker #5: much. This concludes today's conference
Operator: This concludes today's conference call. Thank you for joining. You may now disconnect.
Operator: This concludes today's conference call. Thank you for joining. You may now disconnect.
