Good morning and welcome to United Community Banks' fourth quarter 2025 earnings call. Hosting our call today are Chairman and Chief Executive Officer Lynn Harton, Chief Financial Officer Jefferson Harrelson, President and Chief Banking Officer Rich Bradshaw, and Chief Risk Officer Rob Edwards. United's presentation today includes references to operating earnings, pre-tax, pre-credit earnings, and other non-GAAP financial information. For these non-GAAP financial measures, United has provided a reconciliation to the corresponding GAAP financial measure in the financial highlights section of the earnings release, as well as at the end of the investor presentation. Both are included on the website at ucbi.com. Copies of the fourth quarter's earnings release and investor presentation were filed this morning on Form 8-K with the SEC, and a replay of this call will be available in the investor relations section of the company's website at ucbi.com.
Please be aware that during this call, forward-looking statements may be made by representatives of United. Any forward-looking statement should be considered in light of risks and uncertainties described on pages five and six of the company's 2024 Form 10-K, as well as other information provided by the company in its filings with the SEC and included on its website. At this time, I'll turn the call over to Lynn Harton.
Good morning and thank you for joining our call today. The fourth quarter was a solid end to a great year. During the quarter, we had 11% year-over-year revenue growth, led by continued margin expansion and 4.4% annualized loan growth. Non-performing assets, past dues, and substandard loans remained stable at low levels. Our operating earnings per share for the quarter was $0.71, a 13% year-over-year improvement. Our fourth quarter return on assets was 1.22%, and our return on tangible common equity was 13.3%. For the year, our operating earnings per share grew by 18%, from $2.30- $2.71. 2024 saw solid improvements in all of our key performance ratios. Margin was up 23 basis points, efficiency ratio improved by 264 basis points, credit losses declined, and our return on assets improved by 18 basis points. We topped $1 billion in revenue for the year with 12% year-over-year growth.
We put extra focus on our retail and small business lending efforts, and both of those lines passed $1 billion in annual production for the first time. Our Novitas equipment finance team also crossed $1 billion in originations for the first time. Executing on our capital plan, we increased our dividend in the third quarter to an annualized rate of $1 per share. We took advantage of the opportunity to repurchase 1 million shares of our stock in the fourth quarter at an average price below $30 per share. During the year, we also redeemed our preferred stock, further increasing our returns to common shareholders. Our return on tangible common equity reached 13.3% for the year, and our tangible book value per share grew by 11% year-over-year. Culture remained a focus during the year as well.
As a result, we were recognized for being number one in retail client satisfaction in the Southeast for the 11th time by J.D. Power. American Banker recognized us for the ninth time as being one of the top banks to work for in the country, and the American Bankers Association awarded us with a Community Commitment Award for our Financial Literacy Month program. For Financial Literacy Month in 2025, our team led 154 workshops, reaching more than 13,400 students. That's just a small example of the tremendous energy the United team personally invests in our communities. 2025 was a great year, but we want to be better. To improve the durability of our earnings and multiple interest rate scenarios, we reduced our securities duration. We upgraded both our talent and our systems that manage interest rate risk and deposit pricing. We continued to invest in growth.
2025 saw the successful conversion of American National Bank and Fort Lauderdale to United's systems and brand, expanding our presence in this dynamic market. We opened a new office in Cary, North Carolina, and began work on new offices in South Miami and Winston-Salem, North Carolina. We committed to the expansion of our Florida private banking model to the rest of our footprint. We expanded our product set in treasury management to help us continue to grow our commercial line of business, and we added talent and risk management to prepare us for continued success. It's been a great year. Jefferson, why don't you cover our performance in more detail?
Thank you, Lynn, and good morning to everyone. I will start on page six and talk about our deposit results. We experienced the positive seasonality we expected with regard to public funds in the fourth quarter, with an increase of $293 million. We were also very pleased that our cost of deposits improved 21 basis points to 1.76% and that our cumulative total deposit beta moved to 40% from 37% as we discussed last quarter. Excluding public funds, our average balances were down slightly for the quarter, but similar to last year, we did see a greater decline in end-of-period balances. This end-of-period decline was partially due to seasonality, with customers moving cash in and out during the last two weeks of the year, and it was also the result of our strategy where we lowered rates on some of our highest-cost single service customers.
For the year, our deposits grew by 1%, and we continued to grow customers and accounts. On page seven, we turn to the loan portfolio, where our growth continued at a 4.4% annualized pace. Our growth came primarily in the C&I and HELOC categories, which are two of our current areas of focus for growth. Turning to page eight, where we highlight some of the strengths of our balance sheet, we believe that our balance sheet is in good position from a liquidity and capital standpoint to be ready for any economic volatility. We have very limited broker deposits and very limited wholesale borrowings of any kind. Our loan-to-deposit ratio remained low but increased for the third quarter in a row and is now at 82%. Our CET1 ratio was relatively flat at 13.4% and remains a source of strength for the bank.
On page nine, we look at capital in more detail. As I mentioned, our CET1 ratio was 13.4%, and our TCE increased by 21 basis points to 9.92%. As Lynn mentioned, we were active in our buyback in the fourth quarter, buying back 1 million shares at just under $30 per share. Moving on to spread income on page 10, we grew spread income 7% annualized in the quarter. Our net interest margin increased four basis points to 3.62%. Excluding loan accretion, our net interest margin increased by 6 basis points as compared to the third quarter. The driver was mainly a lower cost of funds, but we also benefited from the loan-to-deposit ratio moving to 82% from 80% last quarter. We continued to experience a NIM tailwind from our backbook repricing and from the mix change towards loans and away from securities.
In 2026, using just maturities, we have about $1.4 billion of assets paying down in the 4.90% range. Because of this continued impact, I would expect the NIM to be up between two and four basis points in the first quarter. A key will be how we are able to reprice the $1.4 billion of CDs we have maturing in the first quarter at 3.32%. Moving to page 11, non-interest income was $40.5 million, down $2.8 million from the elevated result of last quarter. We had good growth in our wealth business and continued strong growth in our treasury management and customer swaps businesses within the other category, while mortgage softened as expected due to seasonality. Operating expenses on page 12 were $151.4 million, an increase of $4 million on an operating basis. The main reason for the increase is $1.5 million in higher group health insurance cost.
Moving to credit quality on page 13, net charge-offs were 34 basis points in the quarter, an increase compared to last quarter. The primary reason for the $9 million increase was charge-offs on two C&I loans, of which $5 million was already specifically reserved for. NPAs improved, and past dues were flat as credit quality remained strong. I will finish on page 14 with the allowance for credit losses. Our loan loss provision was $13.7 million in the quarter and included the release of the final $1.9 million of Hurricane Helene special reserve. Net-net, our allowance coverage of credit losses moved down slightly to 1.16%. With that, I will pass it back to Lynn.
Thank you, Jefferson. As we move into 2026, we're optimistic for continued growth and improvement. The economy in our markets remains strong and will support continued growth in our business. Before we turn to questions, I'd like to recognize and congratulate our teams for a great performance this past year. I'm looking forward to another great year with them in 2026. And with that, let's open the floor for questions.
We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Russell Gunther with Stephens. Please go ahead.
Hey, good morning, guys.
Morning, Russell.
Starting on the balance sheet, if I could, you know we got a favorable average earning asset remix this quarter out of securities and into loans. How should we think about the overall balance sheet growth in 2026? Should we expect this dynamic to continue, or just on the investment portfolio front, could that flatten out or grow going forward?
All right, thanks, Russell. I'll take that one. I would expect our balance sheet growth to be really dependent upon our deposit growth. Generally, we're modeling that it would be a couple hundred basis points below our loan growth for both deposit growth and the balance sheet growth. So yes, I would expect this continuation towards a higher loan-to-deposit ratio throughout 2026.
Okay, excellent. And then just maybe isolating for the loan growth piece, Jefferson, you guys talked about C&I and HELOC remaining a focus, but if you could just touch on sort of anticipated asset class and geographic loan leaders for the year ahead? And then lastly, just Novitas as well, strong production in 2025. How are you thinking about that as a contributor to the overall loan mix?
Good morning, Russell. This is Rich. I'll take that one. So first of all, to address the production, this was the largest bank production quarter ever. So we felt great about that. Did have some senior care headwinds and a couple of large loans that we chose not to defend. To your point, very pleased that Florida, which had our two newest acquisitions, led in production for the bank. As you said, C&I grew. We grew that 12%. Owner-occupied CRE did well. Novitas had a strong quarter.
As said earlier, retail crossed the billion-dollar mark and had a great quarter. And SBA, even with the government shutdown, had the largest quarter in commitments that they've ever had. So we feel very good about that. We look forward to 2026. We've got a lot of good conversations going on the hiring side throughout the footprint. We continue to focus, you said, on asset class. We continue to want to do more in C&I and owner-occupied CRE, as well as the HELOCs have done well for us as well.
All right, very good. Thank you, guys. I'll step back.
The next question comes from Stephen Scouten with Piper Sandler. Please go ahead.
Yeah, thanks. Good morning, everyone. Obviously, really nice opportunistic trade on the share repurchase in the quarter. I'm wondering if there's any kind of mindset change at all around that opportunistic nature of the repurchase moving forward, or if you could be a little more aggressive given capital looks like it'll continue to build pretty aggressively based on the strong earnings?
Yeah, I would say we would intend to be more assertive on buybacks as we look into 2026. As you mentioned, capital build is there. Credit quality is great, so no real reason to hold anything there. M&A opportunities are light. You know we've kind of built the foundations of the footprint that we want, and so we're very satisfied with what we've got. So that really puts buybacks in the crosshairs, and frankly, we think they continue to be at a good value and a good earnback as we sit. So yeah, I would expect to see more.
That's great. Okay, and then if I'm thinking about, I think, Jefferson, you had said last quarter, I believe, like in the medium term, felt like you saw some upside to the NIM, and obviously we saw that this quarter on that remix and sounds like next quarter as well. Can you, I don't know if you have any data like this, but give us a feel for, as these loans reprice and mature and maybe as the CDs in particular renew, like what sort of retention rates you tend to get on those pools of assets and deposits just as we think about the upside potential there?
Yeah, that's great. So I'll start on the CD side. I mentioned the amount of CDs that were repricing in Q1 at 332 maturing. They've been coming on around 313, and we've been seeing that trend continue. So we are still seeing more tailwind from the cost of funds or cost of deposits angle. We were at 169 at quarter in there, so we are set for some nice improvement if the current trends stay in place in the first quarter. On the loan side, excluding Novitas, we have $6 billion of fixed-rate loans at 519. That fixed book was up nine basis points in Q4, and it's been increasing about 6-8 basis points a quarter.
In the fourth quarter, we were putting on new fixed-rate loans at 645, excluding Novitas, and with the long end of the curve staying relatively high, that may be able to stay in that 645 range, but we're also seeing a spread compression there. But either way, we're putting them on at a much higher rate than 519. So we have this longer-term trend on the asset side that's a tailwind, and we have a shorter-term trend on the liability side that should help our margin too in the near term.
Got it. That's helpful. And kind of specifically around those fixed-rate loans, like as they reprice or mature, I mean, can you give us a feel for how much of that you retain? I mean, is it, I'd assume, just given the continued loan growth, it's a pretty high percentage, but just kind of curious if you have a metric there and if there's any change in competitive factors with rate cuts that you think that 645 could get pushed lower. I know you spoke to the curve staying where it is, but just curious there.
I'll go back and answer your question too, because you had asked me about the retention on the CDs. That's been in the 90% range. We understand that's much generally higher than where the industry is. I don't have the data in front of me on the loan side. I can come back to you on that. I don't know if retention of loans is a number you guys have, but I'll come back with you on retention.
I don't have that at the table. Yep.
So we'll come back to you on that one, Stephen.
Okay, great. Well, thanks for all the color. Congrats on a really great year in 2025. Look forward to watching it in 2026.
Thank you.
The next question comes from Michael Rose with Raymond James. Please go ahead.
Hey, good morning, guys. Thanks for taking my questions. Just wanted to get a sense from you guys. You know I think Rich mentioned you know just some of the efforts on the hiring front. Can you just talk about the competitive landscape? You know we've had some deals in and around your markets close here recently. You know it feels like it's more competitive both on the loan and deposit side.
Can you just kind of walk us through that? And you know I think last quarter maybe you talked about kind of a 3%-4% expense growth rate, but you know I've heard some other banks talk about maybe accelerating that just given some of the hiring opportunities. Can you just kind of walk us through the puts and takes to the hiring and the expense outlook and then just the competitive aspect, as I mentioned earlier? Thanks.
Yeah, sure, Michael. This is Lynn. I'll start on the competitive side and then turn it over to Rich for further details. But you know I mean, look, we're in fantastic markets, as you know. And so it is a very competitive environment, and there's always deals going on. So I don't view the current deals as being anything unusual or changing the competitive dynamic. I just think we're in a great place to be. And so what matters is how our brand plays in the markets. And that's why we're really focused on client service. We really focus on J.D. Power. Got an extra focus on Greenwich this year. We won five awards last year for commercial service. We'd like to win 10 this year. And the employee culture.
So, we're having opportunities to hire not from the deals that are coming up, but just from people who want to be with a bank that's focused on the community where they feel like they can make a difference and be in this environment with a balance sheet that's big enough to take care of their clients. So, competition is going to always be there. We don't overly focus on it. We just focus on what we can do to be the kind of bank that attracts the right people here. And Rich, what would you add to that?
So yeah, on the competitive front, I would say that in the last two quarters, it probably has gotten a little more competitive. The good news only on interest rate, not on structure. So that feels pretty good. And then along the lines of Lynn's comments on the industry and hiring, what I would say is more than ever, as I've been here almost 12 years, culture has never mattered more. It comes up in every discussion. I'm talking with when you're hiring a senior lender. And so I think that plays in our favor, and that's what we're working towards.
Really helpful. Any commentary on kind of the expense outlook for the year, just maybe given some of those opportunities?
Yeah, we don't budget significant hires or lift-outs. We're really trying to stick to this 3% and 3.5% growth rate. It's a very difficult environment to maintain that, but that is what we are targeting and what we think we'll get in 2026.
Okay, great. And then maybe just finally for me, last quarter, you did talk about maybe some more opportunities here for M&A potential as we move forward. Has any of that changed? You know we've obviously seen some pretty quick deals this year, and it seems like if you want to do a deal, you can get it done. Can you just talk about the opportunity set? I know over the past year or two, you've talked about maybe a relative dearth of opportunities, but last quarter, you talked about maybe seeing more banks raising their hands versus the prior couple quarters. Just would love to, Lynn, just to hear your outlook and view on how the M&A landscape plays out this year. Thanks.
Yeah, sure. Sure, glad to, Michael. You know what? So I mean, I would start with kind of what's our overall strategy, what has been. Like I said, we like our footprint. We're not looking to expand that. We like smaller deals where we can be more additive and the cultures are better fit. And really, the honest truth is, and we want quality organizations. We're not interested typically in fixers. And so there's literally, I was counting them up yesterday when we were talking about this call, and there's literally less than two handfuls. I mean, it's less than 10 in our markets that we would be interested in. So we have ongoing conversations with those. Right now, I would say most of them, like I said, they're quality banks. You know the whole industry, we believe, set up for great performance in 2026.
And so most of them are saying, you know what, I think I'm going to perform in 2026, and I'll think about selling it sometime down the road. So it's really, at this point, our focus is much more internal and building it out. And these other eight companies that we really like, you know we just kind of wait for the popcorn to pop and grab them. That's because it's hard to predict. So that's probably why my conversation, my comments, maybe the last two quarters haven't been as consistent as they should have been, because it's just really hard to predict. It's just based on that small number of quality companies and what they want to do.
Totally get it, like the popcorn analogy there. Thanks for taking my questions, guys.
Thanks, Michael.
The next question comes from Gary Tenner with D.A. Davidson. Please go ahead.
Thanks. Good morning. I just wanted to ask a follow-up on the expense question. I know you mentioned Jefferson targeting 3%-3.5% growth. Obviously, expenses were a bit higher this quarter, and I think with kind of the bigger delta between expectations and where you came in, could you give us some thoughts on the first quarter kind of as a jumping-off point from the expense levels you might expect?
Yeah, great. Thanks for the question. Gary, number one, we put in the deck that the main driver was a bit of a catch-up on the group health of $1.5 million. I don't expect that to be at that level next quarter. The other delta there was the impact of what Rich was talking about, the biggest record loan production in our history. That moved our incentives up by about $1 million versus last quarter. We also had some assorted year-end things.
In some cases, it was a little bit unusual with some small write-ups. And I would say that our run rate of expenses is a little less than we printed in the fourth quarter. You know, that said, Q1 had some seasonality in there, things hitting like the FICA restart at $1.5 million. If you put all that together, I think that our expenses should be flat in Q1.
Okay, thanks for that, Jefferson. And then a quick question on credit. You know, excluding Novitas, your charge-offs were about 26 basis points, highest they've been in a couple of years, really, excluding the manufactured housing loss recognition in 2024. Could you provide any color just on those two specific C&I credits charged off during the quarter? I know there was some specific reserve associated with them already, but just curious about any thoughts around those two credits particularly and kind of bank-level charge-offs as you're looking into 2026.
Yeah. Hey, Gary, this is Rob. Be glad to share with you about the credits. The first one was a $14 million franchise loan for one of the largest franchisees in a national well-known franchise system. Some of the units were struggling, and while normal resolution would be the sale of the stores, the franchisee and the franchisor could not find an agreeable path forward, so the loss is really greater than what we think should have been appropriate because the stores ended up being closed, but that was a $6 million charge-off we took on a $14 million franchise loan. The second one was a $4 million owner-occupied SBA loan where we had a documentation error in the underwriting and decided to not pursue the guarantee. In the last 12 years, that's really the first time we've originated a credit that we decided to not pursue the guarantee.
We have done an after-action review and feel confident in some of the tweaks that we made to the program and confident in the ongoing performance of the SBA portfolio. In terms of looking forward to 2026, you know, when I look back, I think you mentioned sort of taking out the manufactured housing. So if I do that in 2024, the loss rate was 24 basis points. If I look at 2025, the loss rate was 22 basis points for the full year, and I expect 2026 to fall in that 20- 25 basis point range again.
Thank you very much.
The next question comes from Catherine Mealor with KBW. Please go ahead.
Thanks. Good morning.
Morning, Catherine.
One follow-up just on the margin. Jefferson, you mentioned, I think you said $1.4 billion in assets are at $490, and so that's going to be repricing this year. Do you have the break between that $1.4 and securities and loans?
Yeah, I can get that for you. I can have a guess now, but let me get that. Let's talk offline, and I'll get you the details on that. But we'll have a guess to break that down with the information I have right now.
Cool. Okay. I think I was just trying to get a sense as to the upside maybe in just the bond book repricing that we might see this year. So that's maybe another way to ask it.
So if we ask it like that, I can do it better. So if you look at just the HTM book, it's at $190, and I would expect about $150 million of that to cash flow in 2026. And on the AFS portfolio, that is going to be. I want to come back to you on the repricing of what's maturing out of the AFS. So let's again talk about that one offline too.
Okay. Cool. Yeah, that's great. And then maybe just another question on fees, just the fee outlook. The back end of the year run rate on fees for third and fourth quarter were higher than the first two. And so can you just kind of remind us of the seasonality to be aware of as we go into the first quarter of the year and then maybe just your outlook, particularly for kind of Novitas and SBA fee growth into 2026?
All right, so I think about the fee income items. The biggest items would be wealth, where we expect nice growth in 2026. Within other, we also have our treasury management, which is growing well. So I think those are the two items where you're going to see nice kind of upper single-digit growth. We also have, I think with the volumes that we're expecting next year, you're going to see strong growth in our customer swap businesses. Service charges aren't really a growth business for us or banks these days. For mortgage, we're pretty optimistic, and I'll pass it over to Rich here. The Mortgage Bankers Association is expecting 6%-6.5% growth. We're seeing a lot of optimism from our mortgage team, and I'll pass it over to Rich to talk about the seasonality and our outlook for mortgage.
Yeah, and I'd just, yeah, I'd echo what Jefferson said on the mortgage side. Feel good about where we're going on that. And with interest rates gone down just a little bit, we've seen a pickup in applications. So we hope that will continue. With regards to SBA, the one thing you didn't discuss, pricing remains consistent on that. I do feel that we have some momentum going in SBA just with the large Q4 and some hiring going on there. So I think we'll do the same or better on the SBA fees for 2026.
On the seasonality, you get one more weak seasonal quarter from mortgage before they're stronger in second and third quarters, and SBA tends to build up throughout the year.
Great. And then you on Novitas?
Oh, Novitas tends to also build up throughout the year. Now, they've had good momentum all year, but typically their seasonality is a little bit weaker first and then stronger throughout the year.
I would say that they had a great Q4, and they're going to have a good Q1, but there is seasonality associated with it.
Yeah. I mean, typically, do you feel like you'll still be portfolioing as much on Novitas? Or just given that your balance sheet growth feels like it's getting really strong, maybe you sell a little bit more of that? How do you think about the balance between those two things?
Yeah. So as 2025 unfolded, we ended up selling more and more Novitas loans. I would expect that to continue. They're at 9.5% of our total loans. We want to keep that at 10% or under. They're going at a faster rate. They were 18% annualized growth this quarter before sale. So that translated into us selling more. So I think Novitas selling more loans is the most likely outcome for 2026.
Great. Thank you.
The next question comes from David Bishop with Hovde Group. Please go ahead.
Yeah, good morning. Just curious. You know we got some calls in about you know catching up in terms of the impact of tariffs on credit quality. Are you starting to see any of that bleed into the bank's financial statements sort of impacting them negatively in terms of debt service coverage, etc.? Any sort of problems you're seeing starting to emanate around the edges there on credit quality from tariffs? Thanks.
Yeah. Hey, David, this is Rob. Really, the short answer is that we're not seeing any impact from tariffs in terms of asset quality. We continue to have discussions with customers around the impact of tariffs. And people seem to be finding a way to work through that, whether it's passing it on, reducing margins. But there isn't anything we're looking at in the problem loan workout area or through the annual review process that would indicate that there's something that's pushing back to simply this tariff concern.
For the next question, I want to follow up on Catherine's, which was of the $1.4 billion fixed securities. Now, this would be an AFS and HTM would be $285 million and $355 million.
Yeah. I guess one follow-up question of Jefferson. I think you noted in the preamble, you know, another, you know, call it 200 basis point improvement in the efficiency ratio this year. Do you think you can continue to lean on, you know, sort of that ratio as you look out and budget through 2026? Can we expect additional efficiency improvements? Thanks.
Yep. Thanks, David. I do think that we are budgeting for operating leverage improvement in 2026. We see that with our on the revenue side with our expectation for solid loan growth, a little bit of margin expansion in combination with expenses being managed. I think that we should have some efficiency ratio improvement next year, this year.
Great. Thank you.
The next question comes from Christopher Marinac with Janney Montgomery Scott. Please go ahead.
Hey, thanks. Good morning. Thank you for hosting us. And I wanted to ask Rob a few points on just charge-offs in general. You know, saw higher charge-offs in Q4, particularly on the commercial side. Is any of that just related to year-end cleanup? And does the outlook change at all for what y ou see in the next few quarters?
Yeah. So, you know, the outlook, really, I would just go back to the previous comment. The outlook for 2026 is stable and consistent with what we saw on the bank side for 2024 and 2025. So not really seeing any change there. We did have higher charge-offs in the fourth quarter and lower charge-offs in the third quarter. I think you got to look at the overall mix as sort of an annual thing versus a quarter-to-quarter thing. We did see non-accruals come down $4.5 million in the quarter.
We were able to exit two substandard credits during the quarter that were really, we thought, problematic. And so we were pleased with that. So overall, continue to feel good about the shape of the portfolio and performance going forward.
Thanks, Rob. That makes sense on looking broader on losses, so I appreciate that. It seems that the back and forth on the criticized ratio is more of a good thing for you than not. That, if you will, volatility is normal, and it doesn't seem like the overall level is changing a whole lot. Is that a correct read to kind of what to expect and just the criticized combined on the graphic we see every quarter?
Yeah. Two points you made that I would just agree with. One is the overall levels aren't really changing. And the second point you made was we would prefer special mention to substandard. So yes to both.
Okay. And then the last question for Lynn, just on the big picture. I mean, it seems that UCB is really focused on the organic growth and much less on M&A. Does anything out there possibly change that for you? Or is simply the kind of buying business less attractive for you in general?
Yeah. I don't think there's anything that changes that. Yeah, it changes the fact that we are focused more on organic now. You know if you look back in history, you know to me, the only thing that scale really gets you, it's not technology. We can buy whatever technology we need. In fact, at our size, it's probably easier to implement than it is if you're larger. But what scale does get you is a bigger balance sheet, product set, particularly for your commercial clients, and then the ability to attract better talent and better talent throughout the company. So whether it's in risk, whether it's in treasury, whether it's on the lending side. So you know our focus going back 10 years was let's build out, let's get the scale needed to be able to compete for these small business, small commercial, middle market clients in our markets.
And look, would I like to be bigger? Absolutely. But are we big enough? Absolutely. And combined with that, then is both fewer targets out there and honestly fewer quality targets. And you know whereas in the past, we took a couple of fixers on, it's really hard with all the momentum we've got now, the number of technology projects we're able to do without having to worry about integrations and conversions. The bar on what kind of bank I would want to bring into this franchise has honestly gone up. So that to me is more of a natural move as we've built out and executed our strategy than any kind of change in the market or change anything else. So as I'd mentioned earlier, there's a very limited number of high-quality franchises in our current market that we'd be interested in.
And as you would expect, those are the ones that are less needful or less interested in selling near term. And so it's more of a long-term calling game. And you know as they get ready, we'll do our best to be their preferred acquirer. But in the meantime, we've got great momentum and really focused on just executing what's in front of us.
Great, Lynn. Thank you for that background. It's really helpful to get reinforcement. I appreciate it.
All right. Thank you.
The next question comes from Gary Tenner with D.A. Davidson. Please go ahead.
Hey, thanks. Just had a quick follow-up. Just as it relates to loan growth, Jefferson, you kind of mentioned expecting solid loan growth in your answer to the question about the efficiency ratio and operating leverage. So you were right at 5% this year, excluding the Florida deal. You know does that kind of translate to more of kind of more of a 5% plus or 5%-7% number, do you think, in 2026? Or would you anchor expectations closer to that 5% mid-single digit type of number?
Gary, this is Rich. I'll take that one. For Q1, we kind of expect a similar result as to Q4, probably. Because of seasonality, there'll be a little less production, but there'll also be less payoff headwinds. So we figure that's about the same, and then I covered a lot of areas in terms of momentum going into 2026. I think it's still too early to call, but we feel very positive, very optimistic because of all the momentum we have rolling into 2026.
All right. Got it. Thank you.
This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.
Great. Once again, thank you all for joining the call. I appreciate the comments, the conversation. Thought they were great today. Look forward to any follow-up you might have. Just reach out directly. We look forward to talking again soon. Have a great day.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.