First munity (FCCO) - 2019 Q3 - Quarterly Report

Financial Performance - Net income for the nine months ended September 30, 2019, was $8.3 million, or $1.08 diluted earnings per share, compared to $8.5 million, or $1.11 diluted earnings per share for the same period in 2018[166]. - Net income for the three months ended September 30, 2019 was $2.9 million, compared to $2.8 million for the same period in 2018[185]. - Non-interest income for the first nine months of 2019 was $8.8 million, an increase from $8.4 million in the same period of 2018[178]. - Mortgage loan production for the first nine months of 2019 was $100.6 million, up from $94.0 million in the same period of 2018[178]. - Total assets as of September 30, 2019, were $1,104,342, an increase from $1,071,772 in the previous year[222]. Interest Income and Margin - Net interest income increased by $1.1 million for the nine months ended September 30, 2019, primarily due to a higher level of average earning assets and a four basis point increase in net interest margin[166]. - Net interest income for the nine months ended September 30, 2019, was $27.5 million, an increase of $1.1 million from $26.4 million in the same period of 2018, driven by a $30.8 million increase in average earning assets and a net interest margin increase to 3.65% from 3.61%[167]. - Net interest income for the three months ended September 30, 2019 was $9.3 million, an increase from $8.9 million in the same period of 2018[187]. - The average interest yield on loans for the nine months ended September 30, 2019, was 4.85%, compared to 4.73% for the same period in 2018[222]. - The net interest spread for the three months ended September 30, 2019, was 3.38%, consistent with the previous year[225]. Expenses - Non-interest expense increased by $1.8 million for the nine months ended September 30, 2019, compared to the same period in 2018[166]. - Total non-interest expense rose to $25.8 million in the first nine months of 2019, up from $24.0 million in the same period of 2018[181]. - Total non-interest expense for the third quarter of 2019 was $8.8 million, up from $8.1 million in the third quarter of 2018[191]. - Salary and benefit expense increased to $5.5 million in the third quarter of 2019, compared to $5.1 million in the same period of 2018[191]. Loan and Asset Quality - The allowance for loan losses was $6.6 million, or 0.89% of total loans, at September 30, 2019, compared to $6.3 million, or 0.87% of total loans, at December 31, 2018[169]. - Non-performing assets decreased to $3.7 million, or 0.33% of total assets, at September 30, 2019, down from $4.0 million, or 0.37% of total assets, at December 31, 2018[173]. - The provision for loan losses was $139 thousand for the nine months ended September 30, 2019, compared to $252 thousand for the same period in 2018[169]. - The total non-performing assets included 32 loans totaling $2.3 million, with the largest non-accrual loan amounting to $701 thousand secured by developed lots for residential use[173]. - The average loans outstanding for the nine months ended September 30, 2019, were $731.0 million, compared to $677.4 million for the same period in 2018[175]. Capital and Liquidity - The bank's liquidity, represented by interest-bearing bank balances and investment securities, was 24.6% of total assets as of September 30, 2019[204]. - The bank's risk-based capital ratios were 10.1% (leverage ratio), 13.4% (Tier 1), and 14.2% (total capital) as of September 30, 2019, compared to 10.0%, 13.2%, and 14.0% respectively at December 31, 2018[216]. - The Common Equity Tier 1 ratio was 13.4% at September 30, 2019, up from 13.2% at the end of 2018[216]. - Commitments to extend credit totaled $127 million, including $40 million in unused home equity lines of credit[205]. Regulatory and Accounting Policies - The company maintains an allowance for loan losses to absorb probable losses on existing loans, which is a critical accounting policy[152]. - The company evaluates securities for other-than-temporary impairment at least quarterly, considering various factors including the financial condition of the issuer[162]. - Goodwill is evaluated for impairment annually, with qualitative factors assessed to determine if the carrying value is less than fair value[157]. - The bank holding company's ability to declare and pay dividends is subject to federal and state regulatory considerations, including the Federal Reserve's guidelines, which state that dividends should only be paid out of current earnings[218]. - The South Carolina-chartered bank can pay cash dividends of up to 100% of net income in any calendar year without prior approval from the South Carolina Board of Financial Institutions[219].