Financial Performance - Net income for the second quarter of 2023 was $2.7 million, a decrease of $5.4 million or 67.1% from $8.1 million in the second quarter of 2022[99]. - Earnings per common share were $0.19 for the second quarter of 2023, down from $0.70 in the same period of 2022[99]. - Net income for the six months ended June 30, 2023 was $6.1 million, a decrease of 60.9% from $15.7 million for the same period in 2022[153]. - Earnings per common share for the six months ended June 30, 2023 was $0.46, a decrease of 66.2% from $1.36 for the same period in 2022[153]. - Noninterest expense increased due to higher regulatory assessments, legal fees, and software expenses, impacting overall profitability[152]. Asset and Loan Growth - Total assets increased by $84.7 million to $3.2 billion, or 2.7%, as of June 30, 2023, compared to December 31, 2022[99]. - Total loans at June 30, 2023, were $2.6 billion, an increase of $71.6 million, or 2.8%, compared to December 31, 2022[99]. - Net loans increased by $63.2 million, or 2.5%, to $2.6 billion as of June 30, 2023, compared to December 31, 2022[105]. - Loans related to Texas markets increased by $5.6 million, or 1.7%, to $339.4 million at June 30, 2023[105]. - Loans related to new Mideast markets in Kentucky and West Virginia increased by $55.1 million, or 26.1%, to $266.1 million at June 30, 2023[105]. Credit Quality and Allowance for Losses - The allowance for credit losses was 1.23% of total loans at June 30, 2023, compared to 0.93% at December 31, 2022[99]. - The allowance for credit losses totaled $31.9 million at June 30, 2023, compared to $23.5 million at December 31, 2022[109]. - Nonaccrual loans increased by $10.3 million to $23.9 million at June 30, 2023, compared to $13.6 million at December 31, 2022[103]. - Non-performing assets totaled $25.7 million, or 0.79% of total assets, as of June 30, 2023, up from $14.8 million, or 0.47%, at December 31, 2022, representing a 73.5% increase[118]. - The company believes the allowance for credit losses is adequate to cover current expected losses in the loan portfolio given the current economic conditions[179]. Deposits and Funding - Total deposits increased by $43.6 million, or 1.6%, to $2.8 billion from December 31, 2022, to June 30, 2023[135]. - Noninterest-bearing demand deposits decreased by $58.2 million, or 11.1%, to $466.2 million at June 30, 2023[135]. - Time deposits increased by $97.1 million, or 18.2%, to $630.5 million at June 30, 2023, primarily due to increases in consumer and public fund time deposits[135]. - Total public funds deposits were $1.1 billion at June 30, 2023, down from $1.11 billion at December 31, 2022, with public funds as a percentage of total deposits decreasing to 39.8%[145]. - The total amount of uninsured deposits was estimated at $285.9 million at June 30, 2023, excluding collateralized public funds deposits[138]. Interest Income and Expense - Net interest income for the second quarter of 2023 was $20.9 million, down from $26.3 million for the same period in 2022[99]. - Interest income on loans increased by 35.2% to $78.4 million for the six months ended June 30, 2023[163]. - Interest expense for the six months ended June 30, 2023 increased by 256.9% to $41.9 million from $11.7 million in the prior year[166]. - Average yield of interest-earning assets increased by 114 basis points to 5.63% for the six months ended June 30, 2023 compared to 4.49% for the same period in 2022[161]. - The net interest margin for the three months ended June 30, 2023, was 2.74%, down from 3.72% in the same period of 2022[171]. Capital and Ratios - Total shareholders' equity increased to $238.9 million at June 30, 2023, from $235.0 million at December 31, 2022, primarily due to a $9.3 million increase in surplus[150]. - The Tier 1 Leverage Ratio was 9.29% as of June 30, 2023, exceeding the minimum requirement of 5.00%[199]. - The total risk-based capital ratio was 11.18% as of June 30, 2023, above the minimum requirement of 10.00%[199]. Interest Rate Risk Management - The management asset liability committee regularly reviews the asset-liability policies and interest rate risk position to mitigate exposure to interest rate fluctuations[202]. - Interest-sensitive assets and liabilities are monitored periodically to manage the impact of interest rate changes on net interest income[205]. - The company employs various investment strategies, including internal modeling, to manage interest rate risk effectively[202]. - The cumulative gap as a percent of earning assets was -36.2% for the three-month period[206]. - The interest sensitivity analysis indicates a liability-sensitive position with a negative cumulative gap of $(1,185,315) thousand on a one-year basis, representing -37.8% of earning assets[206].
FIRST GTY BANCSH(FGBIP) - 2023 Q2 - Quarterly Report