Financial Performance - Net income for the three months ended March 31, 2025, increased by $1.4 million to $4.0 million, or $0.51 diluted earnings per share, compared to $2.6 million, or $0.34 diluted earnings per share, for the same period in 2024[105]. - Total non-interest income increased by $798,000, primarily due to a $334,000 rise in mortgage banking income and a $448,000 increase in investment advisory fees and non-deposit commissions[105]. - Non-interest income increased by $798,000 to $4.0 million for the three months ended March 31, 2025, from $3.2 million during the same period in 2024[118]. - Total non-interest expense increased by $949,000, mainly due to a $556,000 rise in salaries and employee benefits and a $376,000 increase in other non-interest expenses[105]. - Non-interest expense increased by $949,000 to $12.8 million for the three months ended March 31, 2025, compared to $11.8 million for the same period in 2024[123]. Interest Income and Assets - Net interest income rose by $2.3 million, driven by a $126.0 million increase in average earning assets and a 0.34% increase in net interest margin[105]. - Net interest income increased by $2.3 million, or 19.2%, to $14.4 million for the three months ended March 31, 2025, compared to $12.1 million for the same period in 2024[107]. - Average earning assets were $1.9 billion for the three months ended March 31, 2025, compared to $1.7 billion in the same period of 2024[107]. - The yield on loans increased by 27 basis points to 5.71% during the three months ended March 31, 2025, from 5.44% during the same period in 2024[108]. - The net interest margin improved by 34 basis points to 3.12% during the three months ended March 31, 2025, compared to 2.78% during the same period in 2024[107]. Credit Losses and Provisions - Provision for credit losses for the three months ended March 31, 2025, was $437,000, reflecting a $473,000 increase in the allowance for credit losses on loans[105]. - The company experienced a $308,000 increase in provision for credit losses compared to the previous year[105]. - The allowance for credit losses on loans increased due to a $31.4 million rise in loans held-for-sale during the three months ended March 31, 2025[105]. - The total allowance for credit losses increased to $13.6 million as of March 31, 2025, from $13.1 million at December 31, 2024[130]. - The company incurred a provision for credit losses of $462,000 for loans during the three months ended March 31, 2025, compared to $214,000 for the same period in 2024[129]. Tax and Regulatory Compliance - The effective tax rate for the three months ended March 31, 2025, was 22.85%, compared to 21.94% for the same period in 2024[105]. - The bank is required to maintain a Common Equity Tier 1 capital ratio of 7.0%, a Tier 1 capital ratio of 8.5%, and a total capital ratio of 10.5% under Basel III regulations[183]. - Common Equity Tier 1 capital ratio stands at 12.90%, significantly above the required 4.5%[185]. - Total capital ratio is reported at 13.99%, exceeding the minimum requirement of 8%[189]. - The leverage ratio is 8.45%, well above the required 4%[189]. Shareholder Equity and Dividends - Total shareholders' equity increased by $5.5 million, or 3.8%, to $150.0 million as of March 31, 2025, from $144.5 million at December 31, 2024[165]. - The increase in shareholders' equity was attributed to a $2.9 million rise in retained earnings from $4.0 million net income, less $1.1 million in dividends, and a $2.5 million improvement in accumulated other comprehensive loss[165]. - A cash dividend of $0.15 per common share has been approved for Q1 2025, payable on May 20, 2025[191]. Loan and Deposit Growth - Average loans increased by $90.0 million, or 7.8%, to $1.2 billion for the three months ended March 31, 2025, from $1.1 billion during the same period in 2024[108]. - Total assets increased by $81.4 million, or 4.2%, to $2.0 billion at March 31, 2025, primarily due to increases in interest-bearing bank balances and loans held-for-investment[139]. - Total deposits increased by $49.8 million, or 3.0%, to $1.7 billion at March 31, 2025[157]. - Pure deposits increased by $38.6 million, or 2.8%, to $1.41 billion at March 31, 2025[157]. - Demand deposit accounts accounted for 27.2% of total deposits, with an amount of $468.9 million as of March 31, 2025[160]. Market and Economic Conditions - The target range of federal funds was reduced to 4.25% - 4.50% at March 31, 2025, down from 5.25% - 5.50% at March 31, 2024[100]. - The company is liability sensitive, with projected declines in net interest income of -16.18% and -13.27% for +400 basis points change in interest rates at March 31, 2025, and December 31, 2024, respectively[172]. - The bank's capital ratios could be adversely impacted by future credit losses related to an economic recession[189].
First munity (FCCO) - 2025 Q1 - Quarterly Report