First munity Bancshares(FCBC) - 2025 Q3 - Quarterly Report

Financial Performance - Net income for Q3 2025 was $12.27 million, a decrease of $768 thousand, or 5.89%, compared to Q3 2024[109] - Net interest income for the three months ended September 30, 2025, was $31,410 thousand, compared to $31,703 thousand for the same period in 2024, reflecting a decrease of 0.92%[114] - For the nine months ended September 30, 2025, net interest income was $92,593 thousand, down from $95,476 thousand in the same period of 2024[116] - Net interest income decreased by $2.88 million, or 3.03%, for the nine months ending September 30, 2025, compared to the same period in 2024[123] - Noninterest income increased by approximately $437 thousand, or 4.18%, driven by a 23.46% increase in service charges on deposits[109] - Noninterest income increased by $437 thousand, or 4.18%, in the third quarter of 2025, driven by a $300 thousand, or 28.01%, increase in wealth management fees[130] Assets and Liabilities - Consolidated assets totaled $3.19 billion as of September 30, 2025[109] - The total assets as of September 30, 2025, were $3,202,993 thousand, slightly down from $3,228,976 thousand in 2024[116] - Total liabilities decreased by $55.94 million, or 2.05%, primarily driven by a decrease in deposits of $60.65 million, or 2.25%[139] - Total deposits decreased by $60.65 million, or 2.25%, as of September 30, 2025, with the largest decreases in time deposits by $34.08 million, or 14.17%[158] - Total stockholders' equity decreased by $15.67 million, or 2.98%, to $510.73 million as of September 30, 2025, primarily due to a special cash dividend of $2.07 per share totaling approximately $37.93 million[163] Credit Quality - Total non-performing assets as of September 30, 2025, were $16.90 million, down from $20.54 million as of December 31, 2024[109] - The allowance for credit losses to total loans was 1.36% on September 30, 2025, compared to 1.44% on December 31, 2024[109] - The allowance for credit losses to nonperforming loans ratio was 189.90% as of September 30, 2025, indicating strong coverage for potential losses[147] - Delinquent loans totaled $27.19 million as of September 30, 2025, a decrease of $10.36 million, or 27.59%, compared to December 31, 2024[148] - The provision for credit losses decreased by $2.48 million, or 98.57%, in the nine months ending September 30, 2025, compared to the same period in 2024[129] Mergers and Acquisitions - The Company entered into a merger agreement with Hometown Bancshares, Inc., with each share of Hometown common stock converting into 11.706 shares of the Company's common stock[102][103] - The Company incurred approximately $787 thousand in transaction-related costs during the nine months ended September 30, 2025, related to the merger[105] - The Company entered into a merger agreement with Hometown Bancshares, Inc., valued at approximately $41.5 million, expected to be minimally dilutive to tangible book value per share and provide high-single digit accretion to earnings per share[164] Interest Income and Margin - Net interest margin for Q3 2025 was 4.43%, an increase of 2 basis points from Q3 2024, while net interest income after provision for loan losses increased by $1.06 million, or 3.52%[109] - Total earning assets averaged $2,813,359 thousand in Q3 2025, with a net interest margin of 4.43%, compared to $2,859,901 thousand and a margin of 4.41% in Q3 2024[114] - The net interest rate spread for Q3 2025 was 4.06%, compared to 3.97% in Q3 2024, indicating an improvement in the company's interest income generation[114] - The yield on earning assets fell by 10 basis points, or 1.94%, driven by an 18.38% decline in the average yield earned on interest-bearing deposits with banks[121] - As of September 30, 2025, net interest income on a GAAP basis was $31,297 thousand, a decrease of 0.94% from $31,594 thousand in the same period of 2024[138] Expenses - Noninterest expense increased by $2.10 million, or 8.69%, in the third quarter of 2025, primarily due to a $1.22 million, or 9.31%, increase in salaries and employee benefits[133] - Average interest-bearing liabilities decreased by $21.71 million, or 1.21%, primarily due to a decrease in time deposits of $31.42 million, or 12.82%[122] Capital and Ratios - As of September 30, 2025, the Common Equity Tier 1 ratio was 16.47%, down from 16.75% as of December 31, 2024, primarily due to a decrease in capital levels[165] - The Company’s unencumbered cash totaled $427.71 million as of September 30, 2025, with additional unused borrowing capacity from the FHLB of $313.58 million[162] - The sensitivity of net interest income to a 200 basis point increase in interest rates is projected to be $4,027 thousand, representing a 3.1% change[170] Other Information - Commitments to extend credit as of September 30, 2025, totaled $252.32 million, slightly up from $252.23 million as of December 31, 2024[167] - The information regarding market risk and interest rate sensitivity is referenced in Item 2 of the Quarterly Report on Form 10-Q[173]