First munity (US:FCCO)2025-11-07 20:06Financial Performance - Net income for Q3 2025 increased by $1.3 million to $5.2 million, or $0.67 diluted earnings per share, compared to $3.9 million, or $0.50 diluted earnings per share in Q3 2024[117] - Net interest income rose by $2.6 million, contributing significantly to the increase in net income[117] - Non-interest income increased by $899,000, indicating growth in fee-based services[117] - Provision for credit losses increased by $217,000, reflecting a cautious approach to potential loan defaults[117] - Total non-interest expense rose by $1.7 million, impacting overall profitability[117] - Income tax expense increased by $250,000, affecting net income[117] - Net interest income increased by $7.5 million to $45.7 million for the nine months ended September 30, 2025, compared to $38.2 million for the same period in 2024[145] - Non-interest income rose by $2.3 million to $12.7 million for the nine months ended September 30, 2025, compared to $10.4 million during the same period in 2024[160] - Net income for the nine months ended September 30, 2025, increased by $4.7 million to $14.4 million, or $1.85 diluted earnings per share, compared to $9.7 million, or $1.26 diluted earnings per share, for the same period in 2024[143] Interest Income and Loans - Average loans rose by $80.7 million, or 6.7%, to $1.3 billion for the three months ended September 30, 2025, from $1.2 billion in the same period in 2024[121] - Net interest income increased by $2.6 million, or 19.3%, to $16.0 million for the three months ended September 30, 2025, compared to $13.4 million for the same period in 2024[120] - The net interest margin improved by 0.31% to 3.26% during the three months ended September 30, 2025, compared to 2.95% during the same period in 2024[120] - The yield on loans increased by 0.11% to 5.84% during the three months ended September 30, 2025, from 5.73% during the same period in 2024[121] - Average loans increased by $85.2 million, or 7.2%, to $1.3 billion for the nine months ended September 30, 2025, compared to $1.2 billion for the same period in 2024[149] - The yield on loans increased to 5.78% during the nine months ended September 30, 2025, up from 5.59% during the same period in 2024[149] Non-Interest Income - Non-interest income increased by $899,000 to $4.5 million for the three months ended September 30, 2025, from $3.6 million in the same period in 2024[133] - Mortgage banking income increased by $359,000 to $934,000 during the three months ended September 30, 2025, with total production in the mortgage line of business reaching $51.6 million[134] - Investment advisory fees rose by $267,000 to $1.9 million during the three months ended September 30, 2025, with total assets under management increasing to $1.1 billion[135] - Mortgage banking income increased by $913,000 to $2.6 million during the nine months ended September 30, 2025, compared to $1.7 million during the same period in 2024[162] - Investment advisory fees and non-deposit commissions rose by $958,000 to $5.4 million during the nine months ended September 30, 2025, from $4.5 million in the same period in 2024[163] Expenses - Total non-interest expense increased by $3.9 million to $13.7 million for the three months ended September 30, 2025, compared to $12.0 million in the same period in 2024[138] - Salaries and employee benefits expense increased by $637,000 to $8.1 million during the three months ended September 30, 2025, driven by normal salary adjustments and higher commissions[138] - Non-interest expense increased by $3.9 million to $39.5 million during the nine months ended September 30, 2025, compared to $35.6 million during the same period in 2024[167] - Salaries and employee benefits expense increased by $2.0 million to $23.8 million during the nine months ended September 30, 2025, from $21.8 million in the same period in 2024[167] Tax and Regulatory Considerations - The effective tax rate decreased to 21.19% during the three months ended September 30, 2025, compared to 22.89% during the same period in 2024[123] - The effective tax rate decreased to 21.2% for the three months ended September 30, 2025, from 22.9% in the same period in 2024, due to a non-recurring adjustment[141] - The effective tax rate was 22.10% for the nine months ended September 30, 2025, compared to 21.42% for the same period in 2024[171] Mergers and Acquisitions - A merger agreement with Signature Bank was entered into on July 13, 2025, with each share of Signature Bank common stock converting into 0.6410 shares of the company's common stock[111][112] - The company incurred merger expenses of $575,000 during the three months ended September 30, 2025, primarily for legal and professional fees related to the merger with Signature Bank[138] Asset and Deposit Growth - The company had $1.6 billion in pure deposits plus customer cash management repurchase agreements as of September 30, 2025, up from $1.4 billion a year earlier[125] - Total deposits increased by $95.3 million, or 5.7%, to $1.8 billion at September 30, 2025, compared to $1.7 billion at December 31, 2024[198] - Pure deposits, defined as total deposits less certificates of deposits, increased by $86.5 million, or 6.3%, to $1.46 billion at September 30, 2025[198] - Assets increased by $108.6 million, or 5.5%, to $2.1 billion at September 30, 2025, driven by increases in interest-bearing bank balances and loans held for investment[182] Capital and Liquidity - The Bank's Common Equity Tier 1 capital ratio is 13.10%, significantly above the minimum requirement of 4.5%[225] - The Bank's total capital ratio stands at 14.15% as of September 30, 2025, exceeding the minimum requirement of 8.0%[231] - The Bank maintains a leverage ratio of 8.55% as of September 30, 2025, exceeding the minimum requirement of 4.0%[231] - The Bank's liquidity management strategy includes access to federal funds purchased lines totaling $102.5 million, with no utilization as of September 30, 2025[221] Dividend Policy - The Board of Directors approved a cash dividend of $0.16 per common share for Q3 2025, payable on November 18, 2025, to shareholders of record as of November 4, 2025[232] - The ability to declare and pay dividends is subject to federal and state regulatory considerations, including guidelines from the Federal Reserve[232] - Regulatory policies may restrict the ability to pay dividends if a subsidiary bank becomes undercapitalized[232] - The company operates as a separate legal entity from the Bank and relies on the Bank's ability to pay dividends, which is also subject to regulatory restrictions[233]