First munity Bancshares(FCBC) - 2025 Q4 - Annual Report

Financial Performance - Net income for 2025 was $51.604 million, an increase of 7.46% compared to $48.794 million in 2024[150] - Basic earnings per common share rose to $2.81 in 2025, up from $2.66 in 2024, reflecting a 5.34% increase[150] - Annual net income for 2025 was $48.79 million, a decrease of $2.81 million, or 5.45%, compared to 2024[152] - Adjusted annual net income for 2025 was $51.12 million, reflecting a year-over-year decline of $1.23 million, or 2.34%[152] - Annualized return on average assets (ROA) was 1.52% for 2025, down from 1.60% in 2024; ROE was 9.64%, down from 10.03%[152] - Total comprehensive income for 2025 was $52,451,000, slightly up from $51,384,000 in 2024[221] Income and Expenses - Noninterest income increased by $3.50 million in 2025, driven primarily by a $3.39 million rise in service charges on deposits and other service fees[150] - Noninterest expense increased by $7.74 million in 2025, largely due to higher salaries and merger-related costs[150] - Total noninterest expense rose to $104,303,000 in 2025, a rise of 8.0% from $96,567,000 in 2024[219] - Total interest income for 2025 was $142,535,000, a decrease of 2.1% from $146,142,000 in 2024[219] Credit Losses and Loan Performance - The provision for credit losses decreased by $3.52 million in 2025, indicating improved credit performance and a smaller loan portfolio[150] - The allowance for credit losses (ACL) is estimated based on a national unemployment rate forecast of approximately 4.5% for 2025, up from 4.0% to 4.3% in 2024[144] - Provision for credit losses for loans decreased to $58 thousand in 2025 from $4.00 million in 2024, attributed to a loan portfolio decline of $101.33 million[162] - Non-performing loans to total loans decreased to 0.61%, a reduction of 0.22% compared to 2024[152] - The allowance for credit losses to total loans was 1.33% on December 31, 2025, compared to 1.44% on December 31, 2024[152] Asset and Liability Management - The Company managed and administered $1.79 billion in assets through its Trust Division and First Community Wealth Management as of December 31, 2025[139] - Total assets decreased by $1.57 million, or 0.05%, to $3.26 billion, mainly due to a decline in loans by $101.33 million, or 4.19%[171] - Total deposits as of December 31, 2025, decreased by $5.92 million, or 0.22%, primarily due to a decline in time deposits of $40.17 million, or 16.70%[196] - Total stockholders' equity decreased by $25.84 million, or 4.91%, primarily due to two special dividends declared in 2025, amounting to $3.07 per common share[171] Capital and Ratios - The Common Equity Tier 1 ratio was 16.10% as of December 31, 2025, down from 16.75% in 2024, while the Total risk-based capital ratio decreased to 17.35% from 18.00%[206] - The Tier 1 leverage ratio was 11.44% as of December 31, 2025, compared to 12.25% in 2024[206] - The Company continues to meet all capital adequacy requirements and is classified as well-capitalized under regulatory standards[206] Shareholder Returns - The company repurchased 50,338 common shares in 2025 for $1.85 million, compared to 257,294 shares for $8.72 million in 2024[152] - Cash dividends per common share increased to $4.31 in 2025, compared to $1.20 in 2024, marking a significant increase[219] - The company declared common dividends of $1.24 per share and special dividends of $3.07 per share in 2025[223] Loan Portfolio - Total loans held for investment decreased by $101.33 million, or 4.19%, as of December 31, 2025, compared to December 31, 2024[176] - The total loans portfolio as of December 31, 2025, was $2.31 billion, with commercial loans making up a significant portion[178] - Commercial loans accounted for 66.26% of the total loan portfolio, with significant segments including Non-farm, non-residential loans at $838.46 million[314] Nonaccrual and Delinquency - Nonaccrual loans amounted to $13.94 million as of December 31, 2025, down from $19.87 million in 2024[182] - Delinquent loans totaled $27.85 million as of December 31, 2025, a decrease of $9.70 million, or 25.83%, compared to $37.55 million as of December 31, 2024[185] - The total loans past due (30 days or more) as of December 31, 2025, were $22,825,000, compared to $31,166,000 in 2024, indicating a decline of about 26.9%[333] Credit Risk Management - The Company uses a probability of default/loss given default model to determine the allowance for credit losses, incorporating historical loss information[255] - The allowance for credit losses (ACL) is reviewed quarterly to ensure it is sufficient to absorb expected credit losses in the portfolio[258] - The Company considers qualitative adjustments to expected credit losses based on factors such as changes in lending policies, economic conditions, and the quality of the credit review system[266] Regulatory Compliance - The Company adopted ASU 2022-02 effective January 1, 2023, which requires the allowance for credit losses to incorporate an estimate of lifetime credit losses recorded upon asset origination[270] - The Company expects to early adopt ASU No. 2025-08 related to credit losses for purchased loans in 2026, with no material impact anticipated on financial statements[293]