First munity Bancshares(US:FCBC)2022-11-07 16:00Financial Performance - Net income for the third quarter of 2022 was $13.35 million, an increase of $743 thousand or 5.89% compared to $12.61 million in the same quarter of 2021[156] - Basic earnings per common share for the third quarter were $0.82, a 12.33% increase from $0.73 in the same quarter of 2021[157] - Net income for the three months ended September 30, 2022, was $13,351 thousand, compared to $12,608 thousand for the same period in 2021, marking a growth of 5.9%[14] - For the nine months ended September 30, 2022, net income was $34,079,000, down from $40,613,000 in the same period of 2021, indicating a decline of 16.1%[15] Interest Income and Margin - Net interest margin for the third quarter was 4.01%, a 45 basis point increase from 3.56% reported in the third quarter of 2021[156] - Net interest income for the three months ended September 30, 2022, was $29,458 thousand, an increase from $25,252 thousand in the same period of 2021, reflecting a growth of 8.7%[162] - The average yield on total earning assets for the three months ended September 30, 2022, was 4.07%, compared to 3.65% for the same period in 2021, indicating an increase of 11.5%[162] - The net interest margin, FTE, for the three months ended September 30, 2022, was 4.01%, up from 3.56% in the same period of 2021, reflecting an increase of 12.6%[162] Loan Portfolio and Growth - The Company's loan portfolio increased by $197.16 million, reflecting an annualized growth rate of 12.17% during the first nine months of 2022[156] - Average loans increased by $184.95 million, or 8.60%, due to strong demand across all categories[168] - Total loans as of September 30, 2022, increased by $197.16 million, or 9.10%, compared to December 31, 2021, with the largest increase of $158.29 million in the commercial loan segment[195] - Total loans held for investment increased to $2,362,733 thousand, up from $2,165,569 thousand, representing an increase of 9.1%[73] Credit Losses and Provisions - The provision for credit losses for the third quarter was $685 thousand, an increase of $2.08 million compared to a recovery of $1.39 million in the same quarter of 2021[158] - The allowance for credit losses (ACL) for loans was $29.39 million, representing 1.24% of total loans, an increase of $1.53 million from $27.86 million at December 31, 2021[211] - The provision for credit losses was $3,156,000, compared to a recovery of $7,625,000 in the prior year, indicating a significant shift in credit quality assessment[25] - The allowance for credit losses related to TDRs increased to $29,388,000 as of September 30, 2022, from $29,749,000 at the end of the previous period[96] Deposits and Funding - Total deposits sold to Benchmark as part of the Emporia Branch Sale totaled $61.05 million[156] - Total deposits decreased slightly from $2,729,391 thousand as of December 31, 2021, to $2,710,221 thousand as of September 30, 2022, a decline of about 0.7%[10] - Total deposits decreased by $19.17 million, or 0.70%, to $2.73 billion as of September 30, 2022, primarily due to the divestment of $61.05 million in deposits from the Emporia Branch Sale[213] - Noninterest-bearing demand deposits increased to $878,423 thousand from $842,783 thousand year-over-year[98] Noninterest Income and Expenses - Noninterest income increased by $1.23 million, or 14.11%, driven by a $1.66 million gain from the sale of the Emporia Branch[176] - Noninterest expense increased by $2.31 million, or 12.26%, in Q3 2022 compared to Q3 2021, primarily due to a $1.44 million increase in salaries and employee benefits, which rose by 13.48%[179] - Total noninterest expense rose to $21,145 thousand for the three months ended September 30, 2022, up from $18,836 thousand in the same period of 2021, indicating an increase of 17.3%[14] - Service fees increased by $1.32 million, or 30.22%, primarily due to higher core processing expenses during the first nine months of 2022[180] Asset Quality and Performance - Nonperforming assets decreased by $5.91 million, or 25.45%, from December 31, 2021, primarily due to a $5.47 million decrease in nonaccrual loans[200] - Nonaccrual loans as of September 30, 2022, totaled $15.30 million, down from $20.77 million as of December 31, 2021, representing a decrease of 26.31%[199] - Delinquent loans totaled $27.41 million as of September 30, 2022, a decrease of $5.70 million, or 17.21%, compared to $33.10 million as of December 31, 2021[201] - The allowance for credit losses to nonperforming loans ratio was 175.29% as of September 30, 2022, compared to 125.36% as of December 31, 2021[199] Capital and Equity - Stockholders' equity decreased slightly to $420,476 thousand as of September 30, 2022, from $429,261 thousand in the prior year, a decline of 2.0%[162] - Total stockholders' equity decreased by $15.52 million, or 3.63%, to $412.26 million as of September 30, 2022, due to net income of $34.08 million offset by other comprehensive loss and stock repurchases[219] - The common equity Tier 1 ratio was 13.09% as of September 30, 2022, meeting all capital adequacy requirements under Basel III[223] - The company repurchased 235,400 common shares for $7.38 million during the third quarter of 2022[156] Market and Economic Conditions - The yield on earning assets increased by 42 basis points, or 11.51%, due to a 300 basis points increase in the fed funds rate throughout 2022[168] - The decline in the market value of debt securities available for sale from December 31, 2021, is primarily attributable to the increasing rate environment throughout 2022[66] - The effective tax rate increased to 23.54% in Q3 2022 from 23.23% in Q3 2021, with income tax expense rising by $295 thousand, or 7.73%[182] - The company has developed a LIBOR transition plan in anticipation of the potential discontinuance of LIBOR in 2023[233]