First munity Bancshares(US:FCBC)2023-11-05 16:00Financial Performance - Net income for Q3 2023 was $14.64 million, a 9.66% increase from $13.35 million in Q3 2022, primarily driven by a significant increase in net interest income [150]. - Net income for the first nine months of 2023 increased by $2.16 million compared to the same period in 2022, primarily due to a $13.58 million increase in net interest income [152]. - Total stockholders' equity rose by $73.68 million, or 17.46%, to $495.67 million as of September 30, 2023, largely driven by the acquisition of Surrey Bancorp and net income of $36.24 million [207]. Net Interest Income - Net interest income rose by $4.01 million compared to Q3 2022, with a net interest margin of 4.51%, an increase of 50 basis points year-over-year [150]. - Net interest income for Q3 2023 increased by $4.01 million, or 13.65%, compared to Q3 2022, with a net interest margin on a FTE basis rising by 50 basis points to 4.51% [161]. - For the nine months ended September 30, 2023, net interest income increased by $13.58 million, or 16.55%, with a net interest margin on a FTE basis increasing by 67 basis points to 4.45% [164]. Loan and Deposit Growth - The loan portfolio increased by $193.28 million, or 8.05%, from December 31, 2022, while deposits increased by $67.32 million, or 2.51% [150]. - Total deposits increased by $67.32 million, or 2.51%, to $2.75 billion as of September 30, 2023, primarily due to the acquisition of Surrey Bancorp, which added $403.64 million in deposits [201]. - Average loans increased by $270.29 million, with the yield on loans rising by 61 basis points, resulting in a tax-effected increase in interest on loans of $7.09 million compared to the same quarter in 2022 [161]. Credit Quality - Non-performing loans to total loans remained stable at 0.71%, with net charge-offs of $1.46 million, or 0.22% of annualized average loans for Q3 2023 [150]. - The allowance for credit losses to total loans was 1.39% as of September 30, 2023, compared to 1.38% in the previous quarter [150]. - The total amount of nonperforming assets as of September 30, 2023, was $18.67 million, an increase of $1.27 million, or 7.29%, from December 31, 2022 [188]. Expenses and Liabilities - Total noninterest expense increased by $1.77 million, or 8.36%, in Q3 2023, driven by higher service fees and salaries due to the addition of Surrey branches [171]. - Total liabilities increased by $74.97 million, or 2.76%, as of September 30, 2023, reflecting the impact of the Surrey Bancorp acquisition [179]. - Average interest-bearing liabilities decreased by $100.39 million, or 5.25%, primarily due to a decrease in deposits [166]. Capital and Liquidity - The common equity Tier 1 ratio improved to 14.64% as of September 30, 2023, up from 13.37% at December 31, 2022, indicating a stronger capital position [208]. - The company had unencumbered cash of $113.40 million and unused borrowing capacity from the FHLB of $382.39 million as of September 30, 2023, indicating strong liquidity [206]. - The company continues to meet all capital adequacy requirements and is classified as well-capitalized under the regulatory framework for prompt corrective action [208]. Acquisitions and Mergers - The Company experienced a $3.80 million increase in the provision for credit losses, partly due to the acquisition of Surrey Bancorp [152]. - The company recorded merger expenses of $2.39 million in 2023 related to the Surrey Bancorp acquisition [172]. - Total assets increased by $148.65 million, or 4.74%, as of September 30, 2023, primarily due to the acquisition of Surrey Bancorp [179].