First munity (FCCO) - 2020 Q4 - Annual Report

Financial Performance - Net income for the twelve months ended December 31, 2020, was $10.1 million, a decrease of $872 thousand from $11.0 million in 2019, with diluted earnings per share of $1.35 compared to $1.45 in 2019[326]. - Net interest income increased by $3.2 million, or 8.6%, to $40.0 million for the twelve months ended December 31, 2020, from $36.8 million in 2019[329]. - Non-interest income increased by $2.0 million to $13.7 million in 2020, driven by increases in mortgage banking income and investment advisory fees[326]. - Net income for 2020 was $10,099,000, a decrease from $10,971,000 in 2019, reflecting a decline of 7.9%[449]. - Comprehensive income for 2020 was $8,797,000, compared to $4,824,000 in 2019, showing a significant increase of 82.5%[449]. Asset and Liability Management - Total assets of the company increased to $1,395.4 million as of December 31, 2020, compared to $1,170.3 million in 2019, reflecting a growth of approximately 19.3%[442]. - The company reported a total asset increase to $1,296,081 thousand, up from $1,116,217 thousand in the previous year[336]. - The company’s total liabilities increased to $1,259.0 million as of December 31, 2020, compared to $1,050.1 million in 2019, reflecting a growth of about 19.9%[442]. - The company’s capital ratios exceeded the well-capitalized minimum levels required by regulatory statute as of December 31, 2020[304]. - The leverage ratio as of December 31, 2020, was 8.84%, down from 9.97% in 2019[305]. Loan Performance - Loans on which payments have been deferred declined to $16.1 million at December 31, 2020, from $27.3 million at September 30, 2020, with a peak of $206.9 million during Q2 2020[299]. - The non-performing asset ratio was 0.50% of total assets, with non-performing assets totaling $7.0 million as of December 31, 2020[301]. - The allowance for loan losses increased to $10.4 million at the end of 2020, up from $6.6 million at the end of 2019, representing a 57.5% increase[359]. - The provision for loan losses was $3.7 million in 2020, significantly higher than $139 thousand in 2019, reflecting economic uncertainties due to the COVID-19 pandemic[351]. - Non-performing loans as a percentage of total loans increased to 0.50% in 2020 from 0.31% in 2019[359]. Deposits and Liquidity - Deposits increased by $201.2 million, or 20.4%, to $1.2 billion at December 31, 2020, driven by organic growth and customer proceeds from PPP loans[378]. - The loan to deposit ratio declined to 74.8% at December 31, 2020, compared to 75.7% at December 31, 2019, due to deposit growth exceeding loan growth[332]. - The company has ample liquidity to manage through the COVID-19 pandemic, supported by low-cost deposits and borrowing capabilities[306]. - The company’s non-interest bearing deposits increased to $385.5 million in 2020 from $289.8 million in 2019, a rise of approximately 33.1%[442]. - The company’s retained earnings increased to $26.5 million as of December 31, 2020, compared to $19.9 million in 2019, marking a growth of approximately 33.0%[442]. Investment and Securities - An $11.1 million increase in pretax unrealized gains on available-for-sale investments was noted, rising to $14.3 million at December 31, 2020, from $3.2 million at December 31, 2019[321]. - Investment securities increased to $361.9 million at December 31, 2020, up from $288.8 million in 2019[376]. - The estimated weighted average life of the investment portfolio was approximately 5.3 years with a weighted average tax equivalent yield of approximately 2.16% as of December 31, 2020[391]. - The company held no debt securities rated below investment grade as of December 31, 2020[392]. - The company’s capital ratios were in excess of all regulatory requirements as of September 30, 2020[463]. Operational Efficiency - Non-interest expense rose by $2.9 million to $37.5 million in 2020, primarily due to increased salaries and employee benefits[326]. - The effective tax rate was 19.82% in 2020, down from 20.67% in 2019[326]. - The company’s management assessed the effectiveness of internal controls over financial reporting as effective as of December 31, 2020[428]. - The company has implemented internal policies to manage liquidity, which may face stress due to the COVID-19 pandemic and participation in the PPP[420]. - The company performed qualitative goodwill impairment analyses throughout 2020 and determined no impairment existed as of December 31, 2020[319]. COVID-19 Impact - The company has a business continuity plan activated in response to the COVID-19 pandemic, focusing on maintaining operations and customer service[296]. - The company intends to monitor the potential impacts of future credit losses related to the COVID-19 pandemic on its capital ratios[305]. - As of December 31, 2020, loans with payment deferrals related to COVID-19 declined to $16.1 million from $175.0 million at June 30, 2020, indicating a reduction of 90.8%[357]. - The company is slightly liability sensitive over the first three months and asset sensitive on a cumulative basis over the next 12 months[346]. - The company has ample liquidity to meet customer needs, supported by low-cost deposits and borrowing capabilities[465].