First National (US:FXNC)2023-05-14 16:00Financial Performance - Net income for Q1 2023 increased by $120 thousand, or 3%, to $3.8 million, with earnings per diluted share at $0.61 compared to $0.60 in Q1 2022[142]. - Net income for Q1 2023 increased by $120 thousand, or 3%, to $3.8 million, or $0.61 per diluted share, compared to $3.7 million, or $0.60 per diluted share in Q1 2022[156]. - The return on average assets was 1.15% and return on average equity was 14.2% for Q1 2023, compared to 1.06% and 13.4% in Q1 2022[142]. Income and Expenses - Net interest income rose by $628 thousand, or 6%, driven by a $2.5 million, or 23%, increase in total interest income, despite a $1.9 million, or 394%, increase in total interest expense[143][144]. - Net interest income rose by $628 thousand, or 6%, driven by a $2.5 million increase in total interest income, despite a $1.9 million increase in total interest expense[157]. - Total noninterest income increased by $67 thousand, or 2%, primarily from service charges on deposits and ATM fees[147]. - Total noninterest income increased by $67 thousand, or 3%, primarily due to higher service charges on deposits and ATM fees[169]. - Total noninterest expense increased by $556 thousand, or 6%, mainly due to higher salaries and employee benefits, marketing, and other operating expenses[148]. - Total noninterest expense increased by $556 thousand, or 6%, mainly from higher salaries and employee benefits, marketing, and ATM expenses[170]. - The efficiency ratio for Q1 2023 was 65.49%, compared to 64.38% in Q1 2022, indicating a slight decline in operational efficiency[150]. Credit Quality - The allowance for credit losses on loans totaled $8.7 million, or 0.95% of total loans, as of March 31, 2023, up from 0.81% on December 31, 2022[146]. - There was no provision for credit losses recorded in Q1 2023 or Q1 2022, indicating stable credit quality[146]. - The company recorded no provision for credit losses for both Q1 2023 and Q1 2022[167]. - Non-performing assets totaled $1.8 million, representing approximately 0.13% of total assets, down from 0.21% at the end of 2022[182]. - Other potential problem loans decreased to $1.7 million from $2.3 million at December 31, 2022, indicating improved asset quality management[183]. Assets and Liabilities - Total assets increased to $1.4 billion, up $2.9 million from December 31, 2022, primarily due to a $13.7 million increase in interest-bearing deposits[173]. - Total liabilities decreased slightly by $548 thousand, with total deposits increasing by $193 thousand, while noninterest-bearing deposits decreased by $17.3 million[174]. - Total shareholders' equity rose by $3.5 million, driven by a $955 thousand increase in retained earnings despite cash dividend payments of $0.15 per share[175]. - Loans totaled $918.0 million, a decrease of $2.6 million from December 31, 2022, while average loans increased by $1.0 million from the previous quarter[176]. - Securities portfolio decreased to $315.5 million, down $2.5 million or 0.8% from December 31, 2022, with gross unrealized losses in the available for sale portfolio totaling $21.3 million[186]. - Deposits totaled $1.2 billion, an increase of $193 thousand from December 31, 2022, with average deposits decreasing by $42.7 million or 3% compared to the previous quarter[188]. Liquidity and Capital - On-balance sheet liquidity totaled $142.1 million, an increase from $129.4 million at December 31, 2022[192]. - The Bank had no borrowings from the Bank Term Funding Program during the first quarter of 2023, despite having access to liquidity sources totaling $471.2 million[190]. - As of March 31, 2023, the total available off-balance sheet liquidity for the Bank was $329.094 million, an increase from $287.762 million at December 31, 2022[193]. - The Bank's total available secured lines of credit amounted to $278.094 million as of March 31, 2023, compared to $236.762 million at the end of 2022[193]. - The Bank's common equity Tier 1 capital ratio was 13.94% as of March 31, 2023, exceeding the regulatory minimum requirement of 7.0%[198]. - The capital conservation buffer ratio stood at 6.88% as of March 31, 2023, indicating a strong capital position above the required buffer[198]. - The Bank's Tier 1 capital to risk-weighted assets ratio was 13.94% as of March 31, 2023, indicating a solid capital base[198]. Commitments and Stock Activity - Commitments to extend credit were $170.2 million at March 31, 2023, up from $158.3 million at December 31, 2022[204]. - The Bank had $17.6 million in outstanding standby letters of credit as of March 31, 2023, slightly down from $18.0 million at December 31, 2022[207]. - The Company authorized a stock repurchase plan of up to $5.0 million, with 1,557 shares repurchased at an average price of $16.06 per share during Q1 2023[200]. - The Bank did not pledge securities to, or borrow from, the BTFP facility during the first quarter of 2023, despite having $91.2 million in eligible securities[194]. - The Company recorded an adjustment for unfunded commitments of $153 thousand for the adoption of ASC Topic 326 as of January 1, 2023[206].