First National (US:FXNC)2023-11-12 16:00Financial Performance - Net income for Q3 2023 decreased by $1.3 million, or 30%, to $3.1 million, with diluted earnings per share at $0.50 compared to $0.71 in Q3 2022[143] - For the nine months ended September 30, 2023, net income decreased by $1.5 million, or 13%, to $10.5 million, with diluted earnings per share at $1.67 compared to $1.92 in the same period of 2022[148] - Net income for the three months ended September 30, 2023, decreased by $1.3 million, or 30%, to $3.1 million, with a return on average assets of 0.91%[161] Interest Income and Expenses - Net interest income fell by $1.0 million, or 9%, and total noninterest expenses increased by $701 thousand, or 8%[144] - Net interest income for the three months ended September 30, 2023, decreased by $1.0 million, or 9%, to $10.7 million compared to $11.7 million for the same period in 2022[161] - For the nine months ended September 30, 2023, net interest income decreased by $961 thousand, attributed to a $6.8 million increase in total interest income offset by a $7.8 million increase in total interest expense[173] Asset Quality and Credit Losses - The provision for credit losses decreased by $100 thousand in Q3 2023, reflecting improved asset quality[144] - The provision for credit losses decreased by $100 thousand for the three months ended September 30, 2023, contributing to the offset of net income decline[162] - The provision for credit losses for the nine months ended September 30, 2023, totaled $200 thousand, down from $600 thousand in the same period of the prior year, indicating a positive trend in credit risk management[183] Operational Efficiency - The efficiency ratio for Q3 2023 was 70.67%, compared to 61.09% in Q3 2022, indicating a decline in operational efficiency[153] Interest Rates and Margins - The net interest margin decreased by 23 basis points, with the Federal funds target rate averaging 5.43% in Q3 2023, up from 2.35% a year ago[145] - The net interest margin for the third quarter of 2023 was impacted by a 23-basis point decrease, with the Federal funds target rate averaging 5.43%, compared to 2.35% for the same period last year[166] - The yield on earning assets increased by 68 basis points, partially offsetting the higher cost of funds which rose by 94 basis points[145] Noninterest Income and Expenses - Noninterest income for the third quarter of 2023 increased by $26 thousand, or 1%, to $3.1 million, driven by a 7% increase in ATM and check card fees and a 10% increase in wealth management fees[184] - Noninterest expenses increased by $1.5 million, or 6%, to $28.1 million for the nine-month period ended September 30, 2023, compared to the same period one year ago[189] Loans and Deposits - Total loans for the three months ended September 30, 2023, amounted to $943.452 million, with a taxable yield of 5.31%, up from $890.696 million and a yield of 4.79% in the same period of 2022[178] - Loans totaled $952.5 million at September 30, 2023, representing a $32.0 million, or 5% annualized increase from December 31, 2022[196] - Deposits totaled $1.2 billion on September 30, 2023, which was a $6.2 million decrease from December 31, 2022[208] Assets and Liabilities - The total assets as of September 30, 2023, were $1.355 billion, a decrease from $1.393 billion as of September 30, 2022[178] - Total liabilities decreased by $6.8 million during the nine-month period ended September 30, 2023, primarily from a $6.2 million decrease in total deposits[194] Capital and Regulatory Compliance - The Bank's total capital to risk-weighted assets ratio was 14.80% as of September 30, 2023, exceeding the regulatory minimum requirements[216] - The Bank met all capital adequacy requirements, including a capital conservation buffer ratio of 6.80% as of September 30, 2023[216] - The Bank qualified as "well capitalized" under prompt corrective action requirements as of September 30, 2023[217] Miscellaneous - The effective tax rate for the first nine months of 2023 was 19.3%, compared with 19.0% for the same period in 2022[192] - The estimated amount of uninsured customer deposits increased to $346.9 million as of September 30, 2023, from $261.7 million on December 31, 2022[210] - The Company authorized a stock repurchase plan of up to $5.0 million, repurchasing 37,532 shares at an average price of $15.14 per share during the first nine months of 2023[218]