First National Corporation (the “Company” or “First National”)
(NASDAQ: FXNC), the bank holding company of First Bank (the
“Bank”), reported unaudited consolidated net income of $1.8
million, or $0.36 per diluted share, for the third quarter of 2020,
which resulted in a return on average assets of 0.74% and a return
on average equity of 8.52%. This compares to net income of $2.5
million, or $0.50 per diluted share, and a return on average assets
of 1.27% and a return on average equity of 13.31% for the third
quarter of 2019. Provision for loan losses of $1.5 million was
included in net income for the three-month period ending September
30, 2020, compared to no provision for loan losses for the same
period in 2019.
For the nine months ending September 30, 2020, net income
totaled $5.7 million, or $1.17 per diluted share, which resulted in
a return on average assets of 0.86% and a return on average equity
of 9.49%. This compares to net income of $6.8 million, or $1.38 per
diluted share, and a return on average assets of 1.19% and a return
on average equity of 12.85% for the same period of 2019. Provision
for loan losses of $3.2 million and $200 thousand was included in
net income for the nine-month periods ending September 30, 2020 and
2019, respectively.
Highlights for the third quarter of
2020:
- Net interest income increased $503 thousand, or 7%
- Wealth management revenue increased $96 thousand, or 20%
- Fees for other customer services increased $146 thousand, or
82%
- Salaries and employee benefits decreased $58 thousand, or
2%
- Tangible book value increased 12% to $16.92 per share compared
to $15.11 one year ago
- Loans in the Bank’s deferred payment program decreased to $22.6
million, or 3% of total loans
- Nonperforming assets totaled $7.0 million, an increase of $5.4
million
- Provision for loan losses totaled $1.5 million, compared to no
provision for same quarter of 2019
“We are pleased the Bank generated solid financial performance
in the third quarter with higher net interest income, higher
noninterest income and lower noninterest expenses,” said Scott
Harvard, president and chief executive officer of First National.”
Harvard continued, “While net income was impacted by a provision
for loan losses totaling $1.5 million, we believe the provision
reflected our diligent ongoing management of credits in the current
credit cycle, including specific reserves established for impaired
loans to companies that experienced business interruptions
attributable to the pandemic. We are also pleased with the
significant reduction of loans in the Bank’s deferred loan program,
which totaled 3% of total loans at the end of the third quarter,
compared to 28% of total loans at June 30, 2020.”
“We continue to be impressed by the efforts of our bankers to
adapt to the unusual environment created by the pandemic and are
proud of the improvement in net interest income, noninterest income
and expense management as a result of their efforts.”
COVID-19 PANDEMIC UPDATE
Operations
During the third quarter, the Bank continued to follow its
Pandemic Plan that strives to protect the health of its employees
and customers, while continuing to deliver essential banking
services. The Bank entered phase two of its Pandemic Plan on July
1, 2020 and re-opened branch lobbies with limited hours for
in-person transactions without appointments while it continued to
deliver banking services through branch drive throughs, ATMs, and
mobile and internet banking platforms.
Paycheck Protection Program
The Bank participated as a lender in the U.S. Small Business
Administration’s (“SBA”) Paycheck Protection Program (“PPP”) to
support local small businesses and non-profit organizations. During
the second and third quarters of 2020, the Bank originated $76.6
million of PPP loans, received $2.5 million of loan fees, and
incurred $535 thousand of loan origination costs. The loan fees are
being accreted into earnings evenly over the life of the loans, net
of the loan costs, through interest and fees on loans. At September
30, 2020, PPP loan balances totaled $73.7 million with 99% of the
loan balances maturing in the second quarter of 2022 and 1% of loan
balances maturing in the third quarter of 2025. At September 30,
2020, customers with PPP loan balances totaling $11.3 million had
requested debt forgiveness but have not yet received notifications
of forgiveness decisions from the SBA.
Loan Payment Deferral Program
In response to the unknown impact of the pandemic on the economy
and customers, the Bank created and implemented a loan payment
deferral program for individual and business customers beginning in
the first quarter of 2020 and provided the opportunity to defer
monthly payments for 90 days. Loans participating in the program
totaled $22.6 million, or 3% of total loans at September 30, 2020,
which was a significant reduction compared to $182.6 million, or
28% of the Bank’s loan balances at June 30, 2020. Interest income
continued to accrue to the Bank during the deferral periods.
Asset Quality Impact
The pandemic is expected to have an unfavorable impact on the
financial condition of the Bank’s loan customers, and as a result,
the Bank has continued the process of identifying credit risk with
the goal of mitigating the risk and minimizing future loan
charge-offs. Certain sectors of the commercial real estate loan
portfolio, including retail shopping, lodging and leisure are
expected to experience elevated financial pressure. Those sectors
comprised approximately 5%, 5% and 2% of the loan portfolio,
respectively, excluding PPP loans at September 30, 2020. The
magnitude of the potential decline in the Bank’s loan quality will
likely depend on the duration of the pandemic and the extent that
the Bank’s customers experience business interruptions. The Bank
recorded a provision for loan losses of $1.5 million for the third
quarter of 2020, including specific reserves placed on impaired
loans impacted by the pandemic. This compared to no provision for
loan losses in the third quarter of 2019.
Capital
The stock repurchase plan remained suspended during the third
quarter. The Company updates its enterprise risk assessment and
capital plans quarterly, and as a result, issued $5.0 million of
subordinated debt in June 2020. The purpose of the issuance was
primarily to further strengthen holding company liquidity and to
remain a source of strength for the Bank in the event of a severe
economic downturn. The Company may also use the proceeds of the
issuance for general corporate purposes, including the potential
repayment of the Company’s existing subordinated debt, which
becomes callable in January 2021. The Company declared and paid
dividends of $0.11 per share in the third quarter that was
unchanged from the dividends declared and paid during the first and
second quarters of 2020.
BALANCE SHEET
Total assets of First National increased $165.5 million, or 21%,
to $942.7 million at September 30, 2020, compared to $777.2 million
at September 30, 2019. Total securities decreased $515 thousand,
while loans, net of the allowance for loan losses, increased $74.3
million, or 13%. The growth in the loan portfolio included PPP
loans that totaled $73.7 million at the end of the third
quarter.
Total liabilities increased $158.6 million, or 23%, to $860.5
million at September 30, 2020, compared to $701.9 million one year
ago. The increase in total liabilities was primarily attributable
to significant growth in deposits. Total deposits increased $152.8
million, or 22%, to $838.4 million and subordinated debt increased
by $5.0 million to $10.0 million at September 30, 2020.
Noninterest-bearing demand deposits increased $66.9 million, or
35%, savings and interest-bearing demand deposits increased $104.0
million, or 28%, while time deposits decreased $18.1 million, or
15%. The origination of PPP loans also contributed to the deposit
growth as many customers deposited proceeds of the loans in their
deposit accounts at the Bank. Although proceeds from PPP loan
originations during the second and third quarters contributed to
the increase in deposits, the Bank also experienced a significant
amount of deposit growth that was not related to PPP loan proceeds.
Total deposits increased $152.8 million, while PPP loans totaled
$73.7 million at September 30, 2020.
Subordinated debt increased to $10.0 million at September 30,
2020 from a $5.0 million issuance in the second quarter of 2020.
The Company issued the debt at a 5.50% fixed-to-floating rate
subordinated note due 2030 to an institutional investor. The Note
was structured to qualify as Tier 2 capital under bank regulatory
guidelines, and the proceeds from the sale of the Note may be
utilized to support capital levels at the Bank in the event of a
severe economic downturn or for general corporate purposes,
including the potential repayment of the Company’s other
subordinated debt, which becomes callable in January 2021.
Shareholders’ equity increased $6.9 million, or 9%, to $82.3
million at September 30, 2020, compared to one year ago, from a
$6.4 million increase in retained earnings and a $2.3 million
increase in accumulated other comprehensive income. These increases
were partially offset by $1.7 million decrease in common stock and
surplus, which resulted from stock repurchases in the first quarter
of 2020 under the Company’s stock repurchase plan.
The Company’s stock repurchase plan was suspended near the end
of the first quarter of 2020 due to the potential impact of the
pandemic on the economy and the Bank’s customers. The plan remained
suspended during the second and third quarters of 2020. The Company
paid a cash dividend to common shareholders during the third
quarter of $0.11 per share, which was unchanged from the first and
second quarters of 2020. The Bank was considered well-capitalized
at September 30, 2020.
PERFORMANCE ANALYSIS OF THE THREE-MONTH
PERIOD
Net interest income increased $503 thousand, or 7%, to $7.6
million for the third quarter of 2020, compared to the same period
of 2019. The increase resulted from a $514 thousand, or 40%,
decrease in total interest expense, which was partially offset by
an $11 thousand decrease in total interest and dividend income. The
net interest margin decreased 46 basis points to 3.41%. The
decrease in the net interest margin was offset by growth in average
earning assets of $158.3 million, or 22%, and resulted in an
increase in net interest income.
The decrease in interest expense was primarily a result of the
$548 thousand, or 50%, decrease in interest expense on deposits,
which was attributable to reduced interest rates paid on deposits.
The impact of the $83.6 million, or 17% increase in average
interest-bearing deposits was offset by a 49-basis point decrease
in the cost of interest-bearing deposits. A 59-basis point
reduction of the cost of interest-bearing checking accounts and a
103-basis point reduction of the cost of money market accounts made
the largest contributions to the decrease in interest expense.
The decrease in total interest and dividend income resulted from
an 81-basis point decrease in the yield on earning assets, which
was partially offset by a $158.3 million, or 22%, increase in
average earning assets. The decrease in the yield on earning assets
resulted from a 19-basis point decrease in the yield on securities,
a 48-basis point decrease in the yield on loans, and a 206-basis
point decrease in the yield on interest-bearing deposits in banks.
The loan yield was negatively impacted by PPP loans earning a 1.00%
interest rate. Additionally, the mix of earning assets had an
unfavorable impact on the yield on average earning assets as lower
yielding interest-bearing deposits in banks increased from 2% to
12% of average earning assets.
Noninterest income increased slightly to $2.2 million compared
to the same period of 2019. ATM and check card fees were $83
thousand higher, primarily from an annual incentive payment
received during the third quarter from the Bank’s card services
provider. The incentive payment is typically received in the fourth
quarter. Wealth management fees increased $96 thousand, or 20%,
from a larger amount of assets under management. Fees for other
customer services were $146 thousand, or 82% higher from an
increase in brokered mortgage loan activity. These increases were
partially offset by a $311 thousand, or 41%, decrease in service
charges on deposits. The Bank first experienced a significant
decrease in service charges on deposits in the second quarter of
2020 from lower overdraft fee income, which continued to
underperform in the third quarter compared to historical levels.
Bank management believes the decrease in overdraft fee income was a
result of the significant increase in deposit balances and a
decrease in consumer spending.
Noninterest expense decreased $51 thousand, or 1%, to $6.1
million, compared to the same period one year ago. The decrease was
primarily attributable to a $58 thousand, or 2%, decrease in
salaries and employee benefits, an $80 thousand, or 56%, decrease
in marketing expense, a $38 thousand decrease in amortization
expense, and a $131 thousand, or 17%, decrease in other operating
expense. The decrease in salaries and employee benefits resulted
from a decrease in the number of employees as certain vacated
employee positions were not replaced. Marketing expense decreased
from reduced spending on marketing campaigns. Other operating
expense decreased primarily from a decrease in debit card fraud
losses and loan collection expense. The decrease in loan collection
expense resulted from the recovery of collection costs during the
quarter that were incurred in a prior period. These decreases were
partially offset by increases in occupancy, equipment, supplies,
legal and professional fees, ATM and check card expense, FDIC
assessment, and bank franchise tax.
PERFORMANCE ANALYSIS OF THE
NINE-MONTH PERIOD
Net interest income increased $1.1 million, or 5%, to $22.0
million for the nine-month period ending September 30, 2020,
compared to the same period of 2019. The increase resulted from a
$911 thousand, or 25%, decrease in total interest expense, and a
$165 thousand, or 1%, increase in total interest and dividend
income. The net interest margin decreased 33 basis points to 3.58%.
The decrease in the net interest margin was offset by growth in
average earning assets of $105.3 million, or 15%, and resulted in
an increase in net interest income.
The decrease in total interest expense resulted primarily from
an $883 thousand decrease in interest expense on deposits, which
was attributable to reduced interest rates paid on deposits. The
impact of the $58.1 million or 12%, increase in average
interest-bearing deposits was offset by a 30-basis point decrease
in the cost of interest-bearing deposits. A 49-basis point
reduction of the cost of interest-bearing checking accounts and a
65-basis point reduction of the cost of money market accounts made
the largest contributions to the decrease in interest expense.
The increase in total interest and dividend income resulted from
a $105.3 million, or 15%, increase in average earning assets, which
was partially offset by a 56-basis point decrease in the yield on
earning assets. The decrease in the yield on earning assets
resulted from a 22-basis point decrease in the yield on securities,
a 36-basis point decrease in the yield on loans, and a 189-basis
point decrease in the yield on interest-bearing deposits in banks.
The loan yield was negatively impacted by PPP loans earning a 1.00%
interest rate. Additionally, the mix of earning assets had an
unfavorable impact on the yield on average earning assets as lower
yielding interest-bearing deposits in banks increased from 3% to 8%
of average earning assets.
Noninterest income decreased $138 thousand, or 2%, to $6.1
million, compared to the same period of 2019, primarily from a $698
thousand, or 32%, decrease in service charges on deposits. The Bank
first experienced a significant decrease in service charges on
deposits in the second quarter of 2020 from lower overdraft fee
income, which continued to underperform in the third quarter
compared to historical levels. Bank management believes the
decrease in overdraft fee income was a result of the significant
increase in deposit balances and a decrease in consumer spending.
This decrease was partially offset by a $62 thousand, or 4%,
increase in ATM and check card fees, a $238 thousand, or 17%,
increase in wealth management fees, and a $262 thousand, or 52%,
increase in fees for other customer services. ATM and check card
fees were higher from an annual incentive payment received during
the third quarter from the Bank’s card service provider. The
incentive payment is typically received in the fourth quarter.
Wealth management fees increased from higher amounts of assets
under management. Fees for other customer services were higher from
an increase in brokered mortgage loan activity.
Noninterest expense decreased $622 thousand, or 3%, to $17.9
million, compared to the same period one year ago. The decrease was
attributable to a $265 thousand, or 3%, decrease in salaries and
employee benefits, a $280 thousand, or 54%, decrease in marketing
expense, a $114 thousand decrease in amortization expense, and a
$326 thousand, or 15%, decrease in other operating expense. The
decrease in salaries and employee benefits resulted primarily from
the deferral of $535 thousand of salary costs to originate PPP
loans during the second and third quarters of 2020. Marketing
expense decreased from a combination of reduced spending on
marketing campaigns during 2020 and elevated expenses during 2019
from the timing of marketing initiatives in the prior year. Other
operating expense decreased primarily from lower debit card fraud
losses, education and training expenses, travel costs, loan
servicing fees, registration and licensing costs, and dues and
subscriptions. The decreases in the noninterest expense categories
were partially offset by increases in supplies, legal and
professional fees, ATM and check card expense, FDIC assessment,
bank franchise tax, and data processing expense.
ASSET QUALITY/LOAN LOSS PROVISION
Provision for loan losses totaled $1.5 million for the third
quarter of 2020, which resulted in a total allowance for loan
losses of $7.8 million, or 1.20% of total loans. Excluding PPP
loans, the allowance for loan losses totaled 1.34% of total loans
at September 30, 2020. This compared to no provision for loan
losses for the same period of 2019 and an allowance for loan losses
of $4.9 million, or 0.86% of total loans at September 30, 2019.
The higher provision for loan losses was primarily attributable
to an increase in the specific reserve component of the allowance
for loan losses, which was partially offset by a decrease in the
general reserve component. The increase in the specific reserve
component of the allowance for loan losses resulted from a reserve
placed on a newly identified impaired loan and an increase in a
reserve on an existing impaired loan. The general reserve component
decreased primarily from adjustments to qualitative factors as
loans participating in the Bank’s loan payment deferral program
decreased significantly and economic conditions continued to
improve in the third quarter. Net charge-offs of loans also
contributed to the provision for loan losses, which totaled $19
thousand for the third quarter of 2020, compared to $83 thousand
for the same period of 2019.
Loans that were 30 to 89 days past due and accruing totaled $885
thousand, or 0.14% of total loans at September 30, 2020 compared to
$902 thousand, or 0.16% of total loans one year ago. Accruing
substandard loans totaled $3.8 million at September 30, 2020 and
2019. Nonperforming assets consisted only of non-accrual loans,
which totaled $7.0 million, or 0.74% of total assets at September
30, 2020, compared to $1.6 million, or 0.20% of total assets one
year ago.
FORWARD-LOOKING STATEMENTS
Certain information contained in this discussion may include
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements relate to the Company’s future operations and are
generally identified by phrases such as “the Company expects,” “the
Company believes” or words of similar import. Although the Company
believes that its expectations with respect to the forward-looking
statements are based upon reliable assumptions within the bounds of
its knowledge of its business and operations, there can be no
assurance that actual results, performance or achievements of the
Company will not differ materially from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Forward-looking statements involve a
number of risks and uncertainties, including the rapidly changing
uncertainties related to the COVID-19 pandemic and its potential
adverse effect on the economy, our employees and customers, and our
financial performance. For details on other factors that could
affect expectations, see the risk factors and other cautionary
language included in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2019, and other filings with the
Securities and Exchange Commission.
ABOUT FIRST NATIONAL CORPORATION
First National Corporation (NASDAQ: FXNC) is the parent company
and bank holding company of First Bank, a community bank that first
opened for business in 1907 in Strasburg, Virginia. The Bank offers
loan and deposit products and services through its website,
www.fbvirginia.com, its mobile banking platform, a network of ATMs
located throughout its market area, one loan production office, a
customer service center in a retirement community, and 14 bank
branch office locations located throughout the Shenandoah Valley,
the central regions of Virginia and in the city of Richmond. In
addition to providing traditional banking services, the Bank
operates a wealth management division under the name First Bank
Wealth Management. First Bank also owns First Bank Financial
Services, Inc., which invests in entities that provide investment
services and title insurance.
CONTACTS
Scott C. Harvard |
|
M. Shane Bell |
President and CEO |
|
Executive Vice President and
CFO |
(540) 465-9121 |
|
(540) 465-9121 |
shavard@fbvirginia.com |
|
sbell@fbvirginia.com |
|
|
|
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2019 |
|
Income Statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
7,568 |
|
|
$ |
7,416 |
|
|
$ |
7,203 |
|
|
$ |
7,333 |
|
|
$ |
7,429 |
|
Interest on deposits in banks |
|
|
25 |
|
|
|
16 |
|
|
|
118 |
|
|
|
163 |
|
|
|
97 |
|
Interest on securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable interest |
|
|
575 |
|
|
|
636 |
|
|
|
670 |
|
|
|
627 |
|
|
|
645 |
|
Tax-exempt interest |
|
|
152 |
|
|
|
151 |
|
|
|
151 |
|
|
|
156 |
|
|
|
157 |
|
Dividends |
|
|
23 |
|
|
|
26 |
|
|
|
26 |
|
|
|
27 |
|
|
|
26 |
|
Total interest income |
|
$ |
8,343 |
|
|
$ |
8,245 |
|
|
$ |
8,168 |
|
|
$ |
8,306 |
|
|
$ |
8,354 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on deposits |
|
$ |
541 |
|
|
$ |
676 |
|
|
$ |
962 |
|
|
$ |
1,042 |
|
|
$ |
1,089 |
|
Interest on federal funds purchased |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Interest on subordinated debt |
|
|
160 |
|
|
|
91 |
|
|
|
90 |
|
|
|
91 |
|
|
|
90 |
|
Interest on junior subordinated debt |
|
|
68 |
|
|
|
67 |
|
|
|
90 |
|
|
|
98 |
|
|
|
103 |
|
Total interest expense |
|
$ |
769 |
|
|
$ |
834 |
|
|
$ |
1,142 |
|
|
$ |
1,231 |
|
|
$ |
1,283 |
|
Net interest income |
|
$ |
7,574 |
|
|
$ |
7,411 |
|
|
$ |
7,026 |
|
|
$ |
7,075 |
|
|
$ |
7,071 |
|
Provision for loan losses |
|
|
1,500 |
|
|
|
800 |
|
|
|
900 |
|
|
|
250 |
|
|
|
— |
|
Net interest income after
provision for loan losses |
|
$ |
6,074 |
|
|
$ |
6,611 |
|
|
$ |
6,126 |
|
|
$ |
6,825 |
|
|
$ |
7,071 |
|
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
$ |
446 |
|
|
$ |
348 |
|
|
$ |
681 |
|
|
$ |
753 |
|
|
$ |
757 |
|
ATM and check card fees |
|
|
669 |
|
|
|
550 |
|
|
|
519 |
|
|
|
654 |
|
|
|
586 |
|
Wealth management fees |
|
|
573 |
|
|
|
512 |
|
|
|
525 |
|
|
|
496 |
|
|
|
477 |
|
Fees for other customer services |
|
|
323 |
|
|
|
237 |
|
|
|
207 |
|
|
|
181 |
|
|
|
177 |
|
Income from bank owned life insurance |
|
|
131 |
|
|
|
99 |
|
|
|
115 |
|
|
|
123 |
|
|
|
131 |
|
Net gains (losses) on securities |
|
|
38 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Net gains on sale of loans |
|
|
3 |
|
|
|
26 |
|
|
|
31 |
|
|
|
89 |
|
|
|
34 |
|
Other operating income |
|
|
18 |
|
|
|
1 |
|
|
|
21 |
|
|
|
44 |
|
|
|
29 |
|
Total noninterest income |
|
$ |
2,201 |
|
|
$ |
1,773 |
|
|
$ |
2,099 |
|
|
$ |
2,341 |
|
|
$ |
2,191 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
$ |
3,498 |
|
|
$ |
3,022 |
|
|
$ |
3,589 |
|
|
$ |
3,193 |
|
|
$ |
3,556 |
|
Occupancy |
|
|
433 |
|
|
|
409 |
|
|
|
402 |
|
|
|
415 |
|
|
|
398 |
|
Equipment |
|
|
439 |
|
|
|
418 |
|
|
|
410 |
|
|
|
406 |
|
|
|
410 |
|
Marketing |
|
|
63 |
|
|
|
74 |
|
|
|
106 |
|
|
|
128 |
|
|
|
143 |
|
Supplies |
|
|
112 |
|
|
|
103 |
|
|
|
89 |
|
|
|
88 |
|
|
|
86 |
|
Legal and professional fees |
|
|
262 |
|
|
|
301 |
|
|
|
279 |
|
|
|
311 |
|
|
|
231 |
|
ATM and check card expense |
|
|
259 |
|
|
|
223 |
|
|
|
245 |
|
|
|
231 |
|
|
|
225 |
|
FDIC assessment |
|
|
52 |
|
|
|
60 |
|
|
|
30 |
|
|
|
(53 |
) |
|
|
(6 |
) |
Bank franchise tax |
|
|
162 |
|
|
|
161 |
|
|
|
153 |
|
|
|
136 |
|
|
|
136 |
|
Data processing expense |
|
|
191 |
|
|
|
188 |
|
|
|
184 |
|
|
|
179 |
|
|
|
174 |
|
Amortization expense |
|
|
33 |
|
|
|
42 |
|
|
|
52 |
|
|
|
61 |
|
|
|
71 |
|
Other real estate owned expense (income), net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Net losses (gains) on disposal of premises and equipment |
|
|
— |
|
|
|
— |
|
|
|
(9 |
) |
|
|
14 |
|
|
|
— |
|
Other operating expense |
|
|
631 |
|
|
|
612 |
|
|
|
614 |
|
|
|
694 |
|
|
|
762 |
|
Total noninterest expense |
|
$ |
6,135 |
|
|
$ |
5,613 |
|
|
$ |
6,144 |
|
|
$ |
5,804 |
|
|
$ |
6,186 |
|
Income before income
taxes |
|
$ |
2,140 |
|
|
$ |
2,771 |
|
|
$ |
2,081 |
|
|
$ |
3,362 |
|
|
$ |
3,076 |
|
Income tax expense |
|
|
386 |
|
|
|
528 |
|
|
|
376 |
|
|
|
646 |
|
|
|
583 |
|
Net income |
|
$ |
1,754 |
|
|
$ |
2,243 |
|
|
$ |
1,705 |
|
|
$ |
2,716 |
|
|
$ |
2,493 |
|
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2019 |
|
Common Share and Per Common Share Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income, basic |
|
$ |
0.36 |
|
|
$ |
0.46 |
|
|
$ |
0.34 |
|
|
$ |
0.55 |
|
|
$ |
0.50 |
|
Weighted average shares,
basic |
|
|
4,854,144 |
|
|
|
4,849,719 |
|
|
|
4,950,887 |
|
|
|
4,968,574 |
|
|
|
4,966,641 |
|
Net income, diluted |
|
$ |
0.36 |
|
|
$ |
0.46 |
|
|
$ |
0.34 |
|
|
$ |
0.55 |
|
|
$ |
0.50 |
|
Weighted average shares,
diluted |
|
|
4,854,649 |
|
|
|
4,849,719 |
|
|
|
4,955,970 |
|
|
|
4,972,535 |
|
|
|
4,969,126 |
|
Shares outstanding at period
end |
|
|
4,858,217 |
|
|
|
4,852,187 |
|
|
|
4,849,692 |
|
|
|
4,969,716 |
|
|
|
4,968,277 |
|
Tangible book value at period
end |
|
$ |
16.92 |
|
|
$ |
16.63 |
|
|
$ |
16.17 |
|
|
$ |
15.50 |
|
|
$ |
15.11 |
|
Cash dividends |
|
$ |
0.11 |
|
|
$ |
0.11 |
|
|
$ |
0.11 |
|
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance
Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets |
|
|
0.74 |
% |
|
|
1.00 |
% |
|
|
0.85 |
% |
|
|
1.36 |
% |
|
|
1.27 |
% |
Return on average equity |
|
|
8.52 |
% |
|
|
11.30 |
% |
|
|
8.72 |
% |
|
|
14.10 |
% |
|
|
13.31 |
% |
Net interest margin |
|
|
3.41 |
% |
|
|
3.59 |
% |
|
|
3.77 |
% |
|
|
3.79 |
% |
|
|
3.87 |
% |
Efficiency ratio (1) |
|
|
62.35 |
% |
|
|
60.34 |
% |
|
|
66.50 |
% |
|
|
60.50 |
% |
|
|
65.65 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Balances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
944,390 |
|
|
$ |
899,301 |
|
|
$ |
806,609 |
|
|
$ |
795,391 |
|
|
$ |
780,376 |
|
Average earning assets |
|
|
889,127 |
|
|
|
836,741 |
|
|
|
755,173 |
|
|
|
745,721 |
|
|
|
730,865 |
|
Average shareholders’
equity |
|
|
81,894 |
|
|
|
79,845 |
|
|
|
78,659 |
|
|
|
76,424 |
|
|
|
74,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
Quality |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan charge-offs |
|
$ |
115 |
|
|
$ |
176 |
|
|
$ |
328 |
|
|
$ |
281 |
|
|
$ |
156 |
|
Loan recoveries |
|
|
96 |
|
|
|
88 |
|
|
|
78 |
|
|
|
53 |
|
|
|
73 |
|
Net charge-offs |
|
|
19 |
|
|
|
88 |
|
|
|
250 |
|
|
|
228 |
|
|
|
83 |
|
Non-accrual loans |
|
|
6,974 |
|
|
|
1,480 |
|
|
|
1,522 |
|
|
|
1,459 |
|
|
|
1,566 |
|
Other real estate owned,
net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Nonperforming assets |
|
|
6,974 |
|
|
|
1,480 |
|
|
|
1,522 |
|
|
|
1,459 |
|
|
|
1,566 |
|
Loans 30 to 89 days past due,
accruing |
|
|
885 |
|
|
|
1,094 |
|
|
|
2,901 |
|
|
|
2,372 |
|
|
|
902 |
|
Loans over 90 days past due,
accruing |
|
|
6 |
|
|
|
1 |
|
|
|
86 |
|
|
|
97 |
|
|
|
113 |
|
Troubled debt restructurings,
accruing |
|
|
— |
|
|
|
4,313 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Special mention loans |
|
|
510 |
|
|
|
2,034 |
|
|
|
6,058 |
|
|
|
6,069 |
|
|
|
1,458 |
|
Substandard loans,
accruing |
|
|
3,804 |
|
|
|
8,616 |
|
|
|
4,368 |
|
|
|
3,410 |
|
|
|
3,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Ratios
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital |
|
$ |
89,155 |
|
|
$ |
88,109 |
|
|
$ |
86,849 |
|
|
$ |
85,439 |
|
|
$ |
83,591 |
|
Tier 1 capital |
|
|
81,883 |
|
|
|
81,813 |
|
|
|
81,265 |
|
|
|
80,505 |
|
|
|
78,679 |
|
Common equity tier 1
capital |
|
|
81,883 |
|
|
|
81,813 |
|
|
|
81,265 |
|
|
|
80,505 |
|
|
|
78,679 |
|
Total capital to risk-weighted
assets |
|
|
15.34 |
% |
|
|
15.20 |
% |
|
|
14.98 |
% |
|
|
14.84 |
% |
|
|
14.57 |
% |
Tier 1 capital to
risk-weighted assets |
|
|
14.09 |
% |
|
|
14.11 |
% |
|
|
14.02 |
% |
|
|
13.99 |
% |
|
|
13.71 |
% |
Common equity tier 1 capital
to risk-weighted assets |
|
|
14.09 |
% |
|
|
14.11 |
% |
|
|
14.02 |
% |
|
|
13.99 |
% |
|
|
13.71 |
% |
Leverage ratio |
|
|
8.67 |
% |
|
|
9.08 |
% |
|
|
10.08 |
% |
|
|
10.13 |
% |
|
|
10.09 |
% |
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2019 |
|
Balance Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
13,349 |
|
|
$ |
17,717 |
|
|
$ |
30,551 |
|
|
$ |
9,675 |
|
|
$ |
11,885 |
|
Interest-bearing deposits in
banks |
|
|
108,857 |
|
|
|
90,562 |
|
|
|
17,539 |
|
|
|
36,110 |
|
|
|
18,488 |
|
Securities available for sale,
at fair value |
|
|
117,132 |
|
|
|
123,193 |
|
|
|
128,660 |
|
|
|
120,983 |
|
|
|
114,568 |
|
Securities held to maturity,
at amortized cost |
|
|
15,101 |
|
|
|
16,211 |
|
|
|
17,086 |
|
|
|
17,627 |
|
|
|
18,222 |
|
Restricted securities, at
cost |
|
|
1,848 |
|
|
|
1,848 |
|
|
|
1,848 |
|
|
|
1,806 |
|
|
|
1,806 |
|
Loans held for sale |
|
|
— |
|
|
|
170 |
|
|
|
621 |
|
|
|
167 |
|
|
|
1,098 |
|
Loans, net of allowance for
loan losses |
|
|
640,591 |
|
|
|
645,220 |
|
|
|
576,283 |
|
|
|
569,412 |
|
|
|
566,341 |
|
Premises and equipment,
net |
|
|
19,548 |
|
|
|
19,792 |
|
|
|
19,619 |
|
|
|
19,747 |
|
|
|
19,946 |
|
Accrued interest
receivable |
|
|
3,156 |
|
|
|
3,863 |
|
|
|
2,124 |
|
|
|
2,065 |
|
|
|
2,053 |
|
Bank owned life insurance |
|
|
17,792 |
|
|
|
17,661 |
|
|
|
17,562 |
|
|
|
17,447 |
|
|
|
17,324 |
|
Core deposit intangibles,
net |
|
|
43 |
|
|
|
76 |
|
|
|
118 |
|
|
|
170 |
|
|
|
231 |
|
Other assets |
|
|
5,316 |
|
|
|
5,777 |
|
|
|
4,401 |
|
|
|
4,839 |
|
|
|
5,231 |
|
Total assets |
|
$ |
942,733 |
|
|
$ |
942,090 |
|
|
$ |
816,412 |
|
|
$ |
800,048 |
|
|
$ |
777,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand
deposits |
|
$ |
256,733 |
|
|
$ |
253,974 |
|
|
$ |
197,662 |
|
|
$ |
189,623 |
|
|
$ |
189,797 |
|
Savings and interest-bearing
demand deposits |
|
|
480,017 |
|
|
|
470,764 |
|
|
|
407,555 |
|
|
|
399,255 |
|
|
|
376,047 |
|
Time deposits |
|
|
101,645 |
|
|
|
114,277 |
|
|
|
115,410 |
|
|
|
117,564 |
|
|
|
119,777 |
|
Total deposits |
|
$ |
838,395 |
|
|
$ |
839,015 |
|
|
$ |
720,627 |
|
|
$ |
706,442 |
|
|
$ |
685,621 |
|
Subordinated debt |
|
|
9,987 |
|
|
|
9,982 |
|
|
|
4,987 |
|
|
|
4,983 |
|
|
|
4,978 |
|
Junior subordinated debt |
|
|
9,279 |
|
|
|
9,279 |
|
|
|
9,279 |
|
|
|
9,279 |
|
|
|
9,279 |
|
Accrued interest payable and
other liabilities |
|
|
2,816 |
|
|
|
3,026 |
|
|
|
3,001 |
|
|
|
2,125 |
|
|
|
1,999 |
|
Total liabilities |
|
$ |
860,477 |
|
|
$ |
861,302 |
|
|
$ |
737,894 |
|
|
$ |
722,829 |
|
|
$ |
701,877 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Common stock |
|
|
6,073 |
|
|
|
6,065 |
|
|
|
6,062 |
|
|
|
6,212 |
|
|
|
6,210 |
|
Surplus |
|
|
6,081 |
|
|
|
5,967 |
|
|
|
5,899 |
|
|
|
7,700 |
|
|
|
7,648 |
|
Retained earnings |
|
|
66,670 |
|
|
|
65,451 |
|
|
|
63,741 |
|
|
|
62,583 |
|
|
|
60,314 |
|
Accumulated other
comprehensive income (loss), net |
|
|
3,432 |
|
|
|
3,305 |
|
|
|
2,816 |
|
|
|
724 |
|
|
|
1,144 |
|
Total shareholders’
equity |
|
$ |
82,256 |
|
|
$ |
80,788 |
|
|
$ |
78,518 |
|
|
$ |
77,219 |
|
|
$ |
75,316 |
|
Total liabilities and
shareholders’ equity |
|
$ |
942,733 |
|
|
$ |
942,090 |
|
|
$ |
816,412 |
|
|
$ |
800,048 |
|
|
$ |
777,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans on real
estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development |
|
$ |
27,472 |
|
|
$ |
31,981 |
|
|
$ |
40,279 |
|
|
$ |
43,164 |
|
|
$ |
45,193 |
|
Secured by farmland |
|
|
533 |
|
|
|
872 |
|
|
|
888 |
|
|
|
900 |
|
|
|
916 |
|
Secured by 1-4 family residential |
|
|
234,198 |
|
|
|
234,188 |
|
|
|
230,980 |
|
|
|
229,438 |
|
|
|
226,828 |
|
Other real estate loans |
|
|
249,786 |
|
|
|
247,623 |
|
|
|
240,486 |
|
|
|
235,655 |
|
|
|
232,151 |
|
Loans to farmers (except those
secured by real estate) |
|
|
1,120 |
|
|
|
711 |
|
|
|
1,221 |
|
|
|
1,423 |
|
|
|
1,461 |
|
Commercial and industrial
loans (except those secured by real estate) |
|
|
124,157 |
|
|
|
123,995 |
|
|
|
54,287 |
|
|
|
48,730 |
|
|
|
49,096 |
|
Consumer installment
loans |
|
|
7,378 |
|
|
|
8,401 |
|
|
|
9,505 |
|
|
|
10,400 |
|
|
|
11,040 |
|
Deposit overdrafts |
|
|
194 |
|
|
|
170 |
|
|
|
238 |
|
|
|
374 |
|
|
|
263 |
|
All other loans |
|
|
3,530 |
|
|
|
3,575 |
|
|
|
3,983 |
|
|
|
4,262 |
|
|
|
4,305 |
|
Total loans |
|
$ |
648,368 |
|
|
$ |
651,516 |
|
|
$ |
581,867 |
|
|
$ |
574,346 |
|
|
$ |
571,253 |
|
Allowance for loan losses |
|
|
(7,777 |
) |
|
|
(6,296 |
) |
|
|
(5,584 |
) |
|
|
(4,934 |
) |
|
|
(4,912 |
) |
Loans, net |
|
$ |
640,591 |
|
|
$ |
645,220 |
|
|
$ |
576,283 |
|
|
$ |
569,412 |
|
|
$ |
566,341 |
|
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2019 |
|
Reconciliation of Tax-Equivalent Net Interest
Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP measures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income – loans |
|
$ |
7,568 |
|
|
$ |
7,416 |
|
|
$ |
7,203 |
|
|
$ |
7,333 |
|
|
$ |
7,429 |
|
Interest income – investments and other |
|
|
775 |
|
|
|
829 |
|
|
|
965 |
|
|
|
973 |
|
|
|
925 |
|
Interest expense – deposits |
|
|
(541 |
) |
|
|
(676 |
) |
|
|
(962 |
) |
|
|
(1,042 |
) |
|
|
(1,089 |
) |
Interest expense – federal funds purchased |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
Interest expense – subordinated debt |
|
|
(160 |
) |
|
|
(91 |
) |
|
|
(90 |
) |
|
|
(91 |
) |
|
|
(90 |
) |
Interest expense – junior subordinated debt |
|
|
(68 |
) |
|
|
(67 |
) |
|
|
(90 |
) |
|
|
(98 |
) |
|
|
(103 |
) |
Total net interest income |
|
$ |
7,574 |
|
|
$ |
7,411 |
|
|
$ |
7,026 |
|
|
$ |
7,075 |
|
|
$ |
7,071 |
|
Non-GAAP measures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefit realized on non-taxable interest income – loans |
|
$ |
8 |
|
|
$ |
8 |
|
|
$ |
10 |
|
|
$ |
10 |
|
|
$ |
9 |
|
Tax benefit realized on non-taxable interest income – municipal
securities |
|
|
41 |
|
|
|
40 |
|
|
|
40 |
|
|
|
41 |
|
|
|
43 |
|
Total tax benefit realized on
non-taxable interest income |
|
$ |
49 |
|
|
$ |
48 |
|
|
$ |
50 |
|
|
$ |
51 |
|
|
$ |
52 |
|
Total tax-equivalent net
interest income |
|
$ |
7,623 |
|
|
$ |
7,459 |
|
|
$ |
7,076 |
|
|
$ |
7,126 |
|
|
$ |
7,123 |
|
FIRST NATIONAL CORPORATIONYear-to-Date
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2020 |
|
|
2019 |
|
Income Statement |
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
22,187 |
|
|
$ |
21,625 |
|
Interest on deposits in banks |
|
|
159 |
|
|
|
340 |
|
Interest on securities |
|
|
|
|
|
|
|
|
Taxable interest |
|
|
1,881 |
|
|
|
2,078 |
|
Tax-exempt interest |
|
|
454 |
|
|
|
472 |
|
Dividends |
|
|
75 |
|
|
|
76 |
|
Total interest income |
|
$ |
24,756 |
|
|
$ |
24,591 |
|
Interest expense |
|
|
|
|
|
|
|
|
Interest on deposits |
|
$ |
2,179 |
|
|
$ |
3,062 |
|
Interest on federal funds
purchased |
|
|
— |
|
|
|
1 |
|
Interest on subordinated debt |
|
|
341 |
|
|
|
269 |
|
Interest on junior subordinated debt |
|
|
225 |
|
|
|
322 |
|
Interest on other borrowings |
|
|
— |
|
|
|
2 |
|
Total interest expense |
|
$ |
2,745 |
|
|
$ |
3,656 |
|
Net interest income |
|
$ |
22,011 |
|
|
$ |
20,935 |
|
Provision for loan losses |
|
|
3,200 |
|
|
|
200 |
|
Net interest income after
provision for loan losses |
|
$ |
18,811 |
|
|
$ |
20,735 |
|
Noninterest income |
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
$ |
1,475 |
|
|
$ |
2,173 |
|
ATM and check card fees |
|
|
1,738 |
|
|
|
1,676 |
|
Wealth management fees |
|
|
1,610 |
|
|
|
1,372 |
|
Fees for other customer services |
|
|
767 |
|
|
|
505 |
|
Income from bank owned life insurance |
|
|
345 |
|
|
|
333 |
|
Net gains (losses) on
securities |
|
|
38 |
|
|
|
— |
|
Net gains on sale of loans |
|
|
60 |
|
|
|
81 |
|
Other operating income |
|
|
40 |
|
|
|
71 |
|
Total noninterest income |
|
$ |
6,073 |
|
|
$ |
6,211 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
$ |
10,109 |
|
|
$ |
10,374 |
|
Occupancy |
|
|
1,244 |
|
|
|
1,237 |
|
Equipment |
|
|
1,267 |
|
|
|
1,239 |
|
Marketing |
|
|
243 |
|
|
|
523 |
|
Supplies |
|
|
304 |
|
|
|
250 |
|
Legal and professional fees |
|
|
842 |
|
|
|
775 |
|
ATM and check card expense |
|
|
727 |
|
|
|
666 |
|
FDIC assessment |
|
|
142 |
|
|
|
98 |
|
Bank franchise tax |
|
|
476 |
|
|
|
402 |
|
Data processing expense |
|
|
563 |
|
|
|
526 |
|
Amortization expense |
|
|
127 |
|
|
|
241 |
|
Net losses (gains) on disposal of premises and equipment |
|
|
(9 |
) |
|
|
— |
|
Other operating expense |
|
|
1,857 |
|
|
|
2,183 |
|
Total noninterest expense |
|
$ |
17,892 |
|
|
$ |
18,514 |
|
Income before income
taxes |
|
$ |
6,992 |
|
|
$ |
8,432 |
|
Income tax expense |
|
|
1,290 |
|
|
|
1,592 |
|
Net income |
|
$ |
5,702 |
|
|
$ |
6,840 |
|
FIRST NATIONAL CORPORATIONYear-to-Date
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2020 |
|
|
2019 |
|
Common Share and Per Common Share Data |
|
|
|
|
|
|
|
|
Net income, basic |
|
$ |
1.17 |
|
|
$ |
1.38 |
|
Weighted average shares,
basic |
|
|
4,884,805 |
|
|
|
4,963,571 |
|
Net income, diluted |
|
$ |
1.17 |
|
|
$ |
1.38 |
|
Weighted average shares,
diluted |
|
|
4,886,668 |
|
|
|
4,966,384 |
|
Shares outstanding at period
end |
|
|
4,858,217 |
|
|
|
4,968,277 |
|
Tangible book value at period
end |
|
$ |
16.92 |
|
|
$ |
15.11 |
|
Cash dividends |
|
$ |
0.33 |
|
|
$ |
0.27 |
|
|
|
|
|
|
|
|
|
|
Key Performance
Ratios |
|
|
|
|
|
|
|
|
Return on average assets |
|
|
0.86 |
% |
|
|
1.19 |
% |
Return on average equity |
|
|
9.49 |
% |
|
|
12.85 |
% |
Net interest margin |
|
|
3.58 |
% |
|
|
3.91 |
% |
Efficiency ratio (1) |
|
|
63.04 |
% |
|
|
66.93 |
% |
|
|
|
|
|
|
|
|
|
Average
Balances |
|
|
|
|
|
|
|
|
Average assets |
|
$ |
883,741 |
|
|
$ |
770,777 |
|
Average earning assets |
|
|
827,240 |
|
|
|
721,899 |
|
Average shareholders’
equity |
|
|
80,228 |
|
|
|
71,148 |
|
|
|
|
|
|
|
|
|
|
Asset
Quality |
|
|
|
|
|
|
|
|
Loan charge-offs |
|
$ |
619 |
|
|
$ |
603 |
|
Loan recoveries |
|
|
262 |
|
|
|
306 |
|
Net charge-offs |
|
|
357 |
|
|
|
297 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Tax-Equivalent Net Interest Income |
|
|
|
|
|
|
|
|
GAAP measures: |
|
|
|
|
|
|
|
|
Interest income – loans |
|
$ |
22,187 |
|
|
$ |
21,625 |
|
Interest income – investments and other |
|
|
2,569 |
|
|
|
2,966 |
|
Interest expense – deposits |
|
|
(2,179 |
) |
|
|
(3,062 |
) |
Interest expense – federal
funds purchased |
|
|
— |
|
|
|
(1 |
) |
Interest expense – subordinated debt |
|
|
(341 |
) |
|
|
(269 |
) |
Interest expense – junior subordinated debt |
|
|
(225 |
) |
|
|
(322 |
) |
Interest expense – other borrowings |
|
|
— |
|
|
|
(2 |
) |
Total net interest income |
|
$ |
22,011 |
|
|
$ |
20,935 |
|
Non-GAAP measures: |
|
|
|
|
|
|
|
|
Tax benefit realized on non-taxable interest income – loans |
|
$ |
26 |
|
|
$ |
30 |
|
Tax benefit realized on non-taxable interest income – municipal
securities |
|
|
121 |
|
|
|
126 |
|
Total tax benefit realized on
non-taxable interest income |
|
$ |
147 |
|
|
$ |
156 |
|
Total tax-equivalent net
interest income |
|
$ |
22,158 |
|
|
$ |
21,091 |
|
(1) The efficiency ratio is computed by dividing
noninterest expense excluding other real estate owned
income/expense, amortization of intangibles, and gains and losses
on disposal of premises and equipment by the sum of net interest
income on a tax-equivalent basis and noninterest income, excluding
gains and losses on sales of securities. Tax-equivalent net
interest income is calculated by adding the tax benefit realized
from interest income that is nontaxable to total interest income
then subtracting total interest expense. The tax rate utilized in
calculating the tax benefit is 21%. See the tables above for
tax-equivalent net interest income and reconciliations of net
interest income to tax-equivalent net interest income. The
efficiency ratio is a non-GAAP financial measure that management
believes provides investors with important information regarding
operational efficiency. Such information is not prepared in
accordance with U.S. generally accepted accounting principles
(GAAP) and should not be construed as such. Management
believes; however, such financial information is meaningful to the
reader in understanding operational performance, but cautions that
such information not be viewed as a substitute for GAAP.
(2) All capital ratios reported are for First Bank.
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