FIRST COMMUNITY BANKSHARES INC VA
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
FCBC$45.48+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0001437749-24-024402
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001437749-24-033895
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 96 previous paragraphs and 97 current paragraphs.
58 unchanged; 33 reworded; 6 added; 3 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 25 previous and 25 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
During the last week of September 2024, Hurricane Helene made landfall in Florida’s panhandle, and brought the full suite of hurricane impacts to the southern Appalachian region resulting in widespread flooding and washing out of towns and roadways. Hurricane Helene had a significant impact on western North Carolina. Millions have lost access to critical services like water and sewer, electricity, and telecommunications. Thousands of miles of roads and bridges were damaged. The hurricane resulted in property damage to our customers, the closing or disruption of many businesses and damage to infrastructure in communities that we serve. Our branch in Banner Elk, North Carolina was temporarily closed due to lack of power and water, but it is now open to the public. We continue to evaluate the impact of Hurricane Helene on our customers and the Bank’s loans. Based on our assessment to date, we do not expect the losses related to Hurricane Helene to have a material impact on the Bank’s financial condition or results of operations.
Current report
Net income decreased $1.61 million in the third quarter of 2024 compared to the same period in 2023. The decrease is primarily attributable to a decrease in net interest income of $1.75 million. While interest income increased $787 thousand for the third quarter of 2024, interest expense increased $2.54 million. The increase in interest expense is primarily attributable to an increase in deposit rates.
Current report
Nine-MonthComparison*.*
Current report
Three*-*Month Comparison. Noninterest income comprised 24.86% of total net interest and noninterest income in the third quarter of 2024 compared to 22.39% in the same quarter of 2023. Noninterest income increased $830 thousand or 8.63%. Noninterest income for the third quarter of 2024 included a gain of $825 thousand from the sale of two closed branch properties; while noninterest income for the same period of 2023 included a gain of $204 thousand for the sale of a closed branch property. Both of these gains are reflected in other operating income are primarily attributable for the change in total noninterest income.
Current report
Three*-*Month Comparison. Noninterest expense increased $1.26 million, or 5.52%, in the third quarter of 2024 compared to the same quarter of 2023. The largest increases were primarily due to increases in other operating expense and salaries and employee benefits. The increase in other operating expense of $583 thousand is largely attributable to an increase in loan and deposit fraud losses. The increase in salaries and employee benefits of $456 thousand is attributable to inflationary increases in employee salaries.
Current report
The Company is working with borrowers and customers in North Carolina, Tennessee, Virginia, and southern West Virginia affected by the devastating floods, power outages, and water shortages from Hurricane Helene. This includes payment relief for affected borrowers. We will continue to monitor the situation over the coming weeks as it relates to asset quality.
Removed paragraphs (3)
Previous report
Net income increased $2.87 million in the second quarter of 2024 compared to the same period in 2023. The increase is primarily attributable to a decrease in provision for credit losses of $3.96 million. This increase was offset by a decrease in net interest income of $950 thousand compared to the same period in 2023.
Previous report
Six-MonthComparison*.*
Previous report
Most LIBOR settings ceased to be published after June 30, 2023. The Company had discontinued originating LIBOR-based variable rate loans in 2018 in favor of U. S. Treasury rates. The Company has substituted an alternative reference rate published by the U. S. Treasury for any remaining loans tied to LIBOR.
Reworded paragraphs (33)
Previous wording
First Community Bankshares, Inc. (the “Company”) is a financial holding company, headquartered in Bluefield, Virginia, that provides banking products and services through its wholly owned subsidiary First Community Bank (the “Bank”), a Virginia chartered bank institution. As of June 30, 2024, the Bank operated 53 branches in Virginia, West Virginia, North Carolina and Tennessee. As of June 30, 2024, full-time equivalent employees, calculated using the number of hours worked, totaled 591. Our primary source of earnings is net interest income, the difference between interest earned on assets and interest paid on liabilities, which is supplemented by fees for services, commissions on sales, and various deposit service charges. We fund our lending and investing activities primarily through the retail deposit operations of our branch banking network. We invest our funds primarily in loans to retail and commercial customers and various investment securities. Our common stock is traded on the NASDAQ Global Select Market under the symbol FCBC.
Current wording
First Community Bankshares, Inc. (the “Company”) is a financial holding company, headquartered in Bluefield, Virginia, that provides banking products and services through its wholly owned subsidiary First Community Bank (the “Bank”), a Virginia chartered bank institution. As of September 30, 2024, the Bank operated 53 branches in Virginia, West Virginia, North Carolina and Tennessee. As of September 30, 2024, full-time equivalent employees, calculated using the number of hours worked, totaled 578. Our primary source of earnings is net interest income, the difference between interest earned on assets and interest paid on liabilities, which is supplemented by fees for services, commissions on sales, and various deposit service charges. We fund our lending and investing activities primarily through the retail deposit operations of our branch banking network. We invest our funds primarily in loans to retail and commercial customers and various investment securities. Our common stock is traded on the NASDAQ Global Select Market under the symbol FCBC.
Previous wording
The Bank offers trust management, estate administration, and investment advisory services through its Trust Division and wholly owned subsidiary First Community Wealth Management Inc. (“FCWM”). The Trust Division manages inter vivos trusts and trusts under will, develops and administers employee benefit and individual retirement plans, and manages and settles estates. Fiduciary fees for these services are charged on a schedule related to the size, nature, and complexity of the account. Revenues consist primarily of investment advisory fees and commissions on assets under management and administration. As of June 30, 2024, the Trust Division and FCWM managed and administered $1.58 billion in combined assets under various fee-based arrangements as fiduciary or agent. The Bank also offers a full range of commercial and personal insurance products through its strategic partnership with Bankers Insurance, LLC.
Current wording
The Bank offers trust management, estate administration, and investment advisory services through its Trust Division and wholly owned subsidiary First Community Wealth Management Inc. (“FCWM”). The Trust Division manages inter vivos trusts and trusts under will, develops and administers employee benefit and individual retirement plans, and manages and settles estates. Fiduciary fees for these services are charged on a schedule related to the size, nature, and complexity of the account. Revenues consist primarily of investment advisory fees and commissions on assets under management and administration. As of September 30, 2024, the Trust Division and FCWM managed and administered $1.64 billion in combined assets under various fee-based arrangements as fiduciary or agent. The Bank also offers a full range of commercial and personal insurance products through its strategic partnership with Bankers Insurance, LLC.
Previous wording
Highlights of our results of operations for the three and six months ended June 30, 2024, and financial condition as of June 30, 2024, include the following:
Current wording
Highlights of our results of operations for the three and nine months ended September 30, 2024, and financial condition as of September 30, 2024, include the following:
Previous wording
Net income increased $3.94 million in the first six months of 2024 compared to the same period in 2023. The increase is primarily attributable to a decrease in provision for credit losses of $4.69 million. In addition, net interest income increased $1.27 million and noninterest income increased $1.23 million. These increases were offset by an increase in noninterest expense of $2.80 million compared to the same period in 2023.
Current wording
Net income increased $2.33 million in the first nine months of 2024 compared to the same period in 2023. The increase is primarily attributable to a decrease in provision for credit losses of $4.44 million. Noninterest income increased by $2.06 million, as well. These increases were offset by an increase in noninterest expense of $4.06 million compared to the same period in 2023.
Previous wording
Three*-*Month Comparison. Net interest income comprised 77.35% of total net interest and noninterest income in the second quarter of 2024 compared to 78.91% in the same quarter of 2023. Net interest income on a GAAP basis decreased $950 thousand, or 2.89%. Net interest income on a FTE basis decreased $949 thousand, with a percentage decrease of 2.88%. The net interest margin on a FTE basis increased 3 basis points while the net interest spread on a FTE basis decreased 22 basis points. The increase in net interest margin was primarily driven by an increase in interest income on interest-bearing deposits with banks as well as an increase in interest income on loans. The increase in earnings on interest-bearing deposits with banks was primarily due to an increase in average balance of $147.11 million while the increase in loan interest is primarily due to an increase in yield of 28 basis points. The 22 basis point decrease in net interest spread is primarily due to the increase in yield for interest-bearing liabilities of 67 basis points versus the increase in yield for earning assets of 45 basis points.
Current wording
Three*-*Month Comparison. Net interest income comprised 75.14% of total net interest and noninterest income in the third quarter of 2024 compared to 77.61% in the same quarter of 2023. Net interest income on a GAAP basis decreased $1.75 million, or 5.26%. Net interest income on a FTE basis decreased $1.75 million, with a percentage decrease of 5.24%. The net interest margin on a FTE basis decreased 10 basis points while the net interest spread on a FTE basis decreased 32 basis points. The decrease in both the net interest margin and the net interest spread was primarily driven by an increase in the yield on interest-bearing liabilities of 58 basis points when compared with the same period of 2023 and is primarily attributable to increased rates on interest-bearing deposit liabilities.
Previous wording
Average earning assets decreased $97.66 million, or 3.31%, primarily due to an decrease in average securities available for sale of $173.51 million, or 54.52%. In addition, the average balance for loans decreased $71.27 million, or 2.77%. These decreases to earning assets were offset by an increase in the average balance for interest-bearing balances with banks of $147.11 million, or 232.32%. The yield on earning assets increased 45 basis points, or 9.47%, primarily due to an increase in benchmark rates as compared to the same period of 2023. The average loan to deposit ratio increased to 93.60% from 91.92% reported in the same quarter of 2023. Non-cash accretion income was $661 thousand for the second quarter compared to $884 thousand reported in the same period of 2023.
Current wording
Average earning assets decreased $80.50 million, or 2.74%, primarily due to a decrease in average securities available for sale of $151.01 million, or 53.05%. In addition, the average balance for loans decreased $149.08 million, or 5.72%. These decreases to earning assets were offset by an increase in the average balance for interest-bearing balances with banks of $219.59 million, or 431.79%. The yield on earning assets increased 26 basis points, or 5.32%, primarily due to an increase in benchmark rates as compared to the same period of 2023. The average loan to deposit ratio decreased to 92.11% from 93.39% reported in the same quarter of 2023. Non-cash accretion income was $592 thousand for the third quarter compared to $874 thousand reported in the same period of 2023.
Previous wording
Average interest-bearing liabilities, which consist of interest-bearing deposits and borrowings, decreased $32.24 million, or 1.77%, primarily due to a decrease in deposits. Time deposits decreased $28.62 million, or 10.34%, while interest-bearing demand deposits decreased $24.53 million, or 3.56%. These decreases were offset by an increase in savings deposits of $25.79 million, or 3.05%. The yield on interest-bearing liabilities increased 73 basis points and is primarily due to increases in benchmark rates throughout 2023.
Current wording
Average interest-bearing liabilities, which consist of interest-bearing deposits and borrowings, decreased $36.76 million, or 2.01%, primarily due to a decrease in deposits. Interest-bearing demand deposits decreased $42.29 million, or 6.05%, while time deposits decreased $18.92 million, or 7.17%. These decreases were offset by an increase in savings deposits of $24.65 million, or 2.86%. The yield on interest-bearing liabilities increased 58 basis points and is primarily due to increases in benchmark rates throughout 2023.
Previous wording
*Six-*Month Comparison. Net interest income comprised 77.36% of total net interest and noninterest income for the six months ending June 30, 2024 compared to 78.19% in the same period of 2023. Net interest income on a GAAP basis increased $1.27 million, or 2.03%. Net interest income on a FTE basis increased $1.27 million as well, with a percentage increase of 2.04%. The net interest margin on a FTE basis increased 7 basis points while the net interest spread on a FTE basis decreased 20 basis points. The increase in net interest margin was primarily driven by increase in the average balance for loans as well as an increase in the yield on loans. The average balance for loans increased $41.55 million, while the yield increased 43 basis points resulting in a tax effected increase in interest on loans of $6.58 million compared to 2023. The 20 basis point decrease in net interest spread is primarily due to the increase in yield for interest-bearing liabilities of 73 basis points versus the increase in yield for earning assets of 53 basis points.
Current wording
*Nine-*Month Comparison. Net interest income comprised 76.61% of total net interest and noninterest income for the nine months ending September 30, 2024 compared to 77.99% in the same period of 2023. Net interest income on a GAAP basis decreased $486 thousand, or 0.51%. Net interest income on a FTE basis decreased $481 thousand, with a percentage decrease of 0.50%. The net interest margin on a FTE basis increased 1 basis point while the net interest spread on a FTE basis decreased 24 basis points. The 24 basis point decrease in net interest spread is primarily due to the increase in yield for interest-bearing liabilities of 68 basis points versus the increase in yield for earning assets of 44 basis points.
Previous wording
Average earning assets increased $2.17 million, or 0.08%, primarily due to an increase in the average balance for interest-bearing deposits with banks of $86.24 million, or 165.15%, and an increase in the average balance of loans of $41.55 million, or 1.67%. These increases were offset by a decrease in the average balance for securities available for sale of $125.62 million, or 39.57% The yield on earning assets increased 53 basis points, or 11.47%, primarily due to an increase in benchmark rates as compared to the same period of 2023. The average loan to deposit ratio increased to 94.56% from 91.94% reported in the same period of 2023. Non-cash accretion income increased to $1.44 million from $1.08 million reported in the same period of 2023.
Current wording
Average earning assets decreased $25.70 million, or 0.89%, primarily due to decreases in both securities available for sale and loans. Securities available for sale decrease $134.10 million, or 43.76%. Loans decreased $22.61 million , or 0.90%. These decreases were offset by an increase in the average balance of interest-bearing deposits with banks of $131.01 million, or 253.12%. The yield on earning assets increased 44 basis points, or 9.34%, primarily due to an increase in benchmark rates as compared to the same period of 2023. The average loan to deposit ratio increased to 93.74% from 92.44% reported in the same period of 2023. Non-cash accretion income increased to $2.04 million from $1.95 million reported in the same period of 2023.
Previous wording
Average interest-bearing liabilities, which consist of interest-bearing deposits and borrowings, decreased $77.69 million, or 4.17%, primarily due to a decrease in deposits. Demand deposits decreased $48.24 million, or 6.77%, while time deposits decreased $35.94 million, or 12.73%. These decreases were offset by an increase in savings deposits of $13.11 million, or 1.52%. The yield on interest-bearing liabilities increased 67 basis points and is primarily due to increases in benchmark rates throughout 2023.
Current wording
Average interest-bearing liabilities, which consist of interest-bearing deposits and borrowings, decreased $23.65 million, or 1.31%, primarily due to a decrease in deposits. Time deposits decreased $25.35 million, or 9.30%, while interest-bearing demand deposits decreased $20.39 million, or 2.99%. These decreases were offset by an increase in savings deposits of $25.39 million, or 2.99%. The yield on interest-bearing liabilities increased 68 basis points and is primarily due to increases in benchmark rates throughout 2023.
Previous wording
Three*-*Month Comparison. The provision charged to operations decreased $3.96 million in the second quarter of 2024 compared to the same quarter of 2023. Provision for credit losses for loans of $449 thousand was recorded in the second quarter of 2024 compared to the provision of $4.11 million recorded in the same period of 2023. The provision of $4.11 million recorded in the second quarter of 2023 included $1.61 million of Day 2 provision associated with the Surrey Bancorp acquisition. The remaining decrease in provision is primarily due a much smaller required credit loss provision as the loan portfolio has experienced a decrease in balance of $147.81 million from the same period of 2023. In addition, there was a recovery of provision recorded for the allowance for unfunded commitments during the second quarter of 2024 of $305 thousand. There was no provision for the allowance for unfunded commitments for the same quarter of 2023.
Current wording
Three*-*Month Comparison. The provision charged to operations increased $251 thousand in the third quarter of 2024 compared to the same quarter of 2023. Provision for credit losses for loans of $1.36 was recorded in the third quarter of 2024 compared to the provision of $1.32 million recorded in the same period of 2023. There was a recovery of provision recorded for the allowance for unfunded commitments during the third quarter of 2023 of $206 thousand. There was no provision recorded for unfunded commitments during the third quarter of 2024.
Previous wording
*Six-*Month Comparison. The provision charged to operations decreased $4.69 million for the six months ending June 30, 2024 compared to the same period of 2023. Provision for credit losses for loans of $1.46 million was recorded in the first six months of 2024 compared to the provision of $6.08 million recorded in the same period of 2023. The provision of $6.08 million recorded in the first six months of 2023 included $1.61 million of Day 2 provision associated with the Surrey Bancorp acquisition. The remaining decrease in provision is primarily due a much smaller required credit loss provision as the loan portfolio has experienced a decrease in balance of $147.81 million from the same period of 2023. In addition, there was a recovery of provision recorded for the allowance for unfunded commitments during the first six months of 2024 of $305 thousand. There was a recovery of provision for the allowance for unfunded commitments for the same period of 2023 of $232 thousand.
Current wording
*Nine-*Month Comparison. The provision charged to operations decreased $4.44 million for the nine months ending September 30, 2024 compared to the same period of 2023. Provision for credit losses for loans of $2.82 million was recorded in the first nine months of 2024 compared to the provision of $7.39 million recorded in the same period of 2023. The provision of $7.39 million recorded in the first nine months of 2023 included $1.61 million of Day 2 provision associated with the Surrey Bancorp acquisition. The remaining decrease in provision is primarily due a much smaller required credit loss provision as the loan portfolio has experienced a decrease in balance of $149.36 million from the same period of 2023. In addition, there was a recovery of provision recorded for the allowance for unfunded commitments during the first nine months of 2024 of $305 thousand. There was a recovery of provision for the allowance for unfunded commitments for the same period of 2023 of $438 thousand.
Previous wording
*Six-*Month Comparison. Noninterest income comprised 22.64% of total net interest and noninterest income for the six months ending June 30, 2024 compared to 21.81% in the same period of 2023. Noninterest income increased $1.23 million or 7.10%. Other service charges and fees increased 578 thousand and was primarily driven by an increase in interchange income. Other operating income increased $345 thousand and is primarily attributable to a holdback payment of $184 thousand related to a prior divestiture of an insurance agency.
Current wording
*Nine-*Month Comparison. Noninterest income comprised 23.39% of total net interest and noninterest income for the nine months ending September 30, 2024 compared to 22.01% in the same period of 2023. Noninterest income increased $2.06 million or 7.64%. Other operating income increased $1.18 million. As noted above, other operating income for the third quarter of 2024 included a gain of $825 thousand from the sale of two closed branch properties; while other operating income for the same period of 2023 included a gain of $204 thousand for the sale of a closed branch property. In addition, other operating income for 2024, included a holdback payment of $184 thousand related to a prior divestiture of an insurance agency. Other service charges and fees increased $711 thousand and was primarily driven by an increase in interchange income.
Previous wording
*Six-*Month Comparison. Noninterest expense increased $2.80 million, or 6.15%, for the six months ending June 30, 2024 compared to the same period of 2023. As noted above, noninterest expense for the second quarter of 2024 included a non-recurring charge of $1.80 million to settle a putative class action lawsuit. Noninterest expense for the six month period of 2023 included non-recurring expense of $2.39 million in merger charges related to the Surrey acquisition. Other increases include an increase in salaries and employee benefits, occupancy/furniture and equipment expense, service fees, and amortization of intangibles, and is primarily attributable to the addition of Surrey branches and staff.
Current wording
*Nine-*Month Comparison. Noninterest expense increased $4.06 million, or 5.94%, for the nine months ending September 30, 2024 compared to the same period of 2023. Noninterest expense for the second quarter of 2024 included a non-recurring charge of $1.80 million to settle a putative class action lawsuit. Noninterest expense for the nine month period of 2023 included non-recurring expense of $2.39 million in merger charges related to the Surrey acquisition. Other increases include an increase in salaries and employee benefits, other operating expense, and service fees. The increases are largely attributable to the addition of Surrey branches and inflationary increases.
Previous wording
Three-Month Comparison. Income tax expense increased $470 thousand, or 15.37%. The effective tax rate decreased to 21.75% in the second quarter of 2024 from 23.75% in the same quarter of 2023.
Current wording
Three-Month Comparison. Income tax expense decreased $831 thousand, or 19.29%. The effective tax rate decreased to 21.05% in the third quarter of 2024 from 22.73% in the same quarter of 2023.
Previous wording
Six-Month Comparison. Income tax expense increased $458 thousand, or 6.82%. The effective tax rate decreased to 21.93% for the first six months of 2024 from 23.72% in the same period of 2023.
Current wording
Nine-Month Comparison. Income tax expense decreased $373 thousand, or 3.38%. The effective tax rate decreased to 21.64% for the first nine months of 2024 from 23.32% in the same period of 2023.
Previous wording
Total assets as of June 30, 2024, decreased $35.73 million, or 1.09%, from December 31, 2023. The decrease in assets was primarily driven by decreases in the securities available-for-sale portfolio and loans. Total liabilities decreased $41.32 million, or 1.49%, and was primarily driven by a decrease in deposits. Stockholders' equity increased $5.59 million or 1.11%.
Current wording
Total assets as of September 30, 2024, decreased $44.18 million, or 1.35%, from December 31, 2023. The decrease in assets was primarily driven by decreases in the securities available-for-sale portfolio and loans. Total liabilities decreased $61.58 million, or 2.23%, and was primarily driven by a decrease in deposits. Stockholders' equity increased $17.40 million or 3.46%.
Previous wording
Available-for-sale debt securities as of June 30, 2024, decreased $151.28 million, or 53.84%, compared to December 31, 2023. The decrease is primarily due to the maturity of $141.50 million in U. S. Treasury Notes during the first six months of 2024. The market value of debt securities available-for-sale as a percentage of amortized cost was 89.06% as of June 30, 2024, compared to 95.23% as of December 31, 2023.
Current wording
Available-for-sale debt securities as of September 30, 2024, decreased $114.29 million, or 40.68%, compared to December 31, 2023. The decrease is primarily due to the maturity of securities of $157.96 million during the first nine months of 2024 offset by purchases of $39.99 million. The market value of debt securities available-for-sale as a percentage of amortized cost was 93.88% as of September 30, 2024, compared to 95.23% as of December 31, 2023.
Previous wording
Total loans as of June 30, 2024, decreased $99.03 million, or 3.85%, compared to December 31, 2023. The largest decrease occurred in the commercial loans segment with an overall decrease of $64.56 million, or 3.89%. Within this segment, the largest decreases occurred in construction and non-farm, non-residential loans with decreases of $24.25 million and $24.04 million, respectively. The consumer real estate segment decreased $21.97 million, or 2.77%, primarily due to a decrease in single family owner occupied of $19.24 million, or 2.76%.
Current wording
Total loans as of September 30, 2024, decreased $128.19 million, or 4.98%, compared to December 31, 2023. The largest decrease occurred in the commercial loans segment with an overall decrease of $72.76 million, or 4.38%. Within this segment, the largest decreases occurred in construction and non-farm, non-residential loans with decreases of $31.37 million and $31.22 million, respectively. The consumer real estate segment decreased $36.58 million, or 4.62%, primarily due to a decrease in single family owner occupied of $34.05 million, or 4.89%.
Previous wording
Nonperforming assets as of June 30, 2024, increased $282 thousand, or 1.43%, from December 31, 2023. Nonaccrual loans increased $459 thousand, or 2.37%. OREO decreased $92 thousand, or 47.92% and accruing loans past due 90 days or more decreased $85 thousand from year-end. As of June 30, 2024, nonaccrual loans were largely attributed to single family owner occupied (48.58%), non-farm, non-residential (14.13%), and commercial and industrial of (8.57%). Certain loans included in the nonaccrual category have been written down to estimated realizable value or assigned specific reserves in the allowance for loan losses based on management’s estimate of loss at ultimate resolution.
Current wording
Nonperforming assets as of September 30, 2024, increased $624 thousand, or 3.18%, from December 31, 2023. Nonaccrual loans increased $398 thousand, or 2.06%. OREO increased $154 thousand, or 80.21% and accruing loans past due 90 days or more increased $72 thousand from year-end. As of September 30, 2024, nonaccrual loans were largely attributed to single family owner occupied (45.49%), non-farm, non-residential (13.00%), and commercial and industrial of (10.63%). Certain loans included in the nonaccrual category have been written down to estimated realizable value or assigned specific reserves in the allowance for loan losses based on management’s estimate of loss at ultimate resolution.
Previous wording
Delinquent loans, comprised of loans 30 days or more past due and nonaccrual loans, totaled $31.03 million as of June 30, 2024, a decrease of $2.90 million, or 8.54%, compared to $33.93 million as of December 31, 2023. Delinquent loans as a percent of total loans totaled 1.23% as of June 30, 2024, which includes past due loans (0.45%) and nonaccrual loans (0.80%).
Current wording
Delinquent loans, comprised of loans 30 days or more past due and nonaccrual loans, totaled $33.92 million as of September 30, 2024, a decrease of $10 thousand, or 0.03%, compared to $33.93 million as of December 31, 2023. Delinquent loans as a percent of total loans totaled 1.35% as of September 30, 2024, which includes past due loans (0.58%) and nonaccrual loans (0.81%).
Previous wording
When restructuring loans for borrowers experiencing financial difficulty, we generally make concessions in interest rates, loan terms, or amortization terms. Total loans modified as of June 30, 2024, were $2.29 million. As of June 30, 2024, $26 thousand of these loans were 30-89 days past due.
Current wording
When restructuring loans for borrowers experiencing financial difficulty, we generally make concessions in interest rates, loan terms, or amortization terms. Total loans modified as of September 30, 2024, were $2.32 million. As of September 30, 2024, $326 thousand of these loans were 30-89 days past due.
Previous wording
OREO, which is carried at the lesser of estimated net realizable value or cost, decreased $92 thousand, or 47.92%, as of June 30, 2024, compared to December 31, 2023, and consisted of 3 properties with an average holding period of approximately 24 months. The net loss on the sale of OREO totaled $32 thousand for the six months ended June 30, 2024, compared to a net loss of $41 thousand for the same period of the prior year. The following table presents the changes in OREO during the periods indicated:
Current wording
OREO, which is carried at the lesser of estimated net realizable value or cost, increased $154 thousand, or 80.21%, as of September 30, 2024, compared to December 31, 2023, and consisted of 6 properties with an average holding period of approximately 2 months. The net loss on the sale of OREO totaled $29 thousand for the nine months ended September 30, 2024, compared to a net loss of $94 thousand for the same period of the prior year. The following table presents the changes in OREO during the periods indicated:
Previous wording
As of June 30, 2024, the balance of the ACL for loans was $34.89 million, or 1.41% of total loans. The ACL at June 30, 2024, decreased $1.30 million from the balance of $36.19 million recorded at December 31, 2023. This decrease included a $1.46 million provision offset by net charge-offs for the six months of $2.76 million.
Current wording
As of September 30, 2024, the balance of the ACL for loans was $35.12 million, or 1.44% of total loans. The ACL at September 30, 2024, decreased $1.07 million from the balance of $36.19 million recorded at December 31, 2023. This decrease included a $2.82 million provision offset by net charge-offs for the nine months of $3.89 million.
Previous wording
At June 30, 2024, the Company also had an allowance for unfunded commitments of $441 thousand which was recorded in Other Liabilities on the Balance Sheet. During the first six months of 2024, the Company recorded a recovery of provision for credit losses for loan commitments of $305 thousand compared to a recovery of provision of $232 thousand recorded in the same period of 2023.
Current wording
At September 30, 2024, the Company also had an allowance for unfunded commitments of $441 thousand which was recorded in Other Liabilities on the Balance Sheet. During the first nine months of 2024, the Company recorded a recovery of provision for credit losses for loan commitments of $305 thousand compared to a provision of provision of $438 thousand recorded in the same period of 2023.
Previous wording
Total deposits as of June 30, 2024, decreased $45.05 million, or 1.65%, compared to December 31, 2023. The largest decreases in deposits occurred in noninterest-bearing demand of $42.46 million, or 4.56%, and interest-bearing demand of $34.99 million, or 5.04%. Time deposits decreased $7.82 million or 3.09%. Theses decreases were offset by an increase in savings of $40.21 million or 4.77%.
Current wording
Total deposits as of September 30, 2024, decreased $63.07 million, or 2.32%, compared to December 31, 2023. The largest decreases in deposits occurred in noninterest-bearing demand of $62.20 million, or 6.67%, and interest-bearing demand of $36.22 million, or 5.22%. Time deposits decreased $9.04 million or 3.57%. Theses decreases were offset by an increase in savings of $44.38 million or 5.26%.
Previous wording
Total borrowings in the form of retail repurchase agreements as of June 30, 2024, decreased $225 thousand, or 20.11%, compared to December 31, 2023.
Current wording
Total borrowings in the form of retail repurchase agreements as of September 30, 2024, decreased $165 thousand, or 14.75%, compared to December 31, 2023.
Previous wording
As a financial holding company, the Company’s primary source of liquidity is dividends received from the Bank, which are subject to certain regulatory limitations. Other sources of liquidity include cash, investment securities, and borrowings. As of June 30, 2024, the Company’s cash reserves and short-term investment securities totaled $34.08 million and $10.77 million, respectively. The Company’s cash reserves and investments provide adequate working capital to meet obligations for the next twelve months.
Current wording
As a financial holding company, the Company’s primary source of liquidity is dividends received from the Bank, which are subject to certain regulatory limitations. Other sources of liquidity include cash, investment securities, and borrowings. As of September 30, 2024, the Company’s cash reserves and short-term investment securities totaled $6.50 million and $7.71 million, respectively. The Company’s cash reserves and investments provide adequate working capital to meet obligations for the next twelve months.
Previous wording
In addition to cash on hand and deposits with other financial institutions, we rely on customer deposits, cash flows from loans and investment securities, and lines of credit from the FHLB and the Federal Reserve Bank (“FRB”) Discount Window to meet potential liquidity demands. These sources of liquidity are immediately available to satisfy deposit withdrawals, customer credit needs, and our operations. Secondary sources of liquidity include approved lines of credit with correspondent banks and unpledged available-for-sale securities. As of June 30, 2024, our unencumbered cash totaled $329.88 million, unused borrowing capacity from the FHLB totaled $391.26 million, available credit from the FRB Discount Window totaled $5.78 million, available lines from correspondent banks totaled $100.00 million, and unpledged available-for-sale securities totaled $106.97 million.
Current wording
In addition to cash on hand and deposits with other financial institutions, we rely on customer deposits, cash flows from loans and investment securities, and lines of credit from the FHLB and the Federal Reserve Bank (“FRB”) Discount Window to meet potential liquidity demands. These sources of liquidity are immediately available to satisfy deposit withdrawals, customer credit needs, and our operations. Secondary sources of liquidity include approved lines of credit with correspondent banks and unpledged available-for-sale securities. As of September 30, 2024, our unencumbered cash totaled $315.34 million, unused borrowing capacity from the FHLB totaled $353.31 million, available credit from the FRB Discount Window totaled $5.85 million, available lines from correspondent banks totaled $100.00 million, and unpledged available-for-sale securities totaled $139.56 million.
Previous wording
We are committed to effectively managing our capital to protect our depositors, creditors, and shareholders. Failure to meet certain capital requirements may result in actions by regulatory agencies that could have a material impact on our operations. Total stockholders’ equity as of June 30, 2024, increased $5.59 million, or 1.11%, to $508.88 million from $503.29 million as of December 31, 2023. Capital increased due to net income of $25.53 million. The increase was offset by dividends declared of $10.68 million as well as the repurchase of our common stock totaling $8.25 million. Book value per share at June 30, 2024, was $27.85, an increase of $0.65 from year-end 2023.
Current wording
We are committed to effectively managing our capital to protect our depositors, creditors, and shareholders. Failure to meet certain capital requirements may result in actions by regulatory agencies that could have a material impact on our operations. Total stockholders’ equity as of September 30, 2024, increased $17.40 million, or 3.46%, to $520.69 million from $503.29 million as of December 31, 2023. Capital increased due to net income of $38.56 million. The increase was offset by dividends declared of $16.35 million as well as the repurchase of our common stock totaling $8.72 million. Book value per share at September 30, 2024, was $28.47, an increase of $1.27 from year-end 2023.
Previous wording
Our risk-based capital ratios as of June 30, 2024, increased from December 31, 2023, primarily due to a decrease in risk weighted assets. The decrease in risk-weighted assets was primarily driven by a decrease in both the loan and securities available for sale portfolios. As of June 30, 2024, we continued to meet all capital adequacy requirements and were classified as well-capitalized under the regulatory framework for prompt corrective action. Management believes there have been no conditions or events that would change the Bank’s classification. Additionally, our capital ratios were in excess of the minimum standards under the Basel III capital rules as of June 30, 2024.
Current wording
Our risk-based capital ratios as of September 30, 2024, increased from December 31, 2023, primarily due to a decrease in risk weighted assets and increased capital levels. The decrease in risk-weighted assets was primarily driven by a decrease in both the loan and securities available for sale portfolios. As of September 30, 2024, we continued to meet all capital adequacy requirements and were classified as well-capitalized under the regulatory framework for prompt corrective action. Management believes there have been no conditions or events that would change the Bank’s classification. Additionally, our capital ratios were in excess of the minimum standards under the Basel III capital rules as of September 30, 2024.
Previous wording
As of June 30, 2024, the Federal Open Market Committee had set the benchmark federal funds rate to a range of 525 to 550 basis points. The following table presents the sensitivity of net interest income from immediate and sustained rate shocks in various interest rate scenarios over a twelve-month period for the periods indicated:
Current wording
As of September 30, 2024, the Federal Open Market Committee had set the benchmark federal funds rate to a range of 475 to 500 basis points. The following table presents the sensitivity of net interest income from immediate and sustained rate shocks in various interest rate scenarios over a twelve-month period for the periods indicated:
Previous wording
Astronomic federal government spending, growth in economic activity and demand for goods and services, alongside labor shortages and supply chain complications, have contributed to rising inflation. In response, the Federal Reserve Bank has begun raising interest rates and signaled that it will continue to raise rates, taper its purchase of mortgage and other bonds and reduce the size of the balance sheet over time. The timing and impact of inflation and rising interest rates on our business and related financial results will depend on future developments, which are highly uncertain and difficult to predict.
Current wording
Astronomic federal government spending alongside labor shortages and supply chain complications have contributed to rising inflation. The timing and impact of inflation and rising interest rates on our business and related financial results will depend on future developments, which are highly uncertain and difficult to predict.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Three*-*Month Comparison. Noninterest income comprised 22.65% of total net interest and noninterest income in the second quarter of 2024 compared to 21.09% in the same quarter of 2023. Noninterest income increased $557 thousand or 6.34%. Other service charges and fees increased $210 thousand and was primarily driven by an increase in interchange income. Other operating income increased $263 thousand and is primarily attributable to a holdback payment of $184 thousand related to a prior divestiture of an insurance agency .
Previous report — wording carried elsewhere
Three*-*Month Comparison. Noninterest expense increased $226 thousand, or 0.92%, in the second quarter of 2024 compared to the same quarter of 2023. Noninterest expense for the second quarter of 2024 included a non-recurring charge of $1.80 million recorded to settle a putative class action lawsuit. Noninterest expense for the same period of 2023 included non-recurring expense of $2.01 million in merger charges related to the Surrey acquisition. Other increases are attributable to increases in occupancy/furniture and equipment expense, service fees, and amortization of intangibles, and is primarily attributable to the addition of Surrey branches.