Categories: Wire Stories

First Bank Reports Third Quarter 2022�Net Income of $10.2 Million

Quarterly Results Reflect Continued Strong Organic Loan Growth, Net Interest Margin Expansion, and Exceptional Asset Quality Metrics

HAMILTON, N.J., Oct. 25, 2022 (GLOBE NEWSWIRE) — First Bank (Nasdaq Global Market: FRBA) (the �Bank) today announced results for the third quarter of 2022, highlighted by net income of $10.2 million, or $0.52 per diluted share. Return on average assets, return on average equity, and return on average tangible equityⁱ for the third quarter of 2022 were 1.57%, 14.46% and 15.55%, respectively. In the third quarter of 2021, First Bank reported net income of $9.0 million, or $0.46 per diluted share, and return on average assets, return on average equity, and return on average tangible equityⁱ of 1.46%, 13.86% and 14.90%, respectively.

Third Quarter 2022 Highlights:

Total loans of $2.25 billion on September 30, 2022, reflected growth of $30.3 million, or 1.4%, from the end of the second quarter of 2022 and were up $138.5 million, or 6.6%, from December 31, 2021. Organic loan growth, excluding the decline in Paycheck Protection Program (PPP) loans, totaled $36.5 million in the third quarter of 2022.
Total deposits of $2.19 billion on September 30, 2022, were up $25.0 million, or 1.2%, from the end of the linked second quarter and up $75.6 million, or 3.6%, from December 31, 2021.
Asset quality metrics remained solid during the quarter, with annualized net charge offs to average loans of 0.13% during the quarter ended September 30, 2022 and nonperforming loans to total loans of 0.23% as of September 30, 2022, compared to 0.62% on December 31, 2021, and 0.54% on June 30, 2022.
Continued focus on cost containment resulted in the seventh consecutive quarter of an efficiency ratioⁱⁱ below 50%, at 46.01% for the third quarter of 2022.

President and Chief Executive Officer, Patrick L. Ryan, said, Our third quarter 2022 performance reflects continued organic loan growth, excluding the decline in PPP loans, of 6.5% annualized and net interest margin expansion driven by higher loan rates which outpaced increases in deposit costs. We have renewed our focus on deposit gathering initiatives and remain focused on generating strong returns for shareholders as we continue to grow organically while thoughtfully managing expenses.

Exceptional asset quality metrics are reflected in the decline in nonperforming and past due loans during the current quarter. Annualized net charge offs were 0.13% of average loans for the quarter ended September 30, 2022 and related to opportunities to further strengthen our credit quality.

We are pleased to announce another $0.06 quarterly dividend, reflecting an annualized yield of 1.65% based on our common stocks October 18, 2022, closing price of $14.57 per share. From January 1, 2022 through September 30, 2022, we repurchased 245,942 shares of our common stock at an aggregate cost of $3.4 million, or an average price of $13.99 per share. We also recently received regulatory approval for a new share repurchase program, which allows us to repurchase up to 1,200,000 shares for an aggregate repurchase price of up to $19.2 million through September 30, 2023.

In August, the Kroll Bond Rating Agency (KBRA) again affirmed our investment grade credit ratings. Their report cited our improved earnings profile in recent years, enhanced core deposit base, and the building of scale within our operating footprint through both effectively integrated acquisitions and organic growth. We believe KBRAs report is another validation of our approach to building franchise value for our shareholders. We remain focused on opportunities to provide additional value to our shareholders and we believe the recently announced dividend and share repurchase program contribute to this objective.

We are confident that our strong financial position will allow us to generate strong shareholder returns as we move forward.

Income Statement

The Banks net interest income for the third quarter of 2022 was $24.6 million, an increase of $3.8 million, or 18.2%, compared to $20.8 million in the third quarter of 2021 and an increase of $1.7 million, or 7.2%, compared to $22.9 million in the second quarter of 2022. The increase from the comparable prior year quarter was due to an increase in interest and dividend income of $5.1 million offset somewhat by an increase of $1.3 million in total interest expense. The net interest income increase from the linked second quarter of 2022 was due to an increase in interest and dividend income of $3.1 million partially offset by an increase in total interest expense of $1.5 million.

The increase in interest and dividend income (interest income) during the third quarter of 2022 compared to the third quarter of 2021 and the second quarter of 2022 was primarily due to an increase in our average balance of loans coupled with an increase in the average rate on loans. Average loan balances were $194.5 million higher and the average rate on loans was 43 basis points higher during the three months ended September 30, 2022 compared to the three months ended September 30, 2021. Average loan balances were $43.6 million higher and the average rate on loans was 37 basis points higher during the three months ended September 30, 2022 compared to the three months ended June 30, 2022. Compared to the year-ago quarter and the linked second quarter, despite a decrease in PPP loan fees, loan growth and the rising rate environment led to improved interest income. Interest income from loans included $200,000 in PPP loan fees in the third quarter of 2022 compared to $768,000 in the third quarter of 2021 and $493,000 in the linked second quarter of 2022. Also impacting loan interest income in the third quarter of 2022 was loan prepayment income of $503,000, compared to $166,000 for the quarter ended September 30, 2021, and $682,000 for the quarter ended June 30, 2022.

As the industry experienced increases in the Federal Funds effective rate of 300 basis points during the first nine months of 2022, the Banks continued efforts to contain deposit costs resulted in the average rate on interest bearing deposits increasing 35 basis points during the quarter ended September 30, 2022, compared to the quarter ended September 30, 2021, and increased 36 basis points compared to the second quarter of 2022.

Net interest income for the nine months ended September 30, 2022 totaled $68.6 million, an increase of $7.4 million, or 12.0%, compared to $61.2 million for the same period in 2021. The increase in the 2022 year to date net interest income was also driven by robust growth in average loans, which increased by $141.9 million, or 7.0%, from the prior year period coupled with an increase of 11 basis points in the average rate on loans.

The third quarter 2022 tax equivalent net interest margin was 3.97%, an increase of 43 basis points compared to the comparable prior year quarter and an increase of 21 basis points from the linked second quarter of 2022. The Banks margin continues to benefit from the increase in average interest earning assets, improving earning asset yields and actively managing the cost of funds. The year-to-date tax equivalent net interest margin was 3.77%, an increase of 20 basis points compared to the prior year period. The increase in the nine-month net interest margin was principally a result of the increase in interest earning assets, primarily loans, higher earning asset yields and the relatively stable cost of interest bearing deposits.

The Banks provision for loan losses was $216,000 for the third quarter of 2022, compared to $158,000 in the third quarter of 2021 and $1.3 million for the linked second quarter 2022. The Banks provision for loan losses was $2.2 million for the nine months ended September 30, 2022, compared to a credit to the provision for loan losses of $1.1 million for the same period in 2021. The provision for loan losses for the three and nine months ended September 30, 2022, reflects consistent organic loan growth and continued strong asset quality.

Third quarter 2022 non-interest income of $944,000 compares to $1.9 million during the third quarter of 2021. The decrease between the periods was primarily the result of a decline in Small Business Administration (SBA) loan sales, and a continued decline in loan swap activity, which collectively more than offset the increase in income from service fees from deposit accounts. Non-interest income totaled $3.7 million for the nine months ended September 30, 2022, compared to $5.5 million for the same period in 2021. This decrease in non-interest income for the first nine months of 2022 was a result of lower gains on sale of loans, lower loan fees and lower gains on recovery of acquired loans, predominantly the result of a reduction in Small Business Administration loan sales and a decline in loan swap activity, primarily due to the current market conditions.

Non-interest expense for third quarter 2022 of $11.7 million, increased $1.2 million, or 11.5%, compared to $10.5 million for the prior year quarter. The higher non-interest expense compared to third quarter 2021 was primarily a result of a $403,000, or 6.2%, increase in salaries and employee benefits, along with lesser increases in occupancy and equipment, other professional fees, data processing, and other expense. Partially offsetting these increases were no merger-related expenses to date in 2022. The increase in salaries and employee benefits was due primarily to annual salary increases and an increase in the number of employees, partially due to the employees added from our acquisition of two branches during the fourth quarter of 2021. The increases in the other categories were primarily due to increased activity associated with a growing company and inflationary pressures.

On a linked quarter basis, third quarter 2022 non-interest expense increased $328,000, or 2.9%, compared to $11.4 million for the second quarter of 2022. This increase was also primarily due to salary and employee benefits increases from continuing to hire additional talent.

Non-interest expense for the first nine months of 2022 totaled $34.3 million, an increase of $2.9 million, or 9.4%, compared to $31.3 million for the same period in 2021. The increase was primarily a result of higher salaries and employee benefits, other expense, other professional fees, travel and entertainment expense and higher data processing costs, partially offset by lower occupancy and equipment expenses, no merger-related expenses and lower legal fees.

Income tax expense for the three months ended September 30, 2022, was $3.3 million with an effective tax rate of 24.7%, compared to $3.0 million with an effective tax rate of 24.7% for the third quarter of 2021 and $2.8 million with an effective tax rate of 24.4% for the second quarter of 2022. Income tax expense for the nine months ended September 30, 2022, was $8.7 million with an effective tax rate of 24.2%, compared to $8.9 million for the first nine months of 2021 with an effective tax rate of 24.5%.

Balance Sheet

Total assets on September 30, 2022, were $2.63 billion, an increase of $114.9 million, or 4.6%, from December 31, 2021. Total loans increased $138.5 million, or 6.6%, to $2.25 billion on September 30, 2022, compared to $2.11 billion on December 31, 2021. The increase in loans during the nine-month period ended September 30, 2022, reflects net non-PPP organic loan growth of $185.7 million, offset somewhat by a decline in PPP loans of $47.2 million, as such loans continue to be forgiven. Total loans increased $30.3 million, or 1.4%, from $2.22 billion on June 30, 2022, reflecting organic, net non-PPP loan growth of $36.5 million, offset somewhat by a decline in PPP loans of $6.2 million. PPP loans outstanding on September 30, 2022, were $3.9 million.

Total deposits were $2.19 billion on September 30, 2022, an increase of $75.6 million, or 3.6%, from $2.11 billion on December 31, 2021. Non-interest-bearing deposits totaled $584.0 million on September 30, 2022, an increase of $25.2 million, or 4.5%, from December 31, 2021. The Bank continues to focus efforts on deposit gathering initiatives and enhancing its deposit mix and, as of September 30, 2022, non-interest bearing deposits were 26.7% and time deposits were 18.3% of total deposits. Total deposits increased by $25.0 million, or 1.2%, from June 30, 2022, with interest bearing deposits increasing $41.4 million, offset somewhat by a $16.4 million decrease in non-interest bearing deposits.

Stockholders equity increased to $280.7 million on September 30, 2022, compared to $266.7 million on December 31, 2021. The growth of $14.1 million, or 5.3%, was primarily a result of year-to-date net income of $27.2 million, partially offset by a $7.7 million increase in accumulated other comprehensive loss, $3.4 million in treasury stock purchases and cash dividends paid of $3.5 million during the nine months ended September 30, 2022. The increase in accumulated other comprehensive loss was due to an increase in unrealized losses on the Banks available for sale investment securities, primarily resulting from the current interest rate environment.

As of September 30, 2022, the Bank continued to exceed all regulatory capital requirements to be considered well capitalized, with a Tier 1 Leverage ratio of 10.51%, a Tier 1 Risk-Based capital ratio of 10.36%, a Common Equity Tier 1 Capital ratio of 10.36%, and a Total Risk-Based capital ratio of 12.47%.

Asset Quality

First Banks asset quality metrics remained solid during the period ended September 30, 2022. Net charge offs of $705,000 for the third quarter of 2022 were 0.13% of average loans on an annualized basis. This compares to net recoveries of $121,000, or annualized recoveries of 0.02% of average loans, for the third quarter of 2021 and net charge offs of $404,000, or an annualized 0.07%, for the second quarter of 2022. Nonperforming loans were $5.1 million on September 30, 2022, down from $13.0 million on December 31, 2021. Nonperforming loans as a percentage of total loans on September 30, 2022, declined to 0.23%, compared to 0.62% on December 31, 2021, and 0.54% on June 30, 2022. The allowance for loan losses to nonperforming loans was 480.61% on September 30, 2022, compared with 182.65% on December 31, 2021, and 210.58% on June 30, 2022.

COVID-19 Response

First Bank participated in the PPP, established by the Coronavirus Aid, Relief, and Economic Securities Act (CARES Act), during 2020 and 2021. The PPP was a specialized low-interest loan program funded by the U.S. Treasury Department and administered by the SBA. The PPP provided borrower guarantees for lenders, as well as loan forgiveness incentives for borrowers that utilized the loan proceeds to cover compensation and other business-related operating costs. The PPP ended on May 31, 2021, but the PPP loan forgiveness process is ongoing. As of September 30, 2022, First Bank had 39 PPP loans with outstanding balances of $3.9 million. During the quarter ended September 30, 2022, PPP loans totaling $6.2 million were forgiven and the Bank realized $200,000 in loan fees on these loans as any deferred fees remaining on the forgiven loans were accelerated. As of September 30, 2022, the Bank had $136,000 in remaining unamortized fees associated with outstanding balances of PPP loans.

Cash Dividend Declared

On October 18, 2022, First Banks Board of Directors declared a quarterly cash dividend of $0.06 per share to common stockholders of record at the close of business on November 11, 2022, payable on November 25, 2022.

Conference Call

First Bank will host its earnings call on Wednesday, October 26, 2022, at 9:00 AM eastern time. The direct dial toll free number for the live call is 1-844-200-6205 and the access code is 906842. For those unable to participate in the call, a replay will be available by dialing 1-866-813-9403 (access code 006079) from one hour after the end of the conference call until January 24, 2023. Replay information will also be available on First Banks website at www.firstbanknj.com under the About Us tab. Click on Investor Relations to access the replay of the conference call.

About First Bank

First Bank is a New Jersey state-chartered bank with 18 full-service branches in Cinnaminson, Cranbury, Delanco, Denville, Ewing, Flemington (2), Hamilton, Lawrence, Monroe, Pennington, Randolph, Somerset and Williamstown, New Jersey; and Doylestown, Trevose, Warminster and West Chester, Pennsylvania. With $2.6 billion in assets as of September 30, 2022, First Bank offers a full range of deposit and loan products to individuals and businesses throughout the New York City to Philadelphia corridor. First Bank’s common stock is listed on the Nasdaq Global Market under the symbol FRBA.

Forward Looking Statements

This press release contains certain forward-looking statements, either express or implied, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding First Banks future financial performance, business and growth strategy, projected plans and objectives, and related transactions, integration of acquired businesses, ability to recognize anticipated operational efficiencies, and other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Such forward-looking statements are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about First Bank, any of which may change over time and some of which may be beyond First Banks control. Statements preceded by, followed by or that otherwise include the words believes, expects, anticipates, intends, projects, estimates, plans and similar expressions or future or conditional verbs such as will, should, would, may and could are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Further, certain factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: whether First Bank can successfully implement its growth strategy, including identifying acquisition targets and consummating suitable acquisitions, sustain its internal growth rate, and provide competitive products and services that appeal to its customers and target markets; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which First Bank operates and in which its loans are concentrated, including the effects of inflation and declines in housing market values; the impact of disease pandemics, including COVID-19, on First Banks operations, customers and employees; an increase in unemployment levels and slowdowns in economic growth; First Bank’s level of nonperforming assets and the costs associated with resolving any problem loans including litigation and other costs; changes in market interest rates may increase funding costs and reduce earning asset yields thus reducing margin; the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of First Bank’s investment securities portfolio; the extensive federal and state regulation, supervision and examination governing almost every aspect of First Bank’s operations, including changes in regulations affecting financial institutions and expenses associated with complying with such regulations; uncertainties in tax estimates and valuations, including due to changes in state and federal tax law; First Bank’s ability to comply with applicable capital and liquidity requirements, including First Banks ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; and possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to Forward-Looking Statements and Risk Factors in First Banks Annual Report on Form 10-K and any updates to those risk factors set forth in First Banks proxy statement, subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if First Banks underlying assumptions prove to be incorrect, actual results may differ materially from what First Bank anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and First Bank does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that First Bank or persons acting on First Banks behalf may issue.

_________________________________
ⁱ Return on average tangible equity is a non-U.S. GAAP financial measure and is calculated by dividing net income by average tangible equity (average equity minus average goodwill and other intangible assets). For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

ⁱⁱ The efficiency ratio is a non-U.S. GAAP financial measure and is calculated by dividing non-interest expense less merger-related expenses by adjusted total revenue (net interest income plus non-interest income). For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

CONTACT: Andrew Hibshman, Chief Financial Officer
(609) 643-0058, andrew.hibshman@firstbanknj.com

FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data, unaudited)


			September 30, 2022			December 31, 2021
Assets
Cash and due from banks			$	50,888		$	25,076
Federal funds sold				25,000			–
Interest bearing deposits with banks				31,629			129,431
		Cash and cash equivalents		107,517			154,507
Interest bearing time deposits with banks				1,293			2,170
Investment securities available for sale, at fair value				98,305			94,584
Investment securities held to maturity (fair value of $39,674 at
	September 30, 2022 and $39,718 at December 31, 2021)			43,910			39,547
Restricted investment in bank stocks				6,439			5,856
Other investments				8,335			8,062
Loans, net of deferred fees and costs				2,250,529			2,111,991
	Less: Allowance for loan losses			24,545			23,746
		Net loans		2,225,984			2,088,245
Premises and equipment, net				10,140			9,883
Other real estate owned, net				293			772
Accrued interest receivable				6,898			5,681
Bank-owned life insurance				57,745			56,633
Goodwill				17,826			17,826
Other intangible assets, net				1,773			2,145
Deferred income taxes				13,544			11,081
Other assets				25,210			13,306
		Total assets	$	2,625,212		$	2,510,298

Liabilities and Stockholders’ Equity
Liabilities:
Non-interest bearing deposits			$	584,024		$	558,775
Interest bearing deposits				1,606,168			1,555,827
		Total deposits		2,190,192			2,114,602
Borrowings				90,806			81,835
Subordinated debentures				29,703			29,620
Accrued interest payable				900			399
Other liabilities				32,862			17,176
		Total liabilities		2,344,463			2,243,632
Stockholders’ Equity:
Preferred stock, par value $2 per share; 10,000,000 shares authorized;
	no shares issued and outstanding			–			–
Common stock, par value $5 per share; 40,000,000 shares authorized; 21,072,290
	shares issued and 19,447,206 shares outstanding at September 30, 2022 and
	20,851,506 shares issued and 19,472,364 shares outstanding at December 31, 2021			104,481			103,704
Additional paid-in capital				80,368			79,563
Retained earnings				119,598			95,924
Accumulated other comprehensive loss				(7,939	)		(206	)
Treasury stock, 1,625,084 shares at September 30, 2022 and 1,379,142 shares
	at December 31, 2021			(15,759	)		(12,319	)
		Total stockholders’ equity		280,749			266,666
		Total liabilities and stockholders’ equity	$	2,625,212		$	2,510,298

FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share data, unaudited)

		Three Months Ended					Nine Months Ended
		September 30,					September 30,
		2022			2021		2022		2021
Interest and Dividend Income
Investment securitiestaxable		$	788		$	571	$	2,053	$	1,596
Investment securitiestax-exempt			39			40		109		133
Interest bearing deposits with banks,
Federal funds sold and other			498			168		888		524
Loans, including fees			26,673			22,150		72,697		66,345
	Total interest and dividend income		27,998			22,929		75,747		68,598

Interest Expense
Deposits			2,737			1,266		5,008		4,579
Borrowings			258			442		796		1,449
Subordinated debentures			440			440		1,321		1,321
	Total interest expense		3,435			2,148		7,125		7,349
Net interest income			24,563			20,781		68,622		61,249
Provision for loan losses			216			158		2,156		(1,057	)
	Net interest income after provision for loan losses		24,347			20,623		66,466		62,306

Non-Interest Income
Service fees on deposit accounts			236			173		731		514
Loan fees			(33	)		139		314		954
Income from bank-owned life insurance			369			378		1,112		1,050
Gains on sale of loans			2			651		292		1,500
Gains on recovery of acquired loans			122			170		456		681
Other non-interest income			248			390		769		844
	Total non-interest income		944			1,901		3,674		5,543

Non-Interest Expense
Salaries and employee benefits			6,880			6,477		20,122		18,175
Occupancy and equipment			1,477			1,260		4,282		4,497
Legal fees			188			139		502		639
Other professional fees			619			451		1,998		1,510
Regulatory fees			252			189		678		685
Directors’ fees			172			220		570		655
Data processing			674			537		1,859		1,680
Marketing and advertising			164			150		505		525
Travel and entertainment			91			44		290		83
Insurance			187			191		538		483
Other real estate owned expense, net			72			16		269		97
Merger-related expenses			–			145		–		145
Other expense			961			703		2,655		2,153
	Total non-interest expense		11,737			10,522		34,268		31,327
Income Before Income Taxes			13,554			12,002		35,872		36,522
Income tax expense			3,348			2,966		8,685		8,932
Net Income		$	10,206		$	9,036	$	27,187	$	27,590

Basic earnings per common share		$	0.52		$	0.46	$	1.39	$	1.40
Diluted earnings per common share		$	0.52		$	0.46	$	1.38	$	1.39
Cash dividends per common share		$	0.06		$	0.03	$	0.18	$	0.09

Basic weighted average common shares outstanding			19,451,189			19,629,134		19,523,069		19,659,227
Diluted weighted average common shares outstanding			19,668,133			19,842,817		19,742,399		19,851,429

FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)


	Three Months Ended September 30,
	2022								2021
	Average						Average		Average						Average
	Balance			Interest			Rate (5)		Balance			Interest			Rate (5)
Interest earning assets
Investment securities (1) (2)	$	145,783		$	835		2.27	%	$	122,494		$	619		2.00	%
Loans (3)		2,224,829			26,673		4.76	%		2,030,351			22,150		4.33	%
Interest bearing deposits with banks,
Federal funds sold and other		74,493			406		2.16	%		163,386			62		0.15	%
Restricted investment in bank stocks		5,248			72		5.44	%		6,833			90		5.23	%
Other investments		8,223			20		0.96	%		6,542			16		0.97	%
Total interest earning assets (2)		2,458,576			28,006		4.52	%		2,329,606			22,937		3.91	%
Allowance for loan losses		(25,283	)							(23,388	)
Non-interest earning assets		142,449								150,399
Total assets	$	2,575,742							$	2,456,617

Interest bearing liabilities
Interest bearing demand deposits	$	338,639		$	397		0.47	%	$	225,546		$	51		0.09	%
Money market deposits		713,594			1,458		0.81	%		657,058			424		0.26	%
Savings deposits		182,771			228		0.49	%		185,093			178		0.38	%
Time deposits		350,859			654		0.74	%		446,865			613		0.54	%
Total interest bearing deposits		1,585,863			2,737		0.68	%		1,514,562			1,266		0.33	%
Borrowings		64,330			258		1.59	%		103,055			442		1.70	%
Subordinated debentures		29,685			440		5.93	%		29,576			440		5.95	%
Total interest bearing liabilities		1,679,878			3,435		0.81	%		1,647,193			2,148		0.52	%
Non-interest bearing deposits		590,421								534,586
Other liabilities		25,350								16,242
Stockholders’ equity		280,093								258,596
Total liabilities and stockholders’ equity	$	2,575,742							$	2,456,617
Net interest income/interest rate spread (2)					24,571		3.71	%					20,789		3.39	%
Net interest margin (2) (4)							3.97	%							3.54	%
Tax equivalent adjustment (2)					(8	)							(8	)
Net interest income				$	24,563							$	20,781

(1) Average balance of investment securities available for sale is based on amortized cost.
(2) Interest and average rates are presented on a tax equivalent basis using a federal income tax rate of 21%.
(3) Average balances of loans include loans on nonaccrual status.
(4) Net interest income divided by average total interest earning assets.
(5) Annualized.

FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)


	Nine Months Ended September 30,
	2022								2021
	Average						Average		Average						Average
	Balance			Interest			Rate (5)		Balance			Interest			Rate (5)
Interest earning assets
Investment securities (1) (2)	$	140,452		$	2,185		2.08	%	$	113,586		$	1,757		2.07	%
Loans (3)		2,179,357			72,697		4.46	%		2,037,460			66,345		4.35	%
Interest bearing deposits with banks,
Federal funds sold and other		101,101			627		0.83	%		130,189			202		0.21	%
Restricted investment in bank stocks		5,428			200		4.93	%		7,784			275		4.72	%
Other investments		8,129			61		1.00	%		6,526			47		0.96	%
Total interest earning assets (2)		2,434,467			75,770		4.16	%		2,295,545			68,626		4.00	%
Allowance for loan losses		(24,608	)							(23,829	)
Non-interest earning assets		145,989								139,743
Total assets	$	2,555,848							$	2,411,459

Interest bearing liabilities
Interest bearing demand deposits	$	322,353		$	595		0.25	%	$	212,518		$	165		0.10	%
Money market deposits		719,028			2,548		0.47	%		617,249			1,368		0.30	%
Savings deposits		184,767			572		0.41	%		179,184			574		0.43	%
Time deposits		340,822			1,293		0.51	%		478,934			2,472		0.69	%
Total interest bearing deposits		1,566,970			5,008		0.43	%		1,487,885			4,579		0.41	%
Borrowings		69,571			796		1.53	%		126,220			1,449		1.53	%
Subordinated debentures		29,659			1,321		5.94	%		29,547			1,321		5.96	%
Total interest bearing liabilities		1,666,200			7,125		0.57	%		1,643,652			7,349		0.60	%
Non-interest bearing deposits		593,638								501,809
Other liabilities		21,284								15,798
Stockholders’ equity		274,726								250,200
Total liabilities and stockholders’ equity	$	2,555,848							$	2,411,459
Net interest income/interest rate spread (2)					68,645		3.59	%					61,277		3.40	%
Net interest margin (2) (4)							3.77	%							3.57	%
Tax equivalent adjustment (2)					(23	)							(28	)
Net interest income				$	68,622							$	61,249

(1) Average balance of investment securities available for sale is based on amortized cost.
(2) Interest and average rates are presented on a tax equivalent basis using a federal income tax rate of 21%.
(3) Average balances of loans include loans on nonaccrual status.
(4) Net interest income divided by average total interest earning assets.
(5) Annualized.

FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(in thousands, except for share and employee data, unaudited)

	As of or For the Quarter Ended
	9/30/2022			6/30/2022			3/31/2022			12/31/2021			9/30/2021
EARNINGS
Net interest income	$	24,563		$	22,910		$	21,149		$	20,641		$	20,781
Provision for loan losses		216			1,298			642			825			158
Non-interest income		944			1,463			1,267			2,211			1,901
Non-interest expense		11,737			11,409			11,122			11,825			10,522
Income tax expense		3,348			2,843			2,494			2,363			2,966
Net income		10,206			8,823			8,158			7,839			9,036

PERFORMANCE RATIOS
Return on average assets (1)		1.57	%		1.38	%		1.31	%		1.27	%		1.46	%
Adjusted return on average assets (1) (2)		1.57	%		1.38	%		1.31	%		1.33	%		1.48	%
Return on average equity (1)		14.46	%		12.92	%		12.25	%		11.77	%		13.86	%
Adjusted return on average equity (1) (2)		14.46	%		12.92	%		12.25	%		12.36	%		14.04	%
Return on average tangible equity (1) (2)		15.55	%		13.93	%		13.22	%		12.63	%		14.90	%
Adjusted return on average tangible equity (1) (2)		15.55	%		13.93	%		13.22	%		13.26	%		15.09	%
Net interest margin (1) (3)		3.97	%		3.76	%		3.57	%		3.52	%		3.54	%
Total cost of deposits (1)		0.50	%		0.23	%		0.19	%		0.21	%		0.25	%
Efficiency ratio (2)		46.01	%		46.81	%		49.62	%		49.57	%		45.75	%

SHARE DATA
Common shares outstanding		19,447,206			19,483,415			19,634,744			19,472,364			19,464,388
Basic earnings per share	$	0.52		$	0.45		$	0.42		$	0.40		$	0.46
Diluted earnings per share		0.52			0.45			0.41			0.40			0.46
Adjusted diluted earnings per share (2)		0.52			0.45			0.41			0.42			0.46
Tangible book value per share (2)		13.43			13.08			12.79			12.67			12.45
Book value per share		14.44			14.10			13.81			13.69			13.37

MARKET DATA
Market value per share	$	13.67		$	13.98		$	14.22		$	14.51		$	14.09
Market value / Tangible book value		101.80	%		106.84	%		111.14	%		114.53	%		113.21	%
Market capitalization	$	265,843		$	272,378		$	279,206		$	282,544		$	274,253

CAPITAL & LIQUIDITY
Tangible stockholders’ equity / tangible assets (2)		10.02	%		10.00	%		9.84	%		9.91	%		10.01	%
Stockholders’ equity / assets		10.69	%		10.70	%		10.53	%		10.62	%		10.67	%
Loans / deposits		102.75	%		102.54	%		98.80	%		99.88	%		97.96	%

ASSET QUALITY
Net charge-offs (recoveries)	$	705		$	404		$	247		$	6		$	(121	)
Nonperforming loans		5,107			11,888			12,591			13,001			11,488
Nonperforming assets		5,400			12,181			12,884			13,773			11,967
Net charge offs (recoveries) / average loans (1)		0.13	%		0.07	%		0.05	%		0.00	%		(0.02	%)
Nonperforming loans / total loans		0.23	%		0.54	%		0.59	%		0.62	%		0.57	%
Nonperforming assets / total assets		0.21	%		0.47	%		0.50	%		0.55	%		0.49	%
Allowance for loan losses / total loans		1.09	%		1.13	%		1.12	%		1.12	%		1.14	%
Allowance for loan losses / total loans (excluding PPP loans)		1.09	%		1.13	%		1.13	%		1.15	%		1.19	%
Allowance for loan losses / nonperforming loans		480.61	%		210.58	%		191.72	%		182.65	%		199.57	%

OTHER DATA
Total assets	$	2,625,212		$	2,568,137		$	2,573,845		$	2,510,298		$	2,438,020
Total loans		2,250,529			2,220,223			2,151,751			2,111,991			2,004,289
Total deposits		2,190,192			2,165,163			2,177,895			2,114,602			2,045,966
Total stockholders’ equity		280,749			274,702			271,068			266,666			260,179
Number of full-time equivalent employees (4)		228			233			219			217			209

(1) Annualized.
(2) Non-U.S. GAAP financial measure that we believe provides management and investors with information that is useful in understanding our financial performance and condition. See accompanying table, “Non-U.S. GAAP Financial Measures,” for calculation and reconciliation.
(3) Tax equivalent using a federal income tax rate of 21%.
(4) Includes 8 full-time equivalent seasonal interns as of June 30, 2022.

FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)

		As of the Quarter Ended
		9/30/2022			6/30/2022			3/31/2022			12/31/2021			9/30/2021
LOAN COMPOSITION
Commercial and industrial		$	323,984		$	321,205		$	321,979		$	350,103		$	308,991
Commercial real estate:
	Owner-occupied		512,261			517,791			493,999			470,022			444,635
	Investor		934,490			917,905			888,622			848,021			832,727
	Construction and development		126,206			117,011			96,585			109,292			112,112
	Multi-family		214,819			201,269			193,865			173,728			145,245
	Total commercial real estate		1,787,776			1,753,976			1,673,071			1,601,063			1,534,719
Residential real estate:
	Residential mortgage and first lien home equity loans		96,194			98,841			99,992			106,204			103,890
	Home equitysecond lien loans and revolving lines of credit		31,670			30,491			30,485			31,375			29,998
	Total residential real estate		127,864			129,332			130,477			137,579			133,888
Consumer and other			14,654			19,694			30,096			27,762			31,946
	Total loans prior to deferred loan fees and costs		2,254,278			2,224,207			2,155,623			2,116,507			2,009,544
Net deferred loan fees and costs			(3,749	)		(3,984	)		(3,872	)		(4,516	)		(5,255	)
	Total loans	$	2,250,529		$	2,220,223		$	2,151,751		$	2,111,991		$	2,004,289

LOAN MIX
Commercial and industrial			14.4	%		14.5	%		15.0	%		16.6	%		15.4	%
Commercial real estate:
	Owner-occupied		22.8	%		23.3	%		23.0	%		22.3	%		22.2	%
	Investor		41.5	%		41.3	%		41.3	%		40.1	%		41.5	%
	Construction and development		5.6	%		5.3	%		4.5	%		5.2	%		5.6	%
	Multi-family		9.5	%		9.1	%		9.0	%		8.2	%		7.2	%
	Total commercial real estate		79.4	%		79.0	%		77.8	%		75.8	%		76.5	%
Residential real estate:
	Residential mortgage and first lien home equity loans		4.3	%		4.4	%		4.6	%		5.0	%		5.2	%
	Home equitysecond lien loans and revolving lines of credit		1.4	%		1.4	%		1.4	%		1.5	%		1.5	%
	Total residential real estate		5.7	%		5.8	%		6.0	%		6.5	%		6.7	%
Consumer and other			0.7	%		0.9	%		1.4	%		1.4	%		1.7	%
Net deferred loan fees and costs			(0.2	%)		(0.2	%)		(0.2	%)		(0.3	%)		(0.3	%)
	Total loans		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)

		As of the Quarter Ended
		9/30/2022			6/30/2022			3/31/2022			12/31/2021			9/30/2021
DEPOSIT COMPOSITION
Non-interest bearing demand deposits		$	584,025		$	600,402		$	597,333		$	558,775		$	536,905
Interest bearing demand deposits			343,041			318,687			314,564			293,647			241,869
Money market and savings deposits			860,577			929,075			936,848			871,074			845,607
Time deposits			402,549			316,999			329,150			391,106			421,585
	Total Deposits	$	2,190,192		$	2,165,163		$	2,177,895		$	2,114,602		$	2,045,966

DEPOSIT MIX
Non-interest bearing demand deposits			26.7	%		27.7	%		27.4	%		26.4	%		26.3	%
Interest bearing demand deposits			15.7	%		14.7	%		14.5	%		13.9	%		11.8	%
Money market and savings deposits			39.3	%		42.9	%		43.0	%		41.2	%		41.3	%
Time deposits			18.3	%		14.7	%		15.1	%		18.5	%		20.6	%
	Total Deposits		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(in thousands, except for share data, unaudited)

	As of or For the Quarter Ended
	9/30/2022			6/30/2022			3/31/2022			12/31/2021			9/30/2021
Return on Average Tangible Equity
Net income (numerator)	$	10,206		$	8,823		$	8,158		$	7,839		$	9,036

Average stockholders’ equity	$	280,093		$	273,829		$	270,147		$	264,216		$	258,596
Less: Average Goodwill and other intangible assets, net		19,669			19,823			19,916			17,910			17,937
Average Tangible stockholders’ equity (denominator)	$	260,424		$	254,006		$	250,231		$	246,306		$	240,659

Return on Average Tangible equity (1)		15.55	%		13.93	%		13.22	%		12.63	%		14.90	%

Tangible Book Value Per Share
Stockholders’ equity	$	280,749		$	274,702		$	271,068		$	266,666		$	260,179
Less: Goodwill and other intangible assets, net		19,599			19,768			19,854			19,971			17,920
Tangible stockholders’ equity (numerator)	$	261,150		$	254,934		$	251,214		$	246,695		$	242,259

Common shares outstanding (denominator)		19,447,206			19,483,415			19,634,744			19,472,364			19,464,388

Tangible book value per share	$	13.43		$	13.08		$	12.79		$	12.67		$	12.45


Tangible Equity / Assets
Stockholders’ equity	$	280,749		$	274,702		$	271,068		$	266,666		$	260,179
Less: Goodwill and other intangible assets, net		19,599			19,768			19,854			19,971			17,920
Tangible stockholders’ equity (numerator)	$	261,150		$	254,934		$	251,214		$	246,695		$	242,259

Total assets	$	2,625,212		$	2,568,137		$	2,573,845		$	2,510,298		$	2,438,020
Less: Goodwill and other intangible assets, net		19,599			19,768			19,854			19,971			17,920
Tangible total assets (denominator)	$	2,605,613		$	2,548,369		$	2,553,991		$	2,490,327		$	2,420,100

Tangible stockholders’ equity / tangible assets		10.02	%		10.00	%		9.84	%		9.91	%		10.01	%


Efficiency Ratio
Non-interest expense	$	11,737		$	11,409		$	11,122		$	11,825		$	10,522
Less: Merger-related expenses		–			–			–			498			145
Adjusted non-interest expense (numerator)	$	11,737		$	11,409		$	11,122		$	11,327		$	10,377

Net interest income	$	24,563		$	22,910		$	21,149		$	20,641		$	20,781
Non-interest income		944			1,463			1,267			2,211			1,901
Total revenue	$	25,507		$	24,373		$	22,416		$	22,852		$	22,682

Efficiency ratio		46.01	%		46.81	%		49.62	%		49.57	%		45.75	%

(1) Annualized.

FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(dollars in thousands, except for share data, unaudited)


	For the Quarter Ended
	9/30/2022			6/30/2022			3/31/2022			12/31/2021			9/30/2021

Adjusted diluted earnings per share,
Adjusted return on average assets, and
Adjusted return on average equity

Net income	$	10,206		$	8,823		$	8,158		$	7,839		$	9,036
Add: Merger-related expenses ⁽¹⁾		–			–			–			393			115
Adjusted net income	$	10,206		$	8,823		$	8,158		$	8,232		$	9,151

Diluted weighted average common shares outstanding		19,668,133			19,794,657			19,768,452			19,725,294			19,842,817
Average assets	$	2,575,742		$	2,568,443		$	2,522,775		$	2,447,399		$	2,456,617
Average equity	$	280,093		$	273,829		$	270,147		$	264,216		$	258,596
Average Tangible Equity	$	260,424		$	254,006		$	250,231		$	246,306		$	240,659

Adjusted diluted earnings per share	$	0.52		$	0.45		$	0.41		$	0.42		$	0.46
Adjusted return on average assets ⁽²⁾		1.57	%		1.38	%		1.31	%		1.33	%		1.48	%
Adjusted return on average equity ⁽²⁾		14.46	%		12.92	%		12.25	%		12.36	%		14.04	%
Adjusted return on average tangible equity ⁽²⁾		15.55	%		13.93	%		13.22	%		13.26	%		15.09	%

(1) Items are tax-effected using a federal income tax rate of 21%.
(2) Annualized.