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 stock’s 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 KBRA’s 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 Bank’s 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 Bank’s 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 Bank’s 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 Bank’s 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 Bank’s 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 Bank’s 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 Bank’s 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 Bank’s 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 Bank’s 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 Bank’s 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 Bank’s 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 Bank’s 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 Bank’s 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 Bank’s Annual Report on Form 10-K and any updates to those risk factors set forth in First Bank’s 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 Bank’s 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 Bank’s 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 securities—taxable $ 788     $ 571   $ 2,053   $ 1,596  
Investment securities—tax-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 equity–second 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 equity–second 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.                  
                   

Alex

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