SOURCE: First Bank

First Bank

February 02, 2015 17:56 ET

First Bank Reports 2014 Earnings of $5.8 Million; Total Assets Reach $677 Million

HAMILTON, NJ--(Marketwired - February 02, 2015) - First Bank (NASDAQ: FRBA) today announced fourth quarter and full-year 2014 results. Net income for the quarter was $586 thousand or $0.06 per diluted share, compared to net income of $311 thousand or $0.05 per diluted share for the fourth quarter of 2013 and $1.1 million or $0.12 per diluted share for the third quarter of 2014.

Fourth quarter results were primarily effected by three items: i) $1.1 million in income tax expense, which included $634,000 which related to the bargain purchase gain from the acquisition of Heritage Community Bank (HCB); ii) $472,000 in gains on recovery of acquired loans; and iii) a higher provision for loan losses of $947,000. The higher provision for loan losses was primarily driven by strong loan growth during the quarter. Book value per share was $6.88 at the end of 2014, an increase of $0.09 compared to $6.79 at the end of the third quarter of 2014 and an increase of $0.72 over book value per share at year end 2013. 

Net income for the full year was $5.8 million compared to $1.7 million for 2013, an increase of $4.1 million or 242%. Diluted earnings per share for the comparative periods were $0.63 and $0.33, respectively. For the year over year comparison, the increase in net income was driven by a $8.0 million (61%) increase in net interest income and a $4.6 million (896%) increase in non-interest income, partially offset by a $6.4 million (69%) increase in non-interest expenses.

President and Chief Executive Officer Patrick L. Ryan discussed the results: "We had a strong finish to the year: total loans increased $43 million in the quarter; total assets increased $34 million; and book value per share increased to $6.88, an increase of $0.72 per share (12%) compared to year end 2013. We continued to realize benefits from the HCB acquisition as certain acquired loans performed better than expected, generating an additional $472 thousand in non-interest income during the quarter. Partially offsetting this benefit, deterioration in other components of the acquired portfolio drove our non-performing loan ratios up modestly. Our net interest margin of 3.84% for the quarter was up slightly from the third quarter, a solid accomplishment considering the current rate environment."

Ryan continued, "Despite these positive developments, bottom line results for the quarter were lower than expected because of a higher income tax provision related to the gain from the acquisition. All things considered, we look back at 2014 as a year of great progress and profitability for First Bank. Our customer base and our geographic footprint expanded. Our margin held steady. And, our core earnings showed solid, steady improvement. During the year, we answered key questions: i) we showed that we could effectively price, analyze, and integrate another bank; ii) we showed that our core organic growth engine could continue to churn out solid deposit and loan growth; and iii) we showed that as we grow we can generate positive operating leverage."

Highlights

  • Balance Sheet
    • Total assets at December 31, 2014 were $677.5 million, an increase of $34.0 million or 5.3% compared to September 30, 2014, and an increase of $210.7 million or 45.1% compared to December 31, 2013. 
    • Total loans reached $547.8 million at December 31, 2014, an increase of $42.8 million or 8.5% compared to September 30, 2014 and an increase of $207.8 million or 61.1% compared to December 31, 2013. 
    • Total deposits reached $596.5 million at December 31, 2014, an increase of $33.0 million or 5.9% compared to September 30, 2014 and an increase of $197.4 million or 49.5% compared to December 31, 2013. Non-interest bearing deposits increased to $92.0 million or 15.4% of total deposits at December 31, 2014.
    • Stockholders' equity increased to $64.8 million at December 31, 2014.
    • Book value per share was $6.88 at December 31, 2014 compared to $6.79 per share at September 30, 2014 and $6.16 per share at December 31, 2013. Tangible book value per share was $6.85 at December 31, 2014, compared to $6.75 per share at September 30, 2014 and $6.16 per share at December 31, 2013. 
  • Quarterly Income Statement
    • Net interest income for the fourth quarter of 2014 totaled $6.1 million, an increase of $574 thousand or 10.4% compared to $5.5 million for the third quarter of 2014, and an increase of $2.5 million or 68.4% compared to the fourth quarter of 2013.
    • Non-interest income for the fourth quarter of 2014 totaled $966 thousand, a decrease of $112 thousand or 10.4% compared to $1.1 million for the third quarter of 2014. When compared to the fourth quarter of 2013, non-interest income increased $864 thousand or 847.1%.
    • Non-interest expense for the fourth quarter of 2014 totaled $4.4 million, an increase of $256 thousand or 6.2% compared to $4.1 million for the third quarter of 2014, and an increase of $1.9 million or 76.8% compared to $2.5 million in the fourth quarter of 2013. 
    • Pre-tax income for the fourth quarter of 2014 totaled $1.7 million, an increase of $236 thousand or 15.8% compared to $1.5 million for the third quarter of 2014, and an increase of $1.2 million or 240.4% compared to the fourth quarter of 2013.
    • Net income for the fourth quarter of 2014 totaled $586 thousand, a decrease of $503 thousand or 46.2% compared to $1.1 million in the third quarter of 2014, and an increase of $275 thousand or 88.4% compared to the fourth quarter of 2013.
    • Diluted earnings per share for the fourth quarter totaled $0.06, a decrease of $0.06 per share compared to $0.12 per share in the third quarter of 2014, and an increase of $0.01 per share compared to the fourth quarter of 2013.
    • The provision for loan losses in the fourth quarter of 2014 totaled $947 thousand, a decrease of $30 thousand or 3.1% compared to $977 thousand for the third quarter of 2014, and an increase of $214 thousand or 29.2% compared to the fourth quarter of 2013.
    • Pre-provision net revenue1 for the fourth quarter was $2.2 million, an increase of $486 thousand or 28.2% compared to $1.7 million in the third quarter of 2014, and an increase of $972 thousand or 78.4% compared to the fourth quarter of 2013.
  • Year to Date Income Statement
    • Net interest income for the year ended December 31, 2014 totaled $21.2 million, an increase of $8.0 million or 60.6% compared to $13.2 million for 2013.
    • Non-interest income for the year ended December 31, 2014 totaled $5.1 million, an increase of $4.6 million or 895.7% compared to $512 thousand for 2013.
    • Non-interest expense for the year ended December 31, 2014 totaled $15.8 million, an increase of $6.4 million or 68.5% compared to $9.4 million for 2013.
    • The provision for loan losses for the year ended December 31, 2014 totaled $2.4 million, an increase of $895 thousand or 58.0% compared to $1.5 million for 2013.
  • Other items
    • The tax equivalent net interest margin ("NIM") for the fourth quarter of 2014 was 3.84% compared to 3.72% for the third quarter of 2014 and 3.33% for the fourth quarter of 2013. 
    • Non-performing assets ("NPAs") were $9.4 million or 1.39% of total assets at December 31, 2014 compared to $7.0 million or 1.09% of total assets at September 30, 2014. 
      • Non-accrual loans totaled $4.7 million or 0.85% of total loans at December 31, 2014 compared to non-accrual loans of $4.3 million or 0.85% of total loans at September 30, 2014.
      • Loans 30-89 days past due totaled $5.5 million at December 31, 2014 compared to $8.5 million at September 30, 2014. We had 2 loans over 90 days past due and still accruing at December 31, 2014 totaling $2.4 million. 
      • Other real estate owned (including other repossessed assets) totaled $2.3 million at December 31, 2014.
    • Regulatory capital ratios at December 31, 2014:
      • Tier 1 Leverage ratio of 9.72%.
      • Tier 1 Risk-Based capital ratio of 10.96%.
      • Total Risk-Based capital ratio of 12.00%.
    • The allowance for loan losses ("ALLL") to total loans at December 31, 2014 was 1.11% compared to 1.09% at September 30, 2014.  The increase in the ALLL ratio related primarily to an increase in our organic portfolio and payoffs/reductions in the loan portfolio acquired in the Heritage transaction that carries no loan loss reserve because of the mark to market accounting treatment on that portfolio at the time of acquisition.
    • 94 full-time equivalent employees ("FTEs") at December 31, 2014, compared to 89 FTEs at September 30, 2014.

1 A non-GAAP metric defined by SNL Financial as net interest income before provision for loan losses plus non-interest income excluding non-ordinary items (e.g. gains on sale of investment securities, gains on recovery of acquired loans, and bargain purchase gains) minus non-interest expense excluding non-ordinary items (e.g. merger related expenses).

About First Bank
First Bank (www.firstbanknj.com) is a New Jersey state-chartered bank with nine full-service branches in Cranbury, Denville, Ewing, Hamilton, Lawrence, Randolph (2), Somerset and Williamstown, New Jersey. With $677 million in assets as of December 31, 2014, First Bank offers a traditional range of deposit and loan products to individuals and businesses throughout the New York City to Philadelphia, PA corridor. First Bank's common stock is listed on the Nasdaq Global Market under the symbol "FRBA". 

This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance. These statements may be identified by use of terms such as "estimates", "believes", "intends", "expects", "projects", or similar expressions. These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond First Bank's control and could impede its ability to achieve these goals. These factors include those listed in our Annual Report on Form 10K under the caption "Item 1A-Risk Factors", and general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, and results of regulatory exams, among other factors. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. First Bank does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

   
FIRST BANK AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION  
(in thousands, except share data, unaudited)  
          
   December 31,  
   2014   2013  
Assets           
Cash and due from banks  $4,352   $9,787  
Interest bearing deposits with banks   16,018    13,927  
   Cash and cash equivalents   20,370    23,714  
Interest bearing time deposits with banks   5,183    4,903  
Investment securities available for sale   40,390    65,017  
Investment securities held to maturity (fair value of $34,734 and $15,353 at December 31, 2014 and 2013, respectively)   34,273    15,414  
Restricted investment in bank stocks   1,304    1,131  
Other investments   5,000    5,000  
Loans, net of deferred fees and costs   547,759    339,975  
 Less: Allowance for loan losses   6,104    4,675  
  Net loans   541,655    335,300  
Premises and equipment, net   3,452    1,787  
Other real estate owned, net   2,182    1,664  
Accrued interest receivable   1,724    1,232  
Bank-owned life insurance   14,147    8,805  
Intangible assets, net   356    -  
Deferred income taxes   6,864    2,352  
Other assets   558    473  
  Total assets  $677,458   $466,792  
            
Liabilities and Stockholders' Equity           
Deposits:           
 Non-interest bearing  $91,972   $48,186  
 Interest bearing   504,510    350,927  
  Total deposits   596,482    399,113  
Long-term borrowings   14,000    14,000  
Accrued interest payable   337    156  
Other liabilities   1,880    1,016  
  Total liabilities   612,699    414,285  
Stockholders' Equity:           
Preferred stock, par value $2 per share; authorized 5,000,000 shares; no shares issued and outstanding   -    -  
Common stock, par value $5 per share; authorized 20,000,000 shares; issued and outstanding 9,408,491 shares and 8,520,299 shares at December 31, 2014 and 2013, respectively   47,042    42,602  
Additional paid-in capital   14,301    13,052  
Retained earnings (accumulated deficit)   3,546    (2,290 )
Accumulated other comprehensive loss   (130 )  (857 )
  Total stockholders' equity   64,759    52,507  
  Total liabilities and stockholders' equity  $677,458   $466,792  
         
         
 
FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data, unaudited)
 
   Three Months Ended  Year Ended
   December 31,  December 31,
   2014  2013  2014  2013
Interest and Dividend Income                
Investment securities - taxable  $307  $303  $1,288  $969
Investment securities - tax-exempt   86   52   291   138
Federal funds sold   -   -   2   -
Interest bearing deposits with banks and other   53   55   233   173
Loans, including fees   6,807   4,127   23,536   15,340
 Total interest and dividend income   7,253   4,537   25,350   16,620
                 
Interest Expense                
Deposits   1,123   874   3,919   3,215
Borrowings   55   55   218   199
 Total interest expense   1,178   929   4,137   3,414
Net interest income   6,075   3,608   21,213   13,206
Provision for loan losses   947   733   2,438   1,543
Net interest income after provision for loan losses   5,128   2,875   18,775   11,663
                 
Non-Interest Income                
Service fees on deposit accounts   30   18   136   75
Loan fees   4   4   22   33
Title insurance fees   14   7   19   30
Income from bank-owned life insurance   111   41   342   151
Gains on sale of investment securities, net   -   -   34   18
Gains on sale of loans held for sale   246   -   283   134
Gain on acquisition of Heritage Community Bank   -   -   2,606   -
Gains on recovery of acquired loans   472   -   1,426   -
Other non-interest income   89   32   231   71
 Total non-interest income   966   102   5,099   512
                 
Non-Interest Expense                
Salaries and employee benefits   2,214   1,251   7,904   4,751
Occupancy and equipment   552   369   1,981   1,410
Legal fees   100   18   346   203
Other professional fees   252   179   1,091   562
Regulatory fees   150   83   539   253
Directors' fees   94   57   330   231
Data processing   187   107   730   413
Marketing and advertising   191   148   511   347
Travel and entertainment   75   60   238   163
Insurance   58   29   167   114
Other real estate owned expense, net   135   34   435   385
Merger-related expenses   11   37   590   88
Other expense   349   98   958   468
 Total non-interest expense   4,368   2,470   15,820   9,388
Income Before Income Taxes   1,726   507   8,054   2,787
Income tax expense   1,140   196   2,218   1,079
Net Income  $586  $311  $5,836  $1,708
                 
Basic earnings per share  $0.06  $0.05  $0.63  $0.33
Diluted earnings per share  $0.06  $0.05  $0.63  $0.33
                 
Basic weighted average common shares outstanding   9,408,491   6,436,965   9,244,005   5,128,061
Diluted weighted average common shares outstanding   9,466,647   6,509,078   9,309,134   5,172,233
             
             
   
FIRST BANK AND SUBSIDIARIES  
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES  
(unaudited)  
                          
   Three Months Ended December 31,  
   2014   2013  
   Average 
Balance
  Interest   Average 
Rate
(5)
  Average 
Balance
  Interest   Average 
Rate
(5)
 
   (dollars in thousands)  
Interest earning assets                             
Investment securities (1) (2)  $74,087   $423   2.27 % $68,032   $373   2.17 %
Loans (3)   521,216    6,807   5.18 %  322,601    4,127   5.08 %
Interest bearing deposits with banks   29,679    24   0.32 %  35,502    26   0.29 %
Restricted investment in bank stocks   1,305    13   3.95 %  1,131    10   3.51 %
Other investments   5,000    16   1.27 %  5,000    19   1.51 %
 Total interest earning assets (2)   631,287    7,283   4.58 %  432,266    4,555   4.18 %
Allowance for loan losses   (5,718 )           (4,640 )         
Non-interest earning assets   38,849             21,268           
 Total assets  $664,418            $448,894           
                              
Interest bearing liabilities                             
Interest bearing demand deposits  $26,525   $39   0.58 % $11,921   $10   0.33 %
Money market deposits   100,402    157   0.62 %  78,340    130   0.66 %
Savings deposits   105,456    158   0.59 %  91,545    172   0.75 %
Time deposits   259,266    769   1.18 %  163,785    562   1.36 %
 Total interest bearing deposits   491,649    1,123   0.91 %  345,591    874   1.00 %
Borrowings   14,000    55   1.56 %  14,014    55   1.56 %
 Total interest bearing liabilities   505,649    1,178   0.92 %  359,605    929   1.02 %
Non-interest bearing deposits   91,565             45,632           
Other liabilities   1,930             1,924           
Stockholders' equity   65,274             41,733           
 Total liabilities and stockholders' equity  $664,418            $448,894           
Net interest income/interest rate spread (2)        6,105   3.66 %       3,626   3.16 %
Net interest margin (4)            3.84 %           3.33 %
Tax-equivalent adjustment (2)        (30 )           (18 )    
Net interest income       $6,075            $3,608      
                              
(1) Average balances of investment securities available for sale are based on amortized cost.
(2) Interest and average rates are tax equivalent using a Federal income tax rate of 34 percent.
(3) Average balances of loans include loans on nonaccrual status.
(4) Net interest income divided by average total interest earning assets.
 
 
   
FIRST BANK AND SUBSIDIARIES  
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES  
(unaudited)  
                          
   Year Ended December 31,  
   2014   2013  
 
 
 
 
Average
Balance
 
 
 
 
 
Interest
 
 
 
 
Average
Rate (5)
 
 
 
 
Average
Balance
 
 
 
 
 
Interest
 
 
 
 
Average
Rate (5)
 
 
    (dollars in thousands)
Interest earning assets                             
Investment securities (1) (2)  $73,741   $1,678   2.28 % $59,118   $1,154   1.95 %
Loans (3)   456,105    23,536   5.16 %  294,751    15,340   5.20 %
Federal funds sold and interest                             
bearing deposits with banks   31,508    101   0.32 %  21,861    61   0.28 %
Restricted investment in bank stocks   1,337    53   3.96 %  997    34   3.41 %
Other investments   5,000    81   1.62 %  5,000    78   1.56 %
 Total interest earning assets (2)   567,691    25,449   4.48 %  381,727    16,667   4.37 %
Allowance for loan losses   (5,138 )           (4,405 )         
Non-interest earning assets   35,258             19,652           
 Total assets  $597,811            $396,974           
                              
Interest bearing liabilities                             
Interest bearing demand deposits  $19,380   $84   0.43 % $11,556   $40   0.35 %
Money market deposits   91,121    521   0.57 %  71,134    488   0.69 %
Savings deposits   113,415    713   0.63 %  87,471    670   0.77 %
Time deposits   218,934    2,601   1.19 %  140,669    2,017   1.43 %
 Total interest bearing deposits   442,850    3,919   0.88 %  310,830    3,215   1.03 %
Borrowings   14,000    218   1.56 %  11,843    199   1.68 %
 Total interest bearing liabilities   456,850    4,137   0.91 %  322,673    3,414   1.06 %
Non-interest bearing deposits   77,831             39,030           
Other liabilities   1,600             1,164           
Stockholders' equity   61,530             34,107           
 Total liabilities and stockholders' equity  $597,811            $396,974           
Net interest income/interest rate spread (2)        21,312   3.57 %       13,253   3.31 %
Net interest margin (4)            3.75 %           3.47 %
Tax-equivalent adjustment (2)        (99 )           (47 )    
Net interest income       $21,213            $13,206      
                              
(1) Average balances of investment securities available for sale are based on amortized cost.
(2) Interest and average rates are tax equivalent using a Federal income tax rate of 34 percent.
(3) Average balances of loans include loans on nonaccrual status.
(4) Net interest income divided by average total interest earning assets.
(5) Average rates are annualized.
 
 
   
FIRST BANK AND SUBSIDIARIES  
QUARTERLY FINANCIAL HIGHLIGHTS  
(in thousands, except share data, unaudited)  
                      
   4Q2014   3Q2014   2Q2014   1Q2014   4Q2013  
EARNINGS                          
 Net interest income  $6,075   $5,501   $5,415   $4,222   $3,608  
 Provision for loan losses   947    977    336    178    733  
 Non-interest income   966    1,078    316    2,739    102  
 Non-interest expense   4,368    4,112    4,119    3,221    2,470  
 Income tax expense   1,140    401    353    324    196  
 Net income   586    1,089    923    3,238    311  
                           
PER SHARE DATA                          
 Basic earnings per share  $0.06   $0.12   $0.10   $0.37   $0.05  
 Diluted earnings per share   0.06    0.12    0.10    0.37    0.05  
 Book value   6.88    6.79    6.68    6.54    6.16  
 Tangible book value   6.85    6.75    6.64    6.50    6.16  
                           
PERFORMANCE RATIOS                          
 Return on average assets   0.35 %  0.69 %  0.61 %  2.63 %  0.27 %
 Return on average equity   3.56 %  6.77 %  5.95 %  23.79 %  2.96 %
 Net interest margin, tax equivalent basis   3.84 %  3.72 %  3.81 %  3.61 %  3.33 %
 Efficiency ratio   75.06 %  70.12 %  68.98 %  74.20 %  69.85 %
                           
MARKET DATA                          
 Market value per share, period end  $6.24   $6.15   $6.00   $6.50   $6.34  
 Market value / book value (x)   0.91    0.91    0.90    0.99    1.03  
 Common shares outstanding, period-end   9,408    9,408    9,408    9,395    8,520  
 Market capitalization  $58,706   $57,859   $56,448   $61,068   $54,017  
                           
CAPITAL & LIQUIDITY                          
 Tangible equity / assets   9.51 %  9.87 %  10.23 %  10.19 %  11.25 %
 Equity / assets   9.56 %  9.93 %  10.29 %  10.26 %  11.25 %
 Loans / deposits   91.83 %  89.63 %  87.73 %  86.27 %  85.18 %
                           
ASSET QUALITY                          
 Net charge offs  $354   $490   $165   $124   $600  
 Annualized net charge offs / average loans   0.27 %  0.41 %  0.14 %  0.14 %  0.74 %
 Nonperforming loans  $7,112   $4,666   $3,411   $3,175   $3,336  
 Nonperforming loans / total loans   1.30 %  0.92 %  0.73 %  0.70 %  0.98 %
 Nonperforming assets  $9,394   $7,014   $5,745   $5,539   $5,087  
 Nonperforming assets / total assets   1.39 %  1.09 %  0.94 %  0.92 %  1.09 %
 Allowance for loan losses / total loans   1.11 %  1.09 %  1.08 %  1.05 %  1.38 %
                           
PERIOD-END DATA                          
 Total assets  $677,458   $643,499   $610,645   $599,212   $466,792  
 Total loans   547,759    505,008    466,878    450,424    339,975  
 Total deposits   596,482    563,433    532,147    522,102    399,113  
 Total stockholders' equity   64,759    63,895    62,847    61,453    52,507  
 Full-time equivalent employees   94    89    95    91    59  
                     
                     

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