SOURCE: First Bank

First Bank

April 25, 2016 18:21 ET

First Bank Reports First Quarter 2016 Earnings of $1.4 Million; Total Assets Reach $917 Million

HAMILTON, NJ--(Marketwired - April 25, 2016) - First Bank (NASDAQ: FRBA) today announced first quarter 2016 results. Net income for the quarter was $1.4 million or $0.14 per diluted share, compared to $686 thousand or $0.07 per diluted share for the fourth quarter of 2015 and $1.7 million or $0.18 per diluted share for the first quarter of 2015. 

The increase in first quarter net income compared to the fourth quarter of 2015 was driven by higher net interest income from strong loan growth and lower non-interest expenses. Fourth quarter 2015 results included $350 thousand in one-time severance and branch closing costs. 

Book value per share was $7.42 at the end of the first quarter of 2016, an increase of 5.0% compared to book value of $7.07 at the end of the first quarter of 2015. Nonperforming assets as a percentage of total assets equaled 0.63% at the end of the first quarter of 2016 compared to 1.03% at the end of the first quarter of 2015.

President and Chief Executive Officer Patrick L. Ryan commenting on the results said: "The first quarter of 2016 was a good, clean quarter. We had very little in the way of unusual or non-recurring income or expense. I believe it provides a good perspective on the improved earnings potential of the franchise based on our larger balance sheet and more streamlined cost structure. We hope that a strong first quarter puts us on the path for an excellent 2016. 

"Importantly, we had another very good quarter of loan growth, with an increase of $68 million in the quarter. It was nice to see continued, strong growth, especially on the heels of $81 million in loan growth in the fourth quarter of last year. Often a strong growth quarter can be followed by a slow down as we work to rebuild our pipeline and that did not happen in the first quarter. We do expect loan growth will slow from its current pace as we move through the remainder of 2016, but we are certainly enjoying our current momentum. We believe having lending teams in three different markets is helping to smooth out some of the peaks and troughs that are typical in the community bank lending business. In a manner fairly consistent with prior quarters and our stated goals, a little over half of the loan growth came from our central NJ region, a little over 25% came from the PA region, and about 20% came from the northern NJ region.

"We were pleased to see good deposit growth in the quarter, with net increases coming from nine of the ten branches in our network. Our newest location in Flemington is off to a great start. We are still looking to drive stronger growth in our non-interest bearing product categories and we have implemented some new initiatives which we hope will help drive stronger results in that area. We are also working on new product designs and features that should help drive continued adoption of our mobile and e-banking services. Over 20% of our online banking customers use mobile banking today, but we know the mobile penetration rate can and should move higher.

"Asset quality metrics remained strong. Nonperforming assets/total assets ticked down slightly and remained at very healthy levels. Delinquency rates also improved during the quarter. Thankfully, our markets (and our bank) do not have much in the way of energy exposure. Due to the cyclical nature of credit, we do not take our current environment for granted. We're watching key trends and metrics closely. Thankfully, the current signals indicate that borrowers remain in a healthy position.

"First quarter results showed that our expense control measures are working. Non-interest expenses were down not only compared to the fourth quarter of 2015, but also compared to the first quarter of 2015. I expect expenses will start to rise again as we continue to grow, but we will continue our efforts to operate in a prudent, but lean fashion."

Ryan concluded, "After two consecutive quarters of very strong growth, capital planning moves to the front of the agenda. The market opportunity in front of us is substantial, especially given our larger geographic reach, our larger legal lending limit, and the continued consolidation in the industry."

First Quarter 2016 Highlights

  • Balance Sheet
    • Total assets at March 31, 2016 were $917.4 million, an increase of $61.9 million or 7.2% compared to December 31, 2015, and an increase of $186.5 million or 25.5% compared to March 31, 2015. 
    • Total loans reached $758.1 million at March 31, 2016, an increase of $68.2 million or 9.9% compared to December 31, 2015 and an increase of $213.1 million or 39.1% compared to March 31, 2015. 
    • Loan portfolio composition at March 31, 2016:
      • Acquisition, Construction and Development (ACD) loans equaled 7.5% of total loans;
      • Commercial Real Estate, Investor (CREI; including multi-family) loans equaled 45.6% of total loans;
      • Commercial Real Estate, Owner-Occupied (CREO) loans equaled 22.4% of total loans;
      • Commercial and Industrial (C&I) loans equaled 14.9% of total loans;
      • Residential Real Estate and Consumer and Other loans equaled 9.6% of total loans.
    • Total deposits reached $799.0 million at March 31, 2016, an increase of $60.0 million or 8.1% compared to December 31, 2015 and an increase of $150.7 million or 23.2% compared to March 31 2015. Non-interest bearing deposits totaled $101.6 million at March 31, 2016, or 12.7% of total deposits.
    • Stockholders' equity increased to $70.5 million at March 31, 2016.
    • Book value per share was $7.42 at March 31, 2016 compared to $7.26 per share at December 31, 2015 and $7.07 per share at March 31, 2015. Tangible book value per share was $7.39 at March 31, 2016, compared to $7.23 per share at December 31, 2015 and $7.03 per share at March 31, 2015. 
  • Quarterly and Year to Date Income Statement
    • Net interest income for the first quarter of 2016 totaled $6.8 million, an increase of $673 thousand, or 11.0%, compared to $6.1 million for the fourth quarter of 2015 and an increase of $637 thousand, or 10.4%, compared to the first quarter of 2015. Net interest income in the first quarter of 2015 did not include any interest expense on subordinated debt.
    • The provision for loan losses in the first quarter of 2016 totaled $813 thousand, a decrease of $137 thousand, or 14.4%, compared to $950 thousand for the fourth quarter of 2015 and an increase of $757 thousand compared to the first quarter of 2015.
    • Non-interest income for the first quarter of 2016 totaled $360 thousand compared to $282 thousand for the fourth quarter of 2015. Gains on recovery of acquired loans totaled $111 thousand in the first quarter of 2016 compared to $56 thousand in the fourth quarter of 2015. When compared to the first quarter of 2015 non-interest income decreased $472 thousand. Non-interest income of $832 thousand for the first quarter of 2015 included gains on recovery of acquired loans of $624 thousand.
    • Non-interest expense for the first quarter of 2016 totaled $4.4 million, a decrease of $296 thousand, or 6.3%, compared to $4.7 million for the fourth quarter of 2015. Current period non-interest expense was flat at $4.4 million compared to the first quarter of 2015.
    • Pre-tax income for the first quarter of 2016 totaled $1.9 million, an increase of $1.2 million, or 155.2%, compared to $763 thousand for the fourth quarter of 2015 and a decrease of $527 thousand or 21.3% compared to the first quarter of 2015.
    • Income tax expense for the first quarter of 2016 totaled $591 thousand, an increase of $514 thousand compared to $77 thousand for the fourth quarter of 2015 and a decrease of $154 thousand, or 20.7%, compared to the first quarter of 2015. 
    • Net income for the first quarter of 2016 totaled $1.4 million, an increase of $670 thousand, or 97.7%, compared to $686 thousand in the fourth quarter of 2015, and a decrease of $373 thousand, or 21.6%, compared to the first quarter of 2015.
    • Diluted earnings per share for the first quarter of 2016 totaled $0.14 an increase of $0.07 per diluted share compared to $0.07 per diluted share for the fourth quarter of 2015. Diluted earnings per share for the first quarter of 2015 totaled $0.18.
    • Pre-provision net revenue1 for the first quarter of 2016 was $2.6 million, an increase of $618 thousand, or 30.8%, compared to $2.0 million in the fourth quarter of 2015, and an increase of $568 thousand, or 27.6%, compared to the first quarter of 2015.
  • Other items
    • The tax equivalent net interest margin for the first quarter of 2016 was 3.14% compared to 3.05% for the fourth quarter of 2015 and 3.74% for the first quarter of 2015. 
    • Nonperforming assets were $5.8 million or 0.63% of total assets at March 31, 2016 compared to $5.5 million or 0.64% of total assets at December 31, 2015. 
      • Nonaccrual loans totaled $3.9 million or 0.52% of total loans at March 31, 2016 compared to nonaccrual loans of $3.8 million or 0.55% of total loans at December 31, 2015.
      • Loans 30-89 days past due totaled $4.2 million at March 31, 2016 compared to $11.3 million at December 31, 2015. Loans over 90 days past due or more and still accruing at March 31, 2016 totaled $155 thousand compared to $108 thousand in loans over 90 days past due or more and still accruing at December 31, 2015.
      • Other real estate owned and other repossessed assets totaled $1.7 million at March 31, 2016 and $1.6 million at December 31, 2015.
    • Regulatory capital ratios at March 31, 2016:
      • Tier 1 Leverage ratio of 7.73%
      • Tier 1 Risk-Based capital ratio of 8.17%
      • Common Equity Tier 1 capital ratio of 8.17%
      • Total Risk-Based capital ratio of 11.69%
    • The ratio of the allowance for loan losses to total loans at March 31, 2016 was 1.12% compared to 1.15% at December 31, 2015.
    • 102 full-time equivalent employees at March 31, 2016 compared to 99 full-time equivalent employees at December 31, 2015.

1 A non-U.S. 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 and other one-time, non-ordinary costs).

Conference Call

First Bank will host an earnings call on Tuesday, April 26, 2016 at 3:00 p.m. The direct dial toll free number for the call is 1-888-317-6016. For those unable to participate in the call, a replay will be available by dialing 1-877-344-7529 from one hour after the end of the conference call until May 3, 2016. The replay will also be available on our 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 (www.firstbanknj.com) is a New Jersey state-chartered bank with ten full-service branches in Cranbury, Denville, Ewing, Flemington, Hamilton, Lawrence, Randolph, Somerset and Williamstown, New Jersey, and Trevose, Pennsylvania. With $917 million in assets as of March 31 2016, First Bank offers a traditional 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". 

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 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.

   
FIRST BANK AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION  
(in thousands, except share data, unaudited)  
   
    March 31,     December 31,  
    2016     2015  
Assets                
Cash and due from banks   $ 5,312     $ 10,032  
Interest bearing deposits in other banks     38,323       23,299  
    Cash and cash equivalents     43,635       33,331  
Interest bearing time deposits in other banks     3,382       4,125  
Investment securities available for sale     31,146       45,341  
Investment securities held to maturity (fair value of $53,011 at March 31, 2016 and $53,793 at December 31, 2015)     51,845       53,262  
Restricted investment in bank stocks     1,862       1,862  
Other investments     5,000       5,000  
Loans, net of deferred fees and costs     758,131       689,887  
  Less: Allowance for loan losses     8,459       7,940  
    Net loans     749,672       681,947  
Premises and equipment, net     3,434       3,449  
Other real estate owned, net     1,670       1,557  
Accrued interest receivable     2,103       2,056  
Bank-owned life insurance     14,675       14,572  
Intangible assets, net     269       286  
Deferred income taxes     7,790       7,935  
Other assets     958       778  
    Total assets   $ 917,441     $ 855,501  
                 
Liabilities and Stockholders' Equity                
Deposits:                
  Non-interest bearing   $ 101,551     $ 99,966  
  Interest bearing     697,434       639,055  
    Total deposits     798,985       739,021  
Borrowings     24,000       24,000  
Subordinated debentures     21,560       21,533  
Accrued interest payable     1,042       612  
Other liabilities     1,380       1,572  
    Total liabilities     846,967       786,738  
Stockholders' Equity:                
Preferred stock, par value $2 per share; 5,000,000 shares authorized; no shares outstanding     -       -  
Common stock, par value $5 per share; 20,000,000 shares authorized; issued and outstanding 9,497,776 shares at March 31, 2016 and 9,470,157 shares at December 31, 2015     47,321       47,218  
Additional paid-in capital     14,542       14,510  
Retained earnings     8,790       7,433  
Accumulated other comprehensive loss     (179 )     (398 )
    Total stockholders' equity     70,474       68,763  
    Total liabilities and stockholders' equity   $ 917,441     $ 855,501  
                     
                     
 
FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data, unaudited)
 
    Three Months Ended
    March 31,
    2016   2015
Interest and Dividend Income            
Investment securities-taxable   $ 356   $ 295
Investment securities-tax-exempt     126     92
Interest bearing deposits in other banks and other     82     61
Loans, including fees     8,472     6,996
  Total interest and dividend income     9,036     7,444
             
Interest Expense            
Deposits     1,788     1,258
Borrowings     81     54
Subordinated debentures     398     -
  Total interest expense     2,267     1,312
Net interest income     6,769     6,132
Provision for loan losses     813     56
Net interest income after provision for loan losses     5,956     6,076
             
Non-Interest Income            
Service fees on deposit accounts     35     28
Loan fees     15     10
Income from bank-owned life insurance     103     105
Gains on sale of investment securities     25     -
Gains on recovery of acquired loans     111     624
Other non-interest income     71     65
  Total non-interest income     360     832
             
Non-Interest Expense            
Salaries and employee benefits     2,214     2,231
Occupancy and equipment     687     546
Legal fees     74     92
Other professional fees     274     417
Regulatory fees     172     147
Directors' fees     113     110
Data processing     227     189
Marketing and advertising     125     118
Travel and entertainment     48     56
Insurance     57     54
Other real estate owned expense, net     119     234
Other expense     259     240
  Total non-interest expense     4,369     4,434
Income Before Income Taxes     1,947     2,474
Income tax expense     591     745
Net Income   $ 1,356   $ 1,729
             
Basic earnings per share   $ 0.14   $ 0.18
Diluted earnings per share   $ 0.14   $ 0.18
             
Basic weighted average common shares outstanding     9,448,426     9,408,491
Diluted weighted average common shares outstanding     9,540,773     9,467,977
             
             
 
FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(unaudited)
                         
    Three Months Ended March 31,
    2016   2015
    Average
Balance
 
Interest
  Average
Rate (5)
  Average
Balance
 
Interest
  Average
Rate (5)
    (dollars in thousands)
Interest earning assets                                            
Investment securities (1) (2)   $ 94,294     $ 525     2.24 %   $ 74,361     $ 438     2.39 %
Loans (3)     732,347       8,472     4.65 %     548,014       6,996     5.18 %
Interest bearing deposits in other banks     38,682       50     0.52 %     41,806       30     0.29 %
Restricted investment in bank stocks     2,158       16     2.98 %     1,305       15     4.66 %
Other investments     5,000       16     1.29 %     5,000       16     1.30 %
  Total interest earning assets (2)     872,481       9,079     4.19 %     670,486       7,495     4.53 %
Allowance for loan losses     (8,154 )                   (6,289 )              
Non-interest earning assets     37,717                     36,071                
  Total assets   $ 902,044                   $ 700,268                
                                             
Interest bearing liabilities                                            
Interest bearing demand deposits   $ 77,156     $ 135     0.70 %   $ 34,588     $ 61     0.72 %
Money market deposits     124,773       229     0.74 %     103,979       165     0.64 %
Savings deposits     77,721       96     0.50 %     99,691       146     0.59 %
Time deposits     394,223       1,328     1.35 %     293,414       886     1.22 %
  Total interest bearing deposits     673,873       1,788     1.07 %     531,672       1,258     0.96 %
Borrowings     30,593       81     1.06 %     14,046       54     1.56 %
Subordinated debentures     21,544       398     7.39 %     -       -     -  
  Total interest bearing liabilities     726,010       2,267     1.26 %     545,718       1,312     0.98 %
Non-interest bearing deposits     104,018                     86,666                
Other liabilities     2,324                     1,905                
Stockholders' equity     69,692                     65,979                
  Total liabilities and stockholders' equity   $ 902,044                   $ 700,268                
Net interest income/interest rate spread (2)             6,812     2.93 %             6,183     3.55 %
Net interest margin (2) (4)                   3.14 %                   3.74 %
Tax-equivalent adjustment (2)             (43 )                   (51 )      
Net interest income           $ 6,769                   $ 6,132        
                                             
                                             
(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)
                     
    1Q2016   4Q2015   3Q2015   2Q2015   1Q2015
EARNINGS                                        
  Net interest income   $ 6,769     $ 6,096     $ 5,839     $ 5,756     $ 6,132  
  Provision for loan losses     813       950       1,031       632       56  
  Non-interest income     360       282       264       265       832  
  Non-interest expense     4,369       4,665       4,331       4,295       4,434  
  Income tax expense     591       77       17       346       745  
  Net income     1,356       686       724       748       1,729  
                                           
PER SHARE DATA                                        
  Basic earnings per share   $ 0.14     $ 0.07     $ 0.08     $ 0.08     $ 0.18  
  Diluted earnings per share     0.14       0.07       0.08       0.08       0.18  
  Tangible book value (1)     7.39       7.23       7.18       7.09       7.03  
  Book value     7.42       7.26       7.21       7.12       7.07  
                                           
PERFORMANCE RATIOS                                        
  Return on average assets (2)     0.60 %     0.33 %     0.37 %     0.40 %     1.00 %
  Return on average equity (2)     7.83 %     3.97 %     4.21 %     4.44 %     10.63 %
  Net interest margin, tax equivalent basis (2)     3.14 %     3.05 %     3.14 %     3.24 %     3.74 %
  Efficiency ratio (1)     62.48 %     73.79 %     71.49 %     71.69 %     69.94 %
  Pre-provision net revenue (1)   $ 2,624     $ 2,006     $ 1,727     $ 1,696     $ 2,056  
                                           
MARKET DATA (period-end)                                        
  Market value per share   $ 6.94     $ 6.61     $ 6.21     $ 6.00     $ 6.03  
  Market value / book value     93.37 %     91.03 %     86.07 %     84.24 %     85.34 %
  Common shares outstanding     9,498       9,470       9,470       9,435       9,437  
  Market capitalization   $ 65,805     $ 62,597     $ 58,809     $ 56,610     $ 56,905  
                                           
CAPITAL & LIQUIDITY                                        
  Tangible equity / assets (1)     7.65 %     8.00 %     8.42 %     8.83 %     9.08 %
  Equity / assets     7.68 %     8.04 %     8.46 %     8.88 %     9.12 %
  Loans / deposits     94.89 %     93.35 %     86.68 %     88.98 %     84.08 %
                                           
ASSET QUALITY                                        
  Net charge offs (recoveries)   $ 294     $ 170     $ 626     $ 58     $ (21 )
  Nonperforming loans     4,094       3,903       4,729       4,887       5,414  
  Nonperforming assets     5,793       5,489       6,567       6,949       7,521  
  Net charge offs (recoveries) / average loans (2)     0.16 %     0.11 %     0.42 %     0.04 %     (0.02 %)
  Nonperforming loans / total loans     0.54 %     0.57 %     0.78 %     0.84 %     0.99 %
  Nonperforming assets / total assets     0.63 %     0.64 %     0.81 %     0.92 %     1.03 %
  Allowance for loan losses / total loans     1.12 %     1.15 %     1.18 %     1.16 %     1.13 %
  Allowance for loan losses / nonperforming loans     206.62 %     203.43 %     151.41 %     138.22 %     114.17 %
                                           
PERIOD-END DATA                                        
  Total assets   $ 917,441     $ 855,501     $ 808,031     $ 757,039     $ 730,935  
  Total loans     758,131       689,887       608,794       580,760       545,074  
  Total deposits     798,985       739,021       702,325       652,665       648,316  
  Total stockholders' equity     70,474       68,763       68,323       67,198       66,684  
  Full-time equivalent employees     102       99       103       105       94  
                                         
                                         
(1) 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.
(2) Annualized.
                                         
                                         

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