SOURCE: First Bank

First Bank

July 29, 2015 17:00 ET

First Bank Reports Second Quarter 2015 Earnings of $748 Thousand; Total Assets Reach $757 Million

HAMILTON, NJ--(Marketwired - July 29, 2015) - First Bank (NASDAQ: FRBA) today announced second quarter 2015 results. Net income for the quarter was $748 thousand or $0.08 per diluted share, compared to net income of $923 thousand or $0.10 per diluted share for the second quarter of 2014 and $1.7 million or $0.18 per diluted share for the first quarter of 2015.

Second quarter net income for 2015 reflected the impact of $269 thousand in interest expense paid on subordinated debt, as the Bank completed a $22 million subordinated debt financing on April 30, 2015. First quarter 2015 results included $624 thousand in non-interest income from gains on recovery of acquired loans related to the acquisition of Heritage Community Bank ("HCB") as well as $297 thousand in interest income related to a payoff on a partially marked-down HCB loan. Book value per share was $7.12 at the end of the second quarter 2015, an increase of 3.5% compared to book value of $6.88 at year-end.

Net income for the six months ended June 30, 2015 was $2.5 million compared to $3.5 million for the same period in 2014, a decrease of $1.0 million or 29.3%. The decrease in net income was due primarily to the $2.6 million tax-free bargain purchase gain realized in the first quarter of 2014 on the purchase of HCB. Diluted earnings per share for the comparative periods were $0.26 and $0.38, respectively.

President and Chief Executive Officer Patrick L. Ryan discussed the results: "The second quarter included positive strategic developments that will help drive long-term shareholder value and put pressure on short term earnings. Specifically, the important strategic capital raise we completed in April significantly enhanced our total capital position -- creating the opportunity for meaningful additional growth (organic or M&A) without the need to issue additional shares of common stock. But, as with all new forms of capital, the full cost of the new capital is felt immediately, while the benefits are enjoyed over time as the capital gets deployed into profitable projects. Importantly, we did start reinvesting the new capital with the return of strong loan growth in the quarter and our organic expansion into the Bucks County, PA market.

"In the second quarter we worked through a significant excess liquidity position as strong deposit growth in the first quarter, together with the proceeds from the capital raise, created a very strong cash position throughout the quarter. Good loan growth and prudent investment purchases, together with a strategic slowing of new deposit dollars, helped us to deploy the excess cash throughout the quarter. We should benefit from that additional interest income as we move into the second half of the year. We were pleased to see continued improvement in our asset quality in the quarter: i) net charge-offs were minimal, ii) non-performing assets declined, and iii) the coverage of our allowance for loan losses to non-performing loans increased to 138%."

Ryan continued, "We remain very excited about the organic growth opportunities we are finding throughout our New York City to Philadelphia corridor. Our newer branches are performing well and we are seeing new and exciting opportunities for expansion within our footprint. Based on our current pipeline, we expect to see strong loan growth during the second half of the year. Importantly, we think that growth will come from all three of our lending teams: North Jersey, Central/South Jersey, and Bucks County, PA. While growth remains our primary strategic objective, we will not do it without an eye toward the bottom line. As we invest, we are also exploring opportunities for cost savings and efficiencies that can improve profitability without emasculating our growth initiatives."

Second Quarter 2015 Highlights

  • Balance Sheet
    • Total assets at June 30, 2015 were $757.0 million, an increase of $26.1 million or 3.6% compared to March 31, 2015, and an increase of $146.4 million or 24.0% compared to June 30, 2014.
    • Total loans reached $580.8 million at June 30, 2015, an increase of $35.7 million or 6.5% compared to March 31, 2015 and an increase of $113.9 million or 24.4% compared to June 30, 2014.
    • Loan portfolio breakdown at June 30, 2015:
      • Acquisition, Construction and Development (ACD) loans equaled 6.4% of total loans
      • Commercial Real Estate, Investor (CREI; including multi-family) loans equaled 42.9% of total loans
      • Commercial Real Estate, Owner-Occupied (CREO) loans equaled 22.1% of total loans
      • Commercial and Industrial (C&I) loans equaled 16.0% of total loans
      • Residential, Consumer and Other loans equaled 12.6% of total loans
    • Total deposits reached $652.7 million, an increase of $4.3 million or 0.7% compared to March 31, 2015 and an increase of $120.5 million or 22.6% compared to June 30, 2014. Non-interest bearing deposits totaled $97.3 million at June 30, 2015 or 14.9% of total deposits.
    • Stockholders' equity increased to $67.2 million at June 30, 2015.
    • Book value per share was $7.12 at June 30, 2015 compared to $7.07 per share at March 31, 2015 and $6.68 per share at June 30, 2014. Tangible book value per share was $7.09 at June 30, 2015, compared to $7.03 per share at March 31, 2015 and $6.64 per share at June 30, 2014.
  • Quarterly Income Statement
    • Net interest income for the second quarter of 2015 totaled $5.76 million, a decrease of $376 thousand or 6.1% compared to $6.13 million for the first quarter of 2015 and an increase of $341 thousand or 6.3% compared to the second quarter of 2014. First quarter 2015 results included $297 thousand in interest income related to a payoff on a partially marked-down loan.
    • Non-interest income for the second quarter of 2015 totaled $265 thousand compared to $832 thousand for the first quarter of 2015. Gains on recovery of acquired loans totaled $30 thousand in the second quarter of 2015 compared to $624 thousand in the first quarter of 2015. When compared to the second quarter of 2014 non-interest income decreased $52 thousand.
    • Non-interest expense for the second quarter of 2015 totaled $4.30 million, a decrease of $139 thousand or 3.1% compared to $4.43 million for the first quarter of 2015 and an increase of $175 thousand or 4.2% compared to the second quarter of 2014.
    • Pre-tax income for the second quarter of 2015 totaled $1.1 million, a decrease of $1.4 million or 55.8% compared to $2.5 million for the first quarter of 2015 and a decrease of $182 thousand or 14.3% compared to the second quarter of 2014.
    • Net income for the second quarter of 2015 totaled $748 thousand, a decrease of $981 thousand or 56.7% compared to $1.7 million in the first quarter of 2015, and a decrease of $175 thousand or 19.0% compared to the second quarter of 2014.
    • Diluted earnings per share for the second quarter of 2015 totaled $0.08, a decrease of $0.10 per share compared to $0.18 per share in the first quarter of 2015, and a decrease of $0.02 per share compared to the second quarter of 2014.
    • The provision for loan losses in the second quarter of 2015 totaled $632 thousand, an increase of $576 thousand or 1,028.6% compared to $56 thousand for the first quarter of 2015 and an increase of $296 thousand or 88.1% compared to the second quarter of 2014.
    • Pre-provision net revenue(1) for the second quarter was $1.7 million, a decrease of $360 thousand or 17.5% compared to $2.1 million in the first quarter of 2015, and a decrease of $41 thousand or 2.4% compared to the second quarter of 2014. First quarter 2015 results include $297 thousand in interest income related to a payoff on a partially marked-down loan.
  • Year to Date Income Statement
    • Net interest income for the six months ended June 30, 2015 totaled $11.9 million, an increase of $2.3 million or 23.4% compared to $9.6 million for the same period in 2014.
    • Non-interest income for the six months ended June 30, 2015 totaled $1.1 million, a decrease of $2.0 million or 64.1% compared to $3.1 million for the same period in 2014. The bargain purchase gain of $2.6 million is included for the six months ended June 30, 2014.
    • Non-interest expense for the six months ended June 30, 2015 totaled $8.7 million, an increase of $1.4 million or 18.9% compared to $7.3 million for the same period in 2014.
    • The provision for loan losses for the six months ended June 30, 2015 totaled $688 thousand, an increase of $174 thousand or 33.9% compared to $514 thousand for the same period in 2014.
  • Other items
    • The tax equivalent net interest margin (NIM) for the second quarter of 2015 was 3.24% compared to 3.73% for the first quarter of 2015 and 3.81% for the second quarter of 2014.
    • Non-performing assets ("NPAs") were $6.9 million or 0.92% of total assets at June 30, 2015 compared to $7.5 million or 1.03% of total assets at March 31, 2015.
      • Non-accrual loans totaled $4.9 million or 0.84% of total loans at June 30, 2015 compared to non-accrual loans of $4.9 million or 0.90% of total loans at March 31, 2015.
      • Loans 30-89 days past due totaled $4.4 million at June 30, 2015 compared to $6.7 million at March 31, 2015. We had no loans over 90 days past due or more and still accruing at June 30, 2015 compared to $513 thousand at March 31, 2015.
      • Other real estate owned (including other repossessed assets) totaled $2.1 million at June 30, 2015 and March 31, 2015.
    • Regulatory capital ratios at June 30, 2015:
      • Tier 1 Leverage ratio of 8.95%
      • Common equity Tier 1 capital of 10.16%
      • Tier 1 Risk-Based capital ratio of 10.16%
      • Total Risk-Based capital ratio of 14.43%
    • The allowance for loan losses (ALLL) to total loans at June 30, 2015 was 1.16% compared to 1.13% at March 31, 2015.
    • 105 full-time equivalent employees (FTEs) at June 30, 2015 compared to 94 at March 31, 2015.

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About First Bank
First Bank (www.firstbanknj.com) is a New Jersey state-chartered bank with ten full-service branches in Cranbury, Denville, Ewing, Hamilton, Lawrence, Randolph (2), Somerset and Williamstown, New Jersey, and Trevose, Pennsylvania. With $757 million in assets as of June 30, 2015, 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 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.

(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, or other one-time, non-ordinary costs).

  
FIRST BANK AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION 
(in thousands, except share data, unaudited) 
  
      
 June 30,  December 31, 
 2015  2014 
Assets       
Cash and due from banks$9,779  $4,352 
Interest bearing deposits with banks 19,123   16,018 
 Cash and cash equivalents 28,902   20,370 
Interest bearing time deposits with banks 5,322   5,183 
Investment securities available for sale 57,106   40,390 
Investment securities held to maturity (fair value of $55,663 at June 30, 2015 and $34,734 at December 31, 2014) 55,466   34,273 
Restricted investment in bank stocks 1,412   1,304 
Other investments 5,000   5,000 
Loans, net of deferred fees and costs 580,760   547,759 
 Less: Allowance for loan losses 6,755   6,104 
 Net loans 574,005   541,655 
Premises and equipment, net 3,512   3,452 
Other real estate owned, net 1,977   2,182 
Accrued interest receivable 1,825   1,724 
Bank-owned life insurance 14,360   14,147 
Intangible assets, net 320   356 
Deferred income taxes 6,972   6,864 
Other assets 860   558 
 Total assets$757,039  $677,458 
        
Liabilities and Stockholders' Equity       
Deposits:       
 Non-interest bearing$97,271  $91,972 
 Interest bearing 555,394   504,510 
 Total deposits 652,665   596,482 
Long-term borrowings 14,000   14,000 
Subordinated debentures 21,491   - 
Accrued interest payable 614   337 
Other liabilities 1,071   1,880 
 Total liabilities 689,841   612,699 
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 9,434,741 shares at June 30, 2015 and 9,408,491 shares at December 31, 2014 47,042   47,042 
Additional paid-in capital 14,426   14,301 
Retained earnings 6,023   3,546 
Accumulated other comprehensive loss (293)  (130)
 Total stockholders' equity 67,198   64,759 
 Total liabilities and stockholders' equity$757,039  $677,458 
         
         
 
FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data, unaudited)
 
        
 Three Months Ended Six Months Ended
 June 30, June 30,
 2015 2014 2015 2014
Interest and Dividend Income           
Investment securities-taxable$357 $338 $652 $705
Investment securities-tax-exempt 106  66  198  130
Federal funds sold -  1  -  2
Interest bearing deposits with banks and other 64  59  125  117
Loans, including fees 6,890  5,938  13,886  10,600
 Total interest and dividend income 7,417  6,402  14,861  11,554
            
Interest Expense           
Deposits 1,338  933  2,596  1,809
Long-term borrowings 54  54  108  108
Subordinated debentures 269  -  269  -
 Total interest expense 1,661  987  2,973  1,917
Net interest income 5,756  5,415  11,888  9,637
Provision for loan losses 632  336  688  514
Net interest income after provision for loan losses 5,124  5,079  11,200  9,123
            
Non-Interest Income           
Service fees on deposit accounts 37  53  65  80
Loan fees 13  8  23  10
Title insurance fees 7  5  7  5
Income from bank-owned life insurance 109  65  214  128
Gains on sale of investment securities, net -  34  -  34
Gains on sale of loans held for sale -  -  -  14
Gain on acquisition of Heritage Community Bank -  -  -  2,606
Gains on recovery of acquired loans 30  97  654  97
Other non-interest income 69  55  134  82
 Total non-interest income 265  317  1,097  3,056
            
Non-Interest Expense           
Salaries and employee benefits 2,278  2,048  4,509  3,565
Occupancy and equipment 609  494  1,155  906
Legal fees 91  98  183  169
Other professional fees 269  315  686  587
Regulatory fees 143  138  290  224
Directors' fees 118  75  228  134
Data processing 203  202  392  347
Marketing and advertising 119  97  237  189
Travel and entertainment 61  71  117  105
Insurance 49  41  103  73
Other real estate owned expense, net 96  74  330  194
Merger-related expenses -  256  -  463
Other expense 259  211  499  385
 Total non-interest expense 4,295  4,120  8,729  7,341
Income Before Income Taxes 1,094  1,276  3,568  4,838
Income tax expense 346  353  1,091  1,332
Net Income$748 $923 $2,477 $3,506
            
Basic earnings per share$0.08 $0.10 $0.26 $0.39
Diluted earnings per share$0.08 $0.10 $0.26 $0.38
            
Basic weighted average common shares outstanding 9,408,491  9,396,349  9,408,491  9,076,792
Diluted weighted average common shares outstanding 9,473,950  9,467,472  9,471,105  9,147,873
            
            
  
FIRST BANK AND SUBSIDIARIES 
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES 
(unaudited) 
                  
                  
 Three Months Ended June 30, 
 2015  2014 
 Average
Balance
  Interest  Average
Rate
(5)
  Average
Balance
  Interest  Average
Rate
(5)
 
 (dollars in thousands) 
Interest earning assets                     
Investment securities (1) (2)$96,885  $499  2.07% $74,952  $426  2.28%
Loans (3) 564,227   6,890  4.90%  456,896   5,938  5.21%
Federal funds sold and interest bearing deposits with banks 48,741   37  0.30%  34,708   26  0.30%
Restricted investment in bank stocks 1,406   12  3.42%  1,491   12  3.23%
Other investments 5,000   15  1.20%  5,000   22  1.76%
 Total interest earning assets (2) 716,259   7,453  4.17%  573,047   6,424  4.50%
Allowance for loan losses (6,605)         (4,890)       
Non-interest earning assets 40,212          35,989        
 Total assets$749,866         $604,146        
                      
Interest bearing liabilities                     
Interest bearing demand deposits$45,877  $82  0.72% $18,184   16  0.35%
Money market deposits 113,318   187  0.66%  94,198   126  0.54%
Savings deposits 94,199   121  0.52%  126,608   195  0.62%
Time deposits 304,832   948  1.25%  207,790   596  1.15%
 Total interest bearing deposits 558,226   1,338  0.96%  446,780   933  0.84%
Long-term borrowings 14,000   54  1.55%  14,000   54  1.55%
Subordinated debentures 14,696   269  7.32%  -   -  - 
 Total interest bearing liabilities 586,922   1,661  1.14%  460,780   987  0.86%
Non-interest bearing deposits 93,652          79,785        
Other liabilities 1,756          1,386        
Stockholders' equity 67,536          62,195        
 Total liabilities and stockholders' equity$749,866         $604,146        
Net interest income/ interest rate spread (2)     5,792  3.03%      5,437  3.64%
Net interest margin (2) (4)        3.24%         3.81%
Tax-equivalent adjustment (2)     (36)         (22)   
Net interest income    $5,756         $5,415    
                      

(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 
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES 
(unaudited) 
                  
                  
 Six Months Ended June 30, 
 2015  2014 
 Average
Balance
  Interest  Average
Rate
(5)
  Average
Balance
  Interest  Average
Rate
(5)
 
 (dollars in thousands) 
Interest earning assets                     
Investment securities (1) (2)$85,685  $917  2.16% $77,275  $879  2.29%
Loans (3) 556,165   13,886  5.03%  411,755   10,600  5.19%
Federal funds sold and interest bearing deposits with banks 45,294   67  0.30%  29,276   48  0.33%
Restricted investment in bank stocks 1,356   27  4.02%  1,338   27  4.07%
Other investments 5,000   31  1.25%  5,000   44  1.77%
 Total interest earning assets (2) 693,500   14,928  4.34%  524,644   11,598  4.46%
Allowance for loan losses (6,448)         (4,800)       
Non-interest earning assets 38,099          31,009        
 Total assets$725,151         $550,853        
                      
Interest bearing liabilities                     
Interest bearing demand deposits$40,264  $143  0.72% $15,776  $27  0.35%
Money market deposits 108,674   352  0.65%  86,553   246  0.57%
Savings deposits 96,930   267  0.56%  114,819   376  0.66%
Time deposits 299,155   1,834  1.24%  192,319   1,160  1.22%
Total interest bearing deposits 545,023   2,596  0.96%  409,467   1,809  0.89%
Long-term borrowings 14,022   108  1.55%  14,000   108  1.56%
Subordinated debentures 7,388   269  7.28%  -   -  - 
 Total interest bearing liabilities 566,433   2,973  1.06%  423,467   1,917  0.91%
Non-interest bearing deposits 90,126          67,436        
Other liabilities 1,830          1,344        
Stockholders' equity 66,762          58,606        
 Total liabilities and stockholders' equity$725,151         $550,853        
Net interest income/interest rate spread (2)     11,955  3.28%      9,681  3.55%
Net interest margin (4)        3.48%         3.72%
Tax-equivalent adjustment (2)     (67)         (44)   
Net interest income    $11,888         $9,637    
                      

(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) 
               
 2Q2015  1Q2015  4Q2014  3Q2014  2Q2014 
EARNINGS                   
 Net interest income$5,756  $6,132  $6,075  $5,501  $5,415 
 Provision for loan losses 632   56   947   977   336 
 Non-interest income 265   832   966   1,078   316 
 Non-interest expense 4,295   4,434   4,368   4,112   4,119 
 Income tax expense 346   745   484   401   353 
 Net income 748   1,729   1,242   1,089   923 
                    
PER SHARE DATA                   
 Basic earnings per share$0.08  $0.18  $0.13  $0.12  $0.10 
 Diluted earnings per share 0.08   0.18   0.13   0.12   0.10 
 Tangible book value 7.09   7.03   6.85   6.75   6.64 
 Book value 7.12   7.07   6.88   6.79   6.68 
                    
PERFORMANCE RATIOS                   
 Return on average assets (1) 0.40%  1.00%  0.74%  0.69%  0.61%
 Return on average equity (1) 4.44%  10.63%  7.55%  6.77%  5.95%
 Net interest margin, tax equivalent basis (1) 3.24%  3.73%  3.84%  3.72%  3.81%
 Efficiency ratio 71.69%  69.94%  68.91%  70.12%  68.98%
                    
MARKET DATA (period-end)                   
 Market value per share$6.00  $6.03  $6.24  $6.15  $6.00 
 Market value / book value 84.24%  85.34%  90.65%  90.55%  89.82%
 Common shares outstanding 9,435   9,437   9,408   9,408   9,408 
 Market capitalization$56,610  $56,905  $58,706  $57,859  $56,448 
                    
CAPITAL & LIQUIDITY                   
 Tangible equity / assets 8.83%  9.08%  9.51%  9.87%  10.23%
 Equity / assets 8.88%  9.12%  9.56%  9.93%  10.29%
 Loans / deposits 88.98%  84.08%  91.83%  89.63%  87.73%
                    
ASSET QUALITY                   
 Net charge offs (recoveries)$58  $(21) $354  $490  $41 
 Nonperforming loans 4,887   5,414   7,112   4,666   3,411 
 Nonperforming assets 6,949   7,521   9,394   7,014   5,745 
 Net charge offs (recoveries) / average loans (1) 0.04%  (0.02%)  0.27%  0.41%  0.04%
 Nonperforming loans / total loans 0.84%  0.99%  1.30%  0.92%  0.73%
 Nonperforming assets / total assets 0.92%  1.03%  1.39%  1.09%  0.94%
 Allowance for loan losses / total loans 1.16%  1.13%  1.11%  1.09%  1.08%
 Allowance for loan losses / nonperforming loans 138.22%  114.17%  85.83%  118.11%  147.29%
                    
PERIOD-END DATA                   
 Total assets$757,039  $730,935  $677,458  $643,499  $610,645 
 Total loans 580,760   545,074   547,759   505,008   466,878 
 Total deposits 652,665   648,316   596,482   563,433   532,147 
 Total stockholders' equity 67,198   66,684   64,759   63,895   62,847 
 Full-time equivalent employees 105   94   94   89   95 
                     

(1) Annualized.

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