First Bank Reports Second Quarter 2022 Net Income Of $8.8 Mi...| MENAFN.COM

Monday, 08 August 2022 01:17 GMT

First Bank Reports Second Quarter 2022 Net Income Of $8.8 Million


(MENAFN- GlobeNewsWire - Nasdaq)

HAMILTON, N.J., July 26, 2022 (GLOBE NEWSWIRE) -- First Bank (Nasdaq Global Market: FRBA) today announced results for the second quarter of 2022, accentuated by net income of $8.8 million, or $0.45 per diluted share. Return on average assets, return on average equity, and return on average tangible equityi for the second quarter of 2022 were 1.38%, 12.92% and 13.93%, respectively. In the second quarter of 2021, First Bank reported net income of $8.9 million, or $0.45 per diluted share, and return on average assets, return on average equity, and return on average tangible equityi of 1.48%, 14.26% and 15.37%, respectively.

Second Quarter 2022 Highlights:

  • Total loans of $2.22 billion on June 30, 2022, reflected growth of $68.5 million, or 3.2%, from the end of the first quarter of 2022 and were up $108.2 million, or 5.1%, from December 31, 2021. Loan growth, excluding the decline in Paycheck Protection Program (PPP) loans, totaled $84.0 million in the second quarter of 2022, representing a 15.8% annualized increase.
  • Total deposits of $2.17 billion on June 30, 2022, were down $12.7 million, or 0.6%, from the end of the linked first quarter and up $50.6 million, or 2.4%, from December 31, 2021.
  • Asset quality metrics remained solid during the quarter, with annualized net charge offs to average loans of 0.07% and nonperforming loans to total loans of 0.57% as of June 30, 2022, compared to 0.62% on December 31, 2021, and 0.59% on March 31, 2022.
  • Continued focus on managing expenses resulted in the sixth consecutive quarter of an efficiency ratioii below 50%, at 46.81% for the second quarter of 2022.

President and Chief Executive Officer, Patrick L. Ryan, said,“We are pleased with our performance during the second quarter. Our continued focus on developing new and existing customer relationships facilitated another quarter of robust loan growth. Total deposits remained relatively stable as we continued to shift our deposit mix with non-interest bearing deposits representing 27.7% of total deposits at quarter-end. Loan growth, improving asset yields and managing deposit costs contributed to a 19 basis point improvement in our net interest margin which was 3.76% for the second quarter of 2022 compared to 3.57% for the first quarter of 2022. We remain focused on driving organic growth as we continue to manage expenses to achieve greater profitability.”

“Asset quality metrics also remain strong, reflected by our eighth consecutive quarter end with our nonperforming loans to total loans ratio under 65 basis points. Annualized net charge offs were only 0.07% of average loans for the quarter ended June 30, 2022, and primarily related to one small business loan.”

“In our continuous effort to drive long-term shareholder value, we are pleased to announce another $0.06 quarterly dividend, reflecting an annualized yield of 1.69% based on our July 22, 2022, closing price of $14.18. We also have an active share repurchase program and from January 1, 2022, through July 22, 2022, we have repurchased 241,284 shares of our common stock at an aggregate cost of $3.4 million, or an average price of $13.99 per share.”

“Overall, we are very pleased with our performance through the first half of the year and our financial performance provides us with the confidence that we are well positioned to continue to generate strong results during the second half of 2022.”

Income Statement

First Bank's (the“Bank's”) net interest income for the second quarter of 2022 was $22.9 million, an increase of $2.5 million, or 12.2%, compared to $20.4 million in the second quarter of 2021 and an increase of $1.8 million, or 8.3%, compared to $21.1 million in the first quarter of 2022. The increase from the comparable prior year quarter was due to an increase in interest and dividend income of $2.0 million coupled with a decline of $444,000 in total interest expense. The increase from the linked first quarter of 2022 was due to an increase in interest and dividend income of $2.0 million offset somewhat by an increase in total interest expense of $216,000.

The increase in interest income during the second quarter of 2022 compared to the second quarter of 2021 and the first quarter of 2022 was primarily due to an increase in average loans combined with a 7 basis point and 18 basis point increase, respectively, in the average rate on loans. Interest income increased compared to the year-ago quarter and the linked first quarter despite a decrease in PPP loan fees, as loan growth and the rising rate environment led to improved interest income. Interest income from loans included $493,000 in PPP loan fees in the second quarter of 2022 compared to $1.3 million in the second quarter of 2021 and $860,000 in the linked first quarter of 2022. Also impacting loan interest income in the second quarter of 2022 was loan prepayment income of $682,000, compared to $730,000 for the quarter ended June 30, 2021, and $459,000 for the quarter ended March 31, 2022. As a result of the Bank's concerted effort to control deposit costs, the average rate on interest bearing deposits was lower during the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, and increased only 6 basis points compared to the first quarter of 2022, despite the rising rate environment during the second quarter of 2022.

Net interest income for the six months ended June 30, 2022, totaled $44.1 million, an increase of $3.6 million, or 8.9%, compared to $40.5 million for the same period in 2021. The increase in the 2022 year to date net interest income was also driven by solid growth in average loans, which increased by $115.2 million, or 5.6%, from the prior year period, along with a 16 basis point decrease in the average rate on interest-bearing deposits.

The second quarter 2022 tax equivalent net interest margin was 3.76%, an increase of 19 basis points compared to the comparable prior year quarter and from the first quarter of 2022. The Bank's margin continues to benefit from the increase in average non-interest bearing deposits, improving asset yields and actively managing the cost of funds. The year-to-date tax equivalent net interest margin was 3.67%, an increase of 9 basis points compared to the prior year period. The increase in the six-month net interest margin was principally a result of the lower cost of interest bearing deposits, partially offset by lower earning asset yields.

The Bank's provision for loan losses was $1.3 million for the second quarter of 2022, compared to a $162,000 credit to the provision for loan losses in the second quarter of 2021 and a provision for loan losses of $642,000 for the linked first quarter 2022. The Bank's provision for loan losses was $1.9 million for the six months ended June 30, 2022, compared to a credit to the provision for loan losses of $1.2 million for the same period in 2021. The provision for loan losses for the three and six months ended June 30, 2022, reflects consistent organic loan growth and continued strong asset quality. The credit to the provision for loan losses for the three and six months ended June 30, 2021, reflected a reduction in qualitative factors that were increased significantly in 2020 due to the economic uncertainties created by the COVID-19 pandemic.

Second quarter 2022 non-interest income of $1.5 million compares to $1.3 million during the second quarter of 2021. The increase between the periods was primarily the result of higher income from service fees from deposit accounts and higher gains on recovery of acquired loans. Non-interest income totaled $2.7 million for the six months ended June 30, 2022, compared to $3.6 million for the same period in 2021. This decrease in non-interest income for the first six months of 2022 was a result of lower gains on sale of loans, lower loan fees and lower gains on recovery of acquired loans. The decrease was primarily 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 second quarter 2022 of $11.4 million, increased $1.3 million, or 12.3%, compared to $10.2 million for the prior year quarter. The higher non-interest expense compared to second quarter 2021 was primarily a result of a $768,000, or 13.0%, increase in salaries and employee benefits, along with lesser increases in other professional fees, travel and entertainment, and other expense. These increases were partially offset by lower legal fees, directors' fees, and marginal declines in certain other non-interest expense categories. The increase in salaries and employee benefits was due primarily to 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.

On a linked quarter basis, second quarter 2022 non-interest expense of $11.4 million, increased $287,000, or 2.6%, compared to $11.1 million for the first quarter of 2022. This increase was also primarily due to salary and employee benefits increases which was primarily due to annual salary increases that occurred at the end of the first quarter of 2022.

Non-interest expense for the first six months of 2022 totaled $22.5 million, an increase of $1.7 million, or 8.3%, compared to $20.8 million for the same period in 2021. The increase was primarily a result of higher salaries and employee benefits and higher other professional fees, offset somewhat by lower occupancy and equipment expenses.

Income tax expense for the three months ended June 30, 2022, was $2.8 million with an effective tax rate of 24.4%, compared to $2.9 million with an effective tax rate of 24.4% for the second quarter of 2021 and $2.5 million with an effective tax rate of 23.4% for the first quarter of 2022. Income tax expense for the six months ended June 30, 2022, was $5.3 million with an effective tax rate of 23.9%, compared to $6.0 million for the first six months of 2021 with an effective tax rate of 24.3%.

Balance Sheet

Total assets at June 30, 2022, were $2.57 billion, an increase of $57.8 million, or 2.3%, from December 31, 2021. Total loans increased $108.2 million, or 5.1%, to $2.22 billion at June 30, 2022, compared to $2.11 billion at December 31, 2021. The increase in loans during the six-month period ended June 30, 2022, reflects net non-PPP organic loan growth of $149.3 million, offset somewhat by a decline in PPP loans of $41.0 million, as such loans continue to be forgiven. Total loans as of June 30, 2022, increased $68.5 million, or 3.2%, from $2.15 billion on March 31, 2022, reflecting organic, net non-PPP loan growth of $84.0 million, offset somewhat by a decline in PPP loans of $15.5 million. PPP loans outstanding on June 30, 2022, were $10.0 million.

Total deposits were $2.17 billion on June 30, 2022, an increase of $50.6 million, or 2.4%, from $2.11 billion at December 31, 2021. Non-interest-bearing deposits totaled $600.4 million on June 30, 2022, an increase of $41.6 million, or 7.4%, from December 31, 2021. The Bank continues to focus on enhancing its deposit mix and, as of June 30, 2022, had grown non-interest bearing deposits to 27.7% and lowered time deposits to 14.7% of total deposits. Total deposits declined by $12.7 million, or 0.6%, from March 31, 2022, with interest bearing deposits declining $15.8 million, offset somewhat by a $3.1 million increase in non-interest bearing deposits.

Stockholders' equity was $274.7 million on June 30, 2022, compared to $266.7 million on December 31, 2021. The growth of $8.0 million, or 3.0%, was primarily a result of year-to-date net income of $17.0 million, partially offset by a $5.1 million increase in accumulated other comprehensive loss, $2.7 million in treasury stock purchases and cash dividends paid of $2.3 million during the six months ended June 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 June 30, 2022, the Bank continued to exceed all regulatory capital requirements to be considered well capitalized, with a Tier 1 Leverage ratio of 10.19%, a Tier 1 Risk-Based capital ratio of 10.28%, a Common Equity Tier 1 Capital ratio of 10.28%, and a Total Risk-Based capital ratio of 12.46%.

Asset Quality

First Bank's asset quality metrics remained stable and favorable during the three and six months ended June 30, 2022. Net charge offs of $404,000 for the second quarter of 2022 were 0.07% of average loans on an annualized basis. This compares to net charge offs of $116,000, or an annualized 0.02% of average loans, for the second quarter of 2021 and net charge offs of $247,000, or an annualized 0.05%, for the first quarter of 2022. Nonperforming loans were $12.7 million on June 30, 2022, down from $13.0 million on December 31, 2021. Nonperforming loans as a percentage of total loans on June 30, 2022, were 0.57%, compared with 0.62% at December 31, 2021, and 0.59% at March 31, 2022. The allowance for loan losses to nonperforming loans was 197.06% on June 30, 2022, compared with 182.65% at December 31, 2021, and 191.72% on March 31, 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 Small Business Administration. 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 June 30, 2022, First Bank had 99 PPP loans with outstanding balances of $10.0 million. During the quarter ended June 30, 2022, PPP loans totaling $15.5 million were forgiven and the Bank realized $493,000 in loan fees on these loans as any deferred fees remaining on the forgiven loans were accelerated. As of June 30, 2022, the Bank had $336,000 in remaining unamortized fees associated with outstanding balances of PPP loans.

Cash Dividend Declared

On July 19, 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 August 12, 2022, payable on August 26, 2022.

Conference Call

First Bank will host its earnings call on Wednesday, July 27, 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 212059. For those unable to participate in the call, a replay will be available by dialing 1-866-813-9403 (access code 861313) from one hour after the end of the conference call until October 24, 2022. Replay information will also be available on First Bank's website at 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 June 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.

CONTACT: Andrew Hibshman, Chief Financial Officer
(609) 643-0058,

_______________
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.

FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data, unaudited)
June 30, 2022 December 31, 2021
Assets
Cash and due from banks $ 27,392 $ 25,076
Interest bearing deposits with banks 61,186 129,431
Cash and cash equivalents 88,578 154,507
Interest bearing time deposits with banks 1,542 2,170
Investment securities available for sale, at fair value 97,152 94,584
Investment securities held to maturity (fair value of $41,003 at June 30, 2022 and $39,718 at December 31, 2021) 43,426 39,547
Restricted investment in bank stocks 5,705 5,856
Other investments 8,095 8,062
Loans, net of deferred fees and costs 2,220,223 2,111,991
Less: Allowance for loan losses 25,034 23,746
Net loans 2,195,189 2,088,245
Premises and equipment, net 10,067 9,883
Other real estate owned, net 293 772
Accrued interest receivable 6,028 5,681
Bank-owned life insurance 57,376 56,633
Goodwill 17,826 17,826
Other intangible assets, net 1,942 2,145
Deferred income taxes 12,680 11,081
Other assets 22,238 13,306
Total assets $ 2,568,137 $ 2,510,298
Liabilities and Stockholders' Equity
Liabilities:
Non-interest bearing deposits $ 600,402 $ 558,775
Interest bearing deposits 1,564,761 1,555,827
Total deposits 2,165,163 2,114,602
Borrowings 74,479 81,835
Subordinated debentures 29,675 29,620
Accrued interest payable 308 399
Other liabilities 23,810 17,176
Total liabilities 2,293,435 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; 21,050,594 shares issued and 19,483,415 shares outstanding at June 30, 2022 and 20,851,506 shares issued and 19,472,364 shares outstanding at December 31, 2021 104,390 103,704
Additional paid-in capital 80,039 79,563
Retained earnings 110,559 95,924
Accumulated other comprehensive loss (5,280 ) (206 )
Treasury stock, 1,571,179 shares at June 30, 2022 and 1,379,142 shares at December 31, 2021 (15,006 ) (12,319 )
Total stockholders' equity 274,702 266,666
Total liabilities and stockholders' equity $ 2,568,137 $ 2,510,298


FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share data, unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Interest and Dividend Income
Investment securities—taxable $ 689 $ 550 $ 1,265 $ 1,025
Investment securities—tax-exempt 33 45 70 93
Interest bearing deposits with banks,
Federal funds sold and other 260 185 390 356
Loans, including fees 23,881 22,038 46,024 44,195
Total interest and dividend income 24,863 22,818 47,749 45,669
Interest Expense
Deposits 1,262 1,463 2,271 3,313
Borrowings 250 493 538 1,007
Subordinated debentures 441 441 881 881
Total interest expense 1,953 2,397 3,690 5,201
Net interest income 22,910 20,421 44,059 40,468
Provision for loan losses 1,298 (162 ) 1,940 (1,215 )
Net interest income after provision for loan losses 21,612 20,583 42,119 41,683
Non-Interest Income
Service fees on deposit accounts 243 165 495 341
Loan fees 102 134 347 815
Income from bank-owned life insurance 370 343 743 672
Gains on sale of loans 253 315 290 849
Gains on recovery of acquired loans 210 141 334 511
Other non-interest income 285 244 521 454
Total non-interest income 1,463 1,342 2,730 3,642
Non-Interest Expense
Salaries and employee benefits 6,698 5,930 13,242 11,698
Occupancy and equipment 1,381 1,299 2,805 3,237
Legal fees 172 253 314 500
Other professional fees 692 528 1,379 1,059
Regulatory fees 233 228 426 496
Directors' fees 180 219 398 435
Data processing 589 608 1,185 1,143
Marketing and advertising 177 187 341 375
Travel and entertainment 111 24 199 39
Insurance 186 138 351 292
Other real estate owned expense, net 114 30 197 81
Other expense 876 711 1,694 1,450
Total non-interest expense 11,409 10,155 22,531 20,805
Income Before Income Taxes 11,666 11,770 22,318 24,520
Income tax expense 2,843 2,877 5,337 5,966
Net Income $ 8,823 $ 8,893 $ 16,981 $ 18,554
Basic earnings per common share $ 0.45 $ 0.45 $ 0.87 $ 0.94
Diluted earnings per common share $ 0.45 $ 0.45 $ 0.86 $ 0.93
Cash dividends per common share $ 0.06 $ 0.03 $ 0.12 $ 0.06
Basic weighted average common shares outstanding 19,586,103 19,677,002 19,559,605 19,674,523
Diluted weighted average common shares outstanding 19,794,657 19,883,076 19,780,953 19,859,091


FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)
Three Months Ended June 30,
2022 2021
Average Average Average Average
Balance Interest Rate (5) Balance Interest Rate (5)
Interest earning assets
Investment securities (1) (2) $ 141,412 $ 729 2.07 % $ 120,238 $ 605 2.02 %
Loans (3) 2,181,197 23,881 4.39 % 2,044,789 22,038 4.32 %
Interest bearing deposits with banks,
Federal funds sold and other 107,903 171 0.64 % 117,787 71 0.24 %
Restricted investment in bank stocks 5,424 65 4.81 % 8,089 98 4.86 %
Other investments 8,090 24 1.19 % 6,525 16 0.98 %
Total interest earning assets (2) 2,444,026 24,870 4.08 % 2,297,428 22,828 3.99 %
Allowance for loan losses (24,469 ) (23,512 )
Non-interest earning assets 148,886 136,437
Total assets $ 2,568,443 $ 2,410,353
Interest bearing liabilities
Interest bearing demand deposits $ 329,702 $ 137 0.17 % $ 210,494 $ 49 0.09 %
Money market deposits 737,041 642 0.35 % 602,221 424 0.28 %
Savings deposits 181,390 180 0.40 % 183,289 192 0.42 %
Time deposits 321,378 303 0.38 % 482,657 798 0.66 %
Total interest bearing deposits 1,569,511 1,262 0.32 % 1,478,661 1,463 0.40 %
Borrowings 68,024 250 1.47 % 130,441 493 1.52 %
Subordinated debentures 29,658 441 5.95 % 29,547 441 5.97 %
Total interest bearing liabilities 1,667,193 1,953 0.47 % 1,638,649 2,397 0.59 %
Non-interest bearing deposits 606,874 505,912
Other liabilities 20,547 15,649
Stockholders' equity 273,829 250,143
Total liabilities and stockholders' equity $ 2,568,443 $ 2,410,353
Net interest income/interest rate spread (2) 22,917 3.61 % 20,431 3.40 %
Net interest margin (2) (4) 3.76 % 3.57 %
Tax equivalent adjustment (2) (7 ) (10 )
Net interest income $ 22,910 $ 20,421
(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)
Six Months Ended June 30,
2022 2021
Average Average Average Average
Balance Interest Rate (5) Balance Interest Rate (5)
Interest earning assets
Investment securities (1) (2) $ 137,742 $ 1,350 1.98 % $ 109,058 $ 1,138 2.10 %
Loans (3) 2,156,244 46,024 4.30 % 2,041,074 44,195 4.37 %
Interest bearing deposits with banks,
Federal funds sold and other 114,626 221 0.39 % 113,315 140 0.25 %
Restricted investment in bank stocks 5,519 128 4.68 % 8,267 185 4.51 %
Other investments 8,081 41 1.02 % 6,518 31 0.96 %
Total interest earning assets (2) 2,422,212 47,764 3.98 % 2,278,232 45,689 4.04 %
Allowance for loan losses (24,265 ) (24,053 )
Non-interest earning assets 147,788 134,326
Total assets $ 2,545,735 $ 2,388,505
Interest bearing liabilities
Interest bearing demand deposits $ 314,074 $ 198 0.13 % $ 205,896 $ 114 0.11 %
Money market deposits 721,790 1,090 0.30 % 597,015 944 0.32 %
Savings deposits 185,782 344 0.37 % 176,180 396 0.45 %
Time deposits 335,721 639 0.38 % 495,234 1,859 0.76 %
Total interest bearing deposits 1,557,367 2,271 0.29 % 1,474,325 3,313 0.45 %
Borrowings 72,234 538 1.50 % 137,995 1,007 1.47 %
Subordinated debentures 29,645 881 5.94 % 29,533 881 5.97 %
Total interest bearing liabilities 1,659,246 3,690 0.45 % 1,641,853 5,201 0.64 %
Non-interest bearing deposits 595,273 485,149
Other liabilities 19,218 15,571
Stockholders' equity 271,998 245,932
Total liabilities and stockholders' equity $ 2,545,735 $ 2,388,505
Net interest income/interest rate spread (2) 44,074 3.53 % 40,488 3.40 %
Net interest margin (2) (4) 3.67 % 3.58 %
Tax equivalent adjustment (2) (15 ) (20 )
Net interest income $ 44,059 $ 40,468
(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
6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021
EARNINGS
Net interest income $ 22,910 $ 21,149 $ 20,641 $ 20,781 $ 20,421
Provision for loan losses 1,298 642 825 158 (162 )
Non-interest income 1,463 1,267 2,211 1,901 1,342
Non-interest expense 11,409 11,122 11,825 10,522 10,155
Income tax expense 2,843 2,494 2,363 2,966 2,877
Net income 8,823 8,158 7,839 9,036 8,893
PERFORMANCE RATIOS
Return on average assets (1) 1.38 % 1.31 % 1.27 % 1.46 % 1.48 %
Adjusted return on average assets (1) (2) 1.38 % 1.31 % 1.33 % 1.48 % 1.48 %
Return on average equity (1) 12.92 % 12.25 % 11.77 % 13.86 % 14.26 %
Adjusted return on average equity (1) (2) 12.92 % 12.25 % 12.36 % 14.04 % 14.26 %
Return on average tangible equity (1) (2) 13.93 % 13.22 % 12.63 % 14.90 % 15.37 %
Adjusted return on average tangible equity (1) (2) 13.93 % 13.22 % 13.26 % 15.09 % 15.37 %
Net interest margin (1) (3) 3.76 % 3.57 % 3.52 % 3.54 % 3.57 %
Total cost of deposits (1) 0.23 % 0.19 % 0.21 % 0.25 % 0.30 %
Efficiency ratio (2) 46.81 % 49.62 % 49.57 % 45.75 % 46.66 %
SHARE DATA
Common shares outstanding 19,483,415 19,634,744 19,472,364 19,464,388 19,678,528
Basic earnings per share $ 0.45 $ 0.42 $ 0.40 $ 0.46 $ 0.45
Diluted earnings per share 0.45 0.41 0.40 0.46 0.45
Adjusted diluted earnings per share (2) 0.45 0.41 0.42 0.46 0.45
Tangible book value per share (2) 13.08 12.79 12.67 12.45 12.02
Book value per share 14.10 13.81 13.69 13.37 12.94
MARKET DATA
Market value per share $ 13.98 $ 14.22 $ 14.51 $ 14.09 $ 13.54
Market value / Tangible book value 106.84 % 111.14 % 114.53 % 113.21 % 112.61 %
Market capitalization $ 272,378 $ 279,206 $ 282,544 $ 274,253 $ 266,447
CAPITAL & LIQUIDITY
Tangible stockholders' equity / tangible assets (2) 10.00 % 9.84 % 9.91 % 10.01 % 9.76 %
Stockholders' equity / assets 10.70 % 10.53 % 10.62 % 10.67 % 10.42 %
Loans / deposits 102.54 % 98.80 % 99.88 % 97.96 % 100.87 %
ASSET QUALITY
Net charge-offs (recoveries) $ 404 $ 247 $ 6 $ (121 ) $ 116
Nonperforming loans 12,704 12,591 13,001 11,488 9,558
Nonperforming assets 12,997 12,884 13,773 11,967 10,038
Net charge offs (recoveries) / average loans (1) 0.07 % 0.05 % 0.00 % (0.02 %) 0.02 %
Nonperforming loans / total loans 0.57 % 0.59 % 0.62 % 0.57 % 0.47 %
Nonperforming assets / total assets 0.51 % 0.50 % 0.55 % 0.49 % 0.41 %
Allowance for loan losses / total loans 1.13 % 1.12 % 1.12 % 1.14 % 1.10 %
Allowance for loan losses / total loans (excluding PPP loans) 1.13 % 1.13 % 1.15 % 1.19 % 1.18 %
Allowance for loan losses / nonperforming loans 197.06 % 191.72 % 182.65 % 199.57 % 236.95 %
OTHER DATA
Total assets $ 2,568,137 $ 2,573,845 $ 2,510,298 $ 2,438,020 $ 2,443,047
Total loans 2,220,223 2,151,751 2,111,991 2,004,289 2,053,938
Total deposits 2,165,163 2,177,895 2,114,602 2,045,966 2,036,228
Total stockholders' equity 274,702 271,068 266,666 260,179 254,571
Number of full-time equivalent employees (4) 233 219 217 209 215
(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 and 4 full-time equivalent seasonal interns as of June 30, 2022 and 2021, respectively.


FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)
As of the Quarter Ended
6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021
LOAN COMPOSITION
Commercial and industrial $ 321,205 $ 321,979 $ 350,103 $ 308,991 $ 379,916
Commercial real estate:
Owner-occupied 517,791 493,999 470,022 444,635 427,094
Investor 917,905 888,622 848,021 832,727 814,762
Construction and development 117,011 96,585 109,292 112,112 127,329
Multi-family 201,269 193,865 173,728 145,245 142,015
Total commercial real estate 1,753,976 1,673,071 1,601,063 1,534,719 1,511,200
Residential real estate:
Residential mortgage and first lien home equity loans 98,841 99,992 106,204 103,890 108,842
Home equity–second lien loans and revolving lines of credit 30,491 30,485 31,375 29,998 29,422
Total residential real estate 129,332 130,477 137,579 133,888 138,264
Consumer and other 19,694 30,096 27,762 31,946 31,584
Total loans prior to deferred loan fees and costs 2,224,207 2,155,623 2,116,507 2,009,544 2,060,964
Net deferred loan fees and costs (3,984 ) (3,872 ) (4,516 ) (5,255 ) (7,026 )
Total loans $ 2,220,223 $ 2,151,751 $ 2,111,991 $ 2,004,289 $ 2,053,938
LOAN MIX
Commercial and industrial 14.5 % 15.0 % 16.6 % 15.4 % 18.5 %
Commercial real estate:
Owner-occupied 23.3 % 23.0 % 22.3 % 22.2 % 20.8 %
Investor 41.3 % 41.3 % 40.1 % 41.5 % 39.7 %
Construction and development 5.3 % 4.5 % 5.2 % 5.6 % 6.2 %
Multi-family 9.1 % 9.0 % 8.2 % 7.2 % 6.9 %
Total commercial real estate 79.0 % 77.8 % 75.8 % 76.5 % 73.5 %
Residential real estate:
Residential mortgage and first lien home equity loans 4.4 % 4.6 % 5.0 % 5.2 % 5.3 %
Home equity–second lien loans and revolving lines of credit 1.4 % 1.4 % 1.5 % 1.5 % 1.4 %
Total residential real estate 5.8 % 6.0 % 6.5 % 6.7 % 6.7 %
Consumer and other 0.9 % 1.4 % 1.4 % 1.7 % 1.6 %
Net deferred loan fees and costs (0.2 %) (0.2 %) (0.3 %) (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
6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021
DEPOSIT COMPOSITION
Non-interest bearing demand deposits $ 600,402 $ 597,333 $ 558,775 $ 536,905 $ 534,475
Interest bearing demand deposits 318,687 314,564 293,647 241,869 211,074
Money market and savings deposits 929,075 936,848 871,074 845,607 817,424
Time deposits 316,999 329,150 391,106 421,585 473,255
Total Deposits $ 2,165,163 $ 2,177,895 $ 2,114,602 $ 2,045,966 $ 2,036,228
DEPOSIT MIX
Non-interest bearing demand deposits 27.7 % 27.4 % 26.4 % 26.3 % 26.3 %
Interest bearing demand deposits 14.7 % 14.5 % 13.9 % 11.8 % 10.4 %
Money market and savings deposits 42.9 % 43.0 % 41.2 % 41.3 % 40.1 %
Time deposits 14.7 % 15.1 % 18.5 % 20.6 % 23.2 %
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
6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021
Return on Average Tangible Equity
Net income (numerator) $ 8,823 $ 8,158 $ 7,839 $ 9,036 $ 8,893
Average stockholders' equity $ 273,829 $ 270,147 $ 264,216 $ 258,596 $ 250,143
Less: Average Goodwill and other intangible assets, net 19,823 19,916 17,910 17,937 18,001
Average Tangible stockholders' equity (denominator) $ 254,006 $ 250,231 $ 246,306 $ 240,659 $ 232,142
Return on Average Tangible equity (1) 13.93 % 13.22 % 12.63 % 14.90 % 15.37 %
Tangible Book Value Per Share
Stockholders' equity $ 274,702 $ 271,068 $ 266,666 $ 260,179 $ 254,571
Less: Goodwill and other intangible assets, net 19,768 19,854 19,971 17,920 17,965
Tangible stockholders' equity (numerator) $ 254,934 $ 251,214 $ 246,695 $ 242,259 $ 236,606
Common shares outstanding (denominator) 19,483,415 19,634,744 19,472,364 19,464,388 19,678,528
Tangible book value per share $ 13.08 $ 12.79 $ 12.67 $ 12.45 $ 12.02
Tangible Equity / Assets
Stockholders' equity $ 274,702 $ 271,068 $ 266,666 $ 260,179 $ 254,571
Less: Goodwill and other intangible assets, net 19,768 19,854 19,971 17,920 17,965
Tangible stockholders' equity (numerator) $ 254,934 $ 251,214 $ 246,695 $ 242,259 $ 236,606
Total assets $ 2,568,137 $ 2,573,845 $ 2,510,298 $ 2,438,020 $ 2,443,047
Less: Goodwill and other intangible assets, net 19,768 19,854 19,971 17,920 17,965
Tangible total assets (denominator) $ 2,548,369 $ 2,553,991 $ 2,490,327 $ 2,420,100 $ 2,425,082
Tangible stockholders' equity / tangible assets 10.00 % 9.84 % 9.91 % 10.01 % 9.76 %
Efficiency Ratio
Non-interest expense $ 11,409 $ 11,122 $ 11,825 $ 10,522 $ 10,155
Less: Merger-related expenses - - 498 145 -
Adjusted non-interest expense (numerator) $ 11,409 $ 11,122 $ 11,327 $ 10,377 $ 10,155
Net interest income $ 22,910 $ 21,149 $ 20,641 $ 20,781 $ 20,421
Non-interest income 1,463 1,267 2,211 1,901 1,342
Total revenue $ 24,373 $ 22,416 $ 22,852 $ 22,682 $ 21,763
Efficiency ratio 46.81 % 49.62 % 49.57 % 45.75 % 46.66 %
(1) Annualized.


FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(dollars in thousands, except for share data, unaudited)
For the Quarter Ended
6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021
Adjusted diluted earnings per share,
Adjusted return on average assets, and
Adjusted return on average equity
Net income $ 8,823 $ 8,158 $ 7,839 $ 9,036 $ 8,893
Add: Merger-related expenses (1) - - 393 115 -
Adjusted net income $ 8,823 $ 8,158 $ 8,232 $ 9,151 $ 8,893
Diluted weighted average common shares outstanding 19,794,657 19,768,452 19,725,294 19,842,817 19,883,076
Average assets $ 2,568,443 $ 2,522,775 $ 2,447,399 $ 2,456,617 $ 2,410,353
Average equity $ 273,829 $ 270,147 $ 264,216 $ 258,596 $ 250,143
Average Tangible Equity $ 254,006 $ 250,231 $ 246,306 $ 240,659 $ 232,142
Adjusted diluted earnings per share $ 0.45 $ 0.41 $ 0.42 $ 0.46 $ 0.45
Adjusted return on average assets (2) 1.38 % 1.31 % 1.33 % 1.48 % 1.48 %
Adjusted return on average equity (2) 12.92 % 12.25 % 12.36 % 14.04 % 14.26 %
Adjusted return on average tangible equity (2) 13.93 % 13.22 % 13.26 % 15.09 % 15.37 %
(1) Items are tax-effected using a federal income tax rate of 21%.
(2) Annualized.



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