First Bank Reports Fourth Quarter 2019 Net Income of $5.2 Million


Full Year 2019 Net Income of $15.2 Million

For the Fourth Quarter 2019: Efficiency Ratio1of 53.21% Lowest in Last Five Quarters, Pre-Provision Net Revenue2 of $8.2 Million, Successful Systems Integration for Grand Bank Acquisition

HAMILTON, N.J., Jan. 29, 2020 (GLOBE NEWSWIRE) -- First Bank (Nasdaq Global Market: FRBA) today announced results for the fourth quarter and full year 2019. Net income for fourth quarter 2019 was $5.2 million, or $0.25 per diluted share, compared to $4.1 million, or $0.22 per diluted share, for the fourth quarter of 2018. Return on average assets and return on average equity for the fourth quarter of 2019 were 1.02% and 9.17%, respectively compared to fourth quarter 2018 return on average assets and return on average equity of 0.94% and 8.42%, respectively. First Bank’s fourth quarter 2019 adjusted diluted earnings per share3 were $0.28, adjusted return on average assets3 was 1.13% and adjusted return on average equity3 was 10.18% compared to fourth quarter 2018 adjusted diluted earnings per share of $0.21, adjusted return on average assets of 0.90% and adjusted return on average equity of 8.00%. Adjusted results for the fourth quarter of 2019 were impacted by a one-time revaluation of deferred tax assets which increased tax expense by approximately $730,000.  Net income for 2019 was $15.2 million, or $0.79 per diluted share, compared to $17.6 million, or $0.95 per diluted share, for 2018.

Fourth Quarter and Full Year 2019 Performance Highlights:

  • A 16.8%, or $2.5 million, increase in total net revenue (net interest income plus non-interest income) for the fourth quarter 2019 to $17.7 million, compared to $15.1 million for the prior-year quarter, and total net revenue for 2019 of $62.4 million, an increase of 6.8%, or $4.0 million, compared to 2018 net revenue of $58.4 million
  • Total loans of $1.72 billion at December 31, 2019, an increase of $261.1 million, or 17.8%, from $1.46 billion on December 31, 2018
  • Total deposits of $1.64 billion at 2019 yearend increased by $247.7 million, or 17.8%, from $1.39 billion at December 31, 2018; non-interest bearing deposits were up $56.7 million or 25.9% in 2019 compared to 2018
  • Fourth quarter 2019 non-interest expense of $9.3 million increased $119,000, or 1.3%, compared to $9.2 million for the prior year quarter 
  • Efficiency ratio of 53.21% in the fourth quarter of 2019 improved by 5.01% from 58.22% in the linked quarter and improved 8.57% from 61.78% in the fourth quarter of 2018
  • Fourth quarter 2019 tax equivalent net interest margin of 3.34% increased by 19 basis points compared to the linked quarter

“Our fourth quarter results provided a nice performance rebound and reflect an ongoing strategic focus on managing our funding costs, controlling non-interest expense, integrating and fully leveraging recently acquired locations and staff and our efforts to resolve a pair of commercial credits that affected our asset quality metrics,” said Patrick L. Ryan, President and Chief Executive Officer. “We realized a solid increase in core profitability for the fourth quarter even with increased tax expense related to the revaluation of our deferred tax assets. We believe that we’re well positioned to drive improved earnings performance during 2020.”

“While total deposits for the full year were up almost 18%, we allowed some price-sensitive time deposits to run off during the fourth quarter, which is reflected in a 14 basis-point drop in the average rate for interest bearing deposits from the linked third quarter. Our average balance for non-interest-bearing deposits was up by nearly $40 million from third quarter 2019, positively impacted by the Grand Bank acquisition and favorable results related to our commercial deposit gathering efforts. Growth in this area remains our focus. These efforts are closely aligned with a primary operating strategy for 2020 of stabilizing our net interest margin.”

“Non-interest expense for the fourth quarter was up by just 1.3% year-over-year, which we consider a solid accomplishment when you factor in a full quarter of expenses related to the staff and facilities acquired in our Grand Bank transaction. Linked quarter expenses, excluding merger-related costs in the third quarter, were up 9.4%, primarily a result of the Grand Bank acquisition. Continued effective management of our expenses will help our efforts to drive more to our bottom line.”

“We completed the successful system integration of the Grand Bank locations and staff in December. We’re pleased by the reaction of the Grand Bank customers as they get to know our expanded menu of products and services, while being served by familiar staff. While not a large transaction, it has made us the second largest community bank by deposit share for Mercer County and enhanced our market presence going into 2020.”      

“Our loan growth of $261 million for 2019 was very strong and reflected an active organic pipeline and the addition of the Grand Bank portfolio at the end of the third quarter. During the fourth quarter we experienced some early paydowns of commercial real estate loans which had the effect of lowering our period end loan balance in relation to the end of third quarter, however, we did benefit from elevated levels of prepayment penalty income in the quarter. Our commercial real estate pipeline remains strong and active and we plan to remain a fully engaged participant in this market. During 2020, we do plan to moderate the pace at which we grow our loan book to be more selective and to provide more flexibility in how we fund this growth.”

“Recently our nonperforming loans to total loans ratio has increased, mainly as a result of two larger commercial relationships. We believe that these credits are adequately collateralized. The largest of these relationships is an $8.2 million commercial and industrial relationship that was added to nonperforming loans in the third quarter of 2019.  The primary collateral for this relationship is under contract to be sold and we anticipate the loan being paid off during the first quarter of 2020.”           

Income Statement

Net interest income for fourth quarter 2019 was $16.2 million, an increase of $2.0 million, or 14.4%, compared to $14.2 million in the fourth quarter of 2018. This increase was driven by a $3.5 million, or 18.1%, increase in interest and dividend income to $23.0 million. This increase was primarily a result of a $291.4 million increase in average loan balances, with growth across all loan portfolios except consumer lending. Interest income for the fourth quarter 2019 included approximately $361,000 in loan prepayment penalty income compared to approximately $73,000 in the fourth quarter of 2018. The increase in interest income was partially offset by increased interest expense of $1.5 million for the comparable quarter. Increased interest expense was primarily a result of higher average balances and interest rates paid for time deposits and money market deposits. Loan and deposit balances for the fourth quarter reflect acquired and organic growth activity.

Net interest income of $58.4 million for 2019 increased by $3.4 million, or 6.2%, compared to $54.9 million for 2018. Interest and dividend income for 2019 was $84.2 million, an increase of $11.4 million, or 15.7%, compared to $72.7 million for 2018, partially offset by interest expense of $25.8 million, which increased $8.0 million or 45.0% from 2018.   The increase in interest and dividend income for 2019 was also primarily driven by significant growth in average loans, which increased by $211.8 million, along with a 2 basis-point increase in the average interest rate on loans compared to the prior year. Increased interest and dividend income was partially offset by higher interest expense on interest-bearing deposits, reflecting higher average balances and rates paid.

The fourth quarter 2019 tax equivalent net interest margin was 3.34%, a decrease of 10 basis points compared to 3.44% for the prior-year quarter and an increase of 19 basis points from the linked third quarter 2019. The decrease in the fourth quarter margin compared to 2018 was primarily the result of higher average balances and rates paid for interest-bearing liabilities, primarily money market and time deposits. The increase in interest-bearing liability costs was partially offset by a volume-related increase in interest income on interest earning assets. The improvement from the linked third quarter was driven by increased loan volume and a higher average rate for interest earning assets, along with a 14 basis-point decrease in the average rate for interest-bearing liabilities. The net interest margin for 2019 was 3.32%, a decrease of 25 basis points compared to 3.57% for the prior year, was primarily driven by increased average balances for money market and time deposits as well as a 40 basis-point increase in the average rate on interest bearing liabilities.   

The provision for loan losses for the fourth quarter 2019 totaled $340,000, a decrease of $686,000 compared to $1.0 million for fourth quarter 2018 and a decrease of $1.2 million compared to $1.6 million in the linked third quarter 2019. The 2019 provision for loan losses was $4.0 million compared to $3.4 million for the prior-year period. The increase in the provision amount for the full year was primarily a result of continued organic growth in the Bank’s commercial loan portfolio and elevated levels of charge-offs in 2019 compared to the prior year.

Fourth quarter 2019 non-interest income increased $509,000 to $1.5 million from $1.0 million in the fourth quarter of 2018. The increase was primarily a result of loan swap referral fees, an increase in service fees on deposit accounts and increased income from bank-owned life insurance. Non-interest income for 2019 totaled $4.0 million, an increase of $543,000 compared to $3.5 million for 2018. The annual increase was primarily a result of the same factors as the quarter over quarter increase.

Non-interest expense for fourth quarter 2019 totaled $9.3 million, an increase of $119,000, or 1.3%, compared to $9.2 million for the prior-year quarter and an increase of $799,000 compared to the third quarter of 2019 after excluding $984,000 in merger-related expenses from the third quarter. The higher non-interest expense compared to fourth quarter 2018 was primarily a result of increased salaries and employee benefits as well as data processing expense as a result of the Grand Bank acquisition on September 30, 2019, partially offset by lower other professional and regulatory fees. Excluding merger related costs in the third quarter of 2019, the increase in the fourth quarter compared to the linked third quarter was mainly the result of increased salaries and employee benefits; higher occupancy and equipment cost; and an increase in other expense. Non-interest expense for 2019 totaled $36.9 million, an increase of $3.6 million or 10.9%, compared to $33.3 million for 2018.  The 2019 increase in non-interest expense over the prior year was also primarily a result of increased salaries and employee benefits expense, an increase in other expense and higher occupancy and equipment costs, which includes the impact of the acquisition of Grand Bank.

The Bank’s efficiency ratio for the fourth quarter of 2019 was 53.21%, a reduction of 8.57% compared to 61.78% in the fourth quarter of 2018, and a reduction of 5.01% compared to 58.22% for the linked third quarter of 2019. The efficiency ratio for the full year 2019 was 58.00% compared to 56.13% in 2018.  

Pre-provision net revenue for fourth quarter 2019 was $8.2 million, an increase of $2.5 million compared to $5.7 million for the fourth quarter 2018.

Income tax expense for the fourth quarter of 2019 was $2.8 million, or an effective tax rate of 34.7%, compared to $823,000, or an effective tax rate of 16.7%, in the fourth quarter of 2018 and $947,000 or an effective tax rate of 24.7% in the linked third quarter 2019. The effective tax rate for the full year was 29.0%, compared to 18.7% for 2018. In December 2019, the State of New Jersey issued a clarifying technical bulletin related to the impact of the new tax legislation enacted in July 2018, specifically related to the combined income tax reporting for certain members of a commonly controlled unitary business group. This technical bulletin provided clarification on the state’s position and accordingly initiated a revaluation of the Bank’s deferred tax assets. This revaluation increased the Bank’s tax expense by approximately $730,000 during the fourth quarter of 2019.

Balance Sheet

Total assets at December 31, 2019, were $2.01 billion, an increase of $302.2 million, or 17.7%, compared to $1.71 billion at December 31, 2018, due primarily to loan growth, both organic and acquired. Total loans were $1.72 billion at December 31, 2019, an increase of $261.1 million, or 17.8%, compared to $1.46 billion at the 2018 year end. Loan growth during 2019 was primarily in commercial loans and included both originated and acquired loans.

Total deposits were $1.64 billion at December 31, 2019, an increase of $247.7 million, or 17.8%, compared to $1.39 billion at December 31, 2018. Non-interest-bearing deposits totaled $275.8 million at December 31, 2019, an increase of $56.7 million, or 25.9%, from December 31, 2018. Deposit growth also includes both organically sourced and acquired balances.

Stockholders’ equity increased to $228.2 million at December 31, 2019, up $33.4 million, or 17.1%, compared to $194.8 million at December 31, 2018. The increase was primarily the result of the Bank’s issuance of additional common shares for the acquisition of Grand Bank, which added $18.4 million to stockholders equity. The increase was also due to a $12.9 million increase in retained earnings which was a result of the Bank’s net income offset somewhat by cash dividends.

Asset Quality

Net charge-offs for the fourth quarter 2019 were $325,000, compared to $7,000 for fourth quarter 2018 and $1.1 million for the linked third quarter of 2019. Net charge-offs as an annualized percentage of average loans were 0.07% in fourth quarter 2019, compared to 0.00% for fourth quarter 2018 and 0.28% for the linked third quarter 2019. Nonperforming loans as a percentage of total loans at December 31, 2019, were 1.32%, compared with 0.44% at December 31, 2018, and 0.91% at September 30, 2019. The allowance for loan losses to nonperforming loans was 75.8% at December 31, 2019, compared with 237.9% at December 31, 2018, and 108.8% at September 30, 2019. The increase in nonperforming loans was primarily due to the aforementioned two commercial loan relationships.

As of December 31, 2019, the Bank exceeded all regulatory capital requirements to be considered well capitalized, with a Tier 1 Leverage ratio of 10.26%, a Tier 1 Risk-Based capital ratio of 10.77%, a Common Equity Tier 1 Capital ratio of 10.77%, and a Total Risk-Based capital ratio of 12.77%.

Cash Dividend Declared

On January 21, 2020, the Board of Directors declared a quarterly cash dividend of $0.03 per share to common stockholders of record at the close of business on February 14, 2020, payable on February 28, 2020.

Grand Bank Acquisition Completed

On October 1, 2019, First Bank announced that it had completed the acquisition of Grand Bank, N.A., effective as of the close of business on September 30, 2019. The merger had previously been unanimously approved by both boards of directors and was then approved by the shareholders of both institutions in September. The merger provided two additional full-service branch locations in Mercer County, New Jersey, approximately $146.3 million in loans and approximately $170.9 million in deposits at the time of acquisition.

Conference Call

First Bank will host an earnings conference call on Thursday, January 30, 2020, at 9:00 a.m. Eastern Time.  The direct dial toll free number for the call is 844-825-9784.  For those unable to participate in the call, a replay will be available by dialing 877-344-7529 (access code 10138057) from one hour after the end of the conference call until April 30, 2020.  Replay information will also be available on our website at www.firstbanknj.com under the “About Us” tab.  Click on “Investor Relations” to access the replay information for 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, Hamilton, Hamilton Square, Lawrence, Mercerville, Pennington, Randolph, Somerset and Williamstown, New Jersey; and Doylestown, Trevose, Warminster and West Chester, Pennsylvania. With over $2.0 billion in assets as of December 31, 2019, 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; continue to sustain its internal growth rate; 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 declines in housing markets; 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, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations being issued in accordance with this statute and potential 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; 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 joint 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.



1 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 adjusted for gains on recovery of acquired 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.

2 Pre-provision net revenue is a non-U.S. GAAP financial measure and is calculated by adding net interest income and non-interest income and subtracting non-interest expense adjusted by certain non-recurring items.  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.

3 Adjusted diluted earnings per share, adjusted return on average assets and adjusted return on average equity are non-U.S. GAAP financial measures and are calculated by dividing net income adjusted for certain merger related expenses and income and other one-time expenses by diluted weighted average shares, average assets and average equity, respectively.  For a reconciliation of these non-U.S. GAAP financial measures, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release. 

CONTACT:  Patrick L. Ryan, President and CEO
(609) 643-0168, patrick.ryan@firstbanknj.com 



FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data)
 
       
    December 31, 2019
  
    (unaudited) December 31, 2018
Assets    
Cash and due from banks$16,751 $13,547 
Federal funds sold 40,000  25,000 
Interest bearing deposits with banks 25,041  16,883 
  Cash and cash equivalents 81,792  55,430 
Interest bearing time deposits with banks 6,087  5,925 
Investment securities available for sale 47,462  51,260 
Investment securities held to maturity (fair value of $47,100   
  at December 31, 2019 and $49,411 at December 31, 2018) 46,612  49,811 
Restricted investment in bank stocks 6,652  5,803 
Other investments 6,388  6,203 
Loans, net of deferred fees and costs 1,723,574  1,462,516 
 Less: Allowance for loan losses 17,245  15,135 
  Net loans 1,706,329  1,447,381 
Premises and equipment, net 11,881  11,003 
Other real estate owned, net 1,363  1,455 
Accrued interest receivable 4,810  4,258 
Bank-owned life insurance 49,580  40,350 
Goodwill 18,046  16,074 
Other intangible assets, net 2,083  1,475 
Deferred income taxes 10,400  10,216 
Other assets 13,895  4,515 
  Total assets$2,013,380 $1,711,159 
       
Liabilities and Stockholders' Equity   
Liabilities:   
Non-interest bearing deposits$275,778 $219,034 
Interest bearing deposits 1,365,089  1,174,170 
  Total deposits 1,640,867  1,393,204 
Borrowings 105,476  93,351 
Subordinated debentures 21,964  21,856 
Accrued interest payable 1,076  1,045 
Other liabilities 15,811  6,867 
  Total liabilities 1,785,194  1,516,323 
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;   
 issued and outstanding 20,458,665 shares at December 31, 2019   
 and 18,676,056 shares at December 31, 2018 101,887  93,132 
Additional paid-in capital 78,112  67,417 
Retained earnings 48,160  35,222 
Accumulated other comprehensive income (loss) 27  (935)
  Total stockholders' equity 228,186  194,836 
  Total liabilities and stockholders' equity$2,013,380 $1,711,159 
       



FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share data, unaudited)
 
           
    Three Months Ended Year Ended
    December 31,  December 31,
     2019   2018  2019  2018
Interest and Dividend Income       
Investment securities—taxable$586  $541 $2,160 $2,156
Investment securities—tax-exempt 84   107  360  443
Interest bearing deposits with banks,       
  Federal funds sold and other 516   567  2,181  1,609
Loans, including fees 21,849   18,287  79,469  68,530
 Total interest and dividend income 23,035   19,502  84,170  72,738
           
Interest Expense       
Deposits  5,816   4,441  21,750  14,170
Borrowings 630   511  2,461  2,031
Subordinated debentures 398   398  1,593  1,593
 Total interest expense 6,844   5,350  25,804  17,794
Net interest income 16,191   14,152  58,366  54,944
Provision for loan losses 340   1,026  3,984  3,447
 Net interest income after provision for loan losses 15,851   13,126  54,382  51,497
           
Non-Interest Income       
Service fees on deposit accounts 178   93  515  364
Loan fees  422   34  660  280
Income from bank-owned life insurance 347   289  1,165  1,044
Gains on sale of investment securities -   -  -  3
Gains on sale of loans 172   143  227  335
Gains on recovery of acquired loans 190   260  776  804
Other non-interest income 184   165  652  622
 Total non-interest income 1,493   984  3,995  3,452
           
Non-Interest Expense       
Salaries and employee benefits 5,306   4,913  20,460  17,583
Occupancy and equipment 1,377   1,466  5,221  4,861
Legal fees 159   133  595  536
Other professional fees 397   559  1,634  1,953
Regulatory fees 26   144  387  580
Directors' fees 199   199  785  700
Data processing 584   445  1,852  1,733
Marketing and advertising 147   197  822  759
Travel and entertainment 147   163  486  450
Insurance  61   94  334  336
Other real estate owned expense, net (7)  72  152  221
Merger-related expenses -   -  1,212  988
Other expense 913   805  2,990  2,614
 Total non-interest expense 9,309   9,190  36,930  33,314
Income Before Income Taxes 8,035   4,920  21,447  21,635
Income tax expense 2,789   823  6,209  4,046
Net Income$5,246  $4,097 $15,238 $17,589
           
Basic earnings per common share$0.26  $0.22 $0.80 $0.97
Diluted earnings per common share$0.25  $0.22 $0.79 $0.95
Cash dividends per common share$0.03  $0.03 $0.12 $0.12
           
Basic weighted average common shares outstanding 20,377,478   18,621,688  19,098,464  18,212,875
Diluted weighted average common shares outstanding 20,666,729   18,937,468  19,392,429  18,571,537
           



FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)
            
 Three Months Ended December 31,
  2019   2018 
 Average    Average
 Average    Average
 Balance Interest Rate (5) Balance Interest Rate (5)
Interest earning assets           
Investment securities (1) (2)$92,875  $688  2.94% $103,201  $670  2.58%
Loans (3) 1,738,847   21,849  4.99%  1,447,438   18,287  5.01%
Interest bearing deposits with banks,           
  Federal funds sold and other 81,247   346  1.69%  72,061   406  2.24%
Restricted investment in bank stocks 7,078   122  6.84%  6,118   120  7.78%
Other investments 6,374   48  2.99%  6,190   41  2.63%
Total interest earning assets (2) 1,926,421   23,053  4.75%  1,635,008   19,524  4.74%
Allowance for loan losses (17,547)      (14,466)    
Non-interest earning assets 130,680       100,565     
  Total assets$2,039,554      $1,721,107     
            
Interest bearing liabilities           
Interest bearing demand deposits$159,936  $171  0.42%  165,625  $257  0.62%
Money market deposits 397,248   1,488  1.49%  310,065   1,093  1.40%
Savings deposits 126,768   338  1.06%  86,974   141  0.64%
Time deposits 690,194   3,819  2.20%  614,299   2,950  1.91%
  Total interest bearing deposits 1,374,146   5,816  1.68%  1,176,963   4,441  1.50%
Borrowings 114,965   630  2.17%  100,334   511  2.02%
Subordinated debentures 21,946   398  7.25%  21,841   398  7.29%
  Total interest bearing liabilities 1,511,057   6,844  1.80%  1,299,138   5,350  1.63%
Non-interest bearing deposits 283,112       219,844     
Other liabilities 18,392       9,051     
Stockholders' equity 226,993       193,074     
  Total liabilities and stockholders' equity$2,039,554      $1,721,107     
Net interest income/interest rate spread (2)   16,209  2.95%    14,174  3.10%
Net interest margin (2) (4)    3.34%     3.44%
Tax equivalent adjustment (2)   (18)      (22)  
Net interest income  $16,191      $14,152   
            
(1) Average balance of investment securities available for sale is based on amortized cost.      
(2) Interest and average rates are tax equivalent 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)
            
            
 Year Ended December 31,
  2019   2018 
 Average    AverageAverage    Average
 Balance Interest Rate Balance Interest Rate
Interest earning assets           
Investment securities (1) (2)$94,185  $2,596  2.76% $108,816  $2,692  2.47%
Loans (3) 1,578,174   79,469  5.04%  1,366,385   68,530  5.02%
Interest bearing deposits with banks,           
  Federal funds sold and other 73,544   1,575  2.14%  52,762   1,054  2.00%
Restricted investment in bank stocks 6,848   421  6.15%  6,361   406  6.38%
Other investments 6,303   185  2.94%  6,130   149  2.43%
Total interest earning assets (2) 1,759,054   84,246  4.79%  1,540,454   72,831  4.73%
Allowance for loan losses (16,458)      (13,282)    
Non-interest earning assets 116,314       90,442     
  Total assets$1,858,910      $1,617,614     
            
Interest bearing liabilities           
Interest bearing demand deposits$148,234  $877  0.59% $163,240  $979  0.60%
Money market deposits 355,046   5,619  1.58%  267,965   3,158  1.18%
Savings deposits 91,293   763  0.84%  84,336   458  0.54%
Time deposits 658,741   14,491  2.20%  572,411   9,575  1.67%
  Total interest bearing deposits 1,253,314   21,750  1.74%  1,087,952   14,170  1.30%
Borrowings 113,740   2,461  2.16%  109,419   2,031  1.86%
Subordinated debentures 21,906   1,593  7.27%  21,800   1,593  7.31%
  Total interest bearing liabilities 1,388,960   25,804  1.86%  1,219,171   17,794  1.46%
Non-interest bearing deposits 244,820       209,876     
Other liabilities 17,335       7,294     
Stockholders' equity 207,795       181,273     
  Total liabilities and stockholders' equity$1,858,910      $1,617,614     
Net interest income/interest rate spread (2)   58,442  2.93%    55,037  3.27%
Net interest margin (2) (4)    3.32%     3.57%
Tax equivalent adjustment (2)   (76)      (93)  
Net interest income  $58,366      $54,944   
            
(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 21%.      
(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
QUARTERLY FINANCIAL HIGHLIGHTS
(in thousands, except for share and employee data, unaudited)
           
  As of or For the Quarter Ended
  12/31/19 9/30/2019 (1) 6/30/19 3/31/19 12/31/18
EARNINGS          
Net interest income $16,191  $13,976  $14,164  $14,035  $14,152 
Provision for loan losses  340   1,558   1,721   365   1,026 
Non-interest income  1,493   905   924   673   984 
Non-interest expense  9,309   9,494   9,127   9,000   9,190 
Income tax expense  2,789   947   1,400   1,073   823 
Net income  5,246   2,882   2,840   4,270   4,097 
           
PERFORMANCE RATIOS           
Return on average assets (2)  1.02%  0.61%  0.64%  0.99%  0.94%
Adjusted return on average assets (2) (3)  1.13%  0.74%  0.63%  0.99%  0.90%
Return on average equity (2)  9.17%  5.58%  5.64%  8.79%  8.42%
Adjusted return on average equity (2) (3)  10.18%  6.69%  5.52%  8.76%  8.00%
Return on average tangible equity (2) (3)  10.10%  6.10%  6.11%  9.64%  9.26%
Adjusted return on average tangible equity (2) (3) 11.22%  7.31%  7.39%  7.47%  7.31%
Net interest margin (2) (4)  3.34%  3.15%  3.37%  3.45%  3.44%
Efficiency ratio (3)  53.21%  58.22%  60.51%  60.95%  61.78%
Pre-provision net revenue (3) $8,185  $6,107  $5,884  $5,691  $5,686 
           
SHARE DATA          
Common shares outstanding  20,458,665   20,460,078   18,757,965   18,735,291   18,676,056 
Basic earnings per share $0.26  $0.15  $0.15  $0.23  $0.22 
Diluted earnings per share  0.25   0.15   0.15   0.23   0.22 
Adjusted diluted earnings per share (3)  0.28   0.18   0.15   0.22   0.21 
Tangible book value per share (3)  10.17   9.88   9.85   9.71   9.50 
Book value per share  11.15   10.91   10.78   10.64   10.43 
           
MARKET DATA          
Market value per share $11.05  $10.83  $11.74  $11.53  $12.12 
Market value / Tangible book value  108.66%  109.59%  119.14%  118.78%  127.60%
Market capitalization $226,068  $221,583  $220,219  $216,018  $226,354 
           
CAPITAL & LIQUIDITY          
Tangible stockholders' equity / tangible assets (3) 10.44%  9.98%  10.19%  10.33%  10.47%
Stockholders' equity / assets  11.33%  10.91%  11.05%  11.22%  11.39%
Loans / deposits  105.04%  105.52%  107.28%  103.19%  104.98%
           
ASSET QUALITY          
Net charge-offs (recoveries) $325  $1,084  $481  $(16) $7 
Nonperforming loans  22,745   15,841   14,554   7,501   6,362 
Nonperforming assets  24,108   17,705   15,330   8,952   7,817 
Net charge offs (recoveries) / average loans (2)  0.07%  0.28%  0.13%  0.00%  0.00%
Nonperforming loans / total loans  1.32%  0.91%  0.94%  0.50%  0.44%
Nonperforming assets / total assets  1.20%  0.86%  0.84%  0.50%  0.46%
Allowance for loan losses / total loans  1.00%  0.99%  1.08%  1.04%  1.03%
Allowance for loan losses / nonperforming loans 75.82%  108.77%  115.13%  206.85%  237.90%
           
OTHER DATA          
Total assets $2,013,380  $2,047,373  $1,830,695  $1,777,301  $1,711,159 
Total loans  1,723,574   1,743,897   1,548,540   1,497,086   1,462,516 
Total deposits  1,640,867   1,652,608   1,443,497   1,450,774   1,393,204 
Total stockholders' equity  228,186   223,303   202,242   199,337   194,836 
Number of full-time equivalent employees (5)  216   216   195   181   186 
           
(1) Includes effects of Grand Bank merger effective September 30, 2019.        
(2) Annualized.          
(3) 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.
(4) Tax equivalent using a federal income tax rate of 21%.         
(5) Includes 15 full-time equivalent seasonal interns as of 6/30/2019.        
           



FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)
            
   As of the Quarter Ended
   12/31/19 9/30/2019 (1) 6/30/19 3/31/19 12/31/18
LOAN COMPOSITION          
Commercial and industrial $239,095  $236,932  $219,930  $204,159  $195,786 
Commercial real estate:          
 Owner-occupied  395,986   405,485   370,498   361,671   355,062 
 Investor  673,300   685,006   619,174   583,849   567,407 
 Construction and development  105,709   113,281   93,916   99,368   85,064 
 Multi-family  119,005   103,858   88,801   87,598   87,930 
   Total commercial real estate  1,294,000   1,307,630   1,172,389   1,132,486   1,095,463 
Residential real estate:          
 Residential mortgage and first lien home equity loans  123,917   127,337   92,760   94,143   101,341 
 Home equity–second lien loans and revolving lines of credit  32,555   35,264   26,695   27,486   28,563 
   Total residential real estate  156,472   162,601   119,455   121,629   129,904 
Consumer and other  35,810   38,584   38,529   40,517   43,070 
Net deferred loan fees and costs  (1,803)  (1,850)  (1,763)  (1,705)  (1,708)
   Total loans $1,723,574  $1,743,897  $1,548,540  $1,497,086  $1,462,515 
            
LOAN MIX          
Commercial and industrial  13.9%  13.6%  14.2%  13.6%  13.4%
Commercial real estate:          
 Owner-occupied  23.0%  23.3%  23.9%  24.2%  24.3%
 Investor  39.1%  39.3%  40.0%  39.0%  38.8%
 Construction and development  6.1%  6.5%  6.1%  6.6%  5.8%
 Multi-family  6.9%  6.0%  5.7%  5.9%  6.0%
   Total commercial real estate  75.1%  75.0%  75.7%  75.7%  74.9%
Residential real estate:          
 Residential mortgage and first lien home equity loans  7.2%  7.3%  6.0%  6.3%  6.9%
 Home equity–second lien loans and revolving lines of credit  1.9%  2.0%  1.7%  1.8%  2.0%
   Total residential real estate  9.1%  9.3%  7.7%  8.1%  8.9%
Consumer and other  2.0%  2.2%  2.5%  2.7%  2.9%
Net deferred loan fees and costs  (0.1%)  (0.1%)  (0.1%)  (0.1%)  (0.1%)
   Total loans  100.0%  100.0%  100.0%  100.0%  100.0%
            
(1) Includes effects of Grand Bank merger effective September 30, 2019.        
            



FIRST BANK AND SUBSIDIARIES 
NON-U.S. GAAP FINANCIAL MEASURES 
(in thousands, except for share data, unaudited) 
           
 As of or For the Quarter Ended 
 12/31/19 9/30/2019 (1) 6/30/19 3/31/19 12/31/18 
Return on Average Tangible Equity          
Net income (numerator)$5,246  $2,882  $2,840  $4,270  $4,097  
           
Average stockholders' equity$226,993  $204,759  $201,796  $197,061  $193,074  
Less: Average Goodwill and other intangible assets, net 20,987   17,412   17,450   17,450   17,484  
Average Tangible stockholders' equity (denominator)$206,006  $187,347  $184,346  $179,611  $175,590  
           
Return on Average Tangible equity 10.10%  6.10%  6.11%  9.64%  9.26% 
           
Tangible Book Value Per Share          
Stockholders' equity$228,186  $223,303  $202,242  $199,337  $194,836  
Less: Goodwill and other intangible assets, net 20,129   21,104   17,406   17,467   17,549  
Tangible stockholders' equity (numerator)$208,057  $202,199  $184,836  $181,870  $177,287  
           
Common shares outstanding (denominator) 20,458,665   20,460,078   18,757,965   18,735,291   18,676,056  
           
Tangible book value per share$10.17  $9.88  $9.85  $9.71  $9.49  
           
           
Tangible Equity / Assets          
Stockholders' equity$228,186  $223,303  $202,242  $199,337  $194,836  
Less: Goodwill and other intangible assets, net 20,129   21,104   17,406   17,467   17,549  
Tangible equity (numerator)$208,057  $202,199  $184,836  $181,870  $177,287  
           
Total assets$2,013,380  $2,047,373  $1,830,695  $1,777,301  $1,711,159  
Less: Goodwill and other intangible assets, net 20,129   21,104   17,406   17,467   17,549  
Adjusted total assets (denominator)$1,993,251  $2,026,269  $1,813,289  $1,759,834  $1,693,610  
           
Tangible equity / assets 10.44%  9.98%  10.19%  10.33%  10.47% 
           
           
Efficiency Ratio          
Non-interest expense$9,309  $9,494  $9,127  $9,000  $9,190  
Less: Merger-related expenses -   984   110   118   -  
Adjusted non-interest expense (numerator)$9,309  $8,510  $9,017  $8,882  $9,190  
           
Net interest income$16,191  $13,976  $14,164  $14,035  $14,152  
Non-interest income 1,493   905   924   673   984  
Total revenue 17,684   14,881   15,088   14,708   15,136  
Less: Gains on recovery of acquired loans 190   264   187   135   260  
Adjusted total revenue (denominator)$17,494  $14,617  $14,901  $14,573  $14,876  
           
Efficiency ratio 53.21%  58.22%  60.51%  60.95%  61.78% 
           
           
Pre-Provision Net Revenue          
Net interest income$16,191  $13,976  $14,164  $14,035  $14,152  
Non-interest income 1,493   905   924   673   984  
Less: Gains on sale of investment securities, net -   -   -   -   -  
Less: Gains on recovery of acquired loans 190   264   187   135   260  
Less: Non-interest expense 9,309   9,494   9,127   9,000   9,190  
Add: Merger-related expenses -   984   110   118   -  
Pre-provision net revenue$8,185  $6,107  $5,884  $5,691  $5,686  
           
(1) Includes effects of Grand Bank merger effective September 30, 2019.         
           



FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(dollars in thousands, except for share data, unaudited)
          
          
 For the Quarter Ended
 12/31/19 9/30/2019 (1) 6/30/19 3/31/19 12/31/18
          
Adjusted diluted earnings per share,         
  Adjusted return on average assets, and         
  Adjusted return on average equity         
          
Net income$5,246  $2,882  $2,840  $4,270  $4,097 
Add: Merger-related expenses (2) -   777   87   93   - 
Add: Deferred Tax Asset revaluation 730   -   -   -   - 
Less: Gains on recovery of acquired loans (2) 150   209   148   107   205 
Adjusted net income$5,826  $3,451  $2,779  $4,257  $3,892 
          
Diluted weighted average common shares outstanding 20,666,729   18,976,574   18,954,171   18,955,624   18,937,468 
Average assets$2,039,554  $1,859,818  $1,782,832  $1,747,414  $1,721,107 
Average equity$226,993  $204,759  $201,796  $197,061  $193,074 
Average Tangible Equity$206,006  $187,347  $184,346  $179,611  $175,590 
          
Adjusted diluted earnings per share$0.28  $0.18  $0.15  $0.22  $0.21 
Adjusted return on average assets (3) 1.13%  0.74%  0.63%  0.99%  0.90%
Adjusted return on average equity (3) 10.18%  6.69%  5.52%  8.76%  8.00%
Adjusted return on average tangible equity (3) 11.22%  7.31%  7.39%  7.47%  7.31%
          
(1) Includes effects of Grand Bank merger effective September 30, 2019.        
(2) Items are tax-effected using a federal income tax rate of 21%.        
(3) Annualized.