First Bank Reports Fourth Quarter 2021 Net Income of $7.8 Million and Full Year Net Income of $35.4 Million

Quarterly Results Highlighted by Branch Acquisition, Strong Organic Loan Growth, Continued Revenue Expansion, and Solid Asset Quality Metrics

Hamilton, New Jersey, UNITED STATES


HAMILTON, N.J., Jan. 26, 2022 (GLOBE NEWSWIRE) -- First Bank (Nasdaq Global Market: FRBA) today announced results for the fourth quarter and full year 2021. Net income for the fourth quarter of 2021 was $7.8 million, or $0.40 per diluted share, compared to $6.2 million, or $0.31 per diluted share, for the fourth quarter of 2020. Return on average assets, return on average equity and return on average tangible equityi for the fourth quarter of 2021 were 1.27%, 11.77% and 12.63%, respectively, compared to 1.06%, 10.44%, and 11.30%, respectively, for the fourth quarter of 2020. Excluding merger-related expenses, fourth quarter 2021 adjusted diluted earnings per shareii were $0.42, adjusted return on average assetsii was 1.33% and adjusted return on average tangible equityii was 13.26%.

Full year 2021 net income was $35.4 million, an increase of $16.0 million, or 82.2%, compared to $19.4 million for 2020. Diluted earnings per share for 2021 were $1.79, an increase of $0.82, or 84.5%, compared to $0.97 per diluted share in 2020. Return on average assets and return on average equity for the full year 2021 were 1.46% and 13.96%, respectively, compared to 0.87% and 8.45%, respectively, for the full year 2020. Excluding merger-related expenses, full year 2021 adjusted diluted earnings per shareii were $1.81, adjusted return on average assetsii was 1.48% and adjusted return on average equity was 14.16%.

Fourth Quarter and Full Year 2021 Performance Highlights:

  • Completion of the acquisition of two branches during the fourth quarter of 2021, adding $100.9 million of deposits and $11.3 million of performing residential and consumer loans.
  • Total net revenue (net interest income plus non-interest income) of $22.9 million for the quarter increased $1.8 million, or 8.6%, compared to the prior year quarter, while full year total net revenue was $89.6 million, an increase of $13.7 million, or 18.1%, compared to 2020.
  • Total loans of $2.11 billion at December 31, 2021 reflected growth of $107.7 million, or 5.4%, from the end of the linked third quarter of 2021 and $64.4 million, or 3.1%, from December 31, 2020. Loan growth, excluding Paycheck Protection Program (PPP) loan activity, totaled $134.4 million in the fourth quarter of 2021 and $150.5 million for the full year 2021.
  • Total deposits of $2.11 billion at December 31, 2021 were up $211.0 million, or 11.1%, from December 31, 2020 and $68.6 million, or 3.4%, from September 30, 2021. Non-interest bearing demand deposits increased to 26.4% of total deposits at December 31, 2021, compared to 22.3% at December 31, 2020, while time deposits decreased to 18.5% at December 31, 2021 from 27.5% of total deposits at December 31, 2020.
  • Asset quality metrics remained solid during the quarter, with low net charge-offs of $6,000 during the fourth quarter of 2021, or 0.00% of average loans on an annualized basis, and nonperforming loans of $13.0 million, or 0.62% of total loans, at December 31, 2021 compared to $10.2 million, or 0.50% of total loans, at December 31, 2020.  
  • Fourth consecutive quarter of an efficiency ratioiii below 50%, at 49.57% for the fourth quarter of 2021.

“First Bank’s fourth quarter performance provided a strong finish to 2021 highlighted by organic loan growth, revenue expansion and solid asset quality metrics, positioning us well heading into 2022,” said Patrick L. Ryan, President and Chief Executive Officer. “We put our liquidity to work in the fourth quarter and achieved significant loan growth, with non-PPP loans up $134.4 million during the quarter, while maintaining our nonperforming assets ratio under 60 basis points. The growth was driven primarily by organic growth in commercial and industrial, multi-family and owner-occupied commercial real estate lending. We also continued to enhance our deposit mix, expanding lower cost core deposits and reducing the proportion of higher cost time deposits on our balance sheet. These reduced funding costs supported a relatively stable net interest margin compared to the linked third quarter.”

Mr. Ryan continued, “We maintained an efficiency ratio below 50% for the fourth consecutive quarter, even as core operating expenses were elevated due to higher incentive compensation based on our strong 2021 performance. Our total non-interest expenses were also impacted by costs associated with our acquisition of two branches during the fourth quarter. Importantly, all remaining acquisition-related expenses related to this strategic in-market transaction were recorded during December and we have been very pleased with the performance of our two new branches since the transaction closed.”

“As we look ahead to 2022, we are excited by the opportunities. Our reputation as a committed and valuable financial partner was significantly enhanced by our response to the challenges faced in 2020 and 2021. We introduced our relationship-based banking approach to a large number of new customers and we deepened our relationships with existing ones. Our lending pipelines at year-end continued to be very strong and, with an expanded team and customer base as a result of our recent branch acquisition, we are well positioned to drive continued organic loan and deposit growth. During the fourth quarter we were also approved as a Preferred Lender by the U.S. Small Business Administration, which should drive continued growth in our SBA lending business. Our SBA team had a great year in 2021 and we’re excited about continued growth in this area.”

“Our ability to deliver strong profitability and earnings enables us to consistently reward our shareholders. We are pleased to announce another $0.06 dividend, which reflects an annualized yield of 1.62% based on our January 25, 2022 closing price, as part of our ongoing focus on creating shareholder value.”

Income Statement

First Bank’s net interest income for the fourth quarter of 2021 was $20.6 million, an increase of $917,000, or 4.6%, compared to $19.7 million in the fourth quarter of 2020, driven by a $1.5 million decrease in total interest expense. The reduction in interest expense was primarily a result of a 61 basis point reduction in the average rates paid on time deposits, along with a decrease of $131.7 million in the average balance of time deposits. As a result of our concerted effort to drive down costs, interest expense on all other interest bearing deposits also declined for the comparative period. Interest income decreased primarily due to a 17 basis point decline in average loan yields, partially offset by a $17.6 million increase in average loans compared with the fourth quarter of 2020. Interest income from loans in the fourth quarter of 2021 included $1.1 million in PPP loan fee income compared to $1.8 million in the fourth quarter of 2020 and $1.8 million in the linked third quarter of 2021. Also impacting loan interest income was prepayment income of $312,000 for the quarter ended December 31, 2021 compared to $138,000 for the quarter ended December 31, 2020 and $166,000 for the linked third quarter of 2021.

Full year 2021 net interest income totaled $81.9 million, an increase of $12.3 million, or 17.7%, compared to $69.6 million for 2020. The increase in 2021 net interest income was also primarily a result of lower interest paid on interest bearing deposits, primarily time deposits. The average rate for time deposits declined by 104 basis points, and the average balance declined by $141.5 million compared to the same period in 2020. Total interest and dividend income of $91.1 million for the full year 2021, increased $1.9 million, driven by higher PPP fee income, solid growth in average loans, which increased by $122.6 million, or 6.4%, from the prior year, partially offset by a 15 basis point decrease in the average yield on loans. The decrease in average yield on loans was primarily due to the low interest rate environment that persisted throughout 2021. Also impacting our average loan yields were the level of PPP loan fees and prepayment income. For the year ended December 31, 2021 PPP fee income was $5.8 million compared to $3.3 million for year ended December 31, 2020. Loan prepayment income was $1.9 million in 2021 compared to $709,000 in 2020.

The fourth quarter 2021 tax equivalent net interest margin was 3.52%, a decrease of four basis points compared to the prior year quarter and a decrease of two basis points compared to the linked third quarter of 2021. The modest decline in the margin compared to the third quarter of 2021 was primarily a result of a 7 basis point decrease in interest earning asset yields, partially offset by a 6 basis point decrease in the average cost of interest-bearing liabilities, primarily interest-bearing deposits. The full year 2021 tax equivalent net interest margin was 3.56%, an increase of 27 basis points compared to the prior year period. The increase in the full year net interest margin was principally a result of a 71 basis point reduction in the cost of interest-bearing deposits, partially offset by a 26 basis point decline in earning asset yields.

First Bank (the Bank) reported a provision for loan losses of $825,000 for the fourth quarter of 2021, compared to a provision for loan losses of $1.6 million in the fourth quarter of 2020. The provision for the quarter ended December 31, 2021 was due to strong loan growth offset somewhat by the low level of net charge-offs and continued stable asset quality metrics. For full year 2021, the Bank reported a credit to the provision for loan losses of $232,000, compared to provision expense of $9.5 million for the same period in 2020. The provision for loan losses in 2020 reflected a higher degree of economic uncertainty associated with the COVID-19 pandemic as well as an elevated level of charge-offs compared to 2021.

Fourth quarter 2021 non-interest income of $2.2 million increased $899,000, or 68.5%, from $1.3 million during the fourth quarter 2020. The increase between the periods was primarily the result of a $321,000 increase in gains on sale of loans, reflecting an increase in U.S. Small Business Administration (SBA) loan sales and a $305,000 increase in loan fees reflecting increased swap fees in the fourth quarter 2021. Non-interest income totaled $7.8 million for the full year ended December 31, 2021, compared to $6.4 million for the same period in 2020, an increase of $1.4 million, or 22.1%. The increase in non-interest income for the full year of 2021 was primarily a result of an increase of $1.6 million in gains on the sale of loans and an increase in other non-interest income of $331,000. For the full year ended December 31, 2021 gain on sale of loans included increased income from the Bank’s growing SBA business as well as gains on the sale of problem loan assets totaling $364,000. Other non-interest income during the year ended December, 31 2021 included a $159,000 gain on the sale of a former branch facility.

Non-interest expense for fourth quarter 2021 of $11.8 million increased $773,000, or 7.0%, compared to $11.1 million for the prior year quarter. The higher non-interest expense compared to fourth quarter 2020 was primarily a result of higher performance related compensation which was reflected in the $628,000 increase in salaries and employee benefits, along with merger-related expenses of $498,000 related to the acquisition of two former OceanFirst Bank branches. These increases were partially offset by reduced occupancy and equipment, regulatory fees, and marketing and advertising costs. Excluding merger-related expenses, non-interest expense would have increased 2.5% for the comparable periods.

On a linked quarter basis, fourth quarter 2021 non-interest expense increased $1.3 million compared to $10.5 million for the third quarter of 2021. The higher non-interest expense compared to the third quarter of 2021 was also due principally to an increase in performance related compensation and merger-related expenses.

Non-interest expense for the full year 2021 totaled $43.2 million, an increase of $2.8 million, or 6.8%, compared to $40.4 million for the same period in 2020. The increase was primarily a result of increased performance related compensation, merger-related expenses and data processing costs, partially offset by lower occupancy and equipment costs and other expense. Lower occupancy and equipment and other expense was primarily due to cost savings from the closure of two branches and administrative office space during 2021. Excluding merger-related expenses, non-interest expense would have increased 5.3% for the comparable periods.

Income tax expense for the three months ended December 31, 2021 was $2.4 million with an effective tax rate of 23.2%, compared to $2.2 million with an effective tax rate of 25.8% for the fourth quarter of 2020 and $3.0 million with an effective tax rate of 24.7% for the third quarter of 2021. Income tax expense for the full year ended December 31, 2021 was $11.3 million with an effective tax rate of 24.2%, compared to $6.5 million for the full year 2020 with an effective tax rate of 25.1%. The increase in the income tax expense is primarily due to higher pre-tax income for the current periods.

Balance Sheet

Total assets at December 31, 2021 were $2.51 billion, an increase of $164.0 million, or 7.0%, compared to $2.35 billion at December 31, 2020. Total loans increased $64.4 million, or 3.1%, to $2.11 billion at December 31, 2021 compared to $2.05 billion at December 31, 2020. The increase in loans for the full year 2021 reflects organic growth of $139.2 million and $11.3 million in acquired loans, offset by a net decline in PPP loans of $86.1 million. Total loans as of December 31, 2021 increased $107.7 million, or 5.4%, from $2.00 billion at September 30, 2021, reflecting organic, net non-PPP loan growth of $123.1 million and $11.3 million in acquired loans, offset by a net decline in PPP loans of $26.7 million. PPP loans outstanding at December 31, 2021 were $51.0 million.

Total deposits were $2.11 billion at December 31, 2021, an increase of $211.0 million, or 11.1%, from $1.90 billion at December 31, 2020, and an increase of $68.6 million, or 3.4%, compared to $2.05 billion at September 30, 2021. Non-interest-bearing deposits totaled $558.8 million at December 31, 2021, an increase of $134.7 million, or 31.7%, from December 31, 2020, and an increase of $21.9 million, or 4.1%, from September 30, 2021, reflective of continued growth in commercial deposits. The Bank continues to focus on enhancing its deposit mix and, as of December 31, 2021, had grown non-interest bearing deposits to 26.4% and lowered time deposits to 18.5% of total deposits.

Stockholders’ equity was $266.7 million at December 31, 2021, compared to $238.1 million on December 31, 2020. The growth of $28.6 million, or 12.0%, in stockholders’ equity was primarily a result of full year 2021 net income of $35.4 million, partially offset by repurchases of 344,458 shares of common stock totaling $4.1 million and cash dividends paid of $2.9 million during the full year ended December 31, 2021.

As of December 31, 2021, the Bank continued to exceed all regulatory capital requirements to be considered well capitalized, with a Tier 1 Leverage ratio of 10.15%, a Tier 1 Risk-Based capital ratio of 10.65%, a Common Equity Tier 1 Capital ratio of 10.65%, and a Total Risk-Based capital ratio of 12.97%.

Asset Quality

First Bank’s asset quality metrics have remained stable and favorable during the twelve months ended December 31, 2021. Net charge-offs were $6,000 for the fourth quarter of 2021, compared to net charge-offs of $465,000 for the fourth quarter of 2020 and net recoveries of $121,000 for the third quarter of 2021. Net charge-offs as an annualized percentage of average loans were 0.00% in fourth quarter 2021, compared to 0.09% in fourth quarter 2020. Nonperforming loans were $13.0 million at December 31, 2021, up from $10.2 million on December 31, 2020, and up from $11.5 million on September 30, 2021. Nonperforming loans as a percentage of total loans at December 31, 2021 were 0.62%, compared with 0.50%, at December 31, 2020 and 0.57% at September 30, 2021. The allowance for loan losses to nonperforming loans was 182.65% at December 31, 2021, compared with 234.24% at the end of fourth quarter 2020, and 199.57% at September 30, 2021.

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 SBA. 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 December 31, 2021, First Bank had 341 PPP loans with outstanding balances of $51.0 million. During 2021, prior to the end of the PPP on May 31, 2021, First Bank originated 783 new PPP loans totaling $107.9 million. During the year ended December 31, 2021, PPP loans totaling $194.0 million were forgiven. During 2021, the Bank realized $5.8 million in fee income on these loans as any deferred fees remaining on the forgiven loans were accelerated. As of December 31, 2021, the Bank had $1.7 million in remaining unamortized fees associated with outstanding balances of PPP loans.

First Bank continues to monitor and analyze its COVID-19 related financial hardship payment deferrals (COVID-19 deferrals). As of December 31, 2021, the Bank’s population of COVID-19 deferrals consisted of three loans totaling $1.6 million, or 0.08% of total loans, down from $10.3 million, or 0.52% of total loans, at September 30, 2021.

Branch Acquisition Completed

At the close of business on December 3, 2021, First Bank completed the acquisition of two New Jersey branch locations from OceanFirst Bank. As part of the acquisition, First Bank also acquired $100.9 million of associated deposits and $11.3 million of select performing loans. Located in Flemington and Monroe, the two branches enhance First Bank’s existing Central New Jersey footprint and further strengthen its presence along the New York City to Philadelphia corridor. Through December 31, 2021 there have been no material fluctuations in the acquired loan or deposit balances since the acquisition.

Cash Dividend Declared

On January 18, 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 February 11, 2022, payable on February 25, 2022.

Conference Call

First Bank will host its earnings call on Thursday, January 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 448993. For those unable to participate in the call, a replay will be available by dialing 1-866-813-9403 (access code 410946) from one hour after the end of the conference call until April 27, 2022. Replay information will also be available on First Bank’s website at www.firstbanknj.com under the “About Us” tab. Click on “Investor Relations” to access the replay of the conference call.

About First Bank

First Bank 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 $2.5 billion in assets as of December 31, 2021, 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 declines in housing market values; the impact of disease pandemics, including COVID-19, on First Bank, its operations and its 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: Patrick L. Ryan, President and CEO
(609) 643-0168, patrick.ryan@firstbanknj.com

_______________
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 Adjusted diluted earnings per share, adjusted return on average assets and adjusted return on average tangible equity are non-U.S. GAAP financial measures and are calculated by dividing net income adjusted for certain merger-related expenses and other one-time gains or expenses by diluted weighted average shares, average assets and average tangible 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.

iii The efficiency ratio is a non-U.S. GAAP financial measure and is calculated by dividing non-interest expense less merger-related expenses by 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)
 
    
 December 31, 2021 December 31, 2020
Assets   
Cash and due from banks$25,076  $24,203 
Interest bearing deposits with banks 129,431   71,270 
Cash and cash equivalents 154,507   95,473 
Interest bearing time deposits with banks 2,170   4,371 
Investment securities available for sale, at fair value 94,584   61,731 
Investment securities held to maturity (fair value of $39,718 at December 31, 2021 and $38,319 at December 31, 2020) 39,547   37,593 
Restricted investment in bank stocks 5,856   8,545 
Other investments 8,062   6,498 
Loans, net of deferred fees and costs 2,111,991   2,047,572 
Less: Allowance for loan losses 23,746   23,974 
Net loans 2,088,245   2,023,598 
Premises and equipment, net 9,883   10,736 
Other real estate owned, net 772   575 
Accrued interest receivable 5,681   6,806 
Bank-owned life insurance 56,633   50,197 
Goodwill 17,826   16,253 
Other intangible assets, net 2,145   1,745 
Deferred income taxes 11,081   11,394 
Other assets 13,306   10,755 
Total assets$2,510,298  $2,346,270 
    
Liabilities and Stockholders' Equity   
Liabilities:   
Non-interest bearing deposits$558,775  $424,119 
Interest bearing deposits 1,555,827   1,479,498 
Total deposits 2,114,602   1,903,617 
Borrowings 81,835   161,135 
Subordinated debentures 29,620   29,508 
Accrued interest payable 399   561 
Other liabilities 17,176   13,341 
Total liabilities 2,243,632   2,108,162 
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; 20,851,506 shares issued and 19,472,364 shares outstanding at December 31, 2021 and 20,742,158 shares issued and 19,707,474 outstanding at December 31, 2020 103,704   103,135 
Additional paid-in capital 79,563   78,887 
Retained earnings 95,924   63,431 
Accumulated other comprehensive (loss) income (206)  839 
Treasury stock, 1,379,142 shares at December 31, 2021 and 1,034,684 shares at December 31, 2020 (12,319)  (8,184)
Total stockholders' equity 266,666   238,108 
Total liabilities and stockholders' equity$2,510,298  $2,346,270 
    


FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share data, unaudited)
 
        
 Three Months Ended Year Ended
 December 31,  December 31,
  2021   2020   2021   2020 
Interest and Dividend Income       
Investment securities—taxable$553  $500  $2,149  $2,229 
Investment securities—tax-exempt 36   57   169   277 
Interest bearing deposits with banks,       
Federal funds sold and other 136   139   660   911 
Loans, including fees 21,791   22,391   88,136   85,784 
Total interest and dividend income 22,516   23,087   91,114   89,201 
        
Interest Expense       
Deposits 1,105   2,357   5,684   15,573 
Borrowings 330   565   1,779   2,260 
Subordinated debentures 440   441   1,761   1,815 
Total interest expense 1,875   3,363   9,224   19,648 
Net interest income 20,641   19,724   81,890   69,553 
Provision for loan losses 825   1,633   (232)  9,539 
Net interest income after provision for loan losses 19,816   18,091   82,122   60,014 
        
Non-Interest Income       
Service fees on deposit accounts 246   189   760   629 
Loan fees 384   79   1,338   1,659 
Income from bank-owned life insurance 386   352   1,436   1,624 
Gains on sale of loans 392   71   1,892   289 
Gains on recovery of acquired loans 554   415   1,235   1,389 
Other non-interest income 249   206   1,093   762 
Total non-interest income 2,211   1,312   7,754   6,352 
        
Non-Interest Expense       
Salaries and employee benefits 7,229   6,601   25,404   22,809 
Occupancy and equipment 1,265   1,533   5,762   6,130 
Legal fees 130   191   769   864 
Other professional fees 623   631   2,133   2,116 
Regulatory fees 170   273   855   1,076 
Directors' fees 221   220   876   869 
Data processing 584   515   2,264   1,933 
Marketing and advertising 1   89   526   427 
Travel and entertainment 65   15   148   147 
Insurance 172   168   655   673 
Other real estate owned expense, net 68   73   165   57 
Merger-related expenses 498   -   643   - 
Other expense 799   743   2,952   3,286 
Total non-interest expense 11,825   11,052   43,152   40,387 
Income Before Income Taxes 10,202   8,351   46,724   25,979 
Income tax expense 2,363   2,156   11,295   6,531 
Net Income$7,839  $6,195  $35,429  $19,448 
        
Basic earnings per common share$0.40  $0.31  $1.81  $0.98 
Diluted earnings per common share$0.40  $0.31  $1.79  $0.97 
Cash dividends per common share$0.06  $0.03  $0.15  $0.12 
        
Basic weighted average common shares outstanding 19,469,404   19,721,653   19,611,381   19,885,699 
Diluted weighted average common shares outstanding 19,725,294   19,827,708   19,815,747   20,005,432 
        


FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)
            
            
 Three Months Ended December 31,
  2021   2020 
 Average    Average
 Average    Average
 Balance Interest Rate (5) Balance Interest Rate (5)
Interest earning assets           
Investment securities (1) (2)$133,768  $596  1.77% $103,736  $569  2.18%
Loans (3) 2,035,059   21,791  4.25%  2,017,496   22,391  4.42%
Interest bearing deposits with banks,           
Federal funds sold and other 145,742   46  0.13%  69,015   40  0.23%
Restricted investment in bank stocks 5,912   73  4.90%  7,199   84  4.64%
Other investments 7,323   17  0.92%  6,493   15  0.92%
Total interest earning assets (2) 2,327,804   22,523  3.84%  2,203,939   23,099  4.17%
Allowance for loan losses (23,529)      (23,323)    
Non-interest earning assets 143,124       135,433     
Total assets$2,447,399      $2,316,049     
            
Interest bearing liabilities           
Interest bearing demand deposits$265,789  $59  0.09% $178,190  $78  0.17%
Money market deposits 656,772   404  0.24%  576,608   624  0.43%
Savings deposits 181,253   165  0.36%  149,946   207  0.55%
Time deposits 399,768   477  0.47%  531,495   1,448  1.08%
Total interest bearing deposits 1,503,582   1,105  0.29%  1,436,239   2,357  0.65%
Borrowings 83,066   330  1.58%  168,396   565  1.33%
Subordinated debentures 29,603   440  5.95%  29,491   441  5.98%
Total interest bearing liabilities 1,616,251   1,875  0.46%  1,634,126   3,363  0.82%
Non-interest bearing deposits 550,718       429,604     
Other liabilities 16,214       16,220     
Stockholders' equity 264,216       236,099     
Total liabilities and stockholders' equity$2,447,399      $2,316,049     
Net interest income/interest rate spread (2)   20,648  3.38%    19,736  3.35%
Net interest margin (2) (4)    3.52%     3.56%
Tax equivalent adjustment (2)   (7)      (12)  
Net interest income  $20,641      $19,724   
            
(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)
            
            
 Year Ended December 31,
  2021   2020 
 Average    Average
 Average    Average
 Balance Interest Rate Balance Interest Rate
Interest earning assets           
Investment securities (1) (2)$118,673  $2,353  1.98% $103,859  $2,564  2.47%
Loans (3) 2,036,855   88,136  4.33%  1,914,266   85,784  4.48%
Interest bearing deposits with banks,           
Federal funds sold and other 134,109   248  0.18%  83,840   425  0.51%
Restricted investment in bank stocks 7,312   348  4.76%  6,785   375  5.53%
Other investments 6,727   64  0.95%  6,462   111  1.72%
Total interest earning assets (2) 2,303,676   91,149  3.96%  2,115,212   89,259  4.22%
Allowance for loan losses (23,753)      (20,768)    
Non-interest earning assets 140,594       132,466     
Total assets$2,420,517      $2,226,910     
            
Interest bearing liabilities           
Interest bearing demand deposits$225,945  $224  0.10% $165,346  $455  0.28%
Money market deposits 627,211   1,772  0.28%  524,520   3,982  0.76%
Savings deposits 179,705   739  0.41%  139,091   1,047  0.75%
Time deposits 458,980   2,949  0.64%  600,447   10,089  1.68%
Total interest bearing deposits 1,491,841   5,684  0.38%  1,429,404   15,573  1.09%
Borrowings 115,343   1,779  1.54%  131,031   2,260  1.72%
Subordinated debentures 29,561   1,761  5.96%  28,367   1,815  6.40%
Total interest bearing liabilities 1,636,745   9,224  0.56%  1,588,802   19,648  1.24%
Non-interest bearing deposits 514,137       391,686     
Other liabilities 15,903       16,257     
Stockholders' equity 253,732       230,165     
Total liabilities and stockholders' equity$2,420,517      $2,226,910     
Net interest income/interest rate spread (2)   81,925  3.40%    69,611  2.98%
Net interest margin (2) (4)    3.56%     3.29%
Tax equivalent adjustment (2)   (35)      (58)  
Net interest income  $81,890      $69,553   
            
(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.        
            


FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(in thousands, except for share and employee data, unaudited)
           
  As of or For the Quarter Ended
  12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020
EARNINGS          
Net interest income $20,641  $20,781  $20,421  $20,047  $19,724 
Provision for loan losses  825   158   (162)  (1,053)  1,633 
Non-interest income  2,211   1,901   1,342   2,300   1,312 
Non-interest expense  11,825   10,522   10,155   10,650   11,052 
Income tax expense  2,363   2,966   2,877   3,089   2,156 
Net income  7,839   9,036   8,893   9,661   6,195 
           
PERFORMANCE RATIOS           
Return on average assets (1)  1.27%  1.46%  1.48%  1.66%  1.06%
Adjusted return on average assets (1) (2)  1.33%  1.48%  1.48%  1.66%  1.06%
Return on average equity (1)  11.77%  13.86%  14.26%  16.21%  10.44%
Adjusted return on average equity (1) (2)  12.36%  14.04%  14.26%  16.21%  10.44%
Return on average tangible equity (1) (2)  12.63%  14.90%  15.37%  17.52%  11.30%
Adjusted return on average tangible equity (1) (2)  13.26%  15.09%  15.37%  17.52%  11.30%
Net interest margin (1) (3)  3.52%  3.54%  3.57%  3.60%  3.56%
Total cost of deposits (1)  0.21%  0.25%  0.30%  0.39%  0.50%
Efficiency ratio (2)  49.57%  45.75%  46.66%  47.66%  52.54%
           
SHARE DATA          
Common shares outstanding  19,472,364   19,464,388   19,678,528   19,663,065   19,707,474 
Basic earnings per share $0.40  $0.46  $0.45  $0.49  $0.31 
Diluted earnings per share  0.40   0.46   0.45   0.49   0.31 
Adjusted diluted earnings per share (2)  0.42   0.46   0.45   0.49   0.31 
Tangible book value per share (2)  12.67   12.45   12.02   11.59   11.17 
Book value per share  13.69   13.37   12.94   12.51   12.08 
           
MARKET DATA          
Market value per share $14.51  $14.09  $13.54  $12.17  $9.38 
Market value / Tangible book value  114.53%  113.21%  112.61%  104.97%  83.98%
Market capitalization $282,544  $274,253  $266,447  $239,300  $184,856 
           
CAPITAL & LIQUIDITY          
Tangible stockholders' equity / tangible assets (2)  9.91%  10.01%  9.76%  9.55%  9.45%
Stockholders' equity / assets  10.62%  10.67%  10.42%  10.23%  10.15%
Loans / deposits  99.88%  97.96%  100.87%  102.62%  107.56%
           
ASSET QUALITY          
Net charge-offs (recoveries) $6  $(121) $116  $(5) $465 
Nonperforming loans  13,001   11,488   9,558   10,676   10,234 
Nonperforming assets  13,773   11,967   10,038   11,251   10,809 
Net charge offs (recoveries) / average loans (1)  0.00%  (0.02%)  0.02%  0.00%  0.09%
Nonperforming loans / total loans  0.62%  0.57%  0.47%  0.53%  0.50%
Nonperforming assets / total assets  0.55%  0.49%  0.41%  0.47%  0.46%
Allowance for loan losses / total loans  1.12%  1.14%  1.10%  1.13%  1.17%
Allowance for loan losses / total loans (excluding PPP loans) 1.15%  1.19%  1.18%  1.24%  1.25%
Allowance for loan losses / nonperforming loans  182.65%  199.57%  236.95%  214.74%  234.24%
           
OTHER DATA          
Total assets $2,510,298  $2,438,020  $2,443,047  $2,405,576  $2,346,270 
Total loans  2,111,991   2,004,289   2,053,938   2,022,187   2,047,572 
Total deposits  2,114,602   2,045,966   2,036,228   1,970,491   1,903,617 
Total stockholders' equity  266,666   260,179   254,571   245,997   238,108 
Number of full-time equivalent employees (4)  217   209   215   211   204 
           
(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 4 full-time equivalent seasonal interns as of June 30, 2021.         
           


FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)
           
  As of the Quarter Ended
  12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020
LOAN COMPOSITION          
Commercial and industrial $350,103  $308,991  $379,916  $432,869  $388,886 
Commercial real estate:          
Owner-occupied  470,022   444,635   427,094   399,042   407,089 
Investor  848,021   832,727   814,762   771,599   778,958 
Construction and development  109,292   112,112   127,329   123,930   149,284 
Multi-family  173,728   145,245   142,015   125,493   144,527 
Total commercial real estate  1,601,063   1,534,719   1,511,200   1,420,064   1,479,858 
Residential real estate:          
Residential mortgage and first lien home equity loans  106,204   103,890   108,842   117,756   120,018 
Home equity–second lien loans and revolving lines of credit  31,375   29,998   29,422   29,306   33,575 
Total residential real estate  137,579   133,888   138,264   147,062   153,593 
Consumer and other  27,762   31,946   31,584   29,213   30,368 
Total loans prior to deferred loan fees and costs  2,116,507   2,009,544   2,060,964   2,029,208   2,052,705 
Net deferred loan fees and costs  (4,516)  (5,255)  (7,026)  (7,021)  (5,133)
Total loans $2,111,991  $2,004,289  $2,053,938  $2,022,187  $2,047,572 
           
LOAN MIX          
Commercial and industrial  16.6%  15.4%  18.5%  21.4%  19.0%
Commercial real estate:          
Owner-occupied  22.3%  22.2%  20.8%  19.7%  19.9%
Investor  40.1%  41.5%  39.7%  38.2%  38.0%
Construction and development  5.2%  5.6%  6.2%  6.1%  7.3%
Multi-family  8.2%  7.2%  6.9%  6.2%  7.0%
Total commercial real estate  75.8%  76.5%  73.5%  70.2%  72.2%
Residential real estate:          
Residential mortgage and first lien home equity loans  5.0%  5.2%  5.3%  5.8%  5.9%
Home equity–second lien loans and revolving lines of credit  1.5%  1.5%  1.4%  1.4%  1.6%
Total residential real estate  6.5%  6.7%  6.7%  7.2%  7.5%
Consumer and other  1.4%  1.7%  1.6%  1.5%  1.6%
Net deferred loan fees and costs  (0.3%)  (0.3%)  (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
  12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020
DEPOSIT COMPOSITION          
Non-interest bearing demand deposits $558,775  $536,905  $534,475  $500,008  $424,119 
Interest bearing demand deposits  293,647   241,869   211,074   208,443   201,881 
Money market and savings deposits  871,074   845,607   817,424   767,603   753,640 
Time deposits  391,106   421,585   473,255   494,437   523,977 
Total Deposits $2,114,602  $2,045,966  $2,036,228  $1,970,491  $1,903,617 
           
DEPOSIT MIX          
Non-interest bearing demand deposits  26.4%  26.3%  26.3%  25.4%  22.3%
Interest bearing demand deposits  13.9%  11.8%  10.4%  10.6%  10.6%
Money market and savings deposits  41.2%  41.3%  40.1%  38.9%  39.6%
Time deposits  18.5%  20.6%  23.2%  25.1%  27.5%
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
 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020
Return on Average Tangible Equity         
Net income (numerator)$7,839  $9,036  $8,893  $9,661  $6,195 
          
Average stockholders' equity$264,216  $258,596  $250,143  $241,674  $236,099 
Less: Average Goodwill and other intangible assets, net 17,910   17,937   18,001   18,023   18,062 
Average Tangible stockholders' equity (denominator)$246,306  $240,659  $232,142  $223,651  $218,037 
          
Return on Average Tangible equity 12.63%  14.90%  15.37%  17.52%  11.30%
          
Tangible Book Value Per Share         
Stockholders' equity$266,666  $260,179  $254,571  $245,997  $238,108 
Less: Goodwill and other intangible assets, net 19,971   17,920   17,965   18,024   17,998 
Tangible stockholders' equity (numerator)$246,695  $242,259  $236,606  $227,973  $220,110 
          
Common shares outstanding (denominator) 19,472,364   19,464,388   19,678,528   19,663,065   19,707,474 
          
Tangible book value per share$12.67  $12.45  $12.02  $11.59  $11.17 
          
          
Tangible Equity / Assets         
Stockholders' equity$266,666  $260,179  $254,571  $245,997  $238,108 
Less: Goodwill and other intangible assets, net 19,971   17,920   17,965   18,024   17,998 
Tangible stockholders' equity (numerator)$246,695  $242,259  $236,606  $227,973  $220,110 
          
Total assets$2,510,298  $2,438,020  $2,443,047  $2,405,576  $2,346,270 
Less: Goodwill and other intangible assets, net 19,971   17,920   17,965   18,024   17,998 
Tangible total assets (denominator)$2,490,327  $2,420,100  $2,425,082  $2,387,552  $2,328,272 
          
Tangible stockholders' equity / tangible assets 9.91%  10.01%  9.76%  9.55%  9.45%
          
          
Efficiency Ratio         
Non-interest expense$11,825  $10,522  $10,155  $10,650  $11,052 
Less: Merger-related expenses 498   145   -   -   - 
Adjusted non-interest expense (numerator)$11,327  $10,377  $10,155  $10,650  $11,052 
          
Net interest income$20,641  $20,781  $20,421  $20,047  $19,724 
Non-interest income 2,211   1,901   1,342   2,300   1,312 
Total revenue$22,852  $22,682  $21,763  $22,347  $21,036 
          
Efficiency ratio 49.57%  45.75%  46.66%  47.66%  52.54%
          


FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(dollars in thousands, except for share data, unaudited)
          
          
 For the Quarter Ended
 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020
          
Adjusted diluted earnings per share,         
Adjusted return on average assets, and         
Adjusted return on average equity         
          
Net income$7,839  $9,036  $8,893  $9,661  $6,195 
Add: Merger-related expenses (1) 393   115   -   -   - 
Adjusted net income$8,232  $9,151  $8,893  $9,661  $6,195 
          
Diluted weighted average common shares outstanding 19,725,294   19,842,817   19,883,076   19,834,319   19,827,708 
Average assets$2,447,399  $2,456,617  $2,410,353  $2,366,417  $2,316,049 
Average equity$264,216  $258,596  $250,143  $241,674  $236,099 
Average Tangible Equity$246,306  $240,659  $232,142  $223,651  $218,037 
          
Adjusted diluted earnings per share$0.42  $0.46  $0.45  $0.49  $0.31 
Adjusted return on average assets (2) 1.33%  1.48%  1.48%  1.66%  1.06%
Adjusted return on average equity (2) 12.36%  14.04%  14.26%  16.21%  10.44%
Adjusted return on average tangible equity (2) 13.26%  15.09%  15.37%  17.52%  11.30%
          
(1) Items are tax-effected using a federal income tax rate of 21%.        
(2) Annualized.         
          


FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(dollars in thousands, except for share data, unaudited)
    
    
 Year Ended December 31,
  2021   2020 
  
Adjusted diluted earnings per share,   
Adjusted return on average assets, and   
Adjusted return on average equity   
    
Net income$35,429  $19,448 
Add: Merger-related expenses (1) 508   - 
Adjusted net income$35,937  $19,448 
    
Diluted weighted average common shares outstanding 19,815,747   20,005,432 
Average assets$2,420,517  $2,226,910 
Average equity$253,732  $230,165 
Average Tangible Equity$235,764  $211,975 
    
Adjusted diluted earnings per share$1.81  $0.97 
Adjusted return on average assets 1.48%  0.87%
Adjusted return on average equity 14.16%  8.45%
Adjusted return on average tangible equity 15.24%  9.17%
    
(1) Tax-effected using a federal income tax rate of 21%