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First Bank Reports First Quarter 2017 Net Income o

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Post# of 301275
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Posted On: 04/24/2017 8:00:28 PM
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Posted By: News Desk 2018
First Bank Reports First Quarter 2017 Net Income of $1.9 Million, an Increase of 43% Over 2016

HAMILTON, N.J., April 24, 2017 (GLOBE NEWSWIRE) -- First Bank (NASDAQ: FRBA ) today announced higher earnings for the fifth consecutive quarter. Net income for first quarter 2017 was $1.94 million or $0.17 per diluted share, compared to $1.36 million or $0.14 per diluted share for the first quarter of 2016. Net income increased by 43.3% and diluted earnings per share increased by $0.03, or 21%, despite a 2.2 million share increase in weighted average diluted shares outstanding from March 2016. The increase in first quarter net income was primarily a result of net interest income growth of 19.7%, which resulted from a 19.7% increase in average interest-earning assets.

First Quarter 2017 Performance Highlights:

  • Total net revenue (net interest income + non-interest income) for first quarter 2017 increased by 20.1%, or $1.4 million, to $8.6 million, compared to the prior year quarter.
  • First quarter 2017 average loans of $900.8 million were up $168.5 million, or 23.0%, from first quarter 2016, and were up $51.0 million, or 6.0% from fourth quarter 2016.
  • Total deposits of $934.3 million at March 31, 2017 were up $135.3 million, or 16.9%, compared to March 31, 2016, and were up $39.4 million, or 4.4%, compared to December 31, 2016.
  • Asset quality metrics remained favorable, with net loan charge-offs to average loans of just 0.06% for first quarter 2017 compared to 0.16% in first quarter 2016. Nonperforming loans to total loans of 0.57% at March 31, 2017, were up slightly in comparison to 0.54% at March 31, 2016, and down compared to 0.66% at December 31, 2016.
  • The Bank's efficiency ratio improved to 61.32% for the first quarter, down from 62.48% for first quarter 2016.

“We continued our positive trend with a solid performance in the first quarter characterized by loan and deposit growth and profit improvement, which was reflective of our team’s continued hard work and dedication to meeting the needs of our customers,” said Patrick L. Ryan, President and Chief Executive Officer. “During the quarter we focused on rebuilding the loan pipeline that fueled our very strong loan growth during the second half of 2016. In addition, we announced a definitive agreement to acquire Bucks County Bank, a transaction that will strengthen our market presence in the attractive Bucks County, Pennsylvania market. We consider this merger a great fit of two organizations that share a similar customer-centric culture along with a focus on commercial and industrial and owner occupied commercial real estate lending. Furthermore, on April 18, our Board declared a $0.02 per share cash dividend, reflective of our directors’ desire to provide cash to shareholders, while at the same time retaining an appropriate level of capital to fund the Bank’s ongoing growth activities. I’m confident that we will continue to perform throughout 2017, based on our reasoned and consistent approach to business and dedication to effective risk management. We remain excited about the near-term business opportunities within our market area, as well as the steps we’ve taken to raise our competitive profile.”

Income Statement

The Bank's net interest income for first quarter 2017 was $8.1 million, an increase of $1.3 million, or 19.7%, compared to $6.8 million in the first quarter of 2016. Our growth was driven by a 17.9% increase in interest and dividend income primarily a result of a $168.5 million increase in average loan balances compared with the first quarter of 2016. This was somewhat offset by increased interest expense of $286,000 for the comparative quarter, which reflected average balance increases for time deposits, transaction accounts and borrowings.

The first quarter 2017 tax equivalent net interest margin was 3.16%, an increase of two basis points compared to the prior year quarter, and an increase of four basis points compared to the linked fourth quarter of 2016. The net interest margin increase compared to first quarter 2016 was primarily the result of higher average interest-earning assets and a six basis point drop in the average rate paid on interest-bearing liabilities.

The provision for loan losses for the first quarter of 2017 totaled $438,000, a decrease of $375,000 compared to the first quarter of 2016, and a decrease of $516,000 compared to the linked fourth quarter of 2016. The decrease in the first quarter 2017 provision reflected a continuation of favorable asset quality metrics, as well as slower loan growth than in the comparable periods.

First quarter 2017 non-interest income increased $99,000, to $459,000, compared to $360,000 in first quarter  2016, primarily a result of gains on the sale of SBA loans of $136,000 and increased income from bank owned life insurance of $50,000, partially offset by lower gains on recovery of acquired loans.

First quarter 2017 non-interest expense of $5.3 million was up $923,000 compared to first quarter 2016. The increase in non-interest expense, compared to first quarter 2016, was primarily a result of increased salaries and employee benefits, $150,000 of costs associated with the agreement to acquire Bucks County Bank and slight increases in other expenses associated with our growth. The increase in salaries and employee benefits was due to several factors, including an increase in base salaries related to additional employees hired during 2016, higher bonus related costs, including FICA taxes, and higher health insurance costs.  

Pre-provision net revenue [1] for the first quarter of 2017 was $3.2 million, an increase of $620,000, or 23.6%, compared to the first quarter of 2016, and declined $139,000 compared to the linked fourth quarter of 2016. The decline in the first quarter of 2017 compared to the fourth quarter of 2016 was due to an increase in non-interest expense. The largest increase in non-interest expense was due to a $137,000 increase in FICA taxes, a component of salaries and employee benefit expenses. The FICA increase related to the payment of employee bonuses in March 2017.

[1] A non-U.S. GAAP metric defined by SNL Financial as net interest income before provision for loan losses plus non-interest income excluding non-ordinary items (e.g. gains on sale of investment securities, gains on recovery of acquired loans, and bargain purchase gains) minus non-interest expense excluding non-ordinary items (e.g. merger related expenses and other one-time, non-ordinary costs).

Income tax expense for the first quarter of 2017 was $886,000, an increase of $295,000 compared to the first quarter of 2016, reflecting higher pre-tax income and a slightly higher effective tax rate.  First quarter income tax expense decreased $5,000 compared to $891,000 for fourth quarter 2016. The first quarter effective income tax rate was 31.3%, compared to 30.4% for first quarter 2016 and 33.0% for fourth quarter 2016.

Balance Sheet

Total assets at March 31, 2017 were $1.1 billion, an increase of $179.0 million, or 19.5%, compared to the end of first quarter 2016, and an increase of $23.1 million, or 2.2%, compared to December 31, 2016. Total loans were $915.3 million at quarter end, an increase of $157.1 million or 20.7% compared to March 31, 2016, and an increase of $16.9 million compared to the linked fourth quarter of 2016.

Total deposits were $934.3 million at March 31, 2017, an increase of $135.3 million, or 16.9%, compared to March 31, 2016, and an increase of $39.4 million, or 4.4% compared to December 31, 2016. Non-interest bearing deposits totaled $127.8 million at March 31, 2017, an increase of $26.2 million, or 25.8% from March 31, 2016, reflective of the Bank’s expanding commercial lending relationships. Non-interest bearing deposits at March 31, 2017 were up $9.2 million, or 7.7%, compared to December 31, 2016.

Stockholders' equity increased to $91.0 million at March 31, 2017, up $20.6 million or 29.2% compared to March 31, 2016, primarily a result of the capital offering completed in June 2016, which raised $13.4 million in net new capital, and $6.8 million of additional retained earnings. First quarter 2017 stockholders’ equity increased by $2.2 million from year end 2016 primarily due to first quarter net income.

Asset Quality

The Bank's asset quality metrics remained stable during the first quarter of 2017, reflective of disciplined risk management and underwriting standards. Net charge-offs were $146,000 for the first quarter of 2017, compared to $294,000 for first quarter 2016 and $424,000 for the fourth quarter of 2016. Net charge-offs as an annualized percentage of average loans were 0.06% in first quarter 2017, compared to 0.16% in first quarter 2016 and 0.20% in the linked fourth quarter of 2016. Nonperforming loans as a percentage of total loans at March 31, 2017 were 0.57%, compared with 0.54% at March 31, 2016 and 0.66% on December 31, 2016. The allowance for loan losses to nonperforming loans was 193.35% at March 31, 2017, compared with 206.62% at March 31, 2016, and 164.67% at the end of fourth quarter 2016.

As of March 31, 2017, the Bank exceeded all regulatory capital requirements to be considered well capitalized with a Tier 1 Leverage ratio of 8.41%, a Tier 1 Risk-Based capital ratio of 8.82%, a Common Equity Tier 1 Capital ("CET1") ratio of 8.82%, and a Total Risk-Based capital ratio of 11.93%.

Quarterly Cash Dividend Declared  

On April 18, 2017, the Bank’s Board of Directors declared and approved a $0.02 per share quarterly cash dividend on the Bank’s common stock, payable on May 30, 2017, to shareholders of record as of May 10, 2017. In approving the dividend, the Bank’s Board stated that this dividend provides shareholders an added tangible benefit which it believes is appropriate given the Bank’s current financial performance, momentum and near-term prospects.

Merger Agreement with Bucks County Bank

First Bank announced on March 29, 2017, that it had entered into a definitive agreement to acquire Bucks County Bank (OTC Pink:BKCS) of Doylestown, Pennsylvania, subject to shareholder and regulatory approvals. Bucks County Bank shareholders are to receive 0.98 shares of First Bank common stock in an all-stock exchange.  First Bank expects to issue approximately 2.4 million new shares of First Bank common stock to consummate this transaction, which is expected to be completed in the third quarter of 2017. 

Bucks County Bank serves small and mid-size businesses through four full-service locations in Doylestown, Warminster, Bensalem and Levittown, Pennsylvania.  On December 31, 2016, it had assets of approximately $198 million, loans of $179 million and deposits of $145 million. Following the merger, First Bank will have approximately $1.3 billion in assets with 14 branches located throughout New Jersey and Eastern Pennsylvania.

Conference Call Scheduled

First Bank will host its first quarter 2017 earnings conference call on Tuesday, April 25, 2017 at 3:00 PM eastern time. The direct dial toll free number for the call is 1-844-825-9784. For those unable to participate in the call, a replay will be available by dialing 1-877-344-7529 (replay access code: 10104945) from approximately one hour after the end of the conference call until July 26, 2017. Replay information will also be available on our website at www.firstbanknj.com under the "About Us" tab. Click on "Investor Relations" to access replay information for the conference call.

About First Bank

First Bank ( www.firstbanknj.com ) is a New Jersey state-chartered bank with ten full-service branches in Cranbury, Denville, Ewing, Flemington, Hamilton, Lawrence, Randolph, Somerset and Williamstown, New Jersey, and Trevose, Pennsylvania. With $1.1 billion in assets as of March 31, 2017, First Bank offers a traditional range of deposit and loan products to individuals and businesses throughout the New York City to Philadelphia corridor. First Bank's common stock is listed on the Nasdaq Global Market under the symbol "FRBA".

This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance. These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond First Bank's control and could impede its ability to achieve these goals. These factors include those listed in our Annual Report on Form 10-K for the year ended December 31, 2016 under the caption "Item 1A-Risk Factors", and general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, changes in laws and regulations and results of regulatory exams, among other factors.

FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data, unaudited)
 
           
      March 31,   December 31,
      2017   2016
Assets        
Cash and due from banks   $ 6,343     $ 6,078  
Federal funds sold     -       5,000  
Interest bearing deposits in other banks     35,606       19,211  
  Cash and cash equivalents     41,949       30,289  
Interest bearing time deposits in other banks     4,951       7,440  
Investment securities available for sale     45,829       47,077  
Investment securities held to maturity (fair value of $53,191      
at March 31, 2017 and $53,358 at December 31, 2016)     53,027       53,473  
Restricted investment in bank stocks     3,024       3,890  
Other investments     5,000       5,000  
Loans, net of deferred fees and costs     915,280       898,429  
Less: Allowance for loan losses     10,118       9,826  
  Net loans     905,162       888,603  
Premises and equipment, net     3,245       3,338  
Other real estate owned, net     1,138       1,292  
Accrued interest receivable     2,267       2,573  
Bank-owned life insurance     21,220       21,067  
Intangible assets, net     209       224  
Deferred income taxes     8,656       8,350  
Other assets     718       678  
  Total assets   $ 1,096,395     $ 1,073,294  
           
Liabilities and Stockholders' Equity      
Deposits:      
Non-interest bearing   $ 127,755     $ 118,569  
Interest bearing     806,571       776,365  
  Total deposits     934,326       894,934  
Borrowings     45,267       64,510  
Subordinated debentures     21,668       21,641  
Accrued interest payable     987       636  
Other liabilities     3,102       2,767  
  Total liabilities     1,005,350       984,488  
Stockholders' Equity:      
Preferred stock, par value $2 per share; 5,000,000 shares authorized;      
no shares issued and outstanding     -       -  
Common stock, par value $5 per share; 20,000,000 shares authorized;      
issued and outstanding 11,446,759 shares at March 31, 2017      
and 11,410,274 shares at December 31, 2016     57,021       56,885  
Additional paid-in capital     18,867       18,779  
Retained earnings     15,554       13,611  
Accumulated other comprehensive loss     (397 )     (469 )
  Total stockholders' equity     91,045       88,806  
  Total liabilities and stockholders' equity   $ 1,096,395     $ 1,073,294  
           
FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share data, unaudited)
 
             
    Three Months Ended
    March 31,
    2017     2016
Interest and Dividend Income            
Investment securities—taxable   $ 376   $ 356
Investment securities—tax-exempt     123     126
Interest bearing deposits in other banks,            
Fed funds sold, and other   125     82
Loans, including fees     10,029     8,472
Total interest and dividend income   10,653     9,036
             
Interest Expense            
Deposits     1,996     1,788
Borrowings     159     81
Subordinated debentures     398     398
Total interest expense   2,553     2,267
Net interest income     8,100     6,769
Provision for loan losses     438     813
Net interest income after provision for loan losses     7,662     5,956
             
Non-Interest Income            
Service fees on deposit accounts     41     35
Loan fees     12     15
Income from bank-owned life insurance     153     103
Gains on sale of investment securities, net     -     25
Gains on sale of loans     136     -
Gains on recovery of acquired loans     37     111
Other non-interest income     80     71
Total non-interest income     459     360
             
Non-Interest Expense            
Salaries and employee benefits     2,750     2,214
Occupancy and equipment     685     687
Legal fees     100     74
Other professional fees     350     274
Regulatory fees     219     172
Directors' fees     118     113
Data processing     255     227
Marketing and advertising     125     125
Travel and entertainment     59     48
Insurance     67     57
Other real estate owned expense, net     123     119
Merger-related expenses     150     -
Other expense     291     259
Total non-interest expense     5,292     4,369
Income Before Income Taxes     2,829     1,947
Income tax expense     886     591
Net Income   $ 1,943   $ 1,356
             
Basic earnings per share   $ 0.17   $ 0.14
Diluted earnings per share   $ 0.17   $ 0.14
             
Basic weighted average common shares outstanding     11,386,536     9,448,426
Diluted weighted average common shares outstanding     11,748,946     9,540,773
             
FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(unaudited)
                                 
                                 
    Three Months Ended March 31,
    2017   2016
    Average         Average   Average       Average
    Balance   Interest   Rate (5)   Balance   Interest   Rate (5)
                                 
    (dollars in thousands)
Interest earning assets                                
Investment securities (1) (2)   $   100,247   $  541   2.19%   $   94,294   $   525   2.24%
Loans (3)     900,822     10,029   4.52%     732,347     8,472   4.65%
Interest bearing deposits in other banks and                                
Federal funds sold     34,950     74   0.86%     38,682     50   0.52%
Restricted investment in bank stocks     3,490     32   3.72%     2,158     16   2.98%
Other investments     5,000     19   1.54%     5,000     16   1.29%
Total interest earning assets (2)     1,044,509     10,695   4.15%     872,481     9,079   4.19%
Allowance for loan losses     (10,104)               (8,154)          
Non-interest earning assets     43,184               37,717          
Total assets   $ 1,077,589             $  902,044          
                                 
Interest bearing liabilities                                
Interest bearing demand deposits   $   116,572   $  168   0.58%   $  77,156   $   135   0.70%
Money market deposits     156,126     253   0.66%     124,773     229   0.74%
Savings deposits     69,482     84   0.49%     77,721     96   0.50%
Time deposits     443,119     1,491   1.36%     394,223     1,328   1.35%
Total interest bearing deposits     785,299     1,996   1.03%     673,873     1,788   1.07%
Borrowings     55,827     159   1.16%     30,593     81   1.06%
Subordinated debentures     21,650     398   7.35%     21,544     398   7.39%
Total interest bearing liabilities     862,776     2,553   1.20%     726,010     2,267   1.26%
Non-interest bearing deposits     120,903               104,018          
Other liabilities     3,695               2,324          
Stockholders' equity     90,215               69,692          
Total liabilities and stockholders' equity   $ 1,077,589             $   902,044          
Net interest income/interest rate spread (2)           8,142   2.95%           6,812   2.93%
Net interest margin (2) (4)               3.16%               3.14%
Tax-equivalent adjustment (2)           (42)               (43)    
Net interest income         $  8,100             $  6,769    
                                 
                                 
                                 
(1) Average balances of investment securities available for sale are based on amortized cost.
(2) Interest and average rates are tax equivalent using a federal income tax rate of 34 percent.
(3) Average balances of loans include loans on nonaccrual status.
(4) Net interest income divided by average total interest earning assets.
(5) Average rates are annualized.
FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(in thousands, except share and employee data, unaudited)
                             
  1Q2017   4Q2016   3Q2016   2Q2016   1Q2016
EARNINGS                            
Net interest income $ 8,100   $ 7,798   $ 7,456   $ 6,880   $ 6,769
Provision for loan losses   438     954     291     639     813
Non-interest income   459     570     384     316     360
Non-interest expense   5,292     4,717     4,793     4,453     4,369
Income tax expense   886     891     955     661     591
Net income   1,943     1,806     1,801     1,443     1,356
                             
PER SHARE DATA                            
Basic earnings per share $ 0.17   $ 0.16   $ 0.16   $ 0.15   $ 0.14
Diluted earnings per share   0.17     0.16     0.16     0.15     0.14
Tangible book value (1)   7.94     7.76     7.66     7.49     7.39
Book value   7.95     7.78     7.68     7.51     7.42
                             
PERFORMANCE RATIOS                            
Return on average assets (2)   0.73%     0.70%     0.74%     0.62%     0.60%
Return on average equity (2)   8.73%     8.10%     8.25%     8.09%     7.83%
Net interest margin, tax equivalent basis (2)   3.16%     3.12%     3.16%     3.04%     3.14%
Efficiency ratio (1)   61.32%     58.23%     62.04%     62.43%     62.48%
Pre-provision net revenue (1) $ 3,244   $ 3,383   $ 2,933   $ 2,680   $ 2,624
                             
MARKET DATA (period-end)                            
Market value per share $ 11.95   $ 11.60   $ 8.38   $ 6.94   $ 6.94
Market value / book value   150.24%     149.04%     109.16%     92.43%     93.53%
Common shares outstanding   11,446,759     11,410,274     11,393,609     11,392,776     9,497,776
Market capitalization $ 136,789   $ 132,359   $ 95,478   $ 79,066   $ 65,805
                             
CAPITAL & LIQUIDITY                            
Tangible equity / assets (1)   8.28%     8.25%     8.66%     8.79%     7.65%
Equity / assets   8.30%     8.27%     8.68%     8.81%     7.68%
Loans / deposits   97.96%     100.39%     94.62%     94.04%     94.89%
                             
ASSET QUALITY                            
Net charge offs (recoveries) $ 146   $ 424   $ 30   $ 63   $ 294
Nonperforming loans   5,233     5,967     3,683     5,595     4,094
Nonperforming assets   6,371     7,289     4,895     7,270     5,793
Net charge offs / average loans (2)   0.06%     0.20%     0.01%     0.03%     0.16%
Nonperforming loans / total loans   0.57%     0.66%     0.45%     0.70%     0.54%
Nonperforming assets / total assets   0.58%     0.68%     0.49%     0.75%     0.63%
Allowance for loan losses / total loans   1.11%     1.09%     1.12%     1.13%     1.12%
Allowance for loan losses / nonperforming loans   193.35%     164.67%     252.40%     161.48%     206.62%
                             
PERIOD-END DATA                            
Total assets $ 1,096,395   $ 1,073,294   $ 1,007,685   $ 970,689   $ 917,441
Total loans   915,280     898,429     827,161     801,421     758,131
Total deposits   934,326     894,934     874,149     852,230     798,985
Total stockholders' equity   91,045     88,806     87,463     85,540     70,474
Full-time equivalent employees   104     108     104     107     102
___________________________                            
                             
(1) Non-U.S. GAAP financial measure that we believe provides management and investors with information that is useful in understanding our
financial performance and condition.                            
(2) Annualized.

Contact: Patrick L. Ryan President and CEO First Bank (609) 643-0168 patrick.ryan@firstbanknj.com



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