10/28/2014 | Press release | Archived content
HAMILTON, NJ -- (Marketwired) -- 10/28/14 --
First Bank (NASDAQ: FRBA) today announced third quarter 2014 results. Net income for the quarter was $1.1 million or $0.12 per diluted share, compared to net income of $492,000 or $0.10 per diluted share for the third quarter of 2013 and $923,000 or $0.10 per diluted share for the second quarter of 2014.
Third quarter results were primarily effected by three items: i) $116,000 in merger related expenses for our acquisition of Heritage Community Bank ("HCB"), ii) $857,000 in gains on recovery of acquired loans, and iii) a higher provision for loan losses of $977,000. The higher provision for loan losses in the third quarter was driven by strong loan growth late in the quarter and higher net loan charge offs. Book value per share was $6.79 at the end of the third quarter of 2014, an increase of $0.11 compared to book value of $6.68 at the end of the second quarter of 2014.
Net income for the nine months ended September 30, 2014 was $5.3 million compared to $1.4 million for the same period in 2013, an increase of $3.9 million or 275.8%. Diluted earnings per share for the comparative periods were $0.57 and $0.30, respectively. For the year over year comparison the increase in net income was due primarily to the bargain purchase gain from the Heritage Community Bank acquisition, reflected in increases in net interest income and non-interest income, partially offset by higher non-interest expense and a higher provision for loan losses. The growth in our organic loan portfolio also contributed to the increase in net income for the comparable periods.
President and Chief Executive Officer Patrick L. Ryan discussed the results: "As we expected, strong deposit and loan growth returned in the third quarter. Balance sheet growth more than offset some margin compression, pushing net interest income slightly higher. Certain non-ordinary income and expense items had a significant impact on net results for the quarter. Namely, we collected $857,000 on loans acquired and marked down to zero during the HCB acquisition. Offsetting this income boost was a larger than usual provision for loan losses in the quarter. The higher provision was partly related to incremental additional charge offs during the quarter (mostly related to acquired HCB loans) and partly related to strong commercial loan growth.
"Strategically we made good progress in the quarter. We received approval for our 9th branch, located in Cranbury, New Jersey. Consistent with our low-overhead branching model, the former Yardville National Bank/PNC site is a 2,200 square foot facility with minimal additional investment required. I'm happy to report the branch opened for business on October 20, 2014. Furthermore, we started to enjoy loan growth from our new Bucks County, Pennsylvania lending team. And, importantly, our Northern New Jersey team made continued progress stabilizing the legacy HCB portfolio and the pipeline of new deals is starting to grow."
Ryan continued, "Our post integration analysis of cost savings from the HCB transaction estimates total annualized cost savings of just under $1.0 million. As a point of reference, that is slightly less than 20% of the HCB pre-merger expense base and almost two times our initial merger model estimates of $500,000. Some of those savings started to materialize in the third quarter, while other savings will accrue as we move forward.
"Like many of our competitors, we saw margin compression during the quarter. The rate environment in our markets is not ideal. In addition to continued downward pressure on loan rates, we are now seeing upward pressure on deposit rates. If this continues, margin reductions may work to reduce the operating leverage benefits we expect from the HCB acquisition and continued organic growth."
Highlights
1 A non-GAAP metric defined by SNL Financial as net interest income before provision for loan losses plus non interest income excluding non-ordinary items (e.g. gains on sale of investment securities, gains on recovery of acquired loans, and bargain purchase gains) minus non-interest expense excluding non-ordinary items (e.g. merger related expenses).
About First Bank
First Bank (www.firstbanknj.com) is a New Jersey state-chartered bank with nine full-service branches in Cranbury, Denville, Ewing, Hamilton, Lawrence, Randolph (2), Somerset and Williamstown, New Jersey. With $643 million in assets as of September 30, 2014, First Bank offers a traditional range of deposit and loan products to individuals and businesses throughout the New York City to Philadelphia, PA corridor. First Bank's common stock is listed on the Nasdaq Global Market under the symbol "FRBA".
This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance. These statements may be identified by use of terms such as "estimates", "believes", "intends", "expects", "projects", or similar expressions. These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond First Bank's control and could impede its ability to achieve these goals. These factors include those listed in our Annual Report on Form 10K under the caption "Item 1A-Risk Factors", and general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, and results of regulatory exams, among other factors. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. First Bank does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
FIRST BANK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (in thousands, except share data, unaudited) September 30, December 31, 2014 2013 ------------- ------------- Assets Cash and due from banks $ 8,007$ 9,787 Interest bearing deposits with banks 21,637 13,927 ------------- ------------- Cash and cash equivalents 29,644 23,714 ------------- ------------- Interest bearing time deposits with banks 5,183 4,903 Investment securities available for sale 41,519 65,017 Investment securities held to maturity (fair value of $31,497 at September 30, 2014 and $15,353 at December 31, 2013) 31,240 15,414 Restricted investment in bank stocks 1,304 1,131 Other investments 5,000 5,000 Loans, net of deferred fees and costs 505,008 339,975 Less: Allowance for loan losses 5,511 4,675 ------------- ------------- Net loans 499,497 335,300 Premises and equipment, net 3,439 1,787 Other real estate owned, net 2,260 1,664 Accrued interest receivable 1,547 1,232 Bank-owned life insurance 14,036 8,805 Intangible assets, net 375 - Deferred income taxes 7,229 2,352 Other assets 1,226 473 ------------- ------------- Total assets $ 643,499$ 466,792 ============= ============= Liabilities and Stockholders' Equity Deposits: Non-interest bearing $ 86,252$ 48,186 Interest bearing 477,181 350,927 ------------- ------------- Total deposits 563,433 399,113 Long-term borrowings 14,000 14,000 Accrued interest payable 319 156 Other liabilities 1,852 1,016 ------------- ------------- Total liabilities 579,604 414,285 ------------- ------------- Stockholders' Equity: Preferred stock, par value $2 per share; authorized 5,000,000 shares; no shares issued and outstanding - - Common stock, par value $5 per share; authorized 20,000,000 shares; issued and outstanding 9,408,491 shares at September 30, 2014 and 8,520,299 shares at December 31, 2013 47,042 42,602 Additional paid-in capital 14,252 13,052 Retained earnings (accumulated deficit) 2,960 (2,290) Accumulated other comprehensive loss (359) (857) ------------- ------------- Total stockholders' equity 63,895 52,507 ------------- ------------- Total liabilities and stockholders' equity $ 643,499$ 466,792 ============= =============
FIRST BANK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except share data, unaudited) Three Months Ended Nine Months Ended September 30, September 30, ----------------------- ----------------------- 2014 2013 2014 2013 ----------- ----------- ----------- ----------- Interest and Dividend Income Investment securities - taxable $ 276$ 241$ 981$ 666 Investment securities - tax- exempt 75 34 205 86 Federal funds sold - - 2 - Interest bearing deposits with banks and other 63 40 180 118 Loans, including fees 6,129 4,026 16,729 11,214 ----------- ----------- ----------- ----------- Total interest and dividend income 6,543 4,341 18,097 12,084 ----------- ----------- ----------- ----------- Interest Expense Deposits 987 817 2,796 2,341 Borrowings 55 53 163 144 ----------- ----------- ----------- ----------- Total interest expense 1,042 870 2,959 2,485 ----------- ----------- ----------- ----------- Net interest income 5,501 3,471 15,138 9,599 Provision for loan losses 977 296 1,491 810 ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 4,524 3,175 13,647 8,789 ----------- ----------- ----------- ----------- Non-Interest Income Service fees on deposit accounts 26 21 106 57 Loan fees 8 7 18 29 Title insurance fees - 8 5 23 Income from bank-owned life insurance 103 37 231 110 Gains on sale of investment securities, net - - 34 18 Gains on sale of loans held for sale 23 - 37 134 Gain on acquisition of Heritage Community Bank - - 2,606 - Gains on recovery of acquired loans 857 - 954 - Other non-interest income 61 13 142 39 ----------- ----------- ----------- ----------- Total non-interest income 1,078 86 4,133 410 ----------- ----------- ----------- ----------- Non-Interest Expense Salaries and employee benefits 2,125 1,169 5,690 3,500 Occupancy and equipment 523 442 1,429 1,041 Legal fees 77 72 246 185 Other professional fees 252 227 839 383 Regulatory fees 165 3 389 170 Directors' fees 102 57 236 174 Data processing 196 101 543 306 Marketing and advertising 131 95 320 199 Travel and entertainment 58 36 163 103 Insurance 36 24 109 85 Other real estate owned expense, net 106 83 300 351 Merger-related expenses 116 39 579 51 Other expense 225 78 609 371 ----------- ----------- ----------- ----------- Total non-interest expense 4,112 2,426 11,452 6,919 ----------- ----------- ----------- ----------- Income Before Income Taxes 1,490 835 6,328 2,280 Income tax expense 401 343 1,078 883 ----------- ----------- ----------- ----------- Net Income $ 1,089$ 492$ 5,250$ 1,397 =========== =========== =========== =========== Basic earnings per share $ 0.12$ 0.10$ 0.57$ 0.30 Diluted earnings per share $ 0.12$ 0.10$ 0.57$ 0.30 Basic weighted average common shares outstanding 9,408,491 4,686,965 9,188,573 4,686,965 Diluted weighted average common shares outstanding 9,469,294 4,744,088 9,256,116 4,720,805
Three Months Ended September 30, ----------------------------------------------------- 2014 2013 -------------------------- ------------------------- Average Average Average Average Rate Rate Balance Interest (5) Balance Interest (5) -------- -------- ------- -------- -------- ------- (dollars in thousands) Interest earning assets Investment securities (1) (2) $ 66,441$ 377 2.25% $ 58,462$ 287 1.94% Loans (3) 478,249 6,129 5.08% 305,633 4,026 5.23% Federal funds sold and interest bearing deposits with banks 37,729 28 0.29% 17,020 13 0.30% Restricted investment in bank stocks 1,369 14 4.06% 1,084 9 3.29% Other investments 5,000 21 1.67% 5,000 18 1.43% -------- -------- -------- -------- Total interest earning assets (2) 588,788 6,569 4.43% 387,199 4,353 4.46% Allowance for loan losses (5,224) (4,442) Non-interest earning assets 38,594 19,295 -------- -------- Total assets $622,158$402,052 ======== ======== Interest bearing liabilities Interest bearing demand deposits $ 19,326 17 0.35% $ 11,932$ 10 0.33% Money market deposits 90,830 119 0.52% 73,855 130 0.70% Savings deposits 118,611 179 0.60% 87,381 166 0.75% Time deposits 230,964 672 1.15% 144,383 511 1.40% -------- -------- -------- -------- Total interest bearing deposits 459,731 987 0.85% 317,551 817 1.02% Borrowings 14,000 55 1.56% 12,990 53 1.62% -------- -------- -------- -------- Total interest bearing liabilities 473,731 1,042 0.87% 330,541 870 1.04% Non-interest bearing deposits 82,866 38,782 Other liabilities 1,769 1,286 Stockholders' equity 63,792 31,443 -------- -------- Total liabilities and stockholders' equity $622,158$402,052 ======== ======== Net interest income/interest rate spread (2) 5,527 3.56% 3,483 3.42% Net interest margin (4) 3.72% 3.57% Tax-equivalent adjustment (2) (26) (12) -------- -------- Net interest income $ 5,501$ 3,471 ======== ======== ---------------------
(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.
Nine Months Ended September 30, ---------------------------------------------------- 2014 2013 ------------------------- ------------------------- Average Average Average Average Rate Rate Balance Interest (5) Balance Interest (5) -------- -------- ------- -------- -------- ------- (dollars in thousands) Interest earning assets Investment securities (1) (2) $ 73,624$ 1,256 2.28% $ 56,114$ 781 1.86% Loans (3) 434,163 16,729 5.15% 285,366 11,214 5.25% Federal funds sold and interest bearing deposits with banks 32,124 76 0.32% 17,265 35 0.27% Restricted investment in bank stocks 1,348 40 3.97% 952 24 3.37% Other investments 5,000 66 1.76% 5,000 59 1.58% -------- -------- -------- -------- Total interest earning assets (2) 546,259 18,167 4.45% 364,697 12,113 4.44% Allowance for loan losses (4,943) (4,326) Non-interest earning assets 33,621 19,107 -------- -------- Total assets $574,937$379,478 ======== ======== Interest bearing liabilities Interest bearing demand deposits $ 16,972 45 0.35% $ 11,433 30 0.35% Money market deposits 87,995 364 0.55% 68,706 358 0.70% Savings deposits 116,097 555 0.64% 86,098 498 0.77% Time deposits 205,342 1,832 1.19% 132,879 1,455 1.46% -------- -------- -------- -------- Total interest bearing deposits 426,406 2,796 0.88% 299,116 2,341 1.05% Borrowings 14,000 163 1.56% 11,112 144 1.73% -------- -------- -------- -------- Total interest bearing liabilities 440,406 2,959 0.90% 310,228 2,485 1.07% Non-interest bearing deposits 72,690 36,802 Other liabilities 1,487 910 Stockholders' equity 60,354 31,538 -------- -------- Total liabilities and stockholders' equity $574,937$379,478 ======== ======== Net interest income/interest rate spread (2) 15,208 3.55% 9,628 3.37% Net interest margin (4) 3.72% 3.53% Tax-equivalent adjustment (2) (70) (29) -------- -------- Net interest income $ 15,138$ 9,599 ======== ========
(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 CONSOLIDATED FINANCIAL HIGHLIGHTS (in thousands, except share data, unaudited) 3Q2014 2Q2014 1Q2014 4Q2013 3Q2013 -------- -------- -------- -------- -------- EARNINGS Net interest income $ 5,501$ 5,415$ 4,222$ 3,607$ 3,471 Provision for loan losses 977 336 178 733 296 Non-interest income 1,078 316 2,739 102 86 Non-interest expense 4,112 4,119 3,221 2,469 2,426 Income tax expense 401 353 324 196 343 Net income 1,089 923 3,238 311 492 PER SHARE DATA Basic earnings per share $ 0.12$ 0.10$ 0.37$ 0.04$ 0.10 Diluted earnings per share 0.12 0.10 0.37 0.04 0.10 Book value 6.79 6.68 6.54 6.16 6.73 Tangible book value 6.75 6.64 6.50 6.16 6.73 PERFORMANCE RATIOS Return on average assets 0.69% 0.61% 2.63% 0.27% 0.49% Return on average equity 6.77% 5.95% 23.79% 2.32% 6.21% Net interest margin (tax equivalent basis) 3.72% 3.81% 3.61% 3.47% 3.57% Efficiency ratio 70.12% 68.98% 74.20% 69.20% 68.20% MARKET DATA Market value per share - period end $ 6.15$ 6.00$ 6.50$ 6.34$ 6.00 Market value / book value (x) 0.91 0.90 0.99 1.03 0.89 Period-end common shares outstanding 9,408 9,408 9,395 8,520 4,687 Market capitalization $ 57,859$ 56,448$ 61,068$ 54,017$ 28,122 CAPITAL & LIQUIDITY Tangible equity / assets 9.87% 10.23% 10.19% 11.25% 7.41% Equity / assets 9.93% 10.29% 10.26% 11.25% 7.41% Loans / deposits 89.63% 87.73% 86.27% 85.18% 83.01% ASSET QUALITY Net charge offs $ 490$ 165$ 124$ 600$ 104 Annualized net charge offs / average loans 0.41% 0.14% 0.14% 0.71% 0.14% Nonperforming loans $ 4,666$ 3,411$ 3,175$ 3,336$ 2,953 Nonperforming loans / total loans 0.92% 0.73% 0.70% 0.98% 0.94% Nonperforming assets $ 7,014$ 5,745$ 5,539$ 5,087$ 4,727 Nonperforming assets / total assets 1.09% 0.94% 0.92% 1.09% 1.11% Allowance for loan losses / total loans 1.09% 1.08% 1.05% 1.38% 1.45% PERIOD-END DATA Total assets $643,499$610,645$599,212$466,792$425,699 Total loans 505,008 466,878 450,424 339,975 314,008 Total deposits 563,433 532,147 522,102 399,113 378,283 Total stockholders' equity 63,895 62,847 61,453 52,507 31,561 Full-time equivalent employees 89 95 91 59 58
CONTACT: Patrick L. Ryan President and CEO (609) 643-0168 [email protected]
Source: First Bank