First Bank Reports Second Quarter 2014 Earnings of $923,000; Total Assets Reach $611 Million

Marketwired

HAMILTON, NJ--(Marketwired - July 29, 2014) - First Bank (FRBA) today announced second quarter 2014 results. Net income for the quarter was $923,000 or $0.10 per diluted share, compared to net income of $525,000 or $0.11 per diluted share for the second quarter of 2013 and $3.2 million or $0.37 per diluted share for the first quarter of 2014. First quarter 2014 results included $2.6 million in income from a bargain purchase gain on the Heritage Community Bank acquisition.

Second quarter results included $256,000 in merger related expenses and $34,000 in gains on sale of investment securities. Book value per share was $6.68 at the end of the second quarter, an increase of $0.14 compared to book value of $6.54 at the end of the first quarter.

President and Chief Executive Officer Patrick L. Ryan discussed the results: "We had a good second quarter. Overall financial results continue to be impacted by merger-related items, but the core banking platform performed well. As those merger-related costs taper off, we expect the second half of 2014 should give some good visibility into the true, improved earnings profile of the franchise. While growth slowed somewhat in the quarter, we expect deposit and loan growth will return to levels in line with historical performance. Loan growth was impacted by anticipated attrition in the Morris County market. With the deal closed and successful systems integration behind us, we expect our Morris team will become a growth engine. Furthermore, the loan pipeline remains strong throughout all of our markets. 

"On the deposit side, we managed growth by lowering rates as we worked through excess liquidity generated through the Heritage acquisition and the sale of certain investment securities. The securities sale generated a small gain, but our primary focus was protecting book value in a rising rate environment by selling certain securities with greater projected market value risk. We think we effectively achieved that objective. Once excess liquidity is deployed, deposit growth efforts will be reenergized."

Ryan continued, "Importantly, we are starting to see some cost savings generated from the merger. Improved operating leverage will be a key to better financial performance. Actions taken with deposit rates also contributed to an improved net interest margin of 3.81% in the second quarter compared to 3.61% in the first quarter. Nevertheless, we expect continued margin pressure as loan pricing remains very competitive. With continued improvement in asset quality trends, together with new growth coming from our Bucks County, PA and Morris County teams, we are looking forward to a good second half of 2014." 

Second Quarter 2014 Highlights

  • Balance Sheet
    • Total assets at June 30, 2014 were $610.6 million, an increase of $11.4 million or 1.9% compared to March 31, 2014, and an increase of $230.2 million or 60.5% compared to June 30, 2013. 
    • Total loans reached $466.9 million at June 30, 2014, an increase of $16.5 million or 3.7% compared to March 31, 2014 and an increase of $175.2 million or 60.0% compared to June 30, 2013. 
    • Total deposits reached $532.1 million at June 30, 2014, an increase of $10.0 million or 1.9% compared to March 31, 2014 and an increase of $193.9 million or 57.3% compared to June 30, 2013. Non-interest bearing deposits increased to 15.6% of total deposits at June 30, 2014.
    • Book equity increased to $62.8 million at June 30, 2014.
    • Book value per share was $6.68 at June 30, 2014 compared to $6.54 per share at March 31, 2014 and $6.61 per share at June 30, 2013. Tangible book value per share was $6.64 at June 30, 2014, compared to $6.50 per share at March 31, 2014 and $6.61 per share at June 30, 2013. 
  • Income Statement
    • Net interest income for the second quarter of 2014 totaled $5.4 million, an increase of $1.2 million or 28.3% compared to $4.2 million for the first quarter of 2014, and an increase of $2.3 million or 71.7% compared to the second quarter of 2013.
    • Non-interest income for the second quarter of 2014 totaled $317 thousand, an increase of $184 thousand or 138.3% compared to $133 thousand (excluding the bargain purchase gain) for the first quarter of 2014. When compared to the second quarter of 2013, non-interest income increased $99 thousand or 45.4%.
    • Non-interest expense for the second quarter of 2014 totaled $4.1 million, an increase of $899 thousand or 27.9% compared to $3.2 million for the first quarter of 2014, and an increase of $1.8 million or 74.8% compared to $2.4 million in the second quarter of 2013. 
    • Pre-tax income for the second quarter of 2014 totaled $1.3 million, an increase of $320 thousand or 33.5% compared to $956 thousand (excluding the bargain purchase gain) for the first quarter of 2014, and an increase of $442 thousand or 53.0% compared to the second quarter of 2013. When adding back the $256 thousand in merger-related costs and subtracting $34 thousand in gains on sale of investment securities, pre-tax income was $1.5 million for the second quarter of 2014. This compares to adjusted pre-tax income of $1.2 million in the first quarter of 2014 when excluding the bargain purchase gain and adding back in merger-related and other non-recurring expenses.
    • The provision for loan losses in the second quarter of 2014 totaled $336 thousand, an increase of $158 thousand or 88.8% compared to $178 thousand for the first quarter of 2014. 
  • Other items
    • The tax equivalent net interest margin (NIM) for the second quarter of 2014 was 3.81% compared to 3.61% for the first quarter of 2014 and 3.53% for the second quarter of 2013. 
    • Non-performing assets (NPAs) were $5.7 million or 0.94% of total assets at June 30, 2014 compared to $5.5 million or 0.91% of total assets at March 31, 2014. 
      • Non-accrual loans totaled $3.3 million or 0.71% of total loans at June 30, 2014 compared to non-accrual loans of $3.1 million or 0.69% of total loans at March 31, 2014.
      • Loans 30-89 days past due totaled $7.8 million at June 30, 2014 compared to $8.8 million at March 31, 2014. We had 1 loan over 90 days past due and still accruing at June 30, 2014 totaling $88 thousand. 
      • OREO (including other repossessed assets) totaled $2.3 million at June 30, 2014.
      • Note: non-performing, non-accrual, and past due loan data does not include $2.9 million of loans acquired with deteriorated credit quality that were marked to fair value as part of the HCB acquisition at June 30, 2014. In the first quarter earnings release dated May 15, 2014, loans totaling $3.0 million acquired with deteriorated credit quality were included in the non-performing, non-accrual, and past due loan numbers.
    • Regulatory capital ratios at June 30, 2014:
      • Tier 1 Leverage ratio of 10.17%.
      • Tier 1 Risk-Based capital ratio of 12.05%.
      • Total Risk-Based capital ratio of 13.04%.
    • The allowance for loan losses (ALLL) to total loans at June 30, 2014 was 1.08% compared to 1.05% at March 31, 2014. The increase in the ALLL ratio relates primarily to an increase in our organic portfolio and payoffs/reductions in the portfolio acquired in the Heritage transaction that currently carries no loan loss reserve because of the mark to market adjustment on that portfolio at the time of acquisition. 
    • 95 full-time equivalent employees (FTEs) at June 30, 2014, compared to 91 FTEs at March 31, 2014.

About First Bank
First Bank (www.firstbanknj.com) is a New Jersey state-chartered bank with eight full-service branches in Denville, Ewing, Hamilton, Lawrence, Randolph (2), Somerset and Williamstown, New Jersey. With $611 million in assets as of June 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 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.

   
   
FIRST BANK AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION  
(in thousands, except share data)  
(Unaudited)  
          
   June 30,   December 31,  
   2014   2013  
Assets           
Cash and due from banks  $10,709   $9,787  
Interest bearing deposits with banks   34,901    13,927  
  Cash and cash equivalents   45,610    23,714  
Interest bearing time deposits with banks   5,182    4,903  
Investment securities available for sale   36,599    65,017  
Investment securities held to maturity (fair value of $30,003 at June 30, 2014 and $15,353 at December 31, 2013)   
29,835
   
15,414
 
Restricted investment in bank stocks   1,496    1,131  
Other investments   5,000    5,000  
Loans, net of deferred fees and costs   466,878    339,975  
 Less: Allowance for loan losses   5,024    4,675  
  Net loans   461,854    335,300  
Premises and equipment, net   3,330    1,787  
Other real estate owned, net   2,335    1,664  
Accrued interest receivable   1,497    1,232  
Bank-owned life insurance   8,933    8,805  
Intangible assets, net   394    -  
Deferred income taxes   7,187    2,352  
Other assets   1,393    473  
  Total assets  $610,645   $466,792  
            
Liabilities and Stockholders' Equity           
Deposits:           
 Non-interest bearing  $82,901   $48,186  
 Interest bearing   449,246    350,927  
  Total deposits   532,147    399,113  
Long-term borrowings   14,000    14,000  
Accrued interest payable   349    156  
Other liabilities   1,302    1,016  
  Total liabilities   547,798    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 June 30, 2014 and 8,520,299 shares at December 31, 2013   47,042    42,602  
Additional paid-in capital   14,229    13,052  
Retained earnings (accumulated deficit)   1,872    (2,290 )
Accumulated other comprehensive loss   (296 )  (857 )
  Total stockholders' equity   62,847    52,507  
  Total liabilities and stockholders' equity  $610,645   $466,792  
 
 
 
FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share data)
(Unaudited)
             
   Three Months Ended  Six Months Ended
   June 30,  June 30,
   2014  2013  2014  2013
Interest and Dividend Income                
Investment securities - taxable  $338  $225  $705  $425
Investment securities - tax-exempt   66   30   130   52
Federal funds sold   1   -   2   -
Interest bearing deposits with banks and other   59   37   117   78
Loans, including fees   5,938   3,670   10,600   7,188
 Total interest and dividend income   6,402   3,962   11,554   7,743
                 
Interest Expense                
Deposits   933   764   1,809   1,524
Borrowings   54   45   108   91
 Total interest expense   987   809   1,917   1,615
Net interest income   5,415   3,153   9,637   6,128
Provision for loan losses   336   180   514   514
Net interest income after provision for loan losses   5,079   2,973   9,123   5,614
                 
Non-Interest Income                
Service fees on deposit accounts   53   19   80   36
Loan fees   8   10   10   22
Title insurance fees   5   3   5   15
Income from bank-owned life insurance   65   37   128   73
Gains on sale of investment securities, net   34   -   34   18
Gains on sale of loans held for sale   -   134   14   134
Gain on acquisition of Heritage Community Bank   -   -   2,606   -
Gain on recovery of acquired loans   97   -   97   -
Other non-interest income   55   15   82   26
 Total non-interest income   317   218   3,056   324
                 
Non-Interest Expense                
Salaries and employee benefits   2,048   1,219   3,565   2,331
Occupancy and equipment   494   297   906   599
Legal fees   98   79   169   113
Other professional fees   315   82   587   156
Regulatory fees   138   85   224   167
Directors' fees   75   57   134   117
Data processing   202   109   347   205
Marketing and advertising   97   54   189   104
Travel and entertainment   71   35   105   67
Insurance   41   25   73   61
Other real estate owned expense, net   74   122   194   268
Merger-related expenses   256   12   463   12
Other expense   211   181   385   293
 Total non-interest expense   4,120   2,357   7,341   4,493
Income Before Income Taxes   1,276   834   4,838   1,445
Income tax expense   353   309   677   540
Net Income  $923  $525  $4,161  $905
                 
Basic earnings per share  $0.10  $0.11  $0.46  $0.19
Diluted earnings per share  $0.10  $0.11  $0.45  $0.19
                 
Basic weighted average common shares outstanding   9,396,349   4,686,965   9,076,792   4,686,965
Diluted weighted average common shares outstanding   9,467,472   4,693,650   9,147,783   4,708,022
Contact:
CONTACT: 
Patrick L. Ryan
President and CEO
(609) 643-0168
patrick.ryan@firstbanknj.com
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