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1st Colonial Bancorp, Inc. Reports Third Quarter 2019 Net Income

COLLINGSWOOD, N.J.--(BUSINESS WIRE)--

1st Colonial Bancorp, Inc. (FCOB), holding company of 1st Colonial Community Bank, today reported net income of $725 thousand, or $0.15 per diluted share, for the three months ended September 30, 2019 compared to net income of $1.2 million, or $0.25 per diluted share, for the three months ended September 30, 2018. For the nine months ended September 30, 2019, net income was $2.7 million, or $0.55 per diluted share, compared to $3.6 million, or $0.76 per diluted share for the same period in 2018. The 2018 earnings per diluted share were adjusted to give effect to the 5% stock dividend distributed to shareholders on April 15, 2019.

Gerry Banmiller, President and Chief Executive Officer, commented, “While the bank continues to recognize a profit, I am dissatisfied with our current results. Expenses associated with our high level of non-performing assets have had a detrimental impact on our financial performance. We continue to proactively work through these impaired credits while we also focus on developing new business relationships. To that end, we recently unveiled a completely redesigned website which vastly improves usability and functionality.”

Highlights for the three and nine months ended September 30, 2019, included:

Balance Sheet Trends:

  • At September 30, 2019, total assets were $545.3 million compared to $543.9 million at December 31, 2018.
  • Total loans were $414.6 million at September 30, 2019, an increase of $10.1 million, or 2.5%, from $404.5 million at December 31, 2018. During the first nine months of 2019, commercial mortgage loans and residential mortgages grew $13.8 million and $5.8 million, respectively, while commercial and construction loans declined $5.4 million and $3.0 million respectively. At September 30, 2019, commercial commitments to extend credit were $31.7 million and included $16.5 million in construction commitments.
  • Total deposits were $493.1 million at September 30, 2019, an increase of $3.0 million, or 0.6%, from $490.1 million at December 31, 2018. Demand deposits and CDs increased $9.7 million and $7.3 million, respectively; however, municipal NOWs, brokered deposits, savings, money markets, and NOW accounts decreased $5.2 million, $2.9 million, $2.4 million, $2.3 million and $1.3 million, respectively.
  • Total shareholders’ equity was $47.2 million at September 30, 2019, an increase of $3.5 million, or 8.0%, from $43.7 million at December 31, 2018.
  • 1st Colonial's non-performing assets at September 30, 2019 were $5.4 million and included $4.7 million in non-accrual loans and $657 thousand in other real estate owned (OREO). Non-performing assets were $2.7 million at December 31, 2018. Non-performing assets to total assets at September 30, 2019 were 0.99% compared to 0.50% at December 31, 2018. We are actively managing our criticized and classified assets with the goal of maximizing value and minimizing losses. During September we negotiated the sale of collateral related to one large relationship, which included two loans and seven OREO properties. The transaction settled in October.

Income Statement and Other Highlights:

  • Net interest income for the three months ended September 30, 2019 decreased $157 thousand, or 3.3%, to $4.6 million from $4.8 million for the three months ended September 30, 2018. While interest income increased $170 thousand quarter over quarter, it was outpaced by the increase in interest expense of $327 thousand. The 50-basis point decrease in the fed funds rate during the third quarter of 2019 had a negative impact on our variable rate loans indexed to the Wall Street Journal Prime rate. Additionally, the inverted yield curve has created pricing pressure on all loan products. Also, the $2.3 million increase in the average balance of total non-accrual loans, from $2.1 million for the three months ended September 30, 2018 to $4.4 million for the three months ended September 30, 2019, adversely impacted 1st Colonial’s loan yield for the quarter.
  • For the first nine months of 2019, net interest income grew $262 thousand, or 1.9%, to $14.0 million from $13.7 million for the same period in 2018. The growth in net interest income for the nine month period was primarily related to an increase in interest income on loans and in the average yield earned on average interest-earning assets. The improvement in interest income was partially offset by an increase in the interest paid on certificates of deposit and NOW accounts.
  • The net interest margin was 3.44% for the third quarter of 2019 compared to 3.49% for the third quarter of 2018 and was 3.49% for the nine months ended September 30, 2019 compared to 3.46% for the nine months ended September 30, 2018.
  • For the three and nine months ended September 30, 2019, we recorded provisions to the allowance for loan losses of $827 thousand and $1.8 million, respectively, compared to $499 thousand and $1.1 million for the three and nine months ended September 30, 2018. The increases in the 2019 provisions were related to an increase in specific reserves required on impaired loans, an increase in the historical loss rates due to loan charge-offs and, to a smaller extent, an increase in qualitative factors. During the first nine months of 2019, we recorded net charge-offs of $2.0 million compared to $427 thousand for the comparable period in 2018. The majority of the charge-offs were related to specific reserves on impaired loans. The allowance for loan losses as a percentage of total loans was 1.32% at September 30, 2019 compared to 1.39% at December 31, 2018.
  • Non-interest income for the third quarter of 2019 was $754 thousand, an increase of $83 thousand, or 12.4%, from $671 thousand for the third quarter of 2018. Gains on the sale of residential mortgages grew $193 thousand due to an increase in the volume of mortgage loans sold quarter over quarter. Partially mitigating this positive contribution was an increase of $109 thousand in the loss on sales of OREO. During September we recognized an expected loss of $169 thousand on seven OREO properties that were sold in October.
  • For the nine months ended September 30, 2019, non-interest income was $2.1 million, a decrease of $225 thousand, or 9.6%, from $2.3 million for the same period in 2018. Because we have not sold SBA loans in 2019, gains on the sale of SBA loans declined $133 thousand. Additionally, the loss on the sales of OREO increased $114 thousand year over year.
  • Non-interest expense was $3.6 million for the three months ended September 30, 2019 and increased $266 thousand, or 8.0%, from $3.3 million for the comparable period in 2018. Contributing to the increase in non-interest expense for the third quarter of 2019 was a $190 thousand increase in expenses associated with non-performing assets and a $72 thousand increase in salaries and benefits.
  • Non-interest expense was $10.8 million for the nine months ended September 30, 2019 and increased $647 thousand, or 6.4%, from $10.1 million for the comparable period in 2018. Contributing to the increase in non-interest expense for 2019 were increases of $324 thousand, $171 thousand and $101 thousand in non-performing asset expenses, salaries and benefits, and data processing expenses, respectively. During 2018 and 2019 we added personnel in commercial lending and in the lending support functions which resulted in higher expenses associated with salaries and benefits for 2019.
  • For the three and nine months ended September 30, 2019, income tax expense was $235 thousand and $870 thousand, respectively, compared to $424 thousand and $1.2 million for the three and nine months ended September 30, 2018, respectively. The lower level of earnings equated to lower income tax provision for the 2019 periods.

Highlights as of September 30, 2019 and 2018, and a comparison of the three and nine months ended September 30, 2019 to the three and nine months ended September 30, 2018 include the following:

1st COLONIAL BANCORP, INC.

CONSOLIDATED INCOME STATEMENTS

(Unaudited, dollars in thousands, except per share data)

 

For the three months

For the nine months

ended September 30,

ended September 30,

2019

2018

2019

2018

Interest income

$

6,018

$

5,848

$

18,009

$

16,575

Interest expense

 

1,403

 

1,076

 

4,030

 

2,858

Net Interest Income

 

4,615

 

4,772

 

13,979

 

13,717

Provision for loan losses

 

827

 

499

 

1,806

 

1,088

Net interest income after provision for loan losses

 

3,788

 

4,273

 

12,173

 

12,629

Non-interest income

 

754

 

671

 

2,120

 

2,345

Non-interest expense

 

3,582

 

3,316

 

10,768

 

10,121

Income before taxes

 

960

 

1,628

 

3,525

 

4,853

Income tax expense

 

235

 

424

 

870

 

1,223

Net Income

$

725

$

1,204

$

2,655

$

3,630

Earnings Per Share – Basic (1)

$

0.16

$

0.26

$

0.57

$

0.79

Earnings Per Share – Diluted (1)

$

0.15

$

0.25

$

0.55

$

0.76

SELECTED PERFORMANCE RATIOS:

 

For the three months

 

For the nine months

ended September 30,

 

ended September 30,

2019

 

2018

 

2019

 

2018

Return on Average Assets

 

 

0.52%

 

 

0.86%

 

 

0.65%

 

 

0.89%

Return on Average Equity

 

 

6.14%

 

 

11.57%

 

 

7.78%

 

 

12.10%

Book value per share (1)

 

$

10.09

 

$

9.04

 

$

10.09

 

$

9.04

 

At September 30, 2019

At December 31, 2018

Capital ratios:

Tier 1 Leverage

8.46%

7.98%

Total Risk Based Capital

14.43%

13.42%

Common Equity Tier 1

13.17%

12.16%

(1) Adjusted to give effect to the 5% stock dividend distributed to shareholders on April 15 2019.

 

1st COLONIAL BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

 

(Unaudited, in thousands)

At September 30, 2019

At December 31, 2018

Cash and cash equivalents

$

19,431

$

12,114

Total investments

 

93,674

 

115,093

Mortgage loans held for sale

 

7,700

 

2,989

Total loans

 

414,607

 

404,535

Less Allowance for loan losses

 

(5,470)

 

(5,627)

Loans and leases, net

 

404,732

 

398,908

Bank owned life insurance

 

8,543

 

8,368

Premises and equipment, net

 

709

 

798

Other real estate owned, net

 

657

 

-

Accrued interest receivable

 

1,740

 

1,737

Other assets

 

3,686

 

3,931

Total Assets

$

545,277

$

543,938

 

Total deposits

$

493,125

$

490,096

Other borrowings

 

3,174

 

8,157

Other liabilities

 

1,773

 

1,989

Total Shareholders’ Equity

 

47,205

 

43,696

Total Liabilities and Equity

$

545,277

$

543,938

1st COLONIAL BANCORP, INC.

NET INTEREST INCOME AND MARGIN TABLES

(Unaudited, in thousands, except percentages)

 

For the three months ended

 

For the three months ended

September 30, 2019

 

September 30, 2018

Average

Balance

 

Interest

 

Yield

 

Average

Balance

 

Interest

 

Yield

Cash and cash equivalents

 

$

16,520

 

$

70

 

1.68%

 

$

28,756

 

$

135

 

1.86%

Investment securities

 

 

99,296

 

 

521

 

2.08%

 

 

109,927

 

 

527

 

1.90%

Mortgage loans held for sale

 

 

8,680

 

 

74

 

3.38%

 

 

6,034

 

 

53

 

3.48%

Loans

 

 

407,854

 

 

5,353

 

5.21%

 

 

397,850

 

 

5,133

 

5.12%

Total interest-earning assets

 

 

532,350

 

 

6,018

 

4.48%

 

 

542,567

 

 

5,848

 

4.28%

Non-interest earning assets

 

 

15,453

 

 

 

 

 

 

12,595

 

 

 

 

Total average assets

 

$

547,803

 

 

 

 

 

$

555,162

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

$

202,949

 

$

411

 

0.80%

 

$

225,288

 

$

312

 

0.55%

Money markets and Savings

 

 

60,825

 

 

68

 

0.44%

 

 

74,400

 

 

85

 

0.45%

Certificates of deposit

 

 

169,084

 

 

912

 

2.14%

 

 

147,067

 

 

675

 

1.82%

Total interest-bearing deposits

 

 

432,858

 

 

1,391

 

1.27%

 

 

446,755

 

 

1,072

 

0.95%

Borrowings

 

 

3,824

 

 

12

 

1.24%

 

 

3,166

 

 

4

 

0.50%

Total interest-bearing liabilities

 

 

436,682

 

 

1,403

 

1.27%

 

 

449,921

 

 

1,076

 

0.95%

Non-interest bearing deposits

 

 

62,185

 

 

 

 

 

 

62,465

 

 

 

 

Other liabilities

 

 

2,133

 

 

 

 

 

 

1,474

 

 

 

 

Shareholders' equity

 

 

46,803

 

 

 

 

 

 

41,302

 

 

 

 

Total average liabilities and equity

 

$

547,803

 

 

 

 

 

$

555,162

 

 

 

 

Net interest income

 

 

 

$

4,615

 

 

 

 

 

$

4,772

 

 

Net interest margin

 

 

 

 

 

3.44%

 

 

 

 

 

3.49%

Net interest spread

 

 

 

 

 

3.21%

 

 

 

 

 

3.33%

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

For the nine months ended

September 30, 2019

 

September 30, 2018

Average

Balance

 

Interest

 

Yield

 

Average

Balance

 

Interest

 

Yield

Cash and cash equivalents

$

14,048

 

$

190

 

1.81%

 

$

22,719

 

$

261

 

1.54%

Investment securities

 

107,896

 

 

1,722

 

2.13%

 

 

112,634

 

 

1,538

 

1.83%

Mortgage loans held for sale

 

 

6,525

 

 

143

 

2.93%

 

 

6,703

 

 

169

 

3.37%

Loans

 

 

406,701

 

 

15,954

 

5.24%

 

 

388,702

 

 

14,607

 

5.02%

Total interest-earning assets

 

 

535,170

 

 

18,009

 

4.50%

 

 

530,758

 

 

16,575

 

4.18%

Non-interest earning assets

 

14,056

 

 

 

 

 

 

12,552

 

 

 

 

Total average assets

$

549,226

 

 

 

 

 

$

543,310

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

$

215,132

 

$

1,239

 

0.77%

 

$

234,267

 

$

792

 

0.45%

Money markets and Savings

 

63,905

 

 

212

 

0.44%

 

 

58,518

 

 

194

 

0.44%

Certificates of deposit

 

156,110

 

 

2,526

 

2.16%

 

 

143,072

 

 

1,859

 

1.74%

Total interest-bearing deposits

 

435,147

 

 

3,977

 

1.22%

 

 

435,857

 

 

2,845

 

0.87%

Borrowings

 

4,847

 

 

53

 

1.46%

 

 

3,256

 

 

13

 

0.54%

Total interest-bearing liabilities

 

439,994

 

 

4,030

 

1.22%

 

 

439,113

 

 

2,858

 

0.87%

Non-interest bearing deposits

 

61,762

 

 

 

 

 

 

62,633

 

 

 

 

Other liabilities

 

1,866

 

 

 

 

 

 

1,468

 

 

 

 

Shareholders' equity

 

45,604

 

 

 

 

 

 

40,095

 

 

 

 

Total average liabilities and equity

$

549,226

 

 

 

 

 

$

543,310

 

 

 

 

Net interest income

 

 

$

13,979

 

 

 

 

 

$

13,717

 

 

Net interest margin

 

 

 

 

3.49%

 

 

 

 

 

3.46%

Net interest spread

 

 

 

 

3.27%

 

 

 

 

 

3.31%

 

1st Colonial Community Bank, the subsidiary of 1st Colonial Bancorp, provides a range of business and consumer financial services, placing emphasis on customer service and access to decision makers. Headquartered in Collingswood, New Jersey, the Bank also has a branch in the New Jersey community of Westville and administrative offices in Cherry Hill, New Jersey. To learn more, call (856) 858-8402 or visit www.1stcolonial.com.

This release contains forward-looking statements that are not historical facts and include statements about management’s strategies and expectations about our business. There are risks and uncertainties that may cause our actual results and performance to be materially different from results indicated by these forward-looking statements. Factors that might cause a difference include economic conditions; unanticipated loan losses, inability to close loans in our pipeline, changes in or additions to management and/or key employees; lack of liquidity; varying and unanticipated costs of collection with respect to nonperforming loans; an inability to dispose of real estate owned; changes in interest rates, changes in FDIC assessments, deposit flows, loan demand, and real estate values; changes in relationships with major customers; operational risks, including the risk of fraud or theft by employees, customers or outsiders, and the risk of interruptions in and breaches in security of our information systems; competition; changes in accounting principles, policies or guidelines; changes in laws or regulations and in the manner in which the regulators enforce same; new technology and other factors affecting our operations, pricing, products and services.

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