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FIRST RESOURCE BANK ANNOUNCES ELEVENTH CONSECUTIVE YEAR OF RECORD ANNUAL EARNINGS; NET INCOME GREW 28% OVER THE PRIOR YEAR

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EXTON, Pa., Jan. 27, 2022 /PRNewswire/ -- First Resource Bank (OTCQX: FRSB) announced financial results for the three months and year ended December 31, 2021.

First Resource Bank is proud to be a community bank that believes in providing exceptional service, managing your banking needs responsibly, and treating you with respect. We are committed to supporting our surrounding towns and neighborhoods. At First Resource Bank, our driving goal is to be your first resource when you want to save, invest or manage your hard-earned dollars, or when you need a lending partner to help you achieve a personal or business goal. (PRNewsFoto/First Resource Bank)
First Resource Bank is proud to be a community bank that believes in providing exceptional service, managing your banking needs responsibly, and treating you with respect. We are committed to supporting our surrounding towns and neighborhoods. At First Resource Bank, our driving goal is to be your first resource when you want to save, invest or manage your hard-earned dollars, or when you need a lending partner to help you achieve a personal or business goal. (PRNewsFoto/First Resource Bank)

Glenn B. Marshall, CEO, stated, "2021 was a phenomenal year for First Resource Bank with significant balance sheet growth driving record earnings. The fundamentals of the Bank are strong with significant improvements in our funding mix supporting loan growth with greater pricing flexibility. Additionally, we took advantage of the opportunity to prepay FHLB advances during the fourth quarter which will yield significant savings in future years."

Highlights for the year ended December 31, 2021 included:

  • Net income grew 28%

  • Total loans grew 15%; the traditional loan portfolio grew 26% excluding PPP loan activity

  • Approximately 96% of Paycheck Protection Program ("PPP") loans have been forgiven and paid off as of December 31, 2021

  • Non-interest bearing checking deposits grew 13%

  • Total deposits grew 12%

  • Total interest income grew 9%, while total interest expense declined 29%

  • Six FHLB advances totaling $5.9 million were prepaid, saving $384 thousand in interest expense over the next four years

  • Completed a 5% stock dividend in May 2021

  • There were no non-accrual or past due loans as of December 31, 2021

  • Named the Best Bank in Chester County for the fifth consecutive year by the readers of The Daily Local News

  • Named the Best Community Bank on the Main Line by readers of the Main Line Today

  • Earned the #1 ranking among medium-sized companies as a "Best Place to Work" by the Philadelphia Business Journal

President and Chief Financial Officer, Lauren C. Ranalli, stated, "The trendlines for First Resource Bank are all incredibly strong. Growth in loans and core deposits continue to drive profitability and enable us to continue to invest in the Bank's future through technology enhancements and quality staffing. We have a dedicated team of employees that deserve the credit for these strong results and we are focused on continuing to make First Resource Bank a premier employer in our market."

Net income for the quarter ended December 31, 2021 was $916,127, which compares to $1,293,398 for the previous quarter and $1,118,435 for the fourth quarter of the prior year. Net income for the year ended December 31, 2021 was $4,171,763, a 28% increase as compared to the prior year.

Total interest income decreased 3% when comparing the fourth quarter of 2021 to the third quarter of 2021. This decrease was driven by lower fees recognized as interest income in association with PPP loan forgiveness during the fourth quarter of 2021 as compared to the prior quarter, offset by a 4% organic growth in loans, excluding PPP loans. The Bank recognized $459 thousand in PPP fees in the third quarter of 2021 and $238 thousand in the fourth quarter of 2021 which represents both the amortization of PPP fees for loans based on the original maturity schedule and the balance of PPP fees recognized when the loans were forgiven by the Small Business Administration.

Total interest income decreased slightly from $4,544,389 for the three months ended December 31, 2020 to $4,543,892 for the three months ended December 31, 2021. This decrease was the result of lower PPP fees recognized as interest income from PPP loan forgiveness during the fourth quarter of 2021 as compared to the fourth quarter of 2020, offset by 15% loan growth when comparing December 31, 2021 to a year prior. Traditional loan growth for the year increases to 26% when excluding PPP loans for both periods. Increased interest income from loan growth was offset by a 58 basis point decrease in loan yields when comparing the fourth quarter of 2020 to the fourth quarter of 2021. The Bank recognized $696 thousand in PPP fees in the three months ended December 31, 2020 as compared to $238 thousand in the three months ended December 31, 2021. The Bank recognized $1.1 million in PPP fees for the year ended December 31, 2020 as compared to $1.7 million for the year ended December 31, 2021.

Total interest expense decreased 3% when comparing the fourth quarter of 2021 to the third quarter of 2021. This decrease was driven by a 5 basis point decrease in the cost of interest-bearing deposits during the quarter. Interest expense on deposits continues to be actively managed to lower costs.

Total interest expense decreased 27% from $825,984 for the three months ended December 31, 2020 to $604,170 for the three months ended December 31, 2021. The vast majority of this decreased expense was related to an overall 32 basis point decline in the cost of interest-bearing deposits, led by a 9 basis point decrease in the cost of money market accounts and a 44 basis point decrease in the cost of certificates of deposit, year over year. Overall interest expense was also mitigated by strong growth in noninterest-bearing deposits, which increased 13% when comparing December 31, 2021 to the year prior.

Net interest income was $3,939,722 for the quarter ended December 31, 2021 as compared to $4,049,491 for the previous quarter, a $109,769, or 3%, decrease. The net interest margin decreased 27 basis points from 3.67% for the quarter ended September 30, 2021 to 3.40% for the quarter ended December 31, 2021. The overall yield on interest earning assets decreased 31 basis points during the fourth quarter primarily due to lower PPP loan fees recognized during December 31, 2021 as compared to September 30, 2021 as well as an increase in low yielding cash maintained on the balance sheet. The cost of interest-bearing deposits decreased 5 basis points during the fourth quarter to 0.57%, with the majority of that decrease attributed to lower cost money market accounts and certificates of deposit. Continued growth in noninterest-bearing deposits fueled a decline in the total cost of deposits from 0.43% at September 30, 2021 to 0.40% at December 31, 2021.

Net interest income for the year ended December 31, 2021 was $15,623,704, a 21% improvement over net interest income of $12,963,569 for the year ended December 31, 2020. This growth was driven by a 10% increase in loan interest income and a 36% decrease in deposit interest expense.

The provision for loan losses increased from $6,834 for the three months ended September 30, 2021 to $59,554 for the three months ended December 31, 2021. The provision for loan losses decreased from $229,538 for the three months ended December 31, 2020, to $59,554 for the three months ended December 31, 2021, consistent with the corresponding decline in past due and nonperforming loans.

The allowance for loan losses to total loans was 0.86% at December 31, 2021 as compared to 0.86% at September 30, 2021, 0.87% at June 30, 2021, and 0.86% at December 31, 2020. Excluding PPP loans, which are 100% guaranteed by the SBA, the allowance for loan losses to total loans was 0.86% at December 31, 2021, 0.88% at September 30, 2021, 0.93% at June 30, 2021, and 0.95% at December 31, 2020. First Resource Bank had no non-performing assets at December 31, 2021. Non-performing assets to total assets were 0.00% at December 31, 2021, down from 0.02% in the prior quarter.

Marshall stated, "Credit quality has been excellent and has remained a top priority for the Bank as we continue to grow loans at a fast pace. We have not and will not sacrifice our credit underwriting standards in exchange for loan volume."

Non-interest income for the quarter ended December 31, 2021 was $180,332, as compared to $179,004 for the previous quarter and $224,391 for the fourth quarter of the prior year. Swap referral fee income received in the fourth quarter of 2020 was $69,000, as compared to zero in the third and fourth quarters of 2021.

Non-interest income for the year ended December 31, 2021 was $718,310 as compared to $781,794 for the prior year. Swap referral fee income of $244,100 was received in 2020 as compared to zero in 2021. This decline in swap fee income is attributed to lower customer demand for this product in 2021 due to the interest rate environment.

Non-interest expense increased $315,062, or 12%, in the three months ended December 31, 2021 as compared to the prior quarter. The increase was primarily due to $277,137 of FHLB advance prepayment penalty fees incurred in the fourth quarter of 2021, which are included in other non-interest expense on the income statement. Excluding the FHLB advance prepayment penalty fees, non-interest expenses increased $37,925, or 1%, when comparing the three months ended December 31, 2021, as compared to the prior quarter. Other increases in salaries and employee benefits, advertising, and professional fees were partially offset by decreases in occupancy and equipment as well as data processing. Non-interest expense increased $602,431, or 26%, when comparing the fourth quarter of 2021 to the fourth quarter of 2020. This increase was primarily attributed to FHLB advance prepayment penalty fees previously mentioned, and increases in salaries and benefits costs, occupancy, advertising, data processing, professional fees, and other costs. Non-interest expenses to average assets were 2.43% for the three months ended December 31, 2021, however excluding FHLB prepayment penalties paid during that quarter, that ratio would have been 2.20%.

Deposits declined a net $1.8 million, or 1%, from $401.8 million at September 30, 2021 to $400.0 million at December 31, 2021. During the fourth quarter, noninterest-bearing deposits decreased $11.4 million, or 9%, from $124.6 million at September 30, 2021 to $113.2 million at December 31, 2021. Interest-bearing checking balances decreased $1.5 million, or 5%, from $32.8 million at September 30, 2021 to $31.3 million at December 31, 2021. Money market deposits increased $13.7 million, or 8%, from $170.9 million at September 30, 2021 to $184.6 million at December 31, 2021. Certificates of deposit decreased $2.6 million, or 4%, from $73.6 million at September 30, 2021 to $71.0 million at December 31, 2021. Between December 31, 2020 and December 31, 2021, total deposits grew 12%, with tremendous checking and money market growth partially offset by a decline in certificates of deposit.

Ranalli noted, "We experienced deposit outflows during the fourth quarter with the majority of those seasonal cash outflows generated by our customer's strong financial results, including bonuses, extra payrolls and distributions as well as real estate purchase activity prior to year-end. We are thrilled to bank these highly successful businesses and are excited to watch their balances continue to grow in 2022 and beyond."

The loan portfolio grew $9.0 million during the fourth quarter from $379.2 million at September 30, 2021 to $388.2 million at December 31, 2021. Excluding PPP loan activity, the loan portfolio increased $14.6 million, or 4%, from $370.4 million at September 30, 2021 to $385.0 million at December 31, 2021, with strong growth in commercial real estate loans and commercial business loans partially offset by a decline in construction loans and consumer loans. Year-to-date loan growth in 2021 was $49.3 million or 15%. Excluding PPP loan activity, year-to-date loan growth was $80.4 million, or 26%.

The following table illustrates the composition of the loan portfolio:


Dec. 31,

2021

Dec. 31,

2020




Commercial real estate

$ 312,736,636

$ 227,224,196

Commercial construction

22,167,820

24,925,050

Commercial business

39,273,664

66,555,149

Consumer

14,052,015

20,235,647




Total loans

$ 388,230,135

$ 338,940,042

Marshall added, "This loan growth in 2021 is the result of the lending team creating custom solutions for borrowers. Our consultative approach to lending has always been a differentiator for First Resource Bank."

Total stockholder's equity increased $840 thousand, or 2%, from $34.7 million at September 30, 2021 to $35.6 million at December 31, 2021, primarily due to net income generated. During the quarter ended December 31, 2021, book value per share grew 28 cents, or 2%, to $12.14.

Total assets increased $1.1 million during the fourth quarter of 2021, with growth in investments and loans offset by reduction in cash and due from banks. PPP loan activity of $5.6 million in payoffs in the fourth quarter of 2021 were replaced with $14.6 million in organic loan growth.

Selected Financial Data:

Balance Sheets (unaudited)


December 31,

2021

December 31,

2020




Cash and due from banks

$ 10,545,913

$ 26,008,820

Time deposits at other banks

100,000

599,000

Investments

53,419,674

43,060,035

Loans

388,230,135

338,940,042

Allowance for loan losses

(3,322,979)

(2,907,023)

Premises & equipment

8,075,525

8,380,269

Other assets

12,016,270

10,353,164




Total assets

$ 469,064,538

$ 424,434,307




Noninterest-bearing deposits

$ 113,175,651

$ 99,898,323

Interest-bearing checking

31,251,216

23,726,721

Money market

184,581,051

140,480,421

Time deposits

70,978,824

93,919,651

Total deposits

399,986,742

358,025,116

Short term borrowings

9,000,000

-

Long term borrowings

15,280,000

24,206,000

Subordinated debt

5,953,144

7,940,649

Other liabilities

3,293,450

2,806,732




Total liabilities

433,513,336

392,978,497




Total stockholders' equity

35,551,202

31,455,810




Total Liabilities &

Stockholders' Equity

$ 469,064,538

$ 424,434,307

Performance Statistics
(unaudited)

Qtr Ended

Dec. 31,

2021

Qtr Ended

Sept. 30,

2021

Qtr Ended

June 30,

2021

Qtr Ended

Mar. 31,

2021

Qtr Ended

Dec. 31,

2020







Net interest margin

3.40%

3.67%

3.77%

3.59%

3.69%







Nonperforming loans/

Total loans

0.00%

0.03%

0.04%

0.10%

0.11%







Nonperforming assets/

Total assets

0.00%

0.02%

0.04%

0.09%

0.09%







Allowance for loan losses/

Total loans

0.86%**

0.86%**

0.87%**

0.83%**

0.86%**







Average loans/Average

assets

80.0%

82.8%

86.4%

84.4%

81.4%







Non-interest expenses*/

Average assets

2.43%

2.27%

2.36%

2.29%

2.20%







Earnings per share – basic

and diluted***

$0.32

$0.44

$0.36

$0.31

$0.39







Book value per share***

$12.14

$11.86

$11.42

$11.07

$10.78







Total shares outstanding***

2,928,166

2,925,874

2,923,777

2,921,312

2,918,668


* Annualized

** Excluding PPP loans, the allowance for loan losses/total loans was 0.86% at December 31, 2021, 0.88%
at September 30, 2021, 0.93% at June 30, 2021, 0.95% at March 31, 2021, and 0.95% at December 31, 2020.

*** Per share data for prior periods was restated to reflect the 5% stock dividend paid in May 2021.


Year Ended

Dec. 31,

2021

Year Ended

Dec. 31,

2020




Net interest margin

3.61%

3.60%




Return on assets

0.92%

0.86%




Return on equity

12.38%

10.93%




Earnings per share-basic and diluted***

$1.43

$1.12

Income Statements (unaudited)



Qtr. Ended

Dec. 31,

2021

Qtr. Ended

Sept. 30,

2021

Qtr. Ended

June 30,

2021

Qtr. Ended

Mar. 31,

2021

Qtr. Ended

Dec. 31,

2020







INTEREST INCOME






Loans, including fees

$4,426,009

$4,566,386

$4,641,636

$4,169,912

$4,439,471

Securities

98,387

89,968

94,794

96,260

93,928

Other

19,496

15,790

5,775

6,022

10,990

Total interest income

4,543,892

4,672,144

4,742,205

4,272,194

4,544,389







INTEREST EXPENSE






Deposits

414,096

424,240

481,151

499,622

581,982

Borrowings

96,950

105,289

104,145

108,743

117,995

Subordinated debt

93,124

93,124

93,123

93,124

126,007

Total interest expense

604,170

622,653

678,419

701,489

825,984







Net interest income

3,939,722

4,049,491

4,063,786

3,570,705

3,718,405







Provision for loan losses

59,554

6,834

270,453

240,153

229,538







Net interest income after
provision for loan losses

3,880,168

4,042,657

3,793,333

3,330,552

3,488,867







NON-INTEREST INCOME






BOLI income

47,390

47,555

47,505

44,523

36,852

Referral fee income

-

-

-

-

69,000

Other

132,942

131,449

133,708

133,238

118,539

Total non-interest income

180,332

179,004

181,213

177,761

224,391







NON-INTEREST EXPENSE






Salaries & benefits

1,584,108

1,559,849

1,592,369

1,432,259

1,405,431

Occupancy & equipment

247,547

253,349

255,537

262,501

238,406

Professional fees

139,071

104,768

98,035

89,413

95,238

Advertising

92,159

81,789

87,788

61,683

80,279

Data processing

150,659

160,971

188,220

149,633

146,147

Other

703,462

441,218

432,851

383,951

349,074

Total non-interest

expense

2,917,006

2,601,944

2,654,800

2,379,440

2,314,575







Income before income tax
expense

1,143,494

1,619,717

1,319,746

1,128,873

1,398,683







Federal income tax expense

227,367

326,319

263,172

223,209

280,248







Net income

$ 916,127

$1,293,398

$1,056,574

$905,664

$1,118,435







Income Statements (unaudited)


Year

Ended

December 31,

2021

Year

Ended

December 31,

2020




INTEREST INCOME



Loans

$ 17,803,943

$ 16,172,232

Investments

379,409

418,601

Other

47,083

63,250

Total interest income

18,230,435

16,654,083




INTEREST EXPENSE



Deposits

1,819,109

2,863,718

Borrowings

415,127

488,352

Subordinated debt

372,495

338,444

Total interest expense

2,606,731

3,690,514




Net interest income

15,623,704

12,963,569




Provision for loan losses

576,994

554,510




Net interest income after provision for
loan losses

15,046,710

12,409,059




NON-INTEREST INCOME



BOLI income

186,973

148,094

Referral fee income

-

244,100

Other

531,337

389,600

Total non-interest income

718,310

781,794




NON-INTEREST EXPENSE



Salaries & benefits

6,168,585

5,493,150

Occupancy & equipment

1,018,934

980,158

Professional fees

431,287

382,827

Advertising

323,419

282,958

Data processing

649,483

552,917

Other

1,961,482

1,453,667

Total non-interest expense

10,553,190

9,145,677




Pre-tax income

5,211,830

4,045,176




Tax expense

1,040,067

794,209




Net income

$ 4,171,763

$ 3,250,967

About First Resource Bank

First Resource Bank is a locally owned and operated Pennsylvania state-chartered bank with three full-service branches, serving the banking needs of businesses, professionals and individuals in the Delaware Valley. The Bank offers a full range of deposit and credit services with a high level of personalized service. First Resource Bank also offers a broad range of traditional financial services and products, competitively priced and delivered in a responsive manner to small businesses, professionals and residents in the local market. For additional information visit our website at www.firstresourcebank.com. Member FDIC.

This press release contains statements that are not of historical facts and may pertain to future operating results or events or management's expectations regarding those results or events. These are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts. When used in this press release, the words "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", or words of similar meaning, or future or conditional verbs, such as "will", "would", "should", "could", or "may" are generally intended to identify forward-looking statements. These forward-looking statements are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are either beyond our control or not reasonably capable of predicting at this time. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the results discussed in these forward-looking statements. Readers of this press release are accordingly cautioned not to place undue reliance on forward-looking statements. First Resource Bank disclaims any intent or obligation to update publicly any of the forward-looking statements herein, whether in response to new information, future events or otherwise.

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