HAMILTON, NJ--(Marketwired - October 28, 2014) - 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 9
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
- Balance Sheet
- Total assets at September 30, 2014 were $643.5 million, an increase of $32.9 million or 5.4% compared to June 30, 2014, and an increase of $217.8 million or 51.2% compared to September 30, 2013.
- Total loans reached $505.0 million at September 30, 2014, an increase of $38.1 million or 8.2% compared to June 30, 2014 and an increase of $191.0 million or 60.8% compared to September 30, 2013.
- Total deposits reached $563.4 million at September 30, 2014, an increase of $31.3 million or 5.9% compared to June 30, 2014 and an increase of $185.2 million or 48.9% compared to September 30, 2013. Non-interest bearing deposits increased to $86.3 million or 15.3% of total deposits at September 30, 2014.
- Stockholders' equity increased to $63.9 million at September 30, 2014.
- Book value per share was $6.79 at September 30, 2014 compared to $6.68 per share at June 30, 2014 and $6.73 per share at September 30, 2013. Tangible book value per share was $6.75 at September 30, 2014, compared to $6.64 per share at June 30, 2014 and $6.73 per share at September 30, 2013.
- Quarterly Income Statement
- Net interest income for the third quarter of 2014 totaled $5.5 million, an increase of $86,000 or 1.6% compared to $5.4 million for the second quarter of 2014, and an increase of $2.0 million or 58.5% compared to the third quarter of 2013.
- Non-interest income for the third quarter of 2014 totaled $1.1 million, an increase of $762,000 or 241.1% compared to $316,000 for the second quarter of 2014. When compared to the third quarter of 2013, non-interest income increased $992,000 or 1,153.5%.
- Non-interest expense for the third quarter of 2014 totaled $4.1 million, a decrease of $7,000 or 0.2% compared to $4.1 million for the second quarter of 2014, and an increase of $1.7 million or 69.5% compared to $2.4 million in the third quarter of 2013.
- Pre-tax income for the third quarter of 2014 totaled $1.5 million, an increase of $214,000 or 16.8% compared to $1.3 million for the second quarter of 2014, and an increase of $655,000 or 78.4% compared to the third quarter of 2013.
- Net income for the third quarter of 2014 totaled $1.1 million, an increase of $166,000 or 18.0% compared to $923,000 in the second quarter of 2014, and an increase of $597,000 or 121.3% compared to the third quarter of 2013.
- Diluted earnings per share for the third quarter totaled $0.12, an increase of $0.02 per share or 20.0% compared to $0.10 per share in the second quarter of 2014, and an increase of $0.02 per share or 20.0% compared to the third quarter of 2013.
- The provision for loan losses in the third quarter of 2014 totaled $977,000, an increase of $641,000 or 190.8% compared to $336,000 for the second quarter of 2014, and an increase of $681,000 or 230.1% compared to the third quarter of 2013.
- Pre-provision net revenue
1 for the third quarter was $1.7 million, a decrease of $11,000 or 0.6% compared to $1.7 million in the second quarter of 2014, and an increase of $595,000 or 52.6% compared to the third quarter of 2013.
- Year to Date Income Statement
- Net interest income for the nine months ended September 30, 2014 totaled $15.1 million, an increase of $5.5 million or 57.7% compared to $9.6 million for the same period in 2013.
- Non-interest income for the nine months ended September 30, 2014 totaled $4.1 million, an increase of $3.7 million or 908.0% compared to $410,000 for the same period in 2013.
- Non-interest expense for the nine months ended September 30, 2014 totaled $11.5 million, an increase of $4.5 million or 65.5% compared to $6.9 million for the same period in 2013.
- The provision for loan losses for the nine months ended September 30, 2014 totaled $1.5 million, an increase of $681,000 or 84.1% compared to $810,000 for the same period in 2013.
- Other items
- The tax equivalent net interest margin ("NIM") for the third quarter of 2014 was 3.72% compared to 3.81% for the second quarter of 2014 and 3.57% for the third quarter of 2013.
- Non-performing assets ("NPAs") were $7.0 million or 1.09% of total assets at September 30, 2014 compared to $5.7 million or 0.94% of total assets at June 30, 2014.
- Non-accrual loans totaled $4.3 million or 0.85% of total loans at September 30, 2014 compared to non-accrual loans of $3.3 million or 0.71% of total loans at June 30, 2014.
- Loans 30-89 days past due totaled $8.5 million at September 30, 2014 compared to $7.8 million at June 30, 2014. We had 4 loans over 90 days past due and still accruing at September 30, 2014 totaling $354,000.
- Other real estate owned (including other repossessed assets) totaled $2.3 million at September 30, 2014.
- Regulatory capital ratios at September 30, 2014:
- Tier 1 Leverage ratio of 10.05%
- Tier 1 Risk-Based capital ratio of 11.38%
- Total Risk-Based capital ratio of 12.39%
- The allowance for loan losses ("ALLL") to total loans at September 30, 2014 was 1.09% compared to 1.08% at June 30, 2014. The increase in the ALLL ratio related primarily to an increase in our organic portfolio and payoffs/reductions in the loan portfolio acquired in the Heritage transaction that currently carries no loan loss reserve because of the mark to market accounting treatment on that portfolio at the time of acquisition.
- 89 full-time equivalent employees ("FTEs") at September 30, 2014, compared to 95 FTEs at June 30, 2014.
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
patrick.ryan@firstbanknj.com
