FRBA
$15.00
First Bank
($.60)
(3.85%)
Earnings Details
3rd Quarter September 2021
Tuesday, October 26, 2021 4:30:00 PM
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Summary

First Bank (FRBA) Recent Earnings

First Bank (FRBA) reported 3rd Quarter September 2021 earnings of $0.46 per share on revenue of $24.8 million. The consensus earnings estimate was $0.43 per share on revenue of $20.2 million. Revenue grew 2.7% on a year-over-year basis.

First Bank Williamstown NJ provides its customers with a variety of financial services targeting all segments of the retail and corporate market, in addition to Fund Management, Brokerage, Leasing, Property Management businesses and Private Banking.

Results
Reported Earnings
$0.46
Earnings Whisper
-
Consensus Estimate
$0.43
Reported Revenue
$24.8 Mil
Revenue Estimate
$20.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

First Bank Reports Third Quarter 2021 Net Income of $9.0 Million

For the Third Quarter of 2021: Strong Revenue and Income Growth, Continued Solid

Asset Quality Metrics, Effective Management of Non-Interest Expense

HAMILTON, N.J., Oct. 26, 2021 (GLOBE NEWSWIRE) -- First Bank (Nasdaq Global Market: FRBA) today announced results for the three and nine months ended September 30, 2021. Net income for the third quarter of 2021 was $9.0 million, or $0.46 per diluted share, compared to $5.9 million, or $0.30 per diluted share, for the third quarter of 2020. Return on average assets, return on average equity and return on average tangible equityi for the third quarter of 2021 were 1.46%, 13.86% and 14.90%, respectively, compared to 1.03%, 10.20% and 11.08%, respectively, for the third quarter of 2020. Net income for the first nine months of 2021 was $27.6 million, an increase of $14.3 million, or 108.2%, compared to $13.3 million for the same period in 2020. Diluted earnings per share for the year-to-date period ended September 30, 2021 were $1.39, an increase of $0.73, or 109.5%, compared to $0.66 per diluted share for the comparable period in 2020.

Third Quarter and Year-to-Date 2021 Performance Highlights:

  • Total net revenue (net interest income plus non-interest income) of $22.7 million for the quarter increased $3.1 million, or 15.9%, compared to $19.6 million for the prior year quarter and was up $919,000, or 4.2%, compared to the linked second quarter of 2021.
  • Total loans of $2.00 billion at September 30, 2021 decreased $49.6 million, or 2.4%, from the end of the linked second quarter of 2021, and were down $43.3 from December 31, 2020. Paycheck Protection Program (PPP) loans decreased $62.2 million and $59.4 million, respectively, during the three and nine months ended September 30, 2021. PPP loans outstanding at September 30, 2021 were $77.8 million.
  • Total deposits of $2.05 billion at September 30, 2021 increased $142.3 million, or 7.5%, from December 31, 2020 and $9.7 million, or 0.5%, from June 30, 2021. Non-interest bearing demand deposits increased to 26.3% of total deposits at September 30, 2021 compared to 22.3% at December 31, 2020 while time deposits decreased from 27.5% of total deposits at December 31, 2020 to 20.6% at September 30, 2021.
  • Asset quality metrics remained solid during the quarter, with net recoveries of $121,000 during the third quarter of 2021, compared to net charge-offs of $633,000 during the third quarter of 2020. Nonperforming loans were $11.5 million at September 30, 2021, $12.7 million on September 30, 2020, and $9.6 million on June 30, 2021. The ratio of nonperforming loans to total loans was 0.57% at September 30, 2021, down six basis points from 0.63% at September 30, 2020, and up 10 basis points from 0.47% at June 30, 2021.
  • Continued effective non-interest expense management was reflected in the third quarter 2021 efficiency ratioii of 45.75%, improved from 49.31% for third quarter 2020, and 46.66% for the linked second quarter of 2021.

“We’re pleased that the positive trends that were evident at mid-year carried through the third quarter, driving continued strong performance for First Bank,” said Patrick L. Ryan, President and Chief Executive Officer. “Our funding cost continued to trend lower, enabling us to maintain a stable net interest margin. Throughout 2021, we have continued to grow lower cost core deposits while reducing higher cost time deposits. Our credit metrics remained solid as evidenced by net recoveries for the three and nine months ended September 30, 2021.”

Mr. Ryan continued, “we maintained our focus on successfully managing non-interest expense and, as a result, reported an efficiency ratio below 50% for the third consecutive quarter. Effective expense control is an important element of our strategy to drive stronger profitability on a continuous basis.”

“We are encouraged by our robust lending pipeline and anticipate stronger loan growth in the fourth quarter of 2021. We also believe that the acquisition of two additional branches, which is expected to close in December 2021, will introduce us to new customers that will help to drive our future growth. Our ability to grow First Bank has been driven by our focus on business banking and commercial lending and our commitment to servicing this sector remains very strong. Our U.S. Small Business Administration loan activity continues to be very active, reflecting the steps we have taken to expand this line of business that we enhanced through our Grand Bank acquisition.”

“In August, the Kroll Bond Rating Agency (KBRA) again affirmed our investment grade credit ratings. Their report cited the continued successful execution of our strategic plan, which is focused on building scale within our footprint through a combination of organic and acquisitive growth and enhancing the core deposit franchise, two strategies that have tremendously improved our earnings capacity. We believe KBRA’s expectation that our bottom-line results will remain favorable in the near-term provides additional validation of our approach to building franchise value for our shareholders. We remain focused on opportunities to provide additional value to our shareholders and we believe the recently announced dividend increase and share repurchase program meet this objective.”

“Our team continues to provide quality customer service and we proved throughout the pandemic that we would go the extra mile to help our customers through a very challenging time. That commitment is attracting new customers to First Bank and helping us expand relationships, which, in turn, has been the catalyst for increased revenue and earnings during 2021. Our very strong 2021 profitability is up substantially from prior years and provides a solid foundation on which we can build in the fourth quarter and into 2022.”

Income Statement

First Bank’s net interest income for the third quarter of 2021 was $20.8 million, an increase of $3.2 million, or 17.9%, compared to $17.6 million in the third quarter of 2020. This increase was driven by a $2.1 million decrease in total interest expense, along with a $1.0 million increase in interest and dividend income. The reduction in interest expense was primarily a result of a 98-basis point reduction in the average rates paid on time deposits, along with a decrease of $130.4 million in the average balance of time deposits. As a result of a significantly lower interest rate environment, interest expense on all other interest bearing deposits also declined for the comparative period. Interest income increased primarily due to a $40.8 million increase in average loans compared with the third quarter of 2020, along with a 10-basis point increase in the average yield on the loan portfolio. Interest income from loans was enhanced by $1.8 million in PPP loan fee income during the third quarter of 2021 compared to $1.3 million in third quarter 2020, and $1.3 million in the second quarter of 2021. Also impacting loan interest income was prepayment penalty income of $166,000 for the quarter ended September 30, 2021 compared to $184,000 for the quarter ended September 30, 2020 and $730,000 in the second quarter of 2021.

Nine-month 2021 net interest income totaled $61.2 million, an increase of $11.4 million, or 22.9%, compared to $49.8 million for the same period in 2020. The increase in the 2021 year-to-date net interest income was also primarily a result of lower interest paid on interest bearing deposits, primarily time deposits. The average rate for time deposits declined by 116 basis points, and the average balance declined by $144.7 million compared to the same period in 2020. Interest and dividend income for the nine-month period increased by $2.5 million, driven by solid growth in average loans, which increased by $157.9 million, or 8.4%, from the prior year period, partially offset by a 16-basis-point decrease in the average yield on loans.

The third quarter 2021 tax equivalent net interest margin was 3.54%, an increase of 31 basis points compared to the prior year quarter and a decrease of three basis points compared to the linked second quarter of 2021. The increase compared to third quarter 2020 was primarily the result of a 58-basis-point reduction in the average interest rate paid on interest bearing deposits. The decrease in the average cost of interest bearing deposits is reflective of the continued repricing of interest bearing deposits in the current lower interest rate environment. Additionally, our deposit mix has improved with non-interest bearing deposits 26.3% of total deposits at September 30, 2021 while higher cost time deposits represent only 20.6% of total deposits. The modest decline in the margin compared to the second quarter of 2021 was primarily a result of an eight-basis-point decrease in interest earning asset yields, partially offset by a seven-basis-point decrease in the average cost of interest bearing liabilities, primarily interest bearing deposits. The year-to-date 2021 tax equivalent net interest margin was 3.57%, an increase of 38 basis points compared to the prior year period. The increase in the nine-month net interest margin was principally a result of the lower cost of interest bearing deposits, partially offset by a 24-basis point decline in interest earning asset yields.

First Bank reported a provision for loan losses of $158,000 for the third quarter of 2021, compared to a provision for loan losses of $2.0 million in the third quarter of 2020. The provision for the quarter ended September 30, 2021 was reflective of a continued improvement in the economic outlook combined with continued stable asset quality metrics. For the year-to-date period, the Bank reported a credit to the provision for loan losses of $1.1 million, compared to provision expense of $7.9 million for the same period in 2020. The difference in the nine-month provision for loan losses for 2021 was primarily due to the same factors as discussed for the three-month period.

Third quarter 2021 non-interest income of $1.9 million was relatively flat compared to the third quarter 2020. The $45,000, or 2.3%, decrease between the periods was primarily the result of a $543,000 decrease in loan fees, comprised mostly of loan swap fees, and a $330,000 decrease in gains on recovery of acquired loans, partially offset by an increase of gains on sale of loans of $586,000 and other non-interest income of $180,000. Non-interest income totaled $5.5 million for the nine months ended September 30, 2021, compared to $5.0 million for the same period in 2020, an increase of $503,000, or 10.0%. This increase in non-interest income for the first nine months of 2021 was primarily a result of an increase of $1.3 million in gains on the sale of loans and higher other non-interest income of $288,000. For the three and nine months ended September 30, 2021 gain on sale of loans included increased income from our growing U.S. Small Business Administration (SBA) business, as well as gains on the sale of problem loan assets totaling $364,000. Other non-interest income included a $159,000 gain on the sale of a former branch facility for the three and nine months ended September 30, 2021.

Non-interest expense for third quarter 2021 of $10.5 million increased $869,000, or 9.0%, compared to $9.7 million for the prior year quarter. The higher non-interest expense compared to third quarter 2020 was primarily a result of increased salaries and employee benefits expense reflecting higher employee benefit cost, merit-based salary increases and increased expense associated with performance related compensation, along with merger-related expenses of $145,000 related to our pending acquisition of two OceanFirst Bank branches, partially offset by reduced occupancy and equipment costs.

On a linked quarter basis, third quarter 2021 non-interest expense increased $367,000 compared to $10.2 million for the second quarter of 2021. The higher non-interest expense compared to the second quarter of 2021 was due principally to an increase in performance-based compensation and merger-related costs associated with our upcoming branch acquisition.

Non-interest expense for the first nine months of 2021 totaled $31.3 million, an increase of $2.0 million, or 6.8%, compared to $29.3 million for the same period in 2020. The increase was primarily a result of increased salaries and employee benefits, data processing costs and marketing expense, partially offset by lower other expense.

Income tax expense for the three months ended September 30, 2021 was $3.0 million with an effective tax rate of 24.7%, compared to $2.0 million with an effective tax rate of 25.5% for the third quarter of 2020 and $2.9 million with an effective tax rate of 24.4% for the second quarter of 2021. Income tax expense for the nine months ended September 30, 2021 was $8.9 million with an effective tax rate of 24.5%, compared to $4.4 million for the first nine months of 2020 with an effective tax rate of 24.8%. The increase in the income tax expense is primarily due to higher pre-tax income for the current periods.

Balance Sheet

Total assets at September 30, 2021 were $2.44 billion, an increase of $128.1 million, or 5.5%, compared to $2.31 billion at September 30, 2020, and an increase of $91.8 million, or 3.9%, from December 31, 2020. Total loans were flat at $2.00 billion at September 30, 2021 compared to September 30, 2020, and decreased $43.3 million, or 2.1%, from December 31, 2020. Total loans as of September 30, 2021 decreased $49.6 million, or 2.4%, from $2.05 billion at June 30, 2021, reflecting organic, net non-PPP loan growth of $12.5 million, offset by a net decline in PPP loans of $62.2 million.

Total deposits were $2.05 billion at September 30, 2021, an increase of $9.7 million, or 0.5%, compared to $2.04 billion at June 30, 2021, and an increase of $142.3 million, or 7.5%, from December 31, 2020. Non-interest bearing deposits totaled $536.9 million at September 30, 2021, an increase of $2.4 million, or 0.5%, from June 30, 2021, reflective of continued growth in commercial deposits primarily related to expanded business banking relationships.

Stockholders’ equity was $260.2 million at September 30, 2021, compared to $238.1 million on December 31, 2020. The growth in stockholders’ equity was primarily a result of year-to-date net income of $27.6 million, partially offset by treasury stock repurchases of $4.1 million and cash dividends paid of $1.8 million during the nine months ended September 30, 2021.    

As of September 30, 2021, the Bank continued to exceed all regulatory capital requirements to be considered well capitalized, with a Tier 1 Leverage ratio of 9.89%, a Tier 1 Risk-Based capital ratio of 11.15%, a Common Equity Tier 1 Capital ratio of 11.15%, and a Total Risk-Based capital ratio of 13.59%.

Asset Quality

First Bank’s asset quality metrics have remained stable and favorable during the past 12 months. Net recoveries were $121,000 for the third quarter of 2021, compared to net charge-offs of $633,000 for the third quarter of 2020 and net charge-offs of $116,000 for the second quarter of 2021. Net recoveries as an annualized percentage of average loans were 0.02% in third quarter 2021, compared to net charge-offs of 0.13% in third quarter 2020 and net charge-offs of 0.02% for the second quarter of 2021. Nonperforming loans as a percentage of total loans at September 30, 2021 were 0.57%, compared with 0.63% at September 30, 2020 and 0.47% at June 30, 2021. Nonperforming loans were $11.5 million at September 30, 2021, down from $12.7 million on September 30, 2020, and up from $9.6 million on June 30, 2021. The allowance for loan losses to nonperforming loans was 199.57% at September 30, 2021, compared with 179.66% at the end of third quarter 2020, and 236.95% at June 30, 2021.

COVID-19 Response

First Bank participated in the PPP, established by the Coronavirus Aid, Relief, and Economic Securities Act (CARES Act), during 2020 and 2021. The PPP is a specialized low-interest loan program funded by the U.S. Treasury Department and administered by the SBA. The PPP provides borrower guarantees for lenders, as well as loan forgiveness incentives for borrowers that utilize the loan proceeds to cover compensation and other business-related operating costs. The PPP ended on May 31, 2021 but the PPP loan forgiveness process is ongoing. As of September 30, 2021, First Bank had 540 PPP loans with outstanding balances of $77.8 million. During 2021, prior to the end of the PPP on May 31, 2021, First Bank originated 783 new PPP loans totaling $107.9 million. During the first nine months of 2021, PPP loans totaling $167.3 million were forgiven. During the nine months ended September 30, 2021, the Bank realized $4.7 million in fee income on these loans as any deferred fees remaining on the forgiven loans were accelerated. As of September 30, 2021, the Bank had $2.8 million in remaining unamortized fees associated with outstanding balances of PPP loans.

First Bank continues to monitor and analyze its COVID-19 related financial hardship payment deferrals (COVID-19 deferrals) based on asset class and borrower type. As of September 30, 2021, the Bank’s population of COVID-19 deferrals was $10.3 million, or 0.52% of total loans, down from $11.7 million, or 0.57% of total loans, at June 30, 2021.                               

Branch Acquisition

On August 4, 2021, First Bank announced that it had entered into a definitive agreement to acquire two New Jersey branch locations from OceanFirst Bank, including the owned premises and equipment, all deposits associated with the branches, which totaled approximately $124 million as of June 30, 2021, as well as selected performing loans totaling approximately $14 million as of June 30, 2021. First Bank has received the required regulatory approval and the closing of the acquisition and customer conversion is expected to take place in early December 2021.

Share Repurchase Program

On October 26, 2021, the Bank received regulatory approval for the repurchase of up to 1.3 million shares of First Bank common stock in the open market for an aggregate repurchase amount of up to $18.2 million. This new share repurchase program was also approved by the Bank’s Board of Directors and will expire on September 30, 2022. The Company purchased 218,000 shares during the third quarter 2021, for an aggregate purchase price of approximately $2.8 million, or an average share price of $13.03, under its preexisting share repurchase program that was approved in third quarter 2020 and ended on September 30, 2021.

Cash Dividend Declared

On October 19, 2021, First Bank’s Board of Directors declared a quarterly cash dividend of $0.06 per share to common stockholders of record at the close of business on November 5, 2021, payable on November 19, 2021. This reflects a 100% increase from the dividend declared during the linked and prior year quarters and represents an annualized yield of 1.57% based on upon the $15.25 closing price of the Bank’s stock on October 19, 2021.

Conference Call

First Bank will host its earnings call on Wednesday, October 27, 2021 at 9:00 AM eastern time. The direct dial toll free number for the live call is 1-844-200-6205 and the access code is 592319. For those unable to participate in the call, a replay will be available by dialing 1-866-813-9403 (access code 658656) from one hour after the end of the conference call until November 28, 2021. Replay information will also be available on First Bank’s website at www.firstbanknj.com under the “About Us” tab. Click on “Investor Relations” to access the replay of the conference call.

About First Bank

First Bank is a New Jersey state-chartered bank with 16 full-service branches in Cinnaminson, Cranbury, Delanco, Denville, Ewing, Flemington, Hamilton, Lawrence, Pennington, Randolph, Somerset and Williamstown, New Jersey and Doylestown, Trevose, Warminster and West Chester, Pennsylvania. With $2.44 billion in assets as of September 30, 2021, First Bank offers a full range of deposit and loan products to individuals and businesses throughout the New York City to Philadelphia corridor. First Bank's common stock is listed on the Nasdaq Global Market under the symbol “FRBA.”

Forward Looking Statements

This press release contains certain forward-looking statements, either express or implied, within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include information regarding First Bank’s future financial performance, business and growth strategy, projected plans and objectives, and related transactions, integration of acquired businesses, ability to recognize anticipated operational efficiencies, and other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material.  Such forward-looking statements are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about First Bank, any of which may change over time and some of which may be beyond First Bank’s control. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Further, certain factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: whether First Bank can: successfully implement its growth strategy, including identifying acquisition targets and consummating suitable acquisitions; continue to sustain its internal growth rate; provide competitive products and services that appeal to its customers and target markets; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which First Bank operates and in which its loans are concentrated, including the effects of declines in housing market values; the impact of disease pandemics, including COVID-19, on First Bank, its operations and its customers and employees; an increase in unemployment levels and slowdowns in economic growth; First Bank's level of nonperforming assets and the costs associated with resolving any problem loans including litigation and other costs; changes in market interest rates may increase funding costs and reduce earning asset yields thus reducing margin; the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of First Bank's investment securities portfolio; the extensive federal and state regulation, supervision and examination governing almost every aspect of First Bank's operations including changes in regulations affecting financial institutions, and expenses associated with complying with such regulations; uncertainties in tax estimates and valuations, including due to changes in state and federal tax law; First Bank's ability to comply with applicable capital and liquidity requirements, including First Bank’s ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Forward-Looking Statements” and “Risk Factors” in First Bank’s Annual Report on Form 10-K and any updates to those risk factors set forth in First Bank’s proxy statement, subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if First Bank’s underlying assumptions prove to be incorrect, actual results may differ materially from what First Bank anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and First Bank does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that First Bank or persons acting on First Bank’s behalf may issue.

CONTACT: Patrick L. Ryan, President and CEO
(609) 643-0168, patrick.ryan@firstbanknj.com

i Return on average tangible equity is a non-U.S. GAAP financial measure and is calculated by dividing net income by average tangible equity (average equity minus average goodwill and other intangible assets). For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

ii The efficiency ratio is a non-U.S. GAAP financial measure and is calculated by dividing non-interest expense less merger-related expenses by adjusted total revenue (net interest income plus non-interest income). For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.


FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data)
 
       
    September 30, 2021  
    (unaudited) December 31, 2020
Assets    
Cash and due from banks$36,282  $24,203 
Interest bearing deposits with banks 158,351   71,270 
  Cash and cash equivalents 194,633   95,473 
Interest bearing time deposits with banks 3,472   4,371 
Investment securities available for sale, at fair value 93,814   61,731 
Investment securities held to maturity (fair value of $39,584   
  at September 30, 2021 and $38,319 at December 31, 2020) 39,235   37,593 
Restricted investment in bank stocks 6,093   8,545 
Other investments 6,545   6,498 
Loans, net of deferred fees and costs 2,004,289   2,047,572 
 Less: Allowance for loan losses 22,927   23,974 
  Net loans 1,981,362   2,023,598 
Premises and equipment, net 9,012   10,736 
Other real estate owned, net 479   575 
Accrued interest receivable 5,625   6,806 
Bank-owned life insurance 56,247   50,197 
Goodwill 16,253   16,253 
Other intangible assets, net 1,667   1,745 
Deferred income taxes 11,574   11,394 
Other assets 12,009   10,755 
  Total assets$2,438,020  $2,346,270 
       
Liabilities and Stockholders' Equity   
Liabilities:   
Non-interest bearing deposits$536,905  $424,119 
Interest bearing deposits 1,509,061   1,479,498 
  Total deposits 2,045,966   1,903,617 
Borrowings 87,100   161,135 
Subordinated debentures 29,592   29,508 
Accrued interest payable 819   561 
Other liabilities 14,364   13,341 
  Total liabilities 2,177,841   2,108,162 
Stockholders' Equity:   
Preferred stock, par value $2 per share; 10,000,000 shares authorized;   
 no shares issued and outstanding -   - 
Common stock, par value $5 per share; 40,000,000 shares authorized; 20,843,530  
 shares issued and 19,464,388 shares outstanding at September 30, 2021 and   
 20,742,158 shares issued and 19,707,474 outstanding at December 31, 2020 103,627   103,135 
Additional paid-in capital 79,312   78,887 
Retained earnings 89,253   63,431 
Accumulated other comprehensive income 306   839 
Treasury stock, 1,379,142 shares at September 30, 2021 and 1,034,684 shares   
 at December 31, 2020 (12,319)  (8,184)
  Total stockholders' equity 260,179   238,108 
  Total liabilities and stockholders' equity$2,438,020  $2,346,270 
       


FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share data, unaudited)
 
           
    Three Months Ended Nine Months Ended
    September 30,  September 30,
    2021 2020 2021 2020
Interest and Dividend Income       
Investment securities—taxable$571 $567  $1,596  $1,729 
Investment securities—tax-exempt 40  66   133   220 
Interest bearing deposits with banks,       
  Federal funds sold and other 168  146   524   772 
Loans, including fees 22,150  21,142   66,345   63,393 
 Total interest and dividend income 22,929  21,921   68,598   66,114 
           
Interest Expense       
Deposits  1,266  3,265   4,579   13,216 
Borrowings 442  586   1,449   1,695 
Subordinated debentures 440  440   1,321   1,374 
 Total interest expense 2,148  4,291   7,349   16,285 
Net interest income 20,781  17,630   61,249   49,829 
Provision for loan losses 158  1,997   (1,057)  7,906 
 Net interest income after provision for loan losses 20,623  15,633   62,306   41,923 
           
Non-Interest Income       
Service fees on deposit accounts 173  153   514   440 
Loan fees  139  682   954   1,580 
Income from bank-owned life insurance 378  336   1,050   1,272 
Gains on sale of loans 651  65   1,500   218 
Gains on recovery of acquired loans 170  500   681   974 
Other non-interest income 390  210   844   556 
 Total non-interest income 1,901  1,946   5,543   5,040 
           
Non-Interest Expense       
Salaries and employee benefits 6,477  5,516   18,175   16,208 
Occupancy and equipment 1,260  1,633   4,497   4,597 
Legal fees 139  218   639   673 
Other professional fees 451  460   1,510   1,485 
Regulatory fees 189  293   685   803 
Directors' fees 220  219   655   649 
Data processing 537  424   1,680   1,418 
Marketing and advertising 150  113   525   338 
Travel and entertainment 44  18   83   132 
Insurance  191  187   483   505 
Other real estate owned expense, net 16  (227)  97   (16)
Merger-related expenses 145  -   145   - 
Other expense 703  799   2,153   2,543 
 Total non-interest expense 10,522  9,653   31,327   29,335 
Income Before Income Taxes 12,002  7,926   36,522   17,628 
Income tax expense 2,966  2,023   8,932   4,375 
Net Income$9,036 $5,903  $27,590  $13,253 
           
Basic earnings per common share$0.46 $0.30  $1.40  $0.67 
Diluted earnings per common share$0.46 $0.30  $1.39  $0.66 
Cash dividends per common share$0.03 $0.03  $0.09  $0.09 
           
Basic weighted average common shares outstanding 19,629,134  19,542,231   19,659,227   19,835,359 
Diluted weighted average common shares outstanding 19,842,817  19,603,919   19,851,429   19,981,325 
           


FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)
            
            
 Three Months Ended September 30,
  2021   2020 
 Average    AverageAverage    Average
 Balance Interest Rate (5) Balance Interest Rate (5)
Interest earning assets           
Investment securities (1) (2)$122,494  $619  2.00% $114,481  $647  2.25%
Loans (3) 2,030,351   22,150  4.33%  1,989,565   21,142  4.23%
Interest bearing deposits with banks,           
   Federal funds sold and other 163,386   62  0.15%  55,188   42  0.30%
Restricted investment in bank stocks 6,833   90  5.23%  6,837   89  5.18%
Other investments 6,542   16  0.97%  6,479   15  0.92%
Total interest earning assets (2) 2,329,606   22,937  3.91%  2,172,550   21,935  4.02%
Allowance for loan losses (23,388)      (22,184)    
Non-interest earning assets 150,399       138,937     
     Total assets$2,456,617      $2,289,303     
            
Interest bearing liabilities           
Interest bearing demand deposits$225,546  $51  0.09% $157,845  $84  0.21%
Money market deposits 657,058   424  0.26%  545,569   730  0.53%
Savings deposits 185,093   178  0.38%  143,817   250  0.69%
Time deposits 446,865   613  0.54%  577,259   2,201  1.52%
       Total interest bearing deposits 1,514,562   1,266  0.33%  1,424,490   3,265  0.91%
Borrowings 103,055   442  1.70%  148,588   586  1.57%
Subordinated debentures 29,576   440  5.95%  29,464   440  5.97%
      Total interest bearing liabilities 1,647,193   2,148  0.52%  1,602,542   4,291  1.07%
Non-interest bearing deposits 534,586       441,103     
Other liabilities 16,242       15,536     
Stockholders' equity 258,596       230,122     
     Total liabilities and stockholders' equity$2,456,617      $2,289,303     
Net interest income/interest rate spread (2)   20,789  3.39%    17,644  2.95%
Net interest margin (2) (4)    3.54%     3.23%
Tax equivalent adjustment (2)   (8)      (14)  
Net interest income  $20,781      $17,630   
            
(1) Average balance of investment securities available for sale is based on amortized cost.      
(2) Interest and average rates are presented on a tax equivalent basis using a federal income tax rate of 21%.    
(3) Average balances of loans include loans on nonaccrual status.          
(4) Net interest income divided by average total interest earning assets.        
(5) Annualized.           
            


FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)
            
            
 Nine Months Ended September 30,
  2021   2020 
 Average    AverageAverage    Average
 Balance Interest Rate (5) Balance Interest Rate (5)
Interest earning assets           
Investment securities (1) (2)$113,586  $1,757  2.07% $103,901  $1,995  2.56%
Loans (3) 2,037,460   66,345  4.35%  1,879,604   63,393  4.51%
Interest bearing deposits with banks,           
   Federal funds sold and other 130,189   202  0.21%  88,816   385  0.58%
Restricted investment in bank stocks 7,784   275  4.72%  6,646   291  5.85%
Other investments 6,526   47  0.96%  6,452   96  1.99%
Total interest earning assets (2) 2,295,545   68,626  4.00%  2,085,419   66,160  4.24%
Allowance for loan losses (23,829)      (19,910)    
Non-interest earning assets 139,743       131,472     
     Total assets$2,411,459      $2,196,981     
            
Interest bearing liabilities           
Interest bearing demand deposits$212,518  $165  0.10% $161,032  $377  0.31%
Money market deposits 617,249   1,368  0.30%  507,031   3,358  0.88%
Savings deposits 179,184   574  0.43%  135,447   840  0.83%
Time deposits 478,934   2,472  0.69%  623,599   8,641  1.85%
       Total interest bearing deposits 1,487,885   4,579  0.41%  1,427,109   13,216  1.24%
Borrowings 126,220   1,449  1.53%  118,486   1,695  1.91%
Subordinated debentures 29,547   1,321  5.96%  27,990   1,374  6.55%
      Total interest bearing liabilities 1,643,652   7,349  0.60%  1,573,585   16,285  1.38%
Non-interest bearing deposits 501,809       378,954     
Other liabilities 15,798       16,269     
Stockholders' equity 250,200       228,173     
     Total liabilities and stockholders' equity$2,411,459      $2,196,981     
Net interest income/interest rate spread (2)   61,277  3.40%    49,875  2.86%
Net interest margin (2) (4)    3.57%     3.19%
Tax equivalent adjustment (2)   (28)      (46)  
Net interest income  $61,249      $49,829   
            
(1) Average balances of investment securities available for sale are based on amortized cost.      
(2) Interest and average rates are presented on a tax equivalent basis using a federal income tax rate of 21%.    
(3) Average balances of loans include loans on nonaccrual status.          
(4) Net interest income divided by average total interest earning assets.        
(5) Annualized.           
            


FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(in thousands, except for share and employee data, unaudited)
           
  As of or For the Quarter Ended
  9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020
EARNINGS          
   Net interest income $20,781  $20,421  $20,047  $19,724  $17,630 
   Provision for loan losses  158   (162)  (1,053)  1,633   1,997 
   Non-interest income  1,901   1,342   2,300   1,312   1,946 
   Non-interest expense  10,522   10,155   10,650   11,052   9,653 
   Income tax expense  2,966   2,877   3,089   2,156   2,023 
   Net income  9,036   8,893   9,661   6,195   5,903 
           
PERFORMANCE RATIOS           
   Return on average assets (1)  1.46%  1.48%  1.66%  1.06%  1.03%
   Return on average equity (1)  13.86%  14.26%  16.21%  10.44%  10.20%
   Return on average tangible equity (1) (2)  14.90%  15.37%  17.52%  11.30%  11.08%
   Net interest margin (1) (3)  3.54%  3.57%  3.60%  3.56%  3.23%
   Total cost of deposits (1)  0.25%  0.30%  0.39%  0.50%  0.70%
   Efficiency ratio (2)  45.75%  46.66%  47.66%  52.54%  49.31%
           
SHARE DATA          
   Common shares outstanding  19,464,388   19,678,528   19,663,065   19,707,474   19,694,892 
   Basic earnings per share $0.46  $0.45  $0.49  $0.31  $0.30 
   Diluted earnings per share  0.46   0.45   0.49   0.31   0.30 
   Tangible book value per share (2)  12.45   12.02   11.59   11.17   10.88 
   Book value per share  13.37   12.94   12.51   12.08   11.79 
           
MARKET DATA          
   Market value per share $14.09  $13.54  $12.17  $9.38  $6.20 
   Market value / Tangible book value  113.21%  112.61%  104.97%  83.98%  57.01%
   Market capitalization $274,253  $266,447  $239,300  $184,856  $122,108 
           
CAPITAL & LIQUIDITY          
   Tangible stockholders' equity / tangible assets (2)  10.01%  9.76%  9.55%  9.45%  9.35%
   Stockholders' equity / assets  10.67%  10.42%  10.23%  10.15%  10.06%
   Loans / deposits  97.96%  100.87%  102.62%  107.56%  109.22%
           
ASSET QUALITY          
   Net (recoveries) charge-offs $(121) $116  $(5) $465  $633 
   Nonperforming loans  11,488   9,558   10,676   10,234   12,694 
   Nonperforming assets  11,967   10,038   11,251   10,809   13,397 
   Net (recoveries) charge offs / average loans (1)  (0.02%)  0.02%  0.00%  0.09%  0.13%
   Nonperforming loans / total loans  0.57%  0.47%  0.53%  0.50%  0.63%
   Nonperforming assets / total assets  0.49%  0.41%  0.47%  0.46%  0.58%
   Allowance for loan losses / total loans  1.14%  1.10%  1.13%  1.17%  1.14%
   Allowance for loan losses / total loans (excluding PPP loans) 1.19%  1.18%  1.24%  1.25%  1.25%
   Allowance for loan losses / nonperforming loans  199.57%  236.95%  214.74%  234.26%  179.66%
           
OTHER DATA          
   Total assets $2,438,020  $2,443,047  $2,405,576  $2,346,270  $2,309,897 
   Total loans  2,004,289   2,053,938   2,022,187   2,047,572   2,004,650 
   Total deposits  2,045,966   2,036,228   1,970,491   1,903,617   1,835,427 
   Total stockholders' equity  260,179   254,571   245,997   238,108   232,300 
   Number of full-time equivalent employees (4)  209   215   211   204   204 
           
(1) Annualized.          
(2) Non-U.S. GAAP financial measure that we believe provides management and investors with information that is useful in understanding our  financial performance and condition. See accompanying table, "Non-U.S. GAAP Financial Measures", for calculation and reconciliation. 
(3) Tax equivalent using a federal income tax rate of 21%.          
(4) Includes 4 full-time equivalent seasonal interns as of June 30, 2021 and 2020.        
           


FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)
            
   As of the Quarter Ended
   9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020
LOAN COMPOSITION          
Commercial and industrial $308,991  $379,916  $432,869  $388,886  $430,722 
Commercial real estate:          
 Owner-occupied  444,635   427,094   399,042   407,089   402,147 
 Investor  832,727   814,762   771,599   778,958   721,029 
 Construction and development  112,112   127,329   123,930   149,284   146,057 
 Multi-family  145,245   142,015   125,493   144,527   133,778 
     Total commercial real estate  1,534,719   1,511,200   1,420,064   1,479,858   1,403,011 
Residential real estate:          
 Residential mortgage and first lien home equity loans  103,890   108,842   117,756   120,018   117,530 
 Home equity–second lien loans and revolving lines of credit  29,998   29,422   29,306   33,575   27,600 
     Total residential real estate  133,888   138,264   147,062   153,593   145,130 
Consumer and other  31,946   31,584   29,213   30,368   32,531 
     Total loans prior to deferred loan fees and costs  2,009,544   2,060,964   2,029,208   2,052,705   2,011,394 
Net deferred loan fees and costs  (5,255)  (7,026)  (7,021)  (5,133)  (6,744)
     Total loans $2,004,289  $2,053,938  $2,022,187  $2,047,572  $2,004,650 
            
LOAN MIX          
Commercial and industrial  15.4%  18.5%  21.4%  19.0%  21.5%
Commercial real estate:          
 Owner-occupied  22.2%  20.8%  19.7%  19.9%  20.1%
 Investor  41.5%  39.7%  38.2%  38.0%  36.0%
 Construction and development  5.6%  6.2%  6.1%  7.3%  7.3%
 Multi-family  7.2%  6.9%  6.2%  7.0%  6.6%
     Total commercial real estate  76.5%  73.5%  70.2%  72.2%  70.0%
Residential real estate:          
 Residential mortgage and first lien home equity loans  5.2%  5.3%  5.8%  5.9%  5.8%
 Home equity–second lien loans and revolving lines of credit  1.5%  1.4%  1.4%  1.6%  1.4%
     Total residential real estate  6.7%  6.7%  7.2%  7.5%  7.2%
Consumer and other  1.7%  1.6%  1.5%  1.6%  1.6%
Net deferred loan fees and costs  (0.3%)  (0.3%)  (0.3%)  (0.3%)  (0.3%)
     Total loans  100.0%  100.0%  100.0%  100.0%  100.0%
            


FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)
            
   As of the Quarter Ended
   9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020
DEPOSIT COMPOSITION          
Non-interest bearing demand deposits $536,905  $534,475  $500,008  $424,119  $445,514 
Interest bearing demand deposits  241,869   211,074   208,443   201,881   156,059 
Money market and savings deposits  845,607   817,424   767,603   753,640   695,224 
Time deposits  421,585   473,255   494,437   523,977   538,630 
 Total Deposits $2,045,966  $2,036,228  $1,970,491  $1,903,617  $1,835,427 
            
DEPOSIT MIX          
Non-interest bearing demand deposits  26.3%  26.3%  25.4%  22.3%  24.3%
Interest bearing demand deposits  11.8%  10.4%  10.6%  10.6%  8.5%
Money market and savings deposits  41.3%  40.1%  38.9%  39.6%  37.9%
Time deposits  20.6%  23.2%  25.1%  27.5%  29.3%
 Total Deposits  100.0%  100.0%  100.0%  100.0%  100.0%
            


FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(in thousands, except for share data, unaudited)
          
 As of or For the Quarter Ended
 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020
Return on Average Tangible Equity         
Net income (numerator)$9,036  $8,893  $9,661  $6,195  $5,903 
          
Average stockholders' equity$258,596  $250,143  $241,674  $236,099  $230,122 
Less: Average Goodwill and other intangible assets, net 17,937   18,001   18,023   18,062   18,156 
Average Tangible stockholders' equity (denominator)$240,659  $232,142  $223,651  $218,037  $211,966 
          
Return on Average Tangible equity 14.90%  15.37%  17.52%  11.30%  11.08%
          
Tangible Book Value Per Share         
Stockholders' equity$260,179  $254,571  $245,997  $238,108  $232,300 
Less: Goodwill and other intangible assets, net 17,920   17,965   18,024   17,998   18,108 
Tangible stockholders' equity (numerator)$242,259  $236,606  $227,973  $220,110  $214,192 
          
Common shares outstanding (denominator) 19,464,388   19,678,528   19,663,065   19,707,474   19,694,892 
          
Tangible book value per share$12.45  $12.02  $11.59  $11.17  $10.88 
          
          
Tangible Equity / Assets         
Stockholders' equity$260,179  $254,571  $245,997  $238,108  $232,300 
Less: Goodwill and other intangible assets, net 17,920   17,965   18,024   17,998   18,108 
Tangible stockholders' equity (numerator)$242,259  $236,606  $227,973  $220,110  $214,192 
          
Total assets$2,438,020  $2,443,047  $2,405,576  $2,346,270  $2,309,897 
Less: Goodwill and other intangible assets, net 17,920   17,965   18,024   17,998   18,108 
Tangible total assets (denominator)$2,420,100  $2,425,082  $2,387,552  $2,328,272  $2,291,789 
          
Tangible stockholders' equity / tangible assets 10.01%  9.76%  9.55%  9.45%  9.35%
          
          
Efficiency Ratio         
Non-interest expense$10,522  $10,155  $10,650  $11,052  $9,653 
Less: Merger-related expenses 145   -   -   -   - 
Adjusted non-interest expense (numerator)$10,377  $10,155  $10,650  $11,052  $9,653 
          
Net interest income$20,781  $20,421  $20,047  $19,724  $17,630 
Non-interest income 1,901   1,342   2,300   1,312   1,946 
Total revenue$22,682  $21,763  $22,347  $21,036  $19,576 
          
Efficiency ratio 45.75%  46.66%  47.66%  52.54%  49.31%
          


 


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Source: First Bank