HAMILTON, NJ
-- (Marketwired)
-- 10/25/16
First Bank (NASDAQ: FRBA) today announced strong improvement to third quarter and year-to-date 2016 results. Net income for the quarter was $1.8 million or $0.16 per diluted share, compared to $724,000 or $0.08 per diluted share for the third quarter of 2015. Diluted earnings per share increased by 100%, despite a 2.0 million share increase in weighted average diluted shares outstanding from September 30, 2015. Third quarter net income growth was driven by higher net interest income reflecting continued strong loan growth, along with effective management of the Bank's non-interest expense. Net income for the first nine months of 2016 was $4.6 million, an increase of $1.4 million, or 43.7%, compared to the first nine months of 2015. Year-to-date net income improvement was also driven by net interest income growth coupled with managed expense growth.
2016 Performance Highlights:
- Total net revenue (net interest income + non-interest income) for the quarter increased by 28.5%, or $1.7 million, to $7.8 million, compared to the prior year quarter
- Total loans of $827.2 million at September 30, 2016 were up $218.4 million, or 35.9%, from September 30, 2015
- Total deposits of $874.1 million at quarter end were up $171.8 million, or 24.5%, compared to third quarter 2015
- Continued strong asset quality metrics with annualized net loan charge-offs to average loans of just 0.01% for the quarter, and nonperforming loans to total loans of 0.45% at September 30, 2016, down from 0.78% at September 30, 2015
- Continued improvement in the Bank's efficiency ratio of 62.04% for the third quarter, down from 71.49% for third quarter 2015, and from 62.43% for second quarter 2016.
"Our team executed another highly productive and successful quarter where we continued to deploy the capital raised in the second quarter," said Patrick L. Ryan, President and Chief Executive Officer. "We continued the Bank's strong growth trajectory in the third quarter with year-to-date total loan and deposit growth of 19.9% and 18.3%, respectively, and with a 43.7% improvement in net income for the nine month period. Our respectable growth rates did not come at the expense of our prudent risk management, as our total nonperforming loans of $3.7 million were the lowest level we have experienced in nine quarters, and our efficiency ratio of 62.04% continued its downward trend over the last several quarters. Our strong loan generation and deposit gathering enabled us to eclipse an important growth threshold as we surpassed $1 billion in total assets for the first time in our history. Our active expense management has enabled the Bank to realize considerable operating leverage during 2016 with revenue growth well in excess of the increase in our non-interest expense. We believe that we are well positioned to continue our current growth trends in the fourth quarter of 2016 and into 2017, as we leverage our elevated brand awareness and strong capital position to compete for customers dislocated by the recent industry consolidation which is affecting our Central New Jersey markets."
Income Statement
The Bank's net interest income for third quarter 2016 was $7.5 million, an increase of $1.6 million, or 27.7%, compared to the third quarter of 2015. This growth was driven by a 27.0% increase in interest income primarily a result of a $217.1 million increase in average loan balances compared with third quarter 2015. This was somewhat offset by increased interest expense of $471,000 for the comparative quarters, which reflected average balance increases for both time deposits and transaction accounts.
Year-to-date net interest income totaled $21.1 million, an increase of $3.4 million, or 19.1%, compared to $17.7 million for the same period in 2015. The increase in net interest income for the nine months ended September 30, 2016 was driven by the same strong growth in average loans which increased by $206.5 million from the prior year period.
The third quarter 2016 net interest margin was 3.16%, an increase of twelve basis points compared to the linked second quarter of 2016, and an increase of two basis points compared to the prior year quarter.
The increase compared to second quarter 2016 was the result of a six basis point improvement in the yield on interest-earning assets, primarily loans, and a five basis-point drop in the rate paid on interest-bearing liabilities.
The provision for loan losses for the third quarter of 2016 totaled $291,000, a decrease of $740,000 or 71.8% compared to the third quarter of 2015, and a decrease of $348,000, or 54.5%, compared to $639,000 for the linked second quarter of 2016. The reduction in the provision, despite the loan growth for the quarter, is primarily the result of minimal net charge offs and strong asset quality. The provision for loan losses for the nine months ended September 30, 2016 totaled $1.74 million, an increase of $24,000 or 1.4% compared to $1.72 million for the same period in 2015. The provision level for the year-to-date period is reflective of the Bank's strong loan growth in 2016, as well as the improvement in asset quality metrics.
Third quarter 2016 non-interest income increased $120,000 to $384,000 compared to third quarter 2015, primarily a result of gains on recovery of acquired loans of $114,000, compared to $34,000 for third quarter 2015. Year-to-date non-interest income totaled $1.1 million, a decrease of $301,000, or 22.1%, compared to $1.4 million for the same period in 2015. This decrease was a result of a $400,000 decrease in gains on recovery of acquired loans in 2016, compared to the prior year period.
Non-interest expense for third quarter 2016 totaled $4.8 million, an increase of $462,000, or 10.7%, compared to $4.3 million for the prior year quarter. The increase in non-interest expense compared to third quarter 2015 was primarily a result of 18.6% increase in salaries and employee benefits which reflected the Bank's continued growth, as well as an employee incentive bonus accrual adjustment of $240,000 during the quarter. Year-to-date non-interest expense totaled $13.6 million, an increase of $555,000 or 4.2% compared to $13.1 million for the same period in 2015. The increase was primarily a result of increased salaries and employee benefits and higher occupancy and equipment costs in comparison to the nine month period of 2015.
Pre-provision net revenue[1] for the third quarter of 2016 was $2.9 million, an increase of $1.2 million, or 69.8%, compared to the third quarter of 2015, and an increase of $253,000, or 9.4%, compared to $2.7 million in the linked second quarter of 2016.
Income tax expense for the third quarter of 2016 was $955,000, compared to $661,000 for second quarter 2016. The increase, in comparison to second quarter 2016, resulted from higher pre-tax income and an additional $102,000 in tax expense that was recorded as a discrete item for changes in estimates relating to our prior year tax provision. The third quarter effective income tax rate was 34.7%, compared to 31.4% for second quarter 2016.
Balance Sheet
Total assets at September 30, 2016 were $1.0 billion, an increase of $152.2 million or 17.8% compared to December 31, 2015, and an increase of $199.7 million or 24.7% compared to September 30, 2015. Total loans were $827.2 million at September 30, 2016, an increase of $137.3 million or 19.9% compared to December 31, 2015, and an increase of $218.4 million or 35.9% compared to September 30, 2015. Total loans increased $25.7 million compared to the linked second quarter of 2016, net of $23.3 million in loan paydowns that occurred in the quarter.
Total deposits were $874.1 million at September 30, 2016, an increase of $135.1 million or 18.3% compared to December 31, 2015 and an increase of $171.8 million or 24.5% compared to September 30, 2015. Non-interest bearing deposits totaled $113.9 million at September 30, 2016, an increase of $13.9 million, or 13.9% from December 31, 2015, and an increase of $16.2 million, or 16.6% from September 30, 2015.
Stockholders' equity increased to $87.5 million at September 30, 2016, up $18.7 million or 27.2% compared to December 31, 2015 and an increase of $19.1 million, or 28.0%, from September 30, 2015.
Asset Quality
First Bank's asset quality metrics continued to improve during the third quarter and compare favorably to current peer and industry averages, reflective of disciplined risk management and underwriting standards. Net charge-offs were $30,000 for the third quarter of 2016, compared to $63,000 for the second quarter of 2016 and $626,000 for the third quarter of 2015. Net charge-offs as an annualized percentage of average loans were 0.01% in third quarter 2016, compared to 0.03% in the linked second quarter and 0.42% in third quarter 2015. Nonperforming loans as a percentage of total loans at September 30, 2016 were 0.45%, improved from 0.70% in the linked second quarter and 0.78% at September 30, 2015. The allowance for loan losses to nonperforming loans was 252.4% at September 30, 2016, compared with 161.5% at the end of the second quarter of 2016, and 151.4% at September 30, 2015.
As of September 30, 2016, the Bank exceeded all regulatory capital requirements to be considered well capitalized with a Tier 1 Leverage ratio of 8.88%, a Tier 1 Risk-Based capital ratio of 9.33%, a Common Equity Tier 1 Capital ("CET1") ratio of 9.33%, and a Total Risk-Based capital ratio of 12.66%.
1 A non-U.S. GAAP metric defined by SNL Financial as net interest income before provision for loan losses plus non-interest income excluding non-ordinary items (e.g. gains on sale of investment securities, gains on recovery of acquired loans, and bargain purchase gains) minus non-interest expense excluding non-ordinary items (e.g. merger related expenses and other one-time, non-ordinary costs).
Conference Call
First Bank will host an earnings call on Wednesday, October 26, 2016 at 9:00 AM eastern time. The direct dial toll free number for the call is 1-844-825-9784. For those unable to participate in the call, a replay will be available by dialing 1-877-344-7529 from one hour after the end of the conference call until January 24, 2017. Replay information will also be available on our 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 (www.firstbanknj.com) is a New Jersey state-chartered bank with ten full-service branches in Cranbury, Denville, Ewing, Flemington, Hamilton, Lawrence, Randolph, Somerset and Williamstown, New Jersey, and Trevose, Pennsylvania. With $1.0 billion in assets as of September 30, 2016, First Bank offers a traditional 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".
This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance. These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond First Bank's control and could impede its ability to achieve these goals. These factors include those listed in our Annual Report on Form 10K under the caption "Item 1A-Risk Factors", and general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, and results of regulatory exams, among other factors.
FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except share data, unaudited)
September 30, December 31,
2016 2015
------------- -------------
Assets
Cash and due from banks $ 6,396 $ 10,032
Interest bearing deposits in other banks 51,391 23,299
------------- -------------
Cash and cash equivalents 57,787 33,331
------------- -------------
Interest bearing time deposits in other banks 7,943 4,125
Investment securities available for sale 28,375 45,341
Investment securities held to maturity (fair
value of $53,796 at September 30, 2016 and
$53,793 at December 31, 2015) 52,663 53,262
Restricted investment in bank stocks 1,958 1,862
Other investments 5,000 5,000
Loans, net of deferred fees and costs 827,161 689,887
Less: Allowance for loan losses 9,296 7,940
------------- -------------
Net loans 817,865 681,947
Premises and equipment, net 3,420 3,449
Other real estate owned, net 1,182 1,557
Accrued interest receivable 2,200 2,056
Bank-owned life insurance 20,909 14,572
Intangible assets, net 239 286
Deferred income taxes 7,559 7,935
Other assets 585 778
------------- -------------
Total assets $ 1,007,685 $ 855,501
============= =============
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing $ 113,854 $ 99,966
Interest bearing 760,295 639,055
------------- -------------
Total deposits 874,149 739,021
Borrowings 21,573 24,000
Subordinated debentures 21,614 21,533
Accrued interest payable 944 612
Other liabilities 1,942 1,572
------------- -------------
Total liabilities 920,222 786,738
------------- -------------
Stockholders' Equity:
Preferred stock, par value $2 per share;
authorized 5,000,000 shares; no shares
outstanding - -
Common stock, par value $5 per share;
authorized 20,000,000 shares; issued and
outstanding 11,393,609 shares at September
30, 2016 and 9,470,157 shares at December 31,
2015 56,800 47,218
Additional paid-in capital 18,677 14,510
Retained earnings 12,033 7,433
Accumulated other comprehensive loss (47) (398)
------------- -------------
Total stockholders' equity 87,463 68,763
------------- -------------
Total liabilities and stockholders' equity $ 1,007,685 $ 855,501
============= =============
FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data, unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2016 2015 2016 2015
----------- ----------- ----------- -----------
Interest and Dividend Income
Investment securities-
taxable $ 247 $ 396 $ 882 $ 1,048
Investment securities-tax-
exempt 125 127 376 325
Interest bearing deposits in
other banks and other 102 53 279 178
Loans, including fees 9,340 7,150 26,574 21,036
----------- ----------- ----------- -----------
Total interest and
dividend income 9,814 7,726 28,111 22,587
----------- ----------- ----------- -----------
Interest Expense
Deposits 1,941 1,434 5,666 4,030
Borrowings 18 55 145 163
Subordinated debentures 399 398 1,195 667
----------- ----------- ----------- -----------
Total interest expense 2,358 1,887 7,006 4,860
----------- ----------- ----------- -----------
Net interest income 7,456 5,839 21,105 17,727
Provision for loan losses 291 1,031 1,743 1,719
----------- ----------- ----------- -----------
Net interest income after
provision for loan losses 7,165 4,808 19,362 16,008
----------- ----------- ----------- -----------
Non-Interest Income
Service fees on deposit
accounts 38 30 119 95
Loan fees 21 8 56 31
Income from bank-owned life
insurance 129 105 337 319
Gains on sale of investment
securities, net - 11 25 11
Gains on recovery of
acquired loans 114 34 288 688
Other non-interest income 82 76 235 217
----------- ----------- ----------- -----------
Total non-interest income 384 264 1,060 1,361
----------- ----------- ----------- -----------
Non-Interest Expense
Salaries and employee
benefits 2,684 2,263 7,185 6,772
Occupancy and equipment 671 632 1,996 1,787
Legal fees 63 58 215 241
Other professional fees 287 219 856 905
Regulatory fees 139 91 464 381
Directors' fees 107 101 340 329
Data processing 236 205 694 597
Marketing and advertising 125 143 375 380
Travel and entertainment 49 63 154 180
Insurance 50 43 160 146
Other real estate owned
expense, net 118 251 360 581
Other expense 264 262 816 761
----------- ----------- ----------- -----------
Total non-interest expense 4,793 4,331 13,615 13,060
----------- ----------- ----------- -----------
Income Before Income Taxes 2,756 741 6,807 4,309
Income tax expense 955 17 2,207 1,108
----------- ----------- ----------- -----------
Net Income $ 1,801 $ 724 $ 4,600 $ 3,201
=========== =========== =========== ===========
Basic earnings per share $ 0.16 $ 0.08 $ 0.46 $ 0.34
Diluted earnings per share $ 0.16 $ 0.08 $ 0.45 $ 0.34
Basic weighted average
common shares outstanding 11,359,613 9,431,043 10,102,767 9,416,091
Diluted weighted average
common shares outstanding 11,520,646 9,493,900 10,224,537 9,478,893
FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(in thousands, unaudited)
Three Months Ended September 30,
----------------------------------------------------------
2016 2015
---------------------------- ----------------------------
Average Average Average Average
Balance Interest Rate (5) Balance Interest Rate (5)
-------- -------- -------- --------- -------- -------
(dollars in thousands)
Interest earning
assets
Investment
securities (1)
(2) $ 79,685 $ 415 2.07% $ 106,963 $ 566 2.10%
Loans (3) 812,254 9,340 4.57% 595,171 7,150 4.77%
Interest bearing
deposits in
other banks 46,772 64 0.54% 35,084 23 0.26%
Restricted
investment in
bank stocks 1,294 20 6.15% 1,412 14 3.93%
Other
investments 5,000 18 1.43% 5,000 16 1.27%
-------- -------- --------- --------
Total interest
earning
assets (2) 945,005 9,857 4.15% 743,630 7,769 4.14%
Allowance for
loan losses (9,300) (6,961)
Non-interest
earning assets 38,927 38,726
-------- ---------
Total assets $974,632 $ 775,395
======== =========
Interest bearing
liabilities
Interest bearing
demand deposits $ 97,924 $ 136 0.55% $ 62,464 110 0.70%
Money market
deposits 127,669 201 0.63% 108,754 186 0.68%
Savings deposits 70,365 88 0.50% 84,821 107 0.50%
Time deposits 448,590 1,516 1.34% 315,832 1,031 1.30%
-------- -------- --------- --------
Total interest
bearing
deposits 744,548 1,941 1.04% 571,871 1,434 0.99%
Borrowings 6,790 18 1.05% 14,000 55 1.56%
Subordinated
debentures 21,600 399 7.39% 21,496 398 7.41%
-------- -------- --------- --------
Total interest
bearing
liabilities 772,938 2,358 1.21% 607,367 1,887 1.23%
Non-interest
bearing
deposits 112,260 97,794
Other
liabilities 2,586 2,051
Stockholders'
equity 86,848 68,183
-------- ---------
Total
liabilities
and
stockholders'
equity $974,632 $ 775,395
======== =========
Net interest
income/interest
rate spread (2) 7,499 2.94% 5,882 2.91%
Net interest
margin (2) (4) 3.16% 3.14%
Tax-equivalent
adjustment (2) (43) (43)
-------- --------
Net interest
income $ 7,456 $ 5,839
======== ========
(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
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(in thousands, unaudited)
Nine Months Ended September 30,
----------------------------------------------------------
2016 2015
---------------------------- ----------------------------
Average Average Average Average
Balance Interest Rate (5) Balance Interest Rate (5)
-------- -------- -------- --------- -------- -------
(dollars in thousands)
Interest earning
assets
Investment
securities (1)
(2) $ 85,586 $ 1,386 2.16% $ 92,856 $ 1,484 2.14%
Loans (3) 775,786 26,574 4.58% 569,310 21,036 4.94%
Interest bearing
deposits in
other banks 43,079 171 0.53% 41,853 90 0.29%
Restricted
investment in
bank stocks 1,745 59 4.52% 1,375 41 3.99%
Other
investments 5,000 49 1.31% 5,000 47 1.26%
-------- -------- --------- --------
Total interest
earning
assets (2) 911,196 28,239 4.14% 710,394 22,698 4.27%
Allowance for
loan losses (8,728) (6,621)
Non-interest
earning assets 37,369 38,320
-------- ---------
Total assets $939,837 $ 742,093
======== =========
Interest bearing
liabilities
Interest bearing
demand deposits $ 87,516 $ 416 0.63% $ 47,745 $ 253 0.71%
Money market
deposits 122,807 630 0.69% 108,701 538 0.66%
Savings deposits 73,443 275 0.50% 92,849 374 0.54%
Time deposits 430,200 4,345 1.35% 304,775 2,865 1.26%
-------- -------- --------- --------
Total interest
bearing
deposits 713,966 5,666 1.06% 554,070 4,030 0.97%
Borrowings 18,349 145 1.06% 14,015 163 1.55%
Subordinated
debentures 21,572 1,195 7.39% 12,143 667 7.32%
-------- -------- --------- --------
Total interest
bearing
liabilities 753,887 7,006 1.24% 580,228 4,860 1.12%
Non-interest
bearing
deposits 107,466 92,719
Other
liabilities 2,342 1,905
Stockholders'
equity 76,142 67,241
-------- ---------
Total
liabilities
and
stockholders'
equity $939,837 $ 742,093
======== =========
Net interest
income/interest
rate spread (2) 21,233 2.90% 17,838 3.15%
Net interest
margin (2) (4) 3.11% 3.36%
Tax-equivalent
adjustment (2) (128) (111)
-------- --------
Net interest
income $ 21,105 $ 17,727
======== ========
(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 FINANCIAL HIGHLIGHTS
(in thousands, except share and employee data, unaudited)
3Q2016 2Q2016 1Q2016 4Q2015 3Q2015
----------- ----------- ---------- ---------- ----------
EARNINGS
Net interest
income $ 7,456 $ 6,880 $ 6,769 $ 6,096 $ 5,839
Provision for
loan losses 291 639 813 950 1,031
Non-interest
income 384 316 360 282 264
Non-interest
expense 4,793 4,453 4,369 4,665 4,331
Income tax
expense 955 661 591 77 17
Net income 1,801 1,443 1,356 686 724
PER SHARE DATA
Basic earnings
per share $ 0.16 $ 0.15 $ 0.14 $ 0.07 $ 0.08
Diluted earnings
per share 0.16 0.15 0.14 0.07 0.08
Tangible book
value (1) 7.66 7.49 7.39 7.23 7.18
Book value 7.68 7.51 7.42 7.26 7.21
PERFORMANCE RATIOS
Return on
average assets
(2) 0.74% 0.62% 0.60% 0.33% 0.37%
Return on
average equity
(2) 8.25% 8.09% 7.83% 3.97% 4.21%
Net interest
margin, tax
equivalent
basis (2) 3.16% 3.04% 3.14% 3.05% 3.14%
Efficiency ratio
(1) 62.04% 62.43% 62.48% 73.79% 71.49%
Pre-provision
net revenue (1) 2,933 $ 2,680 $ 2,624 $ 2,006 $ 1,727
MARKET DATA
(period-end)
Market value per
share $ 8.38 $ 6.94 $ 6.94 $ 6.61 $ 6.21
Market value /
book value 109.16% 92.43% 93.37% 91.03% 86.07%
Common shares
outstanding 11,393,609 11,392,776 9,497,776 9,470,157 9,470,407
Market
capitalization $ 95,478 $ 79,066 $ 65,805 $ 62,597 $ 58,809
CAPITAL &
LIQUIDITY
Tangible equity
/ assets (1) 8.66% 8.79% 7.65% 8.00% 8.42%
Equity / assets 8.68% 8.81% 7.68% 8.04% 8.46%
Loans / deposits 94.62% 94.04% 94.89% 93.35% 86.68%
ASSET QUALITY
Net charge offs
(recoveries) $ 30 $ 63 $ 294 $ 170 $ 626
Nonperforming
loans 3,683 5,595 4,094 3,903 4,729
Nonperforming
assets 4,895 7,270 5,793 5,489 6,567
Net charge offs
(recoveries) /
average loans
(2) 0.01% 0.03% 0.16% 0.11% 0.42%
Nonperforming
loans / total
loans 0.45% 0.70% 0.54% 0.57% 0.78%
Nonperforming
assets / total
assets 0.49% 0.75% 0.63% 0.64% 0.81%
Allowance for
loan losses /
total loans 1.12% 1.13% 1.12% 1.15% 1.18%
Allowance for
loan losses /
nonperforming
loans 252.40% 161.48% 206.62% 203.43% 151.41%
PERIOD-END DATA
Total assets $ 1,007,685 $ 970,689 $ 917,441 $ 855,501 $ 808,031
Total loans 827,161 801,421 758,131 689,887 608,794
Total deposits 874,149 852,230 798,985 739,021 702,325
Total
stockholders'
equity 87,463 85,540 70,474 68,763 68,323
Full-time
equivalent
employees 104 107 102 99 103
(1) 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.
(2) Annualized.
CONTACT:
Patrick L. Ryan
President and CEO
(609) 643-0168
patrick.ryan@firstbanknj.com
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