Year-To-Date Net Income up 105% to $8.1 Million

For the Second Quarter and First Half of 2018: Continued Strong Loan Origination, Solid Revenue Growth, Continued Stable and Favorable Asset Quality Metrics, Strong Period-End Capital Levels

HAMILTON, N.J., July 23, 2018 (GLOBE NEWSWIRE) -- First Bank (NASDAQ:FRBA) today announced solid results for the three and six months ended June 30, 2018, as strong net interest income growth, along with effective non-interest expense management, contributed to net income which more than doubled for both the quarter and first half of the year, compared to the prior year periods.  Net income for the second quarter of 2018 was $4.0 million, or $0.22 per diluted share, an increase of $2.0 million, or 102.3%, compared to $2.0 million, or $0.15 per diluted share, for the second quarter of 2017. Return on average assets and average equity for the second quarter of 2018 were 1.02% and 9.09%, respectively, compared to 0.72% and 7.54%, respectively, for the second quarter of 2017. Net income for the first six months of 2018 was $8.1 million, an increase of $4.2 million, or 105.0%, compared to $3.9 million in the similar period in 2017. Diluted earnings per share for the first six months of 2018 were $0.44, an increase of $0.12, or 37.5%, over $0.32 for the prior year period.  Diluted weighted average shares outstanding were 18.5 million for the quarter ended June 30, 2018, an increase of 5.5 million shares, or 42.5%, compared to the diluted weighted average shares outstanding for second quarter 2017.

Net income for second quarters 2018 and 2017 included certain merger-related items.  Excluding those items, First Bank’s second quarter 2018 adjusted diluted earnings per share1 were $0.24, adjusted return on average assets1 was 1.14% and adjusted return on average equity1 was 10.13%. Second quarter 2017 adjusted diluted earnings per share were $0.16, adjusted return on average assets was 0.73% and adjusted return on average equity was 7.67%. 

Second Quarter 2018 Performance Highlights:

  • Total net revenue (net interest income plus non-interest income) for the quarter increased by $5.3 million, or 58.6%, to $14.4 million, compared to the prior year quarter.
  • Total loans of $1.4 billion at June 30, 2018 were up $377.3 million, or 38.0%, from June 30, 2017, and $143.4 million, or 11.7% from December 31, 2017.
  • Total deposits of $1.3 billion at June 30, 2018 were up $154.0 million, or 13.2%, compared to the 2017 year end and $374.9 million, or 39.6% compared to June 30, 2017.
  • Asset quality metrics continued to be strong, with net recoveries of $75,000 for second quarter 2018, compared to net charge-offs of $22,000 for second quarter 2017. Nonperforming loans to total loans of 0.61% at June 30, 2018 increased by 12 basis points from 0.49% at June 30, 2017, and 16 basis points from 0.45% on March 31, 2018. 
  • For the fifth consecutive quarter the Bank’s efficiency ratio was below 60.00%.  The ratio was 55.64% for the second quarter of 2018, compared to 58.21% in the year-ago quarter and 53.91% in the linked first quarter of 2018.
  • On April 30, 2018 we closed the acquisition of Delanco Bancorp, Inc. The fair value of the assets acquired and the liabilities assumed on the date of the transaction were $118.2 million in assets, $78.7 million in loans (which includes $23.1 million in loans held for sale) and $108.2 million in deposits.  

“We’re pleased with the Bank’s very solid performance through the first half of 2018, including double-digit loan and deposit growth, strong improvement to earnings, the successful integration of our two recent bank acquisitions and continued solid asset quality,” said Patrick L. Ryan, President and Chief Executive Officer. “Our quarter over prior year quarter loan growth of more than $377 million reflected both acquisition activity and continued strong originations. Deposits were up by nearly 40% compared to mid-year 2017, also reflective of our strategy to take advantage of both acquired and organic growth opportunities. Non-interest bearing deposits grew by more than 60% for the same period as a result of expanded commercial banking relationships and our recent acquisitions. Our acquisition of Delanco Bancorp, Inc. expanded our service footprint into Burlington County through the addition of two quality full-service locations in Delanco and Cinnaminson, New Jersey. We also opened a new loan production office in West Chester, Pennsylvania during the second quarter, strengthening our ability to compete for commercial lending business in Chester, Delaware and Philadelphia counties. Combined with the new full-service branch we opened in Pennington, New Jersey during the first quarter, we now have 18 service locations in nine counties in New Jersey and Pennsylvania.”

“During the second quarter, First Bank was made a component of the Russell 3000 Index, a broad-market and capitalization-weighted stock index,” Mr. Ryan added. “Our addition to the Russell 3000 helps to raise our profile among a larger universe of investors, as we grow both the Bank and our market cap. In May 2018, we commenced an ‘at-the-market’ offering of our common stock, during which 74,206 shares were sold at a price per share of $13.90, for aggregate gross proceeds of approximately $1.0 million (before deducting commissions and offering expenses). The inclusion in the Russell 3000 Index did not provide a boost to our stock price during the offering period so we decided to hold off on a large scale offering at this time given our strong current capital position. Our capital levels at midyear were very strong reflecting our performance during the first six months of 2018, and we’re well positioned to take advantage of appropriate growth opportunities within our targeted service area. Our team has done a good job of managing our funding costs through midyear; however, we do expect to see some deposit cost headwinds through year end, which are reflective of a flattening yield curve environment and the competitive nature of our markets. Building on our accomplishments of the first six months, we believe that we’re well positioned to continue our strong performance through the remainder of 2018.”

Income Statement
The Bank’s net interest income for second quarter 2018 was $13.6 million, an increase of $5.0 million, or 57.5%, compared to $8.7 million in the second quarter of 2017. This growth was driven by a $6.3 million, or 56.0%, increase in interest and dividend income from the second quarter of 2017, primarily as a result of a $405.1 million increase in average loans along with a 42 basis points increase in the average yield on loans compared with the second quarter of 2017. This was partially offset by an increase to interest expense of $1.4 million from the comparable 2017 quarter, which reflected average balance increases for transaction and time accounts, as well as borrowings. Also contributing to the increase in interest expense was an increase of 13 basis points in average rate on interest bearing liabilities.

Six month net interest income totaled $26.2 million, an increase of $9.5 million, or 56.6%, compared to $16.8 million for the first six months of 2017. The increase in 2018 net interest income was also driven by the same strong growth in average loans which increased by $380.8 million from the prior year six-month period.

The second quarter of 2018 net interest margin was 3.63%, an increase of 40 basis points compared to the prior year quarter, and an increase of 1 basis point compared to the linked first quarter of 2018. The increase compared to second quarter 2017 was primarily the result of higher average interest-earning assets (primarily loans) and a 48 basis points improvement in the average yield on interest-earning assets over the second quarter of 2017. Second quarter net interest margin also benefitted from loan prepayment penalty fees of $232,000 related to early commercial loan payoffs during the quarter. The net interest margin for the six months ended June 30, 2018 was also 3.63%, an increase of 43 basis points compared to the same period in 2017. The improvement was also driven by higher average interest-earning assets (primarily loans) and an increase in the average yield on interest-earning assets.

The provision for loan losses for the second quarter of 2018 totaled $701,000, a decrease of $105,000 compared to $806,000 in the second quarter of 2017, and a decrease of $298,000 compared to $999,000 for the linked first quarter of 2018. The decrease in the provision compared to second quarter 2017 and the first quarter of 2018, reflected continued strong asset quality metrics along with net recoveries of $75,000 for the second quarter of 2018. The provision for loan losses for the first six months of 2018 totaled $1.7 million compared to $1.2 million for the same period in 2017. The increase in the six month provision is reflective of the Bank’s continued strong loan growth in 2018, partially offset by continued stable asset quality metrics. 

Second quarter 2018 non-interest income increased by $338,000 to $760,000, compared to $422,000 in second quarter 2017, primarily as a result of higher income from bank-owned life insurance, higher gains on recovery of acquired loans and higher other income compared to second quarter 2017. The increase in other income was mainly due to increases in variance customer service fees reflective of our growing customer base.  Six month non-interest income totaled $1.3 million for 2018 compared to $881,000 for 2017. The increase in 2018 six month non-interest income was primarily a result of the same factors as the three month period.

Non-interest expense for second quarter 2018 totaled $8.7 million, an increase of $3.3 million, compared to $5.4 million for the prior year quarter. The higher non-interest expense compared to second quarter 2017 was primarily a result of increased salaries and employee benefits, merger-related expenses and higher occupancy and equipment cost. The higher salaries and employee benefits and occupancy and equipment cost, compared to second quarter 2017, reflect the additional service locations added during the second half of 2017 and the first half of 2018, primarily the result of our acquisition activity. Non-interest expense for the first six months of 2018 totaled $15.9 million, an increase of $5.2 million, or 49.2%, compared to $10.7 million for the same period in 2017. The increase was also primarily a result of increased salaries and employee benefits, higher merger-related expenses and higher occupancy and equipment cost. The Bank’s net revenue growth rate of 56.0% provided operating leverage for the first six months of 2018 outpacing the 49.2% increase in non-interest expense.

Pre-provision net revenue2 for the second quarter of 2018 was $6.3 million, an increase of $2.6 million, or 67.9%, compared to $3.8 million in the second quarter of 2017, and an increase of $300,000, or 5.0%, compared to $6.0 million in the linked first quarter of 2018.

Income tax expense for the second quarter of 2018 was $1.0 million, with an effective tax rate of 20.2% compared to $914,000, with an effective tax rate of 31.5% for the second quarter of 2017. The reduction in the second quarter 2018 effective tax rate was primarily a result of the enactment of the Tax Cuts and Jobs Act in 2017, which reduced the federal statutory corporate income tax rate from 35% to 21%. On July 1, 2018 New Jersey passed a new law regarding the Corporation Business Tax. The new law imposes an array of new and different tax implications. Notable changes include a surtax on corporations beginning on or after January 1, 2018, limited dividend received deduction retroactive to January 1, 2017, and the adoption of mandatory unitary combined tax filings for corporations that are part of an affiliated group beginning on or after January 1, 2019. We expect these new tax law changes will create additional New Jersey income tax expense starting in the third quarter of 2018 and into future periods. We are currently assessing the impact with our tax advisors.

Balance Sheet
Total assets at June 30, 2018 were $1.6 billion, an increase of $482.5 million, or 41.6%, compared to $1.2 billion at June 30, 2017. Total loans were $1.4 billion at June 30, 2018, an increase of $377.3 million, or 38.0%, compared to $993.4 million at June 30, 2017, and an increase of $143.4 million, or 11.7%, from the 2017 year end. Total loans increased $100.2 million, or 7.9%, to $1.4 billion, compared to $1.3 billion in the linked first quarter of 2018. Loan growth during the second quarter was broadly distributed across the Bank’s commercial and consumer loan segments, and reflected loans acquired in the Delanco transaction and continued strong organic originations.

As of June 30, 2018 we had $22.6 million in residential mortgage loans held for sale that were acquired in the Delanco acquisition. 

Total deposits were $1.3 billion at June 30, 2018, an increase of $374.9 million, or 39.6%, compared to $946.2 million at June 30, 2017, and an increase of $154.0 million from December 31, 2017. Non-interest bearing deposits totaled $215.4 million at June 30, 2018, an increase of $82.3 million, or 61.9%, from June 30, 2017, reflective of expanded commercial lending relationships and our recent acquisitions.

Stockholders’ equity increased to $185.5 million at June 30, 2018, up $22.3 million or 13.6% compared to December 31, 2017.  The increase was primarily the result of the Bank’s issuance of additional common shares for the acquisition of Delanco, which increased capital by $14.4 million, and a $7.1 million increase in retained earnings.

Asset Quality
First Bank’s asset quality metrics remained stable during the second quarter and compare favorably to peer and industry averages, reflecting our disciplined risk management and underwriting standards. Net recoveries were $75,000 for the second quarter of 2018, compared to net charge-offs of $22,000 for second quarter 2017 and $180,000 for the first quarter of 2018. Net recoveries as an annualized percentage of average loans were (0.02%) in second quarter 2018, compared to net charge-offs as an annualized percentage of average loans of 0.06% in the linked first quarter of 2018 and 0.01% in second quarter 2017. Nonperforming loans increased to $8.4 million at June 30, 2018, up from $5.7 million at March 31, 2018, primarily reflecting the movement of a $2.2 million commercial loan to 90 days or more past due and still accruing.  Nonperforming loans as a percentage of total loans at June 30, 2018 were 0.61%, compared with 0.49% at June 30, 2017 and 0.45% at March 31, 2018. The allowance for loan losses to nonperforming loans was 158.77% at June 30, 2018, compared with 221.77% at the end of second quarter 2017 and 220.51% at March 31, 2018.

As of June 30, 2018, the Bank exceeded all regulatory capital requirements to be considered well capitalized, with a Tier 1 Leverage ratio of 10.63%, a Tier 1 Risk-Based capital ratio of 10.83%, a Common Equity Tier 1 Capital ("CET1") ratio of 10.83%, and a Total Risk-Based capital ratio of 13.10%.

Delanco Acquisition Completed
First Bank completed its merger with Delanco Bancorp, Inc. and its wholly-owned subsidiary Delanco Federal Savings Bank on April 30, 2018. This successful transaction expands First Bank’s banking footprint into Burlington County through the addition of two full-service locations in Delanco and Cinnaminson, New Jersey. James Igo, former Chairman, President and Chief Executive Officer of Delanco Federal Savings Bank, will remain with First Bank as the Southern New Jersey Regional President, and will continue to focus on relationship banking to quality consumer and commercial customers.

Cash Dividend Declared
On July 17, 2018, the Board of Directors declared a quarterly cash dividend of $0.03 per share to common shareholders of record at the close of business on August 10, 2018, payable on August 24, 2018. The First Bank Board believes that this dividend provides shareholders an added tangible benefit, and that it is appropriate given the Company’s current financial performance, momentum and near-term prospects.

Conference Call
First Bank will host an earnings call on Tuesday, July 24, 2018 at 9:00 a.m. EST.  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 (access code 10121931) from one hour after the end of the conference call until October 24, 2018.  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 is a New Jersey state-chartered bank with 17 full-service branches in Cinnaminson, Cranbury, Denville, Delanco, Ewing, Flemington, Hamilton, Lawrence, Pennington, Randolph, Somerset and Williamstown, New Jersey, and Trevose, Doylestown, Warminster, Bensalem and Levittown, Pennsylvania. With $1.6 billion in assets as of June 30, 2018, 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 exchange 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 the 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 markets; 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, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations being issued in accordance with this statute and potential expenses associated with complying with such regulations; 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 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.


1 Adjusted diluted earnings per share, adjusted return on average assets and adjusted return on average equity are non-U.S. GAAP financial measures.  For a reconciliation of these non-U.S. GAAP financial measures, 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. 

2 Pre-provision net revenue is a non-U.S. GAAP financial measure.  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.

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

FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data)
 
    June 30,  
     2018  December 31,
    (unaudited)  2017 
Assets    
Cash and due from banks$11,889  $12,808 
Interest bearing deposits with banks 36,118   30,570 
  Cash and cash equivalents 48,007   43,378 
Interest bearing time deposits with banks 5,067   4,113 
Investment securities available for sale 57,718   62,393 
Investment securities held to maturity (fair value of $49,506   
 at June 30, 2018 and $52,920 at December 31, 2017) 50,092   52,900 
Restricted investment in bank stocks 6,261   5,289 
Other investments 6,123   6,054 
Loans held for sale 22,599   - 
Loans, net of deferred fees and costs 1,370,769   1,227,413 
 Less: Allowance for loan losses 13,292   11,697 
  Net loans 1,357,477   1,215,716 
Premises and equipment, net 10,750   5,880 
Other real estate owned, net 1,927   1,183 
Accrued interest receivable 4,297   3,828 
Bank-owned life insurance 36,297   29,806 
Goodwill 15,997   10,497 
Other intangible assets, net 1,519   917 
Deferred income taxes 10,954   5,596 
Other assets 5,914   4,777 
  Total assets$1,640,999  $1,452,327 
       
Liabilities and Stockholders' Equity   
Liabilities:   
Non-interest bearing deposits$215,385  $198,595 
Interest bearing deposits 1,105,683   968,503 
  Total deposits 1,321,068   1,167,098 
Borrowings 104,079   94,863 
Subordinated debentures 21,802   21,748 
Accrued interest payable 900   988 
Other liabilities 7,644   4,380 
  Total liabilities 1,455,493   1,289,077 
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;   
 issued and outstanding 18,640,484 shares at June 30, 2018   
 and 17,443,173 shares at December 31, 2017 92,951   87,003 
Additional paid-in capital 66,912   57,015 
Retained earnings 26,808   19,726 
Accumulated other comprehensive loss (1,165)  (494)
  Total stockholders' equity 185,506   163,250 
  Total liabilities and stockholders' equity$1,640,999  $1,452,327 
       


FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share data, unaudited)
 
    Three Months Ended Six Months Ended
    June 30,  June 30,
     2018  2017  2018  2017
Interest and Dividend Income       
Investment securities—taxable$543 $387 $1,087 $763
Investment securities—tax-exempt 112  125  226  248
Interest bearing deposits with banks and other 307  150  549  275
Loans, including fees 16,714  10,670  32,005  20,699
 Total interest and dividend income 17,676  11,332  33,867  21,985
           
Interest Expense       
Deposits  3,168  2,090  5,916  4,086
Borrowings 477  190  921  349
Subordinated debentures 398  398  796  796
 Total interest expense 4,043  2,678  7,633  5,231
Net interest income 13,633  8,654  26,234  16,754
Provision for loan losses 701  806  1,700  1,244
 Net interest income after provision for loan losses 12,932  7,848  24,534  15,510
           
Non-Interest Income       
Service fees on deposit accounts 65  43  118  84
Loan fees 48  48  80  60
Income from bank-owned life insurance 271  155  491  308
Gains on sale of investment securities, net 3  -  3  -
Gains on sale of loans 55  -  55  136
Gains on recovery of acquired loans 151  76  223  113
Other non-interest income 167  100  313  180
 Total non-interest income 760  422  1,283  881
           
Non-Interest Expense       
Salaries and employee benefits 4,252  2,828  8,251  5,578
Occupancy and equipment 1,182  719  2,147  1,404
Legal fees 137  49  262  149
Other professional fees 520  330  941  680
Regulatory fees 152  182  289  401
Directors' fees 174  132  302  250
Data processing 428  256  848  511
Marketing and advertising 188  108  375  233
Travel and entertainment 97  62  197  121
Insurance 86  56  156  123
Other real estate owned expense, net 56  191  77  314
Merger-related expenses 731  130  951  280
Other expense 651  326  1,114  617
 Total non-interest expense 8,654  5,369  15,910  10,661
Income Before Income Taxes 5,038  2,901  9,907  5,730
Income tax expense 1,019  914  1,851  1,800
Net Income$4,019 $1,987 $8,056 $3,930
           
Basic earnings per share$0.22 $0.16 $0.45 $0.33
Diluted earnings per share$0.22 $0.15  0.44  0.32
Cash dividends declared per common share$0.03 $0.02 $0.06  0.04
           
Basic weighted average common shares outstanding 18,175,617  12,651,518  17,803,492  12,022,524
Diluted weighted average common shares outstanding 18,517,953  12,998,615  18,165,242  12,377,440
           


FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)
            
 Three Months Ended June 30,
  2018   2017 
 Average    Average Average    Average
 Balance Interest Rate (5) Balance Interest Rate (5)
Interest earning assets           
Investment securities (1) (2)$111,191  $679  2.45% $98,570  $555  2.26%
Loans (3) 1,342,365   16,714  4.99%  937,232   10,670  4.57%
Interest bearing deposits with banks and other 42,825   145  1.36%  34,075   86  1.01%
Restricted investment in bank stocks 6,323   126  7.99%  3,605   42  4.67%
Other investments 6,112   36  2.36%  5,000   22  1.76%
Total interest earning assets (2) 1,508,816   17,700  4.71%  1,078,482   11,375  4.23%
Allowance for loan losses (13,265)      (10,383)    
Non-interest earning assets 86,269       43,595     
Total assets$1,581,820      $1,111,694     
            
Interest bearing liabilities           
Interest bearing demand deposits 170,101  $257  0.61% $116,813  $176  0.60%
Money market deposits 263,943   722  1.10%  163,734   290  0.71%
Savings deposits 87,313   103  0.47%  70,688   87  0.49%
Time deposits 539,666   2,086  1.55%  449,316   1,537  1.37%
Total interest bearing deposits 1,061,023   3,168  1.20%  800,551   2,090  1.05%
Borrowings 107,156   477  1.79%  53,594   190  1.42%
Subordinated debentures 21,786   398  7.31%  21,680   398  7.34%
Total interest bearing liabilities 1,189,965   4,043  1.36%  875,825   2,678  1.23%
Non-interest bearing deposits 208,951       127,554     
Other liabilities 5,605       2,568     
Stockholders' equity 177,299       105,747     
Total liabilities and stockholders' equity$1,581,820      $1,111,694     
Net interest income/interest rate spread (2)   13,657  3.35%    8,697  3.00%
Net interest margin (2) (4)    3.63%     3.23%
Tax-equivalent adjustment (2)   (24)      (43)  
Net interest income  $13,633      $8,654   
            
            
(1) Average balance of investment securities available for sale is based on amortized cost. 
(2) Interest and average rates are tax equivalent using a federal income tax rate of 21% in 2018 and 34% in 2017. 
(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)
            
 Six Months Ended June 30,
  2018   2017 
 Average    Average Average    Average
 Balance Interest Rate (5) Balance Interest Rate (5)
Interest earning assets           
Investment securities (1) (2)$112,341  $1,360  2.44% $99,404  $1,096  2.22%
Loans (3) 1,299,965   32,005  4.96%  919,128   20,699  4.54%
Interest bearing deposits with banks and other 36,770   263  1.44%  34,510   160  0.93%
Restricted investment in bank stocks 6,106   216  7.13%  3,548   74  4.21%
Other investments 6,095   70  2.32%  5,000   41  1.65%
Total interest earning assets (2) 1,461,277   33,914  4.68%  1,061,590   22,070  4.19%
Allowance for loan losses (12,492)      (10,245)    
Non-interest earning assets 80,173       43,391     
Total assets$1,528,958      $1,094,736     
            
Interest bearing liabilities           
Interest bearing demand deposits$160,213  $485  0.61% $116,693  $344  0.59%
Money market deposits 240,230   1,200  1.01%  159,951   543  0.68%
Savings deposits 80,656   191  0.48%  70,088   171  0.49%
Time deposits 540,929   4,040  1.51%  446,235   3,028  1.37%
Total interest bearing deposits 1,022,028   5,916  1.17%  792,967   4,086  1.04%
Borrowings 107,429   921  1.73%  54,704   349  1.29%
Subordinated debentures 21,772   796  7.31%  21,665   796  7.35%
Total interest bearing liabilities 1,151,229   7,633  1.34%  869,336   5,231  1.21%
Non-interest bearing deposits 200,378       124,248     
Other liabilities 5,662       3,128     
Stockholders' equity 171,689       98,024     
Total liabilities and stockholders' equity$1,528,958      $1,094,736     
Net interest income/interest rate spread (2)   26,281  3.34%    16,839  2.98%
Net interest margin (2) (4)    3.63%     3.20%
Tax-equivalent adjustment (2)   (47)      (85)  
Net interest income  $26,234      $16,754   
            
            
(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 21% in 2018 and 34% in 2017. 
(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)
           
  2Q2018 (1) 1Q2018 4Q2017 3Q2017 (2) 2Q2017
EARNINGS          
Net interest income $13,633  $12,601  $12,254  $10,655  $8,654 
Provision for loan losses  701   999   715   716   806 
Non-interest income  760   523   604   631   422 
Non-interest expense  8,654   7,256   7,246   6,778   5,369 
Income tax expense  1,019   832   4,314   1,313   914 
Net income  4,019   4,037   583   2,479   1,987 
           
PERFORMANCE RATIOS           
Return on average assets (3)  1.02%  1.11%  0.16%  0.80%  0.72%
Adjusted return on average assets (3) (4)  1.14%  1.14%  0.89%  1.04%  0.73%
Return on average equity (3)  9.09%  9.90%  1.40%  7.15%  7.54%
Adjusted return on average equity (3) (4)  10.13%  10.18%  7.84%  9.28%  7.67%
Net interest margin (3) (5)  3.63%  3.62%  3.51%  3.58%  3.23%
Efficiency ratio (4)  55.64%  53.91%  54.76%  49.63%  58.21%
Pre-provision net revenue (4) $6,316  $6,016  $5,777  $5,627  $3,761 
           
SHARE DATA          
Common shares outstanding  18,640,484   17,517,842   17,443,173   17,437,173   15,015,778 
Basic earnings per share $0.22  $0.23  $0.03  $0.16  $0.16 
Diluted earnings per share  0.22   0.23   0.03   0.16   0.15 
Adjusted diluted earnings per share (4)  0.24   0.23   0.18   0.20   0.16 
Tangible book value per share (4)  9.01   8.87   8.70   8.69   8.71 
Book value per share  9.95   9.52   9.36   9.35   8.72 
           
MARKET DATA (period-end)          
Market value per share $13.90  $14.40  $13.85  $13.30  $11.65 
Market value / book value  139.67%  151.29%  147.99%  142.26%  133.57%
Market capitalization $259,103  $252,257  $241,588  $231,914  $174,934 
           
CAPITAL & LIQUIDITY          
Tangible equity / tangible assets (4)  10.35%  10.56%  10.54%  10.56%  11.29%
Equity / assets  11.30%  11.24%  11.24%  11.27%  11.30%
Loans / deposits  103.76%  106.72%  105.17%  103.70%  105.00%
           
ASSET QUALITY          
Net (recoveries) charge-offs $(75) $180  $287  $348  $22 
Nonperforming loans  8,372   5,676   5,299   6,745   4,916 
Nonperforming assets  10,486   6,822   6,482   8,772   6,133 
Net (recoveries) charge offs / average loans (3)  (0.02%)  0.06%  0.10%  0.13%  0.01%
Nonperforming loans / total loans  0.61%  0.45%  0.43%  0.56%  0.49%
Nonperforming assets / total assets  0.64%  0.46%  0.45%  0.61%  0.53%
Allowance for loan losses / total loans  0.97%  0.99%  0.95%  0.94%  1.10%
Allowance for loan losses / nonperforming loans  158.77%  220.51%  220.74%  167.07%  221.77%
           
PERIOD-END DATA          
Total assets $1,640,999  $1,483,060  $1,452,327  $1,446,790  $1,158,546 
Total loans  1,370,769   1,270,550   1,227,413   1,194,522   993,426 
Total deposits  1,321,068   1,190,593   1,167,098   1,151,857   946,152 
Total stockholders' equity  185,506   166,740   163,250   163,025   130,969 
Full-time equivalent employees (6)  183   150   150   142   116 
___________________________          
           
(1) Includes effects of Delanco Bancorp, Inc. merger effective April 30, 2018.
(2) Includes effects of Bucks County Bank merger effective September 15, 2017.
(3) Annualized.
(4) 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.
(5) Tax equivalent using a federal income tax rate of 21% in 2018 and 34% in 2017.
(6) Full-time equivalent employees include 12 seasonal interns as of 2Q2018 and 8 seasonal interns as of 2Q2017.
           


FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(in thousands, except for share data, unaudited)
          
 2Q2018 (1) 1Q2018 4Q2017 3Q2017 (2) 2Q2017
Tangible Book Value         
Stockholders' equity$185,506  $166,740  $163,250  $163,025  $130,969 
Less:  Goodwill and other intangible assets, net 17,516   11,365   11,414   11,463   196 
Tangible equity (numerator)$167,990  $155,375  $151,836  $151,562  $130,773 
          
Common shares outstanding (denominator) 18,640,484   17,517,842   17,443,173   17,437,173   15,015,778 
          
Tangible book value per share$9.01  $8.87  $8.70  $8.69  $8.71 
          
          
Tangible Equity / Assets         
Stockholders' equity$185,506  $166,740  $163,250  $163,025  $130,969 
Less:  Goodwill and other intangible assets, net 17,516   11,365   11,414   11,463   196 
Tangible equity (numerator)$167,990  $155,375  $151,836  $151,562  $130,773 
          
Total assets$1,640,999  $1,483,060  $1,452,327  $1,446,790  $1,158,546 
Less:  Goodwill and other intangible assets, net 17,516   11,365   11,414   11,463   196 
Adjusted total assets (denominator)$1,623,483  $1,471,695  $1,440,913  $1,435,327  $1,158,350 
          
Tangible equity / assets 10.35%  10.56%  10.54%  10.56%  11.29%
          
          
Efficiency Ratio (3)         
Non-interest expense$8,654  $7,256  $7,246  $6,778  $5,369 
Less:  Merger-related expenses 731   220   254   1,233   130 
Adjusted non-interest expense (numerator)$7,923  $7,036  $6,992  $5,545  $5,239 
          
Net interest income$13,633  $12,601  $12,254  $10,655  $8,654 
Non-interest income 760   523   604   631   422 
Total revenue 14,393   13,124   12,858   11,286   9,076 
Less:  Gains on sale of investment securities, net 3   -   -   -   - 
Less:  Gains on recovery of acquired loans 151   72   89   114   76 
Adjusted total revenue (denominator)$14,239  $13,052  $12,769  $11,172  $9,000 
          
Efficiency ratio 55.64%  53.91%  54.76%  49.63%  58.21%
          
          
Pre-Provision Net Revenue (3)         
Net interest income$13,633  $12,601  $12,254  $10,655  $8,654 
Non-interest income 760   523   604   631   422 
Less:  Gains on sale of investment securities, net 3   -   -   -   - 
Less:  Gains on recovery of acquired loans 151   72   89   114   76 
Less:  Non-interest expense 8,654   7,256   7,246   6,778   5,369 
Add:  Merger-related expenses 731   220   254   1,233   130 
Pre-provision net revenue$6,316  $6,016  $5,777  $5,627  $3,761 
___________________________         
          
(1) Includes effects of Delanco Bancorp, Inc. merger effective April 30, 2018.
(2) Includes effects of Bucks County Bank merger effective September 15, 2017.
(3) Effective 4Q2017, certain reclassifcations were made to prior period information to conform to the current presentation.
The reclassifications had no effect on the previously reported results of operations or changes in stockholders’ equity.
          


FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(in thousands, except for share data, unaudited)
          
          
 2Q2018 (1) 1Q2018 4Q2017 3Q2017 (2) 2Q2017
          
Adjusted diluted earnings per share,         
Adjusted return on average assets, and         
Adjusted return on average equity         
          
Net income$4,019  $4,037  $583  $2,479  $1,987 
Add: Merger-related expenses (3) 577   174   168   814   86 
Add: Impact of income tax rate change -   -   2,570   -   - 
Less: Gains on recovery of acquired loans (3) 119   57   59   75   50 
Adjusted net income$4,477  $4,154  $3,262  $3,218  $2,023 
          
Diluted weighted average common shares outstanding 18,517,953   17,802,021   17,764,188   15,722,351   12,998,615 
Average assets$1,581,820  $1,475,041  $1,452,822  $1,228,464  $1,111,694 
Average equity$177,299  $165,424  $165,111  $137,483  $105,747 
          
Adjusted diluted earnings per share$0.24  $0.23  $0.18  $0.20  $0.16 
Adjusted return on average assets (4) 1.14%  1.14%  0.89%  1.04%  0.73%
Adjusted return on average equity (4) 10.13%  10.18%  7.84%  9.28%  7.67%
___________________________         
          
(1) Includes effects of Delanco Bancorp, Inc. merger effective April 30, 2018. 
(2) Includes effects of Bucks County Bank merger effective September 15, 2017. 
(3) Items are tax-effected using a federal income tax rate of 21% in 2018 and 34% in 2017. 
(4) Annualized. 
          


Primary Logo