First Bank Reports Second Quarter 2022 Net Income of $8.8
First Bank Reports Second Quarter 2022 Net Income of .8

HAMILTON, N.J., July 26, 2022 (GLOBE NEWSWIRE) — First Bank (Nasdaq Global Market: FRBA) today announced results for the second quarter of 2022, accentuated by net income of $8.8 million, or $0.45 per diluted share. Return on average assets, return on average equity, and return on average tangible equityi for the second quarter of 2022 were 1.38%, 12.92% and 13.93%, respectively. In the second quarter of 2021, First Bank reported net income of $8.9 million, or $0.45 per diluted share, and return on average assets, return on average equity, and return on average tangible equityi of 1.48%, 14.26% and 15.37%, respectively.

Second Quarter 2022 Highlights:

  • Total loans of $2.22 billion on June 30, 2022, reflected growth of $68.5 million, or 3.2%, from the end of the first quarter of 2022 and were up $108.2 million, or 5.1%, from December 31, 2021. Loan growth, excluding the decline in Paycheck Protection Program (PPP) loans, totaled $84.0 million in the second quarter of 2022, representing a 15.8% annualized increase.
  • Total deposits of $2.17 billion on June 30, 2022, were down $12.7 million, or 0.6%, from the end of the linked first quarter and up $50.6 million, or 2.4%, from December 31, 2021.
  • Asset quality metrics remained solid during the quarter, with annualized net charge offs to average loans of 0.07% and nonperforming loans to total loans of 0.57% as of June 30, 2022, compared to 0.62% on December 31, 2021, and 0.59% on March 31, 2022.
  • Continued focus on managing expenses resulted in the sixth consecutive quarter of an efficiency ratioii below 50%, at 46.81% for the second quarter of 2022.

President and Chief Executive Officer, Patrick L. Ryan, said, “We are pleased with our performance during the second quarter. Our continued focus on developing new and existing customer relationships facilitated another quarter of robust loan growth. Total deposits remained relatively stable as we continued to shift our deposit mix with non-interest bearing deposits representing 27.7% of total deposits at quarter-end. Loan growth, improving asset yields and managing deposit costs contributed to a 19 basis point improvement in our net interest margin which was 3.76% for the second quarter of 2022 compared to 3.57% for the first quarter of 2022. We remain focused on driving organic growth as we continue to manage expenses to achieve greater profitability.”

“Asset quality metrics also remain strong, reflected by our eighth consecutive quarter end with our nonperforming loans to total loans ratio under 65 basis points. Annualized net charge offs were only 0.07% of average loans for the quarter ended June 30, 2022, and primarily related to one small business loan.”

“In our continuous effort to drive long-term shareholder value, we are pleased to announce another $0.06 quarterly dividend, reflecting an annualized yield of 1.69% based on our July 22, 2022, closing price of $14.18. We also have an active share repurchase program and from January 1, 2022, through July 22, 2022, we have repurchased 241,284 shares of our common stock at an aggregate cost of $3.4 million, or an average price of $13.99 per share.”

“Overall, we are very pleased with our performance through the first half of the year and our financial performance provides us with the confidence that we are well positioned to continue to generate strong results during the second half of 2022.”

Income Statement

First Bank’s (the “Bank’s”) net interest income for the second quarter of 2022 was $22.9 million, an increase of $2.5 million, or 12.2%, compared to $20.4 million in the second quarter of 2021 and an increase of $1.8 million, or 8.3%, compared to $21.1 million in the first quarter of 2022. The increase from the comparable prior year quarter was due to an increase in interest and dividend income of $2.0 million coupled with a decline of $444,000 in total interest expense. The increase from the linked first quarter of 2022 was due to an increase in interest and dividend income of $2.0 million offset somewhat by an increase in total interest expense of $216,000.

The increase in interest income during the second quarter of 2022 compared to the second quarter of 2021 and the first quarter of 2022 was primarily due to an increase in average loans combined with a 7 basis point and 18 basis point increase, respectively, in the average rate on loans. Interest income increased compared to the year-ago quarter and the linked first quarter despite a decrease in PPP loan fees, as loan growth and the rising rate environment led to improved interest income. Interest income from loans included $493,000 in PPP loan fees in the second quarter of 2022 compared to $1.3 million in the second quarter of 2021 and $860,000 in the linked first quarter of 2022. Also impacting loan interest income in the second quarter of 2022 was loan prepayment income of $682,000, compared to $730,000 for the quarter ended June 30, 2021, and $459,000 for the quarter ended March 31, 2022. As a result of the Bank’s concerted effort to control deposit costs, the average rate on interest bearing deposits was lower during the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, and increased only 6 basis points compared to the first quarter of 2022, despite the rising rate environment during the second quarter of 2022.

Net interest income for the six months ended June 30, 2022, totaled $44.1 million, an increase of $3.6 million, or 8.9%, compared to $40.5 million for the same period in 2021. The increase in the 2022 year to date net interest income was also driven by solid growth in average loans, which increased by $115.2 million, or 5.6%, from the prior year period, along with a 16 basis point decrease in the average rate on interest-bearing deposits.

The second quarter 2022 tax equivalent net interest margin was 3.76%, an increase of 19 basis points compared to the comparable prior year quarter and from the first quarter of 2022. The Bank’s margin continues to benefit from the increase in average non-interest bearing deposits, improving asset yields and actively managing the cost of funds. The year-to-date tax equivalent net interest margin was 3.67%, an increase of 9 basis points compared to the prior year period. The increase in the six-month net interest margin was principally a result of the lower cost of interest bearing deposits, partially offset by lower earning asset yields.

The Bank’s provision for loan losses was $1.3 million for the second quarter of 2022, compared to a $162,000 credit to the provision for loan losses in the second quarter of 2021 and a provision for loan losses of $642,000 for the linked first quarter 2022. The Bank’s provision for loan losses was $1.9 million for the six months ended June 30, 2022, compared to a credit to the provision for loan losses of $1.2 million for the same period in 2021. The provision for loan losses for the three and six months ended June 30, 2022, reflects consistent organic loan growth and continued strong asset quality. The credit to the provision for loan losses for the three and six months ended June 30, 2021, reflected a reduction in qualitative factors that were increased significantly in 2020 due to the economic uncertainties created by the COVID-19 pandemic.

Second quarter 2022 non-interest income of $1.5 million compares to $1.3 million during the second quarter of 2021. The increase between the periods was primarily the result of higher income from service fees from deposit accounts and higher gains on recovery of acquired loans. Non-interest income totaled $2.7 million for the six months ended June 30, 2022, compared to $3.6 million for the same period in 2021. This decrease in non-interest income for the first six months of 2022 was a result of lower gains on sale of loans, lower loan fees and lower gains on recovery of acquired loans. The decrease was primarily the result of a reduction in Small Business Administration loan sales and a decline in loan swap activity, primarily due to the current market conditions.   

Non-interest expense for second quarter 2022 of $11.4 million, increased $1.3 million, or 12.3%, compared to $10.2 million for the prior year quarter. The higher non-interest expense compared to second quarter 2021 was primarily a result of a $768,000, or 13.0%, increase in salaries and employee benefits, along with lesser increases in other professional fees, travel and entertainment, and other expense. These increases were partially offset by lower legal fees, directors’ fees, and marginal declines in certain other non-interest expense categories. The increase in salaries and employee benefits was due primarily to salary increases and an increase in the number of employees, partially due to the employees added from our acquisition of two branches during the fourth quarter of 2021.

On a linked quarter basis, second quarter 2022 non-interest expense of $11.4 million, increased $287,000, or 2.6%, compared to $11.1 million for the first quarter of 2022. This increase was also primarily due to salary and employee benefits increases which was primarily due to annual salary increases that occurred at the end of the first quarter of 2022.

Non-interest expense for the first six months of 2022 totaled $22.5 million, an increase of $1.7 million, or 8.3%, compared to $20.8 million for the same period in 2021. The increase was primarily a result of higher salaries and employee benefits and higher other professional fees, offset somewhat by lower occupancy and equipment expenses.

Income tax expense for the three months ended June 30, 2022, was $2.8 million with an effective tax rate of 24.4%, compared to $2.9 million with an effective tax rate of 24.4% for the second quarter of 2021 and $2.5 million with an effective tax rate of 23.4% for the first quarter of 2022. Income tax expense for the six months ended June 30, 2022, was $5.3 million with an effective tax rate of 23.9%, compared to $6.0 million for the first six months of 2021 with an effective tax rate of 24.3%.

Balance Sheet

Total assets at June 30, 2022, were $2.57 billion, an increase of $57.8 million, or 2.3%, from December 31, 2021. Total loans increased $108.2 million, or 5.1%, to $2.22 billion at June 30, 2022, compared to $2.11 billion at December 31, 2021. The increase in loans during the six-month period ended June 30, 2022, reflects net non-PPP organic loan growth of $149.3 million, offset somewhat by a decline in PPP loans of $41.0 million, as such loans continue to be forgiven. Total loans as of June 30, 2022, increased $68.5 million, or 3.2%, from $2.15 billion on March 31, 2022, reflecting organic, net non-PPP loan growth of $84.0 million, offset somewhat by a decline in PPP loans of $15.5 million. PPP loans outstanding on June 30, 2022, were $10.0 million.

Total deposits were $2.17 billion on June 30, 2022, an increase of $50.6 million, or 2.4%, from $2.11 billion at December 31, 2021. Non-interest-bearing deposits totaled $600.4 million on June 30, 2022, an increase of $41.6 million, or 7.4%, from December 31, 2021. The Bank continues to focus on enhancing its deposit mix and, as of June 30, 2022, had grown non-interest bearing deposits to 27.7% and lowered time deposits to 14.7% of total deposits. Total deposits declined by $12.7 million, or 0.6%, from March 31, 2022, with interest bearing deposits declining $15.8 million, offset somewhat by a $3.1 million increase in non-interest bearing deposits.

Stockholders’ equity was $274.7 million on June 30, 2022, compared to $266.7 million on December 31, 2021. The growth of $8.0 million, or 3.0%, was primarily a result of year-to-date net income of $17.0 million, partially offset by a $5.1 million increase in accumulated other comprehensive loss, $2.7 million in treasury stock purchases and cash dividends paid of $2.3 million during the six months ended June 30, 2022. The increase in accumulated other comprehensive loss was due to an increase in unrealized losses on the Bank’s available for sale investment securities, primarily resulting from the current interest rate environment.

As of June 30, 2022, the Bank continued to exceed all regulatory capital requirements to be considered well capitalized, with a Tier 1 Leverage ratio of 10.19%, a Tier 1 Risk-Based capital ratio of 10.28%, a Common Equity Tier 1 Capital ratio of 10.28%, and a Total Risk-Based capital ratio of 12.46%.

Asset Quality

First Bank’s asset quality metrics remained stable and favorable during the three and six months ended June 30, 2022. Net charge offs of $404,000 for the second quarter of 2022 were 0.07% of average loans on an annualized basis. This compares to net charge offs of $116,000, or an annualized 0.02% of average loans, for the second quarter of 2021 and net charge offs of $247,000, or an annualized 0.05%, for the first quarter of 2022. Nonperforming loans were $12.7 million on June 30, 2022, down from $13.0 million on December 31, 2021. Nonperforming loans as a percentage of total loans on June 30, 2022, were 0.57%, compared with 0.62% at December 31, 2021, and 0.59% at March 31, 2022. The allowance for loan losses to nonperforming loans was 197.06% on June 30, 2022, compared with 182.65% at December 31, 2021, and 191.72% on March 31, 2022.

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 was a specialized low-interest loan program funded by the U.S. Treasury Department and administered by the Small Business Administration. The PPP provided borrower guarantees for lenders, as well as loan forgiveness incentives for borrowers that utilized 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 June 30, 2022, First Bank had 99 PPP loans with outstanding balances of $10.0 million. During the quarter ended June 30, 2022, PPP loans totaling $15.5 million were forgiven and the Bank realized $493,000 in loan fees on these loans as any deferred fees remaining on the forgiven loans were accelerated. As of June 30, 2022, the Bank had $336,000 in remaining unamortized fees associated with outstanding balances of PPP loans.

Cash Dividend Declared

On July 19, 2022, 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 August 12, 2022, payable on August 26, 2022.

Conference Call

First Bank will host its earnings call on Wednesday, July 27, 2022, 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 212059. For those unable to participate in the call, a replay will be available by dialing 1-866-813-9403 (access code 861313) from one hour after the end of the conference call until October 24, 2022. 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 18 full-service branches in Cinnaminson, Cranbury, Delanco, Denville, Ewing, Flemington (2), Hamilton, Lawrence, Monroe, Pennington, Randolph, Somerset and Williamstown, New Jersey; and Doylestown, Trevose, Warminster and West Chester, Pennsylvania. With $2.6 billion in assets as of June 30, 2022, 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, sustain its internal growth rate, and 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 inflation and declines in housing market values; the impact of disease pandemics, including COVID-19, on First Bank’s operations, 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; and 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: Andrew Hibshman, Chief Financial Officer
(609) 643-0058, andrew.hibshman@firstbanknj.com

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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, unaudited)
 
       
  June 30, 2022   December 31, 2021
Assets      
Cash and due from banks $ 27,392     $ 25,076  
Interest bearing deposits with banks   61,186       129,431  
Cash and cash equivalents   88,578       154,507  
Interest bearing time deposits with banks   1,542       2,170  
Investment securities available for sale, at fair value   97,152       94,584  
Investment securities held to maturity (fair value of $41,003 at June 30, 2022 and $39,718 at December 31, 2021)   43,426       39,547  
Restricted investment in bank stocks   5,705       5,856  
Other investments   8,095       8,062  
Loans, net of deferred fees and costs   2,220,223       2,111,991  
Less: Allowance for loan losses   25,034       23,746  
Net loans   2,195,189       2,088,245  
Premises and equipment, net   10,067       9,883  
Other real estate owned, net   293       772  
Accrued interest receivable   6,028       5,681  
Bank-owned life insurance   57,376       56,633  
Goodwill   17,826       17,826  
Other intangible assets, net   1,942       2,145  
Deferred income taxes   12,680       11,081  
Other assets   22,238       13,306  
Total assets $ 2,568,137     $ 2,510,298  
       
Liabilities and Stockholders’ Equity      
Liabilities:      
Non-interest bearing deposits $ 600,402     $ 558,775  
Interest bearing deposits   1,564,761       1,555,827  
Total deposits   2,165,163       2,114,602  
Borrowings   74,479       81,835  
Subordinated debentures   29,675       29,620  
Accrued interest payable   308       399  
Other liabilities   23,810       17,176  
Total liabilities   2,293,435       2,243,632  
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; 21,050,594 shares issued and 19,483,415 shares outstanding at June 30, 2022 and 20,851,506 shares issued and 19,472,364 shares outstanding at December 31, 2021   104,390       103,704  
Additional paid-in capital   80,039       79,563  
Retained earnings   110,559       95,924  
Accumulated other comprehensive loss   (5,280 )     (206 )
Treasury stock, 1,571,179 shares at June 30, 2022 and 1,379,142 shares at December 31, 2021   (15,006 )     (12,319 )
Total stockholders’ equity   274,702       266,666  
Total liabilities and stockholders’ equity $ 2,568,137     $ 2,510,298  
       
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,
    2022       2021       2022       2021  
Interest and Dividend Income              
Investment securities—taxable $ 689     $ 550     $ 1,265     $ 1,025  
Investment securities—tax-exempt   33       45       70       93  
Interest bearing deposits with banks,              
Federal funds sold and other   260       185       390       356  
Loans, including fees   23,881       22,038       46,024       44,195  
Total interest and dividend income   24,863       22,818       47,749       45,669  
               
Interest Expense              
Deposits   1,262       1,463       2,271       3,313  
Borrowings   250       493       538       1,007  
Subordinated debentures   441       441       881       881  
Total interest expense   1,953       2,397       3,690       5,201  
Net interest income   22,910       20,421       44,059       40,468  
Provision for loan losses   1,298       (162 )     1,940       (1,215 )
Net interest income after provision for loan losses   21,612       20,583       42,119       41,683  
               
Non-Interest Income              
Service fees on deposit accounts   243       165       495       341  
Loan fees   102       134       347       815  
Income from bank-owned life insurance   370       343       743       672  
Gains on sale of loans   253       315       290       849  
Gains on recovery of acquired loans   210       141       334       511  
Other non-interest income   285       244       521       454  
Total non-interest income   1,463       1,342       2,730       3,642  
               
Non-Interest Expense              
Salaries and employee benefits   6,698       5,930       13,242       11,698  
Occupancy and equipment   1,381       1,299       2,805       3,237  
Legal fees   172       253       314       500  
Other professional fees   692       528       1,379       1,059  
Regulatory fees   233       228       426       496  
Directors’ fees   180       219       398       435  
Data processing   589       608       1,185       1,143  
Marketing and advertising   177       187       341       375  
Travel and entertainment   111       24       199       39  
Insurance   186       138       351       292  
Other real estate owned expense, net   114       30       197       81  
Other expense   876       711       1,694       1,450  
Total non-interest expense   11,409       10,155       22,531       20,805  
Income Before Income Taxes   11,666       11,770       22,318       24,520  
Income tax expense   2,843       2,877       5,337       5,966  
Net Income $ 8,823     $ 8,893     $ 16,981     $ 18,554  
               
Basic earnings per common share $ 0.45     $ 0.45     $ 0.87     $ 0.94  
Diluted earnings per common share $ 0.45     $ 0.45     $ 0.86     $ 0.93  
Cash dividends per common share $ 0.06     $ 0.03     $ 0.12     $ 0.06  
               
Basic weighted average common shares outstanding   19,586,103       19,677,002       19,559,605       19,674,523  
Diluted weighted average common shares outstanding   19,794,657       19,883,076       19,780,953       19,859,091  
               
FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)
                       
  Three Months Ended June 30,
    2022       2021  
  Average       Average Average       Average
  Balance   Interest   Rate (5)   Balance   Interest   Rate (5)
Interest earning assets                      
Investment securities (1) (2) $ 141,412     $ 729     2.07 %   $ 120,238     $ 605     2.02 %
Loans (3)   2,181,197       23,881     4.39 %     2,044,789       22,038     4.32 %
Interest bearing deposits with banks,                      
Federal funds sold and other   107,903       171     0.64 %     117,787       71     0.24 %
Restricted investment in bank stocks   5,424       65     4.81 %     8,089       98     4.86 %
Other investments   8,090       24     1.19 %     6,525       16     0.98 %
Total interest earning assets (2)   2,444,026       24,870     4.08 %     2,297,428       22,828     3.99 %
Allowance for loan losses   (24,469 )             (23,512 )        
Non-interest earning assets   148,886               136,437          
Total assets $ 2,568,443             $ 2,410,353          
                       
Interest bearing liabilities                      
Interest bearing demand deposits $ 329,702     $ 137     0.17 %   $ 210,494     $ 49     0.09 %
Money market deposits   737,041       642     0.35 %     602,221       424     0.28 %
Savings deposits   181,390       180     0.40 %     183,289       192     0.42 %
Time deposits   321,378       303     0.38 %     482,657       798     0.66 %
Total interest bearing deposits   1,569,511       1,262     0.32 %     1,478,661       1,463     0.40 %
Borrowings   68,024       250     1.47 %     130,441       493     1.52 %
Subordinated debentures   29,658       441     5.95 %     29,547       441     5.97 %
Total interest bearing liabilities   1,667,193       1,953     0.47 %     1,638,649       2,397     0.59 %
Non-interest bearing deposits   606,874               505,912          
Other liabilities   20,547               15,649          
Stockholders’ equity   273,829               250,143          
Total liabilities and stockholders’ equity $ 2,568,443             $ 2,410,353          
Net interest income/interest rate spread (2)       22,917     3.61 %         20,431     3.40 %
Net interest margin (2) (4)         3.76 %           3.57 %
Tax equivalent adjustment (2)       (7 )             (10 )    
Net interest income     $ 22,910             $ 20,421      
                       
(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)
                       
  Six Months Ended June 30,
    2022       2021  
  Average       Average Average       Average
  Balance   Interest   Rate (5)   Balance   Interest   Rate (5)
Interest earning assets                      
Investment securities (1) (2) $ 137,742     $ 1,350     1.98 %   $ 109,058     $ 1,138     2.10 %
Loans (3)   2,156,244       46,024     4.30 %     2,041,074       44,195     4.37 %
Interest bearing deposits with banks,                      
Federal funds sold and other   114,626       221     0.39 %     113,315       140     0.25 %
Restricted investment in bank stocks   5,519       128     4.68 %     8,267       185     4.51 %
Other investments   8,081       41     1.02 %     6,518       31     0.96 %
Total interest earning assets (2)   2,422,212       47,764     3.98 %     2,278,232       45,689     4.04 %
Allowance for loan losses   (24,265 )             (24,053 )        
Non-interest earning assets   147,788               134,326          
Total assets $ 2,545,735             $ 2,388,505          
                       
Interest bearing liabilities                      
Interest bearing demand deposits $ 314,074     $ 198     0.13 %   $ 205,896     $ 114     0.11 %
Money market deposits   721,790       1,090     0.30 %     597,015       944     0.32 %
Savings deposits   185,782       344     0.37 %     176,180       396     0.45 %
Time deposits   335,721       639     0.38 %     495,234       1,859     0.76 %
Total interest bearing deposits   1,557,367       2,271     0.29 %     1,474,325       3,313     0.45 %
Borrowings   72,234       538     1.50 %     137,995       1,007     1.47 %
Subordinated debentures   29,645       881     5.94 %     29,533       881     5.97 %
Total interest bearing liabilities   1,659,246       3,690     0.45 %     1,641,853       5,201     0.64 %
Non-interest bearing deposits   595,273               485,149          
Other liabilities   19,218               15,571          
Stockholders’ equity   271,998               245,932          
Total liabilities and stockholders’ equity $ 2,545,735             $ 2,388,505          
Net interest income/interest rate spread (2)       44,074     3.53 %         40,488     3.40 %
Net interest margin (2) (4)         3.67 %           3.58 %
Tax equivalent adjustment (2)       (15 )             (20 )    
Net interest income     $ 44,059             $ 40,468      
                       
(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
QUARTERLY FINANCIAL HIGHLIGHTS
(in thousands, except for share and employee data, unaudited)
                     
    As of or For the Quarter Ended
    6/30/2022   3/31/2022   12/31/2021   9/30/2021   6/30/2021
EARNINGS                    
Net interest income   $ 22,910     $ 21,149     $ 20,641     $ 20,781     $ 20,421  
Provision for loan losses     1,298       642       825       158       (162 )
Non-interest income     1,463       1,267       2,211       1,901       1,342  
Non-interest expense     11,409       11,122       11,825       10,522       10,155  
Income tax expense     2,843       2,494       2,363       2,966       2,877  
Net income     8,823       8,158       7,839       9,036       8,893  
                     
PERFORMANCE RATIOS                    
Return on average assets (1)     1.38 %     1.31 %     1.27 %     1.46 %     1.48 %
Adjusted return on average assets (1) (2)     1.38 %     1.31 %     1.33 %     1.48 %     1.48 %
Return on average equity (1)     12.92 %     12.25 %     11.77 %     13.86 %     14.26 %
Adjusted return on average equity (1) (2)     12.92 %     12.25 %     12.36 %     14.04 %     14.26 %
Return on average tangible equity (1) (2)     13.93 %     13.22 %     12.63 %     14.90 %     15.37 %
Adjusted return on average tangible equity (1) (2)     13.93 %     13.22 %     13.26 %     15.09 %     15.37 %
Net interest margin (1) (3)     3.76 %     3.57 %     3.52 %     3.54 %     3.57 %
Total cost of deposits (1)     0.23 %     0.19 %     0.21 %     0.25 %     0.30 %
Efficiency ratio (2)     46.81 %     49.62 %     49.57 %     45.75 %     46.66 %
                     
SHARE DATA                    
Common shares outstanding     19,483,415       19,634,744       19,472,364       19,464,388       19,678,528  
Basic earnings per share   $ 0.45     $ 0.42     $ 0.40     $ 0.46     $ 0.45  
Diluted earnings per share     0.45       0.41       0.40       0.46       0.45  
Adjusted diluted earnings per share (2)     0.45       0.41       0.42       0.46       0.45  
Tangible book value per share (2)     13.08       12.79       12.67       12.45       12.02  
Book value per share     14.10       13.81       13.69       13.37       12.94  
                     
MARKET DATA                    
Market value per share   $ 13.98     $ 14.22     $ 14.51     $ 14.09     $ 13.54  
Market value / Tangible book value     106.84 %     111.14 %     114.53 %     113.21 %     112.61 %
Market capitalization   $ 272,378     $ 279,206     $ 282,544     $ 274,253     $ 266,447  
                     
CAPITAL & LIQUIDITY                    
Tangible stockholders’ equity / tangible assets (2)     10.00 %     9.84 %     9.91 %     10.01 %     9.76 %
Stockholders’ equity / assets     10.70 %     10.53 %     10.62 %     10.67 %     10.42 %
Loans / deposits     102.54 %     98.80 %     99.88 %     97.96 %     100.87 %
                     
ASSET QUALITY                    
Net charge-offs (recoveries)   $ 404     $ 247     $ 6     $ (121 )   $ 116  
Nonperforming loans     12,704       12,591       13,001       11,488       9,558  
Nonperforming assets     12,997       12,884       13,773       11,967       10,038  
Net charge offs (recoveries) / average loans (1)     0.07 %     0.05 %     0.00 %     (0.02 %)     0.02 %
Nonperforming loans / total loans     0.57 %     0.59 %     0.62 %     0.57 %     0.47 %
Nonperforming assets / total assets     0.51 %     0.50 %     0.55 %     0.49 %     0.41 %
Allowance for loan losses / total loans     1.13 %     1.12 %     1.12 %     1.14 %     1.10 %
Allowance for loan losses / total loans (excluding PPP loans)     1.13 %     1.13 %     1.15 %     1.19 %     1.18 %
Allowance for loan losses / nonperforming loans     197.06 %     191.72 %     182.65 %     199.57 %     236.95 %
                     
OTHER DATA                    
Total assets   $ 2,568,137     $ 2,573,845     $ 2,510,298     $ 2,438,020     $ 2,443,047  
Total loans     2,220,223       2,151,751       2,111,991       2,004,289       2,053,938  
Total deposits     2,165,163       2,177,895       2,114,602       2,045,966       2,036,228  
Total stockholders’ equity     274,702       271,068       266,666       260,179       254,571  
Number of full-time equivalent employees (4)     233       219       217       209       215  
                     
(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 8 and 4 full-time equivalent seasonal interns as of June 30, 2022 and 2021, respectively.
                     
FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)
                     
    As of the Quarter Ended
    6/30/2022   3/31/2022   12/31/2021   9/30/2021   6/30/2021
LOAN COMPOSITION                    
Commercial and industrial   $ 321,205     $ 321,979     $ 350,103     $ 308,991     $ 379,916  
Commercial real estate:                    
Owner-occupied     517,791       493,999       470,022       444,635       427,094  
Investor     917,905       888,622       848,021       832,727       814,762  
Construction and development     117,011       96,585       109,292       112,112       127,329  
Multi-family     201,269       193,865       173,728       145,245       142,015  
Total commercial real estate     1,753,976       1,673,071       1,601,063       1,534,719       1,511,200  
Residential real estate:                    
Residential mortgage and first lien home equity loans     98,841       99,992       106,204       103,890       108,842  
Home equity–second lien loans and revolving lines of credit     30,491       30,485       31,375       29,998       29,422  
Total residential real estate     129,332       130,477       137,579       133,888       138,264  
Consumer and other     19,694       30,096       27,762       31,946       31,584  
Total loans prior to deferred loan fees and costs     2,224,207       2,155,623       2,116,507       2,009,544       2,060,964  
Net deferred loan fees and costs     (3,984 )     (3,872 )     (4,516 )     (5,255 )     (7,026 )
Total loans   $ 2,220,223     $ 2,151,751     $ 2,111,991     $ 2,004,289     $ 2,053,938  
                     
LOAN MIX                    
Commercial and industrial     14.5 %     15.0 %     16.6 %     15.4 %     18.5 %
Commercial real estate:                    
Owner-occupied     23.3 %     23.0 %     22.3 %     22.2 %     20.8 %
Investor     41.3 %     41.3 %     40.1 %     41.5 %     39.7 %
Construction and development     5.3 %     4.5 %     5.2 %     5.6 %     6.2 %
Multi-family     9.1 %     9.0 %     8.2 %     7.2 %     6.9 %
Total commercial real estate     79.0 %     77.8 %     75.8 %     76.5 %     73.5 %
Residential real estate:                    
Residential mortgage and first lien home equity loans     4.4 %     4.6 %     5.0 %     5.2 %     5.3 %
Home equity–second lien loans and revolving lines of credit     1.4 %     1.4 %     1.5 %     1.5 %     1.4 %
Total residential real estate     5.8 %     6.0 %     6.5 %     6.7 %     6.7 %
Consumer and other     0.9 %     1.4 %     1.4 %     1.7 %     1.6 %
Net deferred loan fees and costs     (0.2 %)     (0.2 %)     (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
    6/30/2022   3/31/2022   12/31/2021   9/30/2021   6/30/2021
DEPOSIT COMPOSITION                    
Non-interest bearing demand deposits   $ 600,402     $ 597,333     $ 558,775     $ 536,905     $ 534,475  
Interest bearing demand deposits     318,687       314,564       293,647       241,869       211,074  
Money market and savings deposits     929,075       936,848       871,074       845,607       817,424  
Time deposits     316,999       329,150       391,106       421,585       473,255  
Total Deposits   $ 2,165,163     $ 2,177,895     $ 2,114,602     $ 2,045,966     $ 2,036,228  
                     
DEPOSIT MIX                    
Non-interest bearing demand deposits     27.7 %     27.4 %     26.4 %     26.3 %     26.3 %
Interest bearing demand deposits     14.7 %     14.5 %     13.9 %     11.8 %     10.4 %
Money market and savings deposits     42.9 %     43.0 %     41.2 %     41.3 %     40.1 %
Time deposits     14.7 %     15.1 %     18.5 %     20.6 %     23.2 %
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
  6/30/2022   3/31/2022   12/31/2021   9/30/2021   6/30/2021
Return on Average Tangible Equity                  
Net income (numerator) $ 8,823     $ 8,158     $ 7,839     $ 9,036     $ 8,893  
                   
Average stockholders’ equity $ 273,829     $ 270,147     $ 264,216     $ 258,596     $ 250,143  
Less: Average Goodwill and other intangible assets, net   19,823       19,916       17,910       17,937       18,001  
Average Tangible stockholders’ equity (denominator) $ 254,006     $ 250,231     $ 246,306     $ 240,659     $ 232,142  
                   
Return on Average Tangible equity (1)   13.93 %     13.22 %     12.63 %     14.90 %     15.37 %
                   
Tangible Book Value Per Share                  
Stockholders’ equity $ 274,702     $ 271,068     $ 266,666     $ 260,179     $ 254,571  
Less: Goodwill and other intangible assets, net   19,768       19,854       19,971       17,920       17,965  
Tangible stockholders’ equity (numerator) $ 254,934     $ 251,214     $ 246,695     $ 242,259     $ 236,606  
                   
Common shares outstanding (denominator)   19,483,415       19,634,744       19,472,364       19,464,388       19,678,528  
                   
Tangible book value per share $ 13.08     $ 12.79     $ 12.67     $ 12.45     $ 12.02  
                   
                   
Tangible Equity / Assets                  
Stockholders’ equity $ 274,702     $ 271,068     $ 266,666     $ 260,179     $ 254,571  
Less: Goodwill and other intangible assets, net   19,768       19,854       19,971       17,920       17,965  
Tangible stockholders’ equity (numerator) $ 254,934     $ 251,214     $ 246,695     $ 242,259     $ 236,606  
                   
Total assets $ 2,568,137     $ 2,573,845     $ 2,510,298     $ 2,438,020     $ 2,443,047  
Less: Goodwill and other intangible assets, net   19,768       19,854       19,971       17,920       17,965  
Tangible total assets (denominator) $ 2,548,369     $ 2,553,991     $ 2,490,327     $ 2,420,100     $ 2,425,082  
                   
Tangible stockholders’ equity / tangible assets   10.00 %     9.84 %     9.91 %     10.01 %     9.76 %
                   
                   
Efficiency Ratio                  
Non-interest expense $ 11,409     $ 11,122     $ 11,825     $ 10,522     $ 10,155  
Less: Merger-related expenses               498       145        
Adjusted non-interest expense (numerator) $ 11,409     $ 11,122     $ 11,327     $ 10,377     $ 10,155  
                   
Net interest income $ 22,910     $ 21,149     $ 20,641     $ 20,781     $ 20,421  
Non-interest income   1,463       1,267       2,211       1,901       1,342  
Total revenue $ 24,373     $ 22,416     $ 22,852     $ 22,682     $ 21,763  
                   
Efficiency ratio   46.81 %     49.62 %     49.57 %     45.75 %     46.66 %
                   
(1) Annualized.                  
                   
FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(dollars in thousands, except for share data, unaudited)
                   
                   
  For the Quarter Ended
  6/30/2022   3/31/2022   12/31/2021   9/30/2021   6/30/2021
                   
Adjusted diluted earnings per share,                  
Adjusted return on average assets, and                  
Adjusted return on average equity                  
                   
Net income $ 8,823     $ 8,158     $ 7,839     $ 9,036     $ 8,893  
Add: Merger-related expenses (1)               393       115        
Adjusted net income $ 8,823     $ 8,158     $ 8,232     $ 9,151     $ 8,893  
                   
Diluted weighted average common shares outstanding   19,794,657       19,768,452       19,725,294       19,842,817       19,883,076  
Average assets $ 2,568,443     $ 2,522,775     $ 2,447,399     $ 2,456,617     $ 2,410,353  
Average equity $ 273,829     $ 270,147     $ 264,216     $ 258,596     $ 250,143  
Average Tangible Equity $ 254,006     $ 250,231     $ 246,306     $ 240,659     $ 232,142  
                   
Adjusted diluted earnings per share $ 0.45     $ 0.41     $ 0.42     $ 0.46     $ 0.45  
Adjusted return on average assets (2)   1.38 %     1.31 %     1.33 %     1.48 %     1.48 %
Adjusted return on average equity (2)   12.92 %     12.25 %     12.36 %     14.04 %     14.26 %
Adjusted return on average tangible equity (2)   13.93 %     13.22 %     13.26 %     15.09 %     15.37 %
                   
(1) Items are tax-effected using a federal income tax rate of 21%.                
(2) Annualized.                  
                   

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