EXTON, PA / ACCESSWIRE / January 30, 2020 / First Resource Bank (OTCQX:FRSB) announced financial results for the three months and year ended December 31, 2019.
Highlights for the year ended December 31, 2019 included:
- Net income grew 7%
- Non-interest bearing deposits grew 59%
- Total deposits grew 14%
- Loans grew 15%
- Nonperforming assets to total assets declined 54%
- Opened a third branch location in Wayne, Pennsylvania
Glenn B. Marshall, CEO, stated, "2019 was a remarkable year at First Resource Bank. We opened our third retail branch, experienced significant balance sheet growth funded by core deposits, shed legacy problem loans and achieved record profitability. Investments that were made in 2019 increased overhead expenses; however, those decisions were made with the ultimate goal of continuing to increase profitability."
Net income for the quarter ended December 31, 2019 was $628,299, which compares to $690,729 for the previous quarter and $608,737 for the fourth quarter of the prior year.
Net income for the year ended December 31, 2019 was $2,321,768, a 7% increase as compared to the prior year. The increase in net income is primarily attributable to a 12% increase in net interest income and higher non-interest income, partially offset by a higher provision for loan losses and higher non-interest expense. Swap referral fee income totaled $303 thousand in 2019 as compared to none in 2018. Gains on sales of SBA loans totaled $24 thousand in 2019 as compared to $96 thousand in 2018.
Net interest income was $2,871,683 for the quarter ended December 31, 2019 as compared to $2,861,510 for the previous quarter. The net interest margin decreased 8 basis points from 3.81% for the quarter ended September 30, 2019 to 3.73% for the quarter ended December 31, 2019. The overall yield on interest earning assets decreased 14 basis points during the fourth quarter led by a 5 basis point decrease in loan yields to 5.52%. The cost of deposits decreased 6 basis points during the fourth quarter to 1.38%.
Net interest income for the year ended December 31, 2019 was $11,113,630 as compared to $9,927,714 for the year ended December 31, 2018, a 12% improvement. The net interest margin for the year ended December 31, 2019 was 3.81% as compared to 3.89% for the prior year. Loan yields increased 18 basis points to 5.56% in 2019, as compared to 5.38% in the prior year, and the cost of deposits increased 33 basis points to 1.40% in 2019, as compared to 1.07% in 2018.
Non-interest income for the quarter ended December 31, 2019 was $219,674 as compared to $226,669 for the previous quarter and $178,337 for the fourth quarter of the prior year. Swap referral fee income of $81,500 was received in the fourth quarter of 2019, as compared to $107,160 in the third quarter of 2019 and none in the fourth quarter of 2018. There were no gains on sales of SBA loans recognized during the fourth quarter of 2019 or the third quarter of 2019, as compared to $55,075 in the fourth quarter of 2018.
Non-interest income for the year ended December 31, 2019 was $865,195 as compared to $561,266 for the prior year. The increase is mainly attributed to $302,760 in swap referrals fees received in 2019 as compared to none in 2018.
Non-interest expense increased $99 thousand, or 5%, in the three months ended December 31, 2019 as compared to the prior quarter. The increase was primarily due to an increase in salaries and benefits, occupancy, depreciation, professional fees and other costs, partially offset by a decrease in advertising and data processing costs.
Non-interest expense increased $1.0 million, or 14%, in the year ended December 31, 2019 as compared to the prior year. All expense categories increased from the prior year. Marshall stated, "In 2019 we invested in people and the physical expansion of our branch network. This carefully planned increase in expenses did not inhibit the Bank from achieving record annual profitability for 2019."
Deposits grew $5.4 million from $264.4 million at September 30, 2019 to $269.8 million at December 31, 2019. During the fourth quarter, non-interest bearing deposits increased $2.8 million, or 6%, from $47.8 million at September 30, 2019 to $50.6 million at December 31, 2019. Interest-bearing checking balances increased $2.0 million, or 21%, from $9.8 million at September 30, 2019 to $11.8 million at December 31, 2019. Money market deposits increased $530 thousand, or 1%, from $101.9 million at September 30, 2019 to $102.4 million at December 31, 2019. Certificates of deposit increased $10 thousand, or 0%, from $104.9 million at September 30, 2019 to $105.0 million at December 31, 2019.
During 2019, total deposits increased $33.6 million, or 14%, from $236.2 million at December 31, 2018 to $269.8 million at December 31, 2019. During 2019, non-interest bearing deposits grew 59%, interest checking deposits grew 7%, money market deposits grew 1% and certificates of deposit grew 15%.
Marshall stated, "Over the past few years we have invested in the retail team and this tremendous core deposit growth is attributed to that investment. All employees across the Bank are focused on generating core deposits and the team had some major successes in 2019."
The loan portfolio grew $5.4 million during the fourth quarter from $274.8 million at September 30, 2019 to $280.2 million at December 31, 2019, with growth in commercial real estate loans and construction loans partially offset by a decline in commercial business and consumer loans.
During 2019, the loan portfolio grew $35.5 million, or 15%, from $244.7 at December 31, 2018 to $280.2 million at December 31, 2019, with the majority of that growth in commercial real estate loans.
The following table illustrates the composition of the loan portfolio:
|
|
Dec. 31,
2019
|
Dec. 31,
2018
|
||||||
|
|
||||||||
|
Commercial real estate
|
$ | 203,427,712 | $ | 170,738,479 | ||||
|
Commercial construction
|
29,353,830 | 20,377,108 | ||||||
|
Commercial business
|
30,805,290 | 31,738,443 | ||||||
|
Consumer
|
16,615,540 | 21,843,647 | ||||||
|
|
||||||||
|
Total loans
|
$ | 280,202,372 | $ | 244,697,677 | ||||
The allowance for loan losses to total loans was 0.90% at December 31, 2019 as compared to 0.90% at September 30, 2019 and 0.81% at December 31, 2018. Non-performing assets consisted of non-performing loans of $1.4 million at December 31, 2019, a 54% decrease as compared to the prior quarter primarily due to a decrease in non-performing loans and the sale of other real estate owned during the fourth quarter. Non-performing assets to total assets improved 55% from 0.94% at September 30, 2019 to 0.42% at December 31, 2019.
During the year ended December 31, 2019, total stockholder's equity increased $2.7 million, or 11%, from $25.3 million at December 31, 2018 to $28.0 million at December 31, 2019, primarily due to net income generated. During the year ended December 31, 2019 book value per share has grown 94 cents, or 10%, to $10.10.
During the year ended December 31, 2019, total assets grew $34.0 million, or 11%. This growth was primarily the result of $35.5 million in loan growth funded by a $33.6 million increase in deposits.
Selected Financial Data:
Balance Sheets (unaudited)
|
|
December 31,
2019
|
December 31,
2018
|
||||||
|
|
||||||||
|
Cash and due from banks
|
$ | 2,516,374 | $ | 5,734,677 | ||||
|
Time deposits at other banks
|
599,000 | 599,000 | ||||||
|
Investments
|
37,120,798 | 37,762,190 | ||||||
|
Loans
|
280,202,372 | 244,697,677 | ||||||
|
Allowance for loan losses
|
(2,507,845 | ) | (1,990,253 | ) | ||||
|
Premises & equipment
|
8,675,596 | 6,647,166 | ||||||
|
Other assets
|
9,812,630 | 8,996,941 | ||||||
|
|
||||||||
|
Total assets
|
$ | 336,418,925 | $ | 302,447,398 | ||||
|
|
||||||||
|
Non-interest bearing deposits
|
$ | 50,616,321 | $ | 31,788,359 | ||||
|
Interest-bearing checking
|
11,797,456 | 11,069,325 | ||||||
|
Money market
|
102,433,910 | 101,887,847 | ||||||
|
Time deposits
|
104,952,207 | 91,456,365 | ||||||
|
Total deposits
|
269,799,894 | 236,201,896 | ||||||
|
Short term borrowings
|
10,896,000 | 17,000,400 | ||||||
|
Long term borrowings
|
21,045,500 | 18,515,500 | ||||||
|
Subordinated debt
|
3,994,591 | 3,986,097 | ||||||
|
Other liabilities
|
2,705,583 | 1,466,037 | ||||||
|
|
||||||||
|
Total liabilities
|
308,441,568 | 277,169,930 | ||||||
|
|
||||||||
|
Total stockholders' equity
|
27,977,357 | 25,277,468 | ||||||
|
|
||||||||
|
Total liabilities & stockholders' equity
|
$ | 336,418,925 | $ | 302,447,398 | ||||
Performance Statistics
(unaudited)
|
|
Qtr Ended
Dec. 31,
2019
|
Qtr Ended
Sept. 30,
2019
|
Qtr Ended
June 30,
2019
|
Qtr Ended
Mar. 31,
2019
|
Qtr Ended
Dec. 31,
2018
|
|||||||||||||||
|
|
||||||||||||||||||||
|
Net interest margin
|
3.73 | % | 3.81 | % | 3.85 | % | 3.87 | % | 3.78 | % | ||||||||||
|
|
||||||||||||||||||||
|
Nonperforming loans/
Total loans
|
0.50 | % | 0.89 | % | 0.83 | % | 0.87 | % | 1.14 | % | ||||||||||
|
|
||||||||||||||||||||
|
Nonperforming assets/
Total assets
|
0.42 | % | 0.94 | % | 0.91 | % | 0.74 | % | 0.92 | % | ||||||||||
|
|
||||||||||||||||||||
|
Allowance for loan losses/
Total loans
|
0.90 | % | 0.90 | % | 0.93 | % | 0.95 | % | 0.81 | % | ||||||||||
|
|
||||||||||||||||||||
|
Average loans/Average
assets
|
84.9 | % | 87.2 | % | 87.4 | % | 86.5 | % | 84.9 | % | ||||||||||
|
|
||||||||||||||||||||
|
Non-interest expenses*/
Average assets
|
2.75 | % | 2.71 | % | 2.75 | % | 2.60 | % | 2.67 | % | ||||||||||
|
|
||||||||||||||||||||
|
Earnings per share - basic
and diluted **
|
$ | 0.23 | $ | 0.25 | $ | 0.23 | $ | 0.13 | $ | 0.22 | ||||||||||
|
|
||||||||||||||||||||
|
Book value per share **
|
$ | 10.10 | $ | 9.88 | $ | 9.63 | $ | 9.35 | $ | 9.16 | ||||||||||
|
|
||||||||||||||||||||
|
Total shares outstanding **
|
2,768,729 | 2,766,330 | 2,764,241 | 2,761,910 | 2,759,808 | |||||||||||||||
* Annualized
** Per share data has been restated to reflect 5% stock dividend paid in May 2019.
|
|
Year Ended
Dec. 31,
2019
|
Year Ended
Dec. 31,
2018
|
||||||
|
|
||||||||
|
Net interest margin
|
3.81 | % | 3.89 | % | ||||
|
|
||||||||
|
Return on assets
|
0.76 | % | 0.81 | % | ||||
|
|
||||||||
|
Return on equity
|
8.72 | % | 9.02 | % | ||||
|
|
||||||||
|
Earnings per share-basic and diluted
|
$ | 0.84 | $ | 0.79 | ||||
Income Statements (unaudited)
|
|
Qtr. Ended
Dec. 31,
2019
|
Qtr. Ended
Sept. 30,
2019
|
Qtr. Ended
June 30,
2019
|
Qtr. Ended
Mar. 31,
2019
|
Qtr. Ended
Dec. 31,
2018
|
|||||||||||||||
|
|
||||||||||||||||||||
|
INTEREST INCOME
|
||||||||||||||||||||
|
Loans, including fees
|
$ | 3,819,667 | $ | 3,855,582 | $ | 3,679,137 | $ | 3,438,752 | $ | 3,297,459 | ||||||||||
|
Securities
|
129,178 | 124,908 | 126,881 | 128,301 | 124,207 | |||||||||||||||
|
Other
|
38,987 | 18,348 | 13,428 | 29,310 | 37,950 | |||||||||||||||
|
Total interest income
|
3,987,832 | 3,998,838 | 3,819,446 | 3,596,363 | 3,459,616 | |||||||||||||||
|
|
||||||||||||||||||||
|
INTEREST EXPENSE
|
||||||||||||||||||||
|
Deposits
|
930,953 | 938,804 | 886,280 | 800,541 | 739,464 | |||||||||||||||
|
Borrowings
|
117,350 | 130,679 | 111,271 | 102,671 | 108,664 | |||||||||||||||
|
Subordinated debt
|
67,846 | 67,845 | 67,485 | 67,124 | 67,843 | |||||||||||||||
|
Total interest expense
|
1,116,149 | 1,137,328 | 1,065,036 | 970,336 | 915,971 | |||||||||||||||
|
|
||||||||||||||||||||
|
Net interest income
|
2,871,683 | 2,861,510 | 2,754,410 | 2,626,027 | 2,543,645 | |||||||||||||||
|
|
||||||||||||||||||||
|
Provision for loan losses
|
66,628 | 84,557 | 158,992 | 475,952 | 78,051 | |||||||||||||||
|
|
||||||||||||||||||||
|
Net interest income after provision for loan losses
|
2,805,055 | 2,776,953 | 2,595,418 | 2,150,075 | 2,465,594 | |||||||||||||||
|
|
||||||||||||||||||||
|
NON-INTEREST INCOME
|
||||||||||||||||||||
|
BOLI income
|
38,067 | 38,205 | 37,965 | 37,455 | 38,315 | |||||||||||||||
|
Swap referral fee income
|
81,500 | 107,160 | 114,100 | - | - | |||||||||||||||
|
Gain on sale of SBA loans
|
- | - | - | 24,463 | 55,075 | |||||||||||||||
|
Other
|
100,107 | 81,304 | 110,532 | 94,337 | 84,947 | |||||||||||||||
|
Total non-interest income
|
219,674 | 226,669 | 262,597 | 156,255 | 178,337 | |||||||||||||||
|
|
||||||||||||||||||||
|
NON-INTEREST EXPENSE
|
||||||||||||||||||||
|
Salaries & benefits
|
1,267,867 | 1,266,493 | 1,238,114 | 1,053,586 | 1,121,757 | |||||||||||||||
|
Occupancy & equipment
|
251,297 | 189,381 | 185,402 | 191,572 | 179,256 | |||||||||||||||
|
Professional fees
|
94,744 | 88,083 | 101,117 | 100,169 | 94,756 | |||||||||||||||
|
Advertising
|
54,660 | 82,357 | 35,401 | 33,764 | 34,689 | |||||||||||||||
|
Data processing
|
127,721 | 142,587 | 135,151 | 127,119 | 121,363 | |||||||||||||||
|
Other
|
447,905 | 376,707 | 380,297 | 347,391 | 337,137 | |||||||||||||||
|
Total non-interest
expense
|
2,244,194 | 2,145,608 | 2,075,482 | 1,853,601 | 1,888,958 | |||||||||||||||
|
|
||||||||||||||||||||
|
Income before income tax expense
|
780,535 | 858,014 | 782,533 | 452,729 | 754,973 | |||||||||||||||
|
|
||||||||||||||||||||
|
Federal income tax expense
|
152,236 | 167,285 | 151,013 | 81,509 | 146,236 | |||||||||||||||
|
|
||||||||||||||||||||
|
Net income
|
$ | 628,299 | $ | 690,729 | $ | 631,520 | $ | 371,220 | $ | 608,737 | ||||||||||
|
|
||||||||||||||||||||
Income Statements (unaudited)
|
|
Year
Ended
December 31, 2019
|
Year
Ended
December 31, 2018
|
||||||
|
|
||||||||
|
INTEREST INCOME
|
||||||||
|
Loans
|
$ | 14,793,138 | $ | 12,403,812 | ||||
|
Investments
|
509,268 | 496,230 | ||||||
|
Other
|
100,073 | 62,951 | ||||||
|
Total interest income
|
15,402,479 | 12,962,993 | ||||||
|
|
||||||||
|
INTEREST EXPENSE
|
||||||||
|
Deposits
|
3,556,578 | 2,348,864 | ||||||
|
Borrowings
|
461,971 | 416,115 | ||||||
|
Subordinated debt
|
270,300 | 270,300 | ||||||
|
Total interest expense
|
4,288,849 | 3,035,279 | ||||||
|
|
||||||||
|
Net interest income
|
11,113,630 | 9,927,714 | ||||||
|
|
||||||||
|
Provision for loan losses
|
786,129 | 513,238 | ||||||
|
|
||||||||
|
Net interest income after provision for loan losses
|
10,327,501 | 9,414,476 | ||||||
|
|
||||||||
|
NON-INTEREST INCOME
|
||||||||
|
BOLI income
|
151,692 | 149,082 | ||||||
|
Swap referral fee income
|
302,760 | - | ||||||
|
Gain on sale of SBA loans
|
24,463 | 96,431 | ||||||
|
Other
|
386,280 | 315,753 | ||||||
|
Total non-interest income
|
865,195 | 561,266 | ||||||
|
|
||||||||
|
NON-INTEREST EXPENSE
|
||||||||
|
Salaries & benefits
|
4,826,060 | 4,294,541 | ||||||
|
Occupancy & equipment
|
817,652 | 730,323 | ||||||
|
Professional fees
|
384,113 | 366,572 | ||||||
|
Advertising
|
206,182 | 195,357 | ||||||
|
Data processing
|
532,578 | 446,542 | ||||||
|
Other non-interest expense
|
1,552,300 | 1,277,305 | ||||||
|
Total non-interest expense
|
8,318,885 | 7,310,640 | ||||||
|
|
||||||||
|
Pre-tax income
|
2,873,811 | 2,665,102 | ||||||
|
|
||||||||
|
Tax expense
|
552,043 | 499,895 | ||||||
|
|
||||||||
|
Net income
|
$ | 2,321,768 | $ | 2,165,207 | ||||
|
|
||||||||
###
About First Resource Bank
First Resource Bank is a locally owned and operated Pennsylvania state-chartered bank with three full-service branches, serving the banking needs of businesses, professionals and individuals in Chester County, Pennsylvania. The Bank offers a full range of deposit and credit services with a high level of personalized service. First Resource Bank also offers a broad range of traditional financial services and products, competitively priced and delivered in a responsive manner to small businesses, professionals and residents in the local market. For additional information visit our website at www.firstresourcebank.com. Member FDIC.
This press release contains statements that are not of historical facts and may pertain to future operating results or events or management's expectations regarding those results or events. These are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts. When used in this press release, the words "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", or words of similar meaning, or future or conditional verbs, such as "will", "would", "should", "could", or "may" are generally intended to identify forward-looking statements. These forward-looking statements are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are either beyond our control or not reasonably capable of predicting at this time. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the results discussed in these forward-looking statements. Readers of this press release are accordingly cautioned not to place undue reliance on forward-looking statements. First Resource Bank disclaims any intent or obligation to update publicly any of the forward-looking statements herein, whether in response to new information, future events or otherwise.
Media Contact:
Glenn Marshall, CEO
610-561-6013
SOURCE: First Resource Bank