1st Colonial Bancorp, Inc. Reports 2018 Net Income of $5.2 Million

COLLINGSWOOD, N.J.–(BUSINESS WIRE)–1st Colonial Bancorp, Inc. (FCOB), holding company of 1st
Colonial Community Bank, today reported net income of $1.6 million, or
$0.35 per diluted share, and $5.2 million, or $1.14 per diluted share,
for the three months and year ended December 31, 2018, respectively.
Comparatively, net income was $944 thousand, or $0.21 per diluted share,
and $4.0 million, or $0.90 per diluted share, for the three months and
year ended December 31, 2017, respectively. The 2017 earnings per
diluted share were adjusted to give effect to the 5% stock dividend
distributed to shareholders on April 16, 2018.

1st Colonial also announced that on January 30, 2019, its
Board of Directors declared a five percent (5%) stock dividend to the
company’s shareholders. The dividend will be distributed on all issued
and outstanding shares held of record as of April 1, 2019 and will be
payable on April 15, 2019. Each shareholder as of the record date also
will receive an additional share in lieu of any fractional share payable
to the shareholder.

Gerry Banmiller, President and Chief Executive Officer, commented, “With
the flattening of the yield curve and the rise in short-term interest
rates, we have seen an increase in competitive pricing pressure on the
balance sheet. We have been able to mitigate this environment through
balanced loan growth and selective product pricing.
This measured
approach resulted in an 8.5% increase in net interest income, which is a
key component of our earnings.”

Highlights for the three months and year ended December 31, 2018,
included:

Balance Sheet Trends:

  • At December 31, 2018, total assets were $543.9 million and increased
    $3.8 million, or 0.7% from $540.1 million at December 31, 2017. Total
    assets were $539.3 million at September 30, 2018.
  • Total loans were $404.5 million at December 31, 2018, an increase of
    $28.0 million, or 7.4%, from $376.5 million at December 31, 2017.
    Total loans were $400.8 million at September 30, 2018. During 2018,
    commercial and residential mortgage loans grew $13.6 million and $14.4
    million, respectively.
  • Total deposits were $490.1 million at December 31, 2018, a decrease of
    $6.7 million, or (1.4%), from $496.8 million at December 31, 2017.
    Total deposits were $493.1 million at September 30, 2018. During the
    second quarter of 2018, we ran a successful certificates of deposit
    promotion which helped grow such deposits by $19.7 million, or 19.0%,
    since December 31, 2017. Checking, savings, municipal, and money
    market deposits declined $9.8 million, $9.7 million, $3.6 million and
    $2.5 million, respectively.
  • Total shareholders’ equity was $43.7 million at December 31, 2018, an
    increase of $5.3 million, or 13.8%, from $38.4 million at December 31,
    2017. Total shareholders’ equity was $41.7 million at September 30,
    2018.
  • 1st Colonial’s non-performing loans at December 31, 2018
    were $2.7 million compared to $2.1 million at December 31, 2017.
    Non-performing loans to total loans at December 31, 2018 were 0.68%
    compared to 0.55% at December 31, 2017. Non-performing loans were $2.2
    million and 0.56% of total loans at September 30, 2018.

Income Statement and Other Highlights:

  • Net interest income for the three months ended December 31, 2018
    increased $275 thousand, or 6.2%, to $4.7 million from $4.4 million
    for the three months ended December 31, 2017. For 2018, net interest
    income grew $1.4 million, or 8.5%, to $18.4 million from $17.0 million
    for 2017. The growth in net interest income was primarily related to
    an increase in interest income on loans and in the average yield
    earned on average interest-earning assets. The 100 basis-point
    increase in the fed funds rate since December 2017 has had a positive
    impact on our variable rate loans and our interest-earning deposits.
    The improvement in interest income was partially offset by a $1.5
    million increase in the interest paid on certificates of deposit and
    interest-bearing checking accounts.
  • The net interest margin was 3.51% for the fourth quarter of 2018
    compared to 3.34% for the fourth quarter of 2017 and was 3.47% for
    2018 compared to 3.36% for 2017. The increase in net interest margin
    was directly related to an increase in the yield on average
    interest-earning assets.
  • For the three months and year ended December 31, 2018, we recorded a
    provision to the allowance for loan losses of $389 thousand and $1.5
    million, respectively, compared to $303 thousand and $852 thousand for
    the three months and year ended December 31, 2017. The increase in the
    2018 provision was related to an increase in the specific reserves
    required on impaired loans. The allowance for loan losses as a
    percentage of total loans was 1.39% at December 31, 2018 compared to
    1.29% at December 31, 2017.
  • Non-interest income for the fourth quarter of 2018 was $1.0 million,
    an increase of $110 thousand, or 12.0%, from $918 thousand for the
    fourth quarter of 2017. During the fourth quarter of 2018, we recorded
    a bank owned life insurance (“BOLI”) death benefit of $337 thousand.
    Gains on the sale of residential mortgages and small business
    administration (“SBA”) loans decreased $211 thousand due to a decline
    in the volume of loans originated and sold.
  • Non-interest income for 2018 was $3.4 million, a decrease of $478
    thousand, or (12.4%), from $3.8 million for 2017. Gains on the sale of
    residential mortgages and the sale of SBA loans and declined $539
    thousand and $210 thousand, respectively, due to a decline in the
    volume of loans originated and sold. With the increase in interest
    rates, residential mortgage originations have become increasingly
    competitive. Partially mitigating this decline was the $337 thousand
    BOLI death benefit.
  • Non-interest expense was $3.3 million for the three months ended
    December 31, 2018 compared to $3.2 million for the same period in
    2017. Salaries and benefits, data processing, and occupancy and
    equipment expenses increased $102 thousand, $49 thousand and $30
    thousand, respectively, and were partially mitigated by a $65 thousand
    decline in professional fees.
  • Non-interest expense was $13.4 million for 2018 and increased $264
    thousand, or 2.0%, from $13.2 million for the comparable period in
    2017. Contributing to the increase in non-interest expense for 2018
    was a $215 thousand increase in salaries and benefits related to the
    planned increase in headcount in the lending support and compliance
    functions. Data processing and occupancy and equipment expenses
    increased $227 thousand and $143 thousand, respectively. During the
    fourth quarter of 2017 we leased additional office space at our
    operations and administration center in Cherry Hill, New Jersey.
    Partially offsetting these increases in non-interest expense was a
    decline in professional fees and advertising expenses of $228 thousand
    and $141 thousand, respectively.
  • For the three and twelve months ended December 31, 2018, income tax
    expense was $467 thousand and $1.7 million, respectively, compared to
    $956 thousand and $2.8 million for the three and twelve months ended
    December 31, 2017, respectively. The $1.1 million decrease in tax
    expense year-over-year was related to H.R. 1 (originally known as the
    “Tax Cuts and Jobs Act”) which was enacted on December 22, 2017. H.R.
    1 lowered the maximum federal corporate tax rate to 21% from 35%.
    During the fourth quarter of 2017 we recorded an additional $317
    thousand in income taxes as a result of a re-measurement of our
    deferred tax asset in accordance with H.R. 1.

Highlights as of December 31, 2018 and 2017, and a comparison of the
three months and years ended December 31, 2018 to the three months and
years ended December 31, 2017 include the following:

   

1st COLONIAL BANCORP, INC.

CONSOLIDATED INCOME STATEMENTS
(Unaudited, dollars in thousands, except per share data)
 
For the three months For the years
ended December 31, ended December 31,

2018

 

2017

2018

 

2017

Interest income $ 5,923 $ 5,191 $ 22,498 $ 19,563
Interest expense   1,196   739   4,054   2,558
Net Interest Income 4,727 4,452 18,444 17,005
Provision for loan losses   389   303   1,477   852
Net interest income after provision for loan losses 4,338 4,149 16,967 16,153
Non-interest income 1,028 918 3,364 3,842
Non-interest expense   3,314   3,167   13,426   13,162
Income before taxes 2,052 1,900 6,905 6,833
Income tax expense   467   956   1,690   2,790
Net Income $ 1,585 $ 944 $ 5,215 $ 4,043
Earnings Per Share – Basic (1) $ 0.36 $ 0.22 $ 1.19 $ 0.93
Earnings Per Share – Diluted (1) $ 0.35 $ 0.21 $ 1.14 $ 0.90
 

SELECTED PERFORMANCE RATIOS:

       

For the three months
ended December 31,

For the years ended
December 31,

2018

 

2017

2018

 

2017

Return on Average Assets 1.15 % 0.69 % 0.96 % 0.78 %
Return on Average Equity 14.90 % 9.82 % 12.84 % 11.05 %
Book value per share (1) $ 9.95 $ 8.85 $ 9.95 $ 8.85
 
         
At December 31, 2018

At December 31, 2017

Capital ratios:
Tier 1 Leverage 7.98% 7.07%
Total Risk Based Capital 13.42% 12.36%
Common Equity Tier 1 12.16% 11.11%
 
(1)   Adjusted to give effect to the 5% stock dividend distributed to
shareholders on April 16, 2018.
   

1st COLONIAL BANCORP, INC.

CONSOLIDATED BALANCE SHEETS
 
(Unaudited, in thousands) At December 31, 2018 At December 31, 2017
Cash and cash equivalents $ 12,114 $ 28,395
Total investments 115,093 118,547
Mortgage loans held for sale 2,989 7,169
Total loans 404,535 376,514
Less Allowance for loan losses   (5,627 )   (4,858 )
Loans and leases, net 398,908 371,656
Bank owned life insurance 8,368 8,434
Premises and equipment, net 798 864
Other real estate owned, net 244
Accrued interest receivable 1,737 1,505
Other assets   3,931     3,317  
Total Assets $ 543,938   $ 540,131  
 
Total deposits $ 490,096 $ 496,847
Other borrowings 8,157 3,166
Other liabilities 1,988 1,708
Total Shareholders’ Equity   43,697     38,410  
Total Liabilities and Equity $ 543,938   $ 540,131  
   

1st COLONIAL BANCORP, INC.

NET INTEREST INCOME AND MARGIN TABLES

(Unaudited, in thousands, except percentages)

 
For the three months ended For the three months ended
December 31, 2018 December 31, 2017

Average
Balance

  Interest   Yield

Average
Balance

  Interest   Yield
Cash and cash equivalents $ 16,438 $ 77 1.86 % $ 34,688 $ 98 1.12 %
Investment securities 112,504 578 2.04 % 112,645 450 1.58 %
Mortgage loans held for sale 5,041 45 3.54 % 7,722 53 2.72 %
Loans   399,584   5,223 5.19 %   373,279   4,590 4.88 %
Total interest-earning assets 533,567 5,923 4.40 % 528,334 5,191 3.90 %
Non-interest earning assets   12,561   12,244
Total average assets $ 546,128 $ 540,578

Interest-bearing deposits

Checking accounts $ 229,603 $ 400 0.69 % $ 224,355 $ 153 0.27 %
Money markets and Savings 64,515 72 0.44 % 80,499 93 0.46 %
Certificates of deposit   146,755   716 1.94 %   119,011   489 1.63 %
Total interest-bearing deposits 440,873 1,188 1.07 % 423,865 735 0.69 %
Borrowings   3,435   8 0.92 %   3,160   4 0.50 %
Total interest-bearing liabilities 444,308 1,196 1.07 % 427,025 739 0.69 %
Non-interest bearing deposits 57,964 73,905
Other liabilities 1,659 1,508
Shareholders’ equity   42,197   38,140
Total average liabilities and equity $ 546,128 $ 540,578
Net interest income $ 4,727 $ 4,452
Net interest margin 3.51 % 3.34 %
Net interest spread 3.34 % 3.21 %
   
For the year ended For the year ended
December 31, 2018 December 31, 2017

Average
Balance

  Interest   Yield

Average
Balance

  Interest   Yield
Cash and cash equivalents $ 21,136 $ 338 1.60 % $ 22,752 $ 216 0.95 %
Investment securities 112,601 2,116 1.88 % 110,043 1,571 1.43 %
Mortgage loans held for sale 6,284 214 3.41 % 7,456 218 2.92 %
Loans   391,445   19,830 5.07 %   365,715   17,558 4.80 %
Total interest-earning assets 531,466 22,498 4.23 % 505,966 19,563 3.87 %
Non-interest earning assets   12,554   12,375
Total average assets $ 544,020 $ 518,341

Interest-bearing deposits

Checking accounts $ 221,583 $ 1,135 0.51 % $ 218,842 $ 595 0.27 %
Money markets and Savings 71,754 322 0.45 % 85,175 390 0.46 %
Certificates of deposit   144,000   2,576 1.79 %   104,146   1,556 1.49 %
Total interest-bearing deposits 437,337 4,033 0.92 % 408,163 2,541 0.62 %
Borrowings   3,302   21 0.64 %   3,302   17 0.51 %
Total interest-bearing liabilities 440,639 4,054 0.92 % 411,465 2,558 0.62 %
Non-interest bearing deposits 61,240 68,783
Other liabilities 1,516 1,511
Shareholders’ equity   40,625   36,582
Total average liabilities and equity $ 544,020 $ 518,341
Net interest income $ 18,444 $ 17,005
Net interest margin 3.47 % 3.36 %
Net interest spread 3.31 % 3.24 %
 

1st Colonial Community Bank, the subsidiary of 1st Colonial
Bancorp, provides a range of business and consumer financial services,
placing emphasis on customer service and access to decision makers.
Headquartered in Collingswood, New Jersey, the Bank also has a branch in
the New Jersey community of Westville and administrative offices in
Cherry Hill, New Jersey. To learn more, call (856) 858-8402 or visit www.1stcolonial.com.

This release contains forward-looking statements that are not historical
facts and include statements about management’s strategies and
expectations about our business. There are risks and uncertainties that
may cause our actual results and performance to be materially different
from results indicated by these forward-looking statements. Factors that
might cause a difference include economic conditions; unanticipated loan
losses, inability to close loans in our pipeline, lack of liquidity;
varying and unanticipated costs of collection with respect to
nonperforming loans; an inability to dispose of real estate owned;
changes in interest rates, changes in FDIC assessments, deposit flows,
loan demand, and real estate values; changes in relationships with major
customers; operational risks, including the risk of fraud or theft by
employees, customers or outsiders, and the risk of interruptions in and
breaches in security of our information systems; competition; changes in
accounting principles, policies or guidelines; changes in laws or
regulations and in the manner in which the regulators enforce same; new
technology and other factors affecting our operations, pricing, products
and services.

Contacts

Gerry Banmiller, 856-858-8402

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