First Resource Bank Achieves Record Quarterly Net Income; A 70% Increase Over The Previous Quarter

EXTON, PA / ACCESSWIRE / July 24, 2019 / First Resource Bank (OTCQX: FRSB) announced financial results for the three months ended June 30, 2019. Net income for the quarter ended June 30, 2019 was $631,520, which compares to $371,220 for the previous quarter and $520,825 for the second quarter of the prior year.

Glenn B. Marshall, President & CEO, stated, “Second quarter results were very strong with record profitability and solid balance sheet growth. Loans have increased over 10% year to date and non-interest bearing deposits have increased 49% in that same time period. These strategic achievements are allowing us to maintain our net interest margin and increase profitability as the Bank continues to grow. Smart growth has always been a key strategy at First Resource Bank and the Bank will reap long term benefits from this consistent approach.”

Highlights for the second quarter of 2019 included:

  • Net income of $631,520 was the highest quarterly profit in the Bank’s history
  • Net income grew 70% over the quarter ended March 31, 2019 and 21% over the quarter ended June 30, 2018
  • Total interest income grew 6% over the quarter ended March 31, 2019 and 19% over the quarter ended June 30, 2018
  • Total loans grew 5% during the second quarter
  • Non-interest bearing deposits increased 19% during the quarter
  • 5% stock dividend paid in May
  • Construction of our third branch continues with the opening expected in the third quarter
  • First Resource Bank was named a “Best Place to Work” for companies with up to 50 employees by the Philadelphia Business Journal

Total interest income grew 6% when comparing the second quarter to the first quarter of 2019. This increase was driven by 5% loan growth during the second quarter.

Total interest income rose 19% from $3,205,315 for the three months ended June 30, 2018 to $3,819,446 for the three months ended June 30, 2019. This increase was supported by 16% loan growth when comparing June 30, 2019 to a year prior and a 23 basis point improvement in loan yields when comparing the second quarter of 2018 to the second quarter of 2019.

Total interest income was $7,415,809 for the six months ended June 30, 2019, a 20% increase over the same period in the prior year.

Total interest expense rose 10% when comparing the second quarter to the first quarter of 2019. This increase was driven by a 9 basis point increase in the cost of money market accounts and an 11 basis point increase in the cost of certificates of deposit during the quarter.

Total interest expense rose 50% from $711,445 for the three months ended June 30, 2018 to $1,065,036 for the three months ended June 30, 2019. The vast majority of this increased expense was related to a 38 basis point increase in the cost of money market accounts and a 72 basis point increase in the cost of certificates of deposit, year over year. Overall interest expense was mitigated by strong growth in noninterest bearing deposits, which increased 59% when comparing June 30, 2019 to the year prior.

Total interest expense for the six months ended June 30, 2019 was $2,035,372, a 57% increase over the same period in the prior year.

Net interest income was $2,754,410 for the quarter ended June 30, 2019 as compared to $2,626,027 for the previous quarter, an improvement of 5%. The net interest margin declined 2 basis points from 3.87% for the quarter ended March 31, 2019 to 3.85% for the quarter ended June 30, 2019. The overall yield on interest earning assets increased 4 basis points during the second quarter led by a 1 basis point increase in loan yields to 5.59%. The cost of interest bearing deposits increased 10 basis points during the second quarter to 1.69%, with the majority of that increase attributed to higher cost money market accounts and certificates of deposit. Strong growth in non-interest bearing deposits partially offset the increased cost of interest bearing deposits. The total cost of deposits increased 6 basis points from 1.36% in the first quarter of 2019 to 1.42% in the second quarter of 2019.

Net interest income for the six months ended June 30, 2019 was $5,380,437, a 10% improvement over net interest income of $4,891,173 for the six months ended June 30, 2018. This growth was driven by a 20% increase in loan interest income.

The provision for loan losses decreased from $475,952 for the three months ended March 31, 2019 to $158,992 for the three months ended June 30, 2019. The provision for loan losses decreased from $191,321 for the three months ended June 30, 2018, to $158,992 for the three months ended June 30, 2019. The provision for loan losses increased from $325,643 for the six months ended June 30, 2018 to $634,944 for the six months ended June 30, 2019. These variances are all attributed to one problem loan that required specific reserves due to new information obtained regarding the value of the collateral during the first quarter of 2019.

Non-interest income for the quarter ended June 30, 2019 was $262,597, as compared to $156,255 for the previous quarter and $139,730 for the second quarter of the prior year. Swap referral fee income of $114,100 was received in the second quarter of 2019, as compared to none in the prior quarter or the second quarter of 2018. There were no gains on sales of SBA loans recognized during the second quarter of 2019, as compared to $24,463 in the prior quarter and $28,725 during the second quarter of 2018.

Non-interest income for the six months ended June 30, 2019 was $418,852 as compared to $255,472 for the same period in the prior year. Swap referral fee income of $114,100 was received in the first six months of 2019 as compared to none in the first six months of 2018. There was $24,463 in gains on sales of SBA loans in the first six months of 2019 as compared to $28,725 in the first six months of 2018.

Non-interest expense increased $222 thousand, or 12%, in the three months ended June 30, 2019 as compared to the prior quarter. The increase was primarily due to an increase in salaries and benefits, data processing and other costs, partially offset by a decrease in occupancy. Non-interest expense increased $275 thousand, or 15%, when comparing the second quarter of 2019 to the second quarter of 2018. This increase was primarily attributed to an increase in salaries and benefits, occupancy, data processing and other costs, partially offset by lower advertising expenses.

Non-interest expense increased $333 thousand, or 9%, in the six months ended June 30, 2019 as compared to the same period in the prior year. This increase was due to higher salaries and benefits expense, occupancy, professional fees, data processing and other costs, partially offset by lower advertising expenses.

Deposits grew a net $5.6 million, or 2%, from $247.6 million at March 31, 2019 to $253.3 million at June 30, 2019. During the second quarter, non-interest bearing deposits increased $7.6 million, or 19%, from $39.8 million at March 31, 2019 to $47.4 million at June 30, 2019. Interest-bearing checking balances decreased $72 thousand, or 1%, from $10.2 million at March 31, 2019 to $10.1 million at June 30, 2019. Money market deposits decreased $1.7 million, or 2%, from $100.5 million at March 31, 2019 to $98.8 million at June 30, 2019. Certificates of deposit decreased $205 thousand, or 0%, from $97.2 million at March 31, 2019 to $97.0 million at June 30, 2019. The deposit portfolio grew $17.0 million, or 7%, in the first six months of 2019, with a $14.6 million increase in total checking balances and a $5.5 million increase in certificates of deposit, partially offset by a $3.1 million decline in money market balances. Total deposits grew $29.4 million, or 13%, from $223.8 million at June 30, 2018 to $253.3 million at June 30, 2019, with growth in all deposit categories, but notably a 59% increase in non-interest bearing deposits. Checking balances represented 23% of total deposits at June 30, 2019, a significant increase from 18% at December 31, 2018.

The loan portfolio grew $12.2 million, or 5%, during the second quarter from $258.4 million at March 31, 2019 to $270.5 million at June 30, 2019, with the majority of that growth in commercial real estate loans and construction loans. Year-to-date net loan growth in 2019 was $25.8 million, or 11%, with the majority of that growth in commercial real estate and construction loans. The loan portfolio grew $36.9 million, or 16%, from $233.6 million at June 30, 2018 to $270.5 million at June 30, 2019, with the majority of that growth in commercial real estate and construction loans.

The following table illustrates the composition of the loan portfolio:

June 30,
2019
Dec. 31,
2018
June 30,
2018
Commercial real estate
$ 187,706,105 $ 170,738,479 $ 160,356,631
Commercial construction
30,313,979 20,377,108 20,853,766
Commercial business
32,868,079 31,738,443 30,942,553
Consumer
19,627,636 21,843,647 21,487,555
Total loans
$ 270,515,799 $ 244,697,677 $ 233,640,505

The allowance for loan losses to total loans was 0.93% at June 30, 2019 as compared to 0.81% at December 31, 2018 and 0.87% at June 30, 2018. Non-performing assets consisted of non-performing loans of $2.2 million and other real estate owned of $590 thousand, totaling $2.8 million at June 30, 2019, a 26% increase as compared to the prior quarter. This increase was due to one loan relationship being placed on non-accrual and an increase in other real estate owned, partially offset by a decrease in loans past due over 90 days during the quarter. Non-performing assets to total assets increased from 0.74% at March 31, 2019 to 0.91% at June 30, 2019.

Total stockholder’s equity increased $786 thousand, or 3%, from $25.8 million at March 31, 2019 to $26.6 million at June 30, 2019, primarily due to net income generated and an improvement in the unrealized gain/loss position of the investment portfolio. Book value per share, restated to reflect the 5% stock dividend paid in May 2019, increased 28 cents during the second quarter of 2019 to $9.63 per share at June 30, 2019.

Total assets increased $7.3 million, or 2% during the second quarter of 2019, with significant growth in loans funded by deposit growth and deployment of excess cash.

Media Contact:
Glenn Marshall,
President & CEO
610-561-6013

Selected Financial Data:
Balance Sheets (unaudited)

June 30,
2019
December 31,
2018
Cash and due from banks
$ 7,879,783 $ 5,734,677
Time deposits at other banks
599,000 599,000
Investments
18,812,402 37,762,190
Loans
270,515,799 244,697,677
Allowance for loan losses
(2,522,821 ) (1,990,253 )
Premises & equipment
8,039,706 6,647,166
Other assets
9,310,379 8,996,941
Total assets
$ 312,634,248 $ 302,447,398
Non-interest bearing deposits
$ 47,362,154 $ 31,788,359
Interest-bearing checking
10,086,510 11,069,325
Money market
98,805,697 101,887,847
Time deposits
96,996,152 91,456,365
Total deposits
253,250,513 236,201,896
Short term borrowings
8,831,700 17,000,400
Long term borrowings
18,535,323 18,515,500
Subordinated debt
3,990,344 3,986,097
Other liabilities
1,411,385 1,466,037
Total liabilities
286,019,265 277,169,930
Total stockholders’ equity
26,614,983 25,277,468
Total Liabilities & Stockholders’ Equity
$ 312,634,248 $ 302,447,398
Performance Statistics (unaudited)
Qtr Ended
June 30,
2019
Qtr Ended
Mar. 31,
2019
Qtr Ended
Dec. 31,
2018
Qtr Ended
Sept. 30,
2018
Qtr Ended
June 30,
2018
Net interest margin
3.85 % 3.87 % 3.78 % 3.85 % 3.97 %
Nonperforming loans/
Total loans
0.83 % 0.87 % 1.14 % 1.21 % 1.42 %
Nonperforming assets/
Total assets
0.91 % 0.74 % 0.92 % 1.12 % 1.30 %
Allowance for loan losses/
Total loans
0.93 % 0.95 % 0.81 % 0.85 % 0.87 %
Average loans/Average
assets
87.4 % 86.5 % 84.9 % 86.1 % 86.6 %
Non-interest expenses*/
Average assets
2.75 % 2.60 % 2.67 % 2.68 % 2.72 %
Earnings per share – basic
and diluted **
$ 0.23 $ 0.13 $ 0.22 $ 0.20 $ 0.19
Book value per share**
$ 9.63 $ 9.35 $ 9.16 $ 8.91 $ 8.71
Total shares outstanding
2,764,241 2,630,418 2,628,316 2,626,633 2,625,130

* Annualized
** Per share data has been restated to reflect 5% stock dividend paid in May 2019.

Income Statements (unaudited)

Qtr. Ended
June 30,
2019
Qtr. Ended
Mar. 31,
2019
Qtr. Ended
Dec. 31,
2018
Qtr. Ended
Sept. 30,
2018
Qtr. Ended
June 30,
2018
INTEREST INCOME
Loans, including fees
$ 3,679,137 $ 3,438,752 $ 3,297,459 $ 3,179,807 $ 3,076,950
Securities
126,881 128,301 124,207 115,250 126,632
Other
13,428 29,310 37,950 20,705 1,733
Total interest income
3,819,446 3,596,363 3,459,616 3,315,762 3,205,315
INTEREST EXPENSE
Deposits
886,280 800,541 739,464 655,163 513,174
Borrowings
111,271 102,671 108,664 99,856 130,785
Subordinated debt
67,485 67,124 67,843 67,847 67,486
Total interest expense
1,065,036 970,336 915,971 822,866 711,445
Net interest income
2,754,410 2,626,027 2,543,645 2,492,896 2,493,870
Provision for loan losses
158,992 475,952 78,051 109,544 191,321
Net interest income after provision for loan losses
2,595,418 2,150,075 2,465,594 2,383,352 2,302,549
NON-INTEREST INCOME
BOLI income
37,965 37,455 38,315 38,163 37,564
Referral fee income
114,100
Gain on sale of SBA loans
24,463 55,075 12,631 28,725
Other
110,532 94,337 84,947 76,663 73,441
Total non-interest income
262,597 156,255 178,337 127,457 139,730
NON-INTEREST EXPENSE
Salaries & benefits
1,238,114 1,053,586 1,121,757 1,089,077 1,055,702
Occupancy & equipment
185,402 191,572 179,256 178,176 178,119
Professional fees
101,117 100,169 94,756 84,445 99,919
Advertising
35,401 33,764 34,689 52,808 45,638
Data processing
135,151 127,119 121,363 107,734 111,828
Other
380,297 347,391 337,137 313,657 309,324
Total non-interest
expense
2,075,482 1,853,601 1,888,958 1,825,897 1,800,530
Income before income tax expense
782,533 452,729 754,973 684,912 641,749
Federal income tax expense
151,013 81,509 146,236 130,259 120,924
Net income
$ 631,520 $ 371,220 $ 608,737 $ 554,653 $ 520,825

Income Statements (unaudited)

Six Months
Ended
June 30,
2019
Six Months
Ended
June 30,
2018
INTEREST INCOME
Loans
$ 7,117,889 $ 5,926,546
Investments
255,182 256,773
Other
42,738 4,296
Total interest income
7,415,809 6,187,615
INTEREST EXPENSE
Deposits
1,686,821 954,237
Borrowings
213,942 207,595
Subordinated debt
134,609 134,610
Total interest expense
2,035,372 1,296,442
Net interest income
5,380,437 4,891,173
Provision for loan losses
634,944 325,643
Net interest income after provision for loan losses
4,745,493 4,565,530
NON-INTEREST INCOME
BOLI income
75,420 72,604
Referral fee income
114,100
Gain on sale of SBA loans
24,463 28,725
Other
204,869 154,143
Total non-interest income
418,852 255,472
NON-INTEREST EXPENSE
Salaries & benefits
2,291,700 2,083,707
Occupancy & equipment
376,974 372,891
Professional fees
201,286 187,371
Advertising
69,165 107,860
Data processing
262,270 217,445
Other non-interest expense
727,688 626,511
Total non-interest expense
3,929,083 3,595,785
Pre-tax income
1,235,262 1,225,217
Tax expense
232,522 223,400
Net income
$ 1,002,740 $ 1,001,817

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About First Resource Bank

First Resource Bank is a locally owned and operated Pennsylvania state-chartered bank with two full-service branches, serving the banking needs of businesses, professionals and individuals in the Delaware Valley. 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.

SOURCE: First Resource Bank

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