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

###

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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