First Resource Bank Announces Record Annual Results; 12% Loan Growth In 2015

Jan 25, 2016, 08:00 ET from First Resource Bank

EXTON, Pa., Jan. 25, 2016 /PRNewswire/ -- First Resource Bank (OTCQX: FRSB) announced fourth quarter and full year financial results through December 31, 2015. Net income for the year ended December 31, 2015 was $1,185,769, as compared to $1,105,693 for the prior year.

Significant accomplishments for the year ended December 31, 2015 included:

  • Completed a $2.3 million common equity raise and the issuance of $4 million in subordinated debt
  • Redeemed $3.8 million, or 75%, of the Bank's Small Business Lending Fund preferred stock
  • Opened our second branch location in the largest deposit market in Chester County
  • Achieved record net income, 7% higher than the prior year
  • Paid the Bank's second cash dividend to date
  • Total interest income grew 10% over the prior year
  • Total assets grew 15% to end the year at $208.1 million
  • Total loans grew 12% to a record high of $176.1 million

Net income for the three months ended December 31, 2015 of $252,344 compares to net income of $303,089 for the three months ended September 30, 2015 and $256,007 for the three months ended December 31, 2014. After accounting for preferred stock dividends, net income available to common shareholders for the three months ended December 31, 2015 was $244,297. This compares to net income available to common shareholders of $290,381 for the three months ended September 30, 2015 and $243,299 for the quarter ended December 31, 2014.

Glenn B. Marshall, President & CEO, stated, "2015 was a year of growth in the balance sheet, physical locations and employee team, while also achieving the sixth consecutive year of record net income. The growth in fee income on the sale of SBA guaranteed loans was a significant contributing factor to the bottom line this year. We are thrilled with the successful completion of our internal capital plan in 2015 and resulting reduction in preferred stock outstanding.  The significant balance sheet growth experienced over the past year has established a solid foundation for 2016."

Net interest income was $1,753,210 for the quarter ended December 31, 2015 as compared to $1,679,581 for the previous quarter, an improvement of 4%.  The net interest margin increased 2 basis points from 3.66% for the quarter ended September 30, 2015 to 3.68% for the quarter ended December 31, 2015. The overall yield on interest earning assets increased 9 basis points during the fourth quarter, to 4.65%, mainly due to a lower level of low yielding cash and a higher level of loans. The total cost of interest bearing liabilities increased 7 basis points during the fourth quarter, led by an 85 basis point increase in the cost of borrowings, as a result of the issuance of $2 million in subordinated debt on October 15. The deposit cost of funds decreased 1 basis point to 0.96%. 

Net interest income for the year ended December 31, 2015 was $6,715,443, an improvement of $561 thousand, or 9% over the prior year. The net interest margin for 2015 was 3.80%, which was 10 basis points lower than the prior year. This margin movement is mainly attributed to higher cash and short term investments as well as higher cost of borrowings as a result of the subordinated debt issuance in 2015.

During the year ended December 31, 2015, total deposits increased $22.6 million, or 16%, with all deposit categories experiencing significant growth.. Deposits increased $592 thousand, or 0.4%, from $165.4 million at September 30, 2015 to $166.0 million at December 31, 2015. During the fourth quarter, money market deposits increased $2.2 million, or 4%, from $58.3 million at September 30, 2015 to $60.5 million at December 31, 2015. Interest-bearing checking balances increased $2.1 million, or 47%, from $4.3 million at September 30, 2015 to $6.4 million at December 31, 2015. Non-interest bearing deposits decreased $1.8 million, or 11%, from $16.0 million at September 30, 2015 to $14.2 million at December 31, 2015. Certificates of deposit decreased $1.8 million, or 2%, from $86.8 million at September 30, 2015 to $84.9 million at December 31, 2015.

During the year ended December 31, 2015, the loan portfolio grew $18.8 million, or 12%. Most of this growth was in the commercial real estate portfolio which grew $13.6 million, or 13% in 2015. The loan portfolio increased $8.9 million, or 5%, during the fourth quarter from $167.2 million at September 30, 2015 to $176.1 million at December 31, 2015. Strong growth in the commercial real estate and construction categories was partially offset by a decline in the commercial portfolio during the fourth quarter.

The following table illustrates the composition of the loan portfolio:


Dec. 31,

2015

Dec. 31,

2014




Commercial real estate

$  115,857,098

$  102,290,962

Commercial construction

16,703,701

12,235,078

Commercial business

18,620,360

17,483,708

Consumer

24,921,308

25,316,420




Total loans

$  176,102,467

$  157,326,168

The allowance for loan losses to total loans was 0.82% at December 31, 2015 as compared to 0.84% at December 31, 2014. Non-performing assets, which include non-performing loans of $2.3 million and other real estate owned of $117 thousand, totaled $2.4 million at December 31, 2015, a 9% decline as compared to the prior quarter. Non-performing assets to total assets decreased from 1.34% at September 30, 2015 to 1.17% at December 31, 2015 due to a decline in non-performing loans and an increase in total assets.

Non-interest income for the quarter ended December 31, 2015 was $75,825, as compared to $86,925 for the previous quarter and $218,705 for the fourth quarter of the prior year. Fourth quarter 2014 results include $104 thousand in SBA loan sale income, of which there were none during the current quarter or in the prior quarter of this year.

Non-interest income for the year ended December 31, 2015 was $702,904 as compared to $528,962 for the prior year. SBA loan sale income was $285 thousand higher in 2015 than the prior year.

Non-interest expense increased $95 thousand, or 8%, in the three months ended December 31, 2015 as compared to the prior quarter. All expense categories increased quarter over quarter, except for salaries and benefits.

Non-interest expense increased $729 thousand, or 16%, in the year ended December 31, 2015 as compared to the prior year. All expense categories increased year over year, except for other real estate owned expense. Much of the increase is associated with the opening of the West Chester branch in April 2015.

Selected Financial Data:

Balance Sheets (unaudited)








December 31,

2015

December 31,

2014






Cash and due from banks

$     1,254,982

$        817,026


Investments

19,543,548

11,711,637


Loans

176,102,467

157,326,168


Allowance for loan losses

(1,450,836)

(1,317,363)


Premises & equipment

6,223,326

5,517,252


Other assets

6,378,550

6,472,819






Total assets

$ 208,052,037

$ 180,527,539






Non-interest bearing deposits

$   14,200,995

$     9,355,013


Interest-bearing checking

6,392,765

4,349,552


Money market

60,453,093

51,400,506


Time deposits

84,936,708

78,243,292


  Total deposits

165,983,561

143,348,363


Short term borrowings

10,177,000

12,000,000


Long term borrowings

9,409,500

6,499,000


Subordinated debt

3,960,615

-


Other liabilities

966,129

654,739






Total liabilities

190,496,805

162,502,102






Preferred stock

1,271,000

5,083,000


Common stock

1,977,328

1,612,283


Surplus

11,484,125

9,523,083


Accumulated other

  comprehensive income

 

32,207

 

91,577


Retained earnings

2,790,572

1,715,494


Total stockholders' equity

17,555,232

18,025,437






Total Liabilities &

     Stockholders' Equity

$ 208,052,037

$ 180,527,539


 

 

Performance Statistics (unaudited)







Qtr Ended

Dec. 31,

2015

Qtr Ended

Sept. 30,

2015

Qtr Ended

June 30,

2015

Qtr Ended

Mar. 31,

2015

Qtr Ended

Dec. 31,

2014







Net interest margin

3.68%

3.66%

3.89%

4.01%

3.97%

Nonperforming loans/total loans

1.31%

1.53%

1.66%

1.95%

1.64%

Nonperforming assets/

   Total assets

1.17%

1.34%

1.56%

1.86%

1.57%

Allowance for loan losses/

   Total loans

0.82%

0.83%

0.83%

0.84%

0.84%

Average loans/Average assets

85.1%

83.4%

88.5%

89.5%

88.1%

Non-interest expenses*/

   Average assets

2.69%

2.57%

3.07%

2.89%

2.71%

Earnings per share – basic and

   diluted

$0.12

$0.15

$0.19

$0.18

$0.15

Book value per share

$8.24

$8.13

$8.34

$8.16

$8.03

Total shares outstanding

1,977,328

1,975,520

1,613,592

1,613,009

1,612,283







* Annualized






 

 

Income Statements (unaudited)







Qtr. Ended
Dec. 31,

2015

Qtr. Ended
Sept. 30,

2015

Qtr. Ended
June 30,

2015

Qtr. Ended
Mar. 31,

2015

Qtr. Ended
Dec. 31,

2014







INTEREST INCOME






Loans, including fees

$2,149,344

$2,045,914

$1,999,455

$1,923,274

$1,940,824

Securities

60,049

42,312

37,383

57,947

63,004

Other

5,571

6,983

1,198

63

60

 Total interest income

2,214,964

2,095,209

2,038,036

1,981,284

2,003,888







INTEREST EXPENSE






Deposits

365,375

358,649

346,228

332,872

329,895

Borrowings

33,950

34,170

34,729

22,839

25,173

Subordinated debt

62,429

22,809

-

-

-

 Total interest expense

461,754

415,628

380,957

355,711

355,068







Net interest income

1,753,210

1,679,581

1,657,079

1,625,573

1,648,820







Provision for loan losses

110,446

62,090

92,217

17,622

296,205







Net interest income after provision for loan losses

1,642,764

1,617,491

1,564,862

1,607,951

1,352,615







NON-INTEREST INCOME






BOLI income

29,890

30,000

30,098

30,072

30,740

Gain on sale of SBA loans

-

-

389,160

-

103,661

Gain on sale of securities

-

-

-

15,641

50,286

Other

45,935

56,925

44,606

30,577

34,018

 Total non-interest income

75,825

86,925

463,864

76,290

218,705







NON-INTEREST EXPENSE






Salaries & benefits

704,372

704,651

688,885

673,716

565,894

Occupancy & equipment

186,665

179,855

190,100

151,801

196,056

Professional fees

83,234

64,368

89,414

82,427

60,069

Advertising

39,203

31,117

63,304

23,176

29,792

Data processing

83,772

78,694

82,476

74,957

76,368

Other real estate

9,960

(18,034)

44,113

25,361

42,789

Other

249,741

220,843

237,545

217,013

222,717

Total non-interest

     expense

1,356,947

1,261,494

1,395,837

1,248,451

1,193,685







Income before income tax expense

361,642

442,922

632,889

435,790

377,635







Federal Income Tax expense

109,298

139,833

303,589

134,754

121,628







Net income

$   252,344

$   303,089

$   329,300

$   301,036

$   256,007







Preferred stock dividends

(8,047)

(12,708)

(12,708)

(12,708)

(12,708)







Net income available to common shareholders

$   244,297

$   290,381

$   316,592

$   288,328

$   243,299

 

 

Income Statements (unaudited)




Twelve Months

Ended
December 31,

2015

Twelve Months

Ended
December 31,

2014




INTEREST INCOME



Loans

$   8,117,987

$   7,294,265

Investments

197,691

241,939

Other

13,815

2,920

 Total interest income

8,329,493

7,539,124




INTEREST EXPENSE



Deposits

1,403,124

1,302,540

Borrowings

125,688

82,120

Subordinated debt

85,238

-

 Total interest expense

1,614,050

1,384,660




Net interest income

6,715,443

6,154,464




Provision for loan losses

282,375

536,901




Net interest income after provision for loan losses

6,433,068

5,617,563




NON-INTEREST INCOME



BOLI income

120,060

123,999

Gain on sale of SBA loans

389,160

103,661

Gain on sale of securities

15,641

50,286

Other

178,043

251,016

 Total non-interest income

702,904

528,962




NON-INTEREST EXPENSE



Salaries & benefits

2,771,624

2,228,129

Occupancy & equipment

708,421

606,882

Professional fees

319,443

319,324

Advertising

156,800

131,797

Data processing

319,899

280,532

Other real estate owned expenses

61,400

180,208

Other non-interest expense

925,142

786,720

Total non-interest expense

5,262,729

4,533,592




Pre-tax income

1,873,243

1,612,933




Tax expense

687,474

507,240




Net income

$   1,185,769

$   1,105,693




Preferred stock dividends

(46,171)

(50,830)




Net income available to common shareholders

$   1,139,598

$    1,054,863

 

About First Resource Bank

First Resource Bank is a locally owned and operated Pennsylvania state-chartered bank, 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.                                

SOURCE First Resource Bank



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