First Resource Bank Announces Second Quarter Results; Strong Loan Growth Lowers Preferred Stock Dividend Costs

EXTON, Pa., July 23, 2012 /PRNewswire/ -- First Resource Bank (OTC Bulletin Board: FRSB) announced net income for the three months ended June 30, 2012 was $213,254 as compared to $243,738 for the quarter ended March 31, 2012 and net income of $177,047 for the quarter ended June 30, 2011. After accounting for preferred stock dividends, net income available to common shareholders for the quarter ended June 30, 2012 was $161,030. This compares to net income available to common shareholders of $180,200 for the quarter ended March 31, 2012 and $104,909 for the quarter ended June 30, 2011.

Net income for the six months ended June 30, 2012 of $456,992 compares to net income of $351,167 for the same period in the prior year. After accounting for preferred stock dividends, net income available to common shareholders for the six months ended June 30, 2012 was $341,230, as compared to $206,891 for the same period in the prior year.

Net interest income was $1,304,376 for the quarter ended June 30, 2012 as compared to $1,302,907 for the previous quarter.  The net interest margin declined from 3.91% during the first quarter of 2012 to 3.76% during the second quarter of 2012. A 22 basis point reduction in the yield on interest bearing assets was offset by an 8 basis point decline in the cost of interest bearing liabilities. Loan yields continue to experience pressure from intense competition for new loans as well as the scheduled re-pricing of existing loans during a time of historically low interest rates.

Glenn B. Marshall, President & CEO, stated, "First Resource Bank continues to post solid quarterly results. We continue to digest credit costs as a result of the economic downturn, but believe that we are seeing stabilization in this area. Strong loan growth in 2012 has provided significant Small Business Lending Fund preferred stock dividend cost savings which will help the Bank absorb ongoing credit costs."

The allowance for loan losses to total loans was 1.16% at June 30, 2012 as compared to 1.17% at March 31, 2012, 1.24% at December 31, 2011 and 1.28% at June 30, 2011. Non-performing assets, which include non-performing loans of $3.4 million and other real estate owned of $1.1 million, totaled $4.5 million at June 30, 2012. Non-performing assets to total assets increased from 2.93% at March 31, 2012 to 3.04% at June 30, 2012 due to a $465 thousand commercial mortgage loan placed on nonaccrual during the second quarter.  

The loan portfolio grew $1.2 million, or 0.9%, during the second quarter from $122.8 million at March 31, 2012 to $123.9 million at June 30, 2012. This loan growth was experienced in the commercial business loan, commercial real estate loan and commercial construction loan portfolios, while the consumer loan portfolio declined during the quarter. During the first six months of 2012, the loan portfolio grew $6.5 million, or 5.5%, from $117.5 million at December 31, 2011 to $123.9 million at June 30, 2012.

The following table illustrates the composition of the loan portfolio:


June 30,

2012

Dec. 31,
2011

June 30,
2011







Commercial real estate

$ 75,867,916

$ 71,300,163

$ 70,203,290


Commercial construction

9,583,465

7,165,979

4,932,556


Commercial business

13,927,399

13,507,058

12,044,494


Consumer

24,547,488

25,483,053

25,564,771







Total loans

$123,926,268

$117,456,253

$112,745,111


 

Consistent with the goals of the Small Business Lending Fund, over the past nine months the Bank has grown qualified small business loans by over 15%. This growth will bring the preferred stock dividend cost down to 1.007% for the fourth quarter of 2012, as compared to 3.054% for the third quarter and 4.11% for the second quarter. The gradual reduction in preferred stock dividend costs will continue through the rest of the year as the rates reset quarterly.

Deposits increased $4.8 million, or 3.9% from $125.0 million at March 31, 2012 to $129.8 million at June 30, 2012. During the second quarter, certificates of deposit increased $797 thousand, or 1.1%, from $74.1 million at March 31, 2012 to $74.9 million at June 30, 2012. Money market deposits increased $1.6 million, or 3.7%, from $44.0 million at March 31, 2012 to $45.7 million at June 30, 2012. During the first six months of 2012, total deposits grew $9.9 million, or 8.2%, from $120.0 million at December 31, 2011 to $129.8 million at June 30, 2012. Growth was experienced in all aspects of the deposit portfolio.

Non-interest income for the quarter ended June 30, 2012 was $59,705, as compared to $55,179 for the previous quarter. This increase was primarily due to an increase in loan late fees collected. Non-interest income for the six months ended June 30, 2012 was $114,884, as compared to $60,414 for the same period in the prior year. This increase was primarily due to the income associated with the increase in cash surrender value of bank owned life insurance which was purchased during the fourth quarter of 2011.  

Non-interest expense increased $60,631, or 7.2% in the three months ended June 30, 2012 as compared to the three months ended March 31, 2012. This increase was primarily due to a $61 thousand write down on an other real estate owned property. Non-interest expense for the six months ended June 30, 2012 was $1.7 million, an increase of $139 thousand, or 8.6%, as compared to the same period in the prior year. This increase was primarily due to an increase in salaries and benefits expenses associated with the expansion of the employee base. 

Selected Financial Data:

 

Balance Sheets (unaudited)

 






June 30,

2012

December 31,

2011






Cash and due from banks

$   8,236,201

$   1,554,676


Investments

11,847,416

12,904,792


Loans

123,926,268

117,456,253


Allowance for loan losses

(1,441,187)

(1,458,824)


Premises & equipment

218,085

162,080


Other assets

5,259,583

5,400,055






Total assets

$ 148,046,366

$ 136,019,032






Non-interest bearing deposits

$   7,007,082

$   5,799,857


Interest-bearing checking

2,195,985

1,499,933


Money market

45,685,406

42,006,348


Time deposits

74,933,974

70,637,139


  Total deposits

129,822,447

119,943,277


Borrowings

2,220,000

-


Other liabilities

378,851

859,456






Total liabilities

132,421,298

120,802,733






Preferred stock

5,083,000

5,083,000


Common stock

1,526,436

1,453,094


Surplus

9,558,758

9,629,144


Accumulated other

  comprehensive income (loss)

161,176

96,174


Accumulated deficit

(704,302)

(1,045,113)


Total stockholders' equity

15,625,068

15,216,299






Total Liabilities &

     Stockholders' Equity

$ 148,046,366

$ 136,019,032


 

Performance Statistics (unaudited)

 

Qtr Ended

June 30,

2012

 

Qtr Ended

Mar. 31,

2012

 

Qtr Ended

Dec. 31,

2011

 

Qtr Ended

Sept. 30,

2011

 

Qtr Ended

June 30,

2011







Net interest margin

3.76%

3.91%

3.90%

3.77%

3.75%

Nonperforming loans/total loans

2.75%

2.48%

1.56%

2.23%

2.77%

Nonperforming assets/

   Total assets

3.04%

2.93%

2.20%

2.71%

2.95%

Allowance for loan losses/

   Total loans

1.16%

1.17%

1.24%

1.24%

1.28%

Average loans/Average assets

84.9%

84.4%

84.4%

84.9%

84.9%

Non interest expenses*/

   Average assets

2.52%

2.45%

2.55%

2.32%

2.52%

Earnings per share – basic and

   diluted

$0.11

$0.12

$0.12

$0.09

$0.07







* Annualized






 

Income Statements (unaudited)







 

Qtr Ended
June 30,

2012

 

Qtr Ended
Mar. 31,

2012

 

Qtr Ended
Dec. 31,

2011

 

Qtr Ended
Sept. 30,

2011

 

Qtr Ended
June 30,

2011







INTEREST INCOME






Loans

$1,640,648

$1,642,566

$1,651,201

$1,628,005

$1,587,688

Investments

58,312

61,572

63,897

71,048

63,007

Federal funds sold

-

-

-

-

-

Other

2,383

1,017

2,563

3,644

1,899

 Total interest income

1,701,343

1,705,155

1,717,661

1,702,697

1,652,594







INTEREST EXPENSE






Borrowings

6,925

4,647

-

2,338

8,867

Checking

1,398

964

881

877

743

Money Market

101,368

101,742

101,429

111,541

128,543

Time deposits

287,276

294,895

313,929

316,255

306,267

 Total interest expense

396,967

402,248

416,239

431,011

444,420







Net interest income

1,304,376

1,302,907

1,301,422

1,271,686

1,208,174







Provision for loan losses

149,677

159,991

119,904

126,065

151,933







Net interest income after provision for loan losses

1,154,699

1,142,916

1,181,518

1,145,621

1,056,241







NON INTEREST INCOME

59,705

55,179

38,944

39,849

39,053







NON INTEREST EXPENSE






Salaries & benefits

420,646

435,025

408,677

357,253

346,362

Occupancy & equipment

85,686

77,855

83,108

79,946

74,442

Data processing

55,748

55,714

55,301

53,041

51,552

Professional fees

87,868

93,569

77,539

87,042

103,308

Advertising

12,952

13,269

9,799

8,476

8,045

Other real estate owned expenses

71,100

15,243

90,149

52,502

97,676

Other non interest

     Expenses

170,476

153,171

147,168

153,718

143,943

Total non interest

     Expense

904,476

843,846

871,741

791,978

825,328







Pre-tax income

309,928

354,249

348,721

393,492

269,966







Tax expense

(96,674)

(110,511)

(115,739)

(134,142)

(92,919)







Net income

$  213,254

$  243,738

$  232,982

$  259,350

$  177,047







Preferred stock dividends and accretion

 

(52,224)

 

(63,538)

 

(64,242)

 

(132,455)

 

(72,138)







Net income available to common shareholders

 

$  161,030

 

$  180,200

 

$  168,740

 

$  126,895

 

$  104,909

Income Statements (unaudited)




Six Months

Ended
June 30,

2012

Six Months

Ended

June 30,

2011




INTEREST INCOME



Loans

$3,283,214

$3,173,123

Investments

119,884

118,063

Federal funds sold

-

147

Other

3,400

2,915

 Total interest income

3,406,498

3,294,248




INTEREST EXPENSE



Borrowings

11,572

22,840

Checking

2,362

1,451

Money Market

203,110

265,901

Time deposits

582,171

588,050

 Total interest expense

799,215

878,242




Net interest income

2,607,283

2,416,006




Provision for loan losses

309,668

331,689




Net interest income after provision for loan losses

2,297,615

2,084,317




NON INTEREST INCOME

114,884

60,414




NON INTEREST EXPENSE



Salaries & benefits

855,671

690,179

Occupancy & equipment

163,541

152,781

Data processing

111,462

102,461

Professional fees

181,437

194,397

Advertising

26,221

24,248

Other real estate owned

    expenses

86,343

138,628

Other non interest expense

323,647

306,739

Total non interest expense

1,748,322

1,609,433




Pre-tax income

664,177

535,298




Tax expense

(207,185)

(184,131)




Net income

$  456,992

$  351,167




Preferred stock dividends and accretion

(115,762)

(144,276)




Net income available to common shareholders

$  341,230

$  206,891


 

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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