First Resource Bank Announces Third Quarter Results

EXTON, Pa., Oct. 24, 2011 /PRNewswire/ -- First Resource Bank (OTC Bulletin Board: FRSB) announced net income of $259,350 for the quarter ended September 30, 2011 as compared to net income of $177,047 for the quarter ended June 30, 2011 and net income of $152,577 for the quarter ended September 30, 2010.

Glenn B. Marshall, President & CEO, stated, "The third quarter was the eighth consecutive quarter of profitability and the highest in the Bank's history. Record profits combined with the repayment of TARP Capital Purchase Plan preferred stock continued the positive momentum that the Bank has created."

Net income for the nine months ended September 30, 2011 was $610,517 as compared to net income of $381,499 for the nine months ended September 30, 2010. This increase is attributed to higher net interest income offset by higher salaries and benefits expenses and higher other real estate owned expenses.

Net interest income was $1,271,686 for the quarter ended September 30, 2011 as compared to $1,208,174 for the previous quarter. The net interest margin widened 2 basis points, from 3.75% for the three months ended June 30, 2011 to 3.77% for the three months ended September 30, 2011. This net interest margin improvement resulted from lower deposit interest costs, offset by an increase in low yielding average cash and short term investments held during the third quarter. The loan portfolio yield increased 2 basis points, while the deposit cost of funds declined 9 basis points.

The allowance for loan losses to total loans was 1.24% at September 30, 2011 as compared to 1.28% at June 30, 2011, 1.24% at December 31, 2010 and 1.23% at September 30, 2010. Non-performing assets, which include non-performing loans of $2.6 million and other real estate owned of $1.1 million, totaled $3.7 million at September 30, 2011. Non-performing assets to total assets decreased from 2.95% at June 30, 2011 to 2.71% at September 30, 2011 primarily due to charge-offs and the sale of one other real estate owned property during the quarter. Marshall stated, "The economy is absolutely the overriding factor in loan quality. Quality underwriting has shown stress points that never were apparent in the past. We continue to see a quarter by quarter improvement in the stressed pool of loans as we work through the legal system and dispose of the assets."

The loan portfolio grew $1.7 million, or 1.5%, during the third quarter from $112.7 million at June 30, 2011 to $114.4 million at September 30, 2011. Total loans increased a net $1.4 million during the first nine months of 2011, growing from $113.0 million at December 31, 2010 to $114.4 million at September 30, 2011.

The following table illustrates the composition of the loan portfolio:



Sept. 30,
2011

Dec. 31,
2010

Sept. 30,
2010





Commercial real estate

$ 69,723,326

$ 71,538,599

$ 67,828,719

Commercial construction

5,867,000

2,840,605

3,757,082

Commercial business

12,723,271

12,276,455

12,633,286

Consumer

26,108,408

26,331,755

25,428,264





Total loans

$114,422,005

$112,987,414

$109,647,351




Deposits increased $1.1 million, or 0.9% from $118.0 million at June 30, 2011 to $119.1 million at September 30, 2011. During the third quarter, certificates of deposit increased $913 thousand, or 1.3%, from $67.8 million at June 30, 2011 to $68.7 million at September 30, 2011. Money market deposits declined $2.8 million, or 6.3%, from $45.3 million at June 30, 2011 to $42.4 million at September 30, 2011. During the nine months ended September 30, 2011, total deposits increased $9.6 million, or 8.8%, with significant growth in the certificate of deposit portfolio offset by decline in money market deposits. Certificates of deposit have been used to lock in longer term funding at historic low interest rates.

The Bank issued preferred stock in three different series in 2009 as part of the United States Department of the Treasury's Capital Purchase Program (CPP). Preferred stock dividends are accrued monthly and all dividend payments have been made in accordance with the terms of the preferred stock issued. On September 15, 2011, the Bank redeemed all CPP preferred stock outstanding and issued a new series of preferred stock under the United States Department of the Treasury's Small Business Lending Fund (SBLF). Chairman James B. Griffin stated, "CPP, at the time, was a significant benefit to common shareholders as we grew the bank beyond our then current capital. Our September repayment of CPP, through the SBLF, provides potential for a lower preferred dividend option which benefits the Bank and the common shareholders as we continue to grow."

Third quarter dividends and accretion of $132,455 included $62,833 specifically related to the redemption of CPP preferred stock as the warrant preferred accretion was accelerated to fully redeem all preferred shares issued. After accounting for preferred stock dividends and accretion, net income available to common shareholders for the quarter ended September 30, 2011 was $126,895. This compares to net income available to common shareholders of $104,909 for the quarter ended June 30, 2011 and $80,439 for the quarter ended September 30, 2010.

Non-interest income for the quarter ended September 30, 2011 was $39,849, as compared to $39,053 for the previous quarter. Non-interest income for the nine months ended September 30, 2011 of $131,117 was $64,162, or 95.8% higher than non-interest income of $66,955 for the nine months ended September 30, 2010. This increase was primarily due to rental income on other real estate owned properties.

Non-interest expense decreased $33,350, or 4% in the three months ended September 30, 2011 as compared to the three months ended June 30, 2011. This decrease was primarily due to lower professional fees and lower other real estate owned expenses. Non-interest expense for the nine months ended September 30, 2011 of $2.4 million was $262 thousand, or 12.1% higher than non-interest expense of $2.2 million for the nine months ended September 30, 2010. This increase was due to higher salaries and benefits associated with a higher headcount, higher losses on sales of other real estate owned properties and higher expenses of other real estate owned properties. During the nine months ended September 30, 2011, six other real estate owned properties were disposed of and two were added.

Selected Financial Data:


Balance Sheets (unaudited)


September 30,
2011

Dec. 31,
2010




Cash and due from banks

$   5,607,716

$   1,968,246

Investments

14,002,044

9,333,483

Loans

114,422,005

112,987,414

Allowance for loan losses

(1,418,460)

(1,399,993)

Premises & equipment

161,685

127,419

Other assets

2,679,590

3,341,266




Total assets

$ 135,454,580

$ 126,357,835




Non-interest bearing deposits

$   6,557,860

$   4,393,823

Interest-bearing checking

1,461,987

1,168,134

Money market

42,413,180

51,075,527

Time deposits

68,672,454

52,821,057

 Total deposits

119,105,481

109,458,541

Borrowings

-

1,928,000

Other liabilities

1,270,691

395,402




Total liabilities

120,376,172

111,781,943




Preferred stock

5,083,000

5,066,833

Common stock

1,453,094

1,453,094

Surplus

9,639,185

9,635,586

Accumulated other

 comprehensive income (loss)

116,981

(31,982)

Accumulated deficit

(1,213,852)

(1,547,639)

Total stockholders' equity

15,078,408

14,575,892




Total Liabilities &

    Stockholders' Equity

$ 135,454,580

$ 126,357,835





Performance Statistics (unaudited)

Qtr Ended
Sept. 30,
2011

Qtr Ended
June 30,
2011

Qtr Ended
Mar. 31,
2011

Qtr Ended
Dec. 31,
2010

Qtr Ended
Sept. 30,
2010







Net interest margin

3.77%

3.75%

3.91%

3.77%

3.40%

Nonperforming loans/total loans

2.23%

2.77%

2.35%

2.21%

3.10%

Nonperforming assets/

  Total assets

2.71%

2.95%

3.32%

3.42%

3.36%

Allowance for loan losses/

  Total loans

1.24%

1.28%

1.27%

1.24%

1.23%

Average loans/Average assets

84.9%

84.9%

88.0%

87.8%

84.3%

Non interest expenses*/

  Average assets

2.32%

2.52%

2.58%

2.83%

2.15%







* Annualized



Income Statements (unaudited)


Qtr Ended
Sept. 30,
2011

Qtr Ended
June 30,
2011

Qtr Ended
Mar. 31,
2011

Qtr Ended
Dec. 31,
2010

Qtr Ended
Sept. 30,
2010







INTEREST INCOME






Loans

$1,628,005

$1,587,688

$1,585,435

$1,594,093

$1,575,193

Investments

71,048

63,007

55,056

28,027

39,327

Federal funds sold

-

-

147

704

822

Other

3,644

1,899

1,016

5,047

7,069

Total interest income

1,702,697

1,652,594

1,641,654

1,627,871

1,622,411







INTEREST EXPENSE






Borrowings

2,338

8,867

13,973

23,060

28,818

Checking

877

743

708

817

865

Money Market

111,541

128,543

137,358

145,307

204,531

Time deposits

316,255

306,267

281,783

270,011

290,097

Total interest expense

431,011

444,420

433,822

439,195

524,311







Net interest income

1,271,686

1,208,174

1,207,832

1,188,676

1,098,100







Provision for loan losses

126,065

151,933

179,756

120,888

202,576







NON INTEREST INCOME

39,849

39,053

52,215

22,428

23,332







NON INTEREST EXPENSE






Salaries & benefits

357,253

346,362

343,817

313,127

307,260

Occupancy & equipment

79,946

74,442

78,339

75,080

74,445

Data processing

53,041

51,552

50,909

49,154

46,908

Professional fees

87,042

103,308

91,089

99,816

78,435

Advertising

8,476

8,045

16,203

2,903

4,825

Other real estate owned expenses

52,502

97,676

71,806

237,791

14,387

Other non interest

    Expenses

153,718

143,943

162,796

146,188

160,288

Total non interest

    Expense

791,978

825,328

814,959

924,059

686,548







Pre-tax income

393,492

269,966

265,332

166,157

232,308







Tax expense

(134,142)

(92,919)

(91,212)

(57,296)

(79,731)







Net income

$  259,350

$  177,047

$  174,120

$  108,861

$  152,577







Preferred stock dividends and accretion

(132,455)

(72,138)

(72,138)

(72,138)

(72,138)







Net income available to common shareholders

$  126,895

$  104,909

$  101,982

$   36,723

$   80,439




Income Statements (unaudited)


Nine Months Ended
Sept. 30,
2011

Nine Months Ended
Sept. 30,
2010




INTEREST INCOME



Loans

$4,801,128

$4,607,768

Investments

189,111

250,549

Federal funds sold

147

2,140

Other

6,559

14,621

Total interest income

4,996,945

4,875,078




INTEREST EXPENSE



Borrowings

25,178

102,275

Checking

2,328

2,448

Money Market

377,443

606,456

Time deposits

904,304

1,029,845

Total interest expense

1,309,253

1,741,024




Net interest income

3,687,692

3,134,054




Provision for loan losses

457,754

449,808




NON INTEREST INCOME

131,117

66,955




NON INTEREST EXPENSE



Salaries & benefits

1,047,432

954,173

Occupancy & equipment

232,727

238,931

Data processing

155,502

149,190

Professional fees

281,439

324,898

Advertising

32,724

17,922

Other real estate owned

   expenses

221,984

19,966

Other non interest expense

460,457

464,855

Total non interest expense

2,432,265

2,169,935




Pre-tax income

928,790

581,266




Tax expense

(318,273)

(199,767)




Net income

$  610,517

$  381,499




Preferred stock dividends and accretion

(276,731)

(216,412)




Net income available to common shareholders

$  333,786

$  165,087




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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