First Bank of Delaware Reports Fourth Quarter and Year to Date Earnings

WILMINGTON, Del., Feb. 3, 2012 /PRNewswire/ -- First Bank of Delaware (the "Bank") (OTCBB:FBOD), today announced its financial results for the fourth quarter and twelve months ended December 31, 2011. During the quarter the Bank recorded a loss of $1.9 million or $0.16 per share, compared to earnings of $1.6 million or $0.14 per share for the fourth quarter 2010, a decline of $3.7 million. The loss is primarily due to costs incurred as the Bank exited its E-Payment programs. Earnings for the year ended December 31, 2011 were $1.6 million or $0.14 per share compared to earnings of $3.4 million or $0.30 per share for the comparable prior year period, a decrease of $1.7 million.  The decrease in year over year earnings is attributable to the Bank's exit  from its Short-term Consumer Loan program in December 2010 in addition to the aforementioned costs to exit E-Payment programs in 2011.

Significant items include:

Net Interest Income for the fourth quarter of 2011 was $1.6 million, a decrease of $3.6 million or 69% from $5.2 million for the fourth quarter of 2010. Net Interest Income for the year ended December 31, 2011 was $9.0 million, a decrease of $7.4 million or 45% from $16.4 million for the comparable prior year period. The decrease in Net Interest Income was due primarily to our exit from the Short-term Consumer Loan program on December 31, 2010. The Short-term Consumer Loan program contributed $3.7 million of interest income in the fourth quarter of 2010 compared to no interest income contribution for the fourth quarter of 2011, and $2.3 million for the twelve months ended December 31, 2011 compared to $11.2 million for 2010.

Excluding the impact of the Short-term Consumer Loan program, Net Interest Margin for the fourth quarter of 2011 was 2.74%, a decline of 28 basis points from 3.02% for the fourth quarter of 2010,  and Net Interest Margin for the year ended December 31, 2011 was 3.11% compared to 3.02% for the comparable prior year period, an increase of 9 basis points.

Revenue from E-Payment programs, which includes Remote Check Deposits, ACH Services and Merchant Transaction processing, was $151,000 for the fourth quarter of 2011, a decrease of $1.3 million from the fourth quarter of 2010. The decline in revenue was primarily the result of our exiting these programs in the fourth quarter of 2011. Revenue from E-Payment Programs was $3.2 million for the years ended December 31, 2011 and 2010. Consistent with the terms of the December 29, 2011 Consent Order issued by the FDIC, the Bank exited all E-Payment programs as of December 31, 2011.

Total Shareholder's Equity at December 31, 2010 was $46.0 million. The Bank's Tier 1 Leverage Capital Ratio was 17.90% and the Total Risk Based Capital Ratio was 36.38%.    

Total assets at December 31, 2011 were $256.0 million, representing an increase of $36.9 million or 16.8% over December 31, 2010. The increase was primarily the result of increases in Overnight Fed Funds Sold of $42.4 funded by Federal Home Loan Bank borrowings to enhance liquidity during the exit of certain programs. Total Deposits at December 31, 2011 were $168.3 million, a decrease of $1.7 million from $170.0 million at December 31, 2010.

Total Loans at December 31, 2011 were $122.2 million, an increase of $1.5 million from $120.5 million at December 31, 2010.

Total deposits decreased $1.7 million to $168.3 million at December 31, 2011 from $170.0 million at December 31, 2010. Demand deposits were essentially unchanged at approximately $67.0 million at December 31, 2011 and 2010. A decrease of $29.1 million in money market deposits between the periods was offset by an increase in time deposits of $28.6 million. The Bank's cost of funds declined of 25 basis points from 0.92% for the year ended 2010 to 0.67% for 2011. The Bank's cost of funds may increase going forward as program related demand and money market deposits  run off and are replaced by higher costing time deposits. The Bank borrowed $40.0 million in term funds from the Federal Home Bank of Pittsburgh in November 2011. The borrowing has a 2 year term and bears interest at 0.74%.  This borrowing enhanced our liquidity levels and offset the expected impact of deposit losses related to businesses discontinued by the Bank.

At December 31, 2011, our non-performing assets were $0, a $1.5 million decrease from $1.5 million at December 31, 2010.  Non-performing assets represented 0.0% of total assets at December 31, 2011 versus 0.67% at December 31, 2010.  

As noted in prior releases, the Bank ceased offering its internet based installment product as of December 31, 2010. These consumer loans were offered nationally via the Internet and telephone. The decision to cease offering these loans had a materially adverse effect on earnings. Revenues from the internet installment product included Interest Income of $11.2 million and Fee Income of $3.7 million for the year ended December 31, 2010, or $14.9 million of the Bank 's Total Revenues of $26.1 million for 2010.  The Provision for Loan Losses for the internet product was $4.6 million in 2010.  No additional Provisions for Loan Losses for this product were taken  in 2011. The Bank  continues to earn interest and fee income for this product until the loans are sold or repaid. The loans were sold in March 2011.  The Bank earned interest and fee income of $5.9 million on the discontinued installment loan product in 2011, and does not expect any material revenues from the product in 2012. The Bank  ceased offering its E-Payments Programs and credit cards in 2011. These products contributed $4.5 million to 2011 revenues. The Bank  has begun to reduce certain expenses to reflect the loss of these products.

First Bank of Delaware is a full-service, state-chartered commercial bank, whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC).

The Bank  provides diversified financial products through two locations in New Castle County.

As previously reported on a Form 8-K, dated December 30, 2011, the Bank agreed to the issuance of a Consent Order by the FDIC, which became effective on December 29, 2011 (the "Consent Order').  Under the terms of the Consent Order, the Bank may either take a series of specified actions regarding its future operating plans and policies or submit a strategic plan to the FDIC by March 28, 2012 to wind down the operations of the Bank by December 31, 2012.   The Bank is currently addressing the requirements of and considering the alternatives included in the Consent Order.  A copy of the Consent Order is included as an exhibit to the Bank's Form 8-K, dated December 30, 2012, which is available under the "Investor Relations" section of the Bank's website at www.fbdel.com.  

The Bank  may from time to time make written or oral "forward-looking statements", including statements contained in this release and in the Bank 's filings with the FDIC. These forward-looking statements include statements with respect to the Bank 's beliefs, plans, objectives, goals, expectations, anticipations, estimates, and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors, including without limitation the Bank's ability to address the matters included in the Consent Order, many of which are beyond the Bank 's control. The words "may", "could", "should", "would", "believe", "anticipate", "estimate", "expect", "intend", "plan", and similar expressions are intended to identify forward-looking statements. All such statements are made in good faith by the Bank  pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. The Bank  does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Bank .

SOURCE First Bank of Delaware