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

WILMINGTON, Del., Nov. 2, 2011 /PRNewswire/ -- First Bank of Delaware ("the Company") (OTCBB: FBOD), today reported third quarter 2011 earnings of $358,000 or $0.03 per diluted share, compared to $1.0 million or $0.09 per diluted share for the comparable prior year period. The decrease in earnings reflected the decision to cease offering short-term consumer loans effective December 31, 2010 from which the Bank earned interest income and fees.  Earnings for the nine month period ended September 30, 2011 were $3.4 million or $0.30 per diluted share compared to $1.8 million or $0.16 per diluted share for the comparable prior year period. The increased earnings of $1.6 million are primarily the result of increases in non interest income.  At September 30, 2011, total shareholders' equity was $47.8 million and the leverage ratio was 21.01%. The total risk-based capital ratio was 36.95%, and the book value per share was $4.19 at September 30, 2011.

Earnings for the third quarter 2011 as compared to the third quarter of 2010 decreased $672,000 or $0.06 per diluted share.  This decrease was due primarily to reduced interest earned of $3.2 million and fees earned of $641,000 from the short-term consumer loan product.  Non-interest income decreased by $745,000 primarily as a result of the Bank's decision to exit e-payment products.  These decreases were partially offset by a reduction in the provision for loan losses of $2.1 million, due primarily to the sale of the short term consumer loan portfolio in the first quarter of 2011, and a $338,000 increase in interest income from growth in our commercial loan portfolio.  Fees from the merchant acquiring program increased $109,000, fees from the money service business increased $74,000 and the interest paid on deposits decreased $91,000.  In addition, operating expenses decreased $946,000 primarily due to reduced salary expense and income taxes decreased $350,000.

Earnings for the nine months ended September 30, 2011 are $3.4 million, an increase of $1.6 million from $1.8 million for the nine months ended September 30, 2010. This increase is primarily due to an increase in non interest income of $3.0 million.  Specifically, fees from the short term consumer loan program increased $972,000, fees from the merchant acquiring program increased $1.9 million, fees from the money service business increased $398,000 and fees from deposit accounts increased $61,000.  In addition, the Company sold the short term consumer loan portfolio at a gain of $610,000 in the first quarter of 2011. Partially offsetting these increases was a $629,000 decrease in non-interest income related to the Bank's decision to exit e-payment products.

Net interest income for the nine months ended September 30, 2011 was $7.4 million, a decrease of $3.8 million from $11.1 million for the nine months ended September 30, 2010. This decrease was due primarily to a decrease of $5.2 million in interest income from the short term consumer loan portfolio from $7.5 million for 2010 to $2.3 million for 2011.  This decrease was partially offset by an increase of $1.3 million in interest earned from growth in the commercial loan portfolio.  Interest paid on deposits decreased $73,000. The decrease in net interest income was partially offset by a decrease of $3.3 million in the provision for loan losses due primarily to the discontinued short term consumer loan program.  Operating expenses increased $28,000 due to an increase of $1.3 million in other expenses, primarily increased merchant acquiring expense of $754,000, and increased legal expense of $228,000.  These increases were partially offset by decreased salary expense of $1.2 million. Tax expense increased $949,000.  

Net interest margin for the third quarter of 2011 was 3.47% a decrease of 6.75% from 10.22% for the third quarter of 2010. The margin decrease was mainly the result of discontinuing the short-term consumer loan program.  Net interest margin excluding short-term loans, which the Company discontinued offering on December 31, 2010, was 3.03% for the third quarter of 2010.  The improvement was due primarily to a decrease of 23 basis points in rates paid on interest-bearing deposits from 1.43% to 1.20%.

Net interest margin for the nine months ended September 30, 2011 was 4.71% a decrease of 4.54% from 9.25% for the nine months ended September 30, 2010. The margin decrease was mainly the result of discontinuing the short-term consumer loan program.  Net interest margin excluding short-term loans, which the Company discontinued offering on December 31, 2010, was 3.05% for the nine months ended September 30, 2010.  The improvement was due primarily to a decrease of 32 basis points in rates paid on interest-bearing deposits from 1.51% to 1.19%.

Total assets at September 30, 2011 were $232.9 million, representing an increase of $13.8 million or 6.3% from December 31, 2010. The increase was primarily the result of an increase of $16.1 million in interest bearing deposits with banks and an increase in loans receivable of $8.7 million.  Partially offsetting these increases were a reduction of $3.5 million in cash and cash equivalents, a decrease of $886,000 in investments, a decrease of $5.4 million in loans held for sale and a decrease of $1.2 million in other assets.  

Total deposits increased $12.6 million to $182.6 million at September 30, 2011 from $170.0 million at December 31, 2010. The increase was primarily due to a $25.3 million increase in non-interest bearing demand accounts and a $19.0 million increase in certificates of deposit.  These increases were partially offset by a $31.4 million decrease in money market deposit accounts. The Bank anticipates continued deposit reductions as we wind down e-payment product operations.

At September 30, 2011, our non-performing assets were $127,000, a $488,000 decrease from $615,000 at December 31, 2010. The decrease was due to sales of other real estate owned during the period. Non-performing assets represented 0.05% of total assets at September 30, 2011. Non-performing assets as of September 30, 2011 consist of two OREO properties totaling $127,000.  A property was sold in October for $127,000.  The remaining property is carried at zero value.

The decision to cease offering short term consumer loans at December 31, 2010 continues to affect earnings. The Company sold these loans at a gain of $610,000 during the first quarter of 2011. Revenues from this product for the nine months ended September 30, 2011 included interest income of $2.3 million and fee income of $3.5 million. Revenues for the three month period ended September 30, 2011 included only fee income of $371,000. The decrease in revenues was partially offset by a reduction of the provision for loan losses and an improvement in expense associated with personnel required for this program. The Company will continue to earn fee income for this product until the loans are repaid, which is anticipated to be December 2011.  

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

The Company provides diversified financial products through two locations in New Castle County, Delaware.

The Company may from time to time make written or oral "forward-looking statements", including statements contained in this release and in the Company's filings with the FDIC. These forward-looking statements include statements with respect to the Company'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, many of which are beyond the Company'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 Company pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. The Company 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 Company.

SOURCE First Bank of Delaware