First Resource Bank Announces Most Profitable Quarter To Date; 2017 First Quarter Net Income Grew 60% Over The Prior Year

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Apr 25, 2017, 08:00 ET

EXTON, Pa., April 25, 2017 /PRNewswire/ -- First Resource Bank (OTCQX: FRSB) announced financial results for the three months ended March 31, 2017.

Highlights for the first quarter of 2017 included:

Net income of $406,553, which was 60% higher than the prior year first quarter and 4% higher than the fourth quarter of 2016
Total interest income and net interest income grew 15% over the prior year
Gains of $155,337 on the sale of SBA loans were recognized
Cost of interest bearing deposits declined 4 basis points
Book value per share grew $0.22 to $8.61

Glenn B. Marshall, President & CEO, stated, "The first quarter of 2017 was the fifth consecutive quarter of increasing profitability. We remain focused on growing the balance sheet in an efficient way, avoiding short term pricing decisions to attract loan volume on terms that will hurt us down the road. Our funding mix has improved with organic deposit growth replacing certificates of deposit and non-core sources of funds as they mature. We continue to focus on growing checking deposits to improve our deposit mix and lower our cost of funds."

Net income for the quarter ended March 31, 2017 was $406,553, which compares to $390,990 for the previous quarter and $254,119 for the first quarter of the prior year. The first quarter of 2016 was the last quarter to incur preferred stock dividends due to the redemption of all preferred stock during that quarter.

Net interest income was $2,096,391 for the quarter ended March 31, 2017 as compared to $2,050,560 for the previous quarter, an improvement of 2%. The net interest margin decreased 1 basis point from 3.71% for the quarter ended December 31, 2016 to 3.70% for the quarter ended March 31, 2017. The overall yield on interest earning assets decreased 6 basis points during the first quarter, however loan yields held steady at 5.11%. The decline in asset yield is attributed to an increase in cash and securities during the first quarter. The total cost of interest bearing liabilities declined 5 basis points during the first quarter, led by a 4 basis point decline in the cost of interest bearing deposits, to 0.90%.

Non-interest income for the quarter ended March 31, 2017 was $261,270, as compared to $139,274 for the previous quarter and $72,934 for the first quarter of the prior year. There were $155 thousand in gains on sales of SBA loans recognized during the first quarter of 2017, as compared to $55 thousand in gains in the prior quarter and no gains in the first quarter of 2016.

Non-interest expense increased $117 thousand, or 8%, in the three months ended March 31, 2017 as compared to the prior quarter. The increase was primarily due to growth in salaries and benefits expense, advertising, professional fees and other expense. Growth in other expenses is primarily attributable to costs associated with SBA loans sold during the first quarter.

Deposits grew $1.4 million, or 1%, from $202.7 million at December 31, 2016 to $204.1 million at March 31, 2017. During the first quarter, non-interest bearing deposits increased $1.2 million, or 6%, from $18.8 million at December 31, 2016 to $20.0 million at March 31, 2017. Interest-bearing checking balances increased $406 thousand, or 5%, from $8.1 million at December 31, 2016 to $8.5 million at March 31, 2017. Money market deposits grew $3.4 million, or 4%, from $92.0 million at December 31, 2016 to $95.4 million at March 31, 2017. Certificates of deposit decreased $3.5 million, or 4%, from $83.7 million at December 31, 2016 to $80.2 million at March 31, 2017. Total deposits grew from $168.9 million at March 31, 2016 to $204.1 million at March 31, 2017, an increase of $35.2 million, or 20.9%, with growth in non-interest bearing checking, interest checking and money markets offset by a decline in certificates of deposit.

The loan portfolio grew $4.2 million, or 2%, during the first quarter from $197.8 million at December 31, 2016 to $202.0 million at March 31, 2017, with the majority of that growth in commercial real estate and construction loans. The loan portfolio grew from $179.8 million at March 31, 2016 to $202.0 million at March 31, 2017, an increase of $22.3 million or 12.4%, with growth in the commercial real estate, commercial business and construction portfolios offset by a decline in the consumer portfolio.

The following table illustrates the composition of the loan portfolio:

	Mar. 31, 2017		Dec. 31, 2016	Mar. 31, 2016

Commercial real estate		$ 133,235,684	$ 130,284,708	$ 118,587,106
Commercial construction		19,716,986	17,024,921	17,506,108
Commercial business		26,727,194	26,435,709	19,406,578
Consumer		22,347,176	24,093,510	24,271,503

Total loans		$ 202,027,040	$ 197,838,848	$ 179,771,295

The allowance for loan losses to total loans was 0.81% at March 31, 2017 as compared to 0.80% at December 31, 2016 and 0.79% at March 31, 2016. Non-performing assets consisted solely of non-performing loans of $1.4 million at March 31, 2017, a 4% decrease as compared to the prior quarter. Non-performing assets to total assets decreased from 0.63% at December 31, 2016 to 0.60% at March 31, 2017. This decrease at March 31, 2017 was due to the sale of the final other real estate owned property that remained at December 31, 2016.

Total stockholder's equity increased 3% from $17.6 million at December 31, 2016 to $18.1 million at March 31, 2017, primarily due to net income generated.

Selected Financial Data:
Balance Sheets (unaudited)

	March 31, 2017	December 31, 2016

Cash and due from banks	$ 8,096,173	$ 3,210,601
Investments	19,999,954	28,959,596
Loans	202,027,040	197,838,848
Allowance for loan losses	(1,633,246)	(1,579,068)
Premises & equipment	5,908,898	5,955,748
Other assets	6,380,250	6,530,305

Total assets	$ 240,779,069	$ 240,916,030

Non-interest bearing deposits	$ 19,995,762	$ 18,849,933
Interest-bearing checking	8,512,378	8,106,745
Money market	95,423,938	91,971,538
Time deposits	80,177,023	83,726,935
Total deposits	204,109,101	202,655,151
Short term borrowings	-	-
Long term borrowings	13,387,500	15,607,500
Subordinated debt	3,971,232	3,969,108
Other liabilities	1,209,161	1,065,532

Total liabilities	222,676,994	223,297,291

Common stock	2,102,476	2,100,299
Surplus	12,150,497	12,136,088
Accumulated other comprehensive income (loss)	(13,652)	(73,849)
Retained earnings	3,862,754	3,456,201
Total stockholders' equity	18,102,075	17,618,739

Total Liabilities & Stockholders' Equity	$ 240,779,069	$ 240,916,030

Performance Statistics
(unaudited)
	Qtr Ended Mar. 31, 2017	Qtr Ended Dec. 31, 2016	Qtr Ended Sept. 30, 2016	Qtr Ended June 30, 2016	Qtr Ended Mar. 31, 2016

Net interest margin	3.70%	3.71%	3.69%	3.86%	3.85%

Nonperforming loans/ Total loans	0.71%	0.73%	1.39%	1.28%	1.71%

Nonperforming assets/ Total assets	0.60%	0.63%	1.21%	1.16%	1.57%

Allowance for loan losses/ Total loans	0.81%	0.80%	0.79%	0.77%	0.79%

Average loans/Average assets	82.3%	83.9%	85.2%	88.5%	87.7%

Non-interest expenses*/ Average assets	2.75%	2.61%	2.67%	2.80%	2.99%

Earnings per share – basic and diluted**	$0.19	$0.19	$0.16	$0.15	$0.12

Book value per share**	$8.61	$8.39	$8.30	$8.13	$7.98

Total shares outstanding	2,102,476	2,100,299	2,082,721	2,080,360	1,979,234


* Annualized
** Per share data has been adjusted retroactively for all periods presented to reflect the 5% stock dividend paid in May 2016.

Income Statements (unaudited)
	Qtr. Ended Mar. 31, 2017	Qtr. Ended Dec. 31, 2016	Qtr. Ended Sept. 30, 2016	Qtr. Ended June 30, 2016	Qtr. Ended Mar. 31, 2016

INTEREST INCOME
Loans, including fees	$2,503,577	$2,497,685	$2,378,314	$2,288,773	$2,215,684
Securities	98,823	78,237	61,203	61,264	64,186
Other	21,723	11,994	11,099	132	1,108
Total interest income	2,624,123	2,587,916	2,450,616	2,350,169	2,280,978

INTEREST EXPENSE
Deposits	409,673	412,849	396,349	362,111	354,627
Borrowings	50,935	56,665	56,907	52,197	43,343
Subordinated debt	67,124	67,842	67,847	67,486	67,485
Total interest expense	527,732	537,356	521,103	481,794	465,455

Net interest income	2,096,391	2,050,560	1,929,513	1,868,375	1,815,523

Provision for loan losses	120,024	91,061	43,737	64,125	24,861

Net interest income after provision for loan losses	1,976,367	1,959,499	1,885,776	1,804,250	1,790,662

NON-INTEREST INCOME
BOLI income	28,370	29,129	29,528	29,330	29,281
Gain on sale of SBA loans	155,337	54,708	-	-	-
Other	77,563	55,437	48,418	51,413	43,653
Total non-interest income	261,270	139,274	77,946	80,743	72,934

NON-INTEREST EXPENSE
Salaries & benefits	863,822	840,314	830,995	809,699	832,994
Occupancy & equipment	190,781	193,331	190,840	192,932	194,695
Professional fees	113,494	92,623	73,631	72,489	76,851
Advertising	42,475	23,352	35,394	38,667	42,048
Data processing	96,278	88,497	91,782	87,968	86,514
Other	332,733	284,104	250,501	239,039	262,868
Total non-interest	1,639,583	1,522,221	1,473,143	1,440,794	1,495,970
expense

Income before income tax expense	598,054	576,552	490,579	444,199	367,626

Federal Income Tax expense	191,501	185,562	158,570	140,084	113,507

Net income	$ 406,553	$ 390,990	$ 332,009	$ 304,115	$ 254,119

Preferred stock dividends	-	-	-	-	(2,577)

Net income available to common shareholders	$ 406,553	$ 390,990	$ 332,009	$ 304,115	$ 251,542

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