First Resource Bank Announces Record Quarterly Net Income; Total Assets, Loans And Deposits All Reach Record Highs

Jul 22, 2015, 08:00 ET from First Resource Bank

EXTON, Pa., July 22, 2015 /PRNewswire/ -- First Resource Bank (OTCQX: FRSB) announced record financial results for the three months ended June 30, 2015. Net income for the quarter ended June 30, 2015 was $329,300, which was 9% higher than the prior quarter and 10% higher than the second quarter in the prior year.  Total assets were $193.2 million at June 30, 2015, a 7% increase over December 31, 2014. During the first six months loans grew 4% to a record of $163.5 million and deposits grew 14% to a record of $163.7 million.

Glenn B. Marshall, President & CEO, stated, "The second quarter was incredibly successful with our most profitable quarter to date, a fully subscribed common equity raise, the opening of our second branch and payment of our second cash dividend. First Resource Bank's momentum is strong and we are now seeing the results of years of planning and hard work generating record financial results."

After accounting for preferred stock dividends, net income available to common shareholders for the quarter ended June 30, 2015 was $316,592. This compares to net income available to common shareholders of $288,328 for the quarter ended March 31, 2015 and $287,903 for the quarter ended June 30, 2014.

Net income for the six months ended June 30, 2015 was $630,336, a 6% improvement over the same period in the prior year. Net income available to common shareholders also increased 6% as compared to the prior year, growing from $570,944 for the six months ended June 30, 2014 to $604,920 for the six months ended June 30, 2015.

Net interest income was $1,657,079 for the quarter ended June 30, 2015 as compared to $1,625,573 for the previous quarter, an improvement of 2%.  The net interest margin decreased 12 basis points from 4.01% for the quarter ended March 31, 2015 to 3.89% for the quarter ended June 30, 2015. The overall yield on interest earning assets decreased 10 basis points during the second quarter, to 4.79%, with loan yields down 1 basis point, to 4.96%, and investment yields down 108 basis points to 2.14%. Investment yields decreased during the second quarter due to a one-time special FHLBank of Pittsburgh dividend received during the first quarter. Without that special dividend the net interest margin for the first quarter would have been 3.97%. The total cost of interest bearing liabilities increased 3 basis points during the second quarter, led by a 36 basis point increase in the cost of borrowings, as the Bank took advantage of low interest rates to lock in longer term funding towards the end of the first quarter and reduced overnight borrowings during the second quarter. The deposit cost of funds decreased 1 basis point to 0.98%. 

Net interest income for the six months ended June 30, 2015 was $3,282,652, an 11% improvement over net interest income of $2,964,069 for the six months ended June 30, 2014.

Deposits increased $16.6 million, or 11%, from $147.1 million at March 31, 2015 to $163.7 million at June 30, 2015. During the second quarter, certificates of deposit increased $2.3 million, or 3%, from $81.2 million at March 31, 2015 to $83.6 million at June 30, 2015. Money market deposits increased $4.3 million, or 8%, from $51.9 million at March 31, 2015 to $56.3 million at June 30, 2015. Non-interest bearing deposits increased $5.5 million, or 54% from $10.1 million at March 31, 2015 to $15.6 million at June 30, 2015, with $3 million of that growth attributed to capital raise subscriptions in process. Interest-bearing checking balances increased $4.5 million, or 118% from $3.8 million at March 31, 2015 to $8.3 million at June 30, 2015, with the majority of this increase attributed to title company customers who have balances that fluctuate significantly due to the nature of their business. The deposit portfolio grew $20.4 million, or 14.2%, in the first six months of 2015.

The loan portfolio increased $3.5 million, or 2%, during the second quarter from $160.1 million at March 31, 2015 to $163.5 million at June 30, 2015. Most of that growth was in the commercial and commercial real estate portfolio. Second quarter loan growth was net of a $3.0 million SBA loan sale that closed in June. Year to date net loan growth in 2015 was $6.2 million, or 4%.

The following table illustrates the composition of the loan portfolio:


June 30,

2015

Dec. 31,

2014

June 30,

2014





Commercial real estate

$  105,614,061

$  102,290,962

$    96,505,031

Commercial construction

12,436,796

12,235,078

7,698,285

Commercial business

20,878,866

17,483,708

13,552,767

Consumer

24,618,746

25,316,420

25,539,445





Total loans

$  163,548,469

$  157,326,168

$  143,295,528

The allowance for loan losses to total loans was 0.83% at June 30, 2015 as compared to 0.84% at December 31, 2014 and 0.96% at June 30, 2014.  Non-performing assets, which include non-performing loans of $2.7 million and other real estate owned of $303 thousand, totaled $3.0 million at June 30, 2015, a 10% decline as compared to the prior quarter. Non-performing assets to total assets decreased from 1.86% at March 31, 2015 to 1.56% at June 30, 2015 due to a decline in non-performing loans and an increase in total assets.

Non-interest income for the quarter ended June 30, 2015 was $463,864, as compared to $76,290 for the previous quarter and $98,946 for the second quarter of the prior year. Current quarter results include $389 thousand in SBA loan sale income, of which there were none during the prior quarter or in the second quarter of the prior year.

Non-interest income for the six months ended June 30, 2015 was $540,154, as compared to $194,913 for the same period in the prior year. There was $389 thousand in SBA loan sale income in the first six months of 2015 and none in the first six months of 2014.

Non-interest expense increased $147 thousand, or 12%, in the three months ended June 30, 2015 as compared to the prior quarter. All expense categories increased quarter over quarter, primarily due to the opening of the second branch location during the second quarter.

Non-interest expense increased $478 thousand, or 22%, in the six months ended June 30, 2015 as compared to the same period in the prior year. This increase was due to higher salaries and benefits expenses, higher occupancy, data processing, loan and supplies expense, partially offset by lower professional fees and other real estate owned expense.

Included in federal income tax expense for the three months ended June 30, 2015 is a one-time $99 thousand write down of a deferred tax asset related to stock options that expired unexercised.

The common equity raise announced on June 2, 2015 was fully subscribed by July 1, 2015, including the optional 40,000 extra shares permitted per the Offering Circular. A total of 360,000 shares were issued in July pursuant to this Offering. A limited amount of the Bank's 6.50% subordinated debt remains available. 

Selected Financial Data:

Balance Sheets (unaudited)



June 30,
2015

December 31,
2014






Cash and due from banks

$   12,484,486

$        817,026


Investments

6,162,622

11,711,637


Loans

163,548,469

157,326,168


Allowance for loan losses

(1,364,055)

(1,317,363)


Premises & equipment

6,387,004

5,517,252


Other assets

5,961,395

6,472,819






Total assets

$ 193,179,921

$ 180,527,539






Non-interest bearing deposits

$   15,559,490

$     9,355,013


Interest-bearing checking

8,332,779

4,349,552


Money market

56,251,591

51,400,506


Time deposits

83,586,956

78,243,292


  Total deposits

163,730,816

143,348,363


Short term borrowings

-

12,000,000


Long term borrowings

10,061,500

6,499,000


Other liabilities

841,019

654,739






Total liabilities

174,633,335

162,502,102






Preferred stock

5,083,000

5,083,000


Common stock

1,613,592

1,612,283


Surplus

9,529,877

9,523,083


Accumulated other

  comprehensive income

 

64,222

 

91,577


Retained earnings

2,255,895

1,715,494


Total stockholders' equity

18,546,586

18,025,437






Total Liabilities &

     Stockholders' Equity

$ 193,179,921

$ 180,527,539


 

Performance Statistics (unaudited)







Qtr Ended

June 30,

2015

Qtr Ended

Mar. 31,

2015

Qtr Ended

Dec. 31,

2014

Qtr Ended

Sept. 30,

2014

Qtr Ended

June 30,

2014







Net interest margin

3.89%

4.01%

3.97%

3.89%

3.93%

Nonperforming loans/total loans

1.66%

1.95%

1.64%

1.77%

1.21%

Nonperforming assets/

   Total assets

1.56%

1.86%

1.57%

1.76%

1.31%

Allowance for loan losses/

   Total loans

0.83%

0.84%

0.84%

0.87%

0.96%

Average loans/Average assets

88.5%

89.5%

88.1%

87.4%

86.8%

Non-interest expenses*/

   Average assets

3.07%

2.89%

2.71%

2.79%

2.81%

Earnings per share – basic and

   diluted

$0.20

$0.18

$0.15

$0.15

$0.18







* Annualized






 

Income Statements (unaudited)



Qtr. Ended
June 30,

2015

Qtr. Ended
Mar. 31,

2015

Qtr. Ended
Dec. 31,

2014

Qtr. Ended
Sept. 30,

2014

Qtr. Ended
June 30,

2014







INTEREST INCOME






Loans, including fees

$1,999,455

$1,923,274

$1,940,824

$1,825,644

$1,784,064

Securities

37,383

57,947

63,004

58,636

59,811

Other

1,198

63

60

46

910

 Total interest income

2,038,036

1,981,284

2,003,888

1,884,326

1,844,785







INTEREST EXPENSE






Deposits

346,228

332,872

329,895

321,175

321,473

Borrowings

34,729

22,839

25,173

21,576

17,893

 Total interest expense

380,957

355,711

355,068

342,751

339,366







Net interest income

1,657,079

1,625,573

1,648,820

1,541,575

1,505,419







Provision for loan losses

92,217

17,622

296,205

116,176

27,270







Net interest income after
provision for loan losses

1,564,862

1,607,951

1,352,615

1,425,399

1,478,149







NON-INTEREST INCOME






BOLI income

30,098

30,072

30,740

31,012

31,216

Gain on sale of SBA loans

389,160

-

103,661

-

-

Gain on sale of securities

-

15,641

50,286

-

-

Other

44,606

30,577

34,018

84,332

67,730

 Total non-interest income

463,864

76,290

218,705

115,344

98,946







NON-INTEREST EXPENSE






Salaries & benefits

688,885

673,716

565,894

572,973

562,031

Occupancy & equipment

190,100

151,801

196,056

157,885

139,784

Professional fees

89,414

82,427

60,069

76,624

93,708

Advertising

63,304

23,176

29,792

51,268

33,200

Data processing

82,476

74,957

76,368

69,316

68,379

Other real estate

44,113

25,361

42,789

35,000

59,689

Other

237,545

217,013

222,717

210,872

183,345

Total non-interest

     expense

1,395,837

1,248,451

1,193,685

1,173,938

1,140,136







Income before income tax
expense

632,889

435,790

377,635

366,805

436,959







Federal Income Tax
expense

303,589

134,754

121,628

113,478

136,349







Net income

$   329,300

$   301,036

$   256,007

$   253,327

$   300,610







Preferred stock dividends

(12,708)

(12,708)

(12,708)

(12,707)

(12,707)







Net income available to
common shareholders

$   316,592

$   288,328

$   243,299

$   240,620

$   287,903

 

Income Statements (unaudited)







Six Months

Ended
June 30,

2015

Six Months

Ended
June 30,

2014




INTEREST INCOME



Loans

$   3,922,729

$   3,527,797

Investments

95,330

120,299

Other

1,261

2,814

 Total interest income

4,019,320

3,650,910




INTEREST EXPENSE



Deposits

679,100

651,470

Borrowings

57,568

35,371

 Total interest expense

736,668

686,841




Net interest income

3,282,652

2,964,069




Provision for loan losses

109,839

124,520




Net interest income after provision for
loan losses

3,172,813

2,839,549




NON-INTEREST INCOME



BOLI income

60,170

62,248

Gain on sale of SBA loans

389,160

-

Gain on sale of securities

15,641

-

Other

75,183

132,665

 Total non-interest income

540,154

194,913




NON-INTEREST EXPENSE



Salaries & benefits

1,362,601

1,089,262

Occupancy & equipment

341,901

252,941

Professional fees

171,841

182,631

Advertising

86,480

50,737

Data processing

157,433

134,848

Other real estate owned expenses

69,474

102,419

Other non-interest expense

454,558

353,131

Total non-interest expense

2,644,288

2,165,969




Pre-tax income

1,068,679

868,493




Tax expense

438,343

272,134




Net income

$      630,336

$      596,359




Preferred stock dividends

(25,416)

(25,415)




Net income available to common
shareholders

$      604,920

$      570,944

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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