First Resource Bank Announces Second Quarter Results

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Jul 22, 2011, 08:00 ET

EXTON, Pa., July 22, 2011 /PRNewswire/ -- First Resource Bank (OTC Bulletin Board: FRSB) announced net income of $177,047 for the quarter ended June 30, 2011 as compared to net income of $174,120 for the quarter ended March 31, 2011 and net income of $110,318 for the quarter ended June 30, 2010. The second quarter of 2011 results were the most profitable quarter since First Resource Bank opened and marked the 7th consecutive profitable quarter.

Glenn B. Marshall, President & CEO, stated, "Second quarter results were strong despite losses taken on sales of other real estate owned, due to the improved core earnings power embedded in the balance sheet. The Bank continues to grow profitability while absorbing credit costs and an increased regulatory compliance burden."

Net income for the six months ended June 30, 2011 was $351,167, as compared to net income of $228,922 for the six months ended June 30, 2010. This increase is attributed to a lower cost of funds and lower professional fees, offset by higher other real estate owned expenses.

Net interest income was $1,208,176 for the quarter ended June 30, 2011. The net interest margin declined 16 basis points, from 3.91% for the three months ended March 31, 2011 to 3.75% for the three months ended June 30, 2011. This net interest margin decline resulted from higher cash and short term investment balances comprising a larger portion of the balance sheet at June 30, 2011. The loan portfolio yield declined 6 basis points, while the deposit cost of funds declined 2 basis points.

The allowance for loan losses to total loans was 1.28% at June 30, 2011 as compared to 1.27% at March 31, 2011 and 1.24% at June 30, 2010. Non-performing assets, which include non-performing loans of $3.1 million and other real estate owned of $839 thousand, totaled $4.0 million at June 30, 2011. Non-performing assets to total assets decreased from 3.32% at March 31, 2011 to 2.95% at June 30, 2011 primarily due to an $879 thousand reduction in other real estate owned during the second quarter. Chairman James B. Griffin stated, "The reduction of other real estate owned during the second quarter was a top priority and we are pleased to report a 51% reduction in that portfolio during the past quarter. While losses were taken on these sales, we feel that is important to move forward by eliminating the carrying costs of managing these properties." The provision for loan losses decreased from $179,756 for the three months ended March 31, 2011 to $151,933 for the three months ended June 30, 2011 due to a lower level of net loan charge-offs during the second quarter.

The loan portfolio grew $624 thousand, or 0.6%, during the second quarter from $112.1 million at March 31, 2011 to $112.7 million at June 30, 2011, but was down slightly when compared to December 31, 2010. The loan portfolio increased $4.2 million, or 3.9%, from $108.5 million at June 30, 2010 to $112.7 million at June 30, 2011.

The following table illustrates the composition of the loan portfolio:


	June 30, 2011	Dec. 31, 2010	June 30, 2010

Commercial real estate	$ 70,203,290	$ 71,538,599	$ 63,976,153
Commercial construction	4,932,556	2,840,605	6,177,609
Commercial business	12,044,494	12,276,455	12,680,515
Consumer	25,564,771	26,331,755	25,681,032

Total loans	$112,745,111	$112,987,414	$108,515,309

Deposits increased $3.6 million, or 3.2% from $114.4 million at March 31, 2011 to $118.0 million at June 30, 2011. During the second quarter, certificates of deposit increased $5.4 million, or 8.6%, from $62.4 million at March 31, 2011 to $67.8 million at June 30, 2011. Money market deposits declined $1.4 million, or 3.0%, from $46.7 million at March 31, 2011 to $45.3 million at June 30, 2011. During the six months ended June 30, 2011, total deposits increased $8.6 million, or 7.8%, with all of that growth in the certificate of deposit portfolio. Certificates of deposit were used to lock in longer term funding at historic low interest rates.

The Bank issued preferred stock in 2009 as part of the United States Department of the Treasury's Capital Purchase Program. Preferred stock dividends are accrued monthly and all dividend payments have been made in accordance with the terms of the preferred stock issued. Preferred stock dividends and accretion were $72,138 for the second quarter resulting in net income available to common shareholders of $104,909. This compares to net income available to common shareholders of $101,982 for the quarter ended March 31, 2011 and $38,181 for the quarter ended June 30, 2010.

Non-interest income for the quarter ended June 30, 2011 was $26,747, as compared to $33,667 for the previous quarter. This decrease is primarily attributed to one-time loan fee income recognized during the first quarter.

Non-interest expense increased $16,611, or 2% in the three months ended June 30, 2011 as compared to the three months ended March 31, 2011. This increase was primarily due to higher professional fees and higher losses on sales of other real estate owned, partially offset by lower operating costs on other real estate owned due to the disposition of five properties during the quarter.

Selected Financial Data:

Balance Sheets (unaudited)
	June 30, 2011	Dec. 31, 2010

Cash and due from banks	$ 6,351,382	$ 1,968,246
Investments	14,189,042	9,333,483
Loans	112,745,111	112,987,414
Allowance for loan losses	(1,447,138)	(1,399,993)
Premises & equipment	164,303	127,419
Other assets	2,358,453	3,341,266

Total assets	$ 134,361,153	$ 126,357,835

Non-interest bearing deposits	$ 3,965,331	$ 4,393,823
Interest-bearing checking	1,045,073	1,168,134
Money market	45,258,867	51,075,527
Time deposits	67,759,637	52,821,057
Total deposits	118,028,908	109,458,541
Borrowings	928,000	1,928,000
Other liabilities	513,310	395,402

Total liabilities	119,470,218	111,781,943

Preferred stock	5,079,834	5,066,833
Common stock	1,453,094	1,453,094
Surplus	9,644,075	9,635,586
Accumulated other comprehensive income (loss)	54,682	(31,982)
Accumulated deficit	(1,340,750)	(1,547,639)
Total stockholders' equity	14,890,935	14,575,892

Total Liabilities & Stockholders' Equity	$ 134,361,153	$ 126,357,835

Performance Statistics
(unaudited)	Qtr Ended June 30, 2011	Qtr Ended Mar. 31, 2011	Qtr Ended Dec. 31, 2010	Qtr Ended Sept. 30, 2010	Qtr Ended June 30, 2010

Net interest margin	3.75%	3.91%	3.77%	3.40%	3.25%
Nonperforming loans/total loans	2.77%	2.35%	2.23%	3.08%	2.43%
Nonperforming assets/ Total assets	2.95%	3.32%	3.45%	3.34%	2.68%
Allowance for loan losses/ Total loans	1.28%	1.27%	1.24%	1.23%	1.24%
Average loans/Average assets	84.9%	88.0%	87.8%	84.3%	81.7%
Non interest expenses*/ Average assets	2.48%	2.53%	2.82%	2.15%	2.48%

* Annualized

Income Statements (unaudited)
	Qtr Ended June 30, 2011	Qtr Ended Mar. 31, 2011	Qtr Ended Dec. 31, 2010	Qtr Ended Sept. 30, 2010	Qtr Ended June 30, 2010

INTEREST INCOME
Loans	$1,587,688	$1,585,435	$1,594,093	$1,575,193	$1,530,023
Investments	63,007	55,056	28,027	39,327	99,889
Federal funds sold	-	147	704	822	821
Other	1,899	1,016	5,047	7,069	2,891
Total interest income	1,652,594	1,641,654	1,627,871	1,622,411	1,633,624

INTEREST EXPENSE
Borrowings	8,867	13,973	23,060	28,818	33,407
Checking	743	708	817	865	819
Money Market	128,543	137,358	145,307	204,531	223,164
Time deposits	306,267	281,783	270,011	290,097	334,733
Total interest expense	444,420	433,822	439,195	524,311	592,123

Net interest income	1,208,174	1,207,832	1,188,676	1,098,100	1,041,501

Provision for loan losses	151,933	179,756	120,888	202,576	84,766

NON INTEREST INCOME	26,747	33,667	22,428	23,332	21,190

NON INTEREST EXPENSE
Salaries & benefits	346,362	343,817	313,127	307,260	317,889
Occupancy & equipment	74,443	78,338	75,080	74,445	76,943
Data processing	51,552	50,909	49,154	46,908	50,704
Professional fees	105,808	88,589	99,816	78,435	189,922
Advertising	8,045	16,203	2,903	4,825	8,194
Other real estate owned expenses	85,370	53,258	237,791	14,387	1,650
Other non interest Expenses	141,442	165,297	146,188	160,288	164,072
Total non interest Expense	813,022	796,411	924,059	686,548	809,374

Pre-tax income	269,966	265,332	166,157	232,308	168,551

Tax expense	(92,919)	(91,212)	(57,296)	(79,731)	(58,233)

Net income	$ 177,047	$ 174,120	$ 108,861	$ 152,577	$ 110,318

Preferred stock dividends and accretion	(72,138)	(72,138)	(72,138)	(72,138)	(72,137)

Net income available to common shareholders	$ 104,909	$ 101,982	$ 36,723	$ 80,439	$ 38,181

Income Statements (unaudited)
	Six Months Ended June 30, 2011	Six Months Ended June 30, 2010

INTEREST INCOME
Loans	$3,173,123	$3,252,667
Investments	118,063	211,222
Federal funds sold	147	1,318
Other	2,915	7,552
Total interest income	3,294,248	3,252,667

INTEREST EXPENSE
Borrowings	22,840	73,457
Checking	1,451	1,583
Money Market	265,901	401,925
Time deposits	588,050	739,748
Total interest expense	878,242	1,216,713

Net interest income	2,416,006	2,035,954

Provision for loan losses	331,689	247,232

NON INTEREST INCOME	60,414	43,623

NON INTEREST EXPENSE
Salaries & benefits	690,179	646,913
Occupancy & equipment	152,781	164,486
Data processing	102,461	102,282
Professional fees	194,397	246,463
Advertising	24,248	13,097
Other real estate owned expenses	138,628	5,579
Other non interest expense	306,739	304,567
Total non interest expense	1,609,433	1,483,387

Pre-tax income	535,298	348,958

Tax expense	(184,131)	(120,036)

Net income	$ 351,167	$ 228,922

Preferred stock dividends and accretion	(144,276)	(144,274)

Net income available to common shareholders	$ 206,891	$ 84,648

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