First Resource Bank Announces Second Quarter Results; Strong Loan Growth Lowers Preferred Stock Dividend Costs

EXTON, Pa., July 23, 2012 /PRNewswire/ -- First Resource Bank (OTC Bulletin Board: FRSB) announced net income for the three months ended June 30, 2012 was $213,254 as compared to $243,738 for the quarter ended March 31, 2012 and net income of $177,047 for the quarter ended June 30, 2011. After accounting for preferred stock dividends, net income available to common shareholders for the quarter ended June 30, 2012 was $161,030. This compares to net income available to common shareholders of $180,200 for the quarter ended March 31, 2012 and $104,909 for the quarter ended June 30, 2011.

Net income for the six months ended June 30, 2012 of $456,992 compares to net income of $351,167 for the same period in the prior year. After accounting for preferred stock dividends, net income available to common shareholders for the six months ended June 30, 2012 was $341,230, as compared to $206,891 for the same period in the prior year.

Net interest income was $1,304,376 for the quarter ended June 30, 2012 as compared to $1,302,907 for the previous quarter.  The net interest margin declined from 3.91% during the first quarter of 2012 to 3.76% during the second quarter of 2012. A 22 basis point reduction in the yield on interest bearing assets was offset by an 8 basis point decline in the cost of interest bearing liabilities. Loan yields continue to experience pressure from intense competition for new loans as well as the scheduled re-pricing of existing loans during a time of historically low interest rates.

Glenn B. Marshall, President & CEO, stated, "First Resource Bank continues to post solid quarterly results. We continue to digest credit costs as a result of the economic downturn, but believe that we are seeing stabilization in this area. Strong loan growth in 2012 has provided significant Small Business Lending Fund preferred stock dividend cost savings which will help the Bank absorb ongoing credit costs."

The allowance for loan losses to total loans was 1.16% at June 30, 2012 as compared to 1.17% at March 31, 2012, 1.24% at December 31, 2011 and 1.28% at June 30, 2011. Non-performing assets, which include non-performing loans of $3.4 million and other real estate owned of $1.1 million, totaled $4.5 million at June 30, 2012. Non-performing assets to total assets increased from 2.93% at March 31, 2012 to 3.04% at June 30, 2012 due to a $465 thousand commercial mortgage loan placed on nonaccrual during the second quarter.  

The loan portfolio grew $1.2 million, or 0.9%, during the second quarter from $122.8 million at March 31, 2012 to $123.9 million at June 30, 2012. This loan growth was experienced in the commercial business loan, commercial real estate loan and commercial construction loan portfolios, while the consumer loan portfolio declined during the quarter. During the first six months of 2012, the loan portfolio grew $6.5 million, or 5.5%, from $117.5 million at December 31, 2011 to $123.9 million at June 30, 2012.

The following table illustrates the composition of the loan portfolio:

Consistent with the goals of the Small Business Lending Fund, over the past nine months the Bank has grown qualified small business loans by over 15%. This growth will bring the preferred stock dividend cost down to 1.007% for the fourth quarter of 2012, as compared to 3.054% for the third quarter and 4.11% for the second quarter. The gradual reduction in preferred stock dividend costs will continue through the rest of the year as the rates reset quarterly.

Deposits increased $4.8 million, or 3.9% from $125.0 million at March 31, 2012 to $129.8 million at June 30, 2012. During the second quarter, certificates of deposit increased $797 thousand, or 1.1%, from $74.1 million at March 31, 2012 to $74.9 million at June 30, 2012. Money market deposits increased $1.6 million, or 3.7%, from $44.0 million at March 31, 2012 to $45.7 million at June 30, 2012. During the first six months of 2012, total deposits grew $9.9 million, or 8.2%, from $120.0 million at December 31, 2011 to $129.8 million at June 30, 2012. Growth was experienced in all aspects of the deposit portfolio.

Non-interest income for the quarter ended June 30, 2012 was $59,705, as compared to $55,179 for the previous quarter. This increase was primarily due to an increase in loan late fees collected. Non-interest income for the six months ended June 30, 2012 was $114,884, as compared to $60,414 for the same period in the prior year. This increase was primarily due to the income associated with the increase in cash surrender value of bank owned life insurance which was purchased during the fourth quarter of 2011.  

Non-interest expense increased $60,631, or 7.2% in the three months ended June 30, 2012 as compared to the three months ended March 31, 2012. This increase was primarily due to a $61 thousand write down on an other real estate owned property. Non-interest expense for the six months ended June 30, 2012 was $1.7 million, an increase of $139 thousand, or 8.6%, as compared to the same period in the prior year. This increase was primarily due to an increase in salaries and benefits expenses associated with the expansion of the employee base. 

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