EXTON, Pa., Jan. 30, 2019 /PRNewswire/ -- First Resource Bank (OTCQX: FRSB) announced financial results for the three months and year ended December 31, 2018.
Highlights for the year ended December 31, 2018 included:
- Net income grew 28%
- Earnings per share grew 17%
- Non-interest bearing deposits grew 27%
- Total deposits grew 12%
- Loans grew 13%
- Total assets grew to over $300 million
- Acquired the site for the third branch location in Wayne, Pennsylvania
Glenn B. Marshall, President & CEO, stated, "2018 was a record year for First Resource Bank in numerous ways. The fact that we achieved record net income in 2018 was significant as we took advantage of tax savings to invest in the Bank's infrastructure which will benefit us for years to come. 2018 marked the 5th consecutive year with loan growth of 10% or greater. Our strategic focus on checking deposit growth was highly successful as total deposits grew 12% during the year with non-interest bearing deposits up 27% for the year."
Net income for the quarter ended December 31, 2018 was $608,737, which compares to $554,653 for the previous quarter and $401,757 for the fourth quarter of the prior year.
Net income for the year ended December 31, 2018 was $2,165,207, a 28% increase as compared to the prior year. The increase in net income is primarily attributable to an 11% increase in net interest income and lower income tax expense as a result of the passage of the Tax Cuts and Jobs Act in 2017, partially offset by lower non-interest income, a higher provision for loan losses and higher non-interest expense. Gains on sales of SBA loans totaled $96 thousand in 2018 as compared to $197 thousand in 2017.
Net interest income was $2,543,645 for the quarter ended December 31, 2018 as compared to $2,492,896 for the previous quarter, an improvement of 2%. The net interest margin decreased 7 basis points from 3.85% for the quarter ended September 30, 2018 to 3.78% for the quarter ended December 31, 2018. The overall yield on interest earning assets increased 2 basis points during the fourth quarter led by a 6 basis point increase in loan yields to 5.48%. The cost of deposits increased 10 basis points during the fourth quarter to 1.27%.
Net interest income for the year ended December 31, 2018 was $9,927,714 as compared to $8,960,606 for the year ended December 31, 2017, an 11% improvement. The net interest margin for the year ended December 31, 2018 was 3.89% as compared to 3.86% for the prior year. Loan yields increased 20 basis points to 5.38% in 2018, as compared to 5.18% in the prior year, and the cost of deposits increased 26 basis points to 1.07% in 2018, as compared to 0.81% in 2017.
Non-interest income for the quarter ended December 31, 2018 was $178,337 as compared to $127,457 for the previous quarter and $93,721 for the fourth quarter of the prior year. There were $55,075 in gains on sales of SBA loans recognized during the fourth quarter of 2018, as compared to $12,631 in the prior quarter and none in the fourth quarter of 2017.
Non-interest income for the year ended December 31, 2018 was $561,266 as compared to $590,349 for the prior year. The decrease in mainly attributed to a decrease in gains on the sale of SBA loans, which were $96 thousand during 2018 and $197 thousand in 2017.
Non-interest expense increased $63 thousand, or 3%, in the three months ended December 31, 2018 as compared to the prior quarter. The increase was primarily due to an increase in salaries and benefits, professional fees, data processing and other costs, partially offset by a decrease in advertising costs.
Non-interest expense increased $731 thousand, or 11%, in the year ended December 31, 2018 as compared to the prior year. This increase was due to higher salaries and benefits expense associated with a higher headcount and higher advertising, data processing and other costs, partially offset by lower occupancy costs and professional fees. Marshall stated, "Included in the increased employee headcount was a dedicated compliance officer and chief credit officer, both of whom will generate long term benefits to the bank. These staff additions are important investments in our infrastructure to help grow the Bank to the next level."
Deposits grew $13.6 million from $222.6 million at September 30, 2018 to $236.2 million at December 31, 2018. During the fourth quarter, non-interest bearing deposits increased $3.4 million, or 12%, from $28.4 million at September 30, 2018 to $31.8 million at December 31, 2018. Interest-bearing checking balances increased $679 thousand, or 7%, from $10.4 million at September 30, 2018 to $11.1 million at December 31, 2018. Money market deposits increased $7.5 million, or 8%, from $94.4 million at September 30, 2018 to $101.9 million at December 31, 2018. Certificates of deposit increased $2.0 million, or 2%, from $89.5 million at September 30, 2018 to $91.5 million at December 31, 2018.
During 2018, total deposits increased $25.3 million, or 12%, from $210.9 million at December 31, 2017 to $236.2 million at December 31, 2018. During 2018, non-interest bearing deposits grew 27%, interest checking deposits grew 14%, money market deposits declined 6% and certificates of deposit grew 35%.
Marshall stated, "We are very excited about opening our third branch in 2019 in Wayne, Pennsylvania. The addition of this large deposit market will enhance our ability to grow core deposits. The site has been acquired and the existing building on the site has been completely removed already. We expect a late third quarter opening for this location, dependent on construction timing and possible weather delays as we are building a new structure from the ground up."
The loan portfolio grew $10.3 million during the fourth quarter from $234.4 million at September 30, 2018 to $244.7 million at December 31, 2018, with growth in commercial business loans, commercial real estate loans, and construction loans, partially offset by a decline in consumer loans.
During 2018, the loan portfolio grew $27.2 million, or 13%, from $217.5 at December 31, 2017 to $244.7 million at December 31, 2018, with the majority of that growth in commercial real estate loans.
The following table illustrates the composition of the loan portfolio:
Dec. 31, 2018 | Dec. 31, 2017 | |||
Commercial real estate | $ 170,738,479 | $ 147,895,320 | ||
Commercial construction | 20,377,108 | 19,794,234 | ||
Commercial business | 31,738,443 | 28,315,241 | ||
Consumer | 21,843,647 | 21,459,111 | ||
Total loans | $ 244,697,677 | $ 217,463,906 | ||
The allowance for loan losses to total loans was 0.81% at December 31, 2018 as compared to 0.85% at September 30, 2018 and 0.81% at December 31, 2017. Non-performing assets consisted of non-performing loans of $2.8 million at December 31, 2018, an 8% decrease as compared to the prior quarter primarily due to the sale of other real estate owned during the fourth quarter. Non-performing assets to total assets improved 18% from 1.12% at September 30, 2018 to 0.92% at December 31, 2018.
During the year ended December 31, 2018, total stockholder's equity increased $2.1 million, or 9%, from $23.2 million at December 31, 2017 to $25.3 million at December 31, 2018, primarily due to net income generated. During the year ended December 31, 2018 book value per share has grown 79 cents, or 9%, to $9.62.
During the year ended December 31, 2018, total assets grew $33.9 million, or 13%. This growth was primarily the result of $27.2 million in loan growth funded by a $25.3 million increase in deposits and a $6.2 million increase in borrowings.
Selected Financial Data: | ||||
Balance Sheets (unaudited) | ||||
December 31, 2018 | December 31, 2017 | |||
Cash and due from banks | $ 5,734,677 | $ 2,998,367 | ||
Time deposits at other banks | 599,000 | 599,000 | ||
Investments | 37,762,190 | 36,219,930 | ||
Loans | 244,697,677 | 217,463,906 | ||
Allowance for loan losses | (1,990,253) | (1,751,953) | ||
Premises & equipment | 6,647,166 | 5,671,763 | ||
Other assets | 8,996,941 | 7,353,942 | ||
Total assets | $ 302,447,398 | $ 268,554,955 | ||
Non-interest bearing deposits | $ 31,788,359 | $ 24,987,354 | ||
Interest-bearing checking | 11,069,325 | 9,755,198 | ||
Money market | 101,887,847 | 108,500,566 | ||
Time deposits | 91,456,365 | 67,658,995 | ||
Total deposits | 236,201,896 | 210,902,113 | ||
Short term borrowings | 17,000,400 | 17,997,000 | ||
Long term borrowings | 18,515,500 | 11,287,500 | ||
Subordinated debt | 3,986,097 | 3,977,603 | ||
Other liabilities | 1,466,037 | 1,227,099 | ||
Total liabilities | 277,169,930 | 245,391,315 | ||
Total stockholders' equity | 25,277,468 | 23,163,640 | ||
Total liabilities & stockholders' equity | $ 302,447,398 | $ 268,554,955 | ||
Performance Statistics | |||||
Qtr Ended Dec. 31, 2018 | Qtr Ended Sept. 30, 2018 | Qtr Ended June 30, 2018 | Qtr Ended Mar. 31, 2018 | Qtr Ended Dec. 31, 2017 | |
Net interest margin | 3.78% | 3.85% | 3.97% | 3.98% | 3.90% |
Nonperforming loans/ Total loans | 1.14% | 1.21% | 1.42% | 1.35% | 1.39% |
Nonperforming assets/ Total assets | 0.92% | 1.12% | 1.30% | 1.17% | 1.13% |
Allowance for loan losses/ Total loans | 0.81% | 0.85% | 0.87% | 0.85% | 0.81% |
Average loans/Average assets | 84.9% | 86.1% | 86.6% | 86.1% | 84.3% |
Non-interest expenses*/ Average assets | 2.67% | 2.68% | 2.72% | 2.84% | 2.57% |
Earnings per share – basic and diluted | $0.23 | $0.21 | $0.20 | $0.18 | $0.15 |
Book value per share | $9.62 | $9.35 | $9.15 | $8.97 | $8.83 |
Total shares outstanding | 2,628,316 | 2,626,633 | 2,625,130 | 2,623,575 | 2,621,887 |
* Annualized | |||||
Year Ended Dec. 31, 2018 | Year Ended Dec. 31, 2017 | |
Net interest margin | 3.89% | 3.86% |
Return on assets | 0.81% | 0.69% |
Return on equity | 9.02% | 8.08% |
Earnings per share-basic and diluted | $0.82 | $0.70 |
Income Statements (unaudited) | |||||||||
Qtr. Ended Dec. 31, 2018 | Qtr. Ended Sept. 30, 2018 | Qtr. Ended June 30, 2018 | Qtr. Ended Mar. 31, 2018 | Qtr. Ended Dec. 31, 2017 | |||||
INTEREST INCOME | |||||||||
Loans, including fees | $3,297,459 | $3,179,807 | $3,076,950 | $2,849,596 | $2,768,463 | ||||
Securities | 124,207 | 115,250 | 126,632 | 130,141 | 113,230 | ||||
Other | 37,950 | 20,705 | 1,733 | 2,563 | 15,593 | ||||
Total interest income | 3,459,616 | 3,315,762 | 3,205,315 | 2,982,300 | 2,897,286 | ||||
INTEREST EXPENSE | |||||||||
Deposits | 739,464 | 655,163 | 513,174 | 441,063 | 433,287 | ||||
Borrowings | 108,664 | 99,856 | 130,785 | 76,810 | 47,575 | ||||
Subordinated debt | 67,843 | 67,847 | 67,486 | 67,124 | 67,843 | ||||
Total interest expense | 915,971 | 822,866 | 711,445 | 584,997 | 548,705 | ||||
Net interest income | 2,543,645 | 2,492,896 | 2,493,870 | 2,397,303 | 2,348,581 | ||||
Provision for loan losses | 78,051 | 109,544 | 191,321 | 134,322 | 89,233 | ||||
Net interest income after | 2,465,594 | 2,383,352 | 2,302,549 | 2,262,981 | 2,259,348 | ||||
NON-INTEREST INCOME | |||||||||
BOLI income | 38,315 | 38,163 | 37,564 | 35,040 | 28,258 | ||||
Gain on sale of SBA loans | 55,075 | 12,631 | 28,725 | - | - | ||||
Other | 84,947 | 76,663 | 73,441 | 80,702 | 65,463 | ||||
Total non-interest income | 178,337 | 127,457 | 139,730 | 115,742 | 93,721 | ||||
NON-INTEREST EXPENSE | |||||||||
Salaries & benefits | 1,121,757 | 1,089,077 | 1,055,702 | 1,028,005 | 923,583 | ||||
Occupancy & equipment | 179,256 | 178,176 | 178,119 | 194,772 | 175,539 | ||||
Professional fees | 94,756 | 84,445 | 99,919 | 87,452 | 90,275 | ||||
Advertising | 34,689 | 52,808 | 45,638 | 62,222 | 24,802 | ||||
Data processing | 121,363 | 107,734 | 111,828 | 105,617 | 102,435 | ||||
Other | 337,137 | 313,657 | 309,324 | 317,187 | 309,388 | ||||
Total non-interest expense | 1,888,958 | 1,825,897 | 1,800,530 | 1,795,255 | 1,626,022 | ||||
Income before income tax | 754,973 | 684,912 | 641,749 | 583,468 | 727,047 | ||||
Federal income tax expense | 146,236 | 130,259 | 120,924 | 102,476 | 325,290 | ||||
Net income | $ 608,737 | $ 554,653 | $ 520,825 | $ 480,992 | $ 401,757 | ||||
Income Statements (unaudited) | |||
Year | Year | ||
INTEREST INCOME | |||
Loans | $ 12,403,812 | $ 10,601,912 | |
Investments | 496,230 | 423,450 | |
Other | 62,951 | 62,180 | |
Total interest income | 12,962,993 | 11,087,542 | |
INTEREST EXPENSE | |||
Deposits | 2,348,864 | 1,661,999 | |
Borrowings | 416,115 | 194,637 | |
Subordinated debt | 270,300 | 270,300 | |
Total interest expense | 3,035,279 | 2,126,936 | |
Net interest income | 9,927,714 | 8,960,606 | |
Provision for loan losses | 513,238 | 353,316 | |
Net interest income after provision for | 9,414,476 | 8,607,290 | |
NON-INTEREST INCOME | |||
BOLI income | 149,082 | 113,623 | |
Gain on sale of SBA loans | 96,431 | 196,873 | |
Other | 315,753 | 279,853 | |
Total non-interest income | 561,266 | 590,349 | |
NON-INTEREST EXPENSE | |||
Salaries & benefits | 4,294,541 | 3,630,324 | |
Occupancy & equipment | 730,323 | 742,960 | |
Professional fees | 366,572 | 431,138 | |
Advertising | 195,357 | 156,899 | |
Data processing | 446,542 | 390,185 | |
Other non-interest expense | 1,277,305 | 1,228,459 | |
Total non-interest expense | 7,310,640 | 6,579,965 | |
Pre-tax income | 2,665,102 | 2,617,674 | |
Tax expense | 499,895 | 929,959 | |
Net income | $ 2,165,207 | $ 1,687,715 | |
About First Resource Bank
First Resource Bank is a locally owned and operated Pennsylvania state-chartered bank with two full-service branches, 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.
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